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Baidu Announces Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

BEIJING, China, October 29, 2015 Baidu, Inc. (NASDAQ: BIDU), the leading Chinese language Internet search provider, today announced its unaudited financial results for the third quarter ended September 30, 2015

With mobile accounting for nearly two-thirds of Baidus search traffic and China squarely in a mobile age, Baidu is pioneering and redefining the mobile experience for users in China. We further extended the reach of our platform by deeply integrating and connecting search and maps with transaction services, said Robin Li, chairman and CEO of Baidu. We have made great momentum in O2O and seen st rong progress in transaction services for Baidu, Li said.

We delivered another solid quarter, with mobile growing its contribution. The momentum in transaction services gives us the confidence to continue investing, said Jennifer Li, CFO of Baidu. We will invest in ways that leverage and buttress our competitive advantage, she said.

Third Quarter 2015 Operational Highlights

Mobile search monthly active users (MAUs)

were 643 million for the month of September 2015, an increase of 26% year-over-year

Mobile maps MAUs

were 326 million for the month of September 2015, an increase of 34% year-over-year

Gross merchandise value

(GMV) for Transaction Services

totaled RMB60.2 billion ($9.5 billion) for the third quarter of 2015, an increase of 119% year-over-year

Baidu Wallet activated accounts

reached 45 million at the end of September 2015, an increase of 520% year-over-year

Share Repurchase

In the third quarter of 2015, the Company completed its share repurchase program authorized by the board of directors in July 2015. Under the program, the Company repurchased approximately 6.0 million ADSs for approximately $1 billion. On October 22, 2015, Baidus board of directors authorized a new share repurchase program under which the Company may repurchase up to $2 billion of its shares over the next 24 months.

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB 6.3556 to US$1.00, the effective noon buying rate as of September 30, 2015 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.

Gross merchandise value (GMV) for Transaction Services is defined as GMV generated by Qunar, Baidu Nuomi and Baidu Takeout Delivery. GMV generated by Qunar is defined as the value of confirmed orders of products and services, excluding cancellations. GMV generated by Baidu Nuomi and Baidu Takeout Delivery is defined as the value of confirmed orders of products and services, regardless of whether the service has been consumed or delivered.

Third Quarter 2015 Financial Highlights

Total revenues

in the third quarter of 2015 were RMB18.383 billion ($2.892 billion), a 36.0% increase from the corresponding period in 2014. Mobile revenue represented 54% of total revenues for the third quarter of 2015, compared to 37% for the corresponding period in 2014.

Operating profit

in the third quarter of 2015 was RMB2.512 billion ($395.2 million), a 35.9% decrease from the corresponding period in 2014.

Transaction Services

reduced non-GAAP operating margins by 32.0 percentage points and iQiyi further reduced non-GAAP operating margins by 5.4 percentage points.

Net income attributable to Baidu

in the third quarter of 2015 was RMB2.841 billion ($447.0 million), a 26.7% decrease from the corresponding period in 2014.

Diluted earnings attributable to Baidu per ADS

for the third quarter of 2015 were RMB7.92 ($1.25);

diluted earnings attributable to Baidu per ADS excluding share-based compensation expenses

(non-GAAP) for the third quarter of 2015 were RMB9.07 ($1.43).

Third Quarter 2015 Results

Baidu reported

of RMB18.383 billion ($2.892 billion) for the third quarter of 2015, representing a 36.0% increase from the corresponding period in 2014.

Online marketing revenues

for the third quarter of 2015 were RMB17.680 billion ($2.782 billion), representing a 31.7% increase from the corresponding period in 2014. Baidu had approximately 623,000 active

online marketing customers

in the third quarter of 2015, representing a 20.7% increase from the corresponding period in 2014 and a 5.6% increase from the second quarter of 2015.

Revenue per online marketing customer

for the third quarter was approximately RMB28,300 ($4,453), a 9.3% increase from the corresponding period in 2014 and a 3.3% increase compared to the second quarter of 2015.

Traffic acquisition cost

as a component of cost of revenues was RMB2.411 billion ($379.4 million), representing 13.1% of total revenues, as compared to 12.9% in the corresponding period in 2014 and 12.7% in the second quarter of 2015.

Bandwidth costs

as a component of cost of revenues were RMB970.0 million ($152.6 million), representing 5.3% of total revenues, compared to 5.6% in the corresponding period in 2014.

Transaction Services (formerly O2O & Other) includes Qunar, Baidu Nuomi, Baidu Takeout Delivery, Baidu Maps, Baidu Connect, Baidu Wallet and other products.

The number of active online marketing customers and revenue per online active customer exclude those associated with our group-buying and takeout delivery related businesses for consistency with previous reporting.

Depreciation costs

as a component of cost of revenues were RMB657.3 million ($103.4 million), representing 3.6% of total revenues, compared to 3.8% in the corresponding period in 2014.

Content costs

as a component of cost of revenues were RMB914.5 million ($143.9 million), representing 5.0% of total revenues, compared to 3.7% in the corresponding period in 2014, and 5.1% in the previous quarter. The year-over-year increase was mainly due to iQiyis increased content costs.

Selling, general and administrative expenses

were RMB5.702 billion ($897.1 million), representing an increase of 111.2% from the corresponding period in 2014, primarily due to an increase in promotional spending for transaction services.

Research and development expenses

were RMB2.690 billion ($423.2 million), a 46.9% increase from the corresponding period in 2014. The increase was primarily due to an increase in the...


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