● Baidu Planet ●
*Charts and commentary have been updated for Baidu Q2 June 2011 financial results*
* Unless otherwise noted, currency amounts are in Chinese Renminbi (RMB) *
Baidu Reports Record-Crushing Earnings!: Astonishing acceleration of EPS +52% QoQ & +95% YoY!
Baidu Summary Q2 2011 Baidu not only reported record-crushing financial results, but is apparently crushing the competition in China. New record highs were total revenues, operating income, net income, earnings per share, operating margin, and net margin. Return on assets is an astronomical 44.72%! As expected, the prior Q1 was the seasonal and cyclical annual "bottom" for Baidu, but the acceleration of financial performance was astonishing in Q2. Q3 and Q4 should each set the bar even higher. The expectations continue sky high for Baidu in the world's largest Internet market. Financial position is very strong and very liquid. Robin Li, Chairman and CEO, attributed the financial performance to "strong traffic growth and improved monetization". The currency translation at June 30, 2011 utilized by Baidu was RMB6.4635 to US$1.00.
Baidu Income Statement Q2 2011 Baidu financial performance was an astonishing acceleration with total revenues RMB3.42 billion, net income RMB1.63 billion, earnings per share RMB4.67 ADS. From the prior near-record setting quarter Q1 2011, QoQ, total revenues were up +40%, net income up +53%, and earnings per share up +52%. From the prior year Q2 2010, YoY, these were up +78%, +95%, and +95%, respectively. Gross, operating, and net margins increased QoQ to 74.22%, 54.42%, and 47.81% compared to Q1 2011 of 72.51%, 49.04%, and 43.94%, respectively. All 3 improved YoY compared to Q2 2010. All of this data is summarized in the charts below.
Baidu Balance Sheet Q2 2011 Total assets increased an impressive +16% QoQ and an astounding +85% YoY to a record high RMB14.37 billion. The capital to assets ratio (total stockholders' equity divided by total assets) is a very solid 77.82%. Baidu is incredibly liquid with a current ratio (current assets divided by total assets) of 77.86%. Baidu has over RMB10.2+ billion in cash, cash equivalents, and short-term investments. Return on assets continues at astronomical levels and increased again to 44.72%.
Baidu Outlook Q3 2011 The Baidu outlook for Q3 2011 is very strong, and record-breaking, total revenues of RMB3.95 billion to RMB4.05 billion, which would exceed the Q2 2011 quarterly record of RMB3.42 billion. If the gross and net margins can be sustained at the current very high levels, the remainder of 2011 looks outstanding. Baidu states, "Baidu currently expects to generate total revenues in an amount ranging from RMB3.950 billion($611.1 million) to RMB4.050 billion ($626.6 million) for the third quarter of 2011, representing a 75.1% to 79.5% year-over-year increase. This forecast reflects Baidu's current and preliminary view, which is subject to change." Baidu may provide additional information on their outlook in the earnings conference call, which is not reviewed here.
