Baidu Q3: 6% Topline Growth, Prioritizing AI Investments, ERNIE 4.0 Launch & More

Baidu, Inc (NASDAQ: BIDU) reported a third-quarter FY23 revenue growth of 6% year-on-year to $4.72 billion, missing the consensus of $4.79 billion. 

Baidu's adjusted earnings per ADS of $2.80 beat the consensus of $2.32.

Segments: Baidu's Core revenue increased 5% Y/Y to $3.64 billion; Online marketing revenue improved 5% Y/Y to $2.70 billion. Non-online marketing revenue grew 6% Y/Y to $943 million, driven by cloud and other AI-powered businesses. 

Revenue from IQIYI, Inc IQ increased 7% Y/Y to $1.10 billion, missing the consensus of $1.12 billion. 

iQIYI's average daily number of total subscribing members reached 107.5 million, up from 101.0 million a year ago. Baidu's SG&A expenses increased by 11% Y/Y primarily due to increased channel spending and promotional marketing expenses. R&D expenses grew 6% Y/Y, primarily due to the rise in server depreciation and server custody fees supporting ERNIE Bot research inputs.  

Baidu's adjusted EBITDA margin expanded by 100 bps to 28%. Baidu's Core adjusted EBITDA margin decreased by 100 bps to 32%.

Baidu held $27.8 billion in cash and equivalents and generated $822 million in free cash flow. 

Co-founder and CEO Robin Li addressed the launch of ERNIE 4.0, its most potent foundation model, harnessing the power of ERNIE and ERNIE Bot to reinvent its consumer-facing and enterprise-facing products and fully opening ERNIE API to cloud enterprises.

Price Action: BIDU shares traded higher by 2.12% at $113.65 in the premarket session on the last check Tuesday.