Baidu credits AI focus for annual revenue increase

Baidu posted net income of 27.6 billion yuan ($4 billion) for the 12 month period, an increase of 51 percent year over year.

Baidu announced on Thursday its full year financial results to 31 December 2018, posting revenue of 102.3 billion yuan ($14.88 billion). This was an increase of 22 percent year over year -- or 28 percent year over year if the impact of divested businesses such as Baidu Mobile Games, Baidu Deliveries, Global DU businesses, and Du Xiaoman are excluded -- with the search giant citing increased deployment of AI technologies for the increases.

"2018 was a pivotal year for Baidu, as we worked on deploying AI technologies beyond search to feed voice assistant, AI solutions, and autonomous driving, to enable more users, customers, and partners to benefit from Baidu's AI," CEO Robin Li said.

Of that combined revenue, online marketing revenues accounted for 82 billion yuan ($12 billion) for the full year, up 19 percent year over year. Baidu also had approximately 856,000 active online marketing customers for the same period, increasing 10 percent year over year.

Other revenues -- mainly derived from growth in its iQiyi membership services and cloud businesses -- provided the remaining 20.4 billion yuan ($2.86 billion) of Baidu's total revenue. During the eve of Chinese New Year, Baidu's Cloud infrastructure handled 20.8 billion user interactions, with the cloud experiencing 10 million hits per second at its peak volume.

Revenue from its online video platform iQIYI reached 25 billion yuan ($3.63 billion), increasing 52% from 2017. IQIYI had 87.4 million subscribers as of December 31, of which 98.5 percent were paying members, Baidu said.

Meanwhile, Baidu Core revenue reached 78.3 billion yuan ($11.38 billion), increasing 22 percent year over year.

Net income for Baidu was 27.6 billion yuan ($4 billion), which was an increase of 51 percent from the year prior, and its adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) was 24.3 billion yuan ($3.54 billion).

Operating income was 15.5 billion yuan ($2.26 billion), down one percent year over year, with the company's operating margin in 2018 sitting at 15 percent compared to 20 percent the year prior.

Content costs increased to 7.3 billion yuan ($1.07 billion) and bandwidth costs rose to 1.8 billion yuan ($258 million), up 96 percent and 27 percent year over year, respectively, with the company saying this was due to investments into content and increased demands for its feed, video, and cloud.

Moving forward, Li said the company will continue diversifying its portfolio as "smart home, smart transportation, cloud, and autonomous driving markets will require heavy investments".

Late last year, Baidu and Ford Motor Company had commenced trials to test autonomous vehicles in Beijing, China.

Baidu in 2018 also ended its operations in Brazil in a move to redistribute resources from business units responsible for apps and mobile advertising, as well as financial, to put more emphasis into AI.

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