Baidu Q4 2025 Earnings Call Transcript

Baidu, Inc. (NASDAQ:BIDU) reported fourth-quarter financial results before the market open on Thursday. The transcript from the company’s earnings call has been provided below.

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Juan Lin (Director of Investor Relations)

Hello and thank you for standing by for Baidu’s fourth quarter and fiscal year 2025 earnings conference call. At this time, all participants are in a listen only mode. After management’s prepared remarks, there will be a question and answer session. Today’s conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today’s conference, Juan Lin, Baidu’s Director of Investor Relations. Hello everyone and welcome to Baidu’s fourth quarter and fiscal year 2025 earnings conference call. Baidu’s earnings release was distributed earlier today and you can find a copy on our website as well as on newswire services. On the call today we have Robin Lee, our co Founder and CEO Julius Luong Luo, our EVP in charge of Baidu Mobile Ecosystem Group mega, our EVP in charge of Baidu AI Cloud Group ACG and Henry Haifeng, our cfo. After our prepared remarks, we will hold a Q and A session. Please note that the discussion today will contain forward looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform act of 1995. Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest Annual report and other filings with SEC and Hong Kong Stock Exchange. Baidu does not undertake any obligation to update any forward looking statements except as required under applicable law. Our earnings press release and this call includes discussions of certain unaudited non GAAP financial measures. Our press release contains a reconciliation of the unaudited non GAAP measures to the audited most directly comparable GAAP measures and is available on our IR website at ir.baidu.com As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on Baidu’s IR website. I will now turn the call over to our CEO Robin.

Robin Li (Co-Founder and CEO)

Hello everyone. In Q4 Baidu General business total revenue was RMB 26.1 billion. Revenue from our core AI power business exceeded RMB 11 billion, accounting for 43% of Baidu General Business revenue in AI Cloud infrastructure subscription based revenue from AI accelerator infrastructurestructure grew 143% year over year, accelerating further from 128% in Q3. Meanwhile, Apollo Go maintained its robust momentum, delivering 3.4 million fully driverless operational rides in the quarter Total rides increased by over 200% year over year 2025 marked the third year of our journey in Genai and a pivotal year where AI became the new core of our portfolio. In 2025, we made substantial progress in scaling AI across our businesses, accelerating AI cloud growth, expanding robotaxi operations with improved unit economics and deepening AI integration into our mobile ecosystem. Looking at our portfolio through an AI native lens, momentum across our core AI powered businesses and continue to build in 2025 AI Cloud Infra gained strong traction through its highly efficient and cost effective training and inference capabilities. Revenue from AI Cloud Infra reached approximately RMB 20 billion in 2025, up 34% year over year, outpacing industry growth. Our AI application portfolio is among the most comprehensive in the industry, combining AI empowered flagship products with AI native offerings that unlock entirely new use cases. For the full year 2025, revenue from AI applications exceeded RMB10 billion. Apollo Go achieved a significant landmark. We delivered over 10 million fully driverless operational rides in 2025 alone. To date, Apollo Go has provided a total of over 20 million rides to the public. Cumulatively, with our accelerated global expansion, Apollo GO’s footprint has now reached 26 cities worldwide, reinforcing our leadership in autonomous ride hailing services. Lastly, our AI native marketing services including digital humans and agents sustained strong growth with revenue up 110% year over year. Collectively, these results demonstrate AI’s growing contribution to Baidu’s value creation and our ability to translate AI capabilities into scalable commercial impact. Now let me share the key highlights of the quarter starting with our proprietary AI chips. This quarter we announced the proposed spin off and separate the listing of kunlunxing. After more than a decade of steadfast investment in self developed AI chips, we are proud to see the market increasingly recognize their value and proven performance. This milestone validates our long term strategic vision and unlocks new opportunities for value creation. Our AI chips are built on a proprietary architecture developed in house from day one. They deliver stable high performance AI computing at scale with broad compatibility across different models and frameworks. This enables customers to deploy faster with lower integration costs. What distinguishes our AI chips is a proven track record of large scale real world deployments with leading enterpridess across diverse industries spanning financial services, telecommunications, energy and Internet sectors. Customers choose our chips for reliable performance, stable supply at scale, exceptional software compatibility and strong efficiency, especially in inference workloads. Looking ahead, we see significant opportunities for both Baidu and Kunlunxing as AI infrastructurestructure demand continues to accelerate. Next I will turn to our AI cloud infrastructurestructure. Our infrastructurestructure is among the most advanced in China, powered by a diverse mix of domestic and international high performance computing resources. In Q4, subscription based revenue from AI accelerator infrastructurestructure grew 143% year over year, achieving triple digit growth for the full year.

