Baidu.com Inc. (BIDU) said it expects third quarter revenue of $324.4 million to $333.3 million. The current consensus estimate is revenue of $316.1 million for the quarter ending September 30, 2010.
Second Quarter 2010 Highlights
-- Total revenues in the second quarter of 2010 were RMB1.914 billion
($282.3 million), a 74.4% increase from the corresponding period in
2009.
-- Operating profit in the second quarter of 2010 was RMB971.8 million
($143.3 million), a 129.8% increase from the corresponding period in
2009.
-- Net income in the second quarter of 2010 was RMB837.4 million ($123.5
million), a 118.5% increase from the corresponding period in 2009.
Diluted earnings per ADS(2) for the second quarter of 2010 was RMB2.40
($0.35); diluted earnings per ADS excluding share-based compensation
expenses (non-GAAP) for the second quarter of 2010 was RMB2.46 ($0.36).
(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 RMB6.7815 to US$1.00, the effective noon
buying rate as of June 30, 2010 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) Effective on May 12, 2010, Baidu adjusted the ratio of its American
depositary shares ("ADSs") representing Class A ordinary shares from
one (1) ADS for one (1) share to ten (10) ADSs for one (1) share. All
earnings per ADS figures in this announcement give effect to the
forgoing ADS to share ratio change.
"Baidu’s record top and bottom line results reflect the healthy growth of our customer base and continued improvements in monetization efficiency," said Robin Li, Baidu’s chairman and chief executive officer. "This quarter’s strong performance also underscores the vast Internet market opportunities for us and the growing appreciation for search engine marketing in China."Mr. Li added, "Baidu continues to focus on user experience and has many initiatives on this front to ensure Baidu remains at the center of China’s Internet ecosystem."
Jennifer Li, Baidu’s chief financial officer, commented, "Effective execution resulted in impressive revenue growth and healthy margin improvements for second quarter 2010. Over the next quarters, we will continue to aggressively invest in R&D, sales and infrastructure to drive innovation, enhance monetization and support our growth."
Second Quarter 2010 Results
Baidu reported total revenues of RMB1.914 billion ($282.3 million) for the second quarter of 2010, representing a 74.4% increase from the corresponding period in 2009.
Online marketing revenues for the second quarter of 2010 were RMB1.913 billion ($282.2 million), representing a 74.5% increase from the corresponding period in 2009. Baidu had about 254,000 active online marketing customers in the second quarter of 2010, representing a 25.1% increase from the corresponding period in 2009 and a 14.9% increase from the previous quarter. Revenue per online marketing customer for the second quarter was approximately RMB7,500 ($1,106), a 38.9% increase from the corresponding period in 2009 and a 27.1% increase from the previous quarter.
Traffic acquisition cost (TAC) as a component of cost of revenues was RMB185.6 million ($27.4 million), representing 9.7% of total revenues, as compared to 16.0% in the corresponding period in 2009 and 13.2% in the first quarter of 2010. The decrease in TAC as a percentage of total revenues is primarily due to the quality improvement of Baidu Union traffic.
Bandwidth costs as a component of cost of revenues were RMB67.9 million ($10.0 million), representing 3.5% of total revenues, compared to 4.6% in the corresponding period in 2009. Depreciation costs as a component of cost of revenues were RMB83.6 million ($12.3 million), representing 4.4% of total revenues, compared to 5.5% in the corresponding period in 2009.
Selling, general and administrative expenses were RMB265.0 million ($39.1 million), representing an increase of 47.1% from the corresponding period in 2009, primarily due to increased headcount cost and marketing expenses.
Research and development expenses were RMB159.3 million ($23.5 million), a 66.2% increase from the corresponding period in 2009. The increase was primarily due to increased R&D personnel expenses.
Share-based compensation expenses, which were allocated to related operating costs and expense line items, were RMB21.6 million ($3.2 million) in the second quarter of 2010, compared to RMB19.5 million in the previous quarter and RMB22.9 million in the corresponding period in 2009.
Operating profit was RMB971.8 million ($143.3 million), representing a 129.8% increase from the corresponding period in 2009. Operating profit excluding share-based compensation expenses (non-GAAP) was RMB 993.4 million ($146.5 million), a 122.9% increase from the corresponding period in 2009.
Income tax expense was RMB140.5 million ($20.7 million), compared to an income tax expense of RMB51.1 million in the corresponding period in 2009. The effective tax rate for the second quarter of 2010 was 14.4% as compared to 12.8% in the previous quarter and 11.8% for the corresponding period in 2009. The increase in effective tax rate was due to a new tax circular issued in the second quarter resulting in changes to the applicable tax for one of our subsidiaries in China.
Net income excluding share-based compensation expenses (non-GAAP) was RMB859.0 million ($126.7 million), a 111.5% increase from the corresponding period in 2009. Basic and diluted earnings per ADS excluding share-based compensation expenses (non-GAAP) for the second quarter of 2010 amounted to RMB2.47 ($0.36) and RMB2.46 ($0.36), respectively.
As of June 30, 2010, the Company had cash, cash equivalents and short-term investments of RMB5.913 billion ($872.0 million). Net operating cash inflow and capital expenditures for the second quarter of 2010 were RMB1.240 billion ($182.8 million) and RMB181.6 million ($26.8 million), respectively.
Adjusted EBITDA (non-GAAP), defined in this announcement as earnings before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses, was RMB1.104 billion ($162.8 million) for the second quarter of 2010, representing a 112.0% increase from the corresponding period in 2009.
Outlook for Third Quarter 2010
Baidu currently expects to generate total revenues in an amount ranging from RMB2.200 billion ($324.4 million) to RMB2.260 billion ($333.3 million) for the third quarter of 2010, representing a 72% to 77% 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 21, 2010 U.S. Eastern Time (8:00 AM on July 22, 2010 Beijing/Hong Kong time).
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