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Baidu posts 6% increase in revenues but forecasts disappointing first quarter

The coronavirus situation in China is evolving, and business visibility is very limited, said Baidu.

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The company behind China’s largest search engine, Baidu Inc. (NASDAQ: BIDU), disclosed on Friday slightly better than expected revenues of RMB 28.8 billion (USD 4.1 billion) for its last quarter of 2019, up 6% from last year.

The company also forecasted first-quarter revenues between RMB 21 billion and RMB 22.9 billion, a decline of 5% to 13% year-over-year (YoY), below analysts’ estimates of RMB 23.08 billion, according to IBES data from Refinitiv.

Nasdaq-listed Baidu closed at USD 119.91 on Thursday’s regular session, down 2.94% from the previous close, with a market capitalization of USD 41.5 billion.

“The coronavirus situation in China is evolving, and business visibility is very limited,” said Baidu, adding that this preliminary vies is subject to “substantial uncertainty.”

After delaying its earnings report release citing the coronavirus outbreak, Baidu reported RMB 8.1 billion from other revenues, up 35% Y0Y, driven mainly by strong growth in memberships of its online video platform iQiyi, cloud services, and smart devices. However, the result was offset by a decrease in online marketing revenues, down 2% down YoY at RMB 20.8 billion.

Revenue from Baidu’s core business, which offers keyword-based searching and marketing services, hit RMB 21.7 billion, up 6% year-on-year. Daily active users (DAU) on the Baidu app grew to 195 million in December, up 21% from the previous year, while in-app search queries increased almost 30% YoY, said Robin Li, Chairman and CEO of Baidu.

Revenue from video streaming site iQiyi hit RMB 7.5 billion, a rise of 7% YoY. A narrowed loss of RMB 2.5 billion was also reported by the video-streaming division, compared to RMB 3.5 billion from the same quarter of 2018. iQiyi membership revenue grew 21% YoY, as total subscribers reached 106.9 million in December 2019, of which 98.9% were paid subscribers. However, the platform’s online advertising revenue saw a YoY decline of 15%.

“Our leaner financial model and strong balance sheet put us in a good position to weather the slowing macro, while continuing to invest heavily in technology and new businesses, to optimize future growth,” said Baidu’s chief financial officer Herman Yu.