Baidu, Inc. (Nasdaq: BIDU), the leading Chinese language Internet search provider, today announced its unaudited financial results for the second quarter ended June 30, 2009(1).
"Our focus on execution drove another strong quarter for Baidu," said
Robin Li
, Baidu's chairman and CEO. "Our ongoing initiatives to improve user and customer experience further solidified Baidu's leading market position as both large companies and SMEs are increasingly drawn to the superior ROI offered by Baidu's P4P platform."
Mr. Li noted that the recently introduced Baidu Online Marketing Professional Edition, branded as "Phoenix Nest," while still in its early stages, is already seeing encouraging customer acceptance.
Jennifer Li
, Baidu's chief financial officer, commented, "The inherent scalability of Baidu's business model should allow us to produce strong margins as revenues continue to grow rapidly. At the same time, we will continue to invest in initiatives that best position Baidu for continued long-term growth."
Second Quarter 2009 Results
Baidu reported total revenues of RMB1,097.5 million ($160.7 million) for the second quarter of 2009, representing a 36.7% increase from the corresponding period in 2008.
Online marketing revenues for the second quarter of 2009 were RMB1,096.6 million ($160.6 million), representing a 36.7% increase from the corresponding period in 2008. Baidu had about 203,000 active online marketing customers in the second quarter of 2009, representing a 12.2% increase from the corresponding period in 2008 and a 9.7% increase from the previous quarter. Revenue per online marketing customer for the second quarter was approximately RMB5,400 ($791), a 22.7% increase from both the corresponding period in 2008 and the previous quarter.
Traffic acquisition cost (TAC) as a component of cost of revenues was RMB175.4 million ($25.7 million), representing 16.0% of total revenues, as compared to 12.7% in the corresponding period in 2008 and 15.3% in the first quarter of 2009. The increase in TAC as a percentage of total revenues reflects the continued fast growth of the Baidu Union business.
Bandwidth costs as a component of cost of revenues were RMB50.1 million ($7.3 million), representing 4.6% of total revenues, compared to 5.4% in the corresponding period in 2008. Depreciation costs as a component of cost of revenues were RMB60.1 million ($8.8 million), representing 5.5% of total revenues, compared to 7.2% in the corresponding period in 2008. The decreases in bandwidth and depreciation costs as percentages of total revenues reflect efficiency improvements as well as increased scalability of investment in capital expenditure.
Selling, general and administrative expenses were RMB180.2 million ($26.4 million), representing an increase of 3.4% from the corresponding period in 2008.
Research and development expenses were RMB95.9 million ($14.0 million), a 34.9% increase from the corresponding period in 2008. The increase was primarily due to the increased number of research and development personnel.
Share-based compensation expenses, which were allocated to related operating costs and expense line items, were RMB22.9 million ($3.4 million) in the second quarter of 2009, compared to RMB23.5 million ($3.4 million) in the previous quarter and RMB29.3 million ($4.3 million) in the corresponding period in 2008.
Operating profit was RMB422.8 million ($61.9 million), representing a 53.0% increase from the corresponding period in 2008. Operating profit excluding share-based compensation expenses (non-GAAP) was RMB445.7 million ($65.3 million), a 45.8% increase from the corresponding period in 2008.
Income tax expense was RMB51.1 million ($7.5 million), compared to an income tax expense of RMB28.6 million in the corresponding period in 2008. The effective tax rate for the second quarter of 2009 was 11.8% as compared to 12.9% in the previous quarter and 9.7% for the corresponding period in 2008.
Net income was RMB383.3 million ($56.1 million), representing a 44.6% increase from the corresponding period in 2008. Basic and diluted EPS for the second quarter of 2009 amounted to RMB11.09 ($1.62) and RMB11.02 ($1.61), respectively.
Net income excluding share-based compensation expenses (non-GAAP) was RMB406.1 million ($59.5 million), a 38.0% increase from the corresponding period in 2008. Basic and diluted EPS excluding share based compensation expense (non-GAAP) for the second quarter of 2009 amounted to RMB11.75 ($1.72) and RMB11.68 ($1.71), respectively.
As of June 30, 2009, the Company had cash, cash equivalents and short-term investments of RMB3.4 billion ($491.1 million). Net operating cash inflow and capital expenditures for the second quarter of 2009 were RMB519.1 million ($76.0 million) and RMB81.7 million ($12.0 million), respectively.
Adjusted EBITDA (non-GAAP), defined in this announcement as earnings before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses, was RMB520.9 million ($76.3 million) for the second quarter of 2009, representing a 38.2% increase from the corresponding period in 2008.
Outlook for Third Quarter 2009
Baidu currently expects to generate total revenues in an amount ranging from RMB1,260 million ($184 million) to RMB1,290 million ($189 million) for the third quarter of 2009, representing a 15% to 18% sequential increase. This forecast reflects Baidu's current and preliminary view, which is subject to change.
Conference Call Information
Baidu's management will hold an earnings conference call at 8 PM on July 23, 2009 U.S. Eastern Daylight Time (8 AM on July 24, 2009 Beijing/Hong Kong time).
Dial-in details for the conference call are as follows:
US: +1.617.597.5310
UK: +44.207.365.8426
Hong Kong: +852.3002.1672
Passcode for all regions: 99930542
A replay of the conference call may be accessed by phone at the following number until July 31, 2009:
International: +1.617.801.6888
Passcode: 60289094
Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com .
About Baidu
Baidu, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu's ADSs, each of which represents one Class A ordinary share, currently trade on the NASDAQ Global Select Market under the symbol "BIDU".
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Among other things, the outlook for the third quarter 2009 and quotations from management in this announcement, as well as Baidu's strategic and operational plans, contain forward-looking statements. Baidu may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Baidu's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our growth strategies; our future business development, including development of new products and services; our ability to attract and retain users and customers; competition in the Chinese and Japanese language Internet search markets; competition for online marketing customers; changes in our revenues and certain cost or expense items as a percentage of our revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to intellectual property rights; the expected growth of the Chinese language Internet search market and the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and Internet search providers and general economic conditions in China, Japan and elsewhere. Further information regarding these and other risks is included in our annual report on Form 20-F and other documents filed with the Securities and Exchange Commission. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of July 23, 2009, and Baidu undertakes no duty to update such information, except as required under applicable law.
About Non-GAAP Financial Measures
To supplement Baidu's consolidated financial results presented in accordance with GAAP, Baidu uses the following measures defined as non-GAAP financial measures by the SEC: adjusted EBITDA, operating profit excluding share-based compensation expenses, net income excluding share-based compensation expenses, and basic and diluted EPS excluding share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" and "Reconciliation from net cash provided by operating activities to adjusted EBITDA" set forth at the end of this release
