BEIJING, Oct. 26, 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 third quarter ended September 30, 2017[1].
"In the third quarter, we made good progress in our strategic
pillars to strengthen our mobile foundation and lead in AI,"
said Robin Li, Baidu's Co-Founder and Chief
Executive Officer. "On strengthening our mobile foundation, our
strategy to leverage Baidu's leading AI technologies to increase
the user scale and user stickiness of Mobile Baidu is showing
measurable results. On our AI initiatives, we continue to focus on
developing platforms for smart device and autonomous driving
markets, as well as leveraging AI into vertical sectors, such as
financial services."
"We drove product innovation in our core business to strengthen
our user and customer value proposition and made progress in our
AI-enabled businesses," said Qi Lu, Baidu's Chief
Operating Officer. "We continue to solidify the foundation of our
AI platforms and grow our partner and developer
ecosystems. iQIYI also continued to lead the online video
industry, off the back of highly successful self-produced
content."
"We delivered solid financial results in the third quarter with
top line increasing 29% year over year and operating profit growing
69% year over year," said Herman Yu, Chief Financial Officer
of Baidu. "In the third quarter, we also spun off Baidu
Deliveries, as part of a year-long strategy to free up the
company's resources and management attention to focus on AI and
projects with strong synergy that will optimize Baidu's long term
value."
Third Quarter 2017 Financial Highlights
- Total revenues in the third quarter of 2017 were
RMB 23.5 billion ($3.53 billion), a 29% increase from the
corresponding period in 2016. Mobile revenue represented 73% of
total revenues for the third quarter of 2017, compared to 64% for
the corresponding period in 2016.
- Operating profit in the third quarter of 2017 was
RMB 4.7 billion ($706 million), a 69% increase from the
corresponding period in 2016. iQIYI reduced non-GAAP
operating margins by 11 percentage points for the third quarter of
2017. Non-GAAP operating profit was RMB 5.5 billion ($833
million), representing a 73% increase from the corresponding
period in 2016.
- Net income attributable to Baidu in the third quarter of
2017 was RMB 7.9 billion
($1.20 billion), a 156% increase from
the corresponding period in 2016. Diluted earnings attributable
to Baidu per ADS for the third quarter of 2017 were
RMB 24 ($3.62); non-GAAP net income attributable to
Baidu[2] in the third quarter of 2017 was RMB 9.1 billion ($1.36
billion), a 163% increase from the corresponding period in
2016; non-GAAP diluted earnings per
ADS[3] for the third quarter of 2017 were
RMB 26 ($3.89).
In the following section, comparison and analysis are provided
based on reported consolidated financial results.
Third Quarter 2017 Results
Baidu reported total revenues of RMB 23.5 billion ($3.53
billion) for the third quarter of 2017, representing a 29%
increase from the corresponding period in 2016.
Online marketing revenues for the third quarter of 2017
were RMB 20.1 billion ($3.02 billion), representing a 22% increase from
the corresponding period in 2016. Baidu had about 486,000 active
online marketing customers[4] in the third quarter of 2017,
representing a 7% decrease from the corresponding period in 2016.
Revenue per online marketing customer for the third quarter
of 2017 was approximately RMB 40,900
($6,147), a 31% increase from the
corresponding period in 2016.
Traffic acquisition costs as a component of cost of
revenues was RMB 2.5 billion
($372 million), representing 10.5% of
total revenues, compared to 14.2% in the corresponding period in
2016 and 11.9% in the second quarter of 2017.
Bandwidth costs as a component of cost of revenues were
RMB 1.4 billion ($216 million), representing 6.1% of total
revenues, compared to 6.8% in the corresponding period in 2016.
Depreciation costs as a component of cost of revenues
were RMB 0.9 billion ($128 million), representing 3.6% of total
revenues, compared to 4.4% in the corresponding period in 2016.
Operational costs as a component of cost of revenues were
RMB 1.4 billion ($208 million), representing 5.9% of total
revenues, compared to 6.3% in the corresponding period in 2016.
Content costs as a component of cost of revenues were
RMB 3.9 billion ($586 million), representing 16.6% of total
revenues, compared to 12.1% 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
RMB 3.7 billion ($563 million), representing an increase of 4%
from the corresponding period in 2016.
Research and development expenses were RMB 3.2 billion ($487
million), representing a 24% 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
RMB 0.8 billion ($126 million) in the third quarter of 2017,
compared to RMB 0.4 billion in the
corresponding period in 2016.
