Baidu Planet: Earnings

Showing posts with label Earnings. Show all posts

Friday, February 8, 2013

Baidu Earnings Slower

● Baidu Planet ●

Baidu reported QE December 2012 financial results on February 4

Baidu Earnings Disappoint: Revenues Up, Margins Down

Baidu (BIDU) reported record revenues of RMB6.335 ($1.017 billion) for the quarter ending December 2012, but GAAP ($1.28) and non-GAAP ($1.31) earnings per share did not keep pace. Though both were the second best ever, the gross profit margin (68.5%) fell to an 11-quarter low preventing a push higher for earnings per share to a record. Lower margins offset higher revenues and resulted in lower income. This negatively impacted earnings per share. Read more and see charts at Seeking Alpha.

● Baidu Planet ●

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."

$BIDU

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."

$BIDU

Sunday, May 13, 2012

Baidu Reports Strong Earnings But Is Slowing Growth Ahead?

Baidu ($BIDU) reported Q1 2012 financial results on April 24.

Baidu Q1 revenues were the second best ever reported and met, but did not beat, the outlook. The annual Q1 dip was just a tad deeper than the prior year plus in some metrics fell back to Q3 2011 levels. The prior quarter, Q4 2011, was an all-time record financial performance. The guidance for Q2 reveals a record quarter for revenues, but slowing growth. The Chinese stock star lost some luster with this report but is still shining brightly.

CEO Robin Li and CFO Jennifer Li are estimating record Q2 revenues of RMB5.335 billion ($847.2 million) to RMB5.460 billion ($867.0 million). This is an increase of 56% to 60% YoY, compared to the 8-quarter average of +82% and +75% for this current quarter. The problem here is YoY revenue growth is slowing.

Baidu is not exactly down and out for the count. The upside is still tremendous for the Google of China in the world's largest internet market. All is not lost, revenues can rebound.

The most fundamental issue I see is a downtrend in gross, operating, and net margins. This has caused earnings per share growth YoY to drop faster than total revenues growth YoY. This is what could cause future problems for BIDU stock if the trend is not reversed. The PE ratio dropped over the past year and this could be the double whammy if the margin downtrend persists.

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

Baidu Summary Q1 2012 Baidu reported the second best quarter ever for total revenues, net income, and cash flow per share. Earnings per share matched Q3 2011 as second best. Gross, operating, and net margins decreased. As expected, the current Q1 was a dip from the prior Q4, but the next quarter, Q2, is projected to to be a record for revenues. The power up continues. Financial position is strong and liquid. CEO Robin Li commented, "China's Internet landscape is evolving quickly and we are very excited about fast-emerging opportunities in areas such as mobile and Cloud Computing. We believe that Baidu is uniquely positioned to capture this immense growth potential in the Chinese online market."

Baidu Income Statement Q1 2012 Baidu financial performance was strong with total revenues of RMB4.26 billion, net income of RMB1.88 billion, and earnings per share of RMB5.38 ADS. From the prior record quarter Q4 2011 these were -5%, -8%, and -8%, respectively. From the prior year Q1 20101 YoY, these were +75%, +76%, and +76%, respectively. Gross margin dipped both QoQ and YoY to 71%. Operating and net margins dipped QoQ and were flat YoY at 49% and 44%, respectively. The operating expense ratio increased QoQ and YoY to 22%, but continues at a very profitable.

Baidu Balance Sheet Q1 2012 Total assets increased an astounding +101% YoY to a record high RMB25 billion. That is double the prior year quarter! The capital ratio is a solid 69%, but is below historical levels. Baidu is liquid with a current ratio of 70%, which is also below historical levels. Baidu has over RMB16.1 billion in cash, cash equivalents, and short-term investments. Return on assets of 39% continues at astronomical levels, but has decreased the past 3 recent quarters due to a significant increase in goodwill, intangible assets, and other noncurrent assets.

