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Baidu financial report teleconference record: CEO and brand of electric vehicle joint venture with Geely have been determined

via:博客园     time:2021/2/18 20:13:25     readed:646


Tencent technology on February 18, baidu (NASDAQ: BIDU) released the fourth quarter and full year's unaudited financial report as of December 31, 2020 after the U.S. stock market on February 17, Eastern time. In the fourth quarter, baidu achieved revenue of 30.3 billion yuan and net profit (non US GAAP) attributable to Baidu reached 6.9 billion yuan, exceeding market expectations for four consecutive quarters. In 2020, Baidu's revenue is 107.1 billion yuan, and its net profit (non US GAAP) is 22 billion yuan.

After the release of the earnings report, Baidu chairman and CEO Robin Li, CFO Yu Zhengjun and senior vice president Shen Chao and other executives attended the subsequent earnings call conference, read the main points of the earnings report and answer the analyst's questions.

Citigroup analyst Alicia Yap:My question is about the strategic cooperation between Baidu and Geely. When does the management expect the electric vehicle to come out? What goal does Baidu plan to achieve through this strategic cooperation? Besides Geely, does Baidu plan to cooperate with other auto manufacturers to produce electric vehicles in the future? It seems that Geely is also working with other 80 companies, and is developing its own automatic driving vehicle. So can management describe the relationship with Geely?

Robin Li:The combination of hardware and intelligent software can greatly improve the user experience of automatic driving and electric vehicles. In the past few years, we have developed a large number of advanced automatic driving technologies, so we hope to help our automobile manufacturing customers accelerate the integration and upgrading of intelligent software. But the problem is that many traditional automobile manufacturers are relatively conservative in this aspect, and are not willing to take the initiative to try some new technologies, so we can only take the initiative to manufacture such an electric vehicle integrated with cutting-edge technologies, so as to provide a reference for the whole market, to show that the combination of hardware and software can greatly optimize the user experience, and at the same time It can also ensure a more rapid and powerful feedback process, so as to ensure that we can continuously improve the automatic driving technology according to the actual application.

Now the company established by Baidu and Geely is running smoothly. We employ a management team with strong background and are planning to register a brand for a new car. Generally speaking, it takes about three years from the initial stage of R & D to the official launch of electric vehicles. At present, we also need such a long time.

Generally speaking, Apollo and Baidu brain are open source platforms. In the future, we will continue to cooperate with other automobile manufacturing customers and strive to provide them with technical support. They may have hesitated in the past, but now we have provided them with a preliminary template, so I am sure this will help, and it will also have a very positive impact on the revenue of Apollo's automatic driving technology.

Bank of America Merrill Lynch bank analyst Eddie Leung: I remember Baidu Intelligent Cloud in the testing stage pay more attention to the gross profit margin of the product, hoping to get higher gross profit rate than other competitors. Can the management share some relevant data? Because I heard that some of Baidu's competitors have achieved initial balance of payments.

Yu Zhengjun:In fact, Baidu has many different business branches in the field of intelligent cloud, some of which are completely different from the products on the market. In terms of gross profit rate, for almost the same software, we may spend less now than before, because the market environment has become better and we have more and better products now. As Shen mentioned, we developed a technology a few years ago, and the gross profit margin was very bad at that time, because you have to try to combine the new system with the existing system. Now, because we have a certain user base, the product is more systematic than the previous initial version, so the gross profit rate has been greatly improved, because we are growing very fast.

Now we are developing many products at the same time, and we don't pay much attention to the gross profit rate at the present stage. If we look at the timeline of the whole product, we can see that in the long run, many products, such as automatic driving technology, user support and customer service, will bring us considerable profits.

The main business unit of Baidu intelligent cloud service is enterprise intelligent cloud business. The factors that affect gross margin include business pricing, patent price and so on. With the gradual maturity of products, gross margin will gradually increase. Another major Intelligent Cloud business is intelligent transportation. Gross profit rate will also be affected by many factors, such as product cycle and software integration.

Maybe the products of some competitors on the market are very popular. I think it mainly depends on what kind of enterprise you want to be. We don't have so much money to allow us to invest in other areas. We hope to focus more on it, because the investment in infrastructure is sustainable. In the future, we hope to be different from other competitors in the software market, especially in artificial intelligence technology.

Piyush mubayi, analyst at Goldman Sachs: as for Baidu intelligent electric vehicle, as mentioned by the management just now, why does it take three years for this vehicle to be launched with Geely? What is Baidu's market positioning for this car? What is the target market share? With the passage of time, what is the trend of the turnover of the car? What is the company's pricing for this?

