- By Harsh Jain
Baidu Inc. (BIDU) has been performing amazingly well this year as it is up nearly 34% year to date. Shares of the Chinese search giant surged approximately 10% after reporting strong second-quarter results on Friday.
For the second quarter, the company shared earnings per share of $1.67, beating the analyst's estimate by 16 cents. On the other hand, its revenue came in at $3.08 billion, in-line with the analyst's estimate. That figure, however, represents a year over year surge of 14.1%, with mobile revenue continuing to generate an ever-increasing portion of the search giant's overall sales.
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The intrinsic value of BIDU
After reporting robust top-line growth over the past numerous quarters, the Chinese search giant's top-line growth turned negative in the third quarter of previous fiscal. However, now it looks like the company is headed back on the right track as top-line growth is re-accelerating after last year's setback.
Moving ahead, online marketing revenue accounted for approximately 85% of Baidu's overall revenue. The Chinese search giant ended the second quarter with 470,000 active online marketing customers, signifying a 4% surge compared to the prior quarter.
Although the figure is substantially lower than the pre-regulation top of more than 620,000 online active customers, it specifies a solid reversal after the sharp drop that has led that number to plunge to 452,000 in the fourth quarter last year.
On the other hand, SG&A expenses came in at $433 million, representing a drop of 30% from a year-ago quarter. Its R&D expenses, however, were up almost 28% to $464 million driven mainly by continuing investments in AI-related capabilities.
The most significant thing to notice is that the Chinese search giant was able to deliver the strong revenue growth but with lower costs compared to expectations. That was possible mainly due to higher efficiency in the core business produced by the implementation of AI and the deleveraging of content costs of iQiyi. Also, the company reduced its promotional spending for transaction services to focus on R&D for AI aggressively.
Furthermore, Chinese search giant and digital-graphics specialist NVIDIA (NVDA) recently publicized an extensive partnership that comprises autonomous driving, consumer devices, cloud computing, and Baidu's AI framework PaddlePaddle. The company detailed that it will unite NVIDIA's leading DRIVE PX 2 AI supercomputer with its autonomous-vehicle platform.