Baidu Announces First Quarter 2022 Results - Form 6-K

Baidu Announces First Quarter 2022 Results

BEIJING, China, May 26, 2022 - Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888) ("Baidu" or the "Company"), a leading AI company with strong Internet foundation, today announced its unaudited financial results for the first quarter ended March 31, 2022.

"Baidu delivered solid first quarter results, especially with regard to our cloud and intelligent driving businesses. Baidu AI Cloud reported another quarter of strong revenue growth and Apollo Go was granted the first permit in China to provide driverless ride-hailing services on public roads in Beijing," said Robin Li, Co-founder and CEO of Baidu. "Since mid-March, our business has been negatively impacted by the recent COVID-19 resurgence in China. Although challenges related to the virus continue to pressure our near term business operations, we remain confident that our new AI businesses will boost the long-term growth of Baidu and contribute to China's innovation- driven economy and sustainable development."

"Revenues from Baidu Core remained healthy with non-ad revenues increasing by 35% year over year, driven by Baidu AI Cloud, which grew 45% year over year in the quarter, " said Rong Luo, CFO of Baidu. "Looking ahead, we remain committed to quality revenue growth and an enduring business model. In addition, we will further enhance our overall operational efficiency to drive long-term growth."

First Quarter 2022 Financial Highlights¹

		Baidu, Inc.
(In millions except per ADS, unaudited)		Q1 2021			Q4 2021			Q1 2022			YOY			QOQ
		RMB			RMB			RMB			US$
Total revenues			28,134				33,088				28,411				4,482				1	%			(14	%)
Operating income			2,789				1,958				2,601				410				(7	%)			33	%
Operating income (non-GAAP)2			4,362				4,307				3,996				630				(8	%)			(7	%)
Net income (loss) to Baidu			25,653				1,715				(885	)			(140	)			-				-
Net income to Baidu (non-GAAP)2			4,297				4,084				3,879				612				(10	%)			(5	%)
Diluted earnings (loss) per ADS			73.76				4.51				(2.87	)			(0.45	)			-				-
Diluted earnings per ADS (non-GAAP)2			12.38				11.60				11.22				1.77				(9	%)			(3	%)
Adjusted EBITDA2			5,900				5,757				5,499				867				(7	%)			(4	%)
Adjusted EBITDA margin			21	%			17	%			19	%			19	%

1	Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB6.3393 as of March 31, 2022, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Translations are provided solely for the convenience of the reader.

2	Non-GAAP measures are defined in the Non-GAAP Financial Measures section (see also "Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures" for more details).

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		Baidu Core
(In millions, unaudited)		Q1 2021			Q4 2021			Q1 2022			YOY			QOQ
		RMB			RMB			RMB			US$
Total revenues			20,483				25,978				21,378				3,372				4	%			(18	%)
Operating income			3,847				2,958				2,524				398				(34	%)			(15	%)
Operating income (non-GAAP)2			5,064				4,847				3,686				581				(27	%)			(24	%)
Net income (loss) to Baidu Core			26,354				2,656				(963	)			(152	)			-				-
Net income to Baidu Core (non-GAAP)2			4,870				4,625				3,804				600				(22	%)			(18	%)
Adjusted EBITDA2			6,487				6,210				5,106				805				(21	%)			(18	%)
Adjusted EBITDA margin			32	%			24	%			24	%			24	%

Operational Highlights

Corporate

•

Baidu released its annual ESG Report in May 2022, which details Baidu's ESG policies and sustainability initiatives ( http://esg.baidu.com/en/esg_download.html ).

AI Cloud

•

PaddlePaddle developer community has grown to 4.77 million and has served 180,000 businesses and created 560,000 models, as of May 20, 2022.

•

Baidu ACE smart transportation has been adopted by 41 cities, up from 16 cities a year ago, based on contract value of over RMB10 million, as of the end of the first quarter of 2022.

Intelligent Driving

•

Baidu received a nomination letter from Dongfeng Motor, a Top 3 domestic automaker, in April 2022, indicating that Dongfeng Motor intends to adopt Apollo Self Driving (ANP, AVP, HD Map) in one of its popular models. This followed the nomination letter from BYD earlier this year.

