PR Newswire | Nov 17, 2021 03:30AM EST

11/17 02:30 CST

Baidu Announces Third Quarter 2021 Results BEIJING, Nov. 17, 2021

BEIJING, Nov. 17, 2021 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888) ("Baidu" or the "Company"), a leading AI company with strong Internet foundation, today announced its unaudited financial results for the third quarter ended September 30, 2021.

"Baidu is bringing innovation across the consumer, enterprise and public sector with our commitment to AI," said Robin Li, co-founder and CEO of Baidu. "Our AI Cloud is helping businesses better serve customers and move faster with greater efficiency. We are building Baidu Apollo smart transportation and intelligent driving to smoothen traffic congestion, accelerate the move to EV and reduce traffic accidents."

"Baidu Core delivered another solid quarter, powered by our AI cloud revenue growing 73% year over year," said Rong Luo, CFO of Baidu. "With a diversified AI portfolio, including cloud services, smart transportation, smart devices, self-driving, smart EV and robotaxi, we are well positioned for long-term growth."

Third Quarter 2021 Financial Highlights^[1]

Baidu, Inc.

(In millions except per Q3 Q2 Q3

ADS, unaudited) 2020 2021 2021 YOY QOQ

RMB RMB RMB US$

Total revenues 28,232 31,350 31,921 4,954 13% 2%

Operating income 6,156 3,463 2,308 358 (63%) (33%)

Operating income (non-GAAP) ^2 7,636 5,653 4,708 731 (38%) (17%)

Net income (loss) to Baidu 13,678 (583) (16,559) (2,570) - 2740%

Net income to Baidu (non-GAAP)^ 2 6,988 5,359 5,090 790 (27%) (5%)

Diluted earnings (loss) per ADS 39.79 (1.70) (48.18) (7.48) - 2734%

Diluted earnings per ADS (non-GAAP)^ 2 20.35 15.41 14.66 2.28 (28%) (5%)

Adjusted EBITDA ^2 9,073 7,295 5,962 925 (34%) (18%)

Adjusted EBITDA margin 32% 23% 19% 19%

[1] Unless otherwise noted, RMB to USD was converted at an exchange rate ofRMB6.4434 as of September 30, 2021, as set forth in the H.10 statisticalrelease of the Board of Governors of the Federal Reserve System. Translationsare provided solely for the convenience of the reader.

[2] Non-GAAP measures are defined in the Non-GAAP Financial Measures section(see also "Reconciliations of Non-GAAP Financial Measures to the NearestComparable GAAP Measures" for more details).

Baidu Core

Q3 Q2 Q3

(In millions, unaudited) 2020 2021 2021 YOY QOQ

RMB RMB RMB US$

Total revenues 21,379 24,041 24,661 3,827 15% 3%

Operating income 7,404 4,619 3,718 577 (50%) (20%)

Operating income (non-GAAP) ^2 8,505 6,467 5,823 904 (32%) (10%)

Net income (loss) to Baidu Core 14,368 172 (15,625) (2,425) - -

Net income to Baidu Core (non-GAAP) ^2 7,486 5,942 5,855 909 (22%) (1%)

Adjusted EBITDA2 9,822 7,991 6,994 1,085 (29%) (12%)

Adjusted EBITDA margin 46% 33% 28% 28%

Other Highlights

Corporate

* Q3 21 net loss includes a RMB 18.9 billion non-cash, mark-to-market loss in long-term investments arising from quarterly fair-value adjustment. * ESG:- Baidu donated RMB 90 million to help Henan province cope with its recent natural disaster. - Xiaodu launched "visual assistance" to enable visually impaired voice control and on-demand screen-text reading for a smoother audio experience. - In October, Baidu established a Data Management Committee, to consolidate its existing committees on data management, data privacy & protection and data security, to further improve its policies and oversight around data management.

