BEIJING, Feb. 25, 2016 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU) ("Baidu" or the "Company"), the leading Chinese language Internet search provider, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2015[1].

http://photos.prnewswire.com/prnvar/20081103/BAIDULOGO

"2015 was a touchstone year for Baidu: we made significant progress in broadening our online marketing platform and further extending our reach into transactions services," said Robin Li, chairman and CEO of Baidu. "Even as China's overall growth slows, services and domestic consumption are growing. Services and domestic consumption-related verticals are supported by the government's Internet+ initiative and hold tremendous potential. Our top revenue verticals--retail/ecommerce, local services, financial services, healthcare, and education--reflect Baidu's vital role in connecting users with merchants in these growing sectors. Looking ahead, we will continue to build the Next Baidu not only to benefit from, but also drive, key secular trends of rising domestic consumption, growth in services, and a rapidly evolving mobile environment," Li said.

"We are very pleased to deliver a strong set of results in the fourth quarter. In 2015, we further executed on our vision to connect people with services and drove strong momentum in this area," said Jennifer Li, CFO of Baidu. "We look forward to continuing this journey in 2016 to further build out Baidu's online marketing and transactions services platform. As a reminder, as a result of Baidu's exchange of Qunar shares with Ctrip, Baidu deconsolidated Qunar's financials after October 26, 2015," she said.

Fourth Quarter and Fiscal Year 2015 Operational Highlights


    --  Mobile search monthly active users (MAUs) were 657 million for the month
        of December 2015, an increase of 21% year-over-year
    --  Mobile maps MAUs were 302 million for the month of December 2015, an
        increase of 43% year-over-year
    --  Gross merchandise value[1] (GMV) totaled RMB14.7 billion ($2.3 billion)
        for the fourth quarter of 2015, an increase of 397% year-over-year
    --  Baidu Wallet activated accounts reached 53 million at the end of
        December 2015, an increase of 189% year-over-year

Fourth Quarter and Fiscal Year 2015 Financial Highlights


    --  Total revenues in the fourth quarter of 2015 were RMB18.699 billion
        ($2.887 billion), a 33.1% increase from the corresponding period in
        2014. Mobile revenue represented 56% of total revenues for the fourth
        quarter of 2015, compared to 42% for the corresponding period in 2014.
    --  Total revenues in fiscal year 2015 were RMB66.382 billion ($10.248
        billion), a 35.3% increase from 2014. Mobile revenue represented 53% of
        total revenues in 2015, compared to 37% in 2014.
    --  Operating profit in the fourth quarter of 2015 was RMB3.535 billion
        ($545.7 million), a 19.7% increase from the corresponding period in
        2014. Transaction Services[2] reduced non-GAAP operating margins by 24.9
        percentage points and iQiyi further reduced non-GAAP operating margins
        by 5.9 percentage points for the fourth quarter of 2015.
    --  Operating profit in fiscal year 2015 was RMB11.672 billion ($1.802
        billion), an 8.8% decrease from 2014. Transaction Services reduced
        non-GAAP operating margins by 25.1 percentage points and iQiyi further
        reduced non-GAAP operating margins by 5.5 percentage points for the
        fiscal year 2015.
    --  Net income attributable to Baidu in the fourth quarter of 2015 was
        RMB24.712 billion ($3.815 billion), a 663.0% increase from the
        corresponding period in 2014. Diluted earnings attributable to Baidu per
        ADS for the fourth quarter of 2015 were RMB70.92 ($10.95); diluted
        earnings attributable to Baidu per ADS excluding share-based
        compensation expenses (non-GAAP) for the fourth quarter of 2015 were
        RMB71.90 ($11.10); diluted earnings attributable to Baidu per ADS
        excluding net gain recognized in Baidu's exchange of Qunar shares with
        Ctrip for the fourth quarter of 2015 were RMB7.61 ($1.18).
    --  Net income attributable to Baidu in fiscal year 2015 was RMB33.664
        billion ($5.197 billion), a 155.1% increase from 2014. Diluted earnings
        attributable to Baidu per ADS for the fiscal year 2015 were RMB95.15
        ($14.69); diluted earnings attributable to Baidu per ADS excluding
        share-based compensation expenses (non-GAAP) in fiscal year 2015 were
        RMB99.11 ($15.30); diluted earnings attributable to Baidu per ADS
        excluding net gain recognized in Baidu's exchange of Qunar shares with
        Ctrip in fiscal year 2015 were RMB32.49 ($5.02).

