BEIJING, July 27, 2017 /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, 2017[1].
"In the second quarter, Baidu announced our new mission to make
a complex world simpler through technology." said Robin Li, Baidu's Chairman and Chief Executive
Officer. "To achieve our mission, we will execute on two strategic
pillars: to strengthen our mobile foundation and lead in AI. We
will use AI as a fundamental driver to elevate our current core
business, specifically our core products of Mobile Baidu, search
and feed. In parallel, we will continue to build out our newer
AI-enabled initiatives through an open platform and ecosystem
approach to capture long term economic opportunity."
"We made big strides in the second quarter, as we reported solid
financial performance and made meaningful progress in our core
business and AI-enabled initiatives," said Qi Lu, Baidu's Vice
Chairman, Group President and Chief Operating Officer. "Our Mobile
Baidu App and our Feed product showed strong progress, and the
solid increase of our online active customer base reaffirmed
Baidu's unique and compelling value proposition. At our inaugural
Baidu Create AI Developer conference, we showcased our AI platform
and eco-system leadership position and compelling long term
economic opportunities. iQiyi also continued to solidify its lead
in the online video industry."
"We delivered solid results in the second quarter," said
Jennifer Li, CFO of Baidu. "We will
continue to drive operational efficiency on our platform and invest
in the core strength of technology and in our ecosystem. We will
execute with discipline to fulfill our new mission in the AI era to
generate long term shareholder value."
Second Quarter 2017 Financial Highlights
- Total revenues in the second quarter of 2017 were
RMB20.874 billion ($3.079 billion), a 14.3% increase from the
corresponding period in 2016. Mobile revenue represented 72% of
total revenues for the second quarter of 2017, compared to 62% for
the corresponding period in 2016.
- Operating profit in the second quarter of 2017 was
RMB4.210 billion ($621 million), a 46.9% increase from the
corresponding period in 2016. iQiyi reduced non-GAAP
operating margins by 11.5 percentage points for the second quarter
of 2017.
- Net income attributable to Baidu in the second quarter
of 2017 was RMB4.415 billion
($651 million), an 82.9% increase
from the corresponding period in 2016. Diluted earnings
attributable to Baidu per ADS for the second quarter of 2017
were RMB11.31 ($1.67);non-GAAP net income attributable to
Baidu[2] in the second quarter of 2017 was
RMB5.571 billion ($822 million), a 98.4% increase from the
corresponding period in 2016;non-GAAP diluted earnings per
ADS[3] for the second quarter of 2017 were
RMB16.00 ($2.36).
In the following section, comparison and analysis are provided
based on reported consolidated financial results.
Second Quarter 2017 Results
Baidu reported total revenues of RMB20.874 billion ($3.079
billion) for the second quarter of 2017, representing a
14.3% increase from the corresponding period in 2016.
Online marketing revenues for the second quarter of 2017
were RMB17.883 billion ($2.638 billion), representing a 5.6% increase
from the corresponding period in 2016. Baidu had about 470,000
active online marketing customers[4]
in the second quarter of 2017, representing a 20.9% decrease from
the corresponding period in 2016. Revenue per online marketing
customer for the second quarter of 2017 was approximately
RMB37,500 ($5,532), a 32.0% increase from the corresponding
period in 2016.
Traffic acquisition costs as a component of cost of
revenues was RMB2.478 billion
($365 million), representing 11.9% of
total revenues, compared to 15.9% in the corresponding period in
2016 and 12.9% in the first quarter of 2017.
Bandwidth costs as a component of cost of revenues were
RMB1.382 billion ($204 million), representing 6.6% of total
revenues, compared to 6.3% in the corresponding period in 2016.
Depreciation costs as a component of cost of revenues
were RMB828 million ($122 million), representing 4.0% of total
revenues, compared to 4.1% in the corresponding period in 2016.
Operational costs as a component of cost of revenues were
RMB1.225 billion ($181 million), representing 5.9% of total
revenues, compared to 5.4% in the corresponding period in 2016.
