Chinese search giant Baidu on Monday posted a revenue of 26.33 billion yuan ($3.73 billion) for the quarter that ended in June, beating analysts’ estimates of 25.77 billion yuan ($3.65 billion) as its video streaming service iQiyi style="font-weight: 400;"> continues to see strong growth. The 19-year-old firm’s shares were up over 8% in extended trading.
The company, which is often called Google of China, said revenue of its core businesses grew 12% since the same period last year “despite the weak macro environment, our self-directed healthcare initiative, industry-specific policy changes and large influx of ad inventory.”
Net income for the second quarter dropped to 2.41 billion yuan ($344 million).
“With Baidu traffic growing robustly and our mobile ecosystem continuing to expand, we are in a good position to focus on capitalizing monetization and ROI improvement opportunities to deliver shareholder value,” Herman Yu, CFO of Baidu, said in a statement.
Today’s results for Baidu, which has been struggling of late, should help calm investors’ worries. In recent years, as users move from desktop to mobile and rivals such as ByteDance win hundreds of millions of users through their mobile apps, many have cast serious doubts on Baidu’s ability to maintain its growth and hold onto its grip on advertising business. (On desktop, Baidu continues to command over three quarters of the Chinese market share.)
In the quarter that ended in March this year, Baidu posted its first quarterly loss since 2015, the year it went public.
Baidu’s shares were trading at about $114 in extended hours, pushing its market cap to about $40 billion — still less than half of about $100 billion in mid-May last year.
Robin Li, Baidu co-founder and CEO, said Baidu app was being used by 188 million users everyday, up 27% from the same period last year. “In-app search queries grew over 20% year over year and smart mini program MAUs reached 270 million, up 49% sequentially,” he added.
Baidu’s video streaming service iQiyi style="font-weight: 400;"> has now amassed over 100.5 million subscribers, up from about 87 million late last year, the company said. Revenue from iQiyi stood at 7.11 billion yuan ($1.01 billion), up 15% since last year.
iQiyi inked a deal with Netflix in 2017, which does not operate in China, to cross-license portion of one another’s content. But the partnership has since ended because the “results weren’t as good as iQiyi had expected,” a company top executive said earlier this year. iQiyi continues to maintain its relationship with all six of the major local movie studios.
“On Baidu’s AI businesses, DuerOS voice assistant continues to experience strong momentum with installed base surpassing 400 million devices, up 4.5 fold year over year, and monthly voice queries surpassing 3.6 billion, up 7.5 fold year over year, in June. As mobile internet penetration in China slows, we are excited about the huge opportunity to provide content and service providers a cross-platform distribution channel beyond mobile, into smart homes and automobiles,” he added.
Revenue from online marketing services, which makes a significant contribution to overall sales, fell about 9% to 19.2 billion yuan ($2.72 billion).
More to follow…