•

On April 28th 2022, Apollo Go was granted the permits to provide driverless ride hailing services on public roads of the Yizhuang region of Beijing. Apollo also received the first permits in Chongqing to conduct driverless testing on May 20th, 2022.

•

Apollo Go provided 196K rides in the first quarter of 2022.

•

Apollo Go is now available in ten cities, including Beijing, Shanghai, Guangzhou, Shenzhen, Chongqing, Changsha, Cangzhou, Yangquan, Wuzhen Water Town in Jiaxing and Wuhan. Apollo Go expanded into Wuzhen Water Town in Jiaxing on March 26, 2022 and Wuhan on May 10, 2022.

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Other Growth Initiatives

•

Xiaodu again ranked No.1 in smart display shipments globally for 2021, according to Strategy Analytics and Canalys. Xiaodu continues to be ranked No.1 in smart speaker shipments in China for 2021, according to Strategy Analytics, IDC and Canalys.

Mobile Ecosystem

•

In March, Baidu App's MAUs reached 632 million, up 13% year over year, and daily logged in users reached 83%.

•

In March, Baidu Smart Mini Program ("SMPs") MAUs reached 508 million, up 22% year over year, and the number of SMPs grew by 26% year over year.

•

Revenue from Managed Page grew by 31% and reached 47% of Baidu Core's online marketing revenue in the first quarter of 2022.

iQIYI

•

iQIYI's average daily number of total subscribing members for the quarter was 101 million, compared to 105 million for the first quarter of 2021 and 97 million for the fourth quarter of

2021.

First Quarter 2022 Financial Results

Total revenues were RMB28.4 billion ($4.48 billion), increasing 1% year over year.

•

Revenue from Baidu Core was RMB21.4 billion ($3.37 billion), increasing 4% year over year; online marketing revenue was RMB15.7 billion ($2.47 billion), decreasing 4% year over year, and non-online marketing revenue was RMB5.7 billion ($903 million), up 35% year over year, driven by cloud and other AI-powered businesses.

•

Revenue from iQIYI was RMB7.3 billion ($1.15 billion), decreasing 9% year over year.

Cost of revenues was RMB15.5 billion ($2.45 billion), increasing 4% year over year, primarily due to an increase in cost of goods sold, traffic acquisition costs, bandwidth costs, and other costs related to new AI business, offset by a decrease in content costs.

Selling, general and administrative expenses were RMB4.7 billion ($735 million), decreasing 11% year over year, primarily due to a decrease in channel spending, promotional marketing and expected credit losses.

Research and development expense was RMB5.6 billion ($885 million), increasing 10% year over year, primarily due to an increase in personnel related expense.

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Operating income was RMB2.6 billion ($410 million). Baidu Core operating income was RMB2.5 billion ($398 million), and Baidu Core operating margin was 12%. Non-GAAP operating income was RMB4.0 billion ($630 million). Non-GAAP Baidu Core operating income was RMB3.7 billion ($581 million), and non-GAAP Baidu Core operating margin was 17%.

Total other loss, net was RMB3.0 billion ($466 million), which mainly included a fair value loss of RMB3.0 billion from long-term investments. A significant portion of long-term investments, including but not limited to investments in equity securities of public and private companies, private equity funds and digital assets, is subject to quarterly fair value adjustments, which may contribute to net income volatility in future periods.

Income tax expense was RMB391 million ($62 million), decreasing 75% year over year, primarily due to a decrease in profit before tax and an increase in deduction on certain expenses that were previously considered non-deductible.

Net loss attributable to Baidu was RMB885 million ($140 million), and diluted loss per ADS was RMB2.87 ($0.45). Net loss attributable to Baidu Core was RMB963 million ($152 million). Non- GAAP net income attributable to Baidu was RMB3.9 billion ($612 million). Non-GAAP diluted earnings per ADS was RMB11.22 ($1.77). Non-GAAP net income attributable to Baidu Core was RMB3.8 billion ($600 million), and non-GAAP net margin for Baidu Core was 18%.

Adjusted EBITDA was RMB5.5 billion ($867 million) and adjusted EBITDA margin was 19%. Adjusted EBITDA for Baidu Core was RMB5.1 billion ($805 million) and adjusted EBITDA margin for Baidu Core was 24%.