Saturday, February 18, 2012

Baidu Profits Soar to Record Heights: EPS +9% QoQ & +77% YoY

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Baidu Profits Soar to Record Heights: EPS +9% QoQ & +77% YoY

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

Baidu Summary Q4 2011 Baidu reported yet another record-breaking quarter. New record highs were reported for total revenues, operating income, net income, earnings per share, and cash flow per share. Gross, operating, and net margins continue very strong. Return on assets continue at an amazing 40.45%. As expected, the current Q4 exceeded the prior Q3, but the next quarter, Q1, is projected to dip slightly. The expectations continue sky-high for Baidu in the world's largest Internet market. Financial position is strong and liquid. Robin Li, Chairman and CEO, commented, "Over the course of 2011, we made great progress on the Baidu Open Data and Open Application platforms, executed effectively on our landing page strategy, and rolled out several new initiatives, including our personalized homepage and the Baidu Yi mobile platform." The currency translation at December 31, 2011 utilized by Baidu was RMB6.2939 to US$1.00.

Baidu Income Statement Q4 2011 Baidu financial performance was yet another record-breaking quarter with record total revenues RMB4.47 billion, record net income RMB2.05 billion, and record earnings per share RMB5.87 ADS. From the prior record setting quarter Q3 2011, QoQ, these were +7%, +9%, and +9%, respectively. From the prior year Q4 2010, YoY, these were +83%, +77%, and +77%, respectively. Gross and operating margins dipped QoQ and YoY to 72% and 51%. Net margin increased QoQ but decreased YoY to 46%. The operating expense ratio increased slightly to 21%, but continues at a very profitable.

Baidu Balance Sheet Q4 2011 Total assets increased an astounding +111% YoY to a record high RMB23.34 billion. That is double the prior year quarter! The capital to assets ratio is a solid 66%, but is below historical levels. Baidu is liquid with a current ratio of 68%, which is also below historical levels. Baidu has over RMB14.2 billion in cash, cash equivalents, and short-term investments. Return on assets of 40.45% continues at astronomical levels, but has the 2 recent quarters due to a significant increase in goodwill and intangible assets.

Baidu Outlook Q1 2012 The Baidu outlook for Q1 2012 is strong, but not record-breaking, total revenues of RMB4.195 billion to RMB4.330 billion, which would be the second best quarter ever reported. If the gross and net margins can be sustained at the current very high levels, the next quarter looks outstanding with a dip QoQ but impressive growth YoY. Baidu states, "Baidu currently expects to generate total revenues in an amount ranging from RMB4.195 billion ($666.5 million) to RMB4.330 billion ($688.0 million) for the first quarter of 2012, representing a 72.2% to 77.7% year-over-year increase. This forecast reflects Baidu's current and preliminary view, which is subject to change.

Osprey Flyer Estimate Q1 2012 Based on the above Baidu outlook, this would conservatively equate to an earnings per share of RMB5.39 to RMB5.57 per ADS or $0.85 to $0.88 per diluted share.

Baidu Financial Performance by the Quarters Baidu Earnings Per Share Current Earnings per Share of RMB5.87 increased +9% QoQ and +77% YoY and is another record high. Earnings per Share have increased 7 of the past 8 quarters. For comparison, the chart average is RMB2.98, almost half the current quarter.

Baidu Cash Flow Per Share Current Cash Flow per Share of RMB96.03 increased an incredible +91% QoQ and +90% YoY to an all-time high. Cash Flow per share has increased 7 of the past 10 quarters. For comparison, the chart average CFS is RMB38.81, well below the current quarter.

Baidu Total Revenues, Operating Income, and Net Income Overall, these are amazing results for the current and recent quarters. Current Total Revenues of RMB4.47 billion is another record high, increased +7% QoQ and +83% YoY, and have increased 7 of the past 8 quarters. Current Operating Income of RMB2.297 billion is a record high and has increased 7 of the past 8 quarters. Current Net Income of RMB2.05 billion is a record high, increased an impressive +9% QoQ and +77% YoY, and has increased 7 of the past 8 quarters.

Baidu Gross Margin, Operating Margin, and Net Margin Overall, Baidu has been reporting incredible margins in recent quarters. Current Gross Margin of 72.27% dipped again QoQ and YoY, but is above the chart average of 69.03%. Gross Margin has now been above 70% for 7 consecutive quarters. Current Operating Margin of 51.35% dipped again QoQ and now YoY, but is above the chart average of 44.50%. Operating Margin has been above 50% for 6 of the past 7 quarters. That one-quarter below, Q1 2011, was 49.04%. Current Net Margin of 45.63% increased QoQ, dipped YoY, and has been above 40% for 7 consecutive quarters. The chart average is 39.90%.

