Hello, and thank you for standing by for Baidu's third quarter 2021 earnings conference call. Well, at this time, all participants are in listen-only mode. After management's prepared remarks, there will be an answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I'd 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 third quarter 2021 earnings conference call. Baidu's earnings release was distributed earlier today, and you can find a copy on our website as well as our newswire services. On the call today, we have Robin Li, our Co-founder and CEO, Rong Luo, our CFO, Dou Shen, our EVP in charge of Baidu Mobile Ecosystem, and Herman Yu, our CSO. After our prepared remarks, we will hold a Q&A session. Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of 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 documents filed with the 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 include discussions of certain unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP measures to the most directly comparable GAAP, 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 also be available on Baidu's IR website. I will now turn the call over to our CEO, Robin. Hello, everyone. We delivered another solid quarter in Q3, with Baidu Core revenue growing 15% year-over-year, driven by AI Cloud growing 73% year-over-year. Many years ago, we doubled down on AI, believing that it would expand our market opportunity and accelerate Baidu's long-term growth. Non-ad revenue accounted for 21% of Baidu Core revenue in Q3 and remains a strong growth engine for us. Through AI, we are bringing innovation across the consumer, enterprise, and the public sector against the backdrop of policy tailwinds and the rising tide of tech innovation in digital transformation, industrial Internet, IoT, and intelligent mobility. Baidu AI Cloud is empowering enterprises from traditional industries and the public sector to better serve customers and move faster with greater efficiency. At Baidu World in August, which was broadcast on CCTV, we showcased Baidu AI solutions, including smart quality assurance to automate the screening of electronic components of manufacturing assembly line, smart logistics to optimize fleet management, and smart monitoring to ensure a steady energy supply from the utilities sector. We are excited about Baidu AI Cloud continuing fast growth. Leading companies across industries are adopting Baidu AI Cloud solutions to improve their operation, and we are working hard to standardize such solutions for industry adoption. An example is our end-to-end AI solution composed of IaaS, PaaS, and SaaS for financial services sector. Our AI Cloud customers are recognizing Baidu's value proposition with strong consumer internet reach. For example, we are winning smart public parking projects with our solution offering the convenience of collecting public parking fees via Baidu Maps without the need for meter maids. Hospitals are choosing Baidu for cloud solutions that save patients trips to the hospital with continued patient care for chronic diseases at home through dual OS smart display. According to the World Health Organization, there are 1.35 million road traffic deaths every year. Apollo autonomous driving aims to reduce traffic accidents, accelerate mobility to EV, and provide greater passenger safety, especially after dark. Apollo Go has become the largest robot taxi service provider in the world based on our estimate. Our leadership position in autonomous driving will lend strength to ASD and Jidu Auto. DeepWay, a JV between Baidu and Lionbridge, a leading trucking company in China, recently unveiled its first generation EV truck powered by Apollo to automate road freight, marking Apollo's entry into the multi-trillion-dollar truck market. DeepWay leverages Apollo's leading autonomous driving capabilities and Lionbridge's market reach. Jidu is making great progress as it plans to release the first concept production car at the Beijing Auto Show early next year. Jidu will showcase Apollo's intelligent self-driving and in-cabin features with the aim to deliver mass production in 2023. For the third quarter, China's GDP growth 4.9%, much slower than the 18.3% and 7.9% growth rates in the first two quarters. Our ad business has been impacted by sectors like education, real estate and home furnishing, travel, and franchising, as we expect this headwind to continue in the near term. As we look forward, there are also positives coming into play. For example, Baidu App is reaching over 600 million users each month. Our hosted marketing solution is becoming ever more popular with site owners, and the trend is for the Internet to become more open. Our ad makes up over 1/5 of Baidu Core and grow over 70% year-over-year. We stand to benefit from China's plan to leverage technology to grow the enterprise and public sector part of the economy. ESG is at the heart of Baidu as we leverage our strong internet foundation to grow our AI business at scale. Apollo's mission is aligned with lowering carbon emissions from making traffic in large cities smoother to accelerating the adoption of EVs through Jidu, software for EVs, and EV-powered ride hailing. In June, we announced our goal to become carbon neutral by 2030. Our Yangquan Data Center was awarded the Carbon Neutral Data Center Leader Certification, and MSCI named Baidu as one of the two companies in China with transparent reports on greenhouse gas emissions in its net zero tracker. Turning to Q3 operational highlights. Baidu's AI Cloud continues to see strong growth, leveraging our world-class AI technologies and our capabilities to provide one-stop-shop solutions to our customers. Our AI solutions are being increasingly adopted across different industries and for different scenarios. We enriched our cloud offering with the release of an end-to-end AI cloud solution powered by Kunlun AI chip and PaddlePaddle deep learning framework to help financial services firms digitize and automate their