Baidu Reports Q3 2013 Revenue Growth of 42.3%, Net Profit Up 1.2%, But Mobile Monetization Still Lags Behind PC

Chinese search giant Baidu reported strong revenue growth in Q3 2013, but it is still investing aggressively in its mobile business, which continues to lag behind PC in terms of monetization.

Baidu's total revenues in Q3 2013 were RMB 8.892 billion ($1.453 billion), a 42.3% increase year-on-year. Operating profit in Q3 2013 was RMB 3.338 billion ($545.4 million), a 1.2% increase from a year ago. Net income was RMB 3.048 billion ($498 million), a 1.3% increase from the corresponding period.

Earnings per ADS were RMB 8.63 ($1.41). Baidu currently has RMB 43.3 billion in cash and short-term investments.

The company said it expects total revenue in Q4 2013 to be between RMB 9.22 billion and RMB 9.48 billion, a 45.5% to 49.6% increase year-over-year.

In Baidu's earnings call, Jennifer Li, Baidu's chief financial officer, said that Baidu's main expenses in Q3 2013 were related to the merging streaming video platforms PPS with iQiyi and the acquisition of app marketplace 91 Wireless, as well as increase in research and development costs and advertising for mobile.

Selling, general and administrative expenses were RMB 1.384 billion ($226.2 million), up 115.4% from the corresponding period in 2012, primarily due to promotional expenses for mobile products. Research and development expenses were RMB 1.091 billion ($178.2 million), a 77.5% increase from the corresponding period in 2012, due to the hiring of more R&D personnel.

Baidu's CEO Robin Li said that the revenue growth in Q3 2013 shows that the company's investment in mobile is on a solid trajectory. But mobile monetization still lags behind Baidu's PC business.

“Mobile monetization has been growing very quickly over the past couple of quarters. Yes, it's not reaching the level of PC monetization yet. We certainly see the gap is quickly closing, but exactly when it will catch up is another question. Right now we think the highest priority is still to provide the best user experience so they will spend on the Baidu search app to get information and services,” said Li.

In the next few quarters, Baidu will continue invest aggressively in its mobile products, said CFO Li.

“We have our foot on the pedal to marketing. We're aggressively promoting our mobile products. The install rate for our core search app is growing 50% quarter per quarter and we will continue to use different channels to build our product's presence,” she said.

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