Baidu’s Q4 Earnings: Growth Story Continues

+12.83%
Upside
105
Market
119
Trefis
BIDU: Baidu logo
BIDU
Baidu

Baidu (NASDAQ: BIDU) continued its growth trajectory in Q4 2014. It reported increases in revenue, operating profit and net profit, which were up 48%, 8% and 16%, respectively on a year on year basis. For the entire fiscal year 2014, these metrics registered increases of 54%, 15% and 25% respectively. The top line growth was credited to the robust performance in mobile services. Certain expenses related to R&D and SG&A were also higher, reflecting further investments in developing its mobile ecosystem. [1]

We have a price estimate of $211 for Baidu, almost equal to the market price.

Relevant Articles
  1. Baidu Stock Looks Attractive Despite Recent Rally
  2. Why Baidu Stock Looks Undervalued At $123
  3. Is Baidu Stock Still A Buy Following Recent Rally?
  4. The Baidu Stock Rally Looks Set To Continue
  5. What’s Next For Baidu After Q3 Earnings Beat?
  6. What’s Happening With Baidu Stock?

See our complete analysis of Baidu here

Summary Of The Results

2014 was an eventful year for Baidu. In December, revenues from mobile overtook PC for the first time. This marks the emergence of Baidu as a mobile-first company, with its primary focus on services tailored to the mobile consumer. Mobile revenues were 42% of revenues for the fourth quarter and 37% for the full year. [1]

The shift to mobile led to an increase in the company’s online marketing revenues. Active online marketing customers increased 8% in 2014, while the revenue per customer increased 41%. [1] The larger contribution of the average revenue per customer suggests improvements in the monetization of services.  ((Baidu Q4 2014 Earnings Conference Call))

Expansion Raises Costs As Well

The revenue growth came at a price, with an increase in SG&A and R&D expenses, and higher Traffic Acquisition Costs (TAC). The 89% year on year increase in SG&A expenses in 2014 was on account of promotional spending for mobile products. The R&D expenses for 2014 increased 70% year on year on account of an increase in the number of research personnel. The company’s TAC was 13% higher in 2014 on a year on year basis due to contextual ad spend, mobile traffic acquisition spending and the promotion of Hao123. [2] Hao123 is an online listings portal, and is the 7th most popular website in China. [2]

What To Look Forward To 2015

For the first quarter of 2015, Baidu expects revenues to be 33-37% higher on a year on year basis. To reach this revenue increase, the company has vowed to invest heavily in mobile services such as mobile search, maps and app distribution. Despite the improvement in the monetization of mobile services, they still lag PC-based services in this regard. [2]

Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap
More Trefis Research

Notes:
  1. Baidu Q4 2014 Earnings Report [] [] []
  2. How Popular Is Hao123.com [] [] []