AI Cloud

* Baidu releases end-to-end AI cloud solution, powered by Kunlun AI chip and PaddlePaddle deep learning framework, to help financial services firms digitize and automate their operational processes, enlisting leading customers like China Life and Bank of Jiangsu. * Lijiang, a UNESCO Heritage Site with 800-year old bridges and waterways, is using Baidu smart-city cloud to keep the city safe and clean for visitors. Leveraging the digitalization of tourist areas, Baidu AI solution helps local authorities timely detect and address infractions, e.g., illegal parking and littering. * Tongxiang, Zhejiang (province) signed with Baidu to enable its manufacturing-based enterprises with Baidu AI solutions, allowing Baidu to further penetrate into industrial Internet. * Baidu ACE smart transportation has been adopted by 24 cities, tripling year over year, based on contract amount over RMB10 million.

Intelligent Driving

* Apollo L4 has accumulated over 10 million test miles, up 189% year over year, and has received 411 autonomous driving permits, reflecting Apollo's broad geographic coverage and wide-ranging test scenarios. * Rides provided by Apollo Go doubled sequentially, which are available in Shanghai, Beijing, Guangzhou, Changsha and Cangzhou. * WM Motor, a Chinese EV OEM, signed with Baidu to install Apollo Navigation Pilot (ANP) in its new W6 SUV, taking the total makes that have partnered with Apollo for self-driving and infotainment solutions to 31.

Other Growth Initiatives

* Xiaodu ranks No.1 in smart display shipments globally and smart speaker shipments in China for Q2 2021, according to Strategy Analytics, IDC and Canalys. * In August 2021, Xiaodu completed Series B financing at a valuation of US$5.1 billion with Baidu retaining super-majority shareholding.

Mobile Ecosystem

* In September, Baidu App's MAUs reached 607 million, up 12% year over year, and daily logged in users reached an all-time high of 79%, reflecting positive user experience. * Managed Page reached 43% of Baidu Core Q3 online marketing revenue, through continuous marketing-cloud enhancements, such as expanded e-commerce features and tools. * The open nature of Baidu's Internet infrastructure is leading to top smartphone makers to select Baidu's smart mini program as the landing page for their browser search.

iQIYI

* iQIYI subscribers reached 104 million in September 2021, creating a strong foundation to provide innovative, self-developed blockbusters.

Third Quarter 2021 Financial Results

Total revenues were RMB 31.9 billion ($4.95 billion), increasing 13% year over year.

* Revenue from Baidu Core was RMB 24.7 billion ($3.83 billion), increasing 15% year over year; online marketing revenue was RMB 19.5 billion ($3.02 billion), up 6% year over year, and non-online marketing revenue was RMB 5.2 billion ($806 million), up 76% year over year, driven by cloud and other AI-powered businesses. * Revenue from iQIYI was RMB 7.6 billion ($1.18 billion), increasing 6% year over year.

Cost of revenues was RMB 16.1 billion ($2.50 billion), increasing 26% year over year, primarily due to an increase in traffic acquisition costs, content costs and cost of goods sold related to new AI business.

Selling, general and administrative expenses were RMB 7.3 billion ($1.14 billion), increasing 56% year over year, primarily due to an increase in channel spending, promotional marketing, personnel-related expenses and contingent loss pertaining to legal proceeding involving former advertising agency.

Research and development expense was RMB 6.2 billion ($957 million), increasing 35% year over year, primarily related to personnel-related expenses.

Operating income was RMB 2.3 billion ($358 million). Baidu Core operating income was RMB 3.7 billion ($577 million), and Baidu Core operating margin was 15%. Non-GAAP operating income was RMB 4.7 billion ($731 million). Baidu Core non-GAAP operating income was RMB 5.8 billion ($904 million), and Baidu Core non-GAAP operating margin was 24%.

Total other loss, net was RMB 21.5 billion ($3.34 billion), which included a RMB 18.9 billion non-cash, mark-to-market loss in long-term investments. Such quarterly fair-value adjustment may result in further net income volatility in the future.

Income tax benefit was RMB 1.8 billion ($286 million), compared to an income tax expense of RMB 1.6 billion for Q3 '20, primarily due to an increase in deferred tax benefit recognized on fair value loss of long-term investments and deduction on certain expenses that were previously considered non-deductible.

