Sunday, July 29, 2012

Baidu Earnings Review: Record Performance Beats!

Baidu reported QE June 2012 financial results on Monday, July 23

Baidu the Chinese Stock Star beat their Q2 guidance and analysts' estimates, reporting record quarterly total revenues, operating income, net income, and earnings per share. Gross, operating, and net margins rebounded to well above historical levels.

Although record performances continue to be reported and projected, the YoY growth rates for total revenues, net income, and earnings per share are slowing. The 8-quarter averages have been an incredible +80%, +100%, and +100%, respectively. For the current Q2 these were +60%, +70%, and +68%, which most companies and investors dream about. The historical growth rate is apparently impossible to maintain, even for Baidu.

Result, QoQ Change, YoY Change
Total Assets: RMB28.55 billion, +14%, +99%
Total Revenues: RMB5.46 billion, +28%, +60%
Net Income: RMB2.77 billion, +47%, +70%
Earnings per Share ADS: $7.86, +46%, +68%

CEO Robin Li and CFO Jennifer Li are estimating record Q3 revenues of RMB6.245 billion to RMB6.410 billion. This is an increase of 49% to 53% YoY, compared to the 9-quarter average of +79%. That is how spectacular Baidu growth has been. The problem here is YoY revenue growth is slowing even though vastly superior to mere mortal companies.

* Unless otherwise noted, currency amounts and data below are in Chinese Renminbi (RMB) *

"We are pleased to announce strong results for the second quarter despite macro headwinds and challenging comparisons with the same period last year," said Robin Li, chairman and chief executive officer of Baidu. "Our efforts to expand our customer base continue to make solid progress." Mr. Li continued, "In the coming quarters, we will maintain momentum by rolling out optimized sales processes and more advanced tools to help current and potential customers increase returns on their online marketing spend. We will also continue to actively explore the vast opportunities in China's fast-emerging mobile Internet and cloud sectors."

Jennifer Li, Baidu's chief financial officer, commented, "We once again posted solid growth on the top and bottom lines even as we continued to invest aggressively in expanding our network infrastructure and talent base. Moving forward, this robust investment strategy will be key to achieving long-term, sustainable growth and strengthening Baidu's position at the heart of China's Internet ecosystem."


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