Chinese technology group Baidu on Monday posted a revenue of 26.33 billion yuan ($3.73 billion) for the quarter that ended in June, beating analysts’ estimates of 25.77 billion yuan ($3.65 billion) as its video streaming service iQiyi continues to see strong growth. The 19-year-old firm’s shares were up more than 9% in extended trading.
The company, which is often called the Google of China, said revenue of its core businesses grew 12% since the same period last year “despite the weak macro environment, our self-directed healthcare initiative, industry-specific policy changes and large influx of ad inventory.”
Net income for the second quarter dropped to 2.41 billion yuan ($344 million), down 62% compared to same period last year, but an improvement from the first quarter of this year when Baidu posted a net loss of 327 million yuan ($46.3 million).
“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,” Herman Yu, CFO of Baidu, said in a statement.
Today’s results for Baidu, which has been struggling of late, should help calm investors’ worries. In recent years, as users move from desktop to mobile and rivals such as ByteDance win hundreds of millions of users through their mobile apps, many have cast serious doubts on Baidu’s ability to maintain its growth and hold onto its grip on advertising business. (On desktop, Baidu continues to command more than three quarters of the Chinese market share.)
In the quarter that ended in March this year, Baidu posted its first quarterly loss since 2015, the year it went public.
Baidu’s shares were trading at about $114 in extended hours, pushing its market cap to about $40 billion — still less than half of its roughly $100 billion in mid-May last year. (Baidu is no longer among the top five Chinese internet companies because of the alarming shrinkage in its market cap.)
Robin Li, Baidu co-founder and CEO, said Baidu’s app was being used by 188 million users everyday, up 27% from the same period last year. “In-app search queries grew over 20% year over year and smart mini program MAUs reached 270 million, up 49% sequentially,” he added.
Baidu’s video streaming service iQiyi has amassed 100.5 million subscribers, up from about 87 million late last year and 50 million in late 2017. Revenue from iQiyi stood at 7.11 billion yuan ($1.01 billion), up 15% since last year.
iQiyi inked a deal with Netflix in 2017, which does not operate in China, to cross-license portions of one another’s content. But the partnership has since ended because the “results weren’t as good as iQiyi had expected,” a company top executive said earlier this year. iQiyi continues to maintain its relationship with all six of the major local movie studios.
“On Baidu’s AI businesses, DuerOS voice assistant continues to experience strong momentum with installed base surpassing 400 million devices, up 4.5 fold year over year, and monthly voice queries surpassing 3.6 billion, up 7.5 fold year over year, in June. As mobile internet penetration in China slows, we are excited about the huge opportunity to provide content and service providers a cross-platform distribution channel beyond mobile, into smart homes and automobiles,” he added.
Revenue from online marketing services, which makes a significant contribution to overall sales, fell about 9%, to 19.2 billion yuan ($2.72 billion).
Baidu said it expects its overall revenue for the current quarter to be between 26.9 billion yuan to 28.5 billion yuan ($3.81 billion to $4.04 billion).