operational processes, enlisting leading customers like China Life and Bank of Jiangsu. Baidu AI Cloud is expanding into industrial Internet by partnering with industrial parks and municipalities. Our deployment to serve large pool of enterprises is broadening. Last year, we spent 7 months implementing our AI path in Guiyang Economic and Technology Development Zone, serving approximately 100 enterprises. Our deployment of AI path to enterprises in Tongxiang, including those in their economic development zone, took only 3 months. Tongxiang hosts 40,000 enterprises, mostly manufacturing-based, and we believe our AI solution can help these companies improve their operational capabilities. Baidu AI Cloud is moving into smart cities. Lijiang, a UNESCO heritage site with 800-year-old bridges and waterways in Southwest China, is using Baidu AI solution to keep the city safe and clean for visitors. Leveraging the digitization of tourist areas, Baidu AI Cloud helps local authorities timely detect and address infractions such as illegal parking and public littering. Our success in Lijiang is leading to projects with Chengdu, Suzhou, and other cities. Moving to ACE smart transportation. Baidu ACE has been adopted in 24 cities, up threefold from last year based on contract size over CNY 10 million. About half of ACE projects signed in Q3 came from repeat customers. In addition to supporting policy tailwind, ACE is benefiting from the value we deliver to the public sector. For example, the ACE smart transportation solution that was deployed in Guangzhou earlier this year helped improve congested traffic by over 30%. Smart parking has made it easier for local residents to find available parking spaces, shortening travel time. Turning to autonomous driving, Apollo level four testing has accumulated over 10 million miles or 16 million kilometers, setting a new milestone. We continue to receive green light in our application for autonomous driving testing as we demonstrate to local authorities Apollo's progress in technology and operation. Apollo has received 411 autonomous driving permits, an increase of 237 permits from a year ago. Our progress in autonomous driving technology, operation, and continuous cost reduction positions us for ridesharing monetization in a few years as paid rides scale. In July, Baidu opened its third Apollo Park in Shanghai, a 10,000 sq m facility housing Apollo cloud and data operation. Shanghai marks Apollo Go's fifth ride-hailing service open to the public following the cities of Beijing, Guangzhou, Changsha, and Hangzhou. In August, we introduced the Chinese brand for Apollo Go, Luobo Kuaipao, a phonetic interpretation of robot taxi in Chinese. Apollo Go is resonating with ride-hailing passengers, with total rides doubling quarter-over-quarter to reach 115,000 in the third quarter. Apollo Go is off to a good start as we set an ambitious goal to expand operations into 65 cities by the year 2025 and 100 cities by year 2030. Turning to ASD and DuerOS in-vehicle infotainment software. WM Motor, a Chinese EV OEM, signed with Baidu to install Apollo Navigation Pilot in its new W6 SUV, taking Apollo partner network to 31 makes, including those from automakers like GM, Ford, Toyota, Honda, and Great Wall Motor. Turning to Jidu Auto. Jidu has completed its first vehicle wind tunnel testing with a full-size oil and clay model. We have identified the model design schemes and engineering development, and design optimization are underway. Jidu will showcase the latest ASD, demonstrating the appeal of smart EVs with advanced autonomous driving and smart in-cabin features. We hope the success of Jidu will increase the appeal of Apollo solutions to other automakers. On DuerOS, Xiaodu again was ranked number one in smart display globally and number one in smart speaker in China based on second quarter shipment, according to Strategy Analytics, Canalys, and IDC. A key growth driver for Xiaodu's smart display is the shift of user time spent at home to large screens for services like karaoke, short and long videos, online games, education services, video conferencing, and other visually-oriented activities. Popular mobile apps are appearing on DuerOS skills, like Douyin, Kuaishou, Xiaohongshu, Dianping, 58.com, Haidilao, and Kentucky Fried Chicken, to name a few. In addition, Xiaodu completed its Series B financing at a market valuation of CNY 5.1 billion in August, nine months after its Series A financing at CNY 2.9 billion. Baidu remains a super majority shareholder after the Series B round. The continued strong performance of our new AI business would not have occurred without our relentless investment in technology and our pursuit of better products and more customer adoption from our technology leadership. Baidu released PLATO-XL, the world's first 11 billion-parameter pre-trained dialogue generation model, achieving breakthroughs in Chinese and English conversations. PLATO-XL allows for different kinds of conversation with users, including chit-chat, knowledge-based dialogues, and conversational Q&A, which will be incorporated into Xiaodu in the future. Turning to mobile ecosystem. Daily logged-in users in Baidu App reached another all-time high at 79%, and in-app search queries was up 11% year-over-year, reflecting a better search experience from Baidu App. We continue to focus on deepening the service offering of our key verticals. For example, Baidu Health has built a strong community of medical experts that allow users to frictionlessly move from search to telehealth consultation. We recently enabled doctors in our network to write prescription for online consultation and home delivery. Baidu App now offers instant replies to search queries from over 30,000 industry participants spanning 19 industry verticals. Instant replies were up fivefold from a year ago, and 40% are paid services. For example, users who search for tips on job interviews can readily connect to career advisors to get help on reviewing their resumes