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Baidu Announces Second Quarter 2013 Results

                 Baidu Announces Second Quarter 2013 Results

PR Newswire

BEIJING, July 24, 2013

BEIJING, July 24, 2013 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU) ("Baidu" or
the "Company"), the leading Chinese language Internet search provider, today
announced its unaudited financial results for the second quarter ended June
30, 2013[1].

(Logo: http://photos.prnewswire.com/prnh/20081103/BAIDULOGO)

Second Quarter 2013 Highlights

  oTotal revenues in the second quarter of 2013 were RMB7.561 billion ($1.232
    billion), a 38.6% increase from the corresponding period in 2012.
  oOperating profit in the second quarter of 2013 was RMB2.904 billion
    ($473.1 million), a 3.2% increase from the corresponding period in 2012.
  oNet income attributable to Baidu in the second quarter of 2013 was
    RMB2.644 billion ($430.8 million), a 4.5% decrease from the corresponding
    period in 2012. Diluted earnings attributable to Baidu per ADS for the
    second quarter of 2013 were RMB7.52 ($1.22); diluted earnings attributable
    to Baidu per ADS excluding share-based compensation expenses (non-GAAP)
    for the second quarter of 2013 were RMB7.75 ($1.26).

"We made solid progress in the second quarter, adding a record 58,000 online
active customers," said Robin Li, chairman and chief executive officer of
Baidu. "The adoption of our mobile platform gained momentum and mobile
monetization improved. Mobile revenues for the first time accounted for over
10% of our total revenues this quarter."

Mr. Li continued, "Our recent investments have further strengthened Baidu's
position in key strategic areas such as search, LBS, app distribution and
online video. Our market-leading technology, innovative new products and
unrivaled customer value proposition will keep us at the heart of the Internet
in China."

"We are encouraged to see clear progress in key investment areas," commented
Jennifer Li, Baidu's chief financial officer. "We will continue to invest
aggressively and remain committed to building long-term value for our
shareholders."

Second Quarter 2013 Results

Baidu reported total revenues of RMB7.561 billion ($1.232 billion) for the
second quarter of 2013, representing a 38.6% increase from the corresponding
period in 2012.

Online marketing revenues for the second quarter of 2013 were RMB7.539 billion
($1.228 billion), representing a 38.3% increase from the corresponding period
in 2012. Baidu had about 468,000 active online marketing customers in the
second quarter of 2013, representing a 33.0% increase from the corresponding
period in 2012 and a 14.1% increase from the first quarter of 2013.

Revenue per online marketing customer for the second quarter was approximately
RMB16,100 ($2,623), a 3.9% increase from the corresponding period in 2012 and
an 11.0% increase compared to the first quarter of 2013.

Traffic acquisition cost (TAC) as a component of cost of revenues was RMB880.0
million ($143.4 million), representing 11.6% of total revenues, as compared to
8.3% in the corresponding period in 2012 and 10.2% in the first quarter of
2013. The increase mainly reflected increased contextual ads contributions and
hao123 promotions through our network.

Bandwidth costs as a component of cost of revenues were RMB457.3 million
($74.5 million), representing 6.0% of total revenues, compared to 4.4% in the
corresponding period in 2012. Depreciation costs as a component of cost of
revenues were RMB357.0 million ($58.2 million), representing 4.7% of total
revenues, compared to 4.5% in the corresponding period in 2012. The increase
was mainly due to an increase in network infrastructure capacity.

Content costs as a component of cost of revenues were RMB150.7 million ($24.5
million), representing 2.0% of total revenues, compared to 0.6% in the
corresponding period in 2012, and 1.6% in the previous quarter. The
year-over-year increase was mainly due to the inclusion of iQiyi's content
costs.

Selling, general and administrative expenses were RMB1.078 billion ($175.7
million), representing an increase of 83.5% from the corresponding period in
2012, primarily due to expenses related to the promotion of our products.

Research and development expenses were RMB941.8 million ($153.4 million), a
72.6% increase from the corresponding period in 2012,primarily due to an
increase in the number of research and development personnel.

Share-based compensation expenses, which were allocated to related operating
costs and expense line items, were RMB83.3 million ($13.6 million) in the
second quarter of 2013, compared to RMB53.9 million in the corresponding
period in 2012 and RMB110.9 million in the first quarter of 2013.

Operating profit was RMB2.904 billion ($473.1 million), representing a 3.2%
increase from the corresponding period in 2012. Operating profit excluding
share-based compensation expenses (non-GAAP) was RMB2.987 billion ($486.7
million), a 4.1% increase from the corresponding period in 2012.

