Up to $3.9 billion of revenue expected
Baidu (BIDU) is gearing up to report its results for the fourth quarter of 2018 on February 12. In October last year, Baidu issued fourth-quarter revenue guidance in the range of $3.7 billion to $3.9 billion. On Wall Street, the consensus estimate calls for Baidu to report fourth-quarter revenue of $3.9 billion, indicating revenue growth of 20% YoY.
Baidu generated revenue of $3.6 billion in the fourth quarter of 2017, missing the consensus estimate by $20 million. The company generated revenue of $2.6 billion in the fourth quarter of 2016, missing consensus estimates by $50 million.
Baidu surpassed the consensus revenue estimate in the third quarter
While Baidu missed fourth-quarter revenue expectations in the last two years, the company consistently beat revenue expectations in the last three quarters. In the third quarter of 2018, the most recent reported period, Baidu’s revenue rose 27% YoY to $4.1 billion, surpassing consensus estimates by $40 million. Alphabet (GOOGL) and Yandex (YNDX) grew their third-quarter revenues by 21% and 39% YoY, respectively. Revenue rose 54% YoY at Alibaba (BABA) and 24% YoY at Tencent (TCEHY) in the third quarter.
Advertising is Baidu’s bread and butter
Baidu currently generates the vast majority of its revenue from advertising, with advertising sales accounting for 80% of total revenue in the third quarter. China’s digital advertising market is estimated to have expanded around 27% last year, according to data from eMarketer. Baidu is China’s top Internet search engine company, placing it in a great position to capitalize on the growth of the country’s digital advertising market.