and selecting career training programs. Instant replies have enriched Baidu's search experience, further driving the vibrancy of our in-app search. Revenues from Managed Page reached 43% of Baidu Core advertising, as we make doing business online for merchants simpler through Baidu's hosted marketing cloud. For example, Meinian Onehealth, a physical checkup clinic chain in Shanghai, opened a Managed Page storefront, allowing users to browse its services, chat with customer service, make payments, leave comments, and share reviews. Monthly orders increased four-fold three months after using Managed Page promotion. Search by nature is open, and we are benefiting from the trend to make internet more open in China. Our e-commerce feature is seeing good progress. In September, the number of third-party SKUs from China's top e-commerce sites searchable on Baidu reached almost 1 billion, and e-commerce GMV on Baidu, though small, grew 90% sequentially. The open nature of our mobile ecosystem is leading smartphone makers to select Baidu's smart mini program as the landing page for their browser search. MAU from such collaboration has reached 24 million, and we believe such trend will enhance user experience and monetization for union search. Last but not least, I want to welcome Rong Luo, who has joined us recently as our new CFO. Rong brings a wealth of financial management and capital market experience. I also want to thank Herman for his 4 years of service as Baidu CFO, and we expect more great things from him as CSO. With that, let me turn the call over to Rong to go through the financial highlights. Thank you, Robin. Hello, everyone. I'm very excited to have joined Baidu recently and participating on my first earnings call at Baidu. I look forward to meeting with everyone in the coming months. Now, let me walk you through the details of our Q3 2021 financial results. All monetary amounts used in my discussion are in RMB, unless stated otherwise. Baidu's Q3 revenue was RMB 31.9 billion, or $5 billion, up 13% year-over-year. Baidu Core's Q3 revenue reached RMB 24.7 billion or $3.8 billion, up 15% year-over-year. Non-advertising for Baidu Core reached RMB 5.2 billion, or 21% of Baidu Core's revenue. AI Cloud revenue was RMB 3.8 billion, up 73% year-over-year. Our AI Cloud growth is benefiting from the demand for cloud services by customers from the internet and media, financial services, energy, manufacturing, and the public sectors. ACE smart transportation is another growth driver for AI Cloud revenue. We are finding that automakers who subscribe to our infotainment solutions are also interested in Apollo ASD. Thus, we are reclassifying ASD revenue into AI Cloud. ASD revenue is quite small now and adding approximately 1% growth year-over-year to AI Cloud as a result of the retroactive adjustment. On ID and OGI, Xiaodu continues to make great progress. Demand for higher ASD products keeps growing as customers come to appreciate the value of DuerOS smart assistant and services revenue continues to grow. Baidu Core ad revenue was RMB 19.5 billion, up 6% year-over-year. In-app search advertising was solid, partially offset by the weakness in union revenue. IG revenue was RMB 7.6 billion, up 6% year-over-year. IG subscribers reached 104 million in September, and the membership revenue was up 8% year-over-year, mainly due to the refined membership strategy and improved monetization capabilities. Cost of revenues was RMB 16.1 billion, up 26% year-over-year, primarily resulting from an increase in tech, content costs, and the cost of sales associated with new AI business. Operating expenses were RMB 13.5 billion, up 46% year-over-year. During the third quarter, we incurred a contingent loss of RMB 976 million pertaining to the legal proceeding involving former advertising agency. Excluding such contingent loss, operating expense was up 35%, primarily due to an increase in channel spending, promotional marketing, personnel related expenses. Non-GAAP operating income was CNY 4.6 billion or $731 million. Non-GAAP operating margin was 15%. Non-GAAP operating income for Baidu Core was CNY 5.8 billion or $904 million. Non-GAAP operating margin for Baidu Core was 24%. Adjusted EBITDA was CNY 6 billion or $925 million. Adjusted EBITDA margin was 19%. Adjusted EBITDA for Baidu Core was CNY 7 billion or $1.1 billion. Adjusted EBITDA margin for Baidu Core was 28%. Cash and short-term investment for Baidu Core as of September 13, 2021 was RMB 183.6 billion or $28.5 billion. Free cash flow for Baidu excluding iQIYI was RMB 2.9 billion or $449 million. Baidu Core has approximately 39,000 employees as of September 13, 2021. As Robin mentioned, China's GDP growth has slowed over the last three quarters. Sectors in our app businesses, such as education, real estate and home furnishing, travel, and franchising, have been negatively impacted. With the resurgence of COVID-19 in many cities recently, local governments are putting in place preventive measures, including quarantines, travel suspension, and mass testing. Consequently, our own advertising business may remain soft in the coming quarters before normalizing. Turning to Q4 guidance. For the fourth quarter of 2021, Baidu expects the revenue to be between RMB 31 billion, which is $4.81 billion, and RMB 34 billion, which is $5.27 billion, representing a growth rate of 2%-12% year-over-year. Which assumes that Baidu Core revenue will grow between 5% and 16% year-over-year. The above forecast takes into consideration that the current COVID-19 situation in China, which is still evolving and business visibility is limited. The above forecast reflects our current and preliminary view, which is subject to substantial uncertainty. Before I turn the call to operator, let me recap this quarter. China is adjusting its economic growth drivers with the introduction of a new five-year plan in March of this year. Historically, the Chinese economy has been very resistant to such adjustments, and new drivers allow