Income tax expense was RMB513.2 million ($83.6 million), compared to income
tax expense of RMB235.4 million in the corresponding period in 2012. The
effective tax rate for the second quarter of 2013 was 16.3%, as compared to
7.9% for the corresponding period in 2012 and 16.2% in the first quarter of
2013.

Net income attributable to Baidu was RMB2.644 billion ($430.8 million),
representing a 4.5% decrease from the corresponding period in 2012. Basic and
diluted earnings per ADS for the second quarter of 2013 amounted to RMB7.52
($1.23) and RMB7.52 ($1.22), respectively.

Net income attributable to Baidu excluding share-based compensation expenses
(non-GAAP) was RMB2.727 billion ($444.4 million), a 3.4% decrease from the
corresponding period in 2012. Basic and diluted earnings per ADS excluding
share-based compensation expenses (non-GAAP) for the second quarter of 2013
amounted to RMB7.76 ($1.26) and RMB7.75 ($1.26), respectively.

As of June 30, 2013, the Company had cash, cash equivalents and short-term
investments of RMB34.069 billion ($5.551 billion). Net operating cash inflow
for the second quarter of 2013 was RMB3.205 billion ($522.2 million). Capital
expenditures for the second quarter of 2013 were RMB547.8million ($89.3
million).

Adjusted EBITDA (non-GAAP), defined as earnings before interest, taxes,
depreciation, amortization, other non-operating income and share-based
compensation expenses, was RMB3.477 billion ($566.5 million) for the second
quarter of 2013, representing an 8.4% increase from the corresponding period
in 2012.

Outlook for Third Quarter 2013

Baidu currently expects to generate total revenues in an amount ranging from
RMB8.730 billion ($1.422 billion) to RMB8.960 billion ($1.460 billion) for the
third quarter of 2013, representing a 39.7% to 43.3% year-over-year increase.
This forecast reflects Baidu's current and preliminary view, which is subject
to change.

Conference Call Information

Baidu's management will hold an earnings conference call at 8:00 PM on July
24, 2013, U.S. Eastern Time (8:00 AM on July 25, 2013, Beijing/Hong Kong
Time).

Dial-in details for the earnings conference call are as follows:

International:            +65-6723-9381
U.S.:                    +1-845-675-0437
UK:                +44-203-059-8139
Hong Kong:                +852-2475-0994
Passcode for all regions: 16916370

A replay of the conference call may be accessed by phone at the following
number until July 31, 2013:

International: +61-2-8199-0299
Passcode:     16916370

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

About Baidu

Baidu, Inc. is the leading Chinese language Internet search provider. As a
technology-based media company, Baidu aims to provide the best way for people
to find information. In addition to serving individual Internet search users,
Baidu provides an effective platform for businesses to reach potential
customers. Baidu's ADSs trade on the NASDAQ Global Select Market under the
symbol "BIDU". Currently, ten ADSs represent one Class A ordinary share.

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 third quarter 2013 and
quotations from management in this announcement, as well as Baidu's 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 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 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: our growth strategies; our future
business development, including development of new products and services; our
ability to attract and retain users and customers; competition in the Chinese
and Japanese language Internet search markets; competition for online
marketing customers; changes in our revenues and certain cost or expense items
as a percentage of our 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 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, Japan and elsewhere. Further information
regarding these and other risks is included in our annual report on Form 20-F
and other documents filed with the Securities and Exchange Commission. 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.

About Non-GAAP Financial Measures

To supplement Baidu's consolidated financial results presented in accordance
with GAAP, Baidu uses the following measures defined as non-GAAP financial
measures by the SEC: adjusted EBITDA, operating profit excluding share-based
compensation expenses, net income excluding share-based compensation expenses,
and basic and diluted earnings per ADS excluding share-based compensation
expenses. 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. For more
information on these non-GAAP financial measures, please see the tables
captioned "Reconciliations of non-GAAP results of operations measures to the
nearest comparable GAAP measures" and "Reconciliation from net cash provided
by operating activities to adjusted EBITDA" set forth at the end of this
release.

Baidu believes that these non-GAAP financial measures provide meaningful
supplemental information regarding its performance and liquidity by excluding
certain expenses, particularly share-based compensation expenses, that may not
be indicative of its operating performance or financial condition from a cash
perspective. We believe that both management and investors benefit from
referring to these non-GAAP financial measures in assessing our 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. Baidu has computed its non-GAAP
financial measures using the same consistent method from quarter to quarter
since April 1, 2006. We believe 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 share-based compensation charge that has been and
will continue to be for the foreseeable future a significant recurring expense
in our results of operations. A limitation of using non-GAAP adjusted EBITDA
is that it does not include all items that impact our net income for the
period. Management compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from each non-GAAP measure.
The accompanying tables have more details on the reconciliations between GAAP
financial measures that are most directly comparable to the non-GAAP financial
measures.

