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Baidu Announces Fourth Quarter and Fiscal Year 2008 Results
02/18/09
BEIJING, Feb 18, 2009 /PRNewswire-Asia via COMTEX/ -- Baidu, Inc. (Nasdaq: BIDU), the leading Chinese language Internet search provider, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2008(1).
    (Logo: http://www.newscom.com/cgi-bin/prnh/20081103/BAIDULOGO )

    Fourth Quarter and Fiscal Year 2008 Highlights
    -- Total revenues in the fourth quarter of 2008 were RMB902.1 million
       ($132.2 million), a 58.0% increase from the corresponding period in
       2007.
    -- Total revenues in fiscal year 2008 were RMB3.2 billion ($468.8 million),
       an 83.3% increase from 2007.
    -- Operating profit in the fourth quarter of 2008 was RMB304.7 million
       ($44.7 million), a 72.9% increase from the corresponding period in 2007.
    -- Operating Profit in fiscal year 2008 was RMB1.1 billion ($160.7
       million), a 100.4% increase from 2007.

    (1) This announcement contains translations of certain RMB amounts into
        U.S. dollars at specified rates solely for the convenience of the
        reader. Unless otherwise noted, all translations from RMB to U.S.
        dollars are made at a rate of RMB6.8225 to US$1.00, the effective noon
        buying rate as of December 31, 2008 in The City of New York for cable
        transfers of RMB as certified for customs purposes by the Federal
        Reserve Bank of New York.

Net income in the fourth quarter of 2008 was RMB288.7 million ($42.3 million), a 31.3% increase from the corresponding period in 2007. Diluted earnings per share ("EPS") for the fourth quarter of 2008 was RMB8.31 ($1.22); diluted EPS excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2008 was RMB8.93 ($1.31). Costs and expenses related to Baidu's Japan operations for the fourth quarter of 2008 were RMB37.0 million ($5.4 million), which reduced diluted EPS by RMB1.06 ($0.16).

Net income in fiscal year 2008 was RMB1.0 billion ($153.6 million), representing a 66.6% increase from 2007. Diluted EPS for 2008 was RMB30.19 ($4.43); diluted EPS excluding share-based compensation expenses (non-GAAP) for 2008 was RMB32.61 ($4.78). Costs and expenses related to Baidu's Japan operations for 2008 were RMB129.3 million ($19.0 million), which reduced diluted EPS by RMB3.72 ($0.55).

The number of active online marketing customers during the fourth quarter was over 197,000, an increase of 1.5% from the previous quarter.

"Having gone through this important quarter, Baidu has become a stronger company with a higher quality customer base, tighter operational controls and more confidence in our ability to overcome challenges," said Robin Li, Baidu's chairman and CEO. "Looking forward, we will continue to execute on the strategies we have put in place to drive traffic and monetization in these difficult economic times. As the leader in this high-growth market, we remain confident in our business model and long-term potential."

Jennifer Li, Baidu's chief financial officer, commented, "Going into 2009, we will continue to focus on growing the top line and taking a disciplined approach to costs while making investments for long term gains, particularly in the areas of user experience, monetization, sales efficiency and branding."

Fourth Quarter 2008 Results

Baidu reported total revenues of RMB902.1 million ($132.2 million) for the fourth quarter of 2008, representing a 58% increase from the corresponding period in 2007.

Online marketing revenues for the fourth quarter of 2008 were RMB901.4 million ($132.1 million), representing a 58.3% increase from the fourth quarter of 2007. Baidu had more than 197,000 active online marketing customers in the fourth quarter of 2008, representing a 1.5% increase from the previous quarter and a 27.1% increase from the corresponding period in 2007. Revenue per online marketing customer for the fourth quarter was approximately RMB4,600 ($674), a sequential decrease of 2.1% and a 24.3% increase from the corresponding period in 2007. The sequential decrease in revenue per customer was primarily due to a portion of customers in the medical and pharmaceutical sector being temporarily removed from paid search results during the quarter. A large portion of these customers have resumed using our services since then.

