Baidu’s first-quarter revenue of 22.5 billion yuan, year-on-year profit

In the early hours of May 19, Beijing time, Baidu (NASDAQ:BIDU) today released unaudited results for the first quarter of fiscal year 2020 ended March 31. Baidu’s first-quarter revenue was RMB22.5 billion ($3.18 billion), down 7% year-on-year, while net profit for the first quarter was RMB41 million ($6 million), compared with a net loss of RMB327 million a year earlier, the report showed.

Baidu's first-quarter revenue of 22.5 billion yuan, year-on-year profit

On average, 16 Wall Street analysts expect Baidu’s first-quarter earnings per share to be $0.57, excluding Us General Accounting Standards (GAAP), according to Yahoo Finance. Excluding equity incentive expenses (not in accordance with GAAP), Baidu’s first-quarter diluted earnings per share of U.S. depositary receipts were 9 yuan ($1.25), beating analysts’ expectations.

In addition, the average of 17 Wall Street analysts forecast first-quarter revenue of $3.18 billion. Baidu’s first-quarter revenue was 22.5 billion yuan ($3.18 billion), in line with analysts’ expectations, the company said.

Key results:

-Baidu’s first-quarter revenue was RMB22.5 billion (US$3.18 billion), down 7% year-on-year. Baidu Core, a combination of search and trading services, reported first-quarter revenue of 15.3 billion yuan ($2.16 billion), down 13% year-on-year.

-Baidu’s first-quarter operating loss was RMB437 million (US$62 million), compared with rmb936 million in the same period last year. “Baidu Core” operating profit for the first quarter was 1.8 billion yuan (about $261 million), up 69% year-on-year;

-Baidu’s first-quarter operating profit was RMB1.4 billion (US$203 million), up 258% Year-On Year,” according to Us General Accounting Standards. In accordance with U.S. General Accounting Standards, Baidu Core’s operating profit for the first quarter was 3.3 billion yuan ($473 million), up 59% year-on-year;

-Baidu’s first-quarter net profit was RMB41 million (US$6 million), compared with a net loss of RMB327 million in the same period last year. Baidu’s diluted earnings per American depositary receipt per share in the first quarter were RMB0.02 (US$0.00). Baidu Core’s first-quarter net profit was 1.7 billion yuan ($240 million), up 142 percent from a year earlier. Excluding equity incentive expenses (excluding Us GAAP), Baidu’s first-quarter net profit was RMB3.1 billion (US$435 million), up 219% year-on-year. Excluding equity incentive expenses (not in accordance with GAAP), Baidu’s first-quarter diluted earnings per American depositary receipt per share were RMB9 (approximately US$1.25). Excluding equity incentive expenses (not in accordance with Us GAAP), Baidu Core’s first-quarter net profit was RMB4.5 billion (US$638 million), up 148% Year-on-Year;

-Excluding interest, taxes, depreciation, amortization, other non-operating profit and equity incentive expenses (excluding GAAP), Baidu’s first-quarter adjusted net profit was RMB2.9 billion (US$403 million), with an adjusted net profit margin of 13%. Excluding interest, taxes, depreciation, amortization, other non-operating profit and equity incentive expenses (excluding GAAP), Baidu Core’s adjusted first-quarter net profit was RMB4.6 billion (US$656 million), with an adjusted net profit margin of 30%.

Executive Reviews:

“In the first quarter, people were isolated from home affected by the outbreak, and Baidu’s revenue fell only 7% year-on-year during the period,” said Robin Li, Baidu’s chairman and chief executive. This is largely due to a diverse range of revenue streams, including marketing services for a wide range of industries, anew business for AI and Aichi. As the domestic situation is gradually brought under control and offline activities are gradually recovering, Baidu will also benefit from China’s economic recovery. “

“Baidu’s core business is operating efficiently, mainly benefiting from the enhancement of the mobile ecosystem, which makes in-end searches grow faster and more liquid than browser search,” said Yu Zhengxuan, Baidu’s CFO. In addition, AI’s new business has grown even better. “

Solid mobile ecological foundation Traffic duration growth is strong

Operational highlights:

In the first quarter, Baidu App continuously provided authoritative information about the outbreak of new crown pneumonia, with an average of more than 1 billion people per day through Baidu to understand the outbreak, driving strong growth in Baidu App traffic and user duration. In March, Baidu’s Daily Active Users reached 222 million, up 28% YoY; The shift in user behavior from browser search to artificial intelligence-based in-app search has had a positive impact on Baidu’s long-term growth. At the same time, strong traffic growth also means an increase in cashpotential.

