Baidu (NASDAQ:BIDU) reported its earnings results for the first quarter of 2020 on Monday after the market closed. The company’s results were better than expected. Baidu provided an optimistic outlook for the current quarter.
The shares rose more than 8.0% in extended trading on Monday due to its better-than-expected results and optimistic forecast. The stock gained 7.74% in regular trading and closed at $107.59.
Here are the three takeaways from Baidu’s first-quarter report.
Baidu’s earnings results versus consensus estimates
The company delivered revenue of $3.2 billion—down 7.0% YoY (year-over-year) but better than the consensus estimate of $3.1 billion. Baidu posted an adjusted EPS of $1.25—up from $0.41 a year ago and above the consensus estimate of $0.56.
Baidu’s earnings report showed that the coronavirus outbreak weighed its advertising business in the first quarter. The advertising business is Baidu’s main revenue source. The advertising revenue fell 19% to $2.0 billion and contributed about 63% of the total revenue.
Pressure on the advertising division provided an opportunity for Baidu’s nascent non-advertising operations, like cloud computing and device sales, to shine. The company’s earnings report showed that the revenue from non-advertising businesses rose 28% YoY to $1.17 billion and contributed 36% of the total revenue. The amount is a notable improvement from the previous quarter when non-advertising sales contributed 28% of the total revenue.
Forecast for the current quarter
China has mainly contained the coronavirus outbreak, which means that businesses can reopen following the lockdown. In a statement accompanying Baidu’s earnings report, CEO Robin Li said that the company could benefit from China’s economy reopening. In light of that, Baidu has forecast second-quarter revenue of $3.5 billion–$3.9 billion, which is above the consensus estimate at $3.6 billion.
Baidu returned $185 million to shareholders
Baidu continued to send money back to its shareholders—even in the first quarter when the pandemic hit. The company’s earnings report showed that it returned $185 million to shareholders in the first quarter through stock repurchases. Recently, the board decided to approve a new $1.0 billion repurchase program. The company’s existing repurchase program now has $1.6 billion in it.
The company finished the first quarter with $20.7 billion in cash reserve.
At $107.59 per share at Monday’s closing, Baidu stock has pulled up more than 30% from its pandemic lows. However, the stock is still down 15% for the year. In comparison, JD.com (NASDAQ:JD) and Alibaba (NYSE:BABA) stocks have risen 1.50% and 58% for the year, respectively.