Baidu Return on Assets ROA continues at astronomical levels, but is downtrending. Current Return on Assets of +40.45% dipped QoQ and YoY. ROA has decreased 2 consecutive quarters, after increasing 6 consecutive quarters. The ROA chart average is +39.36%. Total assets have increased significantly due to an increase in goodwill and intangible assets the past 2 quarters. This has reduced the ROA.

Baidu Growth Rates YoY Baidu has been a high growth technology company and stock. Current Total Revenues Growth YoY of +82.55% continues the sensational growth and is about the chart average of +82.79%. Current Earnings per Share Growth YoY of +76.81% also continues the fantastic growth. EPS Growth YoY is "slowing", decreasing 4 consecutive quarters and below the unbelievable chart average of +110.48%.

Baidu Traffic Acquisition Costs Current Traffic Acquisition Costs of 7.91% is the 5th consecutive quarter in the 8.00% area. TAC decreased slightly QoQ and YoY. The TAC chart average is 9.77%.

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Monday, January 23, 2012

Baidu Earnings Preview: Another Record Quarter Expected

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Chinese Renminbi (RMB) A conversion rate of RMB6.333 to US$1.00 on 1-23-12 is utilized as an average and estimate in this preview. A conversion rate of 6.378 was utilized at 9-30-11 by Baidu for prior quarter Q3 2011 financial results.

Baidu (BIDU) Quarterly Earnings Announcement

Baidu will report Q4 2011 financial results on Thursday, February 16, after market close. The conference call will be at 8:00 p.m. ET.

Baidu Future and Past Financial Performance
Estimated Q4 2011 Earnings per Share (Non-GAAP)
Yahoo Finance Analysts Estimates: $0.91 = RMB5.76 avg, $0.86 low, $1.18 high, 18 analysts
Prior Quarter: $0.86 = RMB5.44
Prior Year: $0.52 = RMB3.29
Baidu Outlook: None for
EPS OspreyFlyer Estimate: $0.90 - $0.92 based on Baidu revenue outlook

Prior Q3 2011 Financial Results (GAAP) When Baidu reports Q4 2011, the 3 months ended December, financial results, Baidu is expected to meet, beat, or miss various prior quarterly results. These prior quarterly GAAP financial results were:
Total Revenues RMB4,175,465,000 = $659.631M
Operating Income RMB2,226,329,000 = $297.256M
Net Income RMB1,881,631,000 = $1.78B
Earnings per Share RMB5.38 = $0.85
Baidu Outlook none
Gross Margin 73.51%
Operating Margin 53.32%
Net Margin 44.92%

Summary (GAAP) Overall, Baidu is expected to report another record quarter and beat QoQ and YoY for Earnings per Share. Q4 is the strongest quarter on the annual cycle with a slowing in Q1. Therefore, Baidu should beat QoQ and YoY for Total Revenues, Operating Income, Net Income, and Cash Flow per Share. Baidu should meet QoQ and YoY for gross margin, operating, and net margins. In short, this is expected to be yet another record quarter. The question is how much of a record? The prior quarterly charts are reviewed below.

Baidu Reports Another Record-Breaking Quarter: EPS +15% QoQ & +79% YoY!

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

Baidu Summary Q3 2011 Baidu reported another record-breaking quarter. New record highs were reported for total revenues, operating income, net income, and earnings per share. Gross, operating, and net margins dipped slightly from the prior quarter. Return on assets continues at an astronomical level of 44.72%. As expected, the current Q3 exceeded prior Q2 and Q4 is expected to surpass the current Q3. The expectations continue sky high for Baidu in the world's largest Internet market. Financial position is strong and liquid. Robin Li, Chairman and CEO, attributed the stellar financial performance to "rapid growth in customer spending and user traffic". The currency translation at September 30, 2011 utilized by Baidu was RMB6.3780 to US$1.00.