Automate operational compliance and safety checks through intelligent visual analysis. While known brands across coffee chains, quick service restaurants and fine dining are now using ETN to ensure high standard operations across their thousands of locations. Another example is FM Agent, our self-evolving agent designed to solve complex operational challenges by autonomously reasoning across data, rules and real-world constraints. It simulates countless scenarios to identify best solutions. We’ve seen strong validation both internally through our own cloud resource optimization and externally across industries like manufacturing, energy, finance and logistics, where efficiency improvement is a universal priority. On the organizational front, we recently established the Personal Super Intelligence Business Group or psig. Personal Super Intelligence Group Unified Baidu, Wen Gu and Baidu Drive are two flagship consumer-facing AI applications. Even before this organizational integration, the two teams had already collaborated at the product level to deliver innovations like Free Canvas and gemflow. This new group enables even deeper collaboration going forward as we accelerate the rollout of new applications to foster a robust growth curve driven by application layer innovation. Shifting to Physical AI Apollo Go represents our largest AI application in the physical world. 2025 was a year of accelerated scaling for Apollo Go, where we reinforced our leadership in operational scale and achieved significant progress in global expansion. We continue to expand fully driverless operations at pace delivering 3.4 million fully driverless operational rides in Q4 with weekly rides peaking at over 300,000. Total rides grew by over 200% year over year. Cumulative rides provided to the public have surpassed 20 million as of February 2026, firmly cementing our position as the world’s leading autonomous ride-hailing service provider. We entered 2026 with momentum across key international markets. In the UK, we advanced our partnerships with Uber and Lyft, moving forward with plans to pilot autonomous vehicles in London with testing expected to begin in the first half of 2026. This represents an important step in Apollo GO’s international expansion, extending our right-hand drive robo taxi capabilities from Hong Kong to another strategically important market In Switzerland. We initiated testing in St. Gallen. Following our market entry last quarter in the Middle East, we achieved progress in both Abu Dhabi and Dubai. In Abu Dhabi, we launched a fully autonomous ride-hailing services on Yas Island. In January with Autogo in Dubai, we secured the city’s first fully driverless testing permit from the Roads and Transport Authority. We also announced the next phase of our global partnership with Uber to bring our fully autonomous ride-hailing services to Dubai via the Uber platform. These are critical milestones that accelerate our progress across the Emirates. In Asia, we entered a new market, South Korea, starting with the Seoul metropolitan area, further expanding our presence across the Asian region. Meanwhile in Hong Kong, we expanded our open road testing into Sunwen and initiated cross-district testing between Airport island and Tung Chung, bringing us closer to commercial readiness there. As of February 2026, Apollo GO’s global footprint reached 26 cities, demonstrating the scalability of our autonomous driving technology across diverse regulatory and operational environments. Looking ahead, we are focused on accelerating expansion to more cities globally while continuously improving operational excellence and unit economics. Our growing experience across diverse markets gives us confidence in our ability to scale further, and we expect more cities to achieve positive unit economics over time. Underpinning this expansion, safety remains our top priority and the foundation of everything we do. Our autonomous ride-hailing service is the safest globally with our fully driverless vehicles experience an airbag deployment accident only once every over 12 million kilometers. As we scale, we will continue strengthening safety standards and ensure sustained reliability. Ultimately, our mission is to harness AI to transform mobility, making it fundamentally safer, more affordable and more comfortable, and improving how billions of people move, work and live. In summary, with AI now firmly integrated across our portfolio, we believe we are well positioned to deliver sustainable value and shape the next phase of the AI era. With that, let me turn the call over to Henry to go through the financial results.