Net loss attributable to Baidu was RMB 16.6 billion ($2.57 billion), and diluted loss per ADS was RMB 48.18($7.48). Net loss attributable to Baidu Core was RMB 15.6 billion ($2.43 billion). Non-GAAP net income attributable to Baidu was RMB 5.1 billion ($790 million), and non-GAAP diluted earnings per ADS was RMB 14.66($2.28). Non-GAAP net income attributable to Baidu Core was RMB 5.9 billion ($909 million).

Adjusted EBITDA was RMB 6.0 billion ($925 million). Adjusted EBITDA for Baidu Core was RMB 7.0 billion ($1.09 billion) and adjusted EBITDA margin for Baidu Core was 28%.

As of September 30, 2021, cash, cash equivalents, restricted cash and short-term investments were RMB 194.6 billion ($30.20 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 183.6 billion ($28.49 billion). Free cash flow was RMB 691 million ($108 million), and free cash flow excluding iQIYI was RMB 2.9 billion ($449 million).

Financial Guidance

For the fourth quarter of 2021, Baidu expects revenues to be between RMB 31.0 billion ($4.81 billion) and RMB 34.0 billion ($5.27 billion), representing a growth rate of 2% to 12% year over year, which assumes that Baidu Core revenue will grow between 5% and 16% year over year.

The COVID-19 situation in China is evolving and business visibility is limited. The above forecast reflects Baidu's current and preliminary view, which is subject to substantial uncertainties.

Conference Call Information

Baidu's management will hold an earnings conference call at 7:30 AM on November 17, 2021, U.S. Eastern Time (8:30 PM on November 17, 2021, Beijing Time).

Please register in advance of the conference call using the link provided below. Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and unique registrant ID by email.

For pre-registration, please click http://apac.directeventreg.com/registration/event/8590343. It will automatically direct you to the registration page of "Baidu Q3 2021 Earnings Conference Call", where you may fill in your details for RSVP. If it requires you to enter a participant conference ID, please enter " 8590343".

In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), Direct Event passcode and unique registrant ID) provided in the confirmation email that you have received following your pre-registration.

Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com.

A replay of the conference call may be accessed by phone at the following number until November 24 2021:

International: +61 2 8199 0299

Conference ID: 8590343

About Baidu

Founded in 2000, Baidu's mission is to make the complicated world simpler through technology. Baidu is a leading AI company with strong Internet foundation, trading on the NASDAQ under "BIDU" and HKEX under "9888". One Baidu ADS represents eight Class A ordinary shares.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the outlook for the fourth quarter of 2021, quotations from management in this announcement, as well as Baidu's and other parties' strategic and operational plans, contain forward-looking statements. Baidu may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in announcements made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Baidu's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Baidu's growth strategies; its future business development, including development of new products and services; its ability to attract and retain users and customers; competition in the Chinese Internet search and newsfeed market; competition for online marketing customers; changes in the Company's revenues and certain cost or expense items as a percentage of its revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to intellectual property rights; the expected growth of the Chinese-language Internet search and newsfeed market and the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and Internet search providers, and general economic conditions in China and elsewhere. Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed with the Securities and Exchange Commission, and announcements on the website of the Hong Kong Stock Exchange. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of the press release, and Baidu undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

To supplement Baidu's consolidated financial results presented in accordance with GAAP, Baidu uses the following non-GAAP financial measures: non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) attributable to Baidu, non-GAAP net margin, non-GAAP diluted earnings per ADS, adjusted EBITDA, adjusted EBITDA margin and free cash flow. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain items that may not be indicative of its recurring core business operating results, such as operating performance excluding non-cash charges or non-operating in nature. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Baidu's historical performance and liquidity. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company's results of operations. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data.

Non-GAAP operating income represents operating income excluding share-based compensation expenses, amortization and impairment of intangible assets resulting from business combinations and contingent loss pertaining to legal proceeding in relation to former advertising agency.

Non-GAAP net income attributable to Baidu represents net income attributable to Baidu excluding share-based compensation expenses, amortization and impairment of intangible assets resulting from business combinations, contingent loss pertaining to legal proceeding in relation to former advertising agency, disposal gain or loss, impairment of long-term investments, fair value change of long-term investments, charitable donation from Baidu, adjusted for related income tax effects. Baidu's share of equity method investments for these non-GAAP reconciling items, amortization and impairment of intangible assets not on the investees' books, accretion of their redeemable non-controlling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per shares, adjusted for related income tax effects, are also excluded.

Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated by dividing non-GAAP net income attributable to Baidu, which is adjusted for accretion for the redeemable non-controlling interests, by the weighted average number of ordinary shares expressed in ADS. Adjusted EBITDA represents operating income excluding depreciation, amortization and impairment of intangible assets resulting from business combinations, contingent loss pertaining to legal proceeding in relation to former advertising agency, and share-based compensation expenses.

For more information on non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures.

Baidu, Inc.

Condensed Consolidated Statements of Income (Loss)

(In millions except for per share (or ADS) information, unaudited)

Three Months Ended

September 30, June 30, September 30, September 30,

2020 2021 2021 2021

RMB RMB RMB US$^(2)

Revenues:

Online marketing services 20,201 20,828 21,050 3,267

Others 8,031 10,522 10,871 1,687

Total revenues 28,232 31,350 31,921 4,954

Costs and expenses:

Cost of revenues^(1) 12,815 15,897 16,126 2,503

Selling, general and administrative^(1) 4,700 5,707 7,320 1,136

Research and development^(1) 4,561 6,283 6,167 957

Total costs and expenses 22,076 27,887 29,613 4,596

Operating income 6,156 3,463 2,308 358

Other income (loss):

Interest income 1,297 1,342 1,462 227

Interest expense (755) (845) (880) (137)

Foreign exchange (loss) income, net (271) (36) 7 1

Share of loss from equity method investments (546) (4) (4) (1)

Others, net 9,169 (2,887) (22,079) (3,426)

Total other income (loss), net 8,894 (2,430) (21,494) (3,336)

Income (loss) before income taxes 15,050 1,033 (19,186) (2,978)

Income tax expense (benefit) 1,618 2,197 (1,839) (286)

Net income (loss) 13,432 (1,164) (17,347) (2,692)

Net loss attributable to noncontrolling interests (246) (581) (788) (122)

Net income (loss) attributable to Baidu 13,678 (583) (16,559) (2,570)

Earnings (loss) per ADS (1 ADS representing 8 Class A ordinary shares):

-Basic 40.21 (1.70) (48.18) (7.48)

-Diluted 39.79 (1.70) (48.18) (7.48)

Earnings (loss) per share for Class A and Class B ordinary shares:

-Basic 5.03 (0.21) (6.02) (0.93)

-Diluted 4.97 (0.21) (6.02) (0.93)

Weighted average number of Class A and Class B ordinary shares outstanding (inmillions):

-Basic 2,719 2,782 2,778 2,778

-Diluted 2,747 2,782 2,778 2,778

(1) Includes share-based compensation expenses as follows:

Cost of revenues 81 112 74 11

Selling, general and administrative 403 483 353 55

Research and development 930 1,521 921 144

Total share-based compensation expenses 1,414 2,116 1,348 210

(2) All translations from RMB to U.S. dollars are made at a rate of RMB 6.4434to US$1.00, the exchange rate in effect as ofSeptember 30, 2021 as set forth in the H.10 statistical release of The Board ofGovernors of the Federal Reserve System.

Baidu, Inc.

Condensed Consolidated Balance Sheets

(In millions, unaudited)

December 31, September 30, September 30,

2020 2021 2021

RMB RMB US$

ASSETS

Current assets:

Cash and cash equivalents 35,782 40,701 6,317

Restricted cash 758 10,773 1,672

Short-term investments, net 126,402 143,127 22,213

Accounts receivable, net 8,668 8,704 1,351

Amounts due from related parties 726 947 147

Other current assets, net 11,006 11,142 1,728

Total current assets 183,342 215,394 33,428

Non-current assets:

Fixed assets, net 17,508 20,722 3,216

Licensed copyrights, net 6,435 7,293 1,132

Produced content, net 6,556 9,598 1,490

Intangible assets, net 2,022 1,769 275

Goodwill 22,248 22,605 3,508

Long-term investments, net 76,233 74,012 11,486

Amounts due from related parties 3,438 3,485 541

Deferred tax assets, net 1,674 2,567 398

Operating lease right-of-use assets 9,804 10,491 1,628

Other non-current assets 3,448 16,420 2,547

Total non-current assets 149,366 168,962 26,221

Total assets 332,708 384,356 59,649

LIABILITIES AND EQUITY

Current liabilities:

Short-term loans 3,016 3,990 619

Accounts payable and accrued liabilities 36,716 40,461 6,279

Customer deposits and deferred revenue 12,626 13,525 2,099

Deferred income 158 99 15

Long-term loans, current portion 7,427 659 102

Convertible senior notes, current portion 4,752 4,808 746

Notes payable, current portion - 5,793 899

Amounts due to related parties 1,324 1,824 283

Operating lease liabilities 2,366 2,756 428

Total current liabilities 68,385 73,915 11,470

Non-current liabilities:

Deferred income 97 119 18

Deferred revenue 686 197 31

Amounts due to related parties 3,543 3,318 515

Long-term loans - 12,768 1,982

Notes payable 48,408 48,438 7,517

Convertible senior notes 11,927 12,671 1,967

Deferred tax liabilities 3,067 3,377 524

Operating lease liabilities 4,693 4,900 760

Other non-current liabilities 59 92 14

Total non-current liabilities 72,480 85,880 13,328

Total liabilities 140,865 159,795 24,798

Redeemable noncontrolling interests 3,102 7,916 1,229

Equity

Total Baidu shareholders' equity 182,696 211,378 32,805

Noncontrolling interests 6,045 5,267 817

Total equity 188,741 216,645 33,622

Total liabilities, redeemable noncontrolling 332,708 384,356 59,649interests, and equity

Baidu, Inc.

Selected Information

(In millions, unaudited)

Three months ended Three months ended Three months ended Three months ended September 30, 2020 (RMB) June 30, 2021 (RMB) September 30, 2021 (RMB) September 30, 2021 (US$)

Baidu iQIYI Elim & Baidu, Baidu iQIYI Elim & Baidu, Baidu iQIYI Elim & adj^(2) Baidu, Inc. Baidu Core iQIYI Elim & adj^(2) Baidu, Inc. Core adj^(2) Inc. Core adj^(2) Inc. Core

Total revenues 21,379 7,188 (335) 28,232 24,041 7,608 (299) 31,350 24,661 7,589 (329) 31,921 3,827 1,178 (51) 4,954

YOY 15% 6% 13%

QOQ 3% (0%) 2%

Costs and expenses:

Cost of revenues ^(1) 6,728 6,363 (276) 12,815 9,289 6,869 (261) 15,897 9,370 7,028 (272) 16,126 1,454 1,091 (42) 2,503

Selling, general and administrative ^(1) 3,354 1,364 (18) 4,700 4,526 1,185 (4) 5,707 6,089 1,246 (15) 7,320 945 193 (2) 1,136

Research and development ^(1) 3,893 671 (3) 4,561 5,607 676 - 6,283 5,484 683 - 6,167 851 106 - 957

Total costs and expenses 13,975 8,398 (297) 22,076 19,422 8,730 (265) 27,887 20,943 8,957 (287) 29,613 3,250 1,390 (44) 4,596

YOY

Cost of revenues 39% 10% 26%

Selling, general and administrative 82% (9%) 56%

Research and development 41% 2% 35%

Cost and expenses 50% 7% 34%

Operating income (loss) 7,404 (1,210) (38) 6,156 4,619 (1,122) (34) 3,463 3,718 (1,368) (42) 2,308 577 (212) (7) 358

YOY (50%) 13% (63%)

QOQ (20%) 22% (33%)

Operating margin 35% (17%) 22% 19% (15%) 11% 15% (18%) 7%

Add: total other income (loss), net 8,827 67 8,894 (2,204) (226) - (2,430) (21,163) (331) - (21,494) (3,285) (51) - (3,336)

Less: income tax expense (benefit) 1,599 19 1,618 2,167 30 - 2,197 (1,848) 9 - (1,839) (287) 1 - (286)