Fourth Quarter 2015 Results

Baidu reported total revenues of RMB18.699 billion ($2.887 billion) for the fourth quarter of 2015, representing a 33.1% increase from the corresponding period in 2014.

Online marketing revenues for the fourth quarter of 2015 were RMB17.610 billion ($2.719 billion), representing a 27.2% increase from the corresponding period in 2014. Baidu had about 555,000 active online marketing customers[3] in the fourth quarter of 2015, representing a 6.1% increase from the corresponding period in 2014 and a 10.9% decrease from the third quarter of 2015. Revenue per online marketing customer for the fourth quarter of 2015 was approximately RMB31,000 ($4,786), a 17.4% increase from the corresponding period in 2014 and a 9.5% increase compared to the third quarter of 2015.

Traffic acquisition cost as a component of cost of revenues was RMB2.616 billion ($403.9 million), representing 14.0% of total revenues, as compared to 13.4% in the corresponding period in 2014 and 13.1% in the third quarter of 2015.

Bandwidth costs as a component of cost of revenues were RMB1.001 billion ($154.5 million), representing 5.4% of total revenues, compared to 5.3% in the corresponding period in 2014.

Depreciation costs as a component of cost of revenues were RMB692.0 million ($106.8 million), representing 3.7% of total revenues, compared to 4.0% in the corresponding period in 2014.

Operational costs as a component of cost of revenues were RMB1.182 billion ($182.4 million), representing 6.3% of total revenues, compared to 4.4% in the corresponding period in 2014. This increase was mainly due to Transaction Services and iQiyi-related operating costs.

Content costs as a component of cost of revenues were RMB1.382 billion ($213.3 million), representing 7.4% of total revenues, compared to 4.2% in the corresponding period in 2014, and 5.0% in the third quarter of 2015. The year-over-year increase was mainly due to iQiyi's increased content costs.

Selling, general and administrative expenses were RMB4.528 billion ($699.0 million), representing an increase of 28.5% from the corresponding period in 2014, primarily due to an increase in promotional spending for transaction services.

Research and development expenses were RMB2.487 billion ($383.9 million), a 16.4% increase from the corresponding period in 2014. The increase was primarily due to the growth of research and development personnel-related cost.

Share-based compensation expenses, which were allocated to related operating costs and expense line items, were RMB341.0 million ($52.6 million) in the fourth quarter of 2015, compared to RMB339.0 million in the corresponding period in 2014.

Operating profit was RMB3.535 billion ($545.7 million), representing a 19.7% increase from the corresponding period in 2014. Operating profit excluding share-based compensation expenses (non-GAAP) was RMB3.876 billion ($598.3 million), a 17.8% increase from the corresponding period in 2014.

Other income, net was RMB24.294 billion (US$3.750 billion) in the fourth quarter of 2015. The increase from RMB96.1 million of the corresponding period in 2014 was primarily attributable to the investment gain recognized as a result of Baidu's exchange of Qunar shares with Ctrip.

Income tax expense was RMB3.580 billion ($552.6 million), compared to income tax expense of RMB538.5 million in the corresponding period in 2014. The effective tax rate for the fourth quarter of 2015 was 12.7% as compared to 15.6% for the corresponding period in 2014. There is a 10% tax accrual on the gain associated with Baidu's exchange of Qunar shares with Ctrip.

Net income attributable to Baidu was RMB24.712 billion ($3.815 billion), representing a 663.0% increase from the corresponding period in 2014. Basic and diluted earnings per ADS for the fourth quarter of 2015 amounted to RMB71.10 ($10.98) and RMB70.92 ($10.95), respectively.

Net income attributable to Baidu excluding share-based compensation expenses (non-GAAP) was RMB25.053 billion ($3.867 billion), a 600.2% increase from the corresponding period in 2014. Basic and diluted earnings per ADS excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2015 amounted to RMB72.09 ($11.13) and RMB71.90 ($11.10), respectively.