Henry He (Chief Financial Officer)

Thank you Robin and hello everyone. We are making progress on our key focus areas. Over the recent quarters, we’ve enhanced disclosure for greater transparency and driven operational efficiency improvements. This quarter we took a significant step to unlock value from our strategic AI chip investment through the proposed Kunlunxin spin-off and a separate listing, a milestone we are particularly pleased with. We’ve also announced a new US$5 billion share repurchase program and adopted a dividend policy for the first time. Additionally, we’ve sharpened our strategic focus on high potential AI applications by forming a PSIG Business Group integrating Baidu, WenKu and Baidu Drive. These actions reflect our consistent execution and ongoing focus on creating shareholder value. Looking at Q4 results, we saw positive momentum. Baidu General Business Total revenue increased 6% quarter over quarter, with non-GAAP operating profit expanding 28% sequentially to RMB 2.8 billion. Operating cash flow for Baidu turned positive in Q3 and remained positive in Q4, generating a combined RMB 3.9 billion across both quarters. In terms of our core AI powered business in Q4 revenue exceeded RMB 11 billion, accounting for 43% of Baidu General Business revenue. We are seeing strong momentum across several areas. AI Cloud Infra continues to gain market traction and outpace industry average. Our AI application portfolio is expanding rapidly with strong enterprise adoption. Combining AI Cloud Infra and AI application, our cloud revenue reached RMB 30 billion for the full year 2025 meanwhile, Apollo Go reinforces its position as a global leader in autonomous ride hailing with one of the industry’s largest footprints and the strongest growth momentum and AI native marketing services is growing fast. These results demonstrate our progress and we believe this is just the beginning. We have a robust pipeline of initiatives ahead and we are confident in our ability to create lasting shareholder value. Now let me walk through the details of our fourth quarter and full year 2025 financial results. Total revenues in Q4 were RMB 32.7 billion, increasing 5% quarter over quarter primarily due to an increase in Baidu Core AI powered business. Total revenues for the full year 2025 were RMB 129.1 billion, decreasing 3% year over year primarily due to a decrease in legacy business partially offset by an increase in Baidu Core AI powered business. Cost of revenues was RMB 18.3 billion in Q4 which remained flat quarter over quarter. Cost of revenues was RMB 72.4 billion in 2025, increasing 10% year over year primarily due to an increase in costs related to Baidu Core AI powered business. Operating expenses were RMB 13.0 billion in Q4, increasing 10% quarter over quarter primarily due to an increased expected credit losses and a one time employee severance cost to improve efficiency. Operating expenses will RMB $46.3 billion in 2025, increasing 1% year over year. Impairment of long lived assets was RMB 16.2 billion in 2025 attributable to an impairment loss of core asset group. Operating income was RMB 1.5 billion in Q4 and operating margin was 5%. Operating loss was RMB 5.8 billion in 2025 and operating loss margin was 5% excluding impairment of long lived assets. Operating income was RMB 10.4 billion in 2025. Non GAAP operating income was RMB 3.0 billion in Q4 and non GAAP operating margin was 9%. Non GAAP operating income was RMB 15.0 billion in 2025 and non GAAP operating margin was 12% in Q4. Total. Other income net was RMB 1.2 billion compared to RMB 1.9 billion last quarter. Income tax expense was RMB 1.0 billion compared to income tax benefit of RMB 1.8 billion last quarter in 2025. Total other income net was RMB 12.5 billion compared to RMB 7.4 billion in the same period last year. Income Tax expense was RMB 1.3 billion compared to RMB 4.4 billion in the same period last year In Q4, net income attributable to Baidu was RMB 1.8 billion. Net margin for Baidu was 5% and diluted earnings per ADS was RMB 3.71. Non GAAP net income attributable to Baidu Was RMB 3.9 billion, non GAAP net margin for Baidu was 12% and non GAAP diluted earnings per ADS was RMB 10.62. In 2025, net income attributable to BaidU was RMB 5.6 billion. Net margin for BaidU was 4% and diluted earnings per ADS was RMB 11.78. Excluding the impact of impairment of long lived assets, net income attributable to Baidu was RMB 19.4 billion. Non GAAP net income attributable to Baidu was IMB 18.9 billion. Non GAAP net margin for Baidu was 15% and non GAAP diluted earnings per ADS was RMB 53.41. We defined total cash and investments as cash equivalents, restricted cash short term investments, net long term time deposits and held to maturity investments and adjusted long term investments. As of December 31, 2025, total cash and investments were RMB 294.1 billion. In Q4, operating cash flow was RMB 2.6 billion. In 2025, operating cash flow was negative RMB 3.0 billion, which remained positive for the past two consecutive quarters. Kaidu General Business had approximately 29,000 employees as of December 31, 2025. With that operator, let’s now open the call to questions.

