ReutersMay 17, 2019 11:33:19 IST
Chinese search engine operator Baidu Inc booked its first quarterly loss since at least 2015 and forecast quarterly revenue below market estimates, saying a “challenging marketing environment” is sapping income from advertisers.
The tech giant also pointed to the income impact of heightened government scrutiny of online advertising aimed at reducing the visibility of potentially fraudulent businesses.
After the earnings report on Thursday, the price of Baidu’s US-listed shares fell as much as eight percent in extended trading.
Last year, Baidu said tighter ad regulations, as well as an ongoing trade dispute between China and the United States, could temper short-term profit, but that investment in new technology would pay off in the long term.
“Despite government policies to improve the market condition for SMEs, we anticipate online marketing in the near term to face a challenging environment,” Chief Financial Officer Herman Yu said in a filing, referring to small and mid-sized enterprises.
Baidu reported a net loss attributable to shareholders of 327 million yuan ($47.51 million) for the three months through March 31, versus profit of 6.69 billion yuan in the same period a year prior. The loss was its first since going public in 2005.
Revenue from online marketing services, a key contributor to overall sales, rose nearly three percent, falling slightly short of analyst estimates compiled by researcher FactSet. Total revenue grew 15.4 percent, matching estimates, according to data from Refinitiv IBES
Excluding one-off items, Baidu earned 2.77 yuan per American depositary share, falling short of analysts’ 2.89 estimate.
Baidu forecast second-quarter revenue of 25.1 billion yuan to 26.6 billion yuan. That compared with the 29.30 billion yuan average analyst estimate, showed data from Refinitiv IBES.
Baidu is facing increasing competition in the fast-growing short video and news feed markets, where it has enjoyed an early advantage in data and artificial intelligence as China’s biggest search engine provider.
“The pressure from newly emerged (short video) vendor Tik Tok is heating up in 2019, and Baidu must defend itself,” said TH Capital analyst Tian X. Hou in a report ahead of the earnings.
Baidu also said Hailong Xiang, senior vice president of its search business, has resigned for “personal reasons”. His replacement Dou Shen previously served as vice president of mobile products.
Tech2 is now on WhatsApp. For all the buzz on the latest tech and science, sign up for our WhatsApp services. Just go to Tech2.com/Whatsapp and hit the Subscribe button.