【Earnings Highlights and Outlook】
- Baidu reported Q1 2025 total revenue of RMB 32.5 billion, up 3% year-over-year, with Baidu Core revenue reaching RMB 25.5 billion, a 7% increase year-over-year.
- AI Cloud revenue grew 42% year-over-year to RMB 6.7 billion, now accounting for 26% of Baidu Core revenue.
- The company accelerated its AI-driven search transformation, with 35% of mobile search results containing AI-generated content in April, up from 22% in January.
- Baidu plans to open-source its ERNIE 4.5 series of models on June 30th, reflecting confidence in its technology and efforts to make AI more accessible.

【Q&A Highlights】

Q1: Can you share updates on Baidu's AI model strategy and technology roadmap for ERNIE in 2025?
A:
- Baidu is focusing on an application-driven approach for AI innovation, prioritizing areas with real application value.
- The company is working on the next generation of ERNIE models and expects to accelerate the pace of model iteration.
- Baidu has significantly reduced costs for its models, making them among the most cost-effective options in the market.
- The company plans to open-source the ERNIE 4.5 series on June 30th to encourage broader exploration of the model's capabilities.

Q2: What are the key drivers for the strong AI Cloud growth, and how should we think about its sustainability and profitability?
A:
- AI Cloud revenue growth accelerated to 42% year-over-year in Q1, driven by surging demand for generative AI and foundation models across industries.
- Enterprise Cloud contributes the majority of AI Cloud revenue, with subscription-based revenue growing faster than project-based revenue.
- AI Cloud's non-GAAP operating margin continues to expand, now at teens level, driven by an improved revenue mix towards higher-value offerings.
- Despite potential AI chip export restrictions, Baidu's full-stack AI capabilities and efficient infrastructure enable strong applications and meaningful value delivery.

Q3: What is the rationale behind accelerating the AI search transition, and how should we think about its monetization?
A:
- Baidu is prioritizing user experience enhancement through innovative technology in search.
- The company expects the percentage of AI-generated content in mobile search results to keep rising rapidly in Q2.
- AI search is showing clear signs of improvement in user experiences, with users finding information more efficiently and exploring more types of queries.
- Monetization testing for AI search is in early stages, with Baidu rebuilding and refining its approach to match the new search paradigm.
- While there may be near-term pressure on revenue and margins, Baidu believes this transformation is the right path for long-term growth.

Q4: How is Apollo Go positioned in the evolving competitive landscape of robotaxi services?
A:
- Apollo Go is among the first and few players globally to operate autonomous ride-hailing services at scale, with a presence in 15 cities worldwide.
- Baidu's Robotaxi, RT6, is the first purpose-built, mass-produced Level 4 autonomous vehicle, with unit costs below $30,000 USD.
- The company is expanding globally, recently entering Dubai and Abu Dhabi, and is open to partnerships with ride-hailing platforms and fleet operators.
- Baidu sees a clear path to profitability for Apollo Go as hardware and labor costs decrease and operational efficiencies improve with scale.

Q5: How will Baidu compete with other AI applications and platforms?
A:
- Baidu is reimagining AI search to go beyond just finding information, aiming to help users make decisions and provide solutions.
- The company is enhancing its services through innovative approaches like AI agents to handle complex problems and support decision-making.
- Baidu is making its platform more open by embracing standards like MCP (Model Context Protocol) and supporting third-party agents, enabling greater flexibility and opportunities within and beyond its ecosystem.

Disclaimer: This earnings call summary is generated by AI and is for informational purposes only. Due to technical limitations, inaccuracies may exist. It does not constitute investment advice or commitments.