Strong growth in video streaming helps Baidu beat the Street
Chinese tech giant Baidu, the internet search giant often referred to as Asia’s Google, reported earnings on Monday that beat the Street’s predictions for top-line growth, and demonstrated a healthy underlying business. Particularly notable was the company’s strong showing in streaming video – a segment that it’s eager to capture. These strong results sent Baidu’s share price up at the start of the week by more than 16%!
Baidu’s share price has appreciated by more-than 16% in the last five days
Source: Yahoo Finance
For the quarter that ended June, Baidu said revenues came in at $3.73 billion – better than analysts’ expectations for a revenue figure of $3.65 billion. Importantly, Baidu’s core business of digital advertising has weathered numerous headwinds and seen impressive top-line growth. Speaking of that business, the company said it saw revenues increase by 12% against the previous year “despite the weak macro environment, our self-directed healthcare initiative, industry-specific policy changes and large influx of ad inventory.”
The company’s strong results are predicated not on an environment that sustains “easy wins” (far from it, in fact) but on solid fundamental strengths. Robin Li, Baidu’s co-founder and CEO, said that the company’s app was seeing 188 million users every day – an increase of 27% from the same period in the previous year. He added: “in-app search queries grew over 20% year over year and smart mini program MAUs reached 270 million, up 49% sequentially.”
However, perhaps the most notable win throughout the quarter was continued double-digit growth in Baidu’s video streaming service, iQiyi. Baidu said that this service has now amassed 100.5 million users. Last year, it had 87 million, and in late 2017, it had 50 million. This impressive sustained growth has translated into financial wins, with revenue from the service hitting $1.1 billion this quarter – a 15% rise, year on year.
Looking to the future, the company’s chief financial officer, Herman Yu, said: “With Baidu traffic growing robustly and our mobile ecosystem continuing to expand, we are in a good position to focus on capitalizing monetization and ROI improvement opportunities to deliver shareholder value.”
Dominion holds Baidu in its Global Trends Ecommerce Fund.
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