BIDU: Baidu Reports Earnings For The Quarter Ending June 30, 2006

Baidu.com, Inc. (Nasdaq: BIDU), the leading Chinese language Internet search provider, today announced its unaudited financial results for the quarter ended June 30, 2006.(1)

Second Quarter 2006 Highlights

-- Total revenues increased by 41.3% sequentially or 174.9% year-over-year
to RMB191.6 million ($24.0 million).

-- Net income increased by 65.9% sequentially or 385.2% year-over-year to
RMB58.5 million ($7.3 million). Basic and diluted earnings per share
("EPS") were RMB1.76 ($0.22) and RMB1.69 ($0.21), respectively.

-- Net income, excluding share-based compensation expenses (non-GAAP), was
RMB70.2 million (US$8.8 million). Basic and diluted EPS, excluding
share-based compensation expenses (non-GAAP), were RMB2.11 ($0.26) and
RMB2.03 ($0.25), respectively.

-- The number of active online marketing customers grew to more than
90,000, an increase of 21.6% from the previous quarter.

"We are very pleased Baidu has maintained its revenue growth momentum and achieved another quarter of excellent results," said Robin Li, Chairman and CEO of Baidu. "Our focus on providing the best user experience continues to drive traffic growth and our expanded sales force contributed to a substantial boost in our active customer base."

"Our community-based search products, including Baidu Post Bar, Baidu Knows and Baidupedia, have become increasingly popular because they make users stay connected while searching online. In July, we launched Baidu Space, which allows users to create personalized homepages on Baidu and integrate their use of other Baidu search products in one place. We will continue to develop products tailored to user needs to ensure that Baidu remains the search engine of choice in China," added Mr. Li.

"Our active customer base grew significantly in the second quarter due to expansion of our sales force and increased awareness of Baidu's pay-for- performance services," said Shawn Wang, Baidu's CFO. "In addition to customer base expansion, further optimization in monetization algorithm also contributed to strong revenue growth."

"The scalability of our business was once again demonstrated by margin increase during the quarter while we continued to invest heavily in the fundamental growth drivers of our business to facilitate long term sustainable growth," Mr. Wang continued.

Second Quarter 2006 Results

-- Baidu reported total revenues of RMB191.6 million ($24.0 million) for
the quarter ended June 30, 2006, representing a 41.3% increase from the
previous quarter and a 174.9% increase from the corresponding period in
2005.

-- Online marketing revenues for the second quarter were RMB189.1 million
($23.7 million), representing a 43.2% increase from the first quarter
of 2006 and a 183.3% increase from the second quarter of 2005. The
growth was driven by the increase in the number of active online
marketing customers, which increased by 21.6% from the first quarter of
2006 to more than 90,000 for the second quarter. Customer expansion was
driven by expansion of the direct sales force and the increased
effectiveness of the Company's direct sales offices and distributor
network. Revenue per online marketing customer for the second quarter
increased to RMB2,081 ($260.3) from RMB1,774, a sequential increase of
19.3%.

-- Traffic acquisition cost (TAC) as a component of cost of revenues was
RMB17.6 million ($2.2 million), representing 9.2% of total revenues,
compared to 9.1% in the first quarter of 2006. TAC remained largely
unchanged as a percentage of revenues.

-- Selling, general and administrative expenses for the second quarter
were RMB58.7 million ($7.3 million), representing an increase of 16.7%
from the previous quarter and an increase of 110.1% from the second
quarter of 2005.

-- Research and development expenses were RMB18.3 million ($2.3 million),
representing a 17.5% sequential increase and a 111.3% increase from the
corresponding period in 2005, primarily due to headcount increase.

-- Share-based compensation expenses, which were allocated to related
expense line items, decreased in aggregate to RMB11.7 million ($1.5
million) in the second quarter of 2006 from RMB12.8 million in the
previous quarter.

For the full year, we expect share-based compensation expenses for awards granted to employees prior to July 1, 2006 to be RMB37.6 million. This amount does not include expenses to be recognized over the remainder of the year related to awards granted to employees after July 1, 2006 or awards granted to non-employees that have been or may be granted.

-- Operating profit was RMB58.0 million ($7.3 million), representing a
115.4% increase from the first quarter of 2006 and a 384.7% increase
from the second quarter of 2005. Operating profit excluding share-based
compensation expenses (non-GAAP) was RMB69.7 million ($8.7 million) for
the second quarter of 2006, a 75.4% increase from the previous quarter
and a 284.5% increase from the corresponding period in 2005.

-- Net income was RMB58.5 million ($7.3 million), representing a 65.9%
increase from the previous quarter and a 385.2% increase from the
second quarter of 2005. Basic and diluted EPS for the second quarter of
2006 amounted to RMB1.76 ($0.22) and RMB1.69 ($0.21), respectively.

-- Net income excluding share-based compensation expenses (non-GAAP) was
RMB70.2 million ($8.8 million), a 61.6% increase from the previous
quarter and a 285.3% increase from the second quarter of 2005. Basic
and diluted EPS excluding share-based compensation expenses (non-GAAP)
for the second quarter of 2006 was RMB2.11 ($0.26) and RMB2.03 ($0.25),
respectively.

-- As of June 30, 2006, the Company had cash and cash equivalents of
RMB1.1 billion ($133.2 million). Net operating cash flow and capital
expenditures for the second quarter of 2006 were RMB129.7 million
($16.2 million) and RMB41.1 million ($5.1 million), respectively. The
increase in capital expenditures was primarily due to expenditures
incurred to support significant traffic growth during the quarter.

-- Adjusted EBITDA (non-GAAP), which is defined as earnings before
interest, taxes, depreciation, amortization, other non-operating
income, and share-based compensation expenses, were RMB85.0 million
($10.6 million) for the second quarter of 2006, representing a 62.7%
increase from the previous quarter and a 243.0% increase from the
corresponding period in 2005.

Outlook for Third Quarter 2006
Baidu currently expects to generate total revenues in an amount ranging from RMB238 million ($30 million) to RMB246 million ($31 million) in the third quarter of 2006, representing a 168% to 177% increase from the corresponding period in 2005. This forecast reflects Baidu's current and preliminary view, which is subject to change.