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On August 20th, Baidu released the unaudited financial report for the second quarter of the 2019 fiscal year ending June 30, of which Baidu's total revenue for the second quarter was 26.3 billion yuan (about 3.84 billion US dollars), an increase of 1%. The net profit attributable to Baidu was 2.4 billion yuan (about 351 million US dollars), down 62% year-on-year. Not in accordance with US GAAP, the net profit attributable to Baidu is 3.6 billion yuan (about 529 million US dollars).
After the release of the earnings report, Baidu Chairman and CEO Li Yanhong said in an internal letter to all employees that “this time, faced with severe external challenges and a weak macro environment, the company promoted a series of subversive changes from top to bottom, involving organizations. Architecture, personnel changes, business consolidation, etc. These changes will bring phased pains, and will have a positive and far-reaching impact, making Baidu more stable and farther."
On the day of the release of the earnings report, Baidu's share price rose by 7.52 US dollars in the Nasdaq regular trading, to close at 104.22 US dollars, an increase of 7.78%. In the subsequent after-hours trading at 5:22 pm EST (5:22 am on Tuesday, Beijing time), Baidu shares rose 9.77 US dollars to 113.99 US dollars, or 9.37%. In the past 52 weeks, Baidu's highest price was $234.88 and the lowest price was $93.39.
Compared with the previous quarter's bleak performance, Baidu's quarterly earnings performance was outstanding. In the first quarter of 2019, Baidu ushered in its first quarterly loss since its listing in 2005, leading to a pessimistic outlook for the second quarter.
However, from the specific data point of view, as well as compared with the same period last year, Baidu's performance is still weak, "water reverse period" has not completely ended.
As of press time, Baidu's market value is 36.128 billion US dollars. Currently, it ranks fifth in the market value of listed Internet companies in China. The top four are Ali, Tencent, and the US group.Jingdong. Baidu’s market value at the peak of the year reached $99 billion.
On the road to change, Baidu has a long way to go.
Medical revenue is still negative growth. Li Yanhong: It is a good thing.
According to Baidu's second-quarter earnings report, in terms of revenue, network marketing revenue in the second quarter was 19.2 billion yuan, down 9% year-on-year, up 9% from the previous quarter; other revenues were 7.1 billion yuan, up 44% year-on-year. Mainly due to the iQiyi membership service,cloud serviceAnd the smart device business is growing strongly.
In addition, the “Baidu Core” (search service and transaction service) total revenue for the second quarter was 19.5 billion yuan, down 2% year-on-year, excluding the impact of the announced divestiture transaction, which was 3% year-on-year, compared with the previous quarter. The ratio is up 12%. In the first quarter, Baidu's core total revenue was 17.5 billion yuan, operating loss was 936 million yuan, and net profit was 703 million yuan.
Among them, network marketing has long served as Baidu's revenue engine, accounting for 73% of total revenue. Advertising is Baidu's main source of revenue. From the same period last year, Baidu's core and network marketing revenues declined year-on-year. In the second quarter, revenue from iQiyi reached 7.1 billion yuan, a year-on-year increase of 15%. iQIYI membership services increased by 38% year-on-year, while online advertising revenue decreased by 16% year-on-year.
This quarter, Baidu's core marketing services experienced weak performance in top industry sectors, including healthcare, online games, financial services and automotive/logistics.
In the conference call, Baidu CFO Yu Zhengxi said that the largest contribution to the company's advertising revenue is the medical and health industry, and other industries account for a relatively small proportion.
However, Li Yanhong mentioned that the medical industry's revenue has experienced double-digit negative growth. Compared with last year's figures, the medical revenue in the second quarter accounted for less than one-seventh of Baidu's core revenue. "But I think this It's a good thing for us because we have a better way to improve the quality of the content through the landing page and to monitor the communication between advertisers and users."
In addition, Baidu Vice President Shen Xiao revealed in a conference call that Baidu’s number of advertisers in the medical industry continued to fall from the beginning of the second quarter to the second quarter. It is reported that Baidu regulates customers through smart small programs and management pages, so that it can use AI to review and filter systems, supervise communication between advertisers and users, and ensure information security. On the other hand, it also filters out some non-compliant advertisements. client.
