Sunday, November 11, 2012

Baidu Earnings Review: Performance Rises to Another Record!

Baidu reported QE September 2012 financial results on October 29

Baidu met the lower end of their Q3 revenue guidance (actual RMB6.251 vs. projected RMB6.245) and reported record quarterly total revenues, operating income, net income, cash flow per share, and earnings per share. Gross, operating, and net margins continue above historical averages. Financial position is strong and liquid.

Although record performances continue to be reported and projected, the YoY growth rates for total revenues and earnings per share are slowing. The 10-quarter averages have been an incredible +76% and +98%, respectively. For the current Q3 these were +50% and +60%, respectively, which most companies and investors dream about. These historical growth rates are apparently impossible to maintain, even for Baidu.

Baidu Outlook CEO Robin Li and CFO Jennifer Li are estimating a possible record Q4 revenues of RMB6.155 billion to RMB6.345 billion. This ranges from a QoQ possible decrease of -1.54% to a possible QoQ increase of +1.50%. This is an increase of 38% to 42% YoY but yet a continuing downtrend in long-term growth. That is how spectacular Baidu's growth has been, even though YoY revenue growth is slowing it is still vastly superior to mere mortal companies.

"We are pleased to report a solid performance for the third quarter driven by encouraging customer growth and improvements to our monetization platform," said Robin Li, chairman and chief executive officer of Baidu. "During the quarter, we worked to improve user experience by more closely integrating Baidu's suite of market-leading vertical products with Web search," continued Mr. Li. "Mobile and cloud represent our vision for the future of China's Internet, and Baidu will continue to proactively drive the development of this crucial ecosystem. We stand ready to meet the challenges and capture the opportunities the PC-to-mobile transition presents."

Jennifer Li, Baidu's chief financial officer, commented, "In the third quarter, we saw solid profitability as we continued our strategy of investing in key areas of future growth, particularly mobile and cloud. In the quarters ahead, we will look to accelerate the pace of investment to achieve long-term, sustainable growth."


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