Content costs as a component of cost of revenues were
RMB3.112 billion ($459 million), representing 14.9% of total
revenues, compared to 9.3% in the corresponding period in 2016. The
year-over-year increase was mainly due to iQiyi's increased content
costs.
Selling, general and administrative expenses were
RMB2.934 billion ($433 million), representing a decrease of 30.1%
from the corresponding period in 2016, primarily due to a decrease
in promotional spending
Research and development expenses were RMB3.148 billion ($464
million), representing a 27.7% increase from the
corresponding period in 2016. The increase was primarily due to the
growth of research and development personnel-related costs.
Share-based compensation expenses, which were allocated
to related operating costs and expense line items, were
RMB796 million ($117 million) in the second quarter of 2017,
compared to RMB401 million in the
corresponding period in 2016.
Operating profit was RMB4.210
billion ($621 million),
representing a 46.9% increase from the corresponding period in
2016. Non-GAAP operating profit was RMB5.006 billion ($738
million), representing a 53.2% increase from the
corresponding period in 2016.
Income tax expense was RMB564
million ($83 million),
compared to RMB793 million in the
corresponding period in 2016. The effective tax rate for the second
quarter of 2017 was 11.3% as compared to 24.8% for the
corresponding period in 2016. The decrease in the effective tax
rate was due to the preferential tax status that was granted to
certain PRC subsidiaries in the second quarter of 2017.
Net income attributable to Baidu was RMB4.415 billion ($651
million), representing an 82.9% increase from the
corresponding period in 2016.Basic and diluted earnings per
ADS[5] for the second quarter of 2017 amounted to
RMB11.36 ($1.68) and RMB11.31 ($1.67),
respectively.
Non-GAAP net income attributable to Baidu was
RMB5.571 billion ($822 million), a 98.4% increase from the
corresponding period in 2016. Non-GAAP diluted earnings per
ADS for the second quarter of 2017 amounted to RMB16.00 ($2.36).
As of June 30, 2017, the Company had cash, cash
equivalents and short-term investments of RMB92.152 billion ($13.593
billion). Net operating cash inflow for the
second quarter of 2017 was RMB6.626 billion ($977 million). Capital
expenditures for the second quarter of 2017
were RMB1.125 billion ($166
million).
Adjusted EBITDA was RMB6.008
billion ($886 million) for the
second quarter of 2017, representing a 41.4% increase from the
corresponding period in 2016.
Outlook for Third Quarter 2017
Baidu currently expects to generate total revenues in an amount
ranging from RMB23.130 billion
($3.412 billion) to RMB23.750 billion
($3.503 billion) for the third
quarter of 2017, representing an annual increase of 26.7% to 30.1%.
On an apples-to-apples basis, excluding mobile games from Baidu's
financials, the guidance represents a 29.1% to 32.6% 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 27, 2017, U.S. Eastern Time (8:00 AM on July 28,
2017, Beijing/Hong Kong
Time). Dial-in details for the earnings conference call are as
follows:
|
|
International:
|
+65
67135090
|
China
|
4006208038
|
US:
|
+1
8456750437
|
UK:
|
+44
2036214779
|
Hong Kong:
|
+852
30186771
|
|
|
Passcode for all
regions:
|
50130884
|
|
|
A replay of the conference call may be accessed
by phone at the following number until August 4, 2017:
International:
|
+61 2 8199
0299
|
Passcode:
|
50130884
|
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. Baidu aims to make a complex world simpler through
technology. 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 2017 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: Baidu's growth strategies; its future
business development, including development of new products and
services; its ability to attract and retain users and customers;
competition in the Chinese Internet search market; competition for
online marketing customers; changes in the Company's revenues and
certain cost or expense items as a percentage of its 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 the Company's 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
its 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. The Company
believes that both management and investors benefit from referring
to these non-GAAP financial measures in assessing its 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. The
Company believes 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 the Company's 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 the Company's 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 Baidu's equity method investees at a price higher or
lower than the 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 inquiries, please contact:
Sharon Ng
Baidu, Inc.
