Image Source: Baidu
Baidu (BIDU 0.72%) reported fourth-quarter results on Feb. 25. The Chinese Internet titan is enjoying strong demand in its core search business and impressive growth in its transactional services.
Quarterly revenue surged 33% year over year to $2.9 billion, with online marketing revenue jumping 27.2% to $2.7 billion. Baidu benefited from continued growth in active online marketing customers, which rose 6.1% to 555,000 when compared to Q4 2014, as well as a 17.4% increase in revenue per online marketing customer to $4,786.
Importantly, Baidu continues to make progress with its mobile initiatives, with mobile search monthly active users, or MAUs, for December increasing 21% year over year to 657 million, and mobile maps MAUs leaping 43% to 302 million. That helped mobile revenue increase to 56% of Baidu's total revenues, up from 42% in the fourth quarter of 2014.
Baidu is also seeing strong growth in its transaction services segment, with gross merchandise value (GMV) soaring 397% to $2.3 billion in the fourth quarter.
"2015 was a touchstone year for Baidu: we made significant progress in broadening our online marketing platform and further extending our reach into transactions services," said Chairman and CEO Robin Li in a press release. "Even as China's overall growth slows, services and domestic consumption are growing."
That growth has come at a cost, however, with management noting that Baidu's transaction services business reduced the company's non-GAAP operating margins by 24.9 percentage points in the fourth quarter. Yet Baidu's investments in this area appear to be moderating, with selling, general, and administrative expenses growing 28% in Q4, compared to an 111% increase in the third quarter.
All told, net income soared 663% to $3.8 billion. However, much of that increase was due to gains related to Baidu's divestiture of online travel business Qunar in October. Excluding the impact of the Qunar deal, adjusted earnings per ADS fell 15.7% to $1.18.
Looking ahead
Management expects first-quarter revenue to be between $2.379 billion and $2.465 billion, which would represent year-over-year growth 21.1% to 25.5%, and 27.8% to 32.5% after adjusting for the Qunar divestiture.
"Our top revenue verticals -- retail/e-commerce, local services, financial services, healthcare, and education -- reflect Baidu's vital role in connecting users with merchants in these growing sectors. Looking ahead, we will continue to build the Next Baidu not only to benefit from, but also drive, key secular trends of rising domestic consumption, growth in services, and a rapidly evolving mobile environment," added Li.
