Baidu Profits and Revenues Beyond Expectations
Baidu Inc said third-quarter earnings and revenues exceeded expectations as more users subscribe to iQIYI’s video streaming platform, resulting in Chinese search engine stocks up 5%.
Baidu is trying to reduce its dependence on its core search business, which accounts for three quarters of the company’s revenues. The company has had limited success in cloud services and artificial intelligence so far, but its subsidiary iQIYI, a Netflix-like video service, is popular with young people..
IQIYI’s third-quarter revenue, which competes with Alibaba-backed Youku and Telecom giant Tencent’s Video Tencent Holdings, rose nearly 7% from a year earlier to 7.4 billion yuan ($ 1.06 billion) since September 105.8 million subscribers have already subscribed to the service. IQIYI shares rose 4%.
A relatively new service – offering mini-programs in Baidu’s app to increase traffic – is also gaining traction. Application traffic grew 25% in Q3, the company said.
«The changes we initiated this year are paying off», – said Baidu CEO Robin Li.
But revenue from Baidu’s core business fell 3% in the quarter ended September 30, reflecting total sales, which remained flat at last year‘s level of 28.08 billion yuan, higher than Refinitiv’s estimate of 27.49 billion yuan..
Baidu reported a net loss of 6.37 billion yuan for the quarter, mainly due to losses on equity investment, compared with a profit of 12.40 billion yuan a year earlier..
Excluding these losses, Baidu earned 12.61 yuan per depository share, surpassing estimates of 7.88 yuan per ADS.
Baidu, like other Chinese internet companies, is tightening regulation even as the economy slows down..
These issues are currently affecting Baidu’s earnings, Li said during a conference call..
Baidu, whose search engine dominates the Chinese market, predicts fourth-quarter revenue of RMB 27.10 billion to RMB 28.70 billion. Analysts expect 27.52 billion yuan.
ADS companies, which have lost almost a third of their value this year, are up about 5% to $ 112.74.
Baidu has faced a number of hurdles this year, including a slowdown in the Chinese economy amid a protracted trade war between the United States and China, increased competition from emerging search players such as TikTok’s ByteDance, and increased regulatory oversight of the second-largest advertising market. world economy.
Baidu is committed to diversifying revenues and reducing reliance on its core search business by expanding into areas such as self-driving cars, artificial intelligence, and streaming. The first two are seen as areas of future growth for the company, with the iQiyi video platform already delivering goods.
Baidu is also trying to expand its mobile offerings. The search giant has been criticized in the past for its slow transition to mobile devices as consumers spend more and more time on so-called super apps. These are products like WeChat from Tencent or Alipay from Ant Financial, in which the user can perform different actions – from payments to ordering food – all in one application..
Baidu’s proprietary app, which combines search, news, and video to drive user engagement, brings its daily active users to 189 million, up 25% from September.
The company’s core business has also remained strong, which is a positive sign for investors..
«We aim to integrate the search, feed and expansion of Baidu App content and service offerings in order to improve user experience and attract publishers and service providers to host more content and services on the Baidu platform, which in turn attracts more users.», – notes Lee.