the GDP growth to come back. We are optimistic about China's future, especially when the current COVID-19 situation comes under control. It's quite clear that China will leverage technology to grow the enterprise and public sector portion of the economy. Leveraging AI, our cloud services, our cloud business continued to outperform the market, growing 73% year-over-year in the third quarter. Apollo is making great progress. From L4 autonomous driving testing surpassing 10 million test miles to robotaxi ride, sharing W rides sequentially, to ASD signing on new partners, to Jidu finishing the wind tunnel testing of its first car model 8 months after its CEO joins to build a team. We are moving at China's speed. China is rolling out new policies to support green energy. We hope that Baidu will benefit from the promotion of decarbonization as we leverage AI to minimize traffic congestions in thousands of cities across China, and help accelerate the switch to EV with Jidu, ASD and Apollo Go robotaxi. On mobile ecosystem, Baidu MAU reached 607 million, up 12%, and daily login reached 79%. Our app business is susceptible to macro environment, and we expect our app growth rate to peak back up when GDP growth rate accelerates. Operator, with that, let's now open the call to questions. Certainly. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Participants are requested to restrict to one question at each time. Question comes from the line of Alicia Yap from Citigroup. Please ask your question. Hi, good morning, good evening, Robin, Rong, and Juan. Congratulations, Rong, on your new role. Thanks for taking my questions. I actually try to fit in two, if I may. For the fourth quarter Core Baidu Core revenue guidance, you provided a wider range, which is 5%-16%. Can management elaborate the scenario and the situation that you bake into the low end of this 5%? What would be the implied Core App revenue growth versus the AI Cloud revenue growth if we end up in the low end? And then similarly, what would be the scenario if we end up in the high end of the revenue guidance of 16%? Would that, you know, come from, you know, better macro or a more cloud project that will be closing? Secondly, you know, just in this overall broader, you know, regulation backdrop. Have Baidu started to have any discussions with other major internet peers as related to this potentially opening up of their social network content to the search engine? If this were to go ahead, what is management view on the potential benefit and upside to Baidu fundamental going forward? Also any discussion you have with some of the e-commerce leading player to allow Baidu to crawl into the e-commerce content item on their digital storefront. Any color you can provide would be appreciated. Thank you. Alicia, I will have Herman answer your first question, and I'll answer your second one. Hi, everyone. So with regards to our guidance, we normally guide, you know, totally assuming that we will hit the midpoint. You asked about, you know, what do we factor in, and what would it be if it goes to the low end. I think, obviously, as Robin has mentioned, you know, 21% of Baidu Core is non-advertising and almost 80% is advertising. You know, as we're in the process of trying to, you know, control COVID-19, that obviously is the highest risk right now. In our model, we assume that COVID-19 will be under control for the most part in China by the beginning of December. We have seen since Guangzhou's situation that normally, you know, 60 days after that, it happens that it gets under control. This time, it spreads to several cities. Given the pattern that we've seen, for example, in Beijing, we've seen the cases slow down, we think that that's a doable situation. Secondly, you know, the other side of our business is mainly cloud, right? So when you think about the cloud, trying to recognize revenue, trying to make sure that the software is installed, it's a more complicated process than advertising. As you're getting into your end, the risk there is that, you know, we deliver the software, but it's not up and running, so we cannot recognize revenue. That's always the case when you have 2B businesses. I think that there's a risk there with our, you know, cloud business, there's a risk there with our transportation. I think those are the key risk factors I would call out. But as we said, normally when we, you know, go out with a guidance, given the information that we have today, we think we're more likely to be somewhere in the middle. Hi, Alicia. I'll take the second one. As you know, search by nature is open, and we believe, you know, being able to share content across apps provides a better user experience. Also we believe, you know, this will be a going forward trend. Actually we already see things are happening around this direction. For example, you know, some developers are more willing to open up their ecosystem nowadays, you know, because it's also good for their own business. As Robin already mentioned, you know, on our e-commerce effort, almost 1 billion SKUs from the top e-commerce sites are now searchable on Baidu. You know, the GMV on Baidu grows 90% sequentially. Actually another great example, you know, I want to share, which Robin already mentioned, is that the major, you know, smartphone makers in China are adopting our open-sourced smart mini program framework for their in-house browsers. Now, with this adoption, users will have better experience, and the developers can significantly, you know, extend their reach through the major browsers in China. You're right, you know, we believe, you know, we'll benefit from the openness of the whole internet, and we are seeing things are happening that way. Thank you. Great. Thank you. Our next question comes from a line of Piyush Mubayi from Goldman Sachs. Please go ahead. Piyush, your line is open. Please go ahead. Thank you for taking my question. When I look at the guidance that you talked through, Herman, it appears to be