Macro Outlook and Advertising Demand
Q: How is ad demand trending amid the macro environment?
A: Management noted that the advertising business is highly correlated to the macro environment, especially with offline small and medium enterprises. In Q3, they saw continued weakness across verticals such as real estate, franchising, and healthcare. Consumer spending remains subdued, and they have not observed notable improvement in advertiser spending patterns so far. However, they are encouraged by recent stimulus policies and remain conservatively optimistic about recovery ahead.

Business Focus and Margin Trends
Q: What is the current business focus and margin outlook?
A: Management is committed to an AI-focused strategy as both near-term priority and long-term emphasis. Given ongoing ad-driven renovation of search and not heavily monetizing AI-generated search results soon, margins will remain under pressure in the near term. They plan to intensify product renovations, invest in advancing ERNIE's capabilities, and focus on optimal resource allocation to high-growth opportunities in 2025.

Capital Allocation and Share Buybacks
Q: Any updates on capital return plans like share buybacks or dividends?
A: Since becoming a public company, Baidu has made consistent efforts to generate long-term value through growth and share buyback programs. Over the past few years, they have repurchased about USD 1 billion annually, leading to a decline in total shares outstanding this year. While the pace may vary quarter to quarter, they remain firmly committed to the share buyback program as a key component of delivering value to shareholders.

Cloud Business Growth and Margins
Q: How is the cloud business performing, and what's the outlook?
A: Baidu's AI Cloud business saw slightly moderated revenue growth this quarter due to a temporary impact on personal cloud revenue. However, cloud services for enterprise and public sector, which make up the majority of AI Cloud revenue, maintained strong momentum and outpaced overall cloud business. Gen AI revenue has grown from about 5% to 11% of total AI Cloud revenue over the past year. The non-GAAP operating profit margin is expanding year over year, driven by continued margin enhancement from Gen AI revenue.

ERNIE's API Growth and Adoption
Q: What's driving the growth in ERNIE's API calls and adoption?
A: The remarkable growth in ERNIE's API calls is driven by factors like ERNIE getting smarter every day, reduced hallucinations, lower inference costs, and improved tool chains for customers. Most API calls currently come from the renovation of consumer-facing products, but external API calls have grown quickly, with about 20% quarter-over-quarter growth in the last week of Q3. ERNIE has gained strong recognition across sectors like online education, social media, healthcare, and recruiting.

Robotaxi Competitive Landscape and Expansion Plans
Q: How does Baidu view the robotaxi competitive dynamics and future plans?
A: Baidu has built an unparalleled foundation in autonomous driving, with over a decade of investment. Apollo Go reached 8 million total rides, making it the world's top autonomous ride-hailing service provider. Baidu plans to maintain a competitive edge through cutting-edge technology, strong operational capabilities, and significant cost-effectiveness in hardware. They are open to exploring different business models, focusing on an asset-light strategy, and actively seeking opportunities for international expansion.

ERNIE Technology Roadmap
Q: What are the upcoming milestones for ERNIE's AI model?
A: Baidu is committed to continuously enhancing ERNIE's foundation model capabilities. They introduced ERNIE 4.0 Turbo in June, delivering greater performance. They expect to launch a new version of ERNIE early next year to further strengthen their leadership position in foundation models. Baidu focuses on an application-driven approach, aiming to address real-world problems and create synergistic value across their business.