Baidu (NASDAQ:BIDU) is still a growth stock. The latest scars only add character.

China's leading search engine delivered another strong quarterly report last night. Revenue climbed 41% to $118.6 million. Earnings jogged 24% higher to clock in at $0.76 a share.

Don't let the margin degradation fool you. There are several factors baked into the bottom line, including a near-doubling of the company's tax rate and widening losses from the company's push to matter in Japan. Operating profits actually rose nearly 35% during the quarter. If you back out stock-based compensation and the company's loss attributed to its nascent search engine efforts in Japan, Baidu would have earned a whopping $1.03 a share.

I guess we should have seen this coming. Analysts at both Deutsche Bank and Citigroup upgraded the stock last month, citing improving fundamentals at the company during March.

The momentum is still there. Baidu is targeting between $157 million and $161 million in revenue this quarter, ahead of the $145.9 million target that analysts had laid out for the Chinese dot-com star.

Baidu closed out the quarter with 185,000 active marketing customers. That is just a 15% increase from where the company was a year ago -- and a sequential decline -- but it only proves that existing sponsors are spending more on Baidu.

As for Baidu shedding net advertisers during the quarter, keep in mind that the first quarter is a seasonally moribund period in China. Clearly the company is expecting some serious sequential gains given its high top-line guidance.

This doesn't mean that Baidu is over its recent knockdowns. It may still be way ahead of distant rivals like Google (NASDAQ:GOOG) and Sohu.com's (NASDAQ:SOHU) Sogou, serving up nearly two-thirds of China's search queries, but it has run into a bit of turbulence lately.

  • In November, a Chinese television expose caught the company accepting ads from unlicensed medical companies. Baidu took quick action to clean up its act.
  • Record labels have sued Baidu, Sogou, and Yahoo! (NASDAQ:YHOO) for linking directly to pirated music tracks, just as Google is launching a label-supported ad-sharing model for free downloads.
  • Baidu is now being sued by an advertiser in Beijing, accusing the company of burying organic search results after it reduced its marketing spend.

The company's strong showing as Baidu faces heat from all directions is encouraging, but it should only make investors wonder what the Chinese company is truly capable of the moment that headwinds become tailwinds.

Other recent Baidu-ish headlines:

Baidu, Google, and Sohu.com are Motley Fool Rule Breakers picks. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz has been to mainland China just once, but he's longing to brush up on Mandarin and make it another go in the future. He does not own shares in any of the companies mentioned in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.