BAIDU, INC. BEIJING, April 28, 2016 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU) ("Baidu" or the "Company"), the leading Chinese language Internet search provider, today announced its unaudited financial results for the first quarter ended March 31, 2016[1].
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"We had an excellent start to 2016, and we've made great strides toward realization of our vision to connect people with information and services and provide an integrated solution to our customers," said Robin Li, Chairman and CEO of Baidu. "In 2016, we will continue to build out our integrated platform, and explore the new business opportunities that our core business has opened up for us."
"We are pleased to deliver very strong results for the first quarter, and our integrated online marketing and transaction services platform continued to exhibit strength and momentum," said Jennifer Li, CFO of Baidu. "We look forward to further execute on our vision."
First Quarter 2016 Operational Highlights
-- Mobile search monthly active users (MAUs) were 663 million for the month
of March 2016, an increase of 9% year-over-year
-- Mobile maps MAUs were 321 million for the month of March 2016, an
increase of 19% year-over-year
-- Gross merchandise value[2] (GMV) for Transaction Services totaled
RMB16.0 billion ($2.5 billion) for the first quarter of 2016, an
increase of 268% year-over-year
-- Baidu Wallet activated accounts reached 65 million at the end of March
2016, an increase of 152% year-over-year
Changes to Board Composition
-- Mr. William Decker will step down from the Company's board of directors
(the "Board"), effective on April 29, 2016. Mr. Decker has served as a
member of the Board and chairman of the audit committee of the Board
since October 2005;
-- Mr. Brent Callinicos, a member of the Board and audit committee, has
been appointed as the chairman of the audit committee, effective on
April 29, 2016.
First Quarter 2016 Financial Highlights
-- Total revenues in the first quarter of 2016 were RMB15.821 billion
($2.454 billion), a 31.2% year-over-year increase, excluding Qunar[3] in
the first quarter of 2015. Mobile revenue represented 60% of total
revenues for the first quarter of 2016, compared to 50% for the
corresponding period in 2015.
-- Operating profit in the first quarter of 2016 was RMB2.211 billion
($342.9 million), a 2.6% increase from the corresponding period in 2015.
Transaction Services reduced non-GAAP operating margins by 25.7
percentage points and iQiyi further reduced non-GAAP operating margins
by 8.7 percentage points for the first quarter of 2016.
-- Net income attributable to Baidu in the first quarter of 2016 was
RMB1.987 billion ($308.1 million), an 18.9% decrease from the
corresponding period in 2015. Diluted earnings attributable to Baidu per
ADS for the first quarter of 2016 were RMB5.38 ($0.84); non-GAAP net
income attributable to Baidu[4] in the first quarter of 2016 was
RMB2.359 billion ($365.8 million), a 13.9% decrease from the
corresponding period in 2015; non-GAAP diluted earnings per ADS[5] for
the first quarter of 2016 were RMB6.80 ($1.06).
In the following section, comparison and analysis are provided based on reported consolidated financial results. For ease of comparison, a table with apples-to-apples adjusted financials and metrics excluding Qunar can be found at the end of the following section.
First Quarter 2016 Results
Baidu reported total revenues of RMB15.821 billion ($2.454 billion) for the first quarter of 2016, representing a 24.3% increase from the corresponding period in 2015.
Online marketing revenues for the first quarter of 2016 were RMB14.931 billion ($2.316 billion), representing a 19.3% increase from the corresponding period in 2015. Baidu had about 587,000 active online marketing customers[6] in the first quarter of 2016, representing a 12.0% increase from the corresponding period in 2015.
Revenue per online marketing customer for the first quarter of 2016 was approximately RMB25,400 ($3,939), a 6.7% increase from the corresponding period in 2015.
Traffic acquisition cost as a component of cost of revenues was RMB2.233 billion ($346.3 million), representing 14.1% of total revenues, as compared to 13.5% in the corresponding period in 2015.
Bandwidth costs as a component of cost of revenues were RMB1.088 billion ($168.7 million), representing 6.9% of total revenues, compared to 6.7% in the corresponding period in 2015.
