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Baidu (BIDU) Reports In-Line Q1 Earnings, Beats on Revenues

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Baidu, Inc. (BIDU - Free Report) reported adjusted first-quarter 2019 earnings of 41 cents per share, in line with the Zacks Consensus Estimate.

However, the bottom line decreased 78.6% sequentially and 84.2% year over year.

China’s largest search engine reported revenues of RMB24.1 billion ($3.59 billion), up 15% year over year. The top line was up 21% year over year, excluding revenues from divested business. Also, revenues marginally surpassed the Zacks Consensus Estimate.

In the first quarter, revenues from Baidu Core reached RMB 17.5 billion ($2.60 billion), up 8% year over year, and that of iQIYI touched RMB 7.0 billion ($1.04 billion), increasing 43% year over year.

Baidu’s stock has lost 49.3% in the past year compared with its industry’s decline of 2.9%.

Revenue Sources

Revenues fromonline marketing serviceswere RMB17.7 billion ($2.63 billion), up 3% from the year-ago quarter, and accounted for 82% of its total revenues. The increase was driven by strength in education, retail and business services.

Revenues from Other serviceswere RMB6.5 billion, up 73% year over year, which contributed the remaining 18% to total revenues. The increase was driven by robust growth in iQIYI membership services, cloud and other businesses.

Other Metrics

In the first quarter, Baidu App daily active users reached 174 million, up 28% year over year. Also, DuerOS voice assistant installed base reached 275 million, up 279%, while monthly voice queries on DuerOS touched 2.37 billion, increasing 817% year over year.

Margins

Reported gross margin was 35.3%, down significantly from the year-ago quarter.

Baidu reported total operating expenses of RMB10.2 billion, up 58.8% from RMB6.4 billion incurred in the year-ago quarter. As a percentage of sales, selling, general & administrative expenses decreased, while R&D expenses increased.

This resulted in a GAAP operating margin of (3.9%) compared with 21.8% in the year-ago quarter.

Adjusted EBITDA was RMB 1.8 billion ($263 million) and adjusted EBITDA margin was 7% in the quarter.

Balance Sheet & Cash Flow

Baidu exited the first quarter with cash, cash equivalents, restricted cash and short-term investments of approximately 143.6 billion ($21.40 billion). Excluding iQIYI, cash, cash equivalents, restricted cash and short-term investments were RMB 125.7 billion ($18.73 billion).

Cash flow from operations was RMB1.66 billion compared with RMB8.9 billion in fourth-quarter 2018.

Guidance

For second-quarter 2019, Baidu expects total revenues in the range of RMB25.1 billion (or $3.74 billion) to RMB26.6 billion (or $3.96 billion), indicating a year-over-year increase of (3)–2%. The Zacks Consensus Estimate for revenues is pegged at $4.34 billion.

Baidu, Inc. Price, Consensus and EPS Surprise

 

Baidu, Inc. Price, Consensus and EPS Surprise

Baidu, Inc. price-consensus-eps-surprise-chart | Baidu, Inc. Quote

Zacks Rank and Stocks to Consider

Currently, Baidu has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the broader technology sector include Facebook, Inc. (FB - Free Report) , Shopify Inc. (SHOP - Free Report) and AXT, Inc. (AXTI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Facebook, Shopify and AXT is currently projected at 20.2%, 23.7% and 15%, respectively.

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