Q2 FY2026
Filed Aug 18, 2026Baidu reported Q2 2026 revenue of RMB31.3 billion ($4.62 billion), down 4% year over year and 2% quarter over quarter, as AI Cloud Infra growth was offset by pressure in online marketing services.
AI Cloud Infra revenue grew 50% year over year and GPU Cloud revenue increased 283%, but consolidated revenue declined 4%, online marketing services declined 19%, and free cash flow was negative RMB7.954 billion.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | RMB31.3 billion ($4.62 billion) | decreasing 2% quarter over quarter | decreasing 4% year over year |
| Baidu General Business revenueGAAP | RMB25.2 billion ($3.71 billion) | decreasing 3% quarter over quarter | decreasing 4% year over year |
| iQIYI revenueGAAP | RMB6.3 billion ($927 million) | increasing 1% quarter over quarter | decreasing 5% year over year |
| Cost of revenueGAAP | RMB19.1 billion ($2.82 billion) | decreasing 3% quarter over quarter | increasing 4% year over year |
| Selling, general and administrative expensesGAAP | RMB4.6 billion ($677 million) | decreasing 6% quarter over quarter | decreasing 23% year over year |
| Research and development expensesGAAP | RMB4.6 billion ($679 million) | increasing 5% quarter over quarter | decreasing 10% year over year |
| Total costs and expensesGAAP | RMB 28,301 million | – | – |
| Operating incomeGAAP | RMB3.0 billion ($446 million) | – | – |
| Operating marginGAAP | 10% | – | – |
| Non-GAAP operating incomenon-GAAP | RMB3.8 billion ($558 million) | – | – |
| Non-GAAP operating marginnon-GAAP | 12% | – | – |
| Total other income, netGAAP | RMB184 million ($27 million) | – | – |
| Income tax expenseGAAP | RMB1.0 billion ($147 million) | – | – |
| Net income attributable to BaiduGAAP | RMB2.3 billion ($342 million) | – | – |
| Net margin for BaiduGAAP | 7% | – | – |
| Diluted earnings per ADSGAAP | RMB5.74 ($0.85) | – | – |
| Non-GAAP net income attributable to Baidunon-GAAP | RMB2.6 billion ($379 million) | – | – |
| Non-GAAP net margin for Baidunon-GAAP | 8% | – | – |
| Non-GAAP diluted earnings per ADSnon-GAAP | RMB7.22 ($1.06) | – | – |
| Adjusted EBITDAnon-GAAP | RMB6.2 billion ($906 million) | – | – |
| Adjusted EBITDA marginnon-GAAP | 20% | – | – |
| Operating cash flowGAAP | RMB3.4 billion ($506 million) | – | – |
| Capital expendituresother | RMB (11,390) million | – | – |
| Free cash flownon-GAAP | RMB (7,954) million ($1,173 million) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Baidu Core AI-powered BusinessAI Cloud Infra, AI Applications and AI-native Marketing Services. | RMB 12.5 billion | (8 %) | 25 % |
| AI Cloud InfraGPU Cloud growth reflected mounting demand for public cloud-based AI computing. | RMB 7.3 billion | (17 %) | 50% |
| AI ApplicationsBaidu Wenku and Baidu Drive expanded AI-powered capabilities, including upgrades to GenFlow. | RMB 2.5 billion | 3 % | 3% |
| AI-native Marketing ServicesRevenue was approximately flat year over year. | RMB 2.6 billion | 11 % | 0 % |
| Legacy BusinessNo further driver was provided. | RMB 10.4 billion | 3 % | (23 %) |
| Baidu General BusinessBaidu Core AI-powered Business accounted for 50 % of Baidu General Business revenue. | RMB 25.2 billion | (3 %) | (4 %) |
| Online Marketing ServicesOnline marketing business remained under pressure. | RMB 13.1 billion | 4 % | (19 %) |
| OthersNo further driver was provided. | RMB 12.1 billion | (10 %) | 21 % |
| iQIYINo further driver was provided. | RMB6.3 billion ($927 million) | increasing 1% quarter over quarter | decreasing 5% year over year |
Capital returns
- Baidu has returned US$259 million to shareholders since the beginning of Q1 2026 through repurchases of its shares under the current share repurchase program.
What drove it
- AI Cloud Infra revenue increased 50% year over year.
- GPU Cloud revenue increased by 283% year over year, accelerating from 184% growth in the previous quarter.
- AI DAU penetration across Baidu Wenku and Baidu Drive increased by 27.4% year over year in June 2026.
- Apollo Go's global footprint reached 28 cities, with over 350 million autonomous kilometers and over 240 million fully driverless autonomous kilometers.
- Baidu App's MAUs reached 644 million in June 2026.
- The quarter-over-quarter decline in cost of revenue was primarily due to lower AI Cloud business costs, partially offset by higher traffic acquisition costs.
- The year-over-year decline in selling, general and administrative expenses was primarily due to lower expected credit losses and channel spending expenses.
Concerns
- Revenue from Online Marketing Services declined 19% year over year.
- Baidu General Business revenue declined 4% year over year and 3% quarter over quarter.
- Legacy Business revenue declined 23% year over year.
- AI Cloud Infra revenue declined 17% quarter over quarter.
- Total other income, net was RMB184 million, compared to RMB626 million last quarter and RMB4.9 billion for the same period last year.
