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4 Key Takeaways from Baidu's Earnings Report




<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Chinese search leader Baidu (NASDAQ : BIDU) released its quarterly report by the end of the market on Thursday, and to say that the market did not like the results, it would be an understatement, and revenue growth slows down in the third quarter last year, and to make matters worse, the company has first loss since it was published in 2005. Baidu's share fell more than 10% in the after-trade in the wake of the report. "Data Reaction Time =" 1[ads1]1 "> Chinese Search Leader Baidu (NASDAQ: BIDU) released its quarterly report after the end of the market Thursday, and to say that the market did not like the results would be an understatement. Income growth slows down in the third quarter last year, and in order to make matters worse, the company has established its first loss since it was published in 2005. The Baidu share fell more than 10% in the after-sales transaction.

Where there was a lot on Baidu. Let's dig into the results to uncover the most important missions from the revenue report and get the management to take on what happened.

Baidu's AI lab in Silicon Valley.

Image source: Baidu.

1. Growth continues to slow

The Search Region generated revenue of $ 3.59 billion, an increase of 15% over the year, exceeding the high end of the company's forecast of $ 3,442 billion and ahead of analysts' consensus estimates of $ 3.52 billion. Excluding the divestment business, revenue increased by 21%. Unfortunately, this marked the third quarter of the quarter of decelerating sales growth. For the second, third and fourth quarters, Baidu's turnover increased by 32%, 27% and 22%, respectively, year after year.

Baidu is mainly dependent on advertising from its search platform to generate revenue. As more and more searches have moved to mobile (making money at lower prices), Baidu has been working to generate additional revenue streams. With China's economy slowing down and the trade war in full swing, sellers have cut back on advertising, stunt Baidu's growth.

2. Initial Loss of More Than 13 Years

The slow revenue growth had a major impact on the bottom line, when Baidu reported its first loss since its debut on US markets in August 2005. The company reported a loss per share of $ 0.15, compared to revenue per share of USD 2.98 in the quarter last year. The results were not much better on an adjusted basis, rather, with adjusted earnings per share of $ 0.41, compared to $ 2.60 in the quarter.

Baidu became part of the blame on an ad campaign: "[Our] the margins were subdued by our successful marketing campaign for the CCTV New Year Eve Gala, which accelerated traffic to the Baidu family of apps and highlighted better user search app applications," Baidu CFO, Herman Yu.

3. Weak guidance

For the second quarter ahead, Baidu forecasts revenue of 25.1 billion yuan (3.74 billion yuan) and 26.6 billion yuan (3.96 billion yuan) This will provide a range of 3% decline to a 2% increase year on year, or a slightly better 1% to 6% increase excluding the impact of advertised disposals.

To put it in the perspective of Wall Street's sense, Analysts' consensus estimates demanded much more ambitious $ 4.27 billion, an increase of 14% year-on-year, showing a serious link between Baidu's management and investor expectations.

A statement by Yu just fueled the fire: "To tr For the Government's policy to improve the market conditions for SMEs [small and medium-sized enterprises]we expect short-term online marketing to face a challenging environment. "

4. A massive buyback

Baidu must have seen the writing on the wall, as the board approved a new stock purchase program that will allow the company to buy back up to $ 1 billion of its shares.

With the Baidu share price at its lowest level for more than three years, management hopes that this will act as a show of confidence by the company in the future.

Now what?

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8) em) – sm" type = "text" content = "Although it doesn't look like it is a lot of good news, Baidu has invested heavily in a number of areas that it believes will burn future growth, such as cloud computing, artificial intelligence AI, streaming video through its wholly-owned subsidiary iQiyi its DuerOS voice assistant and smart speakers , and self-propelled cars with their Apollo project. "data-reactid =" 43 "> Although it doesn't look like good news, Baidu has invested heavily in a number of areas that it believes will bring future growth, for example. cloud computing, artificial intelligence (AI), streaming video via the wholly-owned subsidiary iQiyi its DuerOS voice assistant and smart speakers and self-propelled cars with its Apollo project.

The lack of revenue growth is probably a by-product of the slow economy in China, which, in combination with continued strong investment in future opportunities, has conspired hammer Baidu's bottom line.

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt em) – sm" type = "text" content = " More from The Motley Fool " data -reactid = "45"> More from The Motley Fool

<p class = "canvas-textile text-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Danny Vena owns shares in Baidu and iQiyi. The Motley Fool owns shares of and rewards Baidu. Motley Fool recommends iQiyi. Motley Fool has a disclosure policy . "data-response time =" 53 "> Danny Vena owns shares in Baidu and iQiyi. Motley Fool owns and recommends Baidu. Fool recommends iQiyi. Motley Fool has a revealing policy.



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