Strong app traffic helped Baidu beat revenue estimates last quarter
Baidu, the Chinese internet giant often compared to Google in the west, has reported better than expected earnings as its mobile app helped to drive traffic to the country’s biggest search engine. Baidu has suffered this year amid trade disputes, pressure on the Chinese stock market, a global tech backlash, and the possible threat of a major competitor (Google) making a play for its market share. Last week, all of that was background noise, as the company outperformed analysts’ expectations on the top and bottom line.
Baidu’s share price rose by 4% over the past five days
Source: Yahoo Finance
Baidu said that revenue for the three months ended September rose to 28.2 billion yuan ($4.11 billion), beating out the Street’s forecasts of 27.53 billion yuan. That’s a big jump from the 23.49 billion yuan in revenue that the company reported in the year ago quarter. Net income soared by 56% from the same period in the previous year to 12.4 billion yuan, and adjusted earnings per share (excluding gains from the divestiture of its financial services business) came in at 19.01 yuan. Once more, that’s a case of Baidu outperforming expectations: analysts had hoped to see earnings per share of 16.7 yuan.
A major driver of growth throughout the quarter was the Baidu App, which saw a 19% year on year rise in traffic in September. Another area that Baidu is making strong gains is in artificial intelligence (AI). The company recently became the first Chinese member of a major AI ethics group alongside western tech titans like Apple and Google. It’s AI efforts also have the backing of Beijing – a necessity in the Chinese business landscape. That backing gives its vital advertising business an edge over competitors, as it lets Baidu’s operations continue despite a heavily regulated environment where censorship online is the norm. In the last quarter alone, Baidu’s AI algorithms were able to block more than 430 million misleading medical adverts.
Summing up the results, Baidu’s CEO, Robin Li, said: “Baidu delivered a solid third quarter with impressive results from search feed and new AI business.”
Dominion holds Baidu in its Global Trends Managed Fund.
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