Tel: +86-10-5992-4958
Email: ir@baidu.com
[1] This announcement contains translations of certain RMB
amounts into U.S. dollars at specified rates solely for the
convenience of the reader. Unless otherwise noted, all translations
from RMB to U.S. dollars are made at a rate of RMB6.7793 to US$1.00, the effective noon buying rate as of
June 30, 2017, in The City of New York for cable transfers of RMB as
certified for customs purposes by the Federal Reserve Bank of
New York.
[2] 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 the shares by
our equity method investees at a price higher or lower than our
carrying value per share.
[3] Non-GAAP diluted earnings per ADS represents diluted earnings
per ADS calculated based on non-GAAP net income attributable to
Baidu.
[4] The number of active online marketing customers and revenue per
online active customer exclude our group-buying and delivery
related businesses for consistency with previous reporting.
[5] Basic and diluted earnings per ADS was reduced by RMB1.38 ($0.20) and
RMB1.37 ($0.20), respectively, due to the accretion of
the redeemable non-controlling interests.
Baidu,
Inc.
|
|
|
|
|
Condensed
Consolidated Statements of Income
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
June
30,
|
March
31,
|
June
30,
|
(In RMB millions
except for share, per share (or ADS) information)
|
|
2016
|
2017
|
2017
|
|
|
Unaudited
|
Unaudited
|
Unaudited
|
Revenues:
|
|
|
|
|
Online
marketing services
|
|
16,939
|
14,738
|
17,883
|
Other
services
|
|
1,325
|
2,153
|
2,991
|
Total
revenues
|
|
18,264
|
16,891
|
20,874
|
|
|
|
|
|
Operating costs
and expenses:
|
|
|
|
|
Cost of
revenues (note 1, 2)
|
|
(8,738)
|
(9,233)
|
(10,582)
|
Selling,
general and administrative (note 2)
|
|
(4,195)
|
(2,817)
|
(2,934)
|
Research and
development (note 2)
|
|
(2,465)
|
(2,835)
|
(3,148)
|
Total
operating costs and expenses
|
|
(15,398)
|
(14,885)
|
(16,664)
|
|
|
|
|
|
Operating
profit
|
|
2,866
|
2,006
|
4,210
|
|
|
|
|
|
Other
income:
|
|
|
|
|
Interest
income
|
|
487
|
649
|
712
|
Interest
expense
|
|
(275)
|
(323)
|
(334)
|
Foreign
exchange income(loss), net
|
|
244
|
(101)
|
(139)
|
Loss from
equity method investments
|
|
(555)
|
(76)
|
(118)
|
Other income,
net
|
|
429
|
21
|
643
|
Total other
income
|
|
330
|
170
|
764
|
|
|
|
|
|
Income
before income taxes
|
|
3,196
|
2,176
|
4,974
|
|
|
|
|
|
Income
taxes
|
|
(793)
|
(405)
|
(564)
|
|
|
|
|
|
Net
income
|
|
2,403
|
1,771
|
4,410
|
Less: net loss
attributable to noncontrolling interests
|
(11)
|
(6)
|
(5)
|
Net income
attributable to Baidu
|
|
2,414
|
1,777
|
4,415
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
for Class A and Class B ordinary shares:
|
|
|
Net income
attributable to Baidu -Basic
|
|
65.87
|
46.47
|
113.58
|
Net income
attributable to Baidu -Diluted
|
|
65.69
|
46.29
|
113.11
|
|
|
|
|
|
Earnings per ADS (1
Class A ordinary share equals 10 ADSs ):
|
|
|
Net income
attributable to Baidu -Basic
|
|
6.59
|
4.65
|
11.36
|
Net income
attributable to Baidu -Diluted
|
|
6.57
|
4.63
|
11.31
|
|
|
|
|
|
Weighted average
