Baidu Inc ADR Class A (NASDAQ: BIDU) stock fell over 1.3% in the pre-market session of May 19th, 2021 (Source: Google finance) after the company beaten the quarterly revenue estimates, as the company beefed up its cloud and artificial intelligence services to fend off competition in the online advertising sector.
The company has diversified its revenue sources by expanding its cloud services and intelligent driving technology footprint as competition for digital advertising sales heats up from local internet giants Alibaba and ByteDance. Baidu’s online ad revenue rose 27% to 16.3 billion yuan, compared to the same period a year earlier, when Baidu swung to an operating loss due to COVID-19 lockdowns. Non-marketing revenue was up 70% year over year to RMB 4.2 billion ($646 million), driven by cloud and other services. Revenue from iQIYI rose 4% year over year to RMB 8.0 billion ($1.22 billion).
The company posted Non-GAAP operating income of RMB 4.4 billion ($666 million). Non-GAAP Baidu Core operating income was RMB 5.1 billion ($773 million), and non-GAAP Baidu Core operating margin was 25%. The company posted total other income, net was RMB 23.8 billion ($3.63 billion), which included a fair value gain of RMB 23.7 billion from long-term investments, mainly including the profit from the investment in Kuaishou Technology. The company delivered adjusted EBITDA of RMB 5.9 billion ($901 million). The company’s Adjusted EBITDA for Baidu Core is of RMB 6.5 billion ($990 million) with adjusted EBITDA margin for Baidu Core was 32%. At the end of March, 2021, cash, cash equivalents, restricted cash and short-term investments were RMB 172.9 billion ($26.40 billion), and cash, cash equivalents, restricted cash and short-term investments excluding iQIYI were RMB 159.6 billion ($24.37 billion). The company generated free cash flow of RMB 2.6 billion ($400 million), and free cash flow excluding iQIYI was RMB 4.0 billion ($615 million).
The company had reported the adjusted revenue growth of 25 percent to 28.13 billion yuan ($4.38 billion) in the first quarter of FY 21, beating the analysts’ estimates for revenue of 27.25 billion yuan, according to IBES data from Refinitiv. The revenue got grew partly by the 70% year-on-year growth of its non-advertising revenue, which includes the cloud and artificial intelligence businesses.
For the second quarter of 2021, Baidu expects revenues to be in the range of RMB 29.7 billion ($4.5 billion) and RMB 32.5 billion ($5.0 billion), representing a growth rate of 14% to 25% year over year, which assumes that Baidu Core revenue is expected to grow between 20% and 33% year over year.