Baidu Income Statement Q3 2011 Baidu financial performance was yet another record-breaking quarter with record total revenues RMB4.18 billion, record net income RMB1.88 billion, and record earnings per share RMB5.38 ADS. From the prior record setting quarter Q2 2011, QoQ, total revenues were up +22%, net income up +15%, and earnings per share up +15%. From the prior year Q3 2010, YoY, these were up +85%, +80%, and +79%, respectively. Gross, operating, and net margins dipped QoQ to 73.51%, 53.32%, and 44.92% compared to prior year Q3 2010 of 74.57%, 52.37%, and 46.40%, respectively.

Baidu Balance Sheet Q3 2011 Total assets increased an impressive +45% QoQ and an astounding +125% YoY to a record high RMB20.87 billion. The capital to assets ratio is a solid 62.95%, but a multi-year low. Baidu is liquid with a current ratio of 66.42%, which is also a multi-year low. Baidu has over RMB11.4+ billion in cash, cash equivalents, and short-term investments. Return on assets of 42.25% continues at astronomical levels, but slightly decreased QoQ.

Baidu Outlook Q4 2011 The Baidu outlook for Q4 2011 is strong, and record-breaking, total revenues of RMB4.41 billion to RMB4.535 billion, which would exceed the Q3 2011 quarterly record of RMB43.18 billion. If the gross and net margins can be sustained at the current very high levels, the next quarter looks outstanding. Baidu states, "Baidu currently expects to generate total revenues in an amount ranging from RMB4.410 billion($691.4 million) to RMB4.535 billion ($711.0 million) for the fourth quarter of 2011, representing a 79.9% to 85.0% 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.

Baidu Financial Performance by the Quarters Baidu Earnings Per Share Current Earnings per Share of RMB5.38 increased +15% QoQ and +79% YoY and is a record high. Earnings per Share have increased 6 of the past 7 quarters and 7 of the past 9. The EPS chart average is RMB2.70.

Baidu Cash Flow Per Share Current Cash Flow per Share of RMB35.40 decreased -15% QoQ but increased +39% YoY. Cash Flow per share has increased 6 of the past 9 quarters QoQ. The all-time high was Q2 2011 of RMB59.56. The CFS chart average is RMB33.08.

Baidu Total Revenues, Operating Income, and Net Income Current Total Revenues of RMB4.18 billion is a record high, increased impressively +22% QoQ and +85% YoY, and have increased 6 of the past 7 quarters. Current Operating Income of RMB2.23 billion is a record high and has increased 6 of the past 7 quarters. Current Net Income of RMB1.88 billion is a record high, increased an impressive +15% QoQ and +80% YoY, and has increased 6 of the past 7 quarters. The TR, OI, and NI chart averages are RMB 1.94B, 929M, and 824M, respectively.

Baidu Gross Margin, Operating Margin, and Net Margin Overall, these have been incredible margins. Current Gross Margin of 73.51% dipped QoQ and YoY, but is above the historical average. Gross Margin has now been above 70% for 6 consecutive quarters. Current Operating Margin of 53.32% dipped QoQ but increased YoY. Operating Margin has been above 50% for 5 of the past 6 quarters. That one quarter below, Q1 2011, was 49.04%. Current Net Margin of 44.92% dipped QoQ and YoY but has been above 40% for 6 consecutive quarters. The GM, OM, and NM chart averages are 68.76%, 43.93%, and 39.42%, respectively.

Baidu Return on Assets ROA continues at astronomical levels. Current Return on Assets of +42.25% dipped QoQ, after increasing 6 consecutive quarters on the chart. ROA increased YoY. The ROA chart average is +39.23%.

Baidu Growth Rates YoY Baidu's growth. Baidu has been a high growth technology company and stock. Current Total Revenues Growth YoY of +85.09% continues the amazing growth. Current Earnings per Share Growth YoY of +79.33% also continues the very strong growth, but is "slowing". The TRG and EPSG chart averages are 82.83% and 116.09%, respectively.

Baidu Traffic Acquisition Costs Current Traffic Acquisition Costs of 8.00% continues the the 4th consecutive quarter in the 8.00% area. TAC increased slightly QoQ and decreased YoY. The TAC chart average is 10.01%.

Operating Expense Ratio The current Operating Expense Ratio of 20.19% is historically below average, increased QoQ, and decreased YoY. This indicates in the current quarter both a slight decreased efficiency plus a slightly lower proportion of revenues reaching the bottom line, net income and earnings per share. The OER chart average is 24.83%.