Depreciation costs as a component of cost of revenues were RMB707.3 million ($109.7 million), representing 4.5% of total revenues, compared to 4.6% in the corresponding period in 2015.
Operational costs as a component of cost of revenues were RMB1.092 billion ($169.4 million), representing 6.9% of total revenues, compared to 4.7% in the corresponding period in 2015. This increase was mainly due to transaction services and iQiyi-related operating costs.
Content costs as a component of cost of revenues were RMB1.382 billion ($214.4 million), representing 8.7% of total revenues, compared to 4.8% in the corresponding period in 2015. The increase was mainly due to iQiyi's increased content costs.
Selling, general and administrative expenses were RMB3.946 billion ($612.0 million), representing an increase of 33.5% from the corresponding period in 2015. The year-over-year increase was primarily due to an increase in promotional spending for transaction services.
Research and development expenses were RMB2.101 billion ($325.8 million), an 8.1% decrease from the corresponding period in 2015.
Share-based compensation expenses, which were allocated to related operating costs and expense line items, were RMB309.1 million ($47.9 million) in the first quarter of 2016, compared to RMB291.1 million in the corresponding period in 2015.
Operating profit was RMB2.211 billion ($342.9 million), representing a 2.6% increase from the corresponding period in 2015. Non-GAAP operating profit was RMB2.520 billion ($390.8 million), a 3.0% increase from the corresponding period in 2015.
Income tax expense was RMB674.8 million ($104.6 million), compared to RMB541.0 million in the corresponding period in 2015. The effective tax rate for the first quarter of 2016 was 25.4% as compared to 20.7% for the corresponding period in 2015. The increase of effective tax rate of the first quarter of 2016 reflects that some loss-generating entities in the group cannot be consolidated for tax purposes under PRC tax law.
Net income attributable to Baidu was RMB1.987 billion ($308.1 million), representing an 18.9% decrease from the corresponding period in 2015. Basic and diluted earnings per ADS for the first quarter of 2016 amounted to RMB5.40 ($0.84) and RMB5.38 ($0.84), respectively.
Non-GAAP net income attributable to Baidu was RMB2.359 billion ($365.8 million), a 13.9% decrease from the corresponding period in 2015. Non-GAAP diluted earnings per ADS for the first quarter of 2016 amounted to RMB6.80 ($1.06).
As of March 31, 2016, the Company had cash, cash equivalents and short-term investments of RMB71.346 billion ($11.065 billion). Net operating cash inflow for the first quarter of 2016 was RMB4.742 billion ($735.5 million). Capital expenditures for the first quarter of 2016 were RMB825.6 million ($128.0 million).
Adjusted EBITDA was RMB3.457 billion ($536.2 million) for the first quarter of 2016, representing a 4.9% increase from the corresponding period in 2015. On an apples-to-apples basis, excluding Qunar from Baidu's financials, the adjusted EBITDA represents a 2.0% year-over-year decrease.
Summary of adjusted financial information (excluding Qunar)[7]
(RMB in millions, unless otherwise noted)
Three months ended March 31, YoY variance
----------------------------
2016 2015
Adjusted
revenues 15,821 12,055 31.2%
Active online
marketing
customer (000) 587 473 24.1%
Revenue per
active online
marketing
customer (RMB) 25,400 25,000 1.6%
Adjusted cost of
revenues 7,563 5,151 46.8%
Adjusted
selling,
general and
administrative
expenses 3,946 2,403 64.2%
Adjusted
research and
development
expenses 2,101 2,000 5.0%
---
Adjusted
operating
profit 2,211 2,501 (11.6%)
===== ===== ======
Outlook for Second Quarter 2016
Baidu currently expects to generate total revenues in an amount ranging from RMB20.110 billion ($3.119 billion) to RMB20.580 billion ($3.192 billion) for the second quarter of 2016, representing a 21.3% to 24.2% year-over-year increase. On an apples-to-apples basis, excluding Qunar from Baidu's financials, the guidance represents a 28.1% to 31.1% year-over-year 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 8:00 PM on April 28, 2016, U.S. Eastern Time (8:00 AM on April 29, 2016, Beijing/Hong Kong Time).
