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KEY STAT | Baidu warns of weak Q1 2020 prospects after Q4 profits rebound

The company expects its first quarter 2020 revenue to drop 5 – 13% year-on-year as affected by the novel coronavirus outbreak.

Chinese search engine and AI giant Baidu last Thursday reported a deep dive in its 2019 annual net income. The company raked in a net income of RMB 2.1 billion (USD 300 million), a 93% drop from a year earlier.

Its annual revenue for 2019 grossed over RMB 107.4 billion (USD 15.4 billion), representing a 5% year-over-year growth.

In the last quarter of 2019, Baidu managed to turn its revenue around, pulling out a 6% YoY revenue increase to RMB 28.9 billion (USD 4.12 billion), thanks to the growth of its Baidu Core business, which includes search and various information services. Net income for the quarter stood at RMB 6.3 billion (USD 900 million), doubled that of 2008 Q4.

72% of Baidu’s last quarter revenue came from online advertisement. And as the novel coronavirus outbreak struck business operation and challenges corporates’ cash flow, Baidu is likely to be hit hard in the first quarter of 2020. The company expects a 5-13% decrease in its future quarter’s revenue, 10-18% in Baidu Core.

Weibo, China’s Twitter who shares a similar dependence on the advertisements with Baidu, also forecasts a 15 – 20% year-on-year drop on its first quarter revenue. The difference shows that Baidu has a better capability of handling the risks, as its advertisers are more of big brands compared to Weibo, said Tiger Brokers in their analytics.

In the 2000s, Baidu was one of the three internet giants alongside Alibaba and Tencent. Now shadowed by local life service platform Meituan Dianping, e-commerce operator JD.com and game publisher NetEase, Baidu only ranks the 6th by market value among its peers.