Baidu Inc.’s (NASDAQ: BIDU) revenue jumps 24 percent in the first quarter thanks to strong growth in on mobile advertising revenue. But the company spent more on video content and other services to diversity its business.
China’s biggest search engine provider said that the first-quarter revenue increased 24 percent to 15.82 billion yuan ($2.4 billion), matching analysts’ estimates of 15.86 billion yuan. Mobile business accounted for nearly 60 percent of the total revenue, compared with 50 percent a year earlier.
Thanks to the strength of Baidu’s core business, the company expects second-quarter revenue of $3.11 billion to $3.19 billion, above analysts’ estimates of $3.1 billion.
Net income for the quarter ended in March fell 18.9 percent to 1.99 billion yuan, or 5.38 yuan (83 cents) per American depositary receipt, compared with 2.45 billion yuan, or 6.76 yuan per ADR, a year earlier. But the result still beat analysts’ estimates. Analysts had projected net income of 1.91 billion yuan.
Net income is the lowest in four years as the company spend more money into new areas from artificial intelligence and self-driving cars to on-demand services like food-delivery. Baidu is spending heavily to compete with its biggest rivals Alibaba and Tencent. Competition become stronger after Alibaba’s recent $1.25 billion investment in Ele.me.
“We are aggressively beefing up research and development in this area both here in China and our U.S. R&D center in Silicon Valley,”Chairman Robin Li told analysts on a post-earnings conference call. “We will worry about the business model later on.”
Total costs during the quarter rose 28.8 percent 13.6 billion yuan, compared with 10.57 billion yuan during the same period last year.
Baidu shares rose 6.59 percent to $198.20 per ADR at 12:30 p.m. in New York.