Shulou(Shulou.com)06/03 Report--

On Aug. 20, BIDU.Nasdaq reported second-quarter results for 2019. Baidu's total revenue in the second quarter ended June 30 was 26.3 billion yuan ($3.84 billion), exceeding analysts' expectations of 25.768 billion yuan, according to the results.

In the case of the shrinking environment of the Internet economy and the advertising market, Baidu's revenue and profits exceeded expectations, stopped the trend of losses in the last quarter, and completed the revenue "counterattack" in a very short time. From the perspective of financial performance in various fields, Baidu's financial performance is mainly reflected in the higher correlation between mobile ecology and AI strategy system, and the obvious performance of product differentiation advantage and flow advantage, which has a better connection relationship with commercialization ability. In addition, under the technology dividend + mobile ecological empowerment, Baidu revenue points tend to be diversified and rationalized. With the strong performance of mobile ecology and traffic, and the gradual completion of the construction of AI business system, Baidu's revenue capacity has been bullish for a long time.

Q2 total revenue exceeds expectations, and revenue capacity tends to be diversified and rationalized.

Specifically, Baidu Q2 operating profit of 1.96 billion yuan, the market is expected to be 748.9 million yuan. Baidu shares soared 10%, boosted by the results. It can be seen that the market shows a great surprise to Baidu's revenue ability, and gives long-term expectation to Baidu's market performance.

Specifically, if we look at the distribution of the entry point of Baidu Q2, we will find that the commercial ability within the Baidu system shows that the income is diversified, the income between different product lines is relatively balanced and reasonable, and the new growth point is worthy of long-term optimism.

For example, Baidu's core business revenue is 19.5 billion yuan ($2.85 billion), up 12% from a month earlier. Services such as advertising and marketing are cross-platform, intelligent and new scene-driven.

Among the new revenue growth points, Baidu Intelligent Cloud relies on Baidu's technical capability to perform strongly. Xiao du's assistant hardware performance is eye-catching, combined with iqiyi's income of 7.1 billion yuan ($1.04 billion) this quarter, up 15% from a year earlier. Among them, iqiyi's membership service increased by 38% compared with the same period last year. Driven by the overall push, Baidu's other income reached 7.1 billion yuan ($1.03 billion), up 44% from a year earlier. Pull Baidu's rapid stop loss and rebound.

If you dig deeper, you will find that behind the rationalization trend of Baidu's revenue capacity, Baidu mobile ecology and AI ecology are showing a stronger integration. The two crisscross constitute the differentiation of product, experience and market acceptance, which makes the flow performance and market performance higher than expected. Baidu twin engines are moving towards a complete mobile + AI+ business system.

The breakthrough point of mobile ecology is clear, and the stamina of "search + information flow" is sufficient.

In Baidu core business "search + information flow", Baidu Q2 financial report reflects a new growth point and growth trend. Intelligent Mini Program, which combines Baidu's AI technology with product advantages and ecological advantages, is eye-catching. With the continuous improvement and accelerated progress of Baijia content ecology, the intelligent mobile ecology of content + application has become the cornerstone of Baidu's revenue exceeding expectations.

In June, Baidu App's daily active users reached 188 million, up 27% from a year earlier; the number of monthly active users of Smart Mini Program reached 270 million, up 49% from a month earlier. At the same time, the time spent browsing information streams in Baidu App increased by 33% compared with the same period last year, and search traffic increased by 20% year-on-year. The number of Baijia content creators has reached 2.2 million, and the content produced by these creators can not only be distributed in information streams and short video applications, but also can be searched. We can see a strong increase in the user scale and stickiness of Baidu App.

At the same time, iqiyi's user scale has maintained a sustained growth. As of June, the number of members reached 100.5 million, an increase of 50% over the same period last year.

As of Q2, Baidu Mobile Ecology has formed two major traffic engines of "search + information flow" and two ecological three-dimensional layout of "Baijia account + Intelligent Mini Program". Among them, AI technology to improve the product experience can be said to be the key to differentiation. As users become accustomed to the intelligent mobile experience provided by Baidu and agree with the content + application integration portal of Baidu APP, the follow-up performance of Baidu Mobile Ecology is worth looking forward to. As Shen Qiu, senior vice president of Baidu, mentioned on the analyst's phone call, the form of smart Mini Program has changed the relationship between search engines and applications from traffic games to cooperation. Smart Mini Program is helping companies such as Weibo, JD.com and Meituan attract users on Baidu App. This not only improves the user experience of Baidu App, but also makes these enterprises integrate with users more closely, and further improves ROI.

