April 25, 2008
Baidu Stock soars after earnings call
Press Release here:
Baidu Announces First Quarter 2008 Results
BEIJING, April 24 /Xinhua-PRNewswire/ — Baidu.com, Inc. (Nasdaq: BIDU), the leading Chinese language Internet search provider, today announced its unaudited financial results for the first quarter ended March 31, 2008
First Quarter 2008 Highlights
— Total revenues in the first quarter of 2008 increased to RMB574.4
million (US$81.9 million), representing a 108.4% increase from the
corresponding period in 2007.
– Operating profit in the first quarter of 2008 increased to RMB147.4
million (US$21.0 million), representing a 99.6% increase from the
corresponding period in 2007.
– Net income in the first quarter of 2008 increased to RMB146.6 million
(US$20.9 million), representing a 71.5% increase from the corresponding
period in 2007.
– Diluted earnings per share ("EPS") for the first quarter of 2008 were
RMB4.22 (US$0.60); diluted EPS excluding share-based compensation
expenses (non-GAAP) for the first quarter of 2008 were RMB4.68
(US$0.67).
Costs and expenses related to Baidu's Japan operations in the first
quarter of 2008 were RMB30.1 million (US$4.3 million), which reduced
diluted EPS by RMB0.87 (US$0.12).
– The number of active online marketing customers during the first
quarter grew to approximately 161,000, an increase of 3.9% from the
previous quarter.
"This was another excellent quarter for Baidu," said Robin Li, Baidu's chairman and CEO. "Our revenue growth remained strong and is an indication of our ability to execute our strategy of providing the best possible user experience and service to our customers. Instrumental to our growth were the ceaseless efforts of our sales force and customer service teams who continued to deliver strong results despite a long Chinese New Year holiday and severe snow storms across large parts of China. In addition, a larger customer base contributed to strong organic and Baidu Union growth."
During the first quarter Baidu launched the public testing of Baidu Hi, an instant messaging platform complementing Baidu's suite of other already popular products such as Baidu Knows, Baidu Post Bar and Baidu Space. Initial results indicate a positive response to the new product. Baidu also recently signed an agreement with China Netcom (CNC). Under the agreement, Baidu and CNC created a jointly designed Baidu search page that CNC users are redirected to if they attempt to visit an incorrect or nonexistent URL. This arrangement allows CNC Internet users to find information they need more efficiently while increasing Baidu user traffic in a revenue sharing model.
First Quarter 2008 Results
Baidu reported total revenues of RMB574.4 million (US$81.9 million) for the first quarter ended March 31, 2008, representing a 108.4% increase from the corresponding period in 2007.
Online marketing revenues for the first quarter were RMB572.7 million (US$81.7 million), representing a 108.5% increase from the first quarter of 2007. The growth was mainly driven by increases in the number of active online marketing customers as well as revenue per customer. Baidu had nearly 161,000 active online marketing customers in the first quarter of 2008, representing a sequential increase of 3.9% and an increase of 43.8% from the corresponding period in 2007. Revenue per online marketing customer for the first quarter remained stable sequentially at approximately RMB3,600 (US$513), and increased approximately 44.0% from the corresponding period in 2007.
Traffic acquisition costs (TAC) as a component of cost of revenues were RMB76.6 million (US$10.9 million), representing 13.3% of total revenues, compared to 10.3% in the corresponding period in 2007. The increase in TAC as a percentage of total revenues primarily reflects the continued growth of revenue contribution from Baidu Union members.
Bandwidth costs as a component of cost of revenues were RMB38.4 million (US$5.5 million), representing 6.7% of total revenues, compared to 7.8% in the corresponding period in 2007. Depreciation costs as a component of cost of revenues were RMB53.2 million (US$7.6 million), representing 9.3% of total revenues, compared to 9.4% in the corresponding period in 2007.
Selling, general and administrative expenses were RMB147.0 million (US$21.0 million), representing an increase of 96.3% from the corresponding period in 2007, primarily due to expansion of the direct sales force.
Research and development expenses were RMB51.4 million (US$7.3 million), representing a 105.9% increase from the corresponding period in 2007, primarily due to an increase in research and development staff.
Share-based compensation expenses, which were allocated to related operating cost and expense line items, increased in aggregate by 32.5% to RMB16.2 million (US$2.3 million) in the first quarter of 2008 from RMB12.2 million in the corresponding period in 2007.
Operating profit was RMB147.4 million (US$21.0 million), representing a 99.6% increase from the corresponding period in 2007. Operating profit excluding share-based compensation expenses (non-GAAP) was RMB163.5 million (US$23.3 million) for the first quarter of 2008, a 90.1% increase from the corresponding period in 2007.
Adjusted EBITDA (non-GAAP), which is defined in this announcement as earnings before interest, taxes, depreciation, amortization, other non- operating income and share-based compensation expenses, were RMB228.4 million (US$32.6 million) for the first quarter of 2008, representing a 93.5% increase from the corresponding period in 2007.
Income tax expense was RMB10.9 million (US$1.5 million), compared to an income tax expense of RMB1.4 million in the first quarter of 2007. The increase in tax over previous quarters is due to expected increases in tax rates applied to two PRC-based subsidiaries as their tax holidays either expired or partially elapsed.
Net income was RMB146.6 million (US$20.9 million), representing a 71.5% increase from the corresponding period in 2007. Basic and diluted EPS for the first quarter of 2008 amounted to RMB4.29 (US$0.61) and RMB4.22 (US$0.60), respectively.
Net income excluding share-based compensation expenses (non-GAAP) was RMB162.8 million (US$23.2 million), a 66.6% increase from the corresponding period in 2007. Basic and diluted EPS excluding share-based compensation expenses (non-GAAP) for the first quarter of 2008 were RMB4.77 (US$0.68) and RMB4.68 (US$0.67), respectively.
As of March 31, 2008, Baidu's cash, cash equivalents and short-term investments amounted to RMB1.7 billion (US$237.6 million). Net operating cash inflow and capital expenditures for the first quarter of 2008 were RMB248.9 million (US$35.5 million) and RMB158.5 million (US$22.6 million), respectively. A portion of the capital expenditure was associated with the construction of Baidu's new campus facility.
Outlook for Second Quarter 2008
Baidu currently expects to generate total revenues in an amount ranging from RMB780 million (US$111 million) to RMB800 million (US$114 million) for the second quarter of 2008, representing a 94.4% to 99.4% increase from the corresponding period in 2007 and a 35.8% to 39.3% increase from the first quarter of 2008. This forecast reflects Baidu's current and preliminary view, which is subject to change.
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