Baidu managed to post impressive revenue growth of 40 percent for the first quarter of 2013, but its earnings missed analysts’ expectations due to excessive R&D costs. The company earned $961 million in total revenue, or 5.97 billion RMB, but missed analyst pre-estimates of 5.99 RMB. Its net income increased 8.5 percent to $328.9 million but fell short of the $354.9 million analysts had predicted in a Bloomberg poll.
The company managed to increase online marketing revenue by 40 percent to 40 percent to $958.5 million (5.95 billion RMB), and increased active online customers by 28 percent to 410,000 compared to the previous year. Revenue per online customer, however, slipped 6.5 percent from the previous quarter.
Meanwhile, the company’s selling, administrative and general costs rose 77 percent, while R&D jumped 83 percent, stymieing its profit despite the recent growth.
The company’s efforts to buy a stake in online video site iQiyi last November also cut into its profit rate.
“For the quarter, we also recognized a whole quarter consolidation of iQiyi,” said Baidu CFO Jennifer Li.
The company predicted second quarter revenue to be between $1.19 billion and $1.22 billion, which analysts are also expecting.
Though Baidu’s CEO Robin Li admitted the company was rapidly “burning through cash,” he described the overall results for the quarter as “healthy” during an earnings call.
“Continually developing the most advanced search technology remains central to Baidu’s overall strategy, and we’re very excited by the possibilities opened up by innovation in image and voice recognition,” Li said. “Our focus will remain on tightly integrating our leading search core with valuable vertical products in areas such as travel, e-commerce and location-based service to bring users the information they want as quickly as possible on both desktop and mobile devices.”