Chinese search giant Baidu booked strong profit gains and double-digit revenue growth outside its core business in the final quarter of 2019, but forecast a weak start to 2020 due to the widening impact of the Covid-19 (coronavirus) outbreak.
Baidu expects revenue to fall by 5 per cent to 13 per cent year-on-year to between CNY21 billion ($3 billion) to CNY22.9 billion, with an assumption core revenue will drop between 10 per cent and 18 per cent.
In a statement, the company said the Covid-19 situation in China is evolving and “business visibility is very limited. The above forecast reflects Baidu’s current and preliminary view, which is subject to substantial uncertainty”.
Chairman and CEO Robin Li said: “We finished 2019 making tremendous progress in strengthening Baidu’s mobile ecosystem. Quarterly operating margin has also been improving, through the strengthening of the mobile ecosystem and our focus on resource investment returns. Our leaner financial model and strong balance sheet put us in a good position to weather the slowing macro [economy].”
Li said its new AI businesses also made strong gains in 2019, “as we built leadership in smart devices, smart transportation and enterprise cloud solutions”.
The company’s Q4 2019 net profit increased twofold year-on-year to CNY6.3 billion, while revenue up 6.2 per cent to CNY28.9 billion.
Strong growth in cloud services, smart devices and iQIYI membership services fuelled 35 per cent growth in its Other revenue category to CNY8.1 billion. Online marketing revenue, its core business, slipped 2 per cent to CNY20.8 billion.
Average daily active users increased 21 per cent to 195 million and in-app search queries grew nearly 30 per cent. It added 19.5 million iQIYI subscribers, taking the total to 106.9 million.
Baidu said it returned $149 million to shareholders in the fourth quarter as part of its 2019 share repurchase programme.
Full year R&D expenses rose 16.3 per cent to CNY18.3 billion.Subscribe to our daily newsletter Back