Baidu’s ad revenue tanks 8% in fiscal Q2 due to the Coronavirus pandemic

Baidu’s ad revenue tanks 8% in fiscal Q2 due to the Coronavirus pandemic
Written by:
Wajeeh Khan
14th August, 10:03
  • Baidu’s ad revenue tanks 8% in fiscal Q2 due to the Coronavirus pandemic.
  • The tech firm tops analysts' estimates for adjusted profit and sales in Q2.
  • Baidu forecasts £2.89 billion to £3.16 billion of revenue in the third quarter.

Baidu Inc. (NASDAQ: BIDU) said on Thursday that its ad revenue tanked 8% on a year over year basis to £1.95 billion in the fiscal second quarter. The company, however, topped analysts’ estimates for adjusted profit and revenue in Q2. Baidu had also performed better than Wall Street expectations in its fiscal first quarter, as per the report published in May.

Nasdaq listed shares of Baidu tanked about 7% in after-hours trading on Friday. Including the decline, Baidu is now exchanging hands at £88.66 per share versus £64 per share in March when the Coronavirus pandemic halted economic activity in China. Interested in trading stocks online? Here’s how you can buy shares in 2020.

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Baidu’s Q2 financial results versus analysts’ estimates

Baidu reported £388.08 million of earnings in the second quarter that translates to £1.12 per American depository receipt (ADR). In the same quarter last year, it had recorded a much lower £260 million of earnings.

Adjusted for non-recurring items, the technology company registered an even higher £1.59 of earnings per ADR. In terms of revenue, the Chinese multinational posted £2.87 billion that marks a 1% decline versus the comparable quarter of last year.

According to FactSet, experts had forecast the company to print £2.83 billion in sales in the recent quarter. Their estimate for per-ADR adjusted earnings was capped at £1.04. In a report last month, IDC announced Baidu’s share to have surpassed all other companies in China’s AI Public Cloud Services market.  

Baidu’s forecast for the fiscal third quarter

CEO Robin Li of Baidu commented on the company’s earnings report on Thursday and said:

“With COVID-19 becoming more manageable in China, Baidu’s business is steadily rebounding.”

For the fiscal third quarter, the Beijing-based company now forecasts its revenue to lie in the range of £2.89 billion to £3.16 billion. On a percentage basis, this represents a 6% decline in revenue to a 2% growth on an annualised basis.

Baidu, however, warned that the Coronavirus uncertainty is still real and visibility regarding its performance in the upcoming months is quite limited. The guidance, it added, is subject to change depending on how the COVID-19 situation unravels in the current quarter.

Baidu’s performance in the stock market was dovish last year with an annual decline of just under 15%. At the time of writing, the Chinese multinational technology company has a market cap of £32.49 billion and a price to earnings ratio of 129.83.

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