Li Yanhong internal letter: Q3 performance is invaluable bold innovation than mediocre conservative

On the morning of November 7, Baidu reported unaudited results for the third quarter of fiscal year 2019 ended Sept. 30. The report showed that Baidu Q3’s total revenue was RMB28.1 billion, essentially unchanged from the same period last year, up 7% from the previous quarter, and a net loss of Rmb6.4bn, compared with a net profit of RMB12.4bn in the same period last year.

Robin Li, Baidu’s founder, chairman and ceo, said in an internal letter that such results were achieved in the face of a variety of uncertainties, making it more difficult to be valuable, adding that he was “more confident about the upcoming 2020”.

As a platform-oriented company for artificial intelligence, Baidu should give full play to its technological advantages in the field of artificial intelligence and be the builders of the intelligent economy, Li said.

“Bold innovation is better than mediocrity, and all companies that create a business miracle are ‘born different’. In his internal letter, Mr Li said. (Seme)

The following is the full text of Li’s internal financial report:

Dear students:

Beijing time early this morning, the company released the third quarter of this year’s financial results. In the quarter, we achieved total revenue of RMB28.1 billion, and although the macro environment remains challenging, our revenue grew steadily for two consecutive quarters through the joint efforts of all employees, and our net profit attributable to Baidu reached RMB4.4 billion (Non-GAAP) in the third quarter, far exceeding Wall Street expectations. Net profit attributable to Baidu’s core reached 6.3 billion yuan (Non-GAAP).

Such performance is achieved in the context of a wide range of uncertainties, making it even more valuable. This also shows that the positive changes we have made in the past has shown initial results. We have better grasp the balance of innovation, speed and efficiency, so that the company’s business continued to move forward, so that we are more confident about the upcoming 2020.

Baidu is a company with more than 1 billion users, and we have built China’s leading mobile ecosystem with knowledge and information at its core. Baidu App’s September active users reached 189 million, up 25% year-on-year. We strive to create a hundred numbers, small programs and managed page mechanisms, a steady stream of users to provide a large number of comprehensive, diverse, searchable and safe and controllable content and services. This quarter, our search, driven by the latest artificial intelligence technology, increased its first satisfaction rate to 56% from 51% in the previous quarter. The number of creators of 100 streams and short video content reached 2.4 million, up 57% year-on-year. We’ve further increased user viscosity and achieved strong growth in mobile traffic by continuously improving content quality and introducing social capabilities. Smart small program monthly active users reached 290 million, an increase of 157% year-on-year. Our managed page mechanism has been applied in a number of industries, providing users with more objective and stable content and services, but also for our customers to continuously improve ROI has laid a good foundation.

Small-scale smart speakers in the user scale continue to maintain high-speed growth. According to data from third-party market research companies, in the second quarter, the second quarter of the small-scale smart speaker linked to China’s first shipment, and become the world’s second largest shipment of smart speakers. Small-scale assistant growth momentum is still strong, in September voice interaction more than 4.2 billion times, more than 4.5 times the same period last year. In the future, we will continue to use AI technology to continuously improve the user experience, so that small assistants to better help people, service people.

The progress made in Apollo’s ecology is also encouraging. So far, Baidu’s total number of self-driving road testing licenses has reached 150, accounting for more than half of all licensed autonomous driving road testing licenses in China. Our self-driving taxi fleet, Robotaxi, is on the streets of Changsha and is on trial, reflecting not only our system level and technical capabilities in the field of autonomous driving, but also marks an important step in Baidu’s collaborative solution for the commercialization of intelligent transportation.

During the quarter, the company also upgraded its “Cloud plus AI” strategy, further enhancing our AI solution capabilities. From the debut of “Pufa Digital Man” in early July to the launch of the “Digital People Open Platform” at the end of September, Baidu’s intelligent cloud industry has made rapid progress, covering industries, agriculture, finance, telecommunications, medical, education and other industries. Baidu’s AI open platform has gained wider reach, with more than 1.5 million developers in September. More than 280 million users used Baidu’s map voice feature, more than double the number in the same period last year.

At last month’s World Internet Conference in Wuzhen, I talked about a judgment about the future: “Artificial intelligence is driving the evolution of the digital economy to the smart economy”. As a platform-oriented company of artificial intelligence, Baidu should give full play to the technological advantages in the field of artificial intelligence and be the builders of the intelligent economy. Our smart search, smallness will become the driver of user-computer interaction change, our Baidu brain, paddle platform will play a greater role in the upgrading of intelligent economic infrastructure, our intelligent cloud, Apollo will accelerate the process of industrial intelligence to contribute open wisdom and experience.

This is an era when technological value is shining again, and technological innovation is a great adventure, we pay 100 times the effort to achieve a 10 times advantage, to lead by 1 step. But bold innovation trumps mediocrity, and all companies that create a business miracle are “born different”. Let’s use innovation to create a better future!

Robin

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