Operator

Thank you ladies and gentlemen. We will now begin the question and answer session. If you wish to ask a question, please press the star key then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. Your first question comes from Alicia Yap with Citigroup. Please ask your question.

Citigroup Analyst

Thank you. Good evening Robin, Henry and Jen. Thanks for taking my questions. I have questions related to the model. So we have noticed very active model iteration reasons. How does management view the current competitive landscape? And then Baidu recently also released updated earning 5.0 and also make some organizational adjustments. So could management discuss the strategic rationale behind these moves and also how the company thinks about the relationship between the model evolutions and also the application in your overall AI strategy. Thank you.

Robin Li (Co-Founder and CEO)

Hi Alissa, this is Robin. We did see very active model releases recently. The market is highly competitive and moving fast, but amid all the competition we’ve always believed that applications matter more than models because models ultimately create value through applications. That is why we always take an application driven approach with earning. Model improvements are guided by the most valuable and promising use cases and this has been consistent across every iteration of earning. As I just mentioned recently we released the updated version of Ernie 5.0. At the same time, we’ve been proactively making organizational changes to stay agile in this fast moving market. We restructured our model team into different focus areas. One team continues pushing frontier capabilities at the foundation model level to maintain technical leadership early has clear strengths in several key areas such as creative writing, omni model understanding and instruction following. We are confident we will keep improving erle’s performance across key application scenarios. Meanwhile, this high value application scenarios continuously provide ERNIE wi

Operator

Your next question comes from Alex Yao with JP Morgan. Please ask your question.

JP Morgan Analyst

Good evening management team and thank you for taking my question. I have one question about the Baidu AI Cloud. We noticed the Baidu AI Cloud revenue delivered a strong growth for the full year 2025. Can you elaborate and help us understand the key growth driver behind the robust revenue growth number and how shall we think about the AI Cloud revenue growth outlook in 2026? Thank you,

Robin Li (Co-Founder and CEO)