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Tuesday, November 1, 2011

Baidu Quarterly Earnings Call (Review) "Another stellar quarter"

● Baidu Planet ●

Baidu (BIDU) reported another record-breaking quarter on October 27, 2011

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

Baidu Reports Another Record-Breaking Quarter: EPS +15% QoQ & +79% YoY!

Baidu Summary Q3 2011 Baidu reported another record-breaking quarter. New record highs were reported for total revenues, operating income, net income, and earnings per share. Gross, operating, and net margins dipped slightly from the prior quarter. Return on assets continues at an astronomical level of 44.72%. As expected, the current Q3 exceeded prior Q2 and Q4 is expected to surpass the current Q3. The expectations continue sky high for Baidu in the world's largest Internet market. Financial position is strong and liquid. Robin Li, Chairman and CEO, attributed the stellar financial performance to "rapid growth in customer spending and user traffic". The currency translation at September 30, 2011 utilized by Baidu was RMB6.3780 to US$1.00.

Baidu Income Statement Q3 2011 Baidu financial performance was yet another record-breaking quarter with record total revenues RMB4.18 billion, record net income RMB1.88 billion, and record earnings per share RMB5.38 ADS. From the prior record setting quarter Q2 2011, QoQ, total revenues were up +22%, net income up +15%, and earnings per share up +15%. From the prior year Q3 2010, YoY, these were up +85%, +80%, and +79%, respectively. Gross, operating, and net margins dipped QoQ to 73.51%, 53.32%, and 44.92% compared to prior year Q3 2010 of 74.57%, 52.37%, and 46.40%, respectively.

Baidu Balance Sheet Q3 2011 Total assets increased an impressive +45% QoQ and an astounding +125% YoY to a record high RMB20.87 billion. The capital to assets ratio (total stockholders' equity divided by total assets) is a solid 62.95%, but a multi-year low. Baidu is liquid with a current ratio (current assets divided by total assets) of 66.42%, which is also a multi-year low. Baidu has over RMB11.4+ billion in cash, cash equivalents, and short-term investments. Return on assets of 42.25% continues at astronomical levels, but slightly decreased QoQ.

Baidu Outlook Q4 2011 The Baidu outlook for Q4 2011 is strong, and record-breaking, total revenues of RMB4.41 billion to RMB4.535 billion, which would exceed the Q3 2011 quarterly record of RMB43.18 billion. If the gross and net margins can be sustained at the current very high levels, the next quarter looks outstanding. Baidu states, "Baidu currently expects to generate total revenues in an amount ranging from RMB4.410 billion($691.4 million) to RMB4.535 billion ($711.0 million) for the fourth quarter of 2011, representing a 79.9% to 85.0% 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.

Press Release
Robin Li, chairman and chief executive officer of Baidu commented, "Baidu recorded stellar results in the third quarter driven by rapid growth in customer spending and user traffic. In particular, spending by large customers significantly outperformed our expectations as we continued to build strong relationships with high quality companies. China's search industry is still in its early stages, and as the clear industry leader we see enormous room for continuing growth as users and online marketing customers become increasingly sophisticated."

"On the user front, during the third quarter we launched a personalized homepage feature which provides users with a Baidu experience uniquely tailored to their individual online behavior, as well as instant and centralized access to their online social activities," Mr. Li continued. "As we continue to create new ways for users to engage with the Internet, we believe that more and more people will rely on Baidu as their online gateway, further solidifying Baidu's position at the heart of China's Internet ecosystem."

Jennifer Li, Baidu's chief financial officer, commented, "We enjoyed another strong quarter of top and bottom line growth, while maintaining a robust level of investment in R&D, infrastructure development and new strategic opportunities to support our future growth."

"In this quarter, we completed the acquisition of Qunar, a leading travel search engine in China, and for the first time consolidated Qunar's financial results. In addition, to support the rapid growth of our online video service provider Qiyi, we made a $23 million cash contribution and incurred a chargebased on equity method accounting. Our EPADS would have been $0.91 without this charge associated with Qiyi."