generally slowing down, and we realize it's a very high base for the cloud business in the fourth quarter of last year. As we look at that pace of growth, and we go through the core, which looks like it's a 5%-16% range, and we try to estimate where are the, in the advertising vertical, the weaknesses and whether it's COVID-related or macro-related or third-party related. As you exited third quarter, what was the pace of decline that with the commencement of the fourth quarter? If you could take us through that pace so we can understand where we might end up to a certain degree. Also, I know it's very early to talk about it, but broadly speaking into 2022, with the opening up of platforms, with so much that's going on from a business perspective on the AI front as well as on the cloud front, what is the sort of pace of growth we can expect on the Core? Hey, Piyush Mubayi, can you repeat that last sentence? I missed that. As we look at. We've seen a slowing down into the third quarter, which is probably one of the reasons why you're giving a very wide range for Q4 for the core. There's so much that's going on that leads to a level of optimism for what 2022 would look like, including the opening of the systems, opening up of platforms, how much search you can originate in the e-commerce vertical, and that's just the e-commerce space. I don't know how many other verticals you can tap into. As we think through 2022 and the core pace of growth, any feelers around how that would be would be great. Okay. Yeah, the answer to that. So we talked about Q3, right? So when you look at advertising in Q3, we've been gradually slowing down in terms of our growth. In Q3, what we've seen, sectors that have impacted us, you know, some of these are pretty obvious, like education, like real estate and home furnishing, like travel and franchising. These would probably be more related to COVID-19. So these kind of situation are gonna extend into Q4, and we suspect that this might be a multi-quarter impact. Based on what we have seen right now, we expect that advertising for Baidu Core, which was 6% year-over-year in Q3, will probably go into an even slower growth rate in Q4, assuming that COVID-19 gets under control by the beginning of December. A lot of uncertainty. If that continues to, you know, have new cases every day, then our advertising could even perform worse than that. I think a lot of it has to do with COVID-19, but other you know factors that's impacting that, such as regulations and so forth. I think with regards to the AI businesses, I think it's, you know, COVID-19 does impact that a lot. As we talked about before, that our AI cloud is based on solutions, and we have to customize for certain customers and so forth. If we are unable to travel or we have to, we're not able to be as fluid as before, that will have some impact. Others are just, you know, more, you know, end of the year, trying to complete these enterprise solutions. Sometimes, you know, given the difficulties that we have right now, traveling about and so forth, might not, you know, make it. I think we're just putting that uncertainty in there. With regards to our range, actually, we've been pretty consistent if you look at over the last year. It's at the Baidu consolidated level, it's always ±5%. I don't think we've made any changes in the recent quarter. You know, going into 2022, it's kinda hard to look out so many quarters into 2022. But what we have seen, you know, for advertising, as I mentioned, we think that this is, this could be a multi-quarter impact because, you know, the, for example, COVID-19 comes and goes and then the regulations and so forth. When we, you know, talk to our peers in the market, there seems to be a consensus that this could be beyond one quarter. I think that's where we are with advertising. Sure enough, there's also that upside, you know, with the opening up, with different apps and so forth, but it's hard to bake that in until we actually see more development. We'll keep you guys apprised as that comes. You know, the other side of this is that we're pretty optimistic with our, you know, AI businesses. You know, Robin has said, you know, Q3 would be 7% year-over-year. If you look at, for the last few quarters, we've been always growing above the market speed. We continue to believe that we can grow above the markets. If you look at our NRR, for example, it's been gradually improving or increasing. We're coming, you know, feeling pretty good about that. One of the things is that our... If you look at our cloud business, SaaS business is the fastest piece growing right now. You know, we were ranked by IDC as number one with the largest AI solutions in China, and this is the piece that's the fastest of our cloud solutions or our cloud. I think we feel like we're in a good spot right now because of the, you know, policy trends supporting technology or leveraging AI for enterprises and also for the public sector. Yeah, let me just add about the opening up of e-commerce platforms that will enable users to do transactions. The Baidu mobile ecosystem, especially Baidu App, more easily. Given that the e-commerce infrastructure in China has matured, it's very easy for people to pay using their mobile phone. It's very quick to get something delivered to your home. Now that we can index a lot of local use on Baidu, we expect a very, you know, quick increase in terms of GMV from a low base. The revenue contribution directly from transactions will not be large. Once users get used to do transactions on the Baidu platform, I think the overall conversion rate for our advertisers will also improve. I think that the benefit will be well beyond simple transactions on the Baidu platform. All right. Your next question comes from Alex Yao from JP Morgan. Please ask your question. Thank you, management for taking my question, and a warm welcome back to the Internet investment community. I have two questions. Number 1 is, we have seen a lot of regulatory and