On November 7, Baidu announced its unaudited financial report for the third quarter of 2019. During the reporting period, Baidu generated flat quarterly revenue of 28.1 billion yuan, representing a sequential increase of 7%. Baidu’s DAUs increased by 25% to 189 million in September. The company’s share price rose 5.9% in postmarket trading following the earnings release, reflecting investors approval of the strong traffic growth numbers.
The Q3 revenue is slightly higher than analysts’ expectations. Previously, analysts said that Baidu Q3’s performance would be affected by its sluggish search services and adverse market conditions, and revenue was expected to decline by 5% to $3.89 billion (about 27.53 billion yuan).
In terms of profitability, Baidu experienced a net loss of 6.34 billion yuan in Q3 after showing profit three months ago in Q2. According to its official analysis, Baidu suffered a loss in the third quarter, mainly due to a noncash impairment loss of 8.9 billion yuan on equity investment valuation. Baidu’s recent divesture of nearly one third of their holdings in Ctrip, valued at $1 billion, marks the company’s largest equity investment change in the third quarter.
“Due to the decline of the valuation of some equity investments over a long period of time, an unrealized loss of 8.9 billion yuan was taken into account. However, it has nothing to do with the company’s main business operations.” Baidu representatives told Chinese tech media 36Kr.
Robin Li, founder and CEO of Baidu, issued an internal letter to all of Baidu’s employees afterwards: “Though faced with a challenging macro environment, the prior changes of the company have begun to show positive results. As a company specialized in artificial intelligence, Baidu is confident about the upcoming year.”