Baidu's growing research, marketing costs keep Q4 profit flat

The investments are bringing more revenue from Baidu's mobile advertising business

China's leading search engine, Baidu, reported flat profit growth for the fourth quarter as the company continued its spending spree on research and product promotion.

For the period ended on Dec. 31, Baidu's net profit was 2.8 billion yuan (US$454 million), representing a 0.4 percent year-over-year decrease. Revenues, however, met the high end of the company's projections for the quarter, reaching 9.5 billion yuan, rising by 50 percent year over year.

Baidu historically reports strong earnings, but starting last year profit growth for the search giant began to drop on rising costs in marketing and research. As more Chinese users rely on smartphones to go online, the company is investing in its mobile Internet products, and focusing on app distribution and map-related location-based services.

The costs have been rising at a breakneck pace. Baidu's research expenses in the period were up 80.1 percent year over year. In addition, selling and administrative costs relating to promotional spending increased by 135 percent from the same period a year ago.

"We are pleased with how quickly this investment has gained traction," said Baidu CEO Robin Li in an earnings call on Thursday. "We showed progress in growing our mobile ecosystem and monetizing the mobile channel."

In the fourth quarter, more than 20 percent of its revenue came from its mobile advertising business, he said. Two quarters ago, the figure was at 10 percent, he added.

More users are also relying on Baidu's mobile search app. In the fourth quarter, it had 400 million active users, up from 330 million in the previous quarter.

Outside of mobile, Baidu is focusing on consumer products in the gaming and social spaces and wants to build up its international operations. The company is already testing search engines for Brazil, Egypt and Thailand.

The company expects profit growth to remain flat over the next financial quarters. For the first quarter, Baidu projects company revenue will reach between 9.2 billion yuan and 9.5 billion yuan, marking a 55 percent to 60 percent year-over-year increase.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags internetbusiness issuessearch enginesfinancial resultsbaidu

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Michael Kan

IDG News Service
Show Comments

Cool Tech

Toys for Boys

Family Friendly

Stocking Stuffer

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?