BEIJING — Chinese language tech big Baidu on Thursday posted a 3% annual drop in third-quarter income, nonetheless beating market expectations amid AI cloud progress.
The income print got here in at $4.78 billion for the quarter ending on Sept. 30. Web earnings for the interval rose by 14% to $1.09 billion.
Baidu famous a 12% surge in its non-online advertising income to the equal of $1.1 billion, primarily pushed by its synthetic intelligence cloud enterprise.
The corporate’s U.S.-traded shares fell 2.3% at 08:42 a.m. ET in premarket buying and selling following the discharge of its outcomes.
This is what analysts anticipated the corporate to report for the quarter, based on LSEG estimates:
- Income: $4.63 billion
- Web earnings: $857.17 million
Baidu had reported income of 34.45 billion yuan ($4.75 billion) and web earnings of 6.68 billion yuan for the third quarter of 2023.
Beijing-based Baidu operates one of many main internet browser search engines like google in China, together with a continuously used maps app. The corporate additionally sells cloud computing providers. On-line advertising drives a good portion of the agency’s income.
On-line advert spend from small and medium-sized companies remained weak within the third quarter with out noticeable enchancment within the weeks since, administration stated on an earnings name. They forecast that China’s stimulus bulletins, which started in late September, would require time to take impact.
The expansion within the AI cloud enterprise offset “ongoing weak spot” in Baidu’s on-line advertising stream, CEO Robin Li stated within the earnings launch, additionally commenting on the efficiency of the corporate’s Ernie generative AI mannequin and chatbot.
“Our robust AI capabilities are gaining broader market recognition, as evidenced by growing adoption of Ernie,” he stated.
Baidu has promoted its Ernie chatbot as an area various to OpenAI’s ChatGPT, which is not obtainable in China. Ernie bot now has 430 million customers, and applications entry its underlying AI mannequin round 1.5 billion occasions a day, greater than double the 600 million price in August, Baidu stated final week.
“Regardless of the near-term pressures, we stay steadfast in our AI-focused technique and are assured in our long-term trajectory,” Li stated Thursday. “As we additional scale AI, we’re emboldened to seek out the way it can drive improvements and create worth for customers, enterprises and society at massive.”
Throughout an earnings name later within the day, he added that he expects generative AI can flip Baidu search into the “new killer app within the age of AI.”
Li stated that about one-third of Baidu’s code is now generated by AI.
Within the meantime, generative AI is rising its income contribution to Baidu’s AI cloud enterprise, reaching 11% within the third quarter, the corporate’s administration stated Thursday — up from 9% within the earlier quarter and in addition up from 5% within the fourth quarter of final yr, when Baidu began monitoring generative AI income.
The corporate this month additionally introduced that its Xiaodu AI Glasses will start gross sales within the first half of subsequent yr. The wearable has at the least one digicam and makes use of Ernie’s AI capabilities and Baidu’s maps and search capabilities. Whereas Baidu hasn’t revealed a value, the product is broadly anticipated to be a Chinese language various to Meta’s standard Ray-Ban sensible glasses.
Baidu introduced a administration rotation final month, with Junjie He, beforehand head of the cellular ecosystem group, turning into the corporate’s interim Chief Monetary Officer, whereas former CFO Rong Luo assumed management of the cellular division.
“AI Cloud continued to point out wholesome and sustainable growth within the third quarter,” he stated within the earnings launch. “In the meantime, Apollo Go continued to make operational strides, underpinning our confidence within the validity of the absolutely autonomous trip hailing enterprise mannequin.”
Apollo Go, which operates Baidu’s robotaxi enterprise, reported a 20% year-on-year surge in rides within the third quarter. The typical variety of rides a month rose to 329,333 in the course of the third quarter, up from 287,500 within the first half of the yr, based on CNBC calculations.
Li instructed traders that the corporate is actively exploring Apollo Go’s worldwide enlargement, however didn’t specify places or a timeframe.