As of March 31, 2022, cash, cash equivalents, restricted cash and short-term investments were RMB191.0 billion ($30.13 billion), and cash, cash equivalents, restricted cash and short- term investments excluding iQIYI were RMB185.8 billion ($29.31 billion). Free cash flow was negative RMB107 million ($17 million), and free cash flow excluding iQIYI was RMB1.1 billion ($175 million).

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Conference Call Information

Baidu's management will hold an earnings conference call at 8.00AM on May 26, 2022, U.S. Eastern Time (8.00PM on May 26, 2022, Beijing Time).

Please register in advance of the conference call using the link provided below. Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and unique registrant ID by email.

For pre-registration, please click http://apac.directeventreg.com/registration/event/3917105

It will automatically direct you to the registration page of "Baidu Q1 2022 Earnings Conference Call", where you may fill in your details for RSVP. If it requires you to enter a participant conference ID, please enter "3917105".

In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), Direct Event passcode and unique registrant ID) provided in the confirmation email that you have received following your pre-registration.

Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com.

About Baidu

Founded in 2000, Baidu's mission is to make the complicated world simpler through technology. Baidu is a leading AI company with strong Internet foundation, trading on NASDAQ under "BIDU" and HKEX under "9888". One Baidu ADS represents eight Class A ordinary shares.

Contacts

Investors Relations, Baidu, Inc.

Tel: +86-10-5992-8888

Email: [email protected]

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Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward- looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, Baidu's and other parties' strategic and operational plans, contain forward-looking statements. Baidu may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in announcements made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Baidu's beliefs and expectations, are forward- looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward- looking statement, including but not limited to the following: Baidu's growth strategies; its future business development, including development of new products and services; its ability to attract and retain users and customers; competition in the Chinese Internet search and newsfeed market; competition for online marketing customers; changes in the Company's revenues and certain cost or expense items as a percentage of its revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to intellectual property rights; the expected growth of the Chinese-language Internet search and newsfeed market and the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and Internet search providers, and general economic conditions in China and elsewhere. Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed with the Securities and Exchange Commission, and announcements on the website of the Hong Kong Stock Exchange. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of the press release, and Baidu undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

To supplement Baidu's consolidated financial results presented in accordance with GAAP, Baidu uses the following non-GAAP financial measures: non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) attributable to Baidu, non-GAAP net margin, non-GAAP diluted earnings per ADS, adjusted EBITDA, adjusted EBITDA margin and free cash flow. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

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Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain items that may not be indicative of its recurring core business operating results, such as operating performance excluding non-cash charges or non-operating in nature. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Baidu's historical performance and liquidity. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company's results of operations. These non- GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data.

Non-GAAP operating income represents operating income excluding share-based compensation expenses, amortization and impairment of intangible assets resulting from business combinations and contingent loss pertaining to legal proceeding in relation to former advertising agencies and iQIYI's non-recurring employee severance costs.

Non-GAAP net income attributable to Baidu represents net income attributable to Baidu excluding share-based compensation expenses, amortization and impairment of intangible assets resulting from business combinations, contingent loss pertaining to legal proceeding in relation to former advertising agencies, iQIYI's non-recurring employee severance costs, disposal gain or loss, impairment of long-term investments, fair value change of long-term investments, charitable donation from Baidu, adjusted for related income tax effects. Baidu's share of equity method investments for these non-GAAP reconciling items, amortization and impairment of intangible assets not on the investees' books, accretion of their redeemable non-controlling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per shares, adjusted for related income tax effects, are also excluded.

Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated by dividing non-GAAP net income attributable to Baidu, by the weighted average number of ordinary shares expressed in ADS. Adjusted EBITDA represents operating income excluding depreciation, amortization and impairment of intangible assets resulting from business combinations, contingent loss pertaining to legal proceeding in relation to former advertising agencies, iQIYI's non-recurring employee severance costs, and share-based compensation expenses.

For more information on non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measure".

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Baidu, Inc.

