Baidu (BIDU  ) shares were up 19% following the company's better-than-expected Q3 earnings report which saw it beat expectations on the top and bottom lines. The company also managed to post an increase in its revenue while many ad-dependent, tech, and Chinese stocks are seeing drop-offs due to the challenging environment.

The company also said that the U.S.' limits on chip exports would only have a small impact on the company. Overall, Baidu shares are down 23% YTD which is better than many of its peers and the overall Chinese market. However, shares are off by 68% from their all-time high in early 2021. Like many Chinese and tech stocks, Baidu gave up all of its gains from the March 2020 rally due to the weakness in tech stocks, lockdowns in China, and the harsh regulatory environment.

Inside the Numbers

In Q3, Baidu reported non-GAAP earnings of $2.37 per share, topping analysts' expectations of $2.14 per share. Revenue was up 2% and also beat at $4.6 billion vs expectations of $4.5 billion.

The company's core revenue was up 2% as non-online marketing revenue gained 25% and continues to make up an increasing share of overall revenue. Non-online revenue includes cloud and AI. Online ad revenue was down 4% which was better than expected. Its video platform IQIYI saw a 2% decline in revenue and now has 101 million total subscribers.

The company's cost-cutting efforts are paying off as SG&A expenses declined by 29% and R&D was down 7%. In total, adjusted EBITDA margins were up 8% to reach 27%. Baidu's SG&A fell 29% Y/Y, and R&D expenses declined 7% Y/Y.

The company now has $25 billion in cash and had nearly $1 billion in positive free cash flow during the quarter. This certainly makes the company's valuation more appealing given its total market cap of $38 billion. And, the company seems to have stabilized in terms of the forward path of revenue given that Chinese growth is expected to pick back up in the coming quarters as policymakers revise their harsh COVID policies.

In addition to valuation, the company offers growth exposure given its presence in AI, cloud, and EV.