Operating profit was RMB 4.7
billion ($706 million),
representing a 69% increase from the corresponding period in 2016.
Non-GAAP operating profit was RMB 5.5
billion ($833 million),
representing a 73% increase from the corresponding period in
2016.
Other income, net was RMB 4.2
billion ($636 million), which
mainly consisted of the investment gain recognized as a result of
the disposal of Baidu Deliveries.
Income tax expense was RMB 1.1
billion ($165 million),
compared to RMB 1.0 billion in the
corresponding period in 2016. The effective tax rate for the third
quarter of 2017 was 12% as compared to 25% for the corresponding
period in 2016. The decrease in the effective tax rate was
primarily due to the nontaxable investment gain.
Net income attributable to Baidu was RMB 7.9 billion ($1.20
billion), representing a 156% increase from the
corresponding period in 2016. Basic and diluted earnings per
ADS for the third quarter of 2017 amounted to RMB 24 ($3.65) and
RMB 24 ($3.62), respectively.
Non-GAAP net income attributable to Baidu was
RMB 9.1 billion ($1.36 billion), a 163% increase from the
corresponding period in 2016. Non-GAAP diluted earnings per
ADS for the third quarter of 2017 amounted to RMB 26 ($3.89).
As of September 30, 2017, the Company had cash, cash
equivalents and short-term investments of RMB 108.1 billion ($16.25
billion). Net operating cash inflow for the third
quarter of 2017 was RMB 9.7 billion ($1.45 billion). Capital
expenditures for the third quarter of 2017 were RMB
1.3 billion ($0.20 billion).
Adjusted EBITDA was RMB 6.8
billion ($1.03 billion) for
the third quarter of 2017, representing a 62% increase from the
corresponding period in 2016.
Outlook for Fourth Quarter 2017
Baidu currently expects to generate total revenues in the fourth
quarter of 2017 between RMB 22.23
billion ($3.34 billion) to RMB 23.41
billion ($3.52 billion),
representing a year-over-year growth of 22% to 29%. Excluding
disposed businesses, such as mobile games and Baidu Deliveries, the
guidance represents a year-over-year growth of 28% to 34%. 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 October 26, 2017, U.S. Eastern Time
(8:00 AM on October 27, 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:
|
98359218
|
A replay of the conference call may be accessed by phone at the
following number until November 3, 2017:
International:
|
+61 2 8199
0299
|
|
|
Passcode:
|
98359218
|
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 fourth 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 RMB6.6533 to US$1.00, the effective noon buying rate as of
September 29, 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.
Baidu,
Inc.
|
|
|
|
|
Condensed
Consolidated Statements of Income
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September
30,
|
June
30,
|
September
30,
|
(In RMB millions
except for share, per share (or ADS) information)
|
|
2016
|
2017
|
2017
|
|
|
Unaudited
|
Unaudited
|
Unaudited
|
Revenues:
|
|
|
|
|
Online
marketing services
|
|
16,490
|
17,883
|
20,108
|
Other
services
|
|
1,763
|
2,991
|
3,381
|
Total
revenues
|
|
18,253
|
20,874
|
23,489
|
|
|
|
|
|
Operating costs
and expenses:
|
|
|
|
|
Cost of
revenues (note 1, 2)
|
|
(9,256)
|
(10,582)
|
(11,801)
|
Selling,
general and administrative (note 2)
|
|
(3,596)
|
(2,934)
|
(3,746)
|
Research and
development (note 2)
|
|
(2,614)
|
(3,148)
|
(3,242)
|
Total
operating costs and expenses
|
|
(15,466)
|
(16,664)
|
(18,789)
|
|
|