operating environment changes recently. For example, Apple's IDFA policy change, for example, the implementation of PIPL on first of November. Can you guys talk us through the operational and the financial impact from those changes, particularly how should we think about the online business into the next couple of quarters? Second question is regarding the general corporate strategy. Well, the advertising revenue outlook is weak for the next couple of quarters. How do you guys think about the general corporate strategy, for example, are you still pushing the investments on headcounts and user acquisition costs? I think, you know, in the past, you guys had a very tough cost control when the top line was under pressure. Are you thinking very differently this time? Any thoughts on general corporate strategy in the current advertising revenue outlook will be helpful. Thank you. Take the first one. On the IDFA side, right? Because the majority of Baidu's core ad business does not rely on user data, you know, just it's not like some of the U.S. companies do. The impact on that side is less pronounced actually. But in general, as we are strive to be a global technology leader, issues such as this type of data privacy and security has been taken into consideration for a long while. Many years ago, before this topic even caught up, caught the industry's attention, you know, we saw the need to establish internal committees to define strict policies and procedures to address data privacy, data management and data security. Also, you know, we are working with the leading companies globally and domestically, you know, to trade ideas and derive best practices. We also share our experience with authorities to help the industry address these complicated issues. Given all the efforts we have done, I think the impact on this side is not that pronounced. I'll take the- Your next question comes from James Lee. Sorry. Go ahead, please. Alex, you mentioned about our corporate strategy. You know, where we are this time is that we have our expenses. You could look at mainly two buckets, right? One bucket of spending is related to our growth with our new business, whether that's in cloud, whether that's in Intelligent Driving and so forth. You gotta invest ahead of time to make sure that your sales force is there, to make sure that people who are doing pre-sales is there to support your future growth. As we mentioned earlier, that piece of business is still growing very fast. When you look at non-advertising, we're growing over 7%, so you gotta build a funnel. You gotta get the people in so forth. I think that's gonna continue. Secondly is a new AI business has higher cost of goods sold, whether you're talking about selling you know smart devices, whether you're talking about you know delivery for 2B solutions or smart transportation. Okay, so those things we have to factor in for this new business. That's just part of it. And you know, we look at the growth margin very carefully, but you still have to fund you know the OpEx, the sales people, the development people to support the business growth. And we're leading in those businesses, so we feel comfortable continuing to invest. The second pool of investment that we have is with the mobile ecosystem. What you see there, you know, mainly is supporting our Baidu App. You know, a big part of that spending is us, you know, channel spending, marketing spending for the Baidu App. This year, we've been pushing a Baidu App Lite, which would allow us to tap into users from lower tier cities, and that has been working. In addition to that, you know, we've been beefing up some development in that area to help our search experience. I think we manage that side of the expenses, especially channel spending based on ROI. As long as we're seeing, you know, positive ROI, we will continue to spend in the channel and marketing areas. Yeah. I would just like to emphasize that our investment is pretty much packed with growth potential. We see a lot of growth potential in the AI-enabled new businesses, so we'll continue to aggressively invest in that area. Mobile ecosystem in general, not just for Baidu, I think the overall mobile internet market in China is maturing, so we will use discipline to balance our investment and growth. Right. Thank you. Our next question comes from James Lee from Mizuho. Please ask your question. Great. Thanks for taking my questions. My question's on intelligent driving and autonomous driving. Obviously, you know, there's a lot of moving parts in this business right now. I think you guys already lay out your plans of robotaxi. Can you also lay out the roadmap and how Apollo can achieve a meaningful presence in connected infrastructure and OEM licensing your technology? So what I mean is that does your footprint of your smart transportation influence OEM's decision to choose their autonomous driving solutions? Thanks. Hi, James. Apollo is a platform for both smart transportation and autonomous driving. It has gained a lot of partners, customers, and so on. We've been a leader in many of the fronts, including robotaxi, as I mentioned. We are probably the largest robotaxi service provider in the world by number of rides we provide, and it's open to the public in five cities in China. For many of those areas, we also have smart transportation projects going on. Government pays us to install roadside units and also software systems to better manage the traffic and help you know the autonomous driving become safer and greener. We also work with quite a number of OEMs to provide infotainment system as well as you know autopilot or navigation system, what we call ASD. We have again quite a number of OEM customers. All in all, as a platform, Apollo connects smart transportation, OEMs you know ride-hailing services all together, and we're quite confident that we will continue to lead that market and even become dominant in the future. Right. Your next question comes from Jiong Shao from Barclays. Please