Dial-in details for the earnings conference call are as follows:
International: +65 67135090
China: 4006208038
US: +1 8456750437
UK: +44 2036214779
Hong Kong: +852 30186771
Passcode for all regions: 90850148
A replay of the conference call may be accessed by phone at the following number until May 6, 2016:
International: +61 2 8199 0299
Passcode: 90850148
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 and most equitable way for people to find what they're looking for. In addition to serving individual Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu's ADSs trade on the NASDAQ Global Select Market under the symbol "BIDU". Currently, ten ADSs represent one Class A ordinary share.
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 second quarter 2016 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 the date of the press release, 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 non-GAAP financial measures: non-GAAP operating profit, non-GAAP net income attributable to Baidu, non-GAAP diluted earnings per ADS, adjusted EBITDA and free cash flow. 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.
Baidu believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain items that may not be indicative of our recurring core business operating results, such as operating performance excluding not only non-cash charges, but also other items that are infrequent or unusual in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to Baidu's historical performance and liquidity. We believe these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in our results of operations. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.
Non-GAAP operating profit represents operating profit excluding share-based compensation expenses.
Non-GAAP net income attributable to Baidu represents net income attributable to Baidu excluding share-based compensation expenses and the gain or loss associated with the issuance of shares by our equity method investees at a price higher or lower than our carrying value per share.
Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated based on non-GAAP net income attributable to Baidu.
Adjusted EBITDA represents operating profit excluding depreciation, amortization and share-based compensation expenses.
Free cash flow represents net cash provided by operating activities less capital expenditures.
For more information on non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures".
For investor and media inquiries, please contact:
Sharon Ng
Baidu, Inc.
Tel: +86-10-5992-4958
Investor inquiries email: ir@baidu.com
Media inquiries email: intlcomm@baidu.com
[1] This announcement contains
translations of certain RMB amounts
into U.S. dollars at specified
rates solely for the convenience of
the reader. Unless otherwise noted,
all translations from RMB to U.S.
dollars are made at a rate of
RMB6.4480 to US$1.00, the effective
noon buying rate as of March 31,
2016, in The City of New York for
cable transfers of RMB as certified
for customs purposes by the Federal
Reserve Bank of New York.
[2] Gross merchandise value (GMV) is
defined as GMV generated by the
Baidu platform, through products
such as Baidu Nuomi, Baidu Takeout
Delivery and Baidu Wallet. GMV is
defined as the value of confirmed
orders of products and services,
regardless of whether the service
has been consumed or delivered.
[3] Qunar Cayman Islands Limited
("Qunar") financials were
consolidated in Baidu's financial
statements from July 2011 to
October 26, 2015. Following Baidu's
exchange of Qunar shares with
Ctrip, Baidu deconsolidated Qunar's
financials after October 26, 2015.
[4] Non-GAAP net income attributable to
Baidu represents net income
attributable to Baidu excluding
share-based compensation expenses
and the gain or loss associated
with the issuance of the shares by
our equity method investees at a
price higher or lower than our
carrying value per share.
[5] Non-GAAP diluted earnings per ADS
represents diluted earnings per ADS
calculated based on non-GAAP net
income attributable to Baidu.
[6] The number of active online
marketing customers and revenue per
online active customer exclude our
group-buying related businesses
for consistency with previous
reporting.
[7] The adjusted figures in the table
only exclude Qunar related figures
from Baidu's consolidated results
for the first quarter of 2015.
Share-based compensation was
allocated to related operating
costs and expense line items.
Baidu, Inc.
