Text / Eastland
On March 1, 2022, baidu group (NASDAQ: BIDU; HK: 09888) released the performance announcement for the fourth quarter and the whole year of 2021.
Baidu’s revenue in fiscal year 2021 was 124.5 billion, of which non advertising revenue was 43.6 billion, accounting for 35%; In the fiscal year, the EBITDA was 24.9 billion yuan and the profit margin was 20%.
According to the closing price on March 4, Baidu’s market value was US $52 billion, down 58.5% from the peak in February 2021. Baidu, with a price to book ratio of less than 1.6 times, could not fall.
Who is driving revenue growth
Iqiyi once saved the car
Baidu divides its revenue into “Baidu core” and “iqiyi”. In 2021, the total revenue was 124.5 billion, with a year-on-year increase of 16.3% (Note: the total revenue was confirmed after offsetting the transactions between Baidu core and iqiyi).
In 2015, baidu core accounted for 92.2% of total revenue; To 73.5% in 2020;
In 2021, Baidu’s core revenue was 95.2 billion, accounting for 76.4% of the total revenue.
In recent years, iqiyi’s growth rate has gradually dropped, and its contribution to Baidu group’s revenue growth has been decreasing:
In 2016, iqiyi’s revenue increased by 113% to 11.24 billion, while Baidu’s core revenue decreased by 2.9% year-on-year. Driven by iqiyi, baidu group’s revenue increased by 6.2%;
In 2017, iqiyi’s growth rate soared to 54.6%, but Baidu’s core growth rate rebounded to 13.8%. As a result, baidu group’s revenue increased by 20.2%;
In 2018, iqiyi’s revenue exceeded 25 billion, with a growth rate of more than 40%. Baidu’s core growth rate rose slightly to 15.6%, and Baidu group’s revenue increased by 20.6%. The contribution of the two main businesses to the group’s revenue growth is “four or six”, and the contribution rate of iqiyi is slightly higher than 40%.
In 2019, the revenue growth of Baidu core and iqiyi was 1.8% and 16% respectively, and iqiyi’s contribution rate reached 78%;
In 2020, in the dark hour, the two major businesses “shut down”, Baidu’s core revenue decreased by 1.3% and iqiyi increased by 2.5%; The group’s revenue decreased slightly by 0.3%;
In 2021, Baidu’s core growth rate rebounded to 20.9%, iqiyi’s growth rate was 2.9%, and Baidu group’s revenue increased by 16.3%.
Iqiyi is close to the “ceiling”, and the revenue growth is in line with the objective law. By raising the cost of content, increasing marketing investment and forcing large revenue, I’m afraid the gain is not worth the loss.
Iqiyi, once a “meritorious rescue”, is no longer the “engine” of Baidu’s revenue growth.
The proportion of advertising revenue decreased gradually
Baidu started from online marketing (i.e. advertising), and Baidu core and iqiyi provide such services.
In 2016, the advertising revenue of Baidu core and iqiyi was 57.9 billion and 5.7 billion respectively, accounting for 90.1% of the total revenue;
In 2018, the advertising revenue of Baidu core and iqiyi was 72.6 billion and 9.3 billion respectively, accounting for 80.1% of the total revenue# 10 percentage points in two years#
In 2020, the advertising revenue of Baidu core and iqiyi was 66.3 billion and 6.8 billion respectively, accounting for 68.3% of the total revenue;
In 2021, the advertising revenue of Baidu core and iqiyi was 73.9 billion and 7.1 billion respectively, accounting for 65% of the total revenue;
There are three points worth paying attention to the changes of Baidu’s advertising revenue:
First, the position of advertising business in Baidu is “irreversible” and has a further downward trend;
Second, Baidu’s core advertising revenue may have room to rise. Iqiyi’s focus has shifted to member services. The advertising business will not give up, but the revenue has stopped growing;
With the rise of cloud computing, intelligent driving, intelligent hardware and other businesses, the declining proportion of advertising revenue is the general trend.
Non advertising revenue
The “ceiling” of online marketing is not high!
In 2021, China’s advertising industry will exceed 1 trillion, and the Internet accounts for about 50%. Baidu, Tencent, byte beat and other Internet giants and countless small and medium-sized players competed for 500 billion advertising budget.
Three major non advertising revenue
In 2021, the proportion of advertising revenue decreased to 65%, and the non advertising revenue reached 43.6 billion, with a considerable scale.
Non advertising revenue mainly includes iqiyi member services, smart cloud and content distribution.
Member services and content distribution are all businesses of iqiyi: the revenue from Member Services exceeded 10 billion in 2018, reached 16.5 billion in 2020 and increased slightly to 16.7 billion in 2021; Content distribution revenue reached 2.9 billion in 2021.
In 2018, smart cloud revenue reached 3 billion; 6.4 billion to 2019; Revenue of 9.2 billion in 2020;
In 2021, smart cloud revenue reached 15.1 billion, a year-on-year increase of 64%. By the end of 2021, flying plasma had served 157000 enterprise customers and 4.06 million developers, creating nearly 480000 models.
In 2021, member services, content distribution, smart cloud and other non advertising revenue accounted for 35% of Baidu’s revenue.
Baidu doesn’t want to “curl up” under the ceiling of Internet advertising, and has already put it into action. The proportion of non advertising revenue reached 35% in 2021, which means that the “top third ceiling” has been replaced.
Pregnant non advertising business
Baidu’s financial report also disclosed two non advertising businesses: intelligent driving and intelligent hardware (the main products are intelligent speakers, giant screen TV and translation pen)# Intelligent driving deserves special attention#
Baidu’s intelligent driving strategy is a two pronged approach:
First, online car Hailing service. Turnip Express has started operations in Beijing, Chongqing and Yangquan to obtain valuable data and increase the confidence of the government and users in Baidu’s driverless technology. The earliest in Beijing (November 25, 2021), Q4 unmanned car orders reached 21.3 million in 2021. In 2022, Chongqing (February 18) and Yangquan (February 27) started charging operation successively.
Second, alliance with automobile manufacturers. Baidu and Geely have established a joint venture “Jidu”. At present, it has completed the round a financing of US $400 million, and the intelligent electric vehicle will be booked in 2022. In addition, it is reported that BYD chose Baidu as its intelligent driving supplier, and the models equipped with Baidu intelligent driving products will be put on the market soon. (Note: BYD’s sales volume of new energy vehicles in 2022 is about 1