Traffic acquisition cost (TAC) as a component of cost of revenues was RMB131.4 million ($19.3 million), representing 14.6% of total revenues, as compared to 12.7% in the corresponding period in 2007 and 11.8% in the third quarter of 2008. The increase in TAC as a percentage of total revenues reflects both the growth in our Baidu Union business and also a one-time adjustment, without which TAC for this quarter would have been 13.9% of total revenues.

Bandwidth costs as a component of cost of revenues were RMB49.2 million ($7.2 million), representing 5.5% of total revenues, compared to 6.3% in the corresponding period in 2007. Depreciation costs as a component of cost of revenues were RMB57.9 million ($8.5 million), representing 6.4% of total revenues, compared to 8.2% in the corresponding period in 2007. The decrease in bandwidth and depreciation costs as percentages of total revenues reflects efficiency improvement as well as increased scalability of investment in capital expenditure.

Selling, general and administrative expenses were RMB175.3 million ($25.7 million), representing an increase of 32.6% from the corresponding period in 2007, primarily due to the increase in compensation and marketing expenses.

Research and development expenses were RMB85.5 million ($12.5 million), representing an 83.8% increase from the corresponding period in 2007, primarily due to increased headcount.

Share-based compensation expenses, which were allocated to related operating costs and expense line items, increased in aggregate by 61.8% to RMB21.5 million ($3.2 million) in the fourth quarter of 2008 from RMB13.3 million in the corresponding period in 2007. The increase in share-based compensation expenses primarily reflects an increase in grants to employees.

Operating profit was RMB304.7 million ($44.7 million), representing a 72.9% increase from the corresponding period in 2007. Operating profit excluding share-based compensation expenses (non-GAAP) was RMB326.2 million ($47.8 million) for the fourth quarter of 2008, a 72.1% increase from the corresponding period in 2007.

Income tax expense was RMB41.8 million ($6.1 million), compared to an income tax benefit of RMB18.6 million for the corresponding period in 2007. The effective tax rate increased from 9.1% in the third quarter to 12.7% in the fourth quarter of 2008, primarily due to catch-up of the applicable tax rate for one of our subsidiaries in China in accordance with certain PRC tax interpretations issued in the fourth quarter. The effective tax rate for the full year 2008 was 10%.

Net income was RMB288.7 million ($42.3 million), representing a 31.3% increase from the corresponding period in 2007. Basic and diluted EPS for the fourth quarter of 2008 amounted to RMB8.39 ($1.23) and RMB8.31 ($1.22), respectively.

Net income excluding share-based compensation expenses (non-GAAP) was RMB310.2 million ($45.5 million), a 33% increase from the corresponding period in 2007. Basic and diluted EPS excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2008 were RMB9.02 ($1.32) and RMB8.93 ($1.31), respectively.

As of December 31, 2008, the Company had cash, cash equivalents and short-term investments of RMB2.7 billion ($390.4 million). Net operating cash inflow and capital expenditures for the fourth quarter of 2008 were RMB482.1 million ($70.7 million) and RMB61.4 million ($9.0 million), respectively.

Adjusted EBITDA (non-GAAP), defined in this announcement as earnings before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses, was RMB398.9 million ($58.5 million) for the fourth quarter of 2008, representing a 61.5% increase from the corresponding period in 2007.

Fiscal Year 2008 Results

Total revenues in 2008 were RMB3.2 billion ($468.8 million), representing an 83.3% increase from 2007.

Online marketing revenues in 2008 were RMB3.2 billion ($468.2 million), representing an 83.5% increase from 2007. The growth was driven by increases in both the number of active online marketing customers and revenue per customer. Baidu had more than 284,000 active online marketing customers in 2008, representing a 32.7% increase from 2007. Revenue per online marketing customer for 2008 was RMB11,200 ($1,642), an increase of 38.3% from 2007.

Traffic acquisition costs in 2008 were RMB418.5 million ($61.3 million), representing 13.1% of total revenues, compared to 11.7% in 2007. The increase in TAC as a percentage of total revenues reflects the continued growth of revenue contribution from Baidu Union members.