thank you Alex this is Dove for 2025. Our AI Cloud revenue which includes revenue from AI Cloud Infra and AI applications reached RMB 30 billion in 2025. Revenue from AI cloud infrastructure grew 34% year over year, outpacing the broader market within AI Cloud Infra. Subscription based revenue from AI accelerator infrastructurestructure grew 143% year over year in Q4 and has become the primary growth driver demonstrating strong momentum. We remain highly confident in sustaining strong growth momentum in 2026. Underpinning our growth is the accelerating enterprise AI adoption. We’re seeing demand growth in both training and inference workloads and we expect the demand of AI computing to keep expanding, creating significant opportunities ahead. Baidu’s full stack end to end AI architecture is a key differentiator in capturing such opportunity. At the foundation of this architecture is our industry leading AI infrastructurestructurestructure which achieves an excellent balance across performance, efficiency and cost. Our AI infrastructurestructurem is powered by a diverse mix of chips. We have built deep expertise in heterogeneous computing and unified scheduling which enables us to efficiently manage computing resources from different chip vendors and achieve industry leading performance and efficiency. In the meanwhile, our proprietary chip capabilities provide a significant competitive advantage. As Robin just mentioned, our self developed Kunlunxin AI chips deliver strong performance, compatibility and cost efficiency. They have been deployed at scale with leading enterprise customers across financial services, telecom, energy and Internet sectors and the market feedback has been very positive. Kunlunkin serves as a key component of our own cloud platform’s computing power, playing an important role in our overall AI infrastructure. As AI demand grows, the advantages of our AI infrastructure will become increasingly evident. Beyond AI infrastructure we just discussed, we are continuously evolving our best in class agent Infra to help enterprises rapidly build and deploy AI agents at scale. We keep bringing in the latest, most cutting edge capabilities. For example, we recently launched simplified open Cloud deployment on Baidu AI Cloud which streamlines the process so that even users with no coding experience can quickly deploy their own open cloud agents. Then, looking into 2026 as Enterprise AI deployments deepen further, we are confident that our cloud business will continue to grow faster than the industry. We expect AI Cloud and Infra to maintain strong momentum with AI accelerator infrastructure continuing to serve as a core driver propelling our overall cloud business toward a more sustainable and high quality growth model. Thank you.

Operator

Your next question comes from Lincoln Kong with GS. Please ask your question.

Goldman Sachs Analyst

Thank you Management for taking my question.

So actually this quarter we see this AI power business continue to deliver pretty solid growth. How does management view the current stage development for those AI power businesses? So when should we expect this share to exceed, say 50% of the Baidu General business? And what will be the key driver going forward for the AI powered business? Thank you.

Robin Li (Co-Founder and CEO)

Okay, let me start by sharing how we think about our core AI powered business. This includes AI cloud infrastructurestructure, AI applications like Baidu WenKu and Baidu Drive, and our robotaxibusiness, Apollo and our AI native marketing services including agents and digital humans. AI Powered Bins organizes our business according to the nature of Our products and services where AI is empowering each to create meaningful customer value and business impact. In Q4, AI powered business revenue exceeded RMB 11 billion. That’s like 43% of Baidu General business revenue. This percentage has been rapidly increasing over the recent quarters. And AI powered business is becoming the core driver of our overall revenue growth. Each of our AI powered businesses has clear strategic positioning and competitive advantage. First, it’s AI infrastructure AI cloud infrastructure. We see enterprises scale AI from pilots to production and our full stack end to end AI capabilities enable strong performance at competitive cost. AI

cloud infrastructure revenue grow faster than the industry average in 2025 with subscription based AI accelerator infrastructurestructure revenue accelerating sharply in Q4. And second, it’s AI applications. We’ve always believed AI’s ultimate value will settle at the application layer. And we built one of China’s most comprehensive AI application portfolios. As AI capabilities continue to evolve and new use cases emerge, we see significant expansion potential in this business. And then third is the Robotaxibin Apollo Go. Apollo Go is scaling rapidly while expanding internationally. We lead globally in operating scale, safety record efficiency and cost structure. And the fourth is AI native marketing services. Like agents and digital humans. They improve engagement and conversion. And we’re seeing strong market adoption with great potential ahead. So, looking to the mid to long term, as enterprise AI deployment deepens, monetization capabilities of AI applications improve and physical AI applications such as autonomous driving continue to expand. And we’re confident in the growth trajectory of our AI powered business. These AI powered business aren’t isolated. They continuously reinforce each other through our full stack capabilities. And based on current visibility, we believe our core AI part business will become the majority of Baidu general business in the foreseeable future.

