Baidu, China’s most popular search service, reported its first quarterly loss since it went public in 2005, with a heavy investment in AI, cloud and content weighing on its bottom-line in Q1.
In a statement, the company’s chairman and CEO Robin Li put a positive spin on the poor results, saying: “Baidu’s mobile foundation continues to strengthen with search-powered AI, and our new AI businesses are making strong progress. Looking ahead, we are excited about the opportunities to significantly improve content and service discovery through in-app search and increase customer RoI with our entrance into CRM to deepen our offering to our marketing customers.”
The company’s mobile reach hit 1.1 billion monthly active devices at end-March, while the installed base for it DuerOS voice assistant increased 279 per cent year-on-year to 275 million, generating 2.37 billion monthly voice queries (up 817 per cent).
Baidu App, which offers search and personalised news feeds, reached 174 million daily active users, up 28 per cent.
The company booked a net loss of CNY327 million ($47.5 million), compared with a CNY6.7 billion profit in Q1 2018, on revenue of CNY24.1 billion, up 15 per cent year-on-year (though this was less than the 31 per cent annual rise recorded in Q1 2018).
Administration and business expenses jumped 93 per cent to CNY6.1 billion due to higher spending in channel and promotional marketing as the company invested to find new growth streams. Content costs rose 47 per cent to CNY6.2 billion and R&D expenses increased 26 per cent to CNY4.2 billion.
Herman Yu, Baidu CFO, said despite government policies to improve market condition for SMEs, “we anticipate online marketing in the near term to face a challenging environment. We will take this opportunity to improve our monetisation capabilities and review our businesses for operational efficiency, while recognising the importance to invest for sustainable long-term growth”.
The company forecast Q2 revenue will range from a 3 per cent decline to a 2 per cent increase versus the comparable 2018 period.Subscribe to our daily newsletter Back