Shares of Baidu, Inc. (BIDU) surged nearly ten percent in extended trading on Wednesday after the Chinese Internet search giant reported results for the fourth quarter that missed analysts' expectations by a whisker. The company also provided revenue forecast for the fourth quarter, below Street view. However, profit for the quarter grew 16 percent from last year, despite soaring expenses, reflecting strong double-digit revenue growth.
"Robust mobile performance again drove our strong topline growth this quarter and underpinned the reacceleration of our revenue growth in 2014. The investments we've made in mobile over the last two years have clearly paid off and set the stage for Baidu to capture an even larger market opportunity," CFO Jennifer Li said in a statement.
Beijing, China-based Baidu reported net income of RMB3.23 billion or $520.4 million for the fourth quarter, higher than RMB2.78 billion in the prior-year quarter. Earnings per ADS also increased to RMB9.01 or $1.45, from RMB7.90 last year.
Excluding share-based compensation expenses, earnings per ADS for the latest quarter were RMB9.97 or $1.61. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of RMB9.95 per share for the quarter. Analysts' estimates typically exclude special items.
Baidu's total revenues for the quarter surged 47.5 percent to RMB14.05 billion or $2.26 billion from RMB9.52 billion in the same quarter last year, but missed fifteen Wall Street analysts' consensus estimate of RMB14.12 billion by a whisker.
Online marketing revenues grew 46.3 percent to RMB13.85 billion or $2.23 billion from last year, with active online marketing customers growing 16 percent to about 523,000. Revenue per online marketing customer improved 26.3 percent to about RMB26,400 or $4,255.
Operating profit for the quarter grew 7.8 percent to RMB2.95 billion or $475.8 million from the year-ago quarter.
Selling, general and administrative expenses soared 89.2 percent to RMB3.52 billion or $568.0 million from last year, primarily due to higher promotional expenses for mobile products and services.
Research and development expenses also surged 69.0 percent to RMB2.14 billion or $344.2 million from a year ago, primarily due to an increase in the number of research and development personnel.
Looking ahead to the first quarter, Baidu expects revenue in a range of RMB12.645 billion to RMB13.065 billion, or $2.038 billion to $2.106 billion. Analysts expect the company to report revenues of RMB13.62 billion for the quarter.
"2015 will be an important year for Baidu as we execute on our plan and invest for the next phase of mobile growth. For the upcoming quarter, our guidance reflects the combined impact of both the late timing of Chinese New Year this year and mobile's growing traffic contribution, which monetizes at a rate lower than that of PC. We expect mobile's monetization rate to trend up throughout the year," Jennifer added.
BIDU closed Wednesday's regular trading session at $214.67, down $4.77 or 2.17% on a volume of 4.74 million shares. The stock plunged a further $21.07 or 9.82% in the after-hours trading.
For comments and feedback: editorial@rttnews.com