Baidu fourth quarter and fiscal year 2011 results: annual profit up 88%

17 February 2012 13 h 51 min Comments Off

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Baidu, Inc. (NASDAQ: BIDU), the leading Chinese language Internet search provider, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2011(1).

Fourth Quarter and Fiscal Year 2011 Highlights

• Total revenues in the fourth quarter of 2011 were RMB4.474 billion ($710.9 million), an 82.5% increase from the corresponding period in 2010.

• Total revenues in fiscal year 2011 were RMB14.501 billion ($2.304 billion), an 83.2% increase from 2010.

• Operating profit in the fourth quarter of 2011 was RMB2.297 billion ($365.0 million), an 80.2% increase from the corresponding period in 2010.

• Operating profit in fiscal year 2011 was RMB7.577 billion ($1.204 billion), a 91.4% increase from 2010.

• Net income attributable to Baidu in the fourth quarter of 2011 was RMB2.054 billion ($326.3 million), a 76.9% increase from the corresponding period in 2010. Diluted earnings attributable to Baidu per ADS(2) for the fourth quarter of 2011 was RMB5.87 ($0.93); diluted earnings attributable to Baidu per ADS excluding share-based compensation expenses (non-GAAP) for the fourth quarter of 2011 was RMB6.01 ($0.95).

• Net income attributable to Baidu in fiscal year 2011 was RMB6.639 billion ($1.055 billion), an 88.3% increase from 2010. Diluted earnings attributable to Baidu per ADS for fiscal year 2011 was RMB18.99 ($3.02); diluted earnings attributable to Baidu per ADS excluding share-based compensation expenses (non-GAAP) for fiscal year 2011 was RMB19.42 ($3.09).

“I’m pleased to report that we closed the year with solid financial results as strong execution allowed us to benefit from exceptional market opportunities,” said Robin Li, chairman and chief executive officer of Baidu. “Over the course of 2011, we made great progress on the Baidu Open Data and Open Application platforms, executed effectively on our landing page strategy, and rolled out several new initiatives, including our personalized homepage and the Baidu Yi mobile platform.”
Mr. Li continued, “In 2012, we will continue to innovate and to solidify Baidu’s central position in China’s Internet ecosystem.”
Jennifer Li, Baidu’s chief financial officer, commented, “Driven by strong top line growth, Baidu enjoyed great margins in 2011, as we continued to aggressively invest in infrastructure and talent. Looking ahead, we will continue to focus on driving top line growth and invest at a robust pace to develop and capture long term market opportunities.”

Fourth Quarter 2011 Results

. Baidu reported total revenues of RMB4.474 billion ($710.9 million) for the fourth quarter of 2011, representing an 82.5% increase from the corresponding period in 2010.
. Online marketing revenues for the fourth quarter of 2011 were RMB4.467 billion ($709.7 million), representing an 82.3% increase from the corresponding period in 2010. Baidu had about 311,000 active online marketing customers in the fourth quarter of 2011, representing a 12.7% increase from the corresponding period in 2010 and a 2.3% increase from the previous quarter. Revenue per online marketing customer for the fourth quarter 2011 was approximately RMB14,400 ($2,288), a 61.8% increase from the corresponding period in 2010 and a 5.1% increase from the previous quarter.
. Traffic acquisition cost (TAC) as a component of cost of revenues was RMB353.8 million ($56.2 million), representing 7.9% of total revenues, as compared to 8.1% in the corresponding period in 2010 and 8.0% in the third quarter of 2011. Bandwidth costs as a component of cost of revenues were RMB192.2 million ($30.5 million), representing 4.3% of total revenues, compared to 4.0% in the corresponding period in 2010. . Depreciation costs as a component of cost of revenues were RMB214.9 million ($34.1 million), representing 4.8% of total revenues, compared to 4.0% in the corresponding period in 2010. These increases were mainly due to an increase in network infrastructure capacity.
Selling, general and administrative expenses were RMB522.4 million ($83.0 million), representing an increase of 66.8% from the corresponding period in 2010, mainly due to an increase in personnel-related expenses and marketing expenses.
. Research and development expenses were RMB413.8 million ($65.7 million), a 78.4% increase from the corresponding period in 2010. The increase was primarily due to an increase in the number of research and development personnel.
. Share-based compensation expenses, which were allocated to related operating cost and expense line items, were RMB46.6 million ($7.4 million) in the fourth quarter of 2011, compared to RMB39.4 million in the previous quarter and RMB28.2 million in the corresponding period in 2010.
. Operating profit was RMB2.297 billion ($365.0 million), representing an 80.2% increase from the corresponding period in 2010. Operating profit excluding share-based compensation expenses (non-GAAP) was RMB2.344 billion ($372.4 million), a 79.9% increase from the corresponding period in 2010.
. Income tax expense was RMB404.5 million ($64.3 million), compared to an income tax expense of RMB159.6 million in the corresponding period in 2010. The effective tax rate for the fourth quarter of 2011 was 16.5% as compared to 12.1% for the corresponding period in 2010. The year-on-year increase in the effective tax rate was due to the expiration of preferential tax treatments for some of Baidu’s PRC subsidiaries.
. Net income attributable to Baidu was RMB2.054 billion ($326.3 million), representing a 76.9% increase from the corresponding period in 2010. Basic and diluted earnings attributable to Baidu per ADS for the fourth quarter of 2011 amounted to RMB5.88 ($0.93) and RMB5.87 ($0.93), respectively.
. Net income attributable to Baidu excluding share-based compensation expenses (non-GAAP) was RMB2.100 billion ($333.7 million), a 76.7% increase from the corresponding period in 2010. Basic and diluted earnings attributable to Baidu per ADS excluding share based compensation expense (non-GAAP) for the fourth quarter of 2011 amounted to RMB6.02 ($0.96) and RMB6.01 ($0.95), respectively.
As of December 31, 2011, Baidu had cash, cash equivalents and short-term investments of RMB14.179 billion ($2.253 billion). Net operating cash inflow and capital expenditures for the fourth quarter of 2011 were RMB3.358 billion ($533.5 million) and RMB501.8 million ($79.7 million), respectively.
. Adjusted EBITDA (non-GAAP), defined in this announcement as earnings before interest, taxes, depreciation, amortization, other non-operating income and share-based compensation expenses, was RMB2.640 billion ($419.4 million) for the fourth quarter of 2011, representing an 83.9% increase from the corresponding period in 2010.