number of Class A and Class B ordinary shares
outstanding:
|
|
Basic
|
|
34,652,134
|
34,734,019
|
34,678,268
|
Diluted
|
|
34,747,303
|
34,869,783
|
34,824,387
|
|
|
|
|
|
(1) Cost of
revenues are detailed as follows:
|
|
|
|
|
Sales tax and
surcharges
|
|
(1,212)
|
(1,258)
|
(1,509)
|
Traffic
acquisition costs
|
|
(2,908)
|
(2,185)
|
(2,478)
|
Bandwidth
costs
|
|
(1,152)
|
(1,336)
|
(1,382)
|
Depreciation
costs
|
|
(754)
|
(823)
|
(828)
|
Operational
costs
|
|
(993)
|
(959)
|
(1,225)
|
Content
costs
|
|
(1,699)
|
(2,636)
|
(3,112)
|
Share-based
compensation expenses
|
|
(20)
|
(36)
|
(48)
|
Total cost of
revenues
|
|
(8,738)
|
(9,233)
|
(10,582)
|
|
|
|
|
|
(2) Includes
share-based compensation expenses as follows:
|
|
|
Cost of
revenues
|
|
(20)
|
(36)
|
(48)
|
Selling,
general and administrative
|
|
(94)
|
(187)
|
(236)
|
Research and
development
|
|
(287)
|
(407)
|
(512)
|
Total
share-based compensation expenses
|
|
(401)
|
(630)
|
(796)
|
Baidu,
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
December
31,
|
June
30,
|
(In RMB millions
except for number of shares and per share data)
|
|
2016
|
2017
|
|
|
Audited
|
Unaudited
|
|
|
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash
equivalents
|
|
10,898
|
15,484
|
Restricted
cash
|
|
318
|
123
|
Short-term
investments
|
|
71,196
|
76,668
|
Other invested
securities
|
|
7,748
|
24,998
|
Accounts
receivable, net
|
|
4,109
|
4,097
|
Loans and
interest receivable, net
|
|
1,800
|
9,190
|
Amounts due
from related parties
|
|
346
|
845
|
Other assets,
current
|
|
3,345
|
4,679
|
Total current assets
|
|
99,760
|
136,084
|
|
|
|
|
Non-current assets:
|
|
|
|
Fixed assets,
net
|
|
11,294
|
11,641
|
Intangible
assets, net
|
|
3,872
|
4,900
|
Goodwill
|
|
15,342
|
15,847
|
Long-term
investments, net
|
|
45,690
|
45,007
|
Loans and
interest receivable, net
|
|
2,709
|
3,648
|
Amounts due
from related parties
|
|
11
|
11
|
Deferred tax
assets, net
|
|
1,100
|
1,494
|
Other assets,
non-current
|
|
2,219
|
3,528
|
Total non-current assets
|
|
82,237
|
86,076
|
|
|
|
|
Total
assets
|
|
181,997
|
222,160
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Short-term
loans
|
|
1,115
|
1,056
|
Convertible notes payable
|
|
-
|
8,340
|
Amounts
due to the third-party investors
|
|
6,759
|
31,826
|
Accounts payable and
accrued liabilities
|
|
21,896
|
22,360
|
Customer advances and
deposits
|
|
6,032
|
6,269
|
Deferred
revenue
|
|
596
|
710
|
Deferred
income
|
|
566
|
554
|
Long-term loans,
current portion
|
|
3,468
|
3,399
|
Notes payable,current
portion
|
|
5,203
|
5,083
|
Capital lease
obligation
|
|
8
|
-
|
Amounts due to
related parties
|
|
459
|
248
|
Total current liabilities
|
|
46,102
|
79,845
|
|
|
|
|
Non-current liabilities:
|
|
|
|
Deferred
income
|
|
28
|
69
|
Long-term
loans
|
|
6,822
|
6,963
|
Notes
payable
|
|
27,648
|
27,013
|
Deferred tax
liabilities
|
|
3,589
|
3,580
|
Other non-current
liabilities
|
|
65
|
67
|
Total non-current liabilities
|
|
38,152
|
37,692
|
|
|
|
|
Total
liabilities
|
|
84,254
|
117,537
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