Less: net income (loss) attributable to NCI 264 13 (523) (3) (246) 76 19 (676) (3) (581) 28 22 (838) (3) (788) 4 4 (130) (3) (122)

Net income (loss) attributable to Baidu 14,368 (1,175) 485 13,678 172 (1,397) 642 (583) (15,625) (1,730) 796 (16,559) (2,425) (268) 123 (2,570)

YOY - 47% -

QOQ - 24% 2740%

Net margin 67% (16%) 48% 1% (18%) (2%) (63%) (23%) (52%)

Non-GAAP financial measures:

Operating income (loss) (non-GAAP) 8,505 (831) 7,636 6,467 (780) 5,653 5,823 (1,073) 4,708 904 (166) 731

YOY (32%) 29% (38%)

QOQ (10%) 38% (17%)

Operating margin (non-GAAP) 40% (12%) 27% 27% (10%) 18% 24% (14%) 15%

Net income (loss) attributable to Baidu 7,486 (830) 6,988 5,942 (1,065) 5,359 5,855 (1,400) 5,090 909 (217) 790(non-GAAP)

YOY (22%) 69% (27%)

QOQ (1%) 31% (5%)

Net margin (non-GAAP) 35% (12%) 25% 25% (14%) 17% 24% (18%) 16%

Adjusted EBITDA 9,822 (711) 9,073 7,991 (662) 7,295 6,994 (990) 5,962 1,085 (153) 925

YOY (29%) 39% (34%)

QOQ (12%) 50% (18%)

Adjusted EBITDA margin 46% (10%) 32% 33% (9%) 23% 28% (13%) 19%

(1) Includes share-based compensation as follows:

Cost of revenues 29 52 81 69 43 112 34 40 74 5 6 11

Selling, general and administrative 187 216 403 274 209 483 196 157 353 30 25 55

Research and development 846 84 930 1,443 78 1,521 837 84 921 131 13 144

Total share-based compensation 1,062 352 1,414 1,786 330 2,116 1,067 281 1,348 166 44 210

(2) Relates to intersegment eliminations and adjustments

(3) Relates to the net loss attributable to iQIYI noncontrolling interests

Baidu, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions,unaudited)

Three months ended Three months ended Three months ended Three months ended

September 30, 2020 (RMB) June 30, 2021 (RMB) September 30, 2021 (RMB) September 30, 2021 (US$)

Baidu Baidu, Baidu Baidu, Baidu Baidu, Baidu Baidu, excl. iQIYI Inc. excl. iQIYI Inc. excl. iQIYI Inc. excl. iQIYI Inc. iQIYI iQIYI iQIYI iQIYI

Net cash provided by (used in) operating 9,716 (1,929) 7,787 9,362 (1,426) 7,936 5,436 (2,081) 3,355 844 (323) 521activities

Net cash (used in) provided by investing activities (6,576) 343 (6,233) (12,220) 58 (12,162) (15,857) 1,885 (13,972) (2,461) 293 (2,168)

Net cash (used in) provided by financing activities (4,387) 238 (4,149) 5,256 801 6,057 7,744 867 8,611 1,201 135 1,336

Effect of exchange rate changes on cash, cash (77) (113) (190) (342) (92) (434) (47) (21) (68) (8) (3) (11)equivalents and restricted cash

Net (decrease) increase in cash, cash (1,324) (1,461) (2,785) 2,056 (659) 1,397 (2,724) 650 (2,074) (424) 102 (322)equivalents and restricted cash

Cash, cash equivalents and restricted cash

At beginning of period 16,597 5,280 21,877 44,756 7,395 52,151 46,812 6,736 53,548 7,266 1,045 8,311

At end of period 15,273 3,819 19,092 46,812 6,736 53,548 44,088 7,386 51,474 6,842 1,147 7,989

Net cash provided by (used in) operating 9,716 (1,929) 7,787 9,362 (1,426) 7,936 5,436 (2,081) 3,355 844 (323) 521activities

Less: Capital expenditures (1,417) (90) (1,507) (2,435) (61) (2,496) (2,548) (116) (2,664) (395) (18) (413)

Free cash flow 8,299 (2,019) 6,280 6,927 (1,487) 5,440 2,888 (2,197) 691 449 (341) 108

Note: Baidu excl. iQIYI represents Baidu, Inc. minus iQIYI's consolidated cashflows.