Fiscal Year 2011 Results

. Total revenues in 2011 were RMB14.501 billion ($2.304 billion), representing an 83.2% increase from 2010.
. Online marketing revenues in 2011 were RMB14.490 billion ($2.302 billion), representing an 83.1% increase from 2010. The growth was driven by increases in both the number of active online marketing customers and revenue per customer. Baidu had about 488,000 active online marketing customers in 2011, representing an 18.4% increase from 2010. Revenue per online marketing customer for 2011 was RMB29,700 ($4,719), an increase of 54.7% from 2010.
. Traffic acquisition costs in 2011 were RMB1.156 billion ($183.6 million), representing 8.0% of total revenues, compared to 9.6% in 2010. The decrease in TAC as a percentage of total revenues reflects the continued impact of the Company’s traffic optimization efforts from previous years.
. Bandwidth costs as a component of cost of revenues were RMB626.4 million ($99.5 million), representing 4.3% of total revenues, compared to 3.9% in 2010. Depreciation costs as a component of cost of revenues were RMB657.8 million ($104.5 million), representing 4.5% of total revenues, compared to 4.2% in 2010. These increases were mainly due to an increase in network infrastructure capacity.
Selling, general and administrative expenses in 2011 were RMB1.693 billion ($269.0 million), representing an increase of 55.4% from the previous year, mainly due to an increase in personnel-related expenses and marketing expenses.
. Research and development expenses totaled RMB1.334 billion ($212.0 million) in 2011, representing an 85.8% increase from 2010, primarily due to an increase in the number of research and development personnel.
. Share-based compensation expenses, which were allocated to related operating cost and expense line items, were RMB152.0 million ($24.2 million) in 2011, compared to RMB93.7 million in 2010.
. Operating profit in 2011 was RMB7.577 billion ($1.204 billion), a 91.4% increase from 2010. Operating profit excluding share-based compensation expenses (non-GAAP) in 2011 was RMB7.729 billion ($1.228 billion), representing a 90.7% increase from 2010.
Loss from equity method accounting in 2011 was RMB179.4 million ($28.5 million), representing an increase of RMB170.4 million ($27.1 million) compared to 2010. This increase was mainly attributable to Baidu’s cash investment in iQiyi.
. Income tax expense was RMB1.189 billion ($188.9 million), compared to an income tax expense of RMB536.0 million in 2010. The effective tax rate for 2011 was 15.2% as compared to 13.2% in 2010. The year-on-year increase in the effective tax rate was mainly due to the expiration of preferential tax treatments for some of Baidu’s PRC subsidiaries.
. Net income attributable to Baidu in 2011 was RMB6.639 billion ($1.055 billion), representing an 88.3% increase from 2010. Basic and diluted earnings attributable to Baidu per ADS for 2011 amounted to RMB19.03 ($3.02) and RMB18.99 ($3.02), respectively.
Net income attributable to Baidu excluding share-based compensation expenses (non-GAAP) in 2011 was RMB6.791 billion ($1.079 billion), reflecting an 87.6% increase from 2010. Basic and diluted earnings attributed to Baidu per ADS excluding share-based compensation expenses (non-GAAP) in 2011 were RMB19.46 ($3.09) and RMB19.42 ($3.09), respectively.
Full year net operating cash inflow and capital expenditures were RMB 8.179 billion ($1.299 billion) and RMB1.762 billion ($280.0 million), respectively.
Adjusted EBITDA (non-GAAP) was RMB 8.614 billion ($1.369 billion) in 2011, representing a 91.4% increase from 2010.

Outlook for First Quarter 2012
Baidu currently expects to generate total revenues in an amount ranging from RMB4.195 billion ($666.5 million) to RMB4.330 billion ($688.0 million) for the first quarter of 2012, representing a 72.2% to 77.7% year-over-year increase. This forecast reflects Baidu’s current and preliminary view, which is subject to change.

About Baidu
Baidu, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu’s ADSs, ten of which represent one Class A ordinary share, currently trade on the NASDAQ Global Select Market under the symbol “BIDU”.

Full results

SOURCE Baidu, Inc. (16/02/2012)

ON THE WEB:

. Baidu’s Profit Rises 77% (WSJ, 16/02/2012)

Baidu Drops Most in Two Months on Profit Growth Outlook (businessweek.com, 17/02/2012)

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