For investor and media inquiries, please contact:

China

Victor Tseng
Baidu, Inc.
Tel: +86-10-5992-7244
ir@baidu.com

Nick Beswick
Brunswick Group LLC
Tel: +86-10-5960-8600
baidu@brunswickgroup.com

U.S.

Cindy Zheng
Brunswick Group LLC
Tel: +1-212-333-3810
baidu@brunswickgroup.com

    This announcement contains translations of certain RMB amounts into U.S.
    dollars at specified rates solely for the convenience of the reader.
[1] Unless otherwise noted, all translations from RMB to U.S. dollars are made
    at a rate of RMB6.1374 to US$1.00, the effective noon buying rate as of
    June 28, 2013, in The City of New York for cable transfers of RMB as
    certified for customs purposes by the Federal Reserve Bank of New York.

Baidu, Inc.

Condensed Consolidated Balance Sheets
                                                       June 30   December31
(In RMB thousands except for number of shares and per  2013       2012
share data)
                                                       Unaudited  Audited
ASSETS
 Current assets:
Cash and cash equivalents                             9,028,999  11,880,632
Restricted cash                                       330,754    395,029
Short-term investments                                25,040,393 20,604,223
Accounts receivable, net                              1,786,638  1,253,483
Deferred tax assets, net                              243,482    160,315
Other assets, current                                996,244    380,407
 Total current assets                               37,426,510 34,674,089
 Non-current assets:
Fixed assets, net                                     4,231,365  3,887,877
Intangible assets, net                                2,315,459  1,587,665
Goodwill                                              5,983,192  3,877,564
Long-term investments, net                            1,603,532  803,499
Deferred tax assets, net                              48,575     53,303
Other assets, non-current                            791,826    784,893
 Total non-current assets                           14,973,949 10,994,801
Total assets                                           52,400,459 45,668,890
LIABILITIES AND EQUITY
 Current liabilities:
Short-term loans                                       47,200     0
Accounts payable and accrued liabilities               4,675,516  3,806,836
Customer advances and deposits                         1,990,234  2,067,586
Deferred revenue                                       110,734    94,121
Deferred income                                        72,287     64,506
Long-term loans, current portion                       2,147,544  2,170,978
Capital lease obligation                               33,578     32,502
 Total current liabilities                          9,077,093  8,236,529
 Non-current liabilities:
Deferred income                                        340,800    190,000
Long-term loans                                        348,359    356,589
Notes payable                                          9,196,593  9,336,686
Deferred tax liabilities                               885,525    289,482
Capital lease obligation                               27,418     44,479
 Total non-current liabilities                      10,798,695 10,217,236
Total liabilities                                      19,875,788 18,453,765
Redeemable noncontrolling interests                    924,408    1,033,283
Equity
Class A Ordinary Shares, par value US$0.00005 per
share,

825,000,000 shares authorized, and27,202,710 shares   12         12
and
27,224,449 shares issued and outstanding as at
December 31,
2012 and June 30, 2013
Class B Ordinary Shares, par value US$0.00005 per
share,

35,400,000 shares authorized, and7,763,000 shares
and                                                    3          3

7,753,000 shares issued and outstanding as at
December 31,

2012 and June 30, 2013
Additional paid-in capital                             2,284,601  2,095,273
Retained earnings                                      28,726,137 24,038,219
Accumulated other comprehensive loss                   233,824    (78,278)
 Total Baidu, Inc. shareholders' equity             31,244,577 26,055,229
 Noncontrolling interests                           355,686    126,613
Total equity                                           31,600,263 26,181,842
Total liabilities, redeemable noncontrolling           52,400,459 45,668,890
interests, and equity





Baidu, Inc.

