Baidu Crushes Q1 Forecasts--So Why Is the Stock Sinking?
Warning! GuruFocus has detected 3 Warning Signs with BIDU.
Revenue grew 3% year-on-year to RMB 32,452 ($4.47 billion), above the RMB 31 billion consensus. Core business sales rose 7% to RMB 25.5 billion, while non-marketing revenue, which includes AI Cloud and other services, surged 40% to RMB 9.4 billion. Online advertising declined 6% to RMB 16 billion, underscoring Baidu's shift toward high-growth segments.
Adjusted EPS came in at RMB 18.5, beating the RMB 13.84 estimate.
However, operating income fell 18%, with margins contracting 300 basis points to 14%, as traffic acquisition and cloud infrastructure costs lifted operational expenses to RMB 17.5 billion. Sales, marketing and administrative spending climbed 10% to RMB 5.9 billion, while R&D costs eased 15% to RMB 4.5 billion on lower personnel expenses.
Adjusted EBITDA declined 13% to RMB 7.2 billion, reflecting a 22% margin. iQIYI video revenue slipped 9% to RMB 7.2 billion. Cash and equivalents stood at RMB 49.2 billion as of March 31.
AI Cloud momentum, up 42% year on year, drove Baidu Core growth, CEO Robin Li said, highlighting the firm's distinctive price-performance edge in full-stack AI offerings.
This article first appeared on GuruFocus.
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