How BIDU (Baidu) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a Chinese technology and internet services leader like BIDU Income Statement Overview (formerly Baidu) makes money is essential for investors and anyone interested in the business of digital platforms, AI, and online entertainment. In this post, we break down BIDU's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick BIDU Overview

BIDU Income Statement Overview operates as a leading provider of internet search, AI-powered cloud services, and online video streaming through its core Baidu business and iQIYI segment. Revenue comes primarily from digital advertising, cloud computing, and subscription-based online entertainment. The company’s business segments include Baidu Core (search, cloud, AI, and related services) and iQIYI (online video platform).

Revenue Breakdown

• Total Revenue (Q2 2025): $7.41B (-3.6% YoY)
  • Total Baidu Core Revenue: $5.95B (80.2% of total, -1.6% YoY)
  • Total IQIYI Revenue: $1.50B (20.3% of total, -10.9% YoY)
  • Other Revenue by Product: -$37.6M (-0.5% of total, -14.9% YoY)
• Growth is powered by continued investment in AI, cloud services, and digital advertising, though iQIYI faces headwinds in the online entertainment market.

Gross Profit and Margins

• Gross Profit: $3.25B (43.9% gross margin)
  • Cost of Revenue: $4.16B (+11.9% YoY)
  • BIDU maintains moderate margins due to its scalable digital business model and operational efficiencies in Baidu Core, though rising costs in content and infrastructure impact overall profitability.
• Most costs come from content acquisition, infrastructure, and bandwidth for iQIYI, as well as cloud and AI platform investments.

Operating Income and Expenses

• Operating Income: $742.2M (-44.9% YoY, 10.0% margin)
• Operating Expenses: $2.51B (-4.4% YoY)
  • R&D: $1.16B (-13.1% YoY, 15.6% of revenue) — Focused on AI, autonomous driving, and cloud technology innovation.
  • SG&A: $1.35B (+4.6% YoY, 18.2% of revenue) — Includes marketing, sales, and administrative costs to support business expansion and platform growth.
  • BIDU continues to prioritize innovation in AI and cloud, while controlling costs in non-core areas and expanding its digital ecosystem.

Net Income

• Pre-Tax Income: $1.84B (+21.2% YoY, 24.9% margin)
• Income Tax: $199.5M (10.8% effective tax rate)
• Net Income: $1.66B (+33.4% YoY, 22.4% net margin)
• BIDU converts a significant portion of sales into profit due to its scalable technology platforms and strong pricing power in digital advertising and cloud services.

What Drives BIDU's Money Machine?

• Digital Advertising (Baidu Core): 80%+ of revenue — Dominates China’s search and ad market, leveraging AI for targeted advertising.
• AI Cloud Services: Rapidly growing, supporting enterprise digital transformation and new business models.
• R&D Investment: $1.16B in Q2 2025, focused on AI, autonomous vehicles, and next-gen cloud infrastructure.
• Future Growth Areas: Autonomous driving, generative AI, and smart devices — strategic investments that are not yet profitable but position BIDU for long-term leadership.

Visualizing BIDU's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D and SG&A) taking the largest chunk.
• Even after large investments in AI and cloud, 22.4% of revenue drops to the bottom line.

Key Takeaways

• BIDU's money comes overwhelmingly from digital advertising and Baidu Core services
• High gross and net margins illustrate the power of BIDU's scalable digital platform business model
• Heavy investment in AI and cloud innovation, balanced by efficiency in operating costs
• Ongoing growth is driven by AI, cloud, and digital transformation across China’s economy

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FAQ About BIDU's Income Statement

1. What is the main source of BIDU's revenue in 2025?

BIDU generates over 80% of its revenue from Baidu Core, which includes digital advertising, search, and AI-powered cloud services. The remaining revenue comes from iQIYI’s online entertainment platform and other products.

2. How profitable is BIDU in Q2 2025?

BIDU reported net income of $1.66B in Q2 2025, with a net margin of approximately 22.4%, reflecting strong profitability driven by scalable technology platforms and efficient cost management.

3. What are the largest expense categories for BIDU?

The biggest expenses on BIDU's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $1.16B in Q2 2025, as BIDU prioritizes AI, autonomous driving, and cloud infrastructure.

4. Why does iQIYI operate at a loss?

iQIYI, despite generating $1.50B in revenue, posted an operating loss in Q2 2025. This is because BIDU aggressively invests in content acquisition, platform development, and user growth, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does BIDU's effective tax rate compare to previous years?

BIDU's effective tax rate in Q2 2025 was 10.8%, lower than previous years. This moderate rate is primarily due to tax benefits from share-based compensation and international structuring.