Tech

Baidu Announces Second Quarter 2016 Results

BEIJING, July 28, 2016 /PRNewswire/ — Baidu, Inc. (NASDAQ: BIDU) (“Baidu” or the “Company”), the leading Chinese language Internet search provider, today announced its unaudited financial results for the second quarter ended June 30, 2016[1].

“The challenges Baidu faced in the second quarter served as a healthy reminder to stay focused on the key drivers of growth, sustainability and leadership: delivering the best user experience and staying at the forefront of technology,” said Robin Li, Chairman and CEO of Baidu. “As we enter the next chapter of the Internet, led by artificial intelligence, Baidu has never been better positioned to serve our users and work with our customers and partners, and change the world through technology.”

“While we experienced a tough second quarter, our value proposition to our users remains solid,” said Jennifer Li, CFO of Baidu. “Delivering a superior user experience and building a trusted platform are the pillars that will drive our long term sustainability.”

Second Quarter 2016 Operational Highlights

Second Quarter 2016 Financial Highlights

In the following section, comparison and analysis are provided based on reported consolidated financial results. For ease of comparison, a table with apples-to-apples adjusted financials and metrics excluding Qunar can be found at the end of the following section.

Second Quarter 2016 Results

Baidu reported total revenues of RMB18.264 billion ($2.748 billion) for the second quarter of 2016, representing a 10.2% increase from the corresponding period in 2015.

Online marketing revenues for the second quarter of 2016 were RMB16.939 billion ($2.549 billion), representing a 4.4% increase from the corresponding period in 2015. Baidu had about 594,000 active online marketing customers[6] in the second quarter of 2016, representing a 0.7% increase from the corresponding period in 2015.

Revenue per online marketing customer for the second quarter of 2016 was approximately RMB28,400 ($4,273), a 3.6% increase from the corresponding period in 2015.

Traffic acquisition cost as a component of cost of revenues was RMB2.908 billion ($437.6 million), representing 15.9% of total revenues, as compared to 12.7% in the corresponding period in 2015 and 14.1% in the first quarter of 2016.

Bandwidth costs as a component of cost of revenues were RMB1.152 billion ($173.3 million), representing 6.3% of total revenues, compared to 5.4% in the corresponding period in 2015.

Depreciation costs as a component of cost of revenues were RMB753.8 million ($113.4 million), representing 4.1% of total revenues, compared to 3.7% in the corresponding period in 2015.

Operational costs as a component of cost of revenues were RMB992.8 million ($149.4 million), representing 5.4% of total revenues, compared to 5.1% in the corresponding period in 2015.

Content costs as a component of cost of revenues were RMB1.699 billion ($255.6 million), representing 9.3% of total revenues, compared to 5.1% in the corresponding period in 2015. The increase was mainly due to iQiyi’s increased content costs.

Selling, general and administrative expenses were RMB4.194 billion ($631.1 million), representing an increase of 7.8% from the corresponding period in 2015. The year-over-year increase was primarily due to an increase in promotional spending for transaction services.

Research and development expenses were RMB2.465 billion ($370.9 million), a 9.1% decrease from the corresponding period in 2015.

Share-based compensation expenses, which were allocated to related operating costs and expense line items, were RMB400.9 million ($60.3 million) in the second quarter of 2016, compared to RMB354.7 million in the corresponding period in 2015.

Operating profit was RMB2.866 billion ($431.3 million), representing a 17.4% decrease from the corresponding period in 2015. Non-GAAP operating profit was RMB3.267 billion ($491.6 million), a 14.6% decrease from the corresponding period in 2015.

Income tax expense was RMB792.7 million ($119.3 million), compared to RMB763.0 million in the corresponding period in 2015. The effective tax rate for the second quarter of 2016 was 24.8% as compared to 19.0% for the corresponding period in 2015. The increase of effective tax rate of the second quarter of 2016 mainly reflects that some loss-generating entities in the group cannot be consolidated for tax purposes under PRC tax law.

Net income attributable to Baidu was RMB2.414 billion ($363.2 million), representing a 34.1% decrease from the corresponding period in 2015. Basic and diluted earnings per ADS for the second quarter of 2016 amounted to RMB6.59 ($0.99) and RMB6.57 ($0.99), respectively.