|
|
|
Operating
profit
|
|
2,787
|
4,210
|
4,700
|
|
|
|
|
|
Other
income:
|
|
|
|
|
Interest
income
|
|
627
|
712
|
876
|
Interest
expense
|
|
(320)
|
(334)
|
(557)
|
Foreign
exchange income(loss), net
|
|
20
|
(139)
|
(130)
|
Loss from
equity method investments
|
|
(248)
|
(118)
|
(73)
|
Other income,
net
|
|
1,272
|
643
|
4,229
|
Total other
income
|
|
1,351
|
764
|
4,345
|
|
|
|
|
|
Income
before income taxes
|
|
4,138
|
4,974
|
9,045
|
|
|
|
|
|
Income
taxes
|
|
(1,045)
|
(564)
|
(1,097)
|
|
|
|
|
|
Net
income
|
|
3,093
|
4,410
|
7,948
|
Less: net loss
attributable to noncontrolling interests
|
(9)
|
(5)
|
(1)
|
Net income
attributable to Baidu
|
|
3,102
|
4,415
|
7,949
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
for Class A and Class B ordinary shares:
|
|
|
Net income
attributable to Baidu -Basic
|
|
85.27
|
113.58
|
242.48
|
Net income
attributable to Baidu -Diluted
|
|
85.06
|
113.11
|
240.49
|
|
|
|
|
|
Earnings per ADS (1
Class A ordinary share equals 10 ADSs ):
|
|
|
Net income
attributable to Baidu -Basic
|
|
8.53
|
11.36
|
24.25
|
Net income
attributable to Baidu -Diluted
|
|
8.51
|
11.31
|
24.05
|
|
|
|
|
|
Weighted average
number of Class A and Class B ordinary shares
outstanding:
|
|
Basic
|
|
34,678,734
|
34,678,268
|
34,703,924
|
Diluted
|
|
34,764,579
|
34,824,387
|
34,991,177
|
|
|
|
|
|
(1) Cost of
revenues are detailed as follows:
|
|
|
|
|
Sales tax and
surcharges
|
|
(1,221)
|
(1,509)
|
(1,700)
|
Traffic
acquisition costs
|
|
(2,594)
|
(2,478)
|
(2,476)
|
Bandwidth
costs
|
|
(1,241)
|
(1,382)
|
(1,440)
|
Depreciation
costs
|
|
(802)
|
(828)
|
(852)
|
Operational
costs
|
|
(1,159)
|
(1,225)
|
(1,383)
|
Content
costs
|
|
(2,211)
|
(3,112)
|
(3,897)
|
Share-based
compensation expenses
|
|
(28)
|
(48)
|
(53)
|
Total cost of
revenues
|
|
(9,256)
|
(10,582)
|
(11,801)
|
|
|
|
|
|
(2) Includes
share-based compensation expenses as follows:
|
|
|
Cost of
revenues
|
|
(28)
|
(48)
|
(53)
|
Selling,
general and administrative
|
|
(117)
|
(236)
|
(252)
|
Research and
development
|
|
(273)
|
(512)
|
(536)
|
Total
share-based compensation expenses
|
|
(418)
|
(796)
|
(841)
|
Baidu,
Inc.
|
|
|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
December
31,
|
September
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
|
15,357
|
Restricted
cash
|
|
318
|
447
|
Short-term
investments
|
|
71,196
|
92,730
|
Other invested
securities
|
|
7,748
|
21,496
|
Accounts
receivable, net
|
|
4,109
|
4,728
|
Loans and
interest receivable, net
|
|
1,800
|
14,070
|
Amounts due
from related parties
|
|
346
|
993
|
Other assets,
current
|
|
3,345
|
5,248
|
Total current assets
|
|
99,760
|
155,069
|
|
|
|
|
Non-current assets:
|
|
|
|
Fixed assets,
net
|
|
11,294
|
12,058
|
Intangible
assets, net
|
|
3,872
|
4,895
|
Goodwill
|
|
15,342
|
15,810
|
Long-term
investments, net
|
|
45,690
|
46,214
|
Loans and
interest receivable, net
|
|
2,709
|
3,699
|
Amounts due
from related parties
|
|
11
|
10
|
Deferred tax
assets, net
|
|
1,100
|
1,532
|
Other assets,
non-current
|
|
2,219
|
4,169
|
Total non-current assets
|
|
82,237
|
88,387
|
|
|
|
|
Total
assets
|
|
181,997
|
243,456
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Short-term
loans
|
|
1,115
|
1,353
|
Convertible notes payable
|
|
-
|
8,186
|
Amounts
due to the third-party investors
|
|
6,759
|
35,410
|
Accounts payable and
accrued liabilities
|
|
21,896
|
24,985
|
Customer advances and
deposits
|
|
6,032
|
6,920
|
Deferred
revenue
|
|