As of December 31, 2015, the Company had cash, cash equivalents and short-term investments of RMB67.929 billion ($10.486 billion). Net operating cash inflow for the fourth quarter of 2015 was RMB6.070 billion ($937.1 million). Capital expenditures for the fourth quarter of 2015 were RMB1.424 billion ($219.8 million).

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 RMB4.815 billion ($743.3 million) for the fourth quarter of 2015, representing a 16.7% increase from the corresponding period in 2014.

Fiscal Year 2015 Results

Total revenues in 2015 were RMB66.382 billion ($10.248 billion), representing a 35.3% increase from 2014.

Online marketing revenues in 2015 were RMB64.037 billion ($9.886 billion), representing a 32.0% increase from 2014. Baidu had about 1,049,000 active online marketing customers in 2015, representing a 29.0% increase from 2014. Revenue per online marketing customer for 2015 was RMB60,500 ($9,340), an increase of 1.9% from 2014.

Traffic acquisition costs in 2015 were RMB8.861 billion ($1.368 billion), representing 13.3% of total revenues, compared to 12.9% in 2014.

Bandwidth costs as a component of cost of revenues were RMB3.717 billion ($573.8 million), representing 5.6% of total revenues, compared to 5.8% in 2014.

Depreciation costs as a component of cost of revenues were RMB2.560 billion ($395.1 million), representing 3.9% of total revenues, compared to 4.1% in 2014.

Operational costs as a component of cost of revenues were RMB3.882 billion ($599.2 million), representing 5.8% of total revenues, compared to 4.6% in 2014.

Content costs as a component of cost of revenues were RMB3.745 billion ($578.1 million), representing 5.6% of total revenues, compared to 3.7% in 2014. The year-over-year increase was mainly due to iQiyi's increased content costs.

Selling, general and administrative expenses in 2015 were RMB17.076 billion ($2.636 billion), representing an increase of 64.5% from the previous year, primarily due to an increase in promotional spending for transaction services.

Research and development expenses totaled RMB10.176 billion ($1.571 billion) in 2015, representing a 45.8% increase from 2014. The increase was primarily due to an increase in the number of research and development personnel.

Share-based compensation expenses, which were allocated to related operating cost and expense line items, were RMB1.387 billion ($214.1 million) in 2015, compared to RMB962.7 million in 2014.

Operating profit in 2015 was RMB11.672 billion ($1.802 billion), an 8.8% decrease from 2014. Operating profit excluding share-based compensation expenses (non-GAAP) in 2015 was RMB13.059 billion ($2.016 billion), representing a 5.1% decrease from 2014.

Other income, net was RMB24.728 billion (US$3.817 billion) in 2015, compared to RMB260.6 million in 2014. The increase was primarily attributable to the investment gain recognized as a result of Baidu's exchange of Qunar shares with Ctrip.

Income tax expense was RMB5.474 billion ($845.1 million), compared to an income tax expense of RMB2.231 billion in 2014. The effective tax rate for 2015 was 14.4% as compared to 15.4% in 2014.

Net income attributable to Baidu in 2015 was RMB33.664 billion ($5.197 billion), representing a 155.1% increase from 2014. Basic and diluted earnings attributable to Baidu per ADS for 2015 amounted to RMB95.46 ($14.74) and RMB95.15 ($14.69), respectively.

Net income attributable to Baidu excluding share-based compensation expenses (non-GAAP) in 2015 was RMB35.051 billion ($5.411 billion), reflecting a 147.5% increase from 2014. Basic and diluted earnings attributed to Baidu per ADS excluding share-based compensation expenses (non-GAAP) in 2015 were RMB99.43 ($15.35) and RMB99.11 ($15.30), respectively.

Net operating cash inflow in 2015 was RMB19.422 billion ($2.998 billion). Capital expenditures in 2015 were RMB5.230 billion ($807.3 million).

Adjusted EBITDA (non-GAAP) was RMB16.660 billion ($2.572 billion) in 2015, representing a 0.6% decrease from 2014.

