Baidu Q3 2024 Results:

BEIJING — Chinese technology giant Baidu on Thursday published a 3% annual decline in its turnover in the third quarter, nevertheless exceeding market expectations in a context of growth in the AI ​​cloud.

Revenue was $4.78 billion for the quarter ended September 30. Net profit for the period increased 14% to $1.09 billion.

Baidu noted a 12% increase in non-online marketing revenue to the equivalent of $1.1 billion, driven primarily by its artificial intelligence cloud business.

The company’s U.S.-traded shares fell nearly 4% in premarket trading after its earnings release.

Here’s what analysts expected from the company for the quarter, according to LSEG estimates:

• Income: $4.63 billion
• Net income: $857.17 million

Baidu had reported revenue of 34.45 billion yuan ($4.75 billion) and net profit of 6.68 billion yuan for the third quarter of 2023.

Beijing-based Baidu operates one of China’s leading web browser search engines, as well as a frequently used maps app. The company also sells cloud computing services. Online marketing generates a significant portion of the company’s revenue.

Growth in the AI ​​cloud business offset “persistent weakness” in Baidu’s online marketing stream, CEO Robin Li said in the earnings release, also commenting on the performance of the Ernie generative AI model and of the company’s chatbot.

“Our strong AI capabilities are increasingly recognized in the market, as evidenced by the growing adoption of Ernie,” he said.

Baidu introduced its Ernie chatbot as a local alternative to OpenAI’s ChatGPT, which is not available in China. The Ernie bot now has 430 million users and programs access its underlying AI model about 1.5 billion times a day, more than double the rate of 600 million in August, Baidu said this week last.

“Despite short-term pressures, we remain steadfast in our AI-driven strategy and are confident in our long-term trajectory,” Li said on Thursday. “As we develop AI, we are encouraged to discover how it can drive innovation and create value for consumers, businesses and society as a whole.”

The company also announced this month that its Xiaodu AI glasses would begin sales in the first half of next year. The wearable has at least one camera and uses Ernie’s AI capabilities as well as Baidu’s maps and search functions. Although Baidu did not reveal pricing, the product is expected to be a Chinese alternative to Meta’s popular Ray-Ban smart glasses.

Baidu announced a leadership turnover last month, with Junjie He, former head of the mobile ecosystem group, becoming the company’s interim CFO, while former CFO Rong Luo took over as CEO. the mobile division.

“AI Cloud continued to show healthy and sustainable development in the third quarter,” he said in the results release. “During this time, Apollo Go has continued to make operational progress, strengthening our confidence in the validity of the fully autonomous transportation business model. »

Apollo Go, which operates Baidu’s robotaxi business, reported a 20% year-over-year increase in trips in the third quarter. The average number of trips per month rose to 329,333 in the third quarter, compared to 287,500 in the first half, according to CNBC calculations.