Baidu Financial Performance by the Quarters (Charts)
Baidu Earnings Per Share Below is a chart of quarterly earnings per share. Current Earnings per Share of RMB4.67 increased +52% QoQ and +95% YoY and is a record high. Earnings per Share has been above RMB3.00 for 4 consecutive quarters and increased 5 of the past 6 quarters. Recent chart data is:
Quarter, Earnings per Diluted Share
Baidu Cash Flow Per Share Below is a chart of quarterly cash flow from operations per share. Current Cash Flow per Share of RMB35.40 increased +27% QoQ but decreased slightly RMB-0.11 YoY. Cash Flow per share has increased 6 of the past 8 quarters QoQ. The all-time high continues to be Q4 2010 of RMB50.64. Recent chart data is:
Quarter, Cash Flow per Diluted Share
Jun10: RMB 35.51
Sep10: RMB 36.33
Dec10: RMB 50.64
Mar11: RMB 27.96
Baidu Total Revenues, Operating Income, and Net Income Below is a chart of quarterly total revenues, operating income, and net income. Current Total Revenues of RMB3.42 billion is a record high, increased impressively +40% QoQ and +78% YoY, and have increased 5 of the past 6 quarters. The prior Q4 2010 of RMB2.45 billion had been the all-time high. Current Operating Income of RMB1.86 billion is a record high and has increased 5 of the past 6 quarters. The prior Q4 2010 of RMB1.27 billion had been the all-time high. Current Net Income of RMB1.63 billion is a record high, increased an astounding +53% QoQ and +95% YoY, and has increased 5 of the past 6 quarters. The prior Q4 2010 of RMB1.16 billion had been the all-time high. Recent chart data is:
Quarter, Total Revenues, Operating Income, Net Income
Jun10: RMB 1.91B, 972M, 837M
Sep10: RMB 2.26B, 1.18B, 1.05B
Dec10: RMB 2.45B, 1.27B, 1.16B
Mar11: RMB 2.44B, 1.19B, 1.07B
Jun11: RMB 3.42B, 1.86B, 1.63B
Baidu Gross Margin, Operating Margin, and Net Margin Below is a chart of quarterly gross margin, operating margin, and net margin. Overall, these have been incredible margins. Current Gross Margin of 74.22% is a rebound from the prior Q1 2011 4-quarter low of 72.51%. Gross Margin has now been above 70% for 5 consecutive quarters. Current Operating Margin of 54.42% is a record high and has been above 50% for 4 of the past 5 quarters. That one quarter below, Q1 2011, was 49.04%. Current Net Margin of 47.81% is a record high and has been above 40% for 5 consecutive quarters. Recent chart data is:
Quarter, Gross Margin, Operating Margin, Net Margin
Jun10: 72.92%, 50.76%, 43.74%
Sep10: 74.57%, 52.37%, 46.40%
Dec10: 74.26%, 52.01%, 47.35%
Mar11: 72.51%, 49.04%, 43.94%
Jun11: 74.22%, 54.42%, 47.81%
Baidu Return on Assets Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. ROA continues at astronomical levels. Current Return on Assets of 44.72% is yet another amazing new peak and has increased 6 consecutive quarters on the chart. Recent chart data is:
Quarter, Return on Assets
Baidu Growth Rates Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for revenues and earnings per share. Baidu has been high growth technology company and stock. Current Total Revenues of +40.18% QoQ is a 4-quarter high. Total Revenues have increase 5 of the past 6 quarters. Current Earnings per Share of +52.46 is a 4-quarter high. Earnings per Share have also increased 5 of the past 6 quarters. Recent chart data is;
Jun10: +47.95%, +74.15%
Sep10: +17.84%, +24.98%
Dec10: +8.65%, +10.84%
Mar11: -0.60%, -7.80%
Jun11: 40.18%, 52.46%
Traffic Acquisition Costs Below is a chart of traffic acquisition costs (TAC) as a percentage (%) of total revenues. This is a direct cost and the net is the gross profit before other expenses are allocated to cost of revenues. TAC has been trending downwards which means increased gross profit for Baidu. Current Traffic Acquisition Costs of 7.88% is a record low and and decreased 5 of the past 6 quarters. Recent chart data is:
Quarter, TAC as a % of Total Revenues
Baidu Announces Second Quarter 2011 Financial Results
BEIJING, July 25, 2011 /PRNewswire via COMTEX/ -- Baidu, Inc. (NASDAQ: BIDU), the leading Chinese language Internet search provider, today announced its unaudited financial results for the second quarter ended June 30, 2011 (1).
Second Quarter 2011 Highlights
* Total revenues in the second quarter of 2011 were RMB3.415 billion ($528.4 million), a 78.4% increase from the corresponding period in 2010.
* Operating profit in the second quarter of 2011 was RMB1.858 billion ($287.5 million), a 91.2% increase from the corresponding period in 2010.
* Net income in the second quarter of 2011 was RMB1.633 billion ($252.6 million), a 95.0% increase from the corresponding period in 2010.