Outlook for First Quarter 2016

Baidu currently expects to generate total revenues in an amount ranging from RMB15.410 billion ($2.379 billion) to RMB15.970 billion ($2.465 billion) for the first quarter of 2016, representing a 21.1% to 25.5% year-over-year increase. On an apples-to-apples basis, excluding Qunar from Baidu's financials, the guidance represents a 27.8% to 32.5% year-over-year increase. Following Baidu's exchange of Qunar shares with Ctrip, Baidu deconsolidated Qunar's financials after October 26, 2015. 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 8:00 PM on February 25, 2016, U.S. Eastern Time (9:00 AM on February 26, 2016, Beijing/Hong Kong Time).

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



    International:              +65 67135090

    China:                        4006208038


    US:                        +1 8456750437

    UK:                       +44 2036214779

    Hong Kong:                 +852 30186771


    Passcode for all regions:       33561999

A replay of the conference call may be accessed by phone at the following number until March 3, 2016:



    International:                      +61-2-8199-0299


    Passcode:                                             33561999

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 and most equitable way for people to find what they're looking for. In addition to serving individual Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu's ADSs trade on the NASDAQ Global Select Market under the symbol "BIDU". Currently, ten ADSs represent one Class A ordinary share.

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 the first quarter 2016 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, including development of new products and services; our ability to attract and retain users and customers; competition in the Chinese and Japanese language Internet search markets; 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 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 search 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 the date of the press release, 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 earnings per ADS 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, particularly share-based compensation expenses, that may not be indicative of its operating performance or financial condition 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 these non-GAAP financial measures 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 results of operations. 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 the non-GAAP financial measures.

For investor and media inquiries, please contact:

Sharon Ng
Baidu, Inc.
Tel: +86-10-5992-4958
Investor inquiries email: ir@baidu.com
Media inquiries email: intlcomm@baidu.com



    [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
                    RMB6.4778 to US$1.00, the effective
                    noon buying rate as of December 31,
                    2015, in The City of New York for
                    cable transfers of RMB as certified
                    for customs purposes by the Federal
                    Reserve Bank of New York.

    [2]             Gross merchandise value (GMV) is
                    defined as GMV generated by the
                    Baidu platform, through products
                    such as Baidu Nuomi, Baidu Takeout
                    Delivery and Baidu Wallet. GMV is
                    defined as the value of confirmed
                    orders of products and services,
                    regardless of whether the service
                    has been consumed or delivered.

    [3]             Transaction Services includes Baidu
                    Nuomi, Baidu Takeout Delivery,
                    Baidu Maps, Baidu Connect, Baidu
                    Wallet and other products.

                   Margin drag incurred by Qunar from
                    October 1 to 26, 2015 has been
                    included in Transaction Services
                    for the fourth quarter of 2015.
                    From the first quarter of 2016
                    onwards, Qunar will not be included
                    in Transaction Services due to the
                    October 26, 2015 exchange of Qunar
                    shares with Ctrip.

    [4]             The number of active online
                    marketing customers and revenue per
                    online active customer exclude
                    customers from Qunar and group
                    buying in the current quarter.


    Baidu, Inc.

    Condensed Consolidated Statements of Income

                                                                                                         Three Months Ended                                            Twelve Months Ended
                                                                                                         ------------------                                            -------------------

                                                                                December 31,                December 31,                  September 30,                    December 31,                December 31,

    (In RMB thousands except for share, per share (or ADS) information)                             2015                             2014                         2015                            2015                         2014
    ------------------------------------------------------------------                              ----                             ----                         ----                            ----                         ----

                                                                                 Unaudited                    Unaudited                     Unaudited                       Unaudited                    Audited

     Revenues:

     Online marketing services                                                                17,610,379                       13,844,607                   17,680,374                      64,037,006                   48,495,215

     Other services                                                                            1,088,415                          205,622                      702,707                       2,344,723                      557,103

     Total revenues                                                                           18,698,794                       14,050,229                   18,383,081                      66,381,729                   49,052,318
                                                                                              ----------                       ----------                   ----------                      ----------                   ----------


     Operating costs and expenses:

     Cost of revenues (note 1, 2)                                                            (8,149,327)                     (5,438,351)                 (7,479,580)                   (27,458,030)                (18,885,450)