Baidu, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAPMeasures

(In millions except for per ADS information, unaudited)

Three months ended Three months ended Three months ended Three months ended

September 30, 2020 (RMB) June 30, 2021 (RMB) September 30, 2021 (RMB) September 30, 2021 (US$)

Baidu iQIYI Baidu, Baidu iQIYI Baidu, Baidu iQIYI Baidu, Baidu iQIYI Baidu, Core Inc. Core Inc. Core Inc. Core Inc.

Operating income (loss) 7,404 (1,210) 6,156 4,619 (1,122) 3,463 3,718 (1,368) 2,308 577 (212) 358

Add: Share-based compensation expenses 1,062 352 1,414 1,786 330 2,116 1,067 281 1,348 166 44 210

Add: Amortization and impairment of intangible assets^(1) 39 27 66 62 12 74 62 14 76 10 2 12

Add: Contingent loss^(5) - - - - - - 976 - 976 151 - 151

Operating income (loss) (non-GAAP) 8,505 (831) 7,636 6,467 (780) 5,653 5,823 (1,073) 4,708 904 (166) 731

Add: Depreciation of fixed assets 1,317 120 1,437 1,524 118 1,642 1,171 83 1,254 181 13 194

Adjusted EBITDA 9,822 (711) 9,073 7,991 (662) 7,295 6,994 (990) 5,962 1,085 (153) 925

Net income (loss) attributable to Baidu 14,368 (1,175) 13,678 172 (1,397) (583) (15,625) (1,730) (16,559) (2,425) (268) (2,570)

Add: Share-based compensation expenses 1,056 352 1,252 1,777 330 1,947 1,086 281 1,231 169 44 191

Add: Amortization and impairment of intangible assets^(1) 38 27 55 55 12 62 55 14 63 9 2 10

Add: Disposal loss (gain) (5) - (5) - (45) (28) - - - - - -

Add: Impairment of long-term investments - - - 205 2 206 3,187 29 3,202 494 5 497

Add: Fair value (gain) loss of long-term investments (8,855) (39) (8,880) 3,180 (9) 3,175 18,970 8 18,974 2,944 1 2,945

Add: Reconciling items on equity method investments^(2) 556 3 558 190 32 207 36 3 38 6 - 6

Add: Charitable donation from Baidu^(4) - - - - - - 90 - 90 14 - 14

Add: Contingent loss^(5) - - - - - - 976 - 976 151 - 151

Add: Tax effects on non-GAAP adjustments^(3) 328 2 330 363 10 373 (2,920) (5) (2,925) (453) (1) (454)

Net income (loss) attributable to Baidu (non-GAAP) 7,486 (830) 6,988 5,942 (1,065) 5,359 5,855 (1,400) 5,090 909 (217) 790

Diluted earnings (loss) per ADS 39.79 (1.70) (48.18) (7.48)

Add: Accretion of the redeemable noncontrolling 0.04 0.02 0.49 0.08interests

Add: Non-GAAP adjustments to earnings per ADS (19.48) 17.09 62.35 9.68

Diluted earnings per ADS (non-GAAP) 20.35 15.41 14.66 2.28

(1) This represents amortization and impairment of intangible assets resultingfrom business combinations.

(2) This represents Baidu's share of equity method investments for othernon-GAAP reconciling items, amortization and impairment of intangible assetsnot on the investee's books, accretion of theirredeemable noncontrolling interests, and the gain or loss associated with theissuance of shares by the investees at a price higher or lower than thecarrying value per shares.

(3) Tax impact of non-GAAP adjustments is separately presented from 2020Q4,with comparative periods retrospectively adjusted.

(4) This represents non-recurring charitable donation to discrete events.

(5) This represents contingent loss pertaining to legal proceeding involvingformer advertising agency.

View original content: https://www.prnewswire.com/news-releases/baidu-announces-third-quarter-2021-results-301426444.html

SOURCE Baidu, Inc.