- Income tax expense was RMB1.0 billion, compared to RMB528 million last quarter and RMB881 million for the same period last year.
- Free cash flow was RMB (7,954) million, after capital expenditures of RMB (11,390) million.
What to watch
- Whether GPU Cloud growth continues after revenue increased 283% year over year and AI Cloud Infra revenue declined 17% quarter over quarter.
- The trajectory of online marketing services after a 19% year-over-year revenue decline.
- The pace of capital expenditures and free cash flow following RMB (11,390) million of capital expenditures.
- Progress toward the voluntary conversion to a dual-primary listing in Hong Kong, which is expected to become effective within this year subject to approvals.
- Apollo Go's expansion and operational progress across its 28-city global footprint.
Balance sheet and cash flow
- As of June 30, 2026, total cash and investments were RMB283.1 billion ($41.72 billion).
- Cash and cash equivalents were RMB 24,524 million as of June 30, 2026.
- Restricted cash was RMB 170 million as of June 30, 2026.
- Short-term investments, net were RMB 141,727 million as of June 30, 2026.
- Long-term time deposits and held-to-maturity investments were RMB 74,311 million as of June 30, 2026.
- Long-term investments, net were RMB 42,855 million as of June 30, 2026.
- Short-term loans were RMB 26,311 million as of June 30, 2026.
- Long-term loans, current portion were RMB 2,027 million and long-term loans were RMB 20,779 million as of June 30, 2026.
- Notes payable, current portion were RMB 2,038 million and notes payable were RMB 46,089 million as of June 30, 2026.
- Convertible senior notes were RMB 6,615 million as of June 30, 2026.
- Net cash used in investing activities was RMB (26,463) million.
- Net cash provided by financing activities was RMB 17,405 million.
Analysis
Baidu reported a mixed second quarter. Consolidated revenue was RMB31.3 billion ($4.62 billion), down 4% year over year and 2% quarter over quarter. Baidu General Business revenue fell 4% year over year and 3% quarter over quarter, while iQIYI revenue declined 5% year over year despite increasing 1% sequentially. The principal demand contrast was between AI Cloud Infra, where revenue rose 50% year over year, and Online Marketing Services, where revenue declined 19% year over year.
The AI-powered portfolio remained the central source of growth and mix change. Baidu Core AI-powered Business generated RMB 12.5 billion and represented 50% of Baidu General Business revenue. Within that portfolio, AI Cloud Infra was RMB 7.3 billion and GPU Cloud revenue increased 283% year over year, accelerating from 184% growth in the previous quarter. AI Applications were RMB 2.5 billion, up 3% year over year, and AI-native Marketing Services were RMB 2.6 billion, approximately flat year over year. However, the AI Cloud Infra revenue figure was down 17% quarter over quarter, while Legacy Business revenue declined 23% year over year.
Margins and earnings weakened versus the comparison periods shown in the filing. GAAP operating income was RMB3.0 billion ($446 million) with a 10% operating margin, while non-GAAP operating income was RMB3.8 billion ($558 million) with a 12% margin. Net income attributable to Baidu was RMB2.3 billion ($342 million) and diluted earnings per ADS were RMB5.74 ($0.85). Total other income, net fell to RMB184 million from RMB626 million last quarter and RMB4.9 billion in the same period last year, with the release citing lower fair value gain from long-term investments and a larger net foreign exchange loss year over year.
Cash generation was positive at the operating level but capital intensity produced negative free cash flow. Operating cash flow was RMB3.4 billion ($506 million), the fourth consecutive positive quarter according to the CFO. Capital expenditures were RMB (11,390) million and free cash flow was RMB (7,954) million ($1,173 million). Baidu reported RMB283.1 billion ($41.72 billion) of total cash and investments and returned US$259 million to shareholders through repurchases since the beginning of Q1 2026.
The release provided no financial outlook. Management said it remains committed to investing in AI as the core driver of long-term growth, while pursuing a voluntary conversion to a dual-primary listing in Hong Kong that is expected to become effective within this year, subject to shareholder and Hong Kong Stock Exchange approval. The next reported indicators are whether AI Cloud Infra and GPU Cloud momentum persists, whether online marketing pressure eases, and whether elevated capital expenditures continue to weigh on free cash flow.
Management, verbatim
While our online marketing business remains under pressure, the growing momentum in our core AI-powered Business reaffirms Baidu’s transition from an internet-centric company to an AI-first company, and strengthens our confidence in our long-term growth potential.
Robin Li, Co-founder and CEO of Baidu
The quarter was marked by several highlights. First, revenue from Baidu Core AI-powered Business 2 reached RMB 12.5 billion and continued to account for half of Baidu General Business revenue. Second, operating cash flow for Baidu remained positive for the fourth consecutive quarter, reaching RMB 3.4 billion in the second quarter. Third, we are moving forward with our conversion to a dual-primary listing in Hong Kong and expect it to become effective within this year.
Haijian He, CFO of Baidu
Not in the filing
stated, not guessed- Forward financial guidance was not provided.
- Previous outlook was not provided.
- Gross margin was not reported.
- Gross profit was not reported.
- A consolidated total debt figure was not reported.
- A dividend amount was not reported.
- An effective income tax rate was not reported.
- Share repurchase authorization remaining was not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.