Technology

Baidu Sales Surge 33% on Mobile Ad Growth

Mobile accounts for about two-thirds of the Chinese firm's search traffic in a country that has more mobile than PC users.
Matthew HellerFebruary 29, 2016
Baidu Sales Surge 33% on Mobile Ad Growth

Chinese Internet search giant Baidu reported better-than-expected fourth-quarter revenue as it continued to make progress with its mobile initiatives.

Baidu’s stock rose nearly 10% Friday on news that revenue surged 33% to 18.7 billion yuan ($2.86 billion) for the quarter, beating analysts’ expectations of 18.5 billion yuan. Mobile revenue made up 56% of total sales in the quarter from 42% a year earlier.

“Baidu still holds an upper hand when it comes to attracting advertisements compared with the smaller players,” Marie Sun, a Shenzhen-based analyst at Morningstar Investment Service, told Bloomberg.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

The company sometimes referred to as China’s Google also reported more than a seven-fold rise in fourth-quarter net income to 24.7 billion yuan, though much of that came from gains recognized as a result of a deal with online travel firms Ctrip.com International and Qunar Cayman Islands. It forecast first-quarter revenue of between 15.4 billion yuan and 16 billion yuan, trailing estimates of 16.3 billion yuan.

According to Bloomberg, Baidu’s “dominance in search as more users shift to using mobile devices is helping offset the impact of a Chinese economy growing at its slowest pace in 25 years.” Mobile accounts for about two-thirds of Baidu’s search traffic in a country that has more mobile than PC users.

Chairman Robin Li said Baidu may be able to earn more revenue from mobile advertising than from ads on computers because mobile is more effective.

“On mobile we can be more targeted. We know more about the user, we know the location of the user and we can enable all kinds of user actions,” he told analysts on an earnings call. “The nature of the queries on mobile are more toward local services, which inherently have more commercial value.”

Li is also investing in services such as home delivery and online video to drive growth beyond advertising and help Baidu compete with Alibaba Group Holding and Tencent Holdings.