Selling, general and administrative expenses in 2008 were RMB659.8 million ($96.7 million), representing an increase of 60.5% from the previous year, mainly due to the increase in compensation and marketing expenses.

Research and development expenses totaled RMB286.3 million ($42.0 million) in 2008, representing a 103.4% increase from 2007 primarily due to an increase in research and development staff.

Operating profit in 2008 was RMB1.1 billion ($160.8 million), a 100.4% increase from 2007. Operating profit excluding share-based compensation expenses (non-GAAP) in 2008 was RMB1.2 billion ($173.1 million), representing a 101.1% increase from 2007.

Net income in 2008 was RMB1.0 billion ($153.6 million), representing a 66.6% increase from 2007. Basic and diluted EPS for 2008 amounted to RMB30.63 ($4.49) and RMB30.19 ($4.43), respectively.

Net income excluding share-based compensation expenses (non-GAAP) in 2008 was RMB1.1 billion ($165.9 million), reflecting a 69.3% increase from 2007. Basic and diluted EPS excluding share-based compensation expenses (non-GAAP) in 2008 were RMB33.09 ($4.85) and RMB32.61 ($4.78), respectively.

Full year net operating cash inflow and capital expenditures were RMB1.6 billion ($236.9 million) and RMB417.9 million ($61.3 million), respectively.

Adjusted EBITDA (non-GAAP) was RMB1.5 billion ($214.2 million) in 2008, representing a 90.3% increase from 2007.

Outlook for First Quarter 2009

We expect moderate year-over-year growth for the first quarter of 2009 due to two factors. First, we anticipate a portion of our online marketing customers may scale back on marketing spending given the current market environment. Second, we expect that the removal of certain sponsored links during the fourth quarter of 2008 resulted in a net loss of around 5% of revenue, impacting the first quarter.

Given the above considerations, Baidu currently expects to generate total revenues in an amount ranging from RMB780 million ($114 million) to RMB800 million ($117 million) for the first quarter of 2009, representing a 36% to 39% increase from the corresponding period in 2008. This forecast reflects Baidu's current and preliminary view, which is subject to change.

Conference Call Information

Baidu's management will hold an earnings conference call at 8 PM on February 18, 2009 U.S. Eastern Standard Time (9 AM on February 19, 2009 Beijing/Hong Kong time).

    Dial-in details for the conference call are as follows:

    US:        +1-617-614-2704
    UK:        +44-207-365-8426
    Hong Kong: +852-3002-1672
    Passcode for all regions: 55283502

A replay of the conference call may be accessed by phone at the following number until 10 PM on February 25, 2009 U.S. Eastern Standard Time.

International: +1-617-801-6888

Passcode: 72328702

Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com .

About Baidu

Baidu, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving individual Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu's ADSs, each of which represents one Class A ordinary share, currently trade on the NASDAQ Global Select Market under the symbol "BIDU."

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the outlook for first quarter 2009 and quotations from management in this announcement, as well as Baidu's strategic and operational plans, contain forward-looking statements. Baidu may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Baidu's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our growth strategies; our future business development, results of operations and financial condition; our ability to attract and retain users and customers; competition in the Chinese language Internet search market; competition for online marketing customers; changes in our revenues and certain cost or expense items as a percentage of our revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to copyright and other intellectual property rights; the expected growth of the Chinese language Internet search market and the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and Internet content providers and general economic conditions in China, Japan and elsewhere. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of February 18, 2009, and Baidu undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Baidu's consolidated financial results presented in accordance with GAAP, Baidu uses the following measures defined as non-GAAP financial measures by the SEC: adjusted EBITDA, operating profit excluding share-based compensation expenses, net income excluding share-based compensation expenses, and basic and diluted EPS excluding share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" and "Reconciliation from net cash provided by operating activities to adjusted EBITDA" set forth at the end of this release.

Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain expenses and expenditures that may not be indicative of its operating performance from a cash perspective. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Baidu's historical performance and liquidity. Baidu has computed its non-GAAP financial measures using the same consistent method from quarter to quarter since April 1, 2006. We believe these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using non-GAAP operating profit excluding share-based compensation expenses, net income excluding share-based compensation expenses, and basic and diluted EPS excluding share-based compensation expenses is that these non-GAAP measures exclude share-based compensation charge that has been and will continue to be for the foreseeable future a significant recurring expense in our business. A limitation of using non-GAAP Adjusted EBITDA is that it does not include all items that impact our net income for the period. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.



                                  Baidu, Inc.
                      Condensed Consolidated Balance Sheets

                                            December   September    December
    (in RMB thousands)                      31, 2008    30, 2008    31, 2007
                                           Unaudited   Unaudited     Audited

    ASSETS
     Current assets:
     Cash and cash equivalents             2,362,171   2,088,554   1,350,600
     Short-term investments                  301,244     206,360     242,037
     Accounts receivable, net                 92,777     100,193      64,274
     Prepaid expenses and other current
      assets                                  90,704     109,597      65,996
     Deferred tax assets, net                  5,580       2,587       2,587
    Total current assets                   2,852,476   2,507,291   1,725,494

    Non-current assets:
     Fixed assets, net                       789,714     748,582     678,886
     Land use right, net                      94,520      95,008      96,472
     Intangible assets, net                   31,263      33,814      40,460
     Goodwill                                 51,082      51,081      51,093
     Investments, net                         12,281      20,197      15,439
     Deferred tax assets, net                 26,537      17,060      15,716
     Other non-current assets                 80,118      84,394      32,348
    Total non-current assets               1,085,515   1,050,136     930,414

    TOTAL ASSETS                           3,937,991   3,557,427   2,655,908

    LIABILITIES AND SHAREHOLDERS' EQUITY
     Current liabilities:
      Accrued expenses and other
       liabilities                           423,029     371,745     359,310
      Customers' deposits                    422,526     357,884     257,577
      Deferred revenue                         3,441       9,149      11,832
      Deferred income                            332         633       2,485
     Total current liabilities               849,328     739,411     631,204

     Non-current liabilities:
      Long-term payable                           --          --       3,000
      Deferred income                             --          --         332
    Total non-current liabilities                 --          --       3,332

    Total liabilities                        849,328     739,411     634,536

    Shareholders' equity
     Class A Ordinary Shares, Par value
      US$0.00005 per share, 825,000,000
      shares authorized, and 25,136,147
      shares and 25,641,847 shares issued
      and outstanding as at December 31,
      2007 and December 31, 2008                  11          11          10
     Class B Ordinary Shares, Par value
      US$0.00005 per share, 35,400,000
      shares authorized, and 8,996,842
      shares and 8,873,986 shares issued
      and outstanding as at December 31,
      2007 and December 31, 2008                   4           4           4
     Additional paid-in capital            1,218,356   1,254,593   1,171,575
     Accumulated other comprehensive loss   (109,552)   (127,770)    (81,953)
     Retained earnings                     1,979,844   1,691,178     931,736
    Total shareholders' equity             3,088,663   2,818,016   2,021,372

    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                3,937,991   3,557,427   2,655,908



                                   Baidu, Inc.
                   Condensed Consolidated Statements of Income

                                               For the Three Months Ended
    (in RMB thousands except for share,      December    December   September
     per share information)                  31, 2008    31, 2007    30, 2008
                                            Unaudited   Unaudited   Unaudited
     Revenues:
      Online marketing services               901,389     569,588     918,179
      Other services                              731       1,474         946
     Total revenues                           902,120     571,062     919,125

     Operating costs and expenses:
      Cost of revenues (note 1, 2)           (336,543)   (216,012)   (309,342)
      Selling, general and administrative
       (note 2)                              (175,313)   (132,230)   (163,247)
      Research and development (note 2)       (85,541)    (46,535)    (78,231)
     Total operating costs and expenses      (597,397)   (394,777)   (550,820)

     Operating profit                         304,723     176,285     368,305

     Other income:
      Interest income                          15,320      12,846      11,375
      Exchange loss, net                           (2)     (1,898)         (5)
      Other income, net                        10,451      14,044       3,009
     Total other income                        25,769      24,992      14,379