Baidu actively promote Baidu App in-line search, enhance the mobile ecosystem strategy, so that more users use Baidu to obtain important and reliable information. For example, during the outbreak, Baidu Health Asked Doctors to provide online health counseling services tens of millions of times, the first entrance to Chinese online health counseling.

Baidu App large-cap data solid upward, the long-standing 100, intelligent small programs and hosting page three pillars also maintained a high growth trend: the number of 100 number of content creators exceeded 3 million, up 44% YoY; Baidu mobile ecology three pillars and knowledge products, automotive, finance, education and other vertical categories complement each other, search and information flow twin engine distribution, Baidu mobile ecosystem continues to develop in depth. Coupled with the focus of the live broadcast business, Baidu system products fully open, from the information portal to the service interface of the leap, Baidu mobile ecology as a whole gradually into a fist.

In the first quarter, the outbreak of the new crown suddenly broke out, so that Baidu AI services accelerated landing, AI anti-epidemic reflects positive social value. For example, more than 100 Apollo unmanned vehicles are rapidly deployed in 17 cities, including Wuhan, Beijing, Shanghai, Shenzhen and Xiamen, providing services such as drug, mask and food delivery and unmanned temperature testing and disinfection; The two-month investment, the total number of external calls is more than 3 million, equivalent to about 1,000 full-time employees a month’s work.

During the outbreak, Baidu donated about 20,000 small home smart screens to front-line health care workers and their families, making it easy for health care workers to talk to their families on video and reduce the risk of infection. The assistant also works with online educational institutions to provide educational resources for children during school closures. In March, the number of voice interactions on the small-scale first-party device reached 3.3 billion, nearly five times the same month last year. The total number of voice interactions for small assistants reached 6.5 billion, nearly three times as many as in the same period last year. Sales of small-scale smart devices also showed strong growth. According to IDC, Strategy Analytics, Canalys, three market research companies, in 2019 small screen smart speaker shipments are the world’s first. China’s smart speaker market shipments reached 45.89 million units in 2019, up 109.7 percent year-on-year, following a year-on-year decline in smartphone shipments. Smart speakers are becoming an emerging and important Internet portal.

To accelerate economic recovery and sustainable growth, the government pushed for “new infrastructure”, and Baidu Apollo, with its leading technologies and solutions, helped build smart transportation everywhere. As the world’s largest open platform and ecosystem for autonomous driving, Apollo represents China’s strongest autopilot strength. In the first quarter, Navigant Research, a leading research firm, listed Baidu Apollo as one of the world’s top four autopilot leaders. Apollo Intelligent Transportation has also won the bid for Chongqing, Hefei, Yangquan and other places in collaboration with new infrastructure projects, and vigorously promote intelligent transportation and intelligent urban construction. In addition, Baidu intelligent cloud formed a “horizontal pull through, vertical access, track focus” development ideas. The cloud and AI work together to achieve high-quality, large-scale growth and sustainable and healthy development, Baidu AI commercialization will break the ground.

Driven by the troika of small-scale assistants, Apollo and smart clouds, Baidu’s leadership in artificial intelligence is emerging, and AI’s new business is becoming Baidu’s strong growth engine.

Financial analysis:

Baidu’s first-quarter revenue was 22.5 billion yuan ($3.18 billion), down 7% from a year earlier.

Baidu’s first-quarter online marketing revenue was RMB14.2 billion ($2.01 billion), down 19% year-on-year. Baidu’s other revenue for the first quarter was RMB8.3 billion (US$1.17 billion), up 28% year-on-year, mainly due to strong growth in its aichi group services, cloud services and smart devices.

Baidu Core’s first-quarter revenue was 15.3 billion yuan ($2.16 billion), down 13 percent from a year earlier. Baidu’s first-quarter revenue from Aichi art reached 7.6 billion yuan ($1.08 billion), up 9 percent from a year earlier. Aichi’s revenue rose 35 per cent year-on-year, but was partially offset by a 27 per cent year-on-year decline in online advertising revenue.

Baidu’s first-quarter revenue costs were RMB14.7 billion (US$2.07 billion), down 1% year-on-year, mainly due to lower traffic acquisition costs, which were offset by higher content costs and impairment of intangible assets. The drop in traffic acquisition costs reflects a decline in alliance revenue as Baidu focuses on expanding in-app search.

Baidu’s first-quarter revenue acquisition cost (TAC) was RMB3.2 billion (US$474 million), up 41% year-on-year, mainly due to increased TAC costs and revenue from online television and offline digital screens.

Baidu’s first-quarter sales, general affairs and administration expenses were RMB3.9 billion (US$544 million), down 36% Year-on-Year, mainly due to lower channel spending and marketing investment, as well as lower personnel-related spending.