Condensed Consolidated Statements of Income (Loss)

(In millions except for per share (or ADS) information, unaudited)

		Three Months Ended
		March 31, 2021			December 31, 2021			March 31, 2022			March 31, 2022
		RMB			RMB			RMB			US$(2)
Revenues:
Online marketing services			18,094				20,723				16,929				2,670
Others			10,040				12,365				11,482				1,812
Total revenues			28,134				33,088				28,411				4,482
Costs and expenses:
Cost of revenues(1)			15,002				17,289				15,546				2,452
Selling, general and administrative(1)			5,245				6,451				4,656				735
Research and development(1)			5,098				7,390				5,608				885
Total costs and expenses			25,345				31,130				25,810				4,072
Operating income			2,789				1,958				2,601				410
Other income (loss):
Interest income			1,233				1,514				1,454				229
Interest expense			(823	)			(873	)			(710	)			(112	)
Foreign exchange income (loss), net			156				(27	)			(11	)			(2	)
Share of losses from equity method investments			(151	)			(773	)			(408	)			(64	)
Others, net			23,362				566				(3,286	)			(517	)
Total other income (loss), net			23,777				407				(2,961	)			(466	)
Income (loss) before income taxes			26,566				2,365				(360	)			(56	)
Income tax expense			1,534				1,295				391				62
Net income (loss)			25,032				1,070				(751	)			(118	)
Net (loss) income attributable to noncontrolling interests			(621	)			(645	)			134				22
Net income (loss) attributable to Baidu			25,653				1,715				(885	)			(140	)

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		Three Months Ended
		March 31, 2021			December 31, 2021			March 31, 2022			March 31, 2022
		RMB			RMB			RMB			US$(2)
Earnings (loss) per ADS (1 ADS representing 8 Class A ordinary shares):
- Basic			76.10				4.57				(2.87	)			(0.45	)
- Diluted			73.76				4.51				(2.87	)			(0.45	)
Earnings (loss) per share for Class A and Class B ordinary shares:
- Basic			9.51				0.57				(0.36	)			(0.06	)
- Diluted			9.22				0.56				(0.36	)			(0.06	)
Weighted average number of Class A and Class B ordinary shares outstanding (in millions):
- Basic			2,692				2,780				2,767				2,767
- Diluted			2,777				2,816				2,767				2,767
(1)   Includes share-based compensation expenses as follows:
Cost of revenues			79				134				82				13
Selling, general and administrative			471				533				377				60
Research and development			949				1,426				864				136
Total share-based compensation expenses			1,499				2,093				1,323				209

(2)	All translations from RMB to U.S. dollars are made at a rate of RMB6.3393 to US$1.00, the exchange rate in effect as of March 31, 2022 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System.

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Baidu, Inc.

Condensed Consolidated Balance Sheets

(In millions, unaudited)

		December 31, 2021			March 31, 2022			March 31, 2022
		RMB			RMB			US$
ASSETS
Current assets:
Cash and cash equivalents			36,850				36,832				5,810
Restricted cash			10,821				10,975				1,731
Short-term investments, net			143,243				143,172				22,585
Accounts receivable, net			9,981				9,671				1,526
Amounts due from related parties			1,368				903				142
Other current assets, net			11,052				9,950				1,569
Total current assets			213,315				211,503				33,363
Non-current assets:
Fixed assets, net			23,027				23,133			3,649
Licensed copyrights, net			7,258				7,096			1,119
Produced content, net			10,951				12,032			1,898
Intangible assets, net			1,689			1,556			245
Goodwill			22,605			22,605			3,566
Long-term investments, net			67,332			64,247			10,135
Amounts due from related parties			3,487				3,471			548
Deferred tax assets, net			2,372			2,670			421
Operating lease right-of-use assets			12,065			10,769			1,699
Other non-current assets			15,933			16,551			2,611
Total non-current assets			166,719				164,130				25,891
Total assets			380,034				375,633				59,254