Condensed Consolidated Statements of Income
                                           ThreeMonthsEnded
                                           June 30,    June 30,    March 31,
(In RMB thousands except for share, per    2013        2012        2013
share (or ADS) information)
                                           Unaudited   Unaudited   Unaudited
Revenues:
Online marketing services                7,539,133   5,451,555   5,952,898
Other services                           21,682      4,677       15,640
Total revenues                           7,560,815   5,456,232   5,968,538
Operating costs and expenses:
Cost of revenues (note 1, 2)             (2,637,118) (1,508,168) (2,099,264)
Selling, general and administrative       (1,078,066) (587,626)   (848,102)
(note 2)
Research and development (note 2)        (941,766)   (545,549)   (810,682)
Total operating costs and expenses       (4,656,950) (2,641,343) (3,758,048)
Operating profit                         2,903,865   2,814,889   2,210,490
Other income:
Interest income                          317,811     203,327     273,987
Interest expense                         (91,249)    (25,527)    (89,246)
Foreign exchange gain (loss), net        (6,382)     864         (461)
Loss from equity method investments      84          (57,331)    (5,453)
Other income (loss), net                 27,341      47,581      6,468
Total other income                       247,605     168,914     185,295
Income before income taxes               3,151,470   2,983,803   2,395,785
Income taxes                             (513,170)   (235,355)   (388,861)
Net income                               2,638,300   2,748,448   2,006,924
Less: net loss attributable to            (5,589)     (21,422)    (35,908)
noncontrolling interests
Net income attributable to Baidu, Inc.   2,643,889   2,769,870   2,042,832
Earnings per share for Class A and Class
B ordinary shares:
Net income attributable to Baidu,          75.19       78.70       58.86
Inc.-Basic
Net income attributable to Baidu,          75.15       78.59       58.82
Inc.-Diluted
Earnings per ADS (1 Class A ordinary
share equals 10 ADSs ):
Net income attributable to Baidu,          7.52        7.87        5.89
Inc.-Basic
Net income attributable to Baidu,          7.52        7.86        5.88
Inc.-Diluted
Weighted average number of Class A and
Class B ordinary shares outstanding:
Basic                                     34,975,728  34,931,905  34,968,420
Diluted                                    34,994,400  34,982,601  34,989,911
(1) Cost of revenues are detailed as
follows:
Sales tax and surcharges                 (544,958)   (392,544)   (432,768)
Traffic acquisition costs                (879,971)   (453,687)   (609,606)
Bandwidth costs                          (457,287)   (242,592)   (404,880)
Depreciation costs                       (356,979)   (245,925)   (333,101)
Operational costs                        (243,229)   (137,765)   (218,712)
Content costs                            (150,652)   (33,162)    (95,791)
Share-based compensation expenses        (4,042)     (2,493)     (4,406)
Total cost of revenues                   (2,637,118) (1,508,168) (2,099,264)
(2) Includes share-based compensation
expenses as follows:
Cost of revenues                         (4,042)     (2,493)     (4,406)
Selling, general and administrative      (22,135)    (17,800)    (29,540)
Research and development                 (57,107)    (33,571)    (77,002)
Total share-based compensation            (83,284)    (53,864)    (110,948)
expenses



Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (*)
(in RMB thousands, unaudited)
             Three months ended June 30,    Three months ended March 31,   Three months ended June 30,
             2012                           2013                           2013
             GAAP      Adjustment Non-GAAP  GAAP      Adjustment Non-GAAP  GAAP      Adjustment Non-GAAP
             Result               Results   Result               Results   Result               Results
Operating    2,814,889 53,864     2,868,753 2,210,490 110,948    2,321,438 2,903,865 83,284     2,987,149
profit
             Three months ended June 30,    Three months ended March 31,   Three months ended June 30,
             2012                           2013                           2013
             GAAP      Adjustment Non-GAAP  GAAP      Adjustment Non-GAAP  GAAP      Adjustment Non-GAAP
             Result               Results   Result               Results   Result               Results
Net income
attributable 2,769,870 53,864     2,823,734 2,042,832 110,948    2,153,780 2,643,889 83,284     2,727,173
to Baidu,
Inc.
(*) The adjustment is only for share-based compensation.



Reconciliation from net cash provided by operating activities to adjusted
EBITDA(*)
(in RMB thousands, unaudited)
                  Three               Three               Three
                  months    As a % of months    As a % of months    As a % of
                  ended               ended               ended
                  June 30,  total     March 31, total     June 30,  total
                  2012      revenues  2013      revenues  2013      revenues
Net cash provided
by operating      3,040,234 56%       2,185,543 37%       3,205,046 42%
activities
Changes in assets
and liabilities,  100,205   2%        391,950   6%        6,321     0%
net of effects of
acquisitions
Income taxes      235,355   4%        388,861   7%        513,170   7%
expenses
Interest income   (168,914) -3%       (185,295) -3%       (247,605) -3%
and other, net
Adjusted EBITDA   3,206,880 59%       2,781,059 47%       3,476,932 46%
(*) Definition of adjusted EBITDA: earnings before interest, taxes,
depreciation, amortization, other non-operating income, and share-based
compensation expenses.



SOURCE Baidu, Inc.

Website: http://www.baidu.com
 
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