The commercialization ability of AI is three-dimensional, and the "technology + commerce" engine performs strongly.

In the field of AI, which is heavily concentrated and highly expected by Baidu, we can also see a strong market climbing force in Q2. What is particularly noteworthy is that Baidu has demonstrated the strong connection ability between AI technology and mobile ecological and commercial channels. For example, small assistant ecology, in this quarter to show a high degree of combination of technology system and content advantages, traffic advantages, eye-catching market performance. With the advantage of differentiated AI technology, Baidu Intelligent Cloud has completed the largest domestic market promotion in the public cloud market. In the case that the market is bullish on the AI+ enterprise service market for a long time, the follow-up performance is expected.

At present, Baidu AI commercialization system tends to be three-dimensional and complete, forming a Baidu AI integrated research and operating system as the underlying support, intelligent cloud and small assistant open a direct dual-track commercial network, and the autopilot system brings a complete pattern of long-term market expectations. In the environment of continuous breakthroughs in the basic technology of AI, Baidu is looking for a "smart +" new track at any time, and its ability to complete rapid and flexible layout is also worthy of attention.

Specifically, the Baidu AI open platform was widely used in the first half of 2019, and the number of developers increased to 1.3 million. Downloads by developers of Baidu's deep learning platform Flying Propeller increased by 45% in the second quarter of 2019 compared with the second quarter of 2019. At the Baidu AI developer conference in July, Baidu demonstrated to the outside world a variety of underlying technological breakthroughs, including semantic understanding, machine vision, knowledge graph and multimodal technology. This has been evaluated by the outside world as "completing the surprise that Google did not bring to the world this year". From the depth of technology, the ability to develop technology, as well as the daily adjustment of AI capacity and the number of AI developers, Baidu has become a veritable infrastructure of China's AI industry.

From technology to commerce, it shows the better-than-expected performance of Baidu's two emerging industries.

According to data released from Canalys and Strategy Analytics, Xiaodu smart speakers have been ranked first in the Chinese market for two consecutive quarters and ranked in the top three in the global market together with Amazon and Google. Xiaodu Assistant has a strong momentum, with a total of more than 400m activated devices, an increase of 4.5 times over the same period last year, and more than 3.6 billion monthly voice queries, an increase of 7.5 times over the same period last year. Especially under the action of investing in content brands such as "Uncle Kai's storytelling", Xiaodu's assistant shows the complete layout of content + technology, becoming a new traffic entrance for Baidu. Li Yanhong, CEO, also mentioned that Xiaodu series products make good use of Baidu's investment in technologies such as AI over the years. In addition to selling hardware, Baidu has seen the commercial prospect of intelligent interaction in areas such as education and games. It can be seen that the launch of hardware is like a track, leading Baidu to explore more business scenarios related to AI in the future.

Baidu's smart cloud revenue has grown by more than 410%, making it the fastest growing cloud in China's public cloud market, according to a report released by IDC on tracking China's public cloud service market (second half of 2018). The general demand of enterprises for AI technology, as well as the multi-terminal integration of AI and cloud, big data and IoT technology, are pushing this huge market to Baidu's technology home. There is reason to believe that the total amount of room for future growth is considerable.

In the field of self-driving, FAW of China launched Apollo-equipped self-driving taxis in June, and Baidu's first batch of self-driving taxis in Changsha, Hunan Province, made steady progress; as of June, Baidu Apollo test fleet covered more than 2 million kilometers, covering 13 cities. As of July, Baidu had obtained more than 100 autopilot road test licenses in China, far ahead in the country. The commercial prelude to autopilot is slowly opening in front of Baidu.

In the next stage, it will become a new breakthrough and challenge for Baidu to integrate the advantages of information and content in the mobile ecology, deeply combine with the family and car scenes represented by small assistants, and give full play to the deep combination of AI's new business scene and "search + information flow". Full information and full AI build the overall positive long-term growth trend of Baidu in the future.

AI's ability to grasp the ground and the systematic space of the mobile end make Baidu's long-term market worth looking forward to.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.