This summary is based on the third quarter fiscal 2007 earnings call conducted by Baidu.com Inc. (BIDU) on October 25, 2007.
Chief Executive Officer: Robin Li
Chief Financial Officer: Shawn Wang
Investor Relations: Lynn Lin
Key Investors Issues
- Basic and diluted EPS were roughly to 74 cents and 72 cents respectively.
- Quarterly revenue grew 107% over last year to 497 million yuan.
- Baidu ended Q3 with cash, cash equivalents and short-term investments of 1.4 billion yuan.
Third Quarter Fiscal 2007 Financial Highlights
The third quarter total revenues were approximately RMB497 million, a 107% increase from the year-ago period.
The marketing revenues were RMB496 million, representing 24% growth sequentially, and 109% growth year over year. The growth was driven by a number of factors, including increased traffic, a sequential increase in the number of IT customers of 12%, as well as a sequential increase in per-customer spending of 11%.
Traffic acquisition costs, as a component of cost of revenue, was RMB59 million.
This was 12% of total revenues, compared to 9% in the corresponding period of 2006. The increase in tax as a percentage of total revenues primarily reflects the continued growth of revenue contribution from Baidu members.
Bandwidth costs, as a component of cost of revenue, was RMB32 million, representing 6% of total revenues compared to 4% in the third quarter of 2006. Depreciation costs, as a cost of revenue, was RMB41 million, representing 8% of total revenues, compared to 6% in the corresponding period of 2006. The increase in bandwidth and depreciation costs, as a percentage of total revenues, reflect expansion of network capacity to support Baidu’s long-term growth.
The share-based compensation expenses, which were allocated to related operating costs and expense items, decreased in aggregate to RMB5 million in the third quarter of 2007, from RMB16 million in the corresponding period of 2006.
Selling, general and administrative expenses were RMB110 million, up RMB57 million from the year-ago period, primarily due to the expansion of the direct sales force.
R&D expenses were RMB37 million, representing a 53% increase from the year-ago period. The increase was primarily due to the expansion of R&D headcount.
- During its third fiscal quarter, Baidu Japan incurred operating costs and expenses of RMB20 million in aggregate.
- The income tax expenses for the quarter were approximately RMB3 million.
The net income was RMB182 million, representing 113% increase year over year.
Net income excluding share-based compensation expenses, a non-GAAP measure, was RMB 187million, representing an 84% increase from the corresponding period of 2006. Basic and diluted EPS, excluding share-based compensation expenses, were RMB5.51 and RMB5.38, translating roughly to 74 cents and 72 cents respectively.
The firm ended the third quarter with cash, cash equivalents and short-term investments of RMB1.4 billion.
Operating cash flow was RMB255 million; CapEx for the