Condensed Consolidated Statements of
Income
Three Months Ended
------------------
March 31, December 31, March 31,
(In RMB thousands except for share, per
share (or ADS) information) 2015 2015 2016
--------------------------------------- ---- ---- ----
Unaudited Unaudited Unaudited
Revenues:
Online marketing services 12,518,757 17,610,379 14,930,530
Other services 205,859 1,088,415 890,042
Total revenues 12,724,616 18,698,794 15,820,572
---------- ---------- ----------
Operating costs and expenses:
Cost of revenues (note 1, 2) (5,326,103) (8,149,327) (7,563,184)
Selling, general and administrative (note
2) (2,956,867) (4,527,813) (3,945,944)
Research and development (note 2) (2,286,333) (2,486,778) (2,100,707)
Total operating costs and expenses (10,569,303) (15,163,918) (13,609,835)
----------- ----------- -----------
Operating profit 2,155,313 3,534,876 2,210,737
--------- --------- ---------
Other income:
Interest income 561,213 572,725 596,120
Interest expense (199,128) (299,372) (268,389)
Foreign exchange income(loss), net 8,992 106,007 (66,166)
Gain (loss) from equity method
investments (7,979) 23,119 (117,092)
Other income, net 90,875 24,294,280 298,119
Total other income 453,973 24,696,759 442,592
------- ---------- -------
Income before income taxes 2,609,286 28,231,635 2,653,329
--------- ---------- ---------
Income taxes (541,000) (3,579,909) (674,750)
Net income 2,068,286 24,651,726 1,978,579
========= ========== =========
Less: net loss attributable to
noncontrolling interests (380,994) (60,085) (8,252)
Net income attributable to Baidu 2,449,280 24,711,811 1,986,831
========= ========== =========
Earnings per share for Class A and Class
B ordinary shares:
Net income attributable to Baidu -Basic 67.86 711.02 53.95
Net income attributable to Baidu -Diluted 67.57 709.15 53.82
Earnings per ADS (1 Class A ordinary
share equals 10 ADSs ):
Net income attributable to Baidu -Basic 6.79 71.10 5.40
Net income attributable to Baidu -Diluted 6.76 70.92 5.38
Weighted average number of Class A and Class B ordinary shares outstanding:
Basic 35,112,842 34,588,703 34,599,297
Diluted 35,267,371 34,679,673 34,681,988
(1) Cost of revenues are detailed as
follows:
Sales tax and surcharges (948,209) (1,259,925) (1,047,564)
Traffic acquisition costs (1,721,629) (2,616,319) (2,233,208)
Bandwidth costs (849,628) (1,000,957) (1,088,038)
Depreciation costs (588,648) (692,046) (707,332)
Operational costs (600,857) (1,181,667) (1,092,153)
Content costs (608,420) (1,381,875) (1,382,468)
Share-based compensation expenses (8,712) (16,538) (12,421)
Total cost of revenues (5,326,103) (8,149,327) (7,563,184)
========== ========== ==========
(2) Includes share-based compensation
expenses as follows:
Cost of revenues (8,712) (16,538) (12,421)
Selling, general and administrative (117,855) (100,353) (105,036)
Research and development (164,509) (224,129) (191,605)
Total share-based compensation expenses (291,076) (341,020) (309,062)
======== ======== ========
Baidu, Inc.
