Baidu's High Profit Sends Stock Higher After-Hours
The Chinese internet giant reported a 24 percent revenue increase, driving its shares up in after-hours trading.
Baidu Inc. (NASDAQ: BIDU) announced today stronger-than-expected growth in the first quarter, leading the Internet giant's stock to jump nearly 6 percent to $251.99 in after-hours trading.
The company reported late Thursday that its revenue grew 24 percent to $3.3 billion in the first three months of 2018. The growth rate was the slowest in three quarters, but topped analysts' predictions of 19 percent, according to Thomson Reuters.
Net income attributable to Baidu rose to $1.06 billion, or $2.96 per American depositary share, in the first quarter, from $281 million, or 73 cents per ADS, a year earlier.
Baidu's net income was boosted by a new accounting standard that required companies to report the value of their investments in private companies.
"We had a strong start in 2018, with our core business exhibiting robust growth, and we continue to execute on our strategy to strengthen Baidu's mobile foundation and lead in AI," said chairman and chief executive officer, Robin Li.
Li also commented on iQiyi Inc. (Nasdaq: IQ), China's largest online video and entertainment service provider, of which Baidu is a controlling shareholder.
"I would also like to congratulate iQiyi on a successful IPO and hope to incubate more businesses with large market opportunities and strong synergies with Baidu," said Li.
IQiyi went public last month, sliding first, but quickly growing to today's $18.75 per share, 55 cents above its IPO price. IQiyi's high costs of content, as well as money spent to acquire AI engineers, is expected to weigh on Baidu's profit margins for some time.
Baidu has been trying to reignite sales growth since the advent of strict search ad regulations in 2016. The rules prompted a major strategy shift and the company has since sold or withdrawn from multiple businesses to focus on autonomous driving, artificial intelligence, and its news feed product.
"We have never been more focused than we have in the past year, by scaling down or exiting non-core businesses and doubling down on investments in AI-powered businesses to generate significant long-term return to our shareholders," said Li.
Baidu's stock rose to $251.99 in after-hours trading, up nearly 6 percent.
In the second three months of 2018, the company said it expected an increase in revenue of 20 to 25 percent compared with the first quarter, ranging between $3.93 billion and $4.13 billion.
(Reuters contributed to this article)