Baidu spent 4.4 billion yuan ($628 million) on research and development in the first quarter, up 7% year-on-year, mainly due to higher costs related to research and development personnel.

Baidu’s first-quarter operating loss was RMB437 million ($62 million), compared with rmb936 million a year earlier. Baidu Core’s first-quarter operating profit was RMB1.8 billion (US$261 million), up 69% year-on-year. Baidu’s first-quarter operating profit was RMB1.4 billion (US$203 million), up 258 percent year-on-year, according to US GAAP. Excluding U.S. General Accounting Standards, Baidu Core’s first-quarter operating profit was 3.3 billion yuan ($473 million), up 59% year-on-year.

Baidu’s other losses in the first quarter totalled 1 billion yuan ($146 million), compared with 900 million yuan in other revenues in the same period last year, mainly due to impairment losses of 1.6 billion yuan ($232 million) due to long-term investments.

Baidu’s income tax expense for the first quarter was 198 million yuan ($28 million), compared with 294 million yuan in the same period last year.

Baidu’s first-quarter net profit was 41 million yuan ($6 million), compared with a net loss of 327 million yuan a year earlier. Baidu’s diluted earnings per American depositary receipt per share in the first quarter were RMB0.02 (US$0.00). Baidu Core’s first-quarter net profit was 1.7 billion yuan ($240 million), up 142 percent from a year earlier. Excluding equity incentive expenses (excluding Us GAAP), Baidu’s first-quarter net profit was RMB3.1 billion (US$435 million), up 219% year-on-year. Excluding equity incentive expenses (not in accordance with GAAP), Baidu’s first-quarter diluted earnings per American depositary receipt per share were RMB9 (approximately US$1.25). Excluding equity incentive expenses (not in accordance with Us GAAP), Baidu Core’s first-quarter net profit was RMB4.5 billion (US$638 million), up 148 percent year-on-year.  

Excluding interest, taxes, depreciation, amortization, other non-operating profit and equity incentive expenses (excluding GAAP), Baidu’s first-quarter adjusted net profit was RMB2.9 billion (US$403 million), with an adjusted net profit margin of 13%. Excluding interest, taxes, depreciation, amortization, other non-operating profit and equity incentive expenses (excluding GAAP), Baidu Core’s adjusted first-quarter net profit was RMB4.6 billion (US$656 million), with an adjusted net profit margin of 30%.

As of March 31, 2020, Baidu’s total cash, cash equivalents, restricted cash and short-term investments were RMB146.7 billion (US$20.72 billion). Excluding Aichi, Baidu’s cash, cash equivalents, restricted cash and short-term investments totaled 136.7 billion yuan ($19.31 billion) as of March 31, 2020. Baidu’s free cash flow for the first quarter was 1.7 billion yuan ($233 million). Excluding Aichi, Baidu’s first-quarter free cash flow was 2.3 billion yuan ($327 million).

Performance Outlook:

Baidu now expects total revenue of 25 billion yuan ($3.5 billion) to 27.3 billion yuan ($3.9 billion) in the second quarter of fiscal 2020, down 5 percent to 4 percent from a year earlier. This forecast assumes that Baidu Core’s revenue will fall 8 per cent year-on-year to 2 per cent. China’s new coronavirus situation is evolving, and commercial visibility is very limited. Baidu’s forecast for second-quarter results represents only current and preliminary views and may be adjusted in the future.

Teleconference:

After the release of the financial results, Baidu management will hold a conference call on the results at 9:15 p.m. EST on May 18, 2020 (9:15 a.m. Beijing time on May 19, 2020).

Please use the link provided below: http://apac.directeventreg.com/register/event/7490173 to register before the conference call. Once registered, the participant’s dial-in number, password and registrant ID will be provided by e-mail.

To pre-register, click on http://apac.directeventreg.com/register/event/7490173, which will go to the registration page of the Baidu Q1 2020 Financial ReportConference, where you can fill in the details of RSVP. If you need to enter the attendee meeting ID, enter “7490173”.

After the conference call, until May 26, 2020, you can listen to the replay at the following phone number:

INTERNATIONAL: : 61 2 8199 0299

Password:7490173

In addition, Baidu’s investor relations channel, http://ir.baidu.com, will broadcast the conference call live and provide audio recordings.

Share price changes:

Baidu shares rose $7.73, or 7.74 percent, to $107.59 in regular trading on the Nasdaq. Baidu shares rose another $9.01, or 8.37 percent, to $116.60 in after-hours trading at 5.35pm EST on Monday .35pm EST .D5.D.M. For the past 52 weeks, Baidu has peaked at $147.38 and its lowest price is $82.00.