596
|
526
|
Deferred
income
|
|
566
|
561
|
Long-term loans,
current portion
|
|
3,468
|
1,008
|
Notes payable,
current portion
|
|
5,203
|
11,637
|
Capital lease
obligation
|
|
8
|
-
|
Amounts due to
related parties
|
|
459
|
337
|
Total current liabilities
|
|
46,102
|
90,923
|
|
|
|
|
Non-current liabilities:
|
|
|
|
Deferred
income
|
|
28
|
73
|
Long-term
loans
|
|
6,822
|
6,841
|
Notes
payable
|
|
27,648
|
29,768
|
Deferred tax
liabilities
|
|
3,589
|
3,472
|
Other non-current
liabilities
|
|
65
|
75
|
Total non-current liabilities
|
|
38,152
|
40,229
|
|
|
|
|
Total
liabilities
|
|
84,254
|
131,152
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
5,492
|
3,097
|
|
|
|
|
Equity
|
|
|
|
Class A Ordinary
Shares, par value US$0.00005 per share, 825,000,000 shares
authorized, and 27,325,551 shares and 27,521,260 shares
issued and outstanding as at December 31, 2016 and September 30,
2017
|
|
-
|
-
|
Class B Ordinary
Shares, par value US$0.00005 per share, 35,400,000 shares
authorized, and 7,401,254 shares and 7,201,254 shares
issued and outstanding as at December 31, 2016 and September 30,
2017
|
|
-
|
-
|
Additional paid-in
capital
|
|
8,323
|
10,958
|
Retained
earnings
|
|
85,734
|
97,979
|
Accumulated other
comprehensive income(loss)
|
|
(1,783)
|
70
|
Total Baidu, Inc. shareholders' equity
|
|
92,274
|
109,007
|
Noncontrolling interests
|
|
(23)
|
200
|
Total
equity
|
|
92,251
|
109,207
|
|
|
|
|
Total liabilities,
redeemable noncontrolling interests, and equity
|
|
181,997
|
243,456
|
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
|
|
September 30,
2016
|
|
June 30,
2017
|
|
September 30,
2017
|
Operating
profit
|
2,787
|
|
4,210
|
|
4,700
|
Add:
Share-based compensation expenses
|
418
|
|
796
|
|
841
|
Non-GAAP operating
profit
|
3,205
|
|
5,006
|
|
5,541
|
Add:
Depreciation of fixed assets
|
899
|
|
932
|
|
957
|
Add:
Amortization of intangible assets
|
126
|
|
70
|
|
347
|
Adjusted
EBITDA
|
4,230
|
|
6,008
|
|
6,845
|
|
|
|
|
|
|
|
Three months
ended
|
|
September 30,
2016
|
|
June 30,
2017
|
|
September 30,
2017
|
Net income
attributable to Baidu
|
3,102
|
|
4,415
|
|
7,949
|
Add:
Share-based compensation expenses
|
418
|
|
796
|
|
841
|
Add: (Gain)loss
associated with the dilution of equity method investees
|
(73)
|
|
360
|
|
286
|
Non-GAAP net
income attributable to Baidu
|
3,447
|
|
5,571
|
|
9,076
|
|
|
|
|
|
|
Weighted average
number of ADS used in computing GAAP and non-
GAAP diluted earnings per ADS
|
347,645,787
|
|
348,243,867
|
|
349,911,767
|
|
|
|
|
|
|
GAAP diluted
earnings per ADS
|
8.51
|
|
11.31
|
|
24.05
|
Add: Accretion
of the redeemable noncontrolling interests
|
0.42
|
|
1.37
|
|
(1.33)
|
Add:
Share-based compensation expenses
|
1.20
|
|
2.29
|
|
2.40
|
Add: (Gain)loss
associated with the dilution of equity method investees
|
(0.21)
|
|
1.03
|
|
0.82
|
Non-GAAP diluted
earnings per ADS
|
9.92
|
|
16.00
|
|
25.94
|
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
|
|
September 30,
2016
|
total
revenues
|
June 30,
2017
|
total
revenues
|
September 30,
2017
|
total
revenues
|
Net cash provided
by operating activities
|
4,501
|
25%
|
6,626
|
32%
|
9,680
|
41%
|
|
|
|
|
|
|
|
Less: Capital
expenditures
|
(1,183)
|
-6%
|
(1,125)
|
-5%
|
(1,297)
|
-6%
|
|
|
|
|
|
|
|
Free cash
flow
|
3,318
|
19%
|
5,501
|
27%
|
8,383
|
35%
|
View original
content:http://www.prnewswire.com/news-releases/baidu-announces-third-quarter-2017-results-300544247.html
SOURCE Baidu, Inc.