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		December 31, 2021			March 31, 2022			March 31, 2022
		RMB			RMB			US$
LIABILITIES,
REDEEMABLE NONCONTROLLING
INTERESTS AND EQUITY
Current liabilities:
Short-term loans			4,168				4,442				701
Accounts payable and accrued liabilities			41,384				35,693				5,630
Customer deposits and deferred revenue			13,706				13,153				2,075
Deferred income			97				87				14
Long-term loans, current portion			2				-				-
Notes payable, current portion			10,505				10,457				1,650
Amounts due to related parties			1,764				1,553				245
Operating lease liabilities			2,862				2,804				442
Total current liabilities			74,488				68,189				10,757
Non-current liabilities:
Deferred income			129				147				23
Deferred revenue			223				234				37
Amounts due to related parties			3,268				3,243				512
Long-term loans			12,629				12,573				1,983
Notes payable			43,120				42,917				6,770
Convertible senior notes			12,652				13,238				2,088
Deferred tax liabilities			3,286				3,006				474
Operating lease liabilities			5,569				5,149				812
Other non-current liabilities			718				1,707				269
Total non-current liabilities			81,594				82,214				12,968
Total liabilities			156,082				150,403				23,725
Redeemable noncontrolling interests			7,148				6,872				1,084
Equity
Total Baidu shareholders' equity			211,459				212,170				33,469
Noncontrolling interests			5,345				6,188				976
Total equity			216,804				218,358				34,445
Total liabilities, redeemable noncontrolling interests, and equity			380,034				375,633				59,254

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Baidu, Inc.

Selected Information

(In millions, unaudited)

		Three months ended			Three months ended			Three months ended			Three months ended
		March 31, 2021 (RMB)			December 31, 2021 (RMB)			March 31, 2022 (RMB)			March 31, 2022 (US$)
		Baidu						Elim &			Baidu,			Baidu						Elim &			Baidu,			Baidu						Elim &			Baidu,			Baidu						Elim &			Baidu,
		Core			iQIYI			adj(2)			Inc.			Core			iQIYI			adj(2)			Inc.			Core			iQIYI			adj(2)			Inc.			Core			iQIYI			adj(2)			Inc.
Total revenues			20,483				7,968				(317	)			28,134				25,978				7,389				(279	)			33,088				21,378				7,277				(244	)			28,411				3,372				1,148				(38	)			4,482
YOY											4	%			(9	%)				1	%
QOQ											(18	%)			(2	%)				(14	%)
Costs and expenses:
Cost of revenues (1)			8,162				7,109				(269	)			15,002				11,017				6,507				(235	)			17,289				9,807				5,964				(225	)			15,546				1,547				941				(36	)			2,452
Selling, general and administrative (1)			4,048				1,201				(4	)			5,245				5,377				1,093				(19	)			6,451				3,913				745				(2	)			4,656				617				118				-				735
Research and development (1)			4,426				672				-				5,098				6,626				764				-				7,390				5,134				474				-				5,608				810				75				-				885
Total costs and expenses			16,636				8,982				(273	)			25,345				23,020				8,364				(254	)			31,130				18,854				7,183				(227	)			25,810				2,974				1,134				(36	)			4,072
YOY
Cost of revenues											20	%			(16	%)				4	%
Selling, general and administrative											(3	%)			(38	%)				(11	%)
Research and development											16	%			(29	%)				10	%
Cost and expenses											13	%			(20	%)				2	%
Operating income (loss)			3,847				(1,014	)			(44	)			2,789				2,958				(975	)			(25	)			1,958				2,524				94				(17	)			2,601				398				14				(2	)			410
YOY											(34	%)			-					(7	%)
QOQ											(15	%)			-					33	%
Operating margin			19	%			(13	%)				10	%			11	%			(13	%)				6	%			12	%			1	%				9	%
Add: total other income (loss), net			23,999				(222	)			-				23,777				1,161				(754	)			-				407				(3,058	)			97				-				(2,961	)			(481	)			15				-				(466	)
Less: income tax expense			1,513				21				-				1,534				1,258				37				-				1,295				374				17				-				391				59				3				-				62
Less: net (loss) income attributable to NCI			(21	)			10				(610	)(3)			(621	)			205				10				(860	)(3)			(645	)			55				5				74	(3)			134				10				1				11	(3)			22
Net income (loss) attributable to Baidu			26,354				(1,267	)			566				25,653				2,656				(1,776	)			835				1,715				(963	)			169				(91	)			(885	)			(152	)			25				(13	)			(140	)
YOY											-				-					-
QOQ											-				-					-
Net margin			129	%			(16	%)				91	%			10	%			(24	%)				5	%			(5	%)			2	%				(3	%)