     Selling, general and administrative (note 2)                                            (4,527,813)                     (3,524,371)                 (5,701,859)                   (17,076,383)                (10,382,142)

     Research and development (note 2)                                                       (2,486,778)                     (2,135,506)                 (2,689,970)                   (10,175,762)                 (6,980,962)

     Total operating costs and expenses                                                     (15,163,918)                    (11,098,228)                (15,871,409)                   (54,710,175)                (36,248,554)
                                                                                             -----------                      -----------                  -----------                     -----------                  -----------


     Operating profit                                                                          3,534,876                        2,952,001                    2,511,672                      11,671,554                   12,803,764
                                                                                               ---------                        ---------                    ---------                      ----------                   ----------


     Other income:

     Interest income                                                                             572,725                          573,154                      616,171                       2,362,632                    1,992,818

     Interest expense                                                                          (299,372)                       (183,575)                   (329,372)                    (1,041,394)                   (628,571)

     Foreign exchange income, net                                                                106,007                           22,873                       61,407                         181,802                       75,780

     Gain (loss) from equity method investments                                                   23,119                            1,142                      (8,856)                          3,867                     (19,943)

     Other income, net                                                                        24,294,280                           96,054                      200,625                      24,728,162                      260,558

     Total other income                                                                       24,696,759                          509,648                      539,975                      26,235,069                    1,680,642
                                                                                              ----------                          -------                      -------                      ----------                    ---------


     Income before income taxes                                                               28,231,635                        3,461,649                    3,051,647                      37,906,623                   14,484,406
                                                                                              ----------                        ---------                    ---------                      ----------                   ----------


     Income taxes                                                                            (3,579,909)                       (538,493)                   (590,517)                    (5,474,377)                 (2,231,172)


     Net income                                                                               24,651,726                        2,923,156                    2,461,130                      32,432,246                   12,253,234
                                                                                              ==========                        =========                    =========                      ==========                   ==========

     Less: net loss attributable to noncontrolling interests                                    (60,085)                       (315,776)                   (379,939)                    (1,231,927)                   (943,698)

     Net income attributable to Baidu, Inc.                                                   24,711,811                        3,238,932                    2,841,069                      33,664,173                   13,196,932
                                                                                              ==========                        =========                    =========                      ==========                   ==========



    Earnings per share for Class A and Class B ordinary shares:

    Net income attributable to Baidu, Inc.-Basic                                                  711.02                            90.79                        79.38                          954.56                       374.88

    Net income attributable to Baidu, Inc.-Diluted                                                709.15                            90.34                        79.20                          951.49                       373.43


    Earnings per ADS (1 Class A ordinary share equals 10 ADSs ):

    Net income attributable to Baidu, Inc.-Basic                                                   71.10                             9.08                         7.94                           95.46                        37.49

    Net income attributable to Baidu, Inc.-Diluted                                                 70.92                             9.03                         7.92                           95.15                        37.34


    Weighted average number of Class A and Class B ordinary shares outstanding:

    Basic                                                                                     34,588,703                       35,093,674                   34,850,398                      34,921,782                   35,062,466

    Diluted                                                                                   34,679,673                       35,269,030                   34,928,787                      35,034,470                   35,198,474


     (1) Cost of revenues are detailed as follows:

     Sales tax and surcharges                                                                (1,259,925)                     (1,029,267)                 (1,260,606)                    (4,644,357)                 (3,597,763)

     Traffic acquisition costs                                                               (2,616,319)                     (1,887,301)                 (2,411,180)                    (8,860,861)                 (6,328,155)

     Bandwidth costs                                                                         (1,000,957)                       (748,604)                   (970,005)                    (3,716,747)                 (2,847,770)

     Depreciation costs                                                                        (692,046)                       (553,572)                   (657,325)                    (2,559,623)                 (1,958,754)

     Operational costs                                                                       (1,181,667)                       (616,228)                 (1,254,114)                    (3,881,609)                 (2,246,491)

     Content costs                                                                           (1,381,875)                       (592,008)                   (914,545)                    (3,745,063)                 (1,871,906)

