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Baidu Announces First Quarter 2016 Results

BEIJING, April 28, 2016 /PRNewswire/ -- Baidu, Inc. BIDU, -1.03% ("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].

"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-GAAPdiluted 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...


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