Operator

Your next question comes from Wei Xiong. Please ask your question.

USB Analyst

Sure. Good evening, Management. Thank you for taking my questions. Could Management elaborate on the framework that you use to allocate capital, including shareholder returns, organic investment and potential strategic strategic opportunities? And also could management comment on the long term strategic positioning of kunlunxin within the Baidu Group? Thank you.

Henry He (Chief Financial Officer)

Thank you. Xiong Wei, this is Henry. I believe many of you may have noticed our recent series of initiatives. These include enhancing our disclosures, improving operational efficiency, optimizing our organizational structure, advancing the proposed kunlunxin spin off and a separate listing, and also announcing our new share repurchase program and the first dividend policy. And recently, we’re also reforming the psig, the Personal Superintelligence Group Business Group integrating Baidu Wenku and Baidu Drive altogether. These moves reflect a coherent execution framework demonstrating our improved management execution and ongoing commitment to creating shareholder value. I think take our new share repurchase program as one example. We are very focused on providing clear and sustainable returns to shareholders. So in the recent in February the board has approved a new 5 billion

US dollar share repurchase program which we plan to execute on a regular basis in a very disciplined and transparent manner. We are also introducing Baidu first Dividend policy. We believe the introduction of the policy alongside with a sizable buyback program will further strengthen our shareholder return profile and attract a broader range of investors, thereby further diversifying our investor base. As you mentioned, the proposed spin off and a separate list of Kunlanxing is another good example. We are making very good progress of the listing process. Kunlencheng is a result of over decades of investment and represents a critical infrastructure component of our full stack AI capabilities. We believe this spin off and a separate listing will receive strong market recognition and unlock significant value for Baidu Asset Group. So looking ahead, we firmly believe the company has tremendous value and we will continue unlocking it through various initiatives. We remain committed to deliver sustainable and consistent returns to our shareholders. So more initiatives will follow in due course. So stay tuned with us. Thank you.

Operator

Your next question comes from Gary Yu with Morgan Stanley. Please ask your question.

Morgan Stanley (Equity Analyst)

Hi. Thank you Management. My question is on Robo Taxi. And first of all, congratulations on the Robotaxi expansion into more countries, especially to my hometown Hong Kong. Can you share your overseas strategy in 2026 and what are your key competitive advantages there? And also with Waymo’s, recently valued at 126 billion, how is management thinking about unlocking Apollo Gold’s value? Would you consider a spin off? Thank you.

Robin Li (Co-Founder and CEO)

Hi Gary, As I mentioned last quarter, I believe Robotaxi has reached a tipping point globally. Through continuous delivery of safe autonomous rides and positive word miles, we’re seeing more countries and regions creating supportive environments for Robotaxi operations. We believe the industry will accelerate in 2026. Apollo is clear global leader in this space. We’ve completed over 20 million cumulative rides. At peak period. Our weekly fully driverless rides exceeded 300,000. To date, Apollo Gold fleets have accumulated more than 300 million autonomous kilometers, including over 190 million fully driverless Atoms kilometers with an outstanding safety record. And we continue advancing our industry leading technology to make rides safer and more comfortable. We’re also accelerating international expansion to capture global opportunities. Today, our Global footprint spans 26 cities across different continents, covering both Left hand and right hand drive robotaxi markets. Our autonomous driving system works reliably anywhere across different traffic patterns and different urban environments. Notably, very few players have entered right hand drive robotaxi markets. While we’ve already established a presence and are making rapid progress. Moreover, we have a fundamental cost advantage. our fleet is the world’s first purpose built production vehicle designed from the ground up for Level 4 autonomous driving. At under US$30,000 per vehicle, our fleet offers

Operator

Your next question comes from Miranda Zuang with Bank of America Securities. Please ask your question.