     Share-based compensation expenses                                                          (16,538)                        (11,371)                    (11,805)                       (49,770)                    (34,611)

     Total cost of revenues                                                                  (8,149,327)                     (5,438,351)                 (7,479,580)                   (27,458,030)                (18,885,450)
                                                                                              ==========                       ==========                   ==========                     ===========                  ===========


     (2) Includes share-based compensation expenses as follows:

     Cost of revenues                                                                           (16,538)                        (11,371)                    (11,805)                       (49,770)                    (34,611)

     Selling, general and administrative                                                       (100,353)                       (149,395)                   (138,133)                      (486,760)                   (426,052)

     Research and development                                                                  (224,129)                       (178,261)                   (250,359)                      (850,588)                   (502,077)

     Total share-based compensation expenses                                                   (341,020)                       (339,027)                   (400,297)                    (1,387,118)                   (962,740)
                                                                                                ========                         ========                     ========                      ==========                     ========


    Baidu, Inc.

    Condensed Consolidated Balance Sheets


                                                                       December 31 December 31

    (In RMB thousands except for number of shares and per share data)         2015         2014
    ----------------------------------------------------------------          ----         ----

                                                                         Unaudited     Audited


    ASSETS

        Current assets:

     Cash and cash equivalents                                           9,959,932   13,852,725

     Restricted cash                                                        95,997      413,010

     Short-term investments                                             57,969,242   42,698,831

     Accounts receivable, net                                            3,927,256    3,664,447

     Amounts due from related parties                                    1,940,559           50

     Deferred tax assets, net                                                    -           -

     Other assets, current                                               4,340,677    3,407,427

        Total current assets                                            78,233,663   64,036,490
                                                                        ----------   ----------


        Non-current assets:

     Fixed assets, net                                                  10,627,127    8,705,364

     Intangible assets, net                                              3,334,619    3,574,359

     Goodwill                                                           15,395,573   17,418,895

     Long-term investments, net                                         37,958,591    3,544,923

     Amounts due from related parties                                        9,725            -

     Deferred tax assets, net                                            1,008,174      944,079

     Other assets, non-current                                           1,285,836      893,952
                                                                                       -------

        Total non-current assets                                        69,619,645   35,081,572
                                                                        ----------   ----------


    Total assets                                                       147,853,308   99,118,062
                                                                       ===========   ==========


    LIABILITIES AND EQUITY

       Current liabilities:

            Short-term loans                                               100,000       93,000

    Accounts payable and accrued liabilities                            17,636,216   12,964,893

    Customer advances and deposits                                       5,420,230    4,296,440

    Deferred revenue                                                       375,672      164,809

    Deferred income                                                        559,855      518,543

    Long-term loans, current portion                                       974,820    2,167,405

    Capital lease obligation                                                46,088       57,346

    Due to related parties, current                                        989,921        8,385

        Total current liabilities                                       26,102,802   20,270,821
                                                                        ----------   ----------


        Non-current liabilities:

    Deferred income                                                         17,413       39,626

    Long-term loans                                                      3,239,676    1,860,000

    Notes payable                                                       30,702,116   21,556,782

    Amounts due to related parties                                               -           8

    Deferred tax liabilities                                             3,441,290    1,143,821

    Capital lease obligation                                                 8,435       50,079

    Other non-current liabilities                                          125,860      144,542

        Total non-current liabilities                                   37,534,790   24,794,858
                                                                        ----------   ----------


    Total liabilities                                                   63,637,592   45,065,679
                                                                        ----------   ----------


    Redeemable noncontrolling interests                                  3,947,879    1,894,502


    Equity

    Class A Ordinary Shares, par value US$0.00005 per share,                    12           12
    825,000,000 shares authorized, and  27,613,315 shares and
    27,113, 541 shares issued and outstanding as at December 31,
    2014 and December 31, 2015

    Class B Ordinary Shares, par value US$0.00005 per share,                     3            3
    35,400,000 shares authorized, and  7,492,921 shares and
    7,492,921 shares issued and outstanding as at December 31,
    2014 and December 31, 2015

    Additional paid-in capital                                           6,402,349    3,650,601

    Retained earnings                                                   74,659,355   47,701,326

