(Yicai Global) Aug. 31 -- Baidu’s shares dropped in Hong Kong after the Chinese tech giant’s second-quarter revenue fell and a report said it was among New York-listed Chinese companies lined up for audit inspections by US regulators.

Baidu [HKG: 9888] closed 3.3 percent lower at HKD141.50 (USD18.03) today, after earlier sliding by as much as 7.3 percent. Its US-traded stock [NASDAQ: BIDU] was up 2.6 percent at USD141.31 in pre-market trading as of 7.04 a.m. local time today, after retreating 6.5 percent yesterday.

Revenue fell 5 percent to CNY29.6 billion (USD4.4 billion) in the three months ended June 30 from a year earlier, the Beijing-based firm’s latest financial results showed yesterday. One reason was a 10 percent drop in income from online marketing, the largest segment, to CNY17.1 billion, while Baidu’s video platform iQiyi recorded a 13 percent revenue slump to CNY6.7 billion.

Net income rose 3 percent to CNY5.5 billion (USD827 million) from a year ago, but was 43 percent up on the first quarter thanks to the rapid growth of Baidu's cloud computing services and other artificial intelligence business. Its earnings figures did not follow generally accepted accounting principles.

Bloomberg News reported today that US regulators have put Baidu in a first group of US-listed Chinese companies, which also includes Alibaba Group Holding, JD.Com, and NetEase, for audit inspections next month in Hong Kong, citing two people with direct knowledge of the matter. Reuters reported similar news, but did not mention Baidu.

China and the United States agreed a landmark deal late last week to end a decades-long impasse over access by US regulators to the audit documents of Chinese businesses whose stocks are traded in New York.

Baidu will face more uncertainties in the macro-environment this half, founder and Chief Executive Robin Li said on its earnings call. But the company sees opportunities in the mobile ecosystem, he said, adding that search engine optimization charges for searches of e-commerce, video, and short video information have been rising recently. 

Covid-19 is visible in Baidu’s financial report. Advertising income dropped by 10 percent year on year due to a big fall in April and May, Li said. The reason was clients in sectors such as retail, tourism, local services, and healthcare, are advertising less because of the pandemic. 

Baidu is increasingly known for its AI. Non-online marketing revenue rose by 22 percent to CNY6.1 billion in the quarter, driven by smart services. One of the big components was Baidu AI Cloud. Its revenue jumped 31 percent from a year ago and 10 percent on the first quarter.

The cloud computing brand that offers services to enterprises and individuals was once again ranked as China's No. 1 AI cloud provider, according to IDC's industry report for the second half of 2021. 

Apollo Go, Baidu's autonomous ride-hailing service, continued its solid progress in expanding operations. Apollo Go reached a milestone of 1 million rides, serving passengers on open roads, as of July 10.

Editor: Emmi Laine, Xiao Yi