Baidu Inc (ADR)(NASDAQ: BIDU) continued its positive momentum in the fourth quarter of 2017 with Total revenues rising 29% yoy to RMB 23.6 billion. The better growth of their feed revenue as well as strong traffic demand, especially from e-commerce companies drove the performance. The Non-GAAP operating income rose 104% yoy to RMB 5.8 billion, while Adjusted EBITDA reached RMB 6.9 billion or 29% of total revenues which is a rise of 78% year-over-year basis. Baidu’s businesses continue to align around AI. During December, the group signed a strategic partnership with Huawei to cooperate in areas of technology, product, and content. Baidu would support Huawei in developing AI-powered smartphones and make available in mobile apps like flagship Baidu app and Baidu maps which are gradually upgraded with AI features like Baidu’s voice assistant, intelligent search and augmented reality.
Their mobile revenue reached 76% of total revenues against 65% for the same period last year. Baidu’s online marketing services revenues rose 26% yoy to RMB 20.4 billion during the fourth quarter. They have over 460,000 online marketing customers in Q4, which is a rise of 2% on a year-over-year basis. Revenue per online marketing customer rose 25% yoy to RMB 44,300 while other services revenues enhanced 53% yoy to RMB 3.1 billion mainly on the back of a robust growth in IT membership and fees for the financial services business.
For 2017, the overall revenues rose 20% yoy to RMB 84.8 billion, while Online marketing revenues rising 13% yoy to RMB 73.1 billion. The group’s Revenue per online marketing customer was over 93,500, which is a rise of 43% against 2016. Other services revenues rose 94% yoy to a RMB 11.7 billion in 2017 on the back of a robust growth in IT membership and fees for the financial services business. Cost of sales in 2017 rose 22% yoy to RMB 43.1 billion, while Content cost rose 70% year-over-year to RMB 13.4 billion driven by rising content purchasing by IT.
For 2018, the group forecasts a content costs to step up at a similar pace to 2017, while planning to continue to invest in self-produced content and high-quality license entertainment content to support IT. On the feed side, the group intends to plan to ramp up their content offering to support the fast growth of Baijiahao or BJH account.