Shudder:As I mentioned in the first question, the reason for such cooperation is that we want to extend our technology to the whole market. So the biggest selling point of this car will focus on the software or the integration of software and hardware.

When we are fully prepared for the launch of this product, we will announce its positioning in the domestic market, which also means that we need to work hard to accelerate the R & D and production process of this product. I believe it will become the most advanced driving technology electric vehicle in the whole market, because we focus on not only electric but also intelligent.

Yu Zhengjun:Let me explain a little bit about intelligence. First, electric vehicles contain many elements, such as Apollo autopilot service and high-definition maps, which can help provide accurate automatic parking and navigation. In this way, our cars are different from most of the electric vehicle manufacturers, because we have made a long-term investment in the field of intelligent software, and our business is not limited to selling cars. Because this is an open source platform, we have many users in different fields.

Second, we have the ability to provide a variety of content input, which is very important because it often requires a very large ecosystem. Another fact is that we are also working in the field of intelligent transportation, because a lot of important data take place on the road, such as map related data and intelligent car related data. In this way, we can have a clearer understanding of each link, so as to improve the performance and performance of electric vehicle products.

James Lee, analyst of Mizuho Securities: about intelligent transportation, what is the cooperation framework with the government in the field of urban construction? Could the management further explain the bidding process? Will government agencies choose multiple bidding companies and multiple standards for testing? In the competition with other companies, where is Baidu's competitive advantage? How much investment is expected in intelligent transportation system and system driving technology in the next few years? Will it be calculated separately from the company's core advertising gross profit? Because in this way, we can see a relatively stable growth.

Shudder:In the field of intelligent transportation, we are the pioneer of ACE (traffic engine) concept in the whole industry, which means that we are the first company in China to regard the whole traffic environment as a whole, optimize the output by using software led technical solutions, so as to organically link the road conditions and vehicles together, which can greatly reduce traffic accidents and carbon dioxide emissions.

Our potential customers are mainly cities of various scales in China. Of course, they will make comparisons and experiment with multiple bidding companies when bidding. Under normal circumstances, the result of the test is that we are far ahead of other competitors. Especially when a city pays more attention to traffic efficiency, we tend to win by a big score. Because Apollo is an open platform, we started to invest many years ago, and we also have a solid foundation in artificial intelligence technology. In addition, due to years of experience in this field, we have provided many customized solutions for urban intelligent transportation. The initial investment income may be relatively low, but once we can start the project in multiple cities, the market environment will change and the gross profit rate will be improved.

Yu Zhengjun:The gross profit rate of our mobile applications is basically between 45% and 50%, which is generally very stable. Sometimes it can exceed 50% in the end quarter, but now it may be difficult for us to reach this level. However, it can be said that our business growth is slowly recovering, and the continuous ecosystem will help the mobile terminal business maintain this gross margin range.

New business is not the same. It often takes several years to improve the commercial cash flow mode and optimize the growth.

UBS analyst: we can see that this quarter, the company's revenue growth exceeded expectations. What are the main driving factors behind this? I guess it may be related to Intelligent Cloud and intelligent transportation system. Are there other factors? The second question is about the core advertising revenue. Is it influenced by macro factors or competitors?

Yu Zhengjun:In the fourth quarter, our non advertising revenue grew by 52%, which we didn't expect, because many of them are new businesses. Intelligent transportation is a part of cloud computing business, with an increase of more than 67% in the fourth quarter, mainly because we have a very strong operating system, and this growth is expected to continue to 2021. Of course, this may be affected by seasons. For example, the fourth quarter may be twice as big as the first quarter.

Advertising revenue is also one of the main driving forces of our non advertising business. For example, for a website related project, advertising will greatly promote growth, and for example, automatic driving service will also help.

For the advertising business, there are many factors that can be mentioned here. First, the economy is slowly recovering, so macro factors have played a great role in boosting it. But the most important thing is Baidu app, the behavior of users is changing, they gradually from the browser to the small program in the web page. Our application is the only nationwide open source intelligent search engine. Users can browse the contents of different applications all over the world.

Analyst: as for the integration with YY live, it was mentioned earlier that Baidu plans to integrate YY into its own content ecology in the next few quarters. Will the valuation of this deep integration change at this stage due to the market environment and policies? As mentioned earlier, this in-depth integration will bring more opportunities to Baidu's online live broadcasting field. Can the management share the major markets and business models they will focus on in the future? In the next few quarters, will financial performance be affected by this business integration?

