Here comes Baidu: Q3 results show solid growth

Business is booming for Baidu. The Chinese search giant today released its Q3 results and things are looking healthy to say the least.

The company recorded US$994.6-million in revenue, a 49.7% increase from the corresponding period in 2011. Profits meanwhile jumped to US$524.6-million, a 48.1% increase on the same period last year.

“We are pleased to report a solid performance for the third quarter driven by encouraging customer growth and improvements to our monetization platform,” said Robin Li, chairman and chief executive officer of Baidu.

“During the quarter, we worked to improve user experience by more closely integrating Baidu’s suite of market-leading vertical products with Web search,” he added. “Mobile and cloud represent our vision for the future of China’s Internet, and Baidu will continue to proactively drive the development of this crucial ecosystem. We stand ready to meet the challenges and capture the opportunities the PC-to-mobile transition presents.”

“In the third quarter, we saw solid profitability as we continued our strategy of investing in key areas of future growth, particularly mobile and cloud”. Jennifer Li, Baidu’s chief financial officer said. “In the quarters ahead, we will look to accelerate the pace of investment to achieve long-term, sustainable growth.”

The vast bulk of Baidu’s revenue — US$$993.8 million — came from online marketing, which has grown 49.6% over the past year. That growth has been made significantly easier as Google’s presence in China keeps diminishing.

Baidu says it had approximately 390 000 active online marketing customers in the third quarter of 2012, representing a 28.3% increase from the corresponding period in 2011 and a 10.8% increase from the second quarter of 2012.

Despite the seemingly strong results, investor confidence in the Chinese search company isn’t exactly at fever pitch right now. According to Bloomberg, Wall Street was less than enthusiastic about Baidu’s prediction that it would generate somewhere between US$979.3-million and US$1.010-billion in the fourth quarter.

It’s also worth bearing in mind that the company’s planned overseas expansion and investment in Cloud databases will cost it serious money. The expenditure may well be worth it in the long-term, but it’s bound to have an impact on profit in the shorter term.