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		Three months ended March 31, 2021 (RMB)			Three months ended December 31, 2021 (RMB)			Three months ended March 31, 2022 (RMB)			Three months ended March 31, 2022 (US$)
		Baidu Core			iQIYI			Elim & adj(2)			Baidu, Inc.			Baidu Core			iQIYI			Elim & adj(2)			Baidu, Inc.			Baidu Core			iQIYI			Elim & adj(2)			Baidu, Inc.			Baidu Core			iQIYI			Elim & adj(2)			Baidu, Inc.
Non-GAAP financial measures:
Operating income (loss) (non-GAAP)			5,064				(658	)				4,362				4,847				(515	)				4,307				3,686				327					3,996				581				51					630
YOY											(27	%)			-					(8	%)
QOQ											(24	%)			-					(7	%)
Operating margin (non-GAAP)			25	%			(8	%)				16	%			19	%			(7	%)				13	%			17	%			4	%				14	%
Net income (loss) attributable to Baidu (non-GAAP)			4,870				(1,021	)				4,297				4,625				(1,001	)				4,084				3,804				162					3,879				600				25					612
YOY											(22	%)			-					(10	%)
QOQ											(18	%)			-					(5	%)
Net margin (non-GAAP)			24	%			(13	%)				15	%			18	%			(14	%)				12	%			18	%			2	%				14	%
Adjusted EBITDA			6,487				(543	)				5,900				6,210				(428	)				5,757				5,106				410					5,499				805				64					867
YOY											(21	%)			-					(7	%)
QOQ											(18	%)			-					(4	%)
Adjusted EBITDA margin			32	%			(7	%)				21	%			24	%			(6	%)				17	%			24	%			6	%				19	%
(1) Includes share-based compensation as follows:
Cost of revenues			33				46					79				90				44					134				45				37					82				7				6					13
Selling, general and administrative			256				215					471				396				137					533				257				120					377				41				19					60
Research and development			866				83					949				1,343				83					1,426				804				60					864				127				9					136
Total share-based compensation			1,155				344					1,499				1,829				264					2,093				1,106				217					1,323				175				34					209

(2)	Relates to intersegment eliminations and adjustments

(3)	Relates to the net (loss) income attributable to iQIYI noncontrolling interests

13

Baidu, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions,unaudited)

		Three months ended March 31, 2021 (RMB)			Three months ended December 31, 2021 (RMB)			Three months ended March 31, 2022 (RMB)			Three months ended March 31, 2022 (US$)
		Baidu excl. iQIYI			iQIYI			Baidu, Inc.			Baidu excl. iQIYI			iQIYI			Baidu, Inc.			Baidu excl. iQIYI			iQIYI			Baidu, Inc.			Baidu excl. iQIYI			iQIYI			Baidu, Inc.
Net cash provided by (used in) operating activities			5,467				(1,350	)			4,117				5,809				(1,095	)			4,714				3,039				(1,167	)			1,872				479				(184	)			295
Net cash (used in) provided by investing activities			(4,579	)			(2,778	)			(7,357	)			(50	)			2,097				2,047				(2,884	)			(67	)			(2,951	)			(455	)			(11	)			(466	)
Net cash provided by (used in) financing activities			18,018				611				18,629				(4,662	)			(5,239	)			(9,901	)			(644	)			2,046				1,402				(102	)			323				221
Effect of exchange rate changes on cash, cash equivalents and restricted cash			251				(29	)			222				(589	)			(74	)			(663	)			(183	)			(4	)			(187	)			(28	)			(1	)			(29	)
Net increase (decrease) in cash, cash equivalents and restricted cash			19,157				(3,546	)			15,611				508				(4,311	)			(3,803	)			(672	)			808				136				(106	)			127				21
Cash, cash equivalents and restricted cash
At beginning of period			25,599				10,941				36,540				44,088				7,386				51,474				44,596				3,075				47,671				7,035				485				7,520
At end of period			44,756				7,395				52,151				44,596				3,075				47,671				43,924				3,883				47,807				6,929				612				7,541
Net cash provided by (used in) operating activities			5,467				(1,350	)			4,117				5,809				(1,095	)			4,714				3,039				(1,167	)			1,872				479				(184	)			295
Less: Capital expenditures			(1,438	)			(61	)			(1,499	)			(4,213	)			(24	)			(4,237	)			(1,928	)			(51	)			(1,979	)			(304	)			(8	)			(312	)
Free cash flow			4,029				(1,411	)			2,618				1,596				(1,119	)			477				1,111				(1,218	)			(107	)			175				(192	)			(17	)

Note: Baidu excl. iQIYI represents Baidu, Inc. minus iQIYI's consolidated cash flows.

