There are about 400 vehicles in the Wuhan taxi fleet, and our current market share in the Wuhan taxi service market is still very small, about 1%. Expanding the scale will definitely be a gradual process and may take many years
On the evening of August 22, at Baidu (Nasdaq: BIDU, 09888. HK)'s financial report conference in the second quarter of 2024, Robin Lee, founder, chairman and CEO of Baidu, disclosed the operation of Apollo Go in Wuhan, which is the largest operation area of Baidu's automated driving.
On August 22, Baidu (Nasdaq: BIDU, 09888. HK) released its second quarter financial report as of June 30, 2024, with a total revenue of 33.9 billion yuan, which was basically unchanged year-on-year and increased by 8% month on month. The market expectation was 34.11 billion yuan; The net profit attributable to Baidu was 5.488 billion yuan, a year-on-year increase of 5%; Under non GAAP accounting standards, the net profit attributable to Baidu was 7.4 billion yuan, a year-on-year decrease of 8% and a month on month increase of 5%.
Robin Lee disclosed that the average daily adjustment amount of Wenxin Model exceeded 600 million times, and the average daily processing amount of Token text was about 1 trillion, both of which were the highest in China. Compared to the 50 million daily average usage announced in the fourth quarter of 2024, it has increased more than tenfold in half a year.
Robin Lee said: "In the next two to three years, the competition in the field of artificial intelligence will be very fierce. As for who will be the final winner, my view is that whoever makes money will survive."
"The focus of Apollo Go business is still to achieve balance of income and expenditure in key cities"
The "Apollo Go", nicknamed as "sweet potato radish" by Wuhan netizens, has become popular on the Internet because of such labels as "no refusal to load, compliance with rules, low price, and business competition". This also brought the Robotaxi industry back to the forefront of public opinion in July this year. On June 19, Apollo Go began to provide 100% driverless car hailing service in almost all of Wuhan.
Robin Lee said that for a long time, Robotaxi has been regarded as a very advanced field by the industry, so that no one can accurately predict how long it will take to really achieve it, but Baidu is about to achieve a regional balance of payments. "We are constantly reducing costs through innovation. With the large-scale test of the sixth generation autonomous vehicle Apollo RT6, we expect that the RT6 model will bring continuous cost reduction after it is officially put into operation."
Robin Lee said that all the cars of Apollo Go are operated by Baidu, which bears the hardware capital expenditure and depreciation costs, and is open to various business models and partnerships. "At present, the business focus of Apollo Go is still to achieve balance of payments in key cities. In the long run, our goal is to innovate through asset light models such as technology licensing to seize market opportunities."
Financial report data shows that in the second quarter of 2024, Baidu's automatic driving service Apollo Go supplied about 899000 automatic driving orders, up 26% year on year. As of July 28, 2024, Apollo Go has provided more than 7 million orders for automated travel services to the public.
Robin Lee believes that China's taxi market has great potential. Apollo Go can effectively promote user demand and open up market opportunities. Innovation can also effectively drive market scale.
18% of search results have been generated by AI
In the second quarter, Baidu Core (a combination of search and transaction services) generated revenue of 26.7 billion yuan, a year-on-year increase of 1% and a month on month increase of 12%; Baidu's core operating profit was 5.6 billion yuan, a year-on-year increase of 23%; Non GAAP net profit attributable to Baidu's core was RMB 7.3 billion, a year-on-year decrease of 5% and a month on month increase of 10%. In Baidu's core revenue, online marketing revenue was 19.2 billion yuan, a decrease of 2% year-on-year, while non online marketing revenue increased by 10% year-on-year to 7.5 billion yuan, mainly driven by intelligent cloud business.
Robin Lee disclosed at the financial report meeting that Baidu AI Cloud's revenue in this quarter reached 5.1 billion yuan, up 14% year on year, and continued to make profits (Non GAAP). Meanwhile, the proportion of revenue contributed by AI has further increased to 9%, higher than the previous quarter's 6.9%.
In addition, Robin Lee mentioned that 18% of Baidu's search results have been generated by AI. At the same time, the distribution of agents in Baidu's ecosystem has increased significantly, with the average number of daily distribution in July exceeding 8 million, twice the number in May.
Baidu's Chief Financial Officer, Luo Rong, stated during the breakdown of Baidu's business focus that regarding intelligent cloud, Baidu is still gradually phasing out low profit margin businesses. In the long run, the standard profit of generative artificial intelligence cloud will be higher than that of traditional cloud businesses. Regarding intelligent driving and other businesses, Baidu's goal is to reduce losses, especially in the field of intelligent driving. We need to improve operational efficiency and continuously improve our performance in Robotaxi and other businesses. The traditional search business is facing macro environmental challenges, which bring certain pressure to the company's revenue. We will continue to use artificial intelligence technology to empower traditional search.
Luo Rong judged that in the short term, the transformation of artificial intelligence may put some pressure on Baidu's profit margin, but in the long run, it will continue to obtain efficient profit returns.
In June, the monthly active users of Baidu App reached 703 million, a year-on-year increase of 4%.
In the second quarter, Baidu's R&D expenses were 5.9 billion yuan, a decrease of 8% year-on-year, mainly due to a reduction in personnel related expenses.
As of June 30, 2024, Baidu's cash, cash equivalents, restricted funds, and short-term investments amounted to 162 billion yuan, while its cash, cash equivalents, restricted funds, and short-term investments (excluding iQiyi) amounted to 155 billion yuan. The free cash flow is 6.3 billion yuan, and the free cash flow (excluding iQiyi) is 5.9 billion yuan.
As of the close of the US stock market on the 22nd, Baidu fell 4.40% to $85.790 per share.