Bank of America Securities Equity Analyst

Thank you management for taking my question. Wish you a happy year of health. So my question is about competition. We have seen that the consumer facing AI competition is intensifying recently, especially during the Chinese New Year. How do you assess the current competitive dynamics? Where do you see Baidu’s AI to see products such as the earning assistance differentiation and also positioning in this market? And lastly, how to think about the path to monetization. Thank you.

Julius Luo (Executive Vice Preisdent)

This is Julius. The AI2C product market is highly competitive. We have seen some competitors adopt very aggressive market strategies to rapidly scale their user base in the past Chinese New Year. However, as technology and products evolve rapidly, we still believe our core strategy should remain grounded in actual user needs. We are highly committed to continuously enhancing our existing products and services capabilities through AI innovations to better serve our users in our flagship consumer facing products, the Baidu App. Today we have build the Earning Assistant to strengthen our service capabilities across the entire user journey from information seeking to providing solutions and completing tasks. On information seeking, we have significantly enhanced how users assess information through Earning Assistant. For example, we have improved the answer accuracy and relevance through racial and Earning Assistant maintains low error rates with minimal hallucinations, delivering the highly trustworthy content to users. We have also integrated the multilingual AI Search API capabilities that can enable users to assess the broader information sources during conversations, improving the information richness and usability, especially for scenarios like traveling planning which is quite helpful. And in December Earning assistance MAU surpassed 200 million and with conversation rounds and engagements growing quite fast for task complexion, we are integrating the multi-channel platform agents to connect users with tools and real world services. This quarter alone we added nearly 100 service capabilities, especially in healthcare, travel, education and E commerce. For example, through the Baidu Health multi-channel platform integrated into earnings system, users can assess a range of healthcare capabilities spanning online to offline services. In E commerce, our multi-channel platform module saw a very strong GMV growth quarter over quarter. Meanwhile, we are taking a different approach with the standalone app positioning as a platform for innovations and experimentations. Our earlier multimodal AI features have gained good traction with the younger audiences and more recently we have added AI capabilities focus on the workplace productivity tapping into earning books ability to handle complex tasks in professional settings, we are seeing the promising early signals in these productivity scenarios. We take a measured approach to monetize the AI tools products, prioritizing the product excellence and the user experiences. Monetization will follow naturally as the products mature. Thank you for your question.

Macquarie Analyst

Good evening. My question is mostly focusing on the AI investment. How do you think about the AI related CAPEX over the next 12 to 24 months? How should we think about the return profile of these AI investments and expected impact on the ROIC over time? Broadly speaking, where do you see further efficiency opportunities to support margin cash flow improvements in the future? Thank you, Thank you.

Henry He (Chief Financial Officer)

This is Henry first of all on capex and AI investment. Since we have launched earnings In March of 2023 we have invested over 100 billion RMB in AI. Going forward, we will continue to maintain this level of the investment density. Second, we are very conscious about returns and understand investors focus on the return on capital invested. That’s why we have work to improve our financial performance and we have delivered a good result on key metrics over the past few quarters. For example, in Q4 gross profit for Baidu grew double digits sequentially and the non GAAP operating income for Baidu increased about 35% quarter over quarter. We also performed better on the margin profile both on margin and EBIT margin sequence. Importantly, operating cash flow for Baidu turned positive in Q3 and remained positive in Q4 with the second half operating cash flow reaching nearly 4 billion RMB. Free cash flow for Baidu also turned positive in Q4. Thirdly, we have also found and explored alternative ways of supporting our financial needs including for example operational and financing leasing as well as we have access to the low cost interest backing borrowing. For example, some of these bank borrowings and the leasing facilities carry the interest rates as low as below 2%. So these approaches help us maintain a healthy long term financing structure while sustaining our AI investment and support our business growth. So in summary, we will continue to maintain our AI investment density while balancing investor focus on profitability and return timelines. We believe that even with significant AI investment, operating cash flow remain positive going forward as well. Thank you.

Operator

Thank you ladies and gentlemen. That does conclude our conference for today. Thank you for participating. You may all disconnect.

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