TMTPOST -- The American depositary receipts (ADRs) of Baidu, Inc. slipped 2.6% on Wednesday after Chinese search engine titan posted steeper-than-anticipated sales decline in spite of its the artificial intelligence (AI) push, failing to ease investors』 concerns over weak online advertising amid the macroeconomic headwinds.
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Baidu』s top line for the quarter ended June 30 reversed the upward trend in a year. Revenue fell 4% year-over-year (YoY) to RMB32.71 billion ($4.55 billion), missing the RMB32.8 billion of analysts』 expectation polled by FactSet. That represented the biggest yearly drop since the second quarter of 2022, and the first YoY decline over the past four quarters. The January to March period saw an increase of 3%.
Baidu』s bottome line delivered double-digit decrease but still beat Wall Street projection. On non-GAAP basis, adjusted earnings per American depositary share (ADS) for the second quarter shed 35% YoY to RMB13.58. Analysts expected the EPS to be RMB13.24 following a 7% decrease three months earlier. Net income soared 33% YoY to RMB7.32 billion, ahead of estimated RMB3.66 billion, while non-GAAP net income tumbled 35% YoY to $4.8 billion. Adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, shed 29% YoY to RMB6.49 billion, compared with a 13% YoY decrease for the previous quarter.
Baidu Core, which marks up around 80.2% of overall revenue for the June quarter, brought RMB26.25 billion, representing a 2% YoY fall after a 7% increase three months ago. Revenue from online marketing, a major part of Baidu Core, dived 15% YoY to RMB16.2 billion. That decline more than doubled from the March quarter seeing a 6% YoY dip, highlighting intense competition and headwinds amid worries about faltering demand in China.
「Baidu』s advertising business is under increasing pressure,」 ThirdBridge analyst Eric Shen said. 「The company』s search arm, once a dominant cash generator, now faces stiff competition from Xiaohongshu and Douyin. These rivals have built content ecosystems that feel livelier and stickier, drawing users away.」
However, AI maintained a key drive. Non-online marketing revenue advanced 34% YoY to RMB10.0 billion, primarily driven by the boost of AI Cloud business. "In Q2, mainly propelled by new AI initiatives, Baidu Core's non-online marketing revenue exceeded RMB 10 billion for the first time, delivering 34% year-over-year growth and marking a more balanced, diversified mix," said Haijian He, Chief Financial Officer (CFO) of Baidu.
Baidu CEO Robin Li, or Li Yanhong, stressed the AI Cloud』s role in limiting drag by the online marketing. 「In the second quarter, our AI Cloud business continued to deliver robust and healthy revenue growth, supported by our strengthening full-stack AI capabilities and comprehensive end-to-end AI products and solutions. This performance helped mitigate the near-term pressure on online marketing business, as we intensified the AI transformation of Baidu Search to elevate user experience and establish a stronger foundation for long-term growth,」 Li commented in a statement.
As another highlights for the second quarter, Apollo Go, Baidu's autonomous ride-hailing service, accelerated with a triple-digit growth. It provided over 2.2 million fully driverless rides in the second quarter of 2025, representing a 148% YoYrise, compared with a 75% increase for the prior quarter.. As of August, the cumulative rides provided to the public by Apollo Go surpassed 14 million.
CFO He said Baidu remains committed to our AI investments, focusing on advancing AI transformation across the Mobile Ecosystem, sustaining healthy growth momentum in AI Cloud, and accelerating Apollo Go's global expansion. 」While navigating near-term challenges, we believe these strategic priorities will drive significant long-term value,」 he said.
