Chinese search and AI giant Baidu (NASDAQ: BIDU) booked RMB 22.5 billion (USD 3.18 billion) in total revenue, down 7% year-on-year (YoY) but surpassing analysts’ expectations of USD 3.1 billion. Following the announcement, Baidu’s stock surged 7.7% in after-hours trading on Monday to USD 115.90.
The COVID-19 period was not particularly negative for Baidu’s business, as daily active users (DAU) for the Baidu App increased by 28% to 222 million during the quarter. Baidu also reported a 9% increase in revenues from its Netflix-like video provider iQiyi (NASDAQ: IQ), which has been subject of a short attack in April, but managed to maintain its share price largely unaffected while subscribers increased 23% YoY to 118.3 million during the quarter.
Baidu’s core business contributed RMB 1.7 billion (USD 240 million) in net income, up 142% YoY, while the company generated only RMB 41 million (USD 6 million) in entire net income in the first quarter of 2020, compared with RMB 327 million (USD 46 million) net losses in the first quarter of 2019.
In March, Baidu announced plans to invest USD 100 million in e-book maker iReader as part of a pending deal which will allow the company to add hundreds of thousands of books onto its platforms. The same month, the firm had set up a new medical subsidiary to offer AI gene sequencing tools to help fight the COVID-19 pandemic in March.
The company’s EBITDA (Earnings Before Interest, taxes, Depreciation, and Amortization) for Baidu’s core business (Baidu Core), increased 38% to reach USD 0.7 billion, while adjusted EBITDA margin reached 30%, increasing 11 points from last year.
“Baidu Core’s operating efficiency can be attributed to the strengthening of Baidu mobile ecosystem, enabling in-app search to grow faster and be more profitable than browser search, and growing new AI businesses with smaller losses,” said Baidu’s chief financial officer Herman Yu.
Robin Li, co-founder and CEO of Baidu added that “With the pandemic coming under control in China, offline activities are rebounding and Baidu stands to benefit from a restart of the Chinese economy.”
Baidu projects the year-on-year revenue decline to persist, forecasting revenue of RMB 25 billion (USD 3.5 billion) and RMB 27.3 billion (USD3.9 billion), representing a growth rate of -5% to 4% YoY.