go ahead. Thank you very much for taking my questions. First off, big congrats to both Herman and Rong on your new roles. My questions are related to your Apollo autonomous driving and the robotaxi as well. Just following up on the previous question, could you elaborate a bit on the pipeline for Jidu in terms of when the assembly line manufacturing facility will be ready? What kind of scale we are talking about when you talk about mass production 2023? You talked about your partnership with Lionbridge for semi-truck. I understand Geely just announced their ambition for the EV semi-truck business a couple days ago. I think I was wondering, since they are your big partner, do you have any plan to work with them for their semi-truck EV initiative? Lastly, on robotaxi, I recall, I may have read somewhere you may have commercial operations up and running for robotaxi come sometime next year. Is there anything there you can share with us? Thank you so much. All right. On Jidu, like I mentioned during the prepared remarks, we are planning to launch the concept production car early next year at the Beijing Auto Show. That car will be the final, you know, shape in the architecture for when it is available for sale in the latter part of 2023. By mass production, we mean everyone, every consumer can place an order. To buy the Jidu car sometime in the second half of 2023. Of course, it's too early for us to predict how many units we can sell at that time, but we are all very excited, the features we're putting in and the values we can offer to our consumers when it's available. In terms of autonomous trucking, it's a huge market. We already have a partnership with Lionbridge and Geely, as you know, is a strategic partner of Baidu, too. We are open to all kinds of collaborations with them. Again, this kind of collaborations are not exclusive. Apollo is an open platform. We can work with everyone, and we would like to help a lot of companies to become successful. On the commercial operation of Robotaxi, we can charge right now in a couple of the areas in Beijing and Hangzhou. We are applying such licenses in other cities. It's a you know a very quick ramping up process. We already provided 115,000 rides in one quarter, in Q3. In Q4, I think that number will continue to increase. This is probably much larger than the reported number you can hear anywhere else in the world. All right. Thank you. Our next question comes from Natalie Wu from Haitong International. Please ask your question. Hi. Good evening. Thanks for taking my question. Thanks, Herman and Rob, for your new role. My question is regarding the investment plan for your new AI business. Firstly, if we just look at the development history of Alibaba Cloud, when the revenue scale approached RMB 20 billion annually, its EBITDA loss ratio actually narrowed significantly. Should we expect the margin profile of cloud business to improve next year as your AI cloud revenue scale reaches also the RMB 20 billion scale? Or how should we see the margin trend of your AI cloud business in the next one or two years? Also for the Intelligent Driving, what kind of investment scale should we expect for the next one to two years? And how could that impact your margins? Thank you. On the AI cloud, I think when you talk about other cloud players, they're talking about scaling with regards to IaaS, right? As we talked about before, IaaS is a smaller piece of our business. What we're more excited about, what we're differentiating in the market is our SaaS. As I mentioned earlier, SaaS is the fastest-growing piece of our business. When you look at SaaS, as we talked about at Baidu World, there's several factors with regards to margin improvements, right? As we come out with new solutions, working with new customers, the first few projects, we might have to spend that extra time in order to integrate with your legacy system, in order to build tools and so forth for it to go up and running. When we're going into new industries, that would also there's that ramp-up cost to be able to adapt our current solutions to that new industry. You're seeing with our fast growth, as Robin mentioned, you know, 73% year-over-year growth is much faster than market right now. We could not have done that without, you know, going into new industries with new solutions, without, you know, consistently getting new customers. At the early stage where we're just expanding market, expanding customers, you're not gonna see good margins. When you look at a particular solution over time, when you're looking at a particular customer over time, you're seeing margin improvements. We've you know went through that in very detail you know during the Baidu World presentation, and our IR can go through that with you again on those things. You know this is a proven business. If you look at our counterparts in the U.S. who are in the SaaS market, you see the same trends. We're pretty confident that as we you know continue to you know grow our businesses here, in the beginning, you're not gonna have a good margin because you have to customize. As the product line becomes more standardized, as we you know become more standardized solution by industry and so forth, you're gonna see that margin pick up. That's number one. Number two is the proportion of SaaS you know is getting higher versus IaaS. IaaS, as we know, because it's a commodity cloud, it's just gonna have lower margins. You have several trends that are playing in our favor. I can see it a few years out, you're gonna see you know margins improving. Okay. Intelligent Driving. Intelligent Driving, I think, there are three pieces as we talked about before. You know, Autonomous Driving is the technology, and then out of that, there are three ways to monetize. Right. There is the infotainment business, right? There is the what we call ASD Apollo, the Autonomous Driving navigation pilot, so forth. So that is a business where you have to invest upfront with our R&D and so forth, but