China’s search engine giant Baidu surpassed quarterly revenue estimates on Thursday as a resurgence of COVID-19 in China and accompanying restrictions boosted demand for its cloud and artificial intelligence (AI) products.
The news drove Baidu’s US-listed shares more than 5 percent up in pre-market trading even as the company cautioned that the second quarter would be more challenging.
Revenue for the three months to March 31 rose 1 percent to CNY 28.41 billion (roughly Rs. 32,748 crore), the slowest growth in six quarters, but topped an analysts’ average estimate of CNY 27.82 billion (roughly Rs. 32,076 crore), IBES data from Refinitiv showed.
It posted a net loss of CNY 885 million (roughly Rs. 1,020 crore), or CNY 2.87 (roughly Rs. 33) per American Depository Share (ADS), amid an economic downturn and pandemic resurgence in China.
A year earlier it had posted a profit of CNY 25.65 billion (roughly Rs. 29,563 crore), or CNY 73.76 (roughly Rs. 850) per ADS.
“Since mid-March, our business has been negatively impacted by the recent COVID-19 resurgence in China,” Robin Li, Baidu’s founder and chief executive, said in a statement, adding that challenges related to the virus will continue to pressure its operations in the near term.
Revenue for Baidu Core, which includes online ad sales and non-ad sales from its AI-powered products including AI cloud, rose 4 percent to CNY 20.48 billion (roughly Rs. 23,615 crore).
Its online ad revenue dropped 4 percent year-on-year to CNY 15.7 billion (roughly Rs. 18,095 crore).
The second quarter will be more challenging for the company, compared with the first quarter, Baidu’s Chief Financial Officer Luo Rong said during a conference call.
Sales from Baidu AI cloud, part of the non-ad revenue and one of its fastest-growing sectors, jumped 45 percent, according to Luo.
Founded as a search engine tool, the company has expanded into cloud services, autonomous driving and robotaxis in recent years as competition rises for its core search platform and advertisement business.
Last month Baidu received permits to deploy robotaxis without humans in the driving seat on open Chinese roads for the first time.
Apollo Go, Baidu’s robotaxi service, currently available in 10 Chinese cities, operated around 196,000 rides during the quarter.
© Thomson Reuters 2022
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