14

Baidu, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(In millions except for per ADS information, unaudited)

		Three months ended			Three months ended			Three months ended			Three months ended
		March 31, 2021 (RMB)			December 31, 2021 (RMB)			March 31, 2022 (RMB)			March 31, 2022 (US$)
		Baidu Core			iQIYI			Baidu, Inc.			Baidu Core			iQIYI			Baidu, Inc.			Baidu Core			iQIYI			Baidu, Inc.			Baidu Core			iQIYI			Baidu, Inc.
Operating income (loss)			3,847				(1,014	)			2,789				2,958				(975	)			1,958				2,524				94				2,601				398				14				410
Add: Share-based compensation expenses			1,155				344				1,499				1,829				264				2,093				1,106				217				1,323				175				34				209
Add: Amortization and impairment of intangible assets(1)			62				12				74				60				17				77				56				16				72				8				3				11
Add: iQIYI non-recurring employee severance costs(4)			-				-				-				-				179				179				-				-				-				-				-				-
Operating income (loss) (non-GAAP)			5,064				(658	)			4,362				4,847				(515	)			4,307				3,686				327				3,996				581				51				630
Add: Depreciation of fixed assets			1,423				115				1,538				1,363				87				1,450				1,420				83				1,503				224				13				237
Adjusted EBITDA			6,487				(543	)			5,900				6,210				(428	)			5,757				5,106				410				5,499				805				64				867
Net income (loss) attributable to Baidu			26,354				(1,267	)			25,653				2,656				(1,776	)			1,715				(963	)			169				(885	)			(152	)			25				(140	)
Add: Share-based compensation expenses			1,146				344				1,325				1,805				264				1,941				1,101				217				1,210				175				34				191
Add: Amortization and impairment of intangible assets(1)			55				12				61				55				17				65				50				16				59				8				3				9
Add: Disposal (gain) loss			-				-				-				-				-				-				-				(430	)			(216	)			-				(68	)			(34	)
Add: Impairment of long-term investments			-				-				-				752				139				824				598				183				690				93				29				109
Add: Fair value (gain) loss of long-term investments			(23,545	)			(88	)			(23,590	)			(1,339	)			2				(1,337	)			3,037				(1	)			3,037				479				-				479
Add: Reconciling items on equity method investments(2)			593				(20	)			583				430				177				521				456				11				462				72				2				73
Add: Charitable donation from Baidu(3)			-				-				-				50				-				50				-				-				-				-				-				-
Add: iQIYI non-recurring employee severance costs(4)			-				-				-				-				179				92				-				-				-				-				-				-
Add: Tax effects on non-GAAP adjustments			267				(2	)			265				216				(3	)			213				(475	)			(3	)			(478	)			(75	)			-				(75	)
Net income (loss) attributable to Baidu (non-GAAP)			4,870				(1,021	)			4,297				4,625				(1,001	)			4,084				3,804				162				3,879				600				25				612

15

		Three months ended			Three months ended			Three months ended			Three months ended
		March 31, 2021 (RMB)			December 31, 2021 (RMB)			March 31, 2022 (RMB)			March 31, 2022 (US$)
		Baidu Core			iQIYI			Baidu, Inc.			Baidu Core			iQIYI			Baidu, Inc.			Baidu Core			iQIYI			Baidu, Inc.			Baidu Core			iQIYI			Baidu, Inc.
Diluted earnings (loss) per ADS					73.76						4.51						(2.87	)					(0.45	)
Add: Accretion of the redeemable noncontrolling interests					0.14						0.36						0.31						0.05
Add: Non-GAAP adjustments to earnings per ADS					(61.52	)					6.73						13.78						2.17
Diluted earnings per ADS (non-GAAP)					12.38						11.60						11.22						1.77

(1)	This represents amortization and impairment of intangible assets resulting from business combinations.

(2)

This represents Baidu's share of equity method investments for other non-GAAP reconciling items, amortization and impairment of intangible assets not on the investee's books, accretion of their redeemable noncontrolling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per shares.

(3)	This represents non-recurring charitable donation to discrete events.

(4)	This represents non-recurring employee severance costs in relation to the iQIYI employee optimization program incurred in 2021.

16