when we sell it on a gross margin level, that gross margin is usually pretty healthy compared to, you know, other, you know, AI businesses. Okay. There is the other piece for Apollo, smart transportation. Smart transportation is mainly, you know, with the, you know, government sector and so forth. It's usually, you know, very complicated solution, so forth. Those margins are pretty healthy, especially when you compare to a business like ads. I think when you're going into smart transportation, the factors that impact the margin are very similar to what I described earlier. Coming out with new solutions, you know, when you're working with new cities, you gotta make that investment when you're, you know, coming out with new solutions. As we're working with the same city, we understand their legacy system, we build out the tools and so forth. Over time with the particular customers, we're seeing that margin improvement, right? I'm pretty confident because when you look at us, you know, we're growing on the one hand, you know, as we mentioned, Robin mentioned smart transportation, the customers, you know, went up like 3-4 year-over-year. The new customers, they're gonna dampen margin. On the other hand, half of that business is with repeat customers. That's gonna improve. I think over time, we see, you know, as we go for the next few years, that more and more revenue is gonna be recurring, which is gonna. All right. Thank you. Our next question comes from Gary Yu from Morgan Stanley. Please ask the question. Hi. Thank you for the opportunity to ask question. I have one follow-up question regarding the opportunities with the further open up of the internet. It seems like there is a great opportunity from both the kind of e-commerce space and also potentially content space. But at the same time, given users have already, you know, got into the habit of doing those transactions in some of the other competing platforms, how are we going to kind of change some of these user behavior to start doing more kind of e-commerce transaction on Baidu? As a result of that, are we going to kind of go into another kind of investment cycle in terms of acquiring traffic and users on these transaction-based traffic? Thank you. Yeah, Gary, I'll take this question. Actually, you know, as we see the users' behaviors in our web search, you know, before the people make their final decision to buy something or not, they come to Baidu for more information. This is how we step in, you know, to help them to do the transactions actually. Also as Robin just mentioned, right, the infrastructure for transactions in terms of the payment delivery or you know it's pretty you know matured in China. That said, you know, once we give the user comprehensive information, you know, for them to make the right decision, you know, people will come back again, you know, for their another transaction. In terms of, you know, getting more traffic, I think, you know, for now we still have tons of, actually, user search volumes in, you know, Baidu for not just the typical e-commerce queries and/or other queries related to transactions. That's why, at this stage, you know, we are trying to, you know, make the transaction experience as smooth as possible, you know, on Baidu's platform. Actually, we have been working on this for a while, since we, you know, started building smart mini programs, you know, on Managed Pages, you know, and Baidu App. That's how we can, you know, not only get the right information, but also, you know, have the right support, you know, for this transaction-related queries. All right. Thank you. Our next question comes from Eddie Leung from Bank of America. Please ask your question. Good evening. Thank you for taking my questions. May I have two questions on your cloud business? The first one is about hybrid cloud and private cloud. As the government is pushing for the awareness of data security, will there be a potential increase in demand for private cloud and hybrid cloud versus public cloud? How might that affect your business? Secondly, I remember, Robin, you mentioned earlier a pretty interesting point. You guys have been focusing your cloud business on SaaS and end-to-end solutions, while some of your industry peers seem to be emphasizing more on the, shall we say, modules or the component capabilities and performance. Probably a bit more about path, at least from a marketing perspective, right? Could you share your thought on any difference between the clients that these two approaches may get? Thank you. Hi, Eddie. I think you're right. Given the regulatory environment changes, I think more and more customers would want private deployment or private cloud or hybrid cloud rather than public cloud. Like Herman mentioned before that our high growth area and also higher margin area comes from those kind of private placements or solution offered to our customers, typically end-to-end solutions leveraging our strong capability in all kinds of AI value chain, PaaS, SaaS, all included. You know, AI chips, frameworks, deep learning frameworks. When we say SaaS, it means more like a end-to-end solution which typically would include the PaaS part. It's just AI PaaS in China or PaaS in general in China is not a big market yet. It's growing very fast, but it's very hard to charge a lot of money for you know middle layer of the solution. Yes, I think a lot of customers do value our end-to-end capability and end solution in terms of AI. I think cloud overall is a very large market, and our strength is to really leverage Baidu's investment in AI and provide end-to-end solution to our customers in you know important verticals like industrial internet, smart transportation, energy, yeah, financial services. This kind of verticals that we think we have a very strong proposition. All right. Thank you. We have reached the end of the question and answer session. With that, we conclude our conference for today. Thank you for participating. You may all disconnect.