     Income before income taxes               330,492     201,277     382,684

     Income taxes                             (41,826)     18,561     (34,825)

     Net income                               288,666     219,838     347,859


    Earnings per share for Class A and
     Class B ordinary shares:
      Basic                                      8.39        6.45       10.15
      Diluted                                    8.31        6.32       10.00

    Weighted average aggregate number of
     Class A and Class B ordinary shares
     outstanding:
      Basic                                34,392,036  34,087,848  34,257,974
      Diluted                              34,740,057  34,797,946  34,786,353

     (1) Cost of revenues are detailed as
      follows:
     Business tax and surcharges              (58,215)    (36,614)    (57,288)
     Traffic acquisition costs               (131,352)    (72,299)   (108,797)
     Bandwidth costs                          (49,245)    (35,857)    (48,029)
     Depreciation costs                       (57,908)    (46,662)    (56,907)
     Operational costs                        (38,317)    (23,820)    (37,379)
     Share-based compensation expenses         (1,506)       (760)       (942)
     Total cost of revenues                  (336,543)   (216,012)   (309,342)

     (2) Includes share-based compensation
      expenses as follows:
     Cost of revenues                          (1,506)       (760)       (942)
     Selling, general and administrative      (10,220)     (5,539)     (6,933)
     Research and development                  (9,765)     (6,986)     (9,149)
     Total share-based compensation
      expenses                                (21,491)    (13,285)    (17,024)


                                                    Twelve Months Ended
    (in RMB thousands except for share,        December 31,      December 31,
     per share information)                           2008              2007
                                                 Unaudited           Audited
     Revenues:
      Online marketing services                  3,194,461         1,741,021
      Other services                                 3,791             3,404
     Total revenues                              3,198,252         1,744,425

     Operating costs and expenses:
      Cost of revenues (note 1, 2)              (1,155,457)         (645,406)
      Selling, general and administrative
       (note 2)                                   (659,804)         (411,163)
      Research and development (note 2)           (286,256)         (140,702)
     Total operating costs and expenses         (2,101,517)       (1,197,271)

     Operating profit                            1,096,735           547,154

     Other income:
      Interest income                               47,677            49,009
      Exchange loss, net                            (1,920)           (2,425)
      Other income, net                             21,687            22,478
     Total other income                             67,444            69,062

     Income before income taxes                  1,164,179           616,216

     Income taxes                                 (116,071)           12,752

     Net income                                  1,048,108           628,968


    Earnings per share for Class A and
     Class B ordinary shares:
      Basic                                          30.63             18.57
      Diluted                                        30.19             18.11

    Weighted average aggregate number of
     Class A and Class B ordinary shares
     outstanding:
      Basic                                     34,217,443        33,872,611
      Diluted                                   34,717,489        34,724,365

     (1) Cost of revenues are detailed as
      follows:
     Business tax and surcharges                  (200,085)         (108,783)
     Traffic acquisition costs                    (418,474)         (204,693)
     Bandwidth costs                              (178,651)         (117,554)
     Depreciation costs                           (225,799)         (147,115)
     Operational costs                            (127,906)          (65,544)
     Share-based compensation expenses              (4,542)           (1,717)
     Total cost of revenues                     (1,155,457)         (645,406)

     (2) Includes share-based
      compensation expenses as follows:
     Cost of revenues                               (4,542)           (1,717)
     Selling, general and administrative           (41,651)          (17,371)
     Research and development                      (37,784)          (20,760)
     Total share-based compensation
      expenses                                     (83,977)          (39,848)



    Reconciliations of non-GAAP Results of Operations Measures to the Nearest
           Comparable GAAP Measures (*) (in RMB thousands, unaudited)

                                        Three months ended December 31, 2007
                                          GAAP Result Adjustment    Non-GAAP
                                                                     Results
    Operating profit                        176,285     13,285       189,570

                                        Three months ended December 31, 2007
                                          GAAP Result Adjustment    Non-GAAP
                                                                     Results
    Net income                              219,838     13,285       233,123