* Diluted earnings per ADS (2) for the second quarter of 2011 were RMB4.67($0.72); diluted earnings per ADS excluding share-based compensation expenses (non-GAAP) for the second quarter of 2011 were RMB4.77($0.74).
(1) This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.4635 to US$1.00, the effective noon buying rate as of June 30, 2011 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.
(2) Effective on May 12, 2010, Baidu adjusted the ratio of its American depositary shares ("ADSs") representing Class A ordinary shares from one (1) ADS for one (1) Class A ordinary share to ten (10) ADSs for one (1) Class A ordinary share. All earnings per ADS figures in this announcement give effect to the forgoing ADS to share ratio change.
"Baidu had another excellent quarter, as we benefited from strong traffic growth and improved monetization," said Robin Li, chairman and chief executive officer of Baidu. "We were especially encouraged with the strong spending from large customers, highlighting the increased value they saw from their marketing spend on Baidu."
Mr. Li continued, "We continued to see strong momentum and product integration from our Box Computing open data and application platforms during the quarter," Mr. Li continued. "Our position at the center of China's Internet ecosystem enables Baidu to benefit from key trends such as the growth of e-commerce. Looking ahead, I am confident that Baidu's emphasis on innovation and execution will help us continue to attract and retain users and customers."
Jennifer Li, Baidu's chief financial officer, commented, "Our top and bottom line results grew strongly again this quarter, with healthy increases in overall traffic and paid click growth. We will continue to accelerate our investments in strategic areas, R&D, network infrastructure and bringing new talents on board to drive long term growth."
Baidu, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu's ADSs, each of which represents one Class A ordinary share, currently trade on the NASDAQ Global Select Market under the symbol "BIDU".
The Baidu Story
Many people have asked about the meaning of our name. "Baidu" was inspired by a poem written more than 800 years ago during the Song Dynasty. The poem compares the search for a retreating beauty amid chaotic glamour with the search for one's dream while confronted by life's many obstacles. "…hundreds and thousands of times, for her I searched in chaos, suddenly, I turned by chance, to where the lights were waning, and there she stood." Baidu, whose literal meaning is hundreds of times, represents persistent search for the ideal.
Baidu chose a poetic Chinese name because it wants the world to remember its heritage. As a native speaker of the Chinese language and a talented engineer, Baidu focuses on what it knows best - Chinese language search. Applying avant-garde technology to the world's most ancient and complex language is as challenging as it is exciting. At least people here at Baidu think so. As having diligently disclosed in the Prospectus of our recent Initial Public Offering, we believe there are at least 38 ways of saying "I" in Chinese. It is important that we master all the ways of addressing oneself in Chinese because our users depend on us to address every one of their daily queries. And trust us, pin pointing queries in the Chinese language is an art rather than a science.
Our mission is to provide the best way for people to find information. To do this we listen carefully to our users' needs and wants. Have we collected all the Chinese web pages they want to see? Are the pages current and up to date? Are the search results closely related to their queries? Did we return those search results instantly? To improve user experience, we constantly make improvements to our products and services. For example, we introduced "phonetic" or "pin-yin" search which allows our users to type in Chinese keywords using English alphabets. This feature is designed to skip the switching from English inputting to Chinese inputting and for when the user is not sure of the written form of a keyword. Our users definitely notice the many little things that we do differently to ensure a simple and reliable search experience every time.
In addition to serving individual users, we also serve as a media platform for online marketing customers. We not only provide our customers easy access to one of the largest online audiences in China but also targeted groups with defined interests as indicated by queries. Unlike traditional online advertising services which charge by flat fee, our marketing products and services are performance based. Our Pay for Performance model has taken the market by storm because it is cost effective and measurable.
We know that a lot of interesting things are going on in the Internet space, but we don't want to lose focus. China's Internet search industry is only a newly discovered territory. We see vast untapped grounds in our home base and we believe there are still plenty of prizes to be claimed by the best players.
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