Shen Wei said that for marketing customers, if they don't use small programs, they can manage the pages with a simpler management page, and all marketing customers in the medical and health industry have completed the conversion from H5 to the management page. It can guarantee the quality of the content and the accuracy of the information, and can also help customers to increase user engagement.
In terms of traffic, Baidu traffic growth accelerated in the second quarter from the financial data. In June, Baidu App's daily users reached 188 million, a year-on-year increase of 27%; smart small programs reached 270 million monthly users, an increase of 49%.
Of course, the corresponding is the increase in traffic acquisition costs. According to the financial report, Baidu's second-quarter traffic acquisition cost (TAC) was 3.4 billion yuan, a year-on-year increase of 27%, mainly due to the increase in traffic acquisition costs and its expansion to offline digital screens and other areas.
In a conference call, Li Yanhong said that the main contribution to traffic growth is retail, e-commerce,educationAs well as the service industry, this is the highlight industry in the second quarter.
Power mobile to the service platform
Entering the mobile era, Baidu's advantage is no longer as strong as the PC side in the past, and it is affected by all parties. Baidu has made the mobile content and service ecology a key part of this year. For example, the "search + information flow" dual-engine strategy is proposed, and the content ecology is established through the Baijia number and Baidu applet, as well as the investment layout.
According to the financial report, Baidu's content cost in the second quarter was 5.8 billion yuan, a year-on-year increase of 12%. The year-on-year increase in Baidu's content cost was mainly due to the increase in the content cost of iQiyi, and to a lesser extent due to the growth of Baidu's information stream content network.
Shen Xiao said in the conference call that the content producers of Baijiahao increased year-on-year, and now it has reached 2.2 million, but this is not enough, because users use Baidu for the purpose of service, while Baidu applet is used. Provide a variety of services.
In addition to its own content system Baijiahao and Baidu small programs, Baidu is also seeking other content that can cooperate and expand the types of services. For example, investment has brought more information and support to Baidu.
Since the beginning of this year, Baidu has increased the investment layout of content, such as investing in Kai Shu storytelling, fruit shell network, knowing and other content companies.
An obvious trend is that Baidu is shifting its thinking from a technology model to a service-oriented model.
Li Yanhong said in an internal letter that search is the foundation of Baidu and the core value of Baidu. In the past 20 years, Baidu search has continued to invest in core technologies to create competitive barriers. Now, it has evolved into intelligent search and has broken through restrictions.Mobile phoneExtend to smart speakers, smart cars and other scenes.
"Based on a solid search base, Baidu is building an unprecedentedly prosperous mobile ecosystem." Li Yanhong said.
Yu Zhengyi also said in a conference call that Baidu is realizing the transition from a technology company to an in-app service delivery platform. He mentioned that technology investment may see results in the current quarter, and channel costs, marketing expenditures and service investment may not appear until several quarters later. In the next year, the company will continue to pay attention to related investments. opportunity.
According to its disclosure, Baidu's content system is divided into three categories, one is knowledge content, such as knowing, Baidu knows; the second is service content; the third is vertical industry content. This part of the content is still fragmented on the Internet. Baidu believes that it can play its own role to aggregate these contents, improve user participation and improve user experience.
At the same time, Baidu is still investing heavily in research and development. According to the financial report, its research and development expenditure in the second quarter was RMB 4.7 billion (US$690 million), a year-on-year increase of 17%, mainly due to the increase in costs associated with R&D personnel.
Baidu used to invest too much in AI, but the return from AI is still difficult to reflect in a short period of time. At present, Baidu's top challenge is more of a challenge in the mobile search business.
With the pace of byte-hopping layout search speeding up, Baidu's road ahead is not optimistic. In response to an analyst question, Shen Sha said that in the search field, there are new competitors joining the news, the profit of the search business is very good, and new companies have been trying to carry out this business in the past few decades.
But he believes that the search industry has a high barrier to entry, search engines need to find content that meets user needs in hundreds of billions of web pages, and the information stream only provides content that roughly matches the recommendation, without identifying the right or wrong. “It’s relatively simple to go from search to information flow, and vice versa.”
At present, Baidu has been strengthening its defense in the content field, and the mobile ecology is also a major measure to meet the challenges in the search field. In the follow-up, Baidu may speed up integration and aggregate the content ecosystem.
Sina Technology Yang Xuemei