                                       Three months ended September 30, 2008
                                          GAAP Result Adjustment    Non-GAAP
                                                                     Results
    Operating profit                        368,305     17,024       385,329

                                       Three months ended September 30, 2008
                                          GAAP Result Adjustment    Non-GAAP
                                                                     Results
    Net income                              347,859     17,024       364,883

                                         Three months ended December 31, 2008
                                          GAAP Result Adjustment     Non-GAAP
                                                                      Results
    Operating profit                        304,723     21,491        326,214

                                         Three months ended December 31, 2008
                                          GAAP Result Adjustment     Non-GAAP
                                                                      Results
    Net income                              288,666     21,491        310,157

                                        Twelve months ended December 31, 2008
                                          GAAP Result Adjustment     Non-GAAP
                                                                      Results
    Operating profit                      1,096,735     83,977      1,180,712

                                        Twelve months ended December 31, 2008
                                          GAAP Result Adjustment     Non-GAAP
                                                                      Results
    Net income                            1,048,108     83,977      1,132,085

                                        Twelve months ended December 31, 2007
                                          GAAP Result Adjustment     Non-GAAP
                                                                      Results
    Operating profit                        547,154     39,848        587,002

                                        Twelve months ended December 31, 2007
                                          GAAP Result Adjustment     Non-GAAP
                                                                      Results
    Net income                              628,968     39,848        668,816

    (*) The adjustment is only for share-based compensation.



    Reconciliation From Net Cash Provided by Operating Activities to Adjusted
                     EBITDA(*) (in RMB thousands, unaudited)

                                          Three months ended       As a % of
                                           December 31, 2007  total revenues
    Net cash provided by operating
     activities                                      334,609            59%

       Changes in assets and liabilities,
        net of effects of acquisitions               (44,063)           -8%
       Income taxes expenses                         (18,561)           -3%
       Interest income and other, net                (24,992)           -4%

    Adjusted EBITDA                                  246,993            44%


                                          Three months ended       As a % of
                                          September 30, 2008  total revenues
    Net cash provided by operating
     activities                                      482,172            52%

       Changes in assets and liabilities,
        net of effects of acquisitions               (45,293)           -5%
       Income taxes expenses                          34,825             4%
       Interest income and other, net                (14,379)           -1%

    Adjusted EBITDA                                  457,325            50%


                                          Three months ended       As a % of
                                           December 31, 2008  total revenues
    Net cash provided by operating
     activities                                      482,108            53%

       Changes in assets and liabilities,
        net of effects of acquisitions               (99,277)          -11%
       Income taxes expenses                          41,826             5%
       Interest income and other, net                (25,769)           -3%

    Adjusted EBITDA                                  398,888            44%


                                          Twelve months ended       As a % of
                                            December 31, 2008  total revenues
    Net cash provided by operating
     activities                                     1,616,534           50%

       Changes in assets and liabilities,
        net of effects of acquisitions               (203,736)          -6%
       Income taxes expenses                          116,071            4%
       Interest income and other, net                 (67,444)          -2%

    Adjusted EBITDA                                 1,461,425           46%

                                         Twelve months ended       As a % of
                                           December 31, 2007  total revenues
    Net cash provided by operating
     activities                                      979,478            56%

       Changes in assets and liabilities,
        net of effects of acquisitions              (129,713)           -7%
       Income taxes expenses                         (12,752)           -1%
       Interest income and other, net                (69,062)           -4%

    Adjusted EBITDA                                  767,951            44%

    (*) Definition of adjusted EBITDA: earnings before interest, taxes,
        depreciation, amortization,  other non-operating income, and
        share-based compensation expenses.


    For further information, please contact:

    Baidu, Inc.
     Linda Sun
     Tel:   +86-10-8262-1188
     Email: ir@baidu.com

    Brunswick Group (Beijing)
     Cynthia He
     Tel:   +86-10-6566-2256
     Email: che@brunswickgroup.com

    Brunswick Group (New York)
     Mike Guerin
     Tel:   +1-212-333-3810
     Email: mguerin@brunswickgroup.com

SOURCE Baidu, Inc.


http://ir.baidu.com
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