Condensed Consolidated
Balance Sheets
December 31 March 31
(In RMB thousands except
for number of shares and
per share data) 2015 2016
------------------------- ---- ----
Audited Unaudited
ASSETS
Current assets:
Cash and cash equivalents 9,959,932 12,593,244
Restricted cash 95,997 229,887
Short-term investments 57,969,242 58,752,895
Accounts receivable, net 3,927,256 3,539,699
Amounts due from related
parties 1,940,559 66,105
Other assets, current 4,340,677 4,416,235
Total current assets 78,233,663 79,598,065
---------- ----------
Non-current assets:
Fixed assets, net 10,627,127 10,489,450
Intangible assets, net 3,334,619 3,421,210
Goodwill 15,395,573 15,395,573
Long-term investments,
net 37,958,591 38,299,459
Amounts due from related
parties 9,725 9,745
Deferred tax assets, net 1,008,174 1,269,036
Other assets, non-
current 1,285,836 1,669,032
---------
Total non-current assets 69,619,645 70,553,505
---------- ----------
Total assets 147,853,308 150,151,570
=========== ===========
LIABILITIES AND EQUITY
Current liabilities:
Short-term loans 100,000 174,200
Accounts payable and
accrued liabilities 17,840,192 18,815,173
Customer advances and
deposits 5,420,230 5,148,409
Deferred revenue 375,672 640,983
Deferred income 559,855 556,766
Long-term loans, current
portion 974,820 969,780
Capital lease obligation 46,088 38,984
Amounts due to related
parties 785,945 137,761
Total current liabilities 26,102,802 26,482,056
---------- ----------
Non-current liabilities:
Deferred income 17,413 17,969
Long-term loans 3,239,676 3,224,387
Notes payable 30,702,116 30,553,131
Deferred tax liabilities 3,441,290 3,409,548
Capital lease obligation 8,435 587
Other non-current
liabilities 125,860 108,766
Total non-current
liabilities 37,534,790 37,314,388
---------- ----------
Total liabilities 63,637,592 63,796,444
---------- ----------
Redeemable noncontrolling
interests 3,947,879 4,047,838
Equity
Class A Ordinary Shares,
par value US$0.00005 per
share, 825,000,000
shares authorized, and
27,113, 541 shares and
27,136,692 shares issued
and outstanding as at
December 31, 2015 and
March 31, 2016 12 12
Class B Ordinary Shares,
par value US$0.00005 per
share, 35,400,000 shares
authorized, and
7,492,921 shares and
7,492,921 shares issued
and outstanding as at
December 31, 2015 and
March 31, 2016 3 3
Additional paid-in
capital 6,402,349 6,744,598
Retained earnings 74,659,355 76,525,815
Accumulated other
comprehensive loss (806,056) (967,077)
-------- --------
Total Baidu, Inc.
shareholders' equity 80,255,663 82,303,351
Noncontrolling interests 12,174 3,937
Total equity 80,267,837 82,307,288
---------- ----------
Total liabilities,
redeemable
noncontrolling
interests, and equity 147,853,308 150,151,570
=========== ===========
Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures (in RMB thousands except for share and per ADS
information, unaudited)
Three months ended
------------------
March 31, 2015 December 31, 2015 March 31, 2016
-------------- ----------------- --------------
Operating profit 2,155,313 3,534,876 2,210,737
Add: Share-based
compensation
expenses 291,076 341,020 309,062
------- ------- -------
Non-GAAP operating
profit 2,446,389 3,875,896 2,519,799
--------- --------- ---------
Add: Depreciation
of fixed assets 667,969 772,684 795,589
Add: Amortization
of intangible
assets 181,866 166,632 141,875
------- ------- -------
Adjusted EBITDA 3,296,224 4,815,212 3,457,263
--------- --------- ---------
Three months ended
------------------
March 31, 2015 December 31, 2015 March 31, 2016
-------------- ----------------- --------------
Net income
attributable to
Baidu 2,449,280 24,711,811 1,986,831
Add: Share-based
compensation
expenses 291,076 341,020 309,062
Add: Loss
associated with
the dilution of an
equity method
investee - - 62,858
--- --- ------
Non-GAAP net
income
attributable to
Baidu 2,740,356 25,052,831 2,358,751
--------- ---------- ---------
Weighted average
number of ADS used
in computing non- 352,673,707 346,796,727 346,819,877
GAAP diluted
earnings per ADS
Non-GAAP diluted
earnings per ADS 7.77 72.24 6.80
Reconciliation from net cash provided by operating activities to free cash flow (in RMB thousands, unaudited)
Three months ended As a % of Three months ended As a % of Three months ended As a % of
------------------ --------- ------------------ --------- ------------------ ---------
March 31, 2015 total revenues December 31, 2015 total revenues March 31, 2016 total revenues
-------------- -------------- ----------------- -------------- -------------- --------------
Net cash provided
by operating
activities 2,839,481 22% 6,070,158 32% 4,742,232 30%
Less: Capital
expenditures (1,021,341) -8% (1,423,527) -8% (825,565) -5%
Free cash flow 1,818,140 14% 4,646,631 25% 3,916,667 25%
========= === ========= === ========= ===
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SOURCE Baidu, Inc.
