Shortly before Baidu’s (BIDU) recent earnings report was released, anyoption wrote, “the company is poised to continue its dominant streak as it seeks to capture additional market share and revenue streams from competitors.”
The earnings numbers seemed to confirm our conclusion. Let’s take a look at the highlights:
Earnings per share came in at RMB9.07, beating the consensus estimate by RMB1.90.
Revenue continues to thrive for the 15-year-old company, growing 35.9% year over year to RMB18.38 billion.
Mobile brought in 54% of revenue, up from 50% last quarter. Mobile search monthly active users grew 26% year over year.
The company is guiding for Q4 revenue of RMB18.2 billion to RMB18.75 billion, below the RMB18.93 billion consensus. However, expectations were already low amid Chinese macroeconomic concerns and Baidu has always been known to be ultra-conservative with its internal estimates.
“With mobile accounting for nearly two-thirds of Baidu’s search traffic and China squarely in a mobile age, Baidu is pioneering and redefining the mobile experience for users in China,” said Chairman and CEO Robin Li in a press release. “We further extended the reach of our platform by deeply integrating and connecting search and maps with transaction services.”
Profits down
While Baidu crushed the earnings per share estimate by analysts, taking a look at last year, the number is actually down 22.3% from last year. This is largely due to the company’s heavy investments in online-to-offline initatives, such as buying a movie ticket online to view the film in the theater.
With fierce competition coming from Dianping and Meituan in the O2O space, we may even see Baidu continue to increase that spending to stay competitive. With Tencent and Alibaba backing Baidu’s competitors, it doesn’t look like they’ll go away anytime soon and will remain a concern for investors going forward.
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