China's Baidu tops revenue estimates as company pivots towards short video, mini programs and AI
- Baidu App saw strong traffic in the quarter although daily active user numbers dropped to 151 million in September from a peak of 161 million in August
- Baidu said its AI system blocked over 430 million medical ads to combat misleading and low-quality medical ads in the third quarter
Traffic growth on Baidu Inc’s mobile app helped drive higher-than-expected third quarter revenue as China’s biggest search engine operator places more emphasis on artificial intelligence (AI) and autonomous driving.
Revenue rose to 28.2 billion yuan (US$4.11 billion) from 23.49 billion yuan in the same quarter a year ago. That beat the average estimate of 27.53 billion yuan, according to Refinitiv data. Net income rose 56 per cent year-on-year to a better-than-expected 12.4 billion yuan.
Baidu chairman and chief executive Robin Li Yanhong said on Wednesday he expects mini-programs and short video to drive continuous growth despite slowing economic growth in China. He said Baidu was in a “sweet spot” as an internet gateway and that the company is continuing to solidify its position as a ‘super app’ to retain users and improve the customer experience.
The rosy outlook comes despite a slowdown in the world’s second-largest economy amid an escalating trade war with the US, which may lead to a softening of advertising and marketing, a segment which generated nearly 80 per cent of revenue in the quarter ended September 30. Baidu’s sales momentum has lagged technology peers Alibaba Group Holding and Tencent Holdings, and it has sold or closed several businesses over the past year which were in direct competition.
However, Baidu has become one of China’s biggest AI champions, with its efforts endorsed by the government as well as international firms. This month, it became the first Chinese company to join an AI ethics group alongside members such as Apple and Alphabet’s Google.
“Confidence levels in the private sector are not very high, but the impact is not obvious yet,” said Li in an earnings call. “It’s hard to predict the macro economy next year,” he said, adding that the impact is primarily on traditional sectors and the company remains positive on its long term outlook.