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Baidu’s Revenue Beat in Defiance of Slowing Economy

Zheping Huang
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Baidu’s Revenue Beat in Defiance of Slowing Economy

(Bloomberg) -- Baidu Inc. reported quarterly revenue that beat estimates after the Chinese search giant’s business proved resilient to an economic slowdown and competition from ByteDance Inc.

Third-quarter revenue came in at 28.1 billion yuan ($4 billion). That was down slightly from a year earlier but exceeded the 27.5 billion yuan average of analysts’ projections. The company also projected revenue of 27.1 billion yuan to 28.7 billion yuan, generally in line with estimates. The shares jumped about 5% in extended trading.

Baidu’s Netflix-style iQiyi Inc., which competes with Alibaba Group Holding Ltd. and Tencent Holdings Ltd., also reported revenue ahead of expectations. The results may assuage investors who are worried that the 19-year-old company is losing advertising sales to upstart ByteDance, which offers lower rates and more than a billion users on popular apps such as video services TikTok and Douyin. ByteDance also recently entered the online search business, Baidu’s main product. To offset a slowdown, the company has reduced spending.

What Bloomberg Intelligence Says

Baidu’s sales growth may pick up mildly in the coming quarters as advertisers’ demand stabilizes and increases in competitive ad inventory slow. The company is building its own content ecosystem using Baijiahao, smart mini-programs and managed landing pages in a bid to retain users for its search engine, which is increasingly blocked from accessing competitor apps.

- Vey-Sern Ling, analyst

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Longer term, China’s economy is growing at its slowest pace in 30 years, which could diminish spending on Baidu ads. The company fell off the list of China’s five most valuable internet companies, trailing Meituan Dianping and NetEase Inc., after shedding more than 30% of its market value this year. In May, it posted its first loss since going public in 2005.

(Updates with BI analyst’s comment in the fourth paragraph. A previous version of the story corrected currency of outlook in the second paragraph.)

To contact the reporter on this story: Zheping Huang in Hong Kong at zhuang245@bloomberg.net

To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Colum Murphy, Molly Schuetz

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