Baidu, Inc. (NASDAQ:BIDU) Q3 2022 Earnings Call Transcript

This has provided us great insight, and we have used these insights to develop auto solutions that best meet our customers’ needs. So for example, ANP 3.0. We believe it is the most advanced intelligent driving solution for city roads on the market. Because ANP 3.0 is derived from our four autonomous driving technology, we were able to use a very limited amount of R&D personnel to make this advance solution available to the market within a short time. Jidu’s first car Robo 01 will be the first one to use ANP 3.0. We believe that with more and more automakers adopting our auto solutions, we will become more experienced in making our solutions compatible with more popular car models. On the other hand, with more and more cars with our auto solutions are on the go, we will be able to grow experience from everyday uses and we’ll continue to improve our auto solutions.

As I mentioned earlier, our total projected cumulative sales for Apollo’s auto solutions reached RMB11.4 billion, which is more than 50% from last year. Based on our current pipeline, some of the major car models that are equipped with ANP, AVP should be launched starting in the second half of next year. So, meaningful revenue contribution for this business should begin in 2024 and profit will follow. On the differentiation, if you look at the cost side, as we mentioned many times before, developing advanced intelligent solutions require massive investment in technology and talent. Frankly speaking, most companies cannot afford this kind of investment. Automakers trust our brand and technology. So, a lot of them have chosen to partner with Baidu intelligent solutions.

For them, we are a trustworthy and reliable supplier because we have made years of investment in intelligent driving technology and we have a strong cash position and our advertising business continue generate strong cash flow to support our investments. Going forward, this will continue to support the operation with many automakers at large scale. That’s why more and more leading automaker have recognized us and have broadened partnership with Baidu. For example, in the quarter, we expanded our partnership with one of China’s largest auto companies, and we plan to use our ASD solutions for yet another of their popular car model. And the ASD solution used into ANP, AVP, and HD Maps. Going forward, we are looking forward to more partnerships with OEMs, both domestically and internationally.

Thank you, Gary.

Operator: The next question comes from Kenneth Fong with Credit Suisse. Please go ahead.

Kenneth Fong: Hi, good evening management. Congrats for the solid quarter and thanks for taking my question. I have a follow-up question about Apollo Go. On a fully autonomous driving, what kind of progress will be seen in the near-term? Could management also talk about a key milestone that Apollo Go will achieve in 2023 and even in the longer term? And to achieve this milestone, how should we think about the impact on your P&L, as well as cash flow? And when should we expect Apollo Go business to achieve breakeven? Thank you.

Zhenyu Li: Thanks for your question. This is Zhenyu. We are making very good progress and package of providing fully drive ride-hailing for the public. We believe Apollo Go is the largest autonomous ride-hailing service provider in the world, because, number one, when we look at the numbers back on coverage rate. Apollo Go has provided 1.4 million drive for the public. In Beijing, Shanghai and Guangzhou each half complete 15 drive per day. We are also providing fully driverless AI ride-hailing solution to public in Wuhan and Chongqing and the number of ride providers by fully driverless AI is growing very fast. And number two, Apollo Go is already in more than 10 cites in China. It is also cities have a population of more than 10 million, as Rong Luo mentioned in his script, building up operation of us to improve technology and safety.