Robin Li:In the business integration with YY, what we see are new content forms, including information streaming media and new business realization mode. In terms of content, live broadcasting is more convenient than text, pictures and videos. Streaming media is a new form of media, including long video and short video, which allows users to easily and quickly combine various other forms of media.

YY is a relatively mature brand in this field, with a very perfect ecosystem. Although YY is more of a streaming media display platform, in the future, its video ability can be gradually applied in other fields such as education and e-commerce.

For commercial realization, there are 100 million daily living registered users on Baidu app mobile terminal, and we have been trying to provide every user with high-quality experience. Now Baidu's main cash channel is advertising business, which is not a normal situation. Many of our competitors will have more than 50% of their revenue from non advertising business. For Baidu, in addition to advertising and online marketing, we can make full use of streaming media to realize commercial realization through subscription business and e-commerce.

Yu Zhengjun:As for the valuation, YY has issued an official announcement. They have hired a professional international legal team and a world-famous audit team, but this is their announcement, not Baidu's. Therefore, I think external policy factors should be taken into account. It is very important to understand the whole market and establish good cooperation with the government in China.

So what we need is a very experienced team in this field, which is one of the reasons why we choose YY. We are more like acquiring a team than a specific product. The ability of the team is very important.

At present, the integration process is still ongoing. YY's revenue in a quarter is between 2 billion and 2.5 billion. After we confirm these, we will have a clear valuation. In the agreement signed with YY, we have listed some terms to protect the rights and interests of Baidu shareholders, so as to prevent any adverse things from happening to us.

Bagley analyst Gregory Zhao: Baidu has many different product lines, such as intelligent cloud, autonomous driving and mobile intelligent devices. So I would like to ask the management how the team allocates time and energy to different business units, and what are the top priority projects? As for the cooperation with Geely mentioned earlier, how does Baidu plan to price?

Robin Li:As for time management, half of Baidu's time and resources are invested in mobile ecology, such as intelligent cloud and automatic driving. There are many different product combinations.

We are committed to creating a more flexible mechanism and structure so that the whole team can be more independent. For example, we founded an independent smart car company and established a very independent team with our strategic partners. Recently, we have raised funds for smart device companies. After that, we will continue to add more use scenarios to existing technologies, organically combine technologies and services, and the pricing will be different.

Yu Zhengjun:In the past two years, we have greatly strengthened our competitive position. At the same time, in the past 12 months, we have been eager to hire talents from many industries. For the newly established tram company, we are also looking for a suitable CEO. So it can be said that Baidu has also invested a lot of time in personnel training.

Analyst of high talent international: with regard to automatic driving, I know Apollo is undoubtedly the leader in this field. What are Baidu's competitors in the three sectors of automatic driving, maps and intelligent urban transportation?

Robin Li: in the field of automatic driving, our main competitors are big companies in the industry. However, Baidu has a unique competitive advantage, such as high-definition maps. Most Chinese companies are not allowed to provide this service.

For the field of intelligent transportation, our main competitors are those traditional domestic intelligent transportation enterprises, but they are generally small in scale, more like selling hardware facilities in bidding. In contrast, our business model is more like an operator, which can continuously optimize the information output, reduce traffic accidents, and improve the safety of the whole transportation system. In this way, it not only provides soil for the investment of automatic driving, but also closely links roads and vehicles, and provides more travel suggestions for drivers. For example, road information helps them avoid traffic jams as much as possible.

As I mentioned just now, we are far ahead of other companies in this field. Many small start-ups are still in the very early testing stage. So our only limitation is ourselves, not other competitors.

Tian Hou, analyst of Tianhao capital: regarding the Apollo autopilot business, Baidu has established strategic cooperation with other companies on the one hand, and also set up its own company on the other hand. What technologies and intellectual property rights will not be disclosed to the public? As for artificial intelligence customer service, we are very glad to see that many companies have begun to buy this service. What are the potential customers? Which industries can it be applied to?

Robin Li:Apollo is an open platform, all information is open to customers. Based on our existing technologies, we will work together with them to develop new products. All the resources we use are open to third parties, but we may have a better understanding of these technologies and be able to better integrate hardware and software. Apollo's benchmarking products are a bit like surface.

Intelligent customer service solutions can be applied in many industries, including aerospace, electronic communication and financial services, etc. as long as there is customer service demand, we can provide corresponding one-stop intelligent solutions. We have also launched a variety of versions based on the constantly rich use scenarios and user data, aiming to provide customers with the best use experience. (Qin Xin)

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