Baidu Q3 2011 Earnings Conference Call

Baidu Management Robin Li, Co-Founder, Chairman, and CEO and Jennifer Li, Chief Financial Officer, were present at the earnings call.

CEO Robin Li "Another stellar quarter" CEO Li opened the earnings conference call, "Looking at our results, another stellar quarter for Baidu. Revenue is accelerating 85% year-on-year. In particular, we see three main factors underpinning robust revenue growth in Q3. First, traffic growth maintained its strong momentum in the quarter. Second, we made solid progress on monetization. The third factor influencing our strong revenue growth was increasing spending by our large accounts, which has been a priority for Baidu." Li continued, "Because of our central position in China’s internet ecosystem, we can always benefit enormously from emerging growth areas. While it is difficult to predict the future of any single industry category, the overall online marketing spending trajectory for our large accounts remained very positive."

Personalized Home Page CEO Li noted, "Baidu’s new personalized homepage feature went online in the beginning of September. The personalized homepage represents the next step in the evolution of Baidu. From simple web search to open data, to open applications, and now to personalized and direct feeds that instantly meet the users need. This new feature give users who sign into Baidu a more personalized experience based on their historical search behavior. Another important thing about our personalized homepage is that users don’t have to do anything and the intelligent recommendation engine customizes their homepage for them based on their behavior and social interactions. This means that the success of the homepage does not depend on users being proactive. These features will ensure that Baidu is the logical starting point for more and more Internet users and will keep users on our sites longer."

Mobile Strategy CEO Li explained, "We’ve made important progress. First, we are extending our partnerships with mobile phone makers. Baidu is now the default search engine on over 80% of branded handsets using the Android operating system built in China so far this year. As a result, we have made tremendous progress in ensuring that Baidu is the gateway to the Internet for Chinese users, whether they are going online on PCs or on mobile devices. Last quarter, we announced our new E-mobile platform, designed to provide Baidu services to users on the go. We have an incredible suite of products and we want Baidu users to be able to use them anywhere, anytime. All of these features will be currently integrated with Baidu’s evolving cloud computing offering and we have plenty more exciting features in the pipeline."

Strategic Investments CEO Li updated, "I’d like to update our strategic investments. Our online leading platform Qiyi Media continues to grow at a very encouraging rate. During Q3 monthly unique visitor jumped to 191 million from 160 million in Q2. High quality travel-related information from Qunar has been further integrated into Baidu search in areas like hotels, airlines and train information. Baidu’s strategic investment combined with our robust organic growth and new innovated products, solidifying our position as a heart of Chinese Internet ecosystem. We have every reason for confidence in our prospects for the future."

CFO Jennifer Li "Q3 was another solid quarter that exceeded expectations. This was driven by traffic growth, monetization improvement and strong spending by large account. In order to ensure that Baidu continues to stay ahead of the curve, we maintain investment in critical areas, R&D, infrastructure and strategic initiatives. Going forward, aggressive investment will remain central to our long-term growth strategy and driving topline growth."

Financial Statements CFO Li then reviewed the financial results, which are reviewed on the Baidu Financial Performance page.

Question and Answer Session

Robin Li, Co-Founder, Chairman, and CEO and Jennifer Li, Chief Financial Officer, were present for the Q and A session.

Baidu's Business
(CEO) Baidu’s business is largely consumer and domestic consumption oriented. The large cities, still contribute super majority of our revenue and the growth rate is also higher.
Mobile Search
(CEO) Mobile search is a little bit different from the PC search. It’s kind of hard to compare on an apple-to-apple basis, each mobile page is generally much shorter than PC page, so number of page views on the mobile site is different from the number page views on the PC side. We’re still trying to optimize the mobile search experience. We have not been very aggressive monetizing the mobile yet. So mobile is growing faster than PC, but it’s still a relatively small part, from the page view point of view, and even smaller part from the revenue point of view.
Market Share
(CEO) We have the largest user base and we have the most sophisticated search technology, so we are quite confident users will increasingly rely upon Baidu for all types of information needs. This is also true for e-commerce related information needs. Like I mentioned before, virtually all of the large B2C e-commerce sites advertise on us, that’s because we can drive traffic, we can drive very quick quality traffic to the site end users.

About Baidu

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.