    Accumulated other comprehensive income (loss)                        (806,056)   (279,518)
                                                                          --------     --------

        Total Baidu, Inc. shareholders' equity                          80,255,663   51,072,424

        Noncontrolling interests                                            12,174    1,085,457

    Total equity                                                        80,267,837   52,157,881
                                                                        ----------   ----------


    Total liabilities, redeemable noncontrolling interests, and equity 147,853,308   99,118,062
                                                                       ===========   ==========


    Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (*) (in RMB thousands, unaudited)


                                                                      Three months ended December 31, 2014   Three months ended September 30, 2015  Three months ended December 31, 2015      Twelve months ended December 31, 2014   Twelve months ended December 31, 2015
                                                                      ------------------------------------   -------------------------------------  ------------------------------------      -------------------------------------   -------------------------------------

                                                                                   GAAP Result                             Adjustment                          Non-GAAP Result                              GAAP Result                             Adjustment                  Non-GAAP Result           GAAP Result            Adjustment         Non-GAAP Result            GAAP Result            Adjustment         Non-GAAP Result            GAAP Result            Adjustment           Non-GAAP Result
                                                                                   -----------                             ----------                          ---------------                              -----------                             ----------                  ---------------           -----------            ----------         ---------------            -----------            ----------         ---------------            -----------            ----------           ---------------

    Operating profit                                                                             2,952,001                                  339,027                                 3,291,028                                2,511,672                                  400,297                 2,911,969              3,534,876            341,020                  3,875,896             12,803,764            962,740                 13,766,504             11,671,554            1,387,118                 13,058,672


                                                                      Three months ended December 31, 2014   Three months ended September 30, 2015  Three months ended December 31, 2015      Twelve months ended December 31, 2014   Twelve months ended December 31, 2015
                                                                      ------------------------------------   -------------------------------------  ------------------------------------      -------------------------------------   -------------------------------------

                                                                                   GAAP Result                             Adjustment                          Non-GAAP Result                              GAAP Result                             Adjustment                  Non-GAAP Result           GAAP Result            Adjustment         Non-GAAP Result            GAAP Result            Adjustment         Non-GAAP Result            GAAP Result            Adjustment           Non-GAAP Result
                                                                                   -----------                             ----------                          ---------------                              -----------                             ----------                  ---------------           -----------            ----------         ---------------            -----------            ----------         ---------------            -----------            ----------           ---------------

    Net income                                                                                   3,238,932                                  339,027                                 3,577,959                                2,841,069                                  400,297                 3,241,366             24,711,811            341,020                 25,052,831             13,196,932            962,740                 14,159,672             33,664,173            1,387,118                 35,051,291
    attributable to Baidu, Inc.


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


    Reconciliation from net cash provided by operating activities to free cash flow (in RMB thousands, unaudited)



                                                                                                                  Three months ended               As a % of          Three months ended                 As a % of            Three months ended                   As a % of             Twelve months ended                     As a % of                Twelve months ended                       As a % of
                                                                                                                  ------------------               ---------          ------------------                 ---------            ------------------                   ---------             -------------------                     ---------                -------------------                       ---------

                                                                                                                  December 31, 2014              total revenues       September 30, 2015               total revenues         December 31, 2015                  total revenues           December 31, 2014                    total revenues              December 31, 2015                      total revenues
                                                                                                                  -----------------              --------------       ------------------               --------------         -----------------                  --------------           -----------------                    --------------              -----------------                      --------------

    Net cash provided by operating activities                                                                                          5,342,027                  38%                       4,785,393                    26%                         6,070,158                     32%                           17,937,175                        37%                             19,422,438                        29%


    Less:  Capital expenditures                                                                                                      (1,540,483)                -11%                     (1,861,602)                  -10%                       (1,423,527)                    -8%                          (4,827,163)                      -10%                            (5,229,616)                        -8%


    Free cash flow                                                                                                                     3,801,544                  27%                       2,923,791                    16%                         4,646,631                     25%                           13,110,012                        27%                             14,192,822                        21%
                                                                                                                                       =========                  ===                        =========                    ===                          =========                     ===                            ==========                        ===                              ==========                        ===

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SOURCE Baidu, Inc.