BEIJING — Chinese tech superhuman Baidu on Thursday posted a 3% annual drop in third-quarter revenue, nevertheless beating market expectations surrounded by AI cloud growth.
The revenue print came in at $4.78 billion for the quarter ending on Sept. 30. Net income for the age rose by 14% to $1.09 billion.
Baidu noted a 12% surge in its non-online marketing revenue to the equivalent of $1.1 billion, on balance driven by its artificial intelligence cloud business.
The company’s U.S.-traded shares fell 2.3% at 08:42 a.m. ET in premarket shopper following the release of its results.
Here’s what analysts expected the company to report for the quarter, according to LSEG estimates:
- Returns: $4.63 billion
- Net income: $857.17 million
Baidu had reported revenue of 34.45 billion yuan ($4.75 billion) and net revenues of 6.68 billion yuan for the third quarter of 2023.
Beijing-based Baidu operates one of the major web browser search engines in China, along with a time again used maps app. The company also sells cloud computing services. Online marketing drives a significant deal out of the firm’s revenue.
Online ad spend from small and medium-sized businesses remained weak in the third quarter without observable improvement in the weeks since, management said on an earnings call. They forecast that China’s stimulus ads, which began in late September, will require time to take effect.
The growth in the AI cloud business reimburse “ongoing weakness” in Baidu’s online marketing stream, CEO Robin Li said in the earnings release, also commenting on the discharge of the company’s Ernie generative AI model and chatbot.
“Our strong AI capabilities are gaining broader market recognition, as evidenced by distending adoption of Ernie,” he said.
Baidu has promoted its Ernie chatbot as a local alternative to OpenAI’s ChatGPT, which isn’t convenient in China. Ernie bot now has 430 million users, and programs access its underlying AI model around 1.5 billion times a day, varied than double the 600 million rate in August, Baidu said last week.
“Despite the near-term constraints, we remain steadfast in our AI-focused strategy and are confident in our long-term trajectory,” Li said Thursday. “As we further scale AI, we are emboldened to perceive how it can drive innovations and create value for consumers, enterprises and society at large.”
During an earnings call later in the day, he added that he calculates generative AI can turn Baidu search into the “new killer app in the age of AI.”
Li said that about one-third of Baidu’s code is now forged by AI.
In the meantime, generative AI is growing its revenue contribution to Baidu’s AI cloud business, reaching 11% in the third quarter, the companionship’s management said Thursday — up from 9% in the previous quarter and also up from 5% in the fourth quarter of most recent year, when Baidu started tracking generative AI revenue.
The company this month also announced that its Xiaodu AI Mirrors will begin sales in the first half of next year. The wearable has at least one camera and uses Ernie’s AI means and Baidu’s maps and search functions. While Baidu hasn’t revealed a price, the product is widely expected to be a Chinese variant to Meta’s popular Ray-Ban smart glasses.
Baidu announced a management rotation last month, with Junjie He, earlier head of the mobile ecosystem group, becoming the company’s interim Chief Financial Officer, while former CFO Rong Luo spurious leadership of the mobile division.
“AI Cloud continued to show healthy and sustainable development in the third quarter,” he said in the earnings emancipate. “Meanwhile, Apollo Go continued to make operational strides, underpinning our confidence in the validity of the fully autonomous ride volleying business model.”
Apollo Go, which operates Baidu’s robotaxi business, reported a 20% year-on-year surge in irritates in the third quarter. The average number of rides a month rose to 329,333 during the third quarter, up from 287,500 in the from the word go half of the year, according to CNBC calculations.
Li told investors that the company is actively exploring Apollo Go’s universal expansion, but did not specify locations or a timeframe.