Baidu’s second-quarter financial report showed a 4% year-on-year decrease in revenue, marking the fourth consecutive quarter of year-on-year decline. Net profit plummeted by 68% year-on-year, with advertising business continuing to face pressure.
On August 18, Baidu (NASDAQ: BIDU/09888.HK) released its second-quarter financial report, with revenue at 31.3 billion yuan (RMB), slightly lower than the market estimate of 315.9 billion yuan, a 2% decrease from the previous quarter and a 4% decrease year-on-year. This also marks the fourth consecutive quarter of year-on-year revenue decline for the company. Baidu’s general business revenue was 25.2 billion yuan, down 3% from the previous quarter and 4% year-on-year; iQIYI revenue was 6.3 billion yuan, up 1% from the previous quarter but down 5% year-on-year.
Net profit attributable to Baidu was 2.3 billion yuan, down 68% year-on-year; net profit attributable to Baidu under non-GAAP was 2.6 billion yuan, a 45.7% decrease year-on-year. The company did not specifically address the reasons for the decline in net profit in its financial report.
Baidu’s traditional “cash cow” advertising business continued to decline, dragged down by AI search functions, with online marketing service revenue dropping by 19% year-on-year to 13.1 billion yuan. As of June, Baidu’s monthly active users on the app reached 640 million. Baidu’s original business model heavily relied on search advertising.
Reuters pointed out that the sluggish China real estate market and weak consumer spending led advertising clients to cut marketing budgets, directly impacting Baidu’s advertising business.
Furthermore, in Baidu’s general business revenue of 25.2 billion yuan, AI business revenue accounted for 50%, surpassing half for two consecutive quarters. Evidently, AI business revenue is currently not sufficient to offset the decline in traditional advertising business and the impact of AI transformation costs.