Baidu, Inc. (NASDAQ:BIDU) Q3 2022 Earnings Call Transcript

So that’s why we believe, we can leverage our strong AI capabilities and AI algorithms to support the top level computing, even though we face some turbulence in the semiconductor supply chain. So to sum up, chip sales restriction should have a limited impact on our business operation in the near term. Instead, we think it increased some good market opportunities for the Chinese chip companies and our equipment AI chips and our AI business will eventually benefit from these opportunities.

Lincoln Kong: Great. Thank you.

Operator: The last question today comes from James Lee with Mizuho. Please go ahead.

James Lee: Great. Thanks for taking my questions. I have two here. First, can you guys provide some more color on your progress of e-commerce search and short video opportunities? Can you guys talk about maybe from a consumer, merchants’ and creators’ point of view, what kind of pinpoint are you trying to resolve here? And second, can you talk about the traction that you have made in open mobile ecosystem and potential monetization opportunities here? Thanks.

Robin Li: Yes, this is Robin. I mentioned earlier that we have been building closed-loop experience for our users and advertisers in our mobile ecosystem especially in Baidu app. For e-commerce, because of the efforts we made in the past, users now come to Baidu not only for information and knowledge, but also for services and merchandise. Since the beginning of this year, merchandise-related search queries on Baidu have grown much faster than last year. You may be wondering why? It is because users increasingly find out that on our platform they can now find detailed product information, product reviews and even buy the product without leaving our app. Now, we have a huge number of SKUs available for search on our platform.

We have also deepened the partnership with leading e-commerce platform, so that users can easily buy products they need here on Baidu App. Just like I said in my prepared remarks, in Q3, GMV facilitated by the search continue to grow very fast. I also mentioned earlier that retail has been an outperforming vertical for our online ad business for quite a few quarters. Even very recently, revenues from the retail vertical during the Double Eleven, e-commerce promotional season, grow by double-digits from last year. And this all prove that our efforts gradually bearing fruit. As for our short video, we’re making short videos increasingly available in our feed and search services. For feed, short video distribution and time spend continue to grow steadily.

Right now, about 85% of the feed distributed by Baidu App are short videos. And for search, more than 20% of the clicks on the search pages were short video. This number increased by more than 80% year-on-year during the month of September. So we believe the popularity and the adoption of video in our search results will ramp up quickly. When we talk about monetization, short videos, especially for videos that provide fully immersive video experience, can be much better monetized than text and images. For example, in feed, ECM — ECPM for fully immersive video apps are much higher than text and images. This is one key reason for feed revenue to show positive growth year-over-year in this quarter, even though the macro was unfavorable. This progress in feed has made us quite confident that short videos will also benefit search revenue later on.