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Baidu: luckier than Google

via:驱动之家     time:2020/8/14 19:12:27     readed:79

Diversified income for Baidu, or a difficult road.

On August 14, Beijing time, baidu (NASDAQ: BIDU) released its unaudited second quarter financial report as of June 30, 2020.

According to the financial report, in the second quarter of 2020, the total revenue reached 26 billion yuan (US $3.69 billion), a year-on-year decrease of 1%. Online marketing revenue was 17.7 billion yuan (US $2.5 billion), down 8% year-on-year. Other revenue was 8.3 billion yuan (US $1.18 billion), up 18% year-on-year, thanks to the growth of iqiyi members and Baidu's cloud computing and intelligent transportation solutions.

Among them, the revenue from Baidu core reached 18.9 billion yuan (US $2.68 billion), down 3% year-on-year. Iqiyi's revenue reached 7.4 billion yuan (US $1.05 billion), up 4% year-on-year. Iqiyi's member revenue increased by 19% year-on-year, but was partially offset by a 28% year-on-year decrease in online advertising revenue.

In the second quarter, Baidu's average profit was 7.0% lower than that of the US stock market.

Profits soared

After the first quarter of revenue, profit trough, in the second quarter, Baidu financial data began to bottom rebound.

On the one hand, revenue rose steadily, up 15.7 percent from a month earlier, to 26.03 billion yuan, of which Baidu's core rebounded significantly, up 24 percent from the previous quarter. On the other hand, operating profit (Non-GAAP)5.6 billion yuan, an increase of 187, net profit (Non-GAAP)5.08 billion yuan, an increase of 40.

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Baidu's second-quarter profit reached nearly two years (2019), according to the image above

In addition to revenue and profit growth, you can also see Baidu's second quarter cost decline.

According to the financial report, the revenue cost was RMB 13.1 billion, down 19% year-on-year, mainly due to the reduction of transportation purchase cost, business tax and surcharges and the cost of goods sold. In addition, sales, general and administrative expenses were 4.4 billion yuan, down 16% year-on-year, mainly due to the decrease in marketing and personnel related expenses.

For cost control, Yu Zhengjun said at the second quarter earnings call,

In terms of cash flow, as of June 30, cash, cash equivalents, restricted cash and short-term investments amounted to 154.1 billion yuan, while cash, cash equivalents, restricted cash and short-term investments excluding iqiyi were 144.6 billion yuan. Free cash flow was RMB 7.3 billion, excluding iqiyi, which was RMB 8.8 billion.

It is worth noting that other total income for the quarter was 366 million yuan, a sharp drop of 70% year-on-year. In this regard, Baidu said that this is mainly due to the equity method investment loss, which is recorded quarterly, reflecting the impact of covid-19 on the investee.

Back to warm ads, in place

As the most important part of Baidu's revenue, online marketing revenue is still the focus of people's attention.

In the last quarter, Baidu's online marketing business was hit hard by the epidemic, with only 14.2 billion yuan. With the relief of the epidemic, the business grew as scheduled in the second quarter, reaching 17.7 billion yuan. But even though online marketing revenue rose 24.6% month on month, the 17.7 billion yuan level just caught up with the level in the first quarter of last year.

It is reported that the growth of online marketing is mainly due to the rapid progress of the three pillars of mobile ecology and the marketing cloud service platform, which makes Baidu app's internal revenue grow against the trend for two consecutive quarters.

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As can be seen from the above figure, Baidu's online marketing revenue in the first quarter of the past three years has been at the lowest level of the year in the first quarter. However, due to well-known reasons in the first quarter of this year, this business appeared again, reaching a new low in nearly three years.

On the other hand, from the change of the proportion of online marketing revenue in the total revenue, it can be seen that after 2020, this proportion has been reduced to less than 70% in the case of continuous decrease. However, the data rose again in the second quarter compared with the first quarter, breaking the six consecutive quarterly downward trend.

At the same time, other businesses (including new AI business, iqiyi member income and cloud computing business) that Baidu placed high hopes on brought in revenue of RMB 8.3 billion in this quarter. Coincidentally, this is completely consistent with the revenue of last quarter. Obviously, the total revenue of these businesses is still in place. Baidu's revenue growth in this quarter is brought by online marketing business.

No doubt, this is not a good signal for Baidu.

Tiger sniff noted that in the last quarter, the results stated,

Although iqiyi's member revenue remained strong in the second quarter, up 19% year-on-year, the downward trend of online advertising revenue continued, at 28%. In contrast, iqiyi's performance can only be regarded as stable, not brilliant.

This quarter, Baidu CEO Robin Li mainly emphasized the two digit growth of Baidu's new AI business, including cloud, smart devices and intelligent transportation, and is expected to become an important driving force for revenue growth in the next few years. However, it is a pity that Baidu did not disclose the revenue brought about by AI's new business in this financial report.

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In fact, as a search giant, Google is also facing the same problems. What's different is that by the second quarter of this year, the proportion of its advertising business in total revenue has decreased for five consecutive quarters. At the same time, the revenue of its cloud computing business has also increased significantly, up 43% year-on-year to US $3.007 billion.

It's not hard to find out, In the short term, Baidu has benefited from recovery, the second quarter bottomed out, revenue, profits over expectations also brought Baidu some confidence, compared with Google handed ove

However, in the long run, this growth mainly comes from the contribution of online marketing revenue, while the growth of other businesses disclosed by Google is obvious, especially the growth rate of Google cloud computing has surpassed that of Amazon and Microsoft in the second quarter. In this way, the effect of Baidu to B transformation seems to have not yet appeared, it is not difficult to speculate that this will be Baidu's hidden worry for some time in the future.

On the next quarter, baidu believes that affected by the new crown epidemic, business visibility is very limited, there is a lot of uncertainty. As a result, baidu expects revenue in the third quarter to be between 26.3 billion yuan (US $3.7 billion) and 28.7 billion yuan (US $4.1 billion), representing a year-on-year increase of - 6% to 2% (assuming Baidu's core revenue will grow by - 7% to 3% year-on-year).

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