Non-GAAP net income attributable to Baidu was RMB2.808 billion ($422.5 million), a 30.1% decrease from the corresponding period in 2015. Non-GAAP diluted earnings per ADS for the second quarter of 2016 amounted to RMB8.08 ($1.22).

As of June 30, 2016, the Company had cash, cash equivalents and short-term investments of RMB75.812 billion ($11.407 billion). Net operating cash inflow for the second quarter of 2016 was RMB4.402 billion ($662.4 million). Capital expenditures for the second quarter of 2016 were RMB979.6 million ($147.4 million).

Adjusted EBITDA was RMB4.250 billion ($639.5 million) for the second quarter of 2016, representing a 9.7% decrease from the corresponding period in 2015. On an apples-to-apples basis, excluding Qunar from Baidu’s financials, the adjusted EBITDA represents a 19.1% year-over-year decrease.

Summary of adjusted financial information (excluding Qunar)[7]

(RMB in millions, unless otherwise noted)

Outlook for Third Quarter 2016

Baidu currently expects to generate total revenues in an amount ranging from RMB18.040 billion ($2.714 billion) to RMB18.580 billion ($2.796 billion) for the third quarter of 2016, representing a decrease of 1.9% to an increase of 1.1%, year-over-year. On an apples-to-apples basis, excluding Qunar from Baidu’s financials, the guidance represents a 5.4% to 8.6% year-over-year increase. This forecast reflects Baidu’s current and preliminary view, which is subject to change.

Conference Call Information

Baidu’s management will hold an earnings conference call at 8:00 PM on July 28, 2016, U.S. Eastern Time (8:00 AM on July 29, 2016, Beijing/Hong Kong Time).

Dial-in details for the earnings conference call are as follows:

A replay of the conference call may be accessed by phone at the following number until August 5, 2016:

Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com.

About Baidu

Baidu, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best and most equitable way for people to find what they’re looking for. In addition to serving individual Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu’s ADSs trade on the NASDAQ Global Select Market under the symbol “BIDU”. Currently, ten ADSs represent one Class A ordinary share.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the outlook for the third quarter 2016 and quotations from management in this announcement, as well as Baidu’s strategic and operational plans, contain forward-looking statements. Baidu may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties.  Statements that are not historical facts, including statements about Baidu’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our growth strategies; our future business development, including development of new products and services; our ability to attract and retain users and customers; competition in the Chinese and Japanese language Internet search markets; competition for online marketing customers; changes in our revenues and certain cost or expense items as a percentage of our revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to intellectual property rights; the expected growth of the Chinese language Internet search market and the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and Internet search providers and general economic conditions in China, Japan and elsewhere. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law.  All information provided in this press release and in the attachments is as of the date of the press release, and Baidu undertakes no duty to update such information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Baidu’s consolidated financial results presented in accordance with GAAP, Baidu uses the following non-GAAP financial measures: non-GAAP operating profit, non-GAAP net income attributable to Baidu, non-GAAP diluted earnings per ADS, adjusted EBITDA and free cash flow. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, such as operating performance excluding not only non-cash charges, but also other items that are infrequent or unusual in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to Baidu’s historical performance and liquidity. We believe these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in our results of operations.  These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

Non-GAAP operating profit represents operating profit excluding share-based compensation expenses.

Non-GAAP net income attributable to Baidu represents net income attributable to Baidu excluding share-based compensation expenses and the gain or loss associated with the issuance of shares by our equity method investees at a price higher or lower than our carrying value per share.

Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated based on non-GAAP net income attributable to Baidu.

Adjusted EBITDA represents operating profit excluding depreciation, amortization and share-based compensation expenses.

Free cash flow represents net cash provided by operating activities less capital expenditures.

For more information on non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures”.

For investor and media inquiries, please contact:

Sharon Ng
Baidu, Inc.
Tel: +86-10-5992-4958
Investor inquiries email: ir@baidu.com
Media inquiries email: intlcomm@baidu.com

 

 

 

 

SOURCE Baidu, Inc.

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