5,492
|
5,998
|
|
|
|
|
Equity
|
|
|
|
Class A Ordinary
Shares, par value US$0.00005 per share, 825,000,000 shares
authorized, and 27,325,551 shares and 27,425,029 shares
issued and outstanding as at December 31, 2016 and June 30,
2017
|
|
-
|
-
|
Class B Ordinary
Shares, par value US$0.00005 per share, 35,400,000 shares
authorized, and 7,401,254 shares and 7,251,254 shares
issued and outstanding as at December 31, 2016 and June 30,
2017
|
|
-
|
-
|
Additional paid-in
capital
|
|
8,323
|
9,958
|
Retained
earnings
|
|
85,734
|
89,564
|
Accumulated other
comprehensive loss
|
|
(1,783)
|
(861)
|
Total Baidu, Inc. shareholders' equity
|
|
92,274
|
98,661
|
Noncontrolling interests
|
|
(23)
|
(36)
|
Total
equity
|
|
92,251
|
98,625
|
|
|
|
|
Total liabilities,
redeemable noncontrolling interests, and equity
|
|
181,997
|
222,160
|
Reconciliations of
non-GAAP financial measures to the nearest comparable GAAP
measures (in RMB millions except for share and per ADS
information, unaudited)
|
|
|
|
|
|
|
|
Three months
ended
|
|
June 30,
2016
|
|
March 31,
2017
|
|
June 30,
2017
|
Operating
profit
|
2,866
|
|
2,006
|
|
4,210
|
Add:
Share-based compensation expenses
|
401
|
|
630
|
|
796
|
Non-GAAP operating
profit
|
3,267
|
|
2,636
|
|
5,006
|
Add:
Depreciation of fixed assets
|
845
|
|
922
|
|
932
|
Add:
Amortization of intangible assets
|
138
|
|
68
|
|
70
|
Adjusted
EBITDA
|
4,250
|
|
3,626
|
|
6,008
|
|
|
|
|
|
|
|
Three months
ended
|
|
June 30,
2016
|
|
March 31,
2017
|
|
June 30,
2017
|
Net income
attributable to Baidu
|
2,414
|
|
1,777
|
|
4,415
|
Add:
Share-based compensation expenses
|
401
|
|
630
|
|
796
|
Add: (Gain)loss
associated with the dilution of equity method investees
|
(7)
|
|
(17)
|
|
360
|
Non-GAAP net
income attributable to Baidu
|
2,808
|
|
2,390
|
|
5,571
|
|
|
|
|
|
|
Weighted average
number of ADS used in computing GAAP and non-
GAAP diluted earnings per ADS
|
347,473,027
|
|
348,697,827
|
|
348,243,867
|
|
|
|
|
|
|
GAAP diluted
earnings per ADS
|
6.57
|
|
4.63
|
|
11.31
|
Add: Accretion
of the redeemable noncontrolling interests
|
0.38
|
|
0.46
|
|
1.37
|
Add:
Share-based compensation expenses
|
1.15
|
|
1.81
|
|
2.29
|
Add: (Gain)loss
associated with the dilution of equity method investees
|
(0.02)
|
|
(0.05)
|
|
1.03
|
Non-GAAP diluted
earnings per ADS
|
8.08
|
|
6.85
|
|
16.00
|
Reconciliation
from net cash provided by operating activities to free cash flow
(in RMB millions, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
As a %
of
|
Three months
ended
|
As a %
of
|
Three months
ended
|
As a %
of
|
|
June 30,
2016
|
total
revenues
|
March 31,
2017
|
total
revenues
|
June 30,
2017
|
total
revenues
|
Net cash provided
by operating activities
|
4,816
|
26%
|
4,704
|
28%
|
6,626
|
32%
|
|
|
|
|
|
|
|
Less: Capital
expenditures
|
(980)
|
-5%
|
(1,168)
|
-7%
|
(1,125)
|
-5%
|
|
|
|
|
|
|
|
Free cash
flow
|
3,836
|
21%
|
3,536
|
21%
|
5,501
|
27%
|
View original
content:http://www.prnewswire.com/news-releases/baidu-announces-second-quarter-2017-results-300495762.html
SOURCE Baidu, Inc.