Baidu posts first loss in over decade as China's economic downturn hits the search giant
Baidu has posted a loss for the first time in more than a decade as the tech and search giant feels the impact of China’s economic slowdown.
Baidu VP of search quits after the tech giant posts disappointing Q1 results
Baidu reported a net loss of RMB 327m ($47.5m) for the first quarter of 2019. The results were a significant increase on analyst expectations, which forecast a loss of RMB 187.5m.
Baidu’s sales forecasts also fell below estimates leading to the resignation of Hailong Xiang, the senior vice president of Baidu’s search business, who leaves after 14 years with the company.
As a result, Baidu has merged its search and mobile businesses, promoting Dou Shen to senior vice president responsible for the merged division. Shen was previously VP of Baidu’s mobile business and oversaw the development of the Baidu App, smart mini program and short video app.
Baidu’s loss was fuelled by the company’s increased investment in content and marketing including its Chinese New Year activity.
Herman Yu, chief financial officer at Baidu, said: “"Baidu Q1 results were solid, with revenues reaching RMB 24.1 billion, up 15% year over year, or 21% year over year, excluding revenue from divested business, and margins were dampened by our successful CCTV New Year Eve Gala marketing campaign, which accelerated the traffic of Baidu family of apps and highlighted better in-app search user experience."
"Despite government policies to improve the market condition for SMEs, we anticipate online marketing in the near term to face a challenging environment. We will take this opportunity to improve our monetization capabilities and review our businesses for operational efficiency, while recognizing the importance to invest for sustainable long-term growth."
Baidu reported growth in mobile reach to 1.1 billion monthly active devices in Q1 while Baidu App daily active users grew 28% year-on-year to reach 174 million.
Baidu’s online video platform iQiyi added 9.4 million new members in Q1 boosting the platform’s subscribers to 96.8 million.
Baidu's tech rivals Alibaba and Tencent both recently posted Q1 results, with Alibaba revenues up 51% year-on-year to reach RMB 93.5 billion (US$13.9bn), while Tencent posted an increase in net profits to reach RMB 27.2bn (US$3.9bn) in the quarter ending March 31.