Baidu Q4 Earnings: AI Cloud Grows, Margin Slides, Expects AI Investments To Bear Fruit In 2025

On Tuesday, Baidu, Inc (NASDAQ: BIDU) reported fiscal fourth-quarter revenue of $4.68 billion, down 2% year-on-year, topping the analyst consensus estimate of $4.56 billion. 

Baidu’s adjusted earnings per ADS of $2.63 beat the analyst consensus estimate of $1.78. The stock price slid after the report.

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Segments: Baidu’s Core revenue grew by 1% year over year to $3.8 billion; Online marketing revenue declined by 7% year over year to $2.46 billion.

Non-online marketing revenue grew 18% year over year to $1.34 billion, driven by the AI Cloud business. AI Cloud business grew by 26% during the quarter.

Revenue from IQIYI, Inc (NASDAQ: IQ) decreased 14% year over year to $906.00 million, missing the analyst consensus estimate of $909.96 million. 

Baidu’s SG&A expenses were $915 million, up 14% year over year, primarily due to an increase in expected credit losses, channel spending, and promotional marketing expenses. R&D expenses declined 12% year over year to $756 million.  

Baidu’s adjusted EBITDA margin declined by 600 bps to 20%, and its Core adjusted EBITDA margin decreased by 600 bps to 24%. As of December 31, 2024, Baidu had $19.1 billion in cash and equivalents and generated $3 million in free cash flow during the quarter. 

Co-founder and CEO Robin Li said 2024 marked a pivotal year in the company’s transformation from an internet-centric to an AI-first business. AI Cloud gained momentum, fueled by broad market recognition of its full-stack AI capabilities.

In the Mobile Ecosystem, Li noted that it was steadfast in advancing the AI transformation. Apollo Go paved the way for global expansion and scalable, asset-light strategies. Li expects its AI investments to deliver more significant results in 2025.

Baidu stock declined 8% in the last 12 months as its AI models failed to gain traction, like Alibaba Group Holdings BABA, ByteDance, and DeepSeek. The Chinese search engine giant plans to launch Ernie 5.0 in late 2025 and offer Ernie Bot free to all users. Baidu is also a key Apple Inc AAPL partner as the latter aims to add AI features to its iPhones for China.

Price Action: BIDU stock traded lower by 2.29% at $95.25 premarket at the last check Tuesday.

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