On the evening of November 21st, Baidu (09888/BIDU) released a mixed third quarter financial report.
According to the financial report, Baidu's total revenue for the third quarter of 2024 was 33.56 billion yuan, a year-on-year decrease of 3%; The net profit was 7.6 billion yuan, of which the net profit attributable to Baidu's core was 7.54 billion yuan, a year-on-year increase of 17%, exceeding market expectations.
It is worth noting that Baidu's online marketing revenue for this quarter was 18.8 billion yuan, a decrease of 4% year-on-year. Baidu's online marketing revenue experienced its first decline in the second quarter of 2024, with revenue of 19.2 billion yuan, a year-on-year decrease of 2%.
QuestMobile data shows that the scale of the domestic Internet advertising market in the first half of 2024 will reach 351.4 billion yuan, up 11.8% year on year. With the growth of the Internet advertising market, Baidu's online marketing revenue has continued to decline, which means that Baidu's most dependent online marketing business is facing comprehensive challenges.
Of course, Baidu has also released some important data to boost investor confidence. By November 2024, the number of ERNIE Bot users has reached 430 million, and the number of daily calls of Wenxin's big model has reached 1.5 billion. Compared to the 50 million times disclosed in Q4 last year, the daily adjustment usage has increased by 30 times within a year.
In addition, in terms of intelligent driving business, Baidu's Apollo Go reached 988000 orders in the third quarter, up 20% year on year. The number of fully autonomous driving orders accounts for over 70% of the total number of orders in the country, and this proportion further increased to 80% in October.
The market seems to have not recognized this financial report, and Baidu's US stock market fell 5.90% in volume on that day. Baidu's current price to book ratio has fallen to 0.80. On October 21, 2022, Baidu's US share price fell below net assets for the first time, becoming the only company with a market value of more than 10 billion US dollars to break the net. Comparable data shows that Alibaba's current price to book ratio is 1.55, JD.com 'is 1.62, NetEase's is 3.13, and Pinduoduo's is 3.76.
As one of the former BAT giants in China, Baidu has been continuously investing in the field of artificial intelligence since 2010 and has since called out 'all in AI', defining itself as an AI company. It can also be regarded as one of the earliest companies in China to promote the concept of AI, but after more than a decade, Baidu seems to have never found the best entry point for commercializing AI.
Taking automatic driving as an example, Baidu set up an automatic driving business unit as early as 2015, which is the first Internet company to set foot in this field in China. It once announced that it would cooperate with BAIC, JAC, Chery and other car companies to provide them with auto drive system from Baidu, but these cooperation ended in vain. Currently, only a few models such as the Extreme Yue and Lantu FREE are equipped with Baidu Apollo's advanced intelligent driving solution.
On the other hand, Baidu's autonomous driving department has lost a large number of high-end talents in recent years. Yu Kai, former Executive Vice President of Baidu Research Institute, founded Horizon Robotics (09660) after leaving Baidu; Peng Jun, former chief architect of Baidu's autonomous driving department, co founded Xiaoma Zhixing with Lou Tiancheng, former chief architect of Baidu's unmanned vehicles, after leaving Baidu; Guo Yang, former Chief Product Architect of Baidu's IDG (Intelligent Driving Business Group), has left Baidu to join Geely Auto's autonomous driving team.
Even though ERNIE Bot was highlighted in this financial report, Baidu is also facing fierce competition. ERNIE Bot's monthly active users are not announced in this financial report. According to the data released by Baidu in September 2024, ERNIE Bot's monthly active users continue to exceed 10 million. According to the public data of the AI product list, as of October 2024, the number of monthly live users of doubao under Tiktok has reached 51.3 million, the number of monthly live users of Baidu's "Wen Xiaoyan" has reached 12.57 million, and the number of Kimi intelligent assistants in the dark side of the month has reached 10.06 million.
Among the three first camp products, ERNIE Bot was the first to launch. Yuehuo users were not only far away from Doubao, but also chased by Kimi to "attack the city".
This once again highlights a core issue that Baidu has been facing for a long time - getting up early to catch up late. Baidu's investment in technology is very advanced, but its commercialization is not very successful in the end. This situation has repeatedly occurred within Baidu, causing it to miss many important market opportunities.
This is clearly not a matter of technology or talent. Taking Horizon Robotics, which was listed on the Hong Kong Stock Exchange on October 24th, as an example. In the prospectus, Horizon positioned itself as a "supplier of advanced driver assistance (ADAS) and advanced autonomous driving (AD) solutions for passenger cars". Horizon's integrated software and hardware solutions have partnered with 27 OEMs (original equipment manufacturers), with 290 designated models and a total of 152 models that have reached SOP, including the top 10 local OEMs. To some extent, Yu Kai alone has accomplished more than even Baidu has accomplished in recent years.
There are generally two dimensions to explain this issue: one is the problem with the internal mechanisms of the company, and the other is the problem with the CEO. Many people who have gone public on Baidu have been very successful, indicating that it is not a matter of vision or talent, but rather Baidu's own problem.
It's time for Robin Lee to reflect on himself.