Baidu Inc (ADR)(NASDAQ: BIDU) stock lost over 8.7% in the pre-market session on October 27th, 2017 (as of 4:08AM EDT; Source: Google finance) due to a weak third quarter of 2017 results. The group forecasts their revenues to be in the range of RMB 22.23 billion ($3.34 billion) to RMB 23.41 billion ($3.52 billion) for the fourth quarter of 2017, which is the rise of 22% to 29% on a yoy basis. Baidu has over 486,000 active online marketing customers which are a 7% fall against the prior corresponding period.
On the other hand, the group delivered an overall revenues rise of 29% yoy to RMB 23.5 billion ($3.53 billion) for the third quarter of 2017. Their Online marketing revenues surged 22% yoy to RMB 20.1 billion ($3.02 billion), during the quarter. Revenue per online marketing customer rose 31% yoy to over RMB 40,900 ($6,147).
Baidu continues to focus on strengthening their user and customer value proposition as well as their AI-enabled businesses. Their iQIYI is leading the online video industry.
The group even controlled their traffic acquisition costs as a component of cost of revenues to RMB 2.5 billion ($372 million), which comprises 10.5% of total revenues, against 14.2% in pcp and 11.9% in the second quarter of 2017. But, Content costs as a component of cost of revenues reached RMB 3.9 billion ($586 million), which contributes over 16.6% of total revenues, against 12.1% in the corresponding period in 2016 hurt by rising iQIYI’s content costs.
The group delivered an operating profit of RMB 4.7 billion ($706 million), which is a 69% rise against the corresponding period in 2016. iQIYI impact their non-GAAP operating margins by 11 percentage points during the third quarter of 2017. Non-GAAP operating profit reached RMB 5.5 billion ($833 million), which is a 73% rise against the corresponding period in 2016. Net income attributable to Baidu rose 156% yoy to RMB 7.9 billion ($1.20 billion). The group’s non-GAAP net income attributable to Baidu reached RMB 9.1 billion ($1.36 billion), which is a 163% rise against the corresponding period in 2016.
The shares of Baidu surged over 58.5% in this year to date (as of October 26th, 2017; Source: Google finance)