Baidu posted double-digit percentage revenue growth in 1Q2013–but its earnings still missed analysts’ expectations as the Chinese search giant’s costs soared.
Baidu’s 1Q2013 net income increased 8.5 percent to $328.9 million (2.043 billion RMB), short of the $354.9 million (2.19 billion yuan) expected by analysts polled by Bloomberg. Total revenue rose 40 percent from $961 million (5.97 billion RMB), missing the 5.99 billion RMB analysts expected.
Online marketing revenue grew 40 percent to $958.5 million (5.95 billion RMB), while Baidu’s active online marketing customers rose 28 percent to 410,000 from a year earlier. But revenue per online advertising customer slipped 6.5 percent from the previous quarter.
Baidu faces tighter competition in the search market as it competes for advertising customers with upstarts like Qihoo 360.
But Baidu’s selling, general and administrative costs increased 77 percent and its R&D jumped 83 percent. The company’s profit margins also narrowed after Baidu announced plans to buy a stake in online video site iQiyi last November. Baidu is gearing up to compete with streaming video giant Youku-Tudou, with reports emerging recently that it purchased PPStream.
In its earnings release, Baidu’s CFO Jennifer Li said “we remain committed to investing aggressively, particularly in marketing and R&D. By deploying resources in the most strategically important areas of our business, we’re confident we can build exceptional long-term value for shareholders.”
Baidu forecast second quarter revenue between $1.19 billion and $1.22 billion, in-line with analysts’ estimates.