Baidu’s Q2 profits surge 70%
24 July 2012
China’s largest search engine Baidu posted a 70% increase in second-quarter profit to RMB2.77bn ($436m), owing to robust ad sales and an increase in new clients.
Baidu, which generates almost all of its revenue from search ads, posted a 60% rise in revenue to RMB5.46bn ($858.8m) over the second quarter. The company also reported an 18% increase in the number of clients advertising on its portal, compared with the year-ago quarter.
According to Baidu chief financial officer Jennifer Li, this quarter’s revenue growth was driven largely by stronger ad spend from small and medium enterprises, while large corporations also increased ad spend.
Baidu has almost an 80% share of China’s online search market. The results suggest that demand for online search advertising remains strong in China, despite the economic outlook for the country. Local businesses are shifting more and more of their ads from traditional TV and print to online.
During a conference call with analysts, Baidu executives were questioned about the company’s efforts to expand its mobile user base considering the number of internet users in China accessing the web via mobile devices. Baidu chief executive Robin Li said that he expects a “hyper growth” in mobile users, but also noted that the mobile internet was still in its early stages.
“We think this is an early stage of mobile internet, we are in no hurry to aggressively monetize our mobile traffic, we are indeed exploring a lot of different mechanisms on the mobile advertising front,” said Li.
Li stated that mobile access to Baidu’s search engine jumped by triple figures during Q2, but neglected to say what percentage of the company’s search traffic came from mobile devices.
In May Baidu launched its first low-cost smartphone, powered by its own operating system, to tap into the country’s fast-growing mobile market.
Looking ahead to the third quarter, Baidu expects revenues of between RMB6.25bn ($983m) and RMB6.41bn ($1.01bn).
“In the coming quarters, we will maintain momentum by rolling out optimised sales processes and more advanced tools to help current and potential customers increase returns on their online marketing spend,” says Li. “We will also continue to actively explore the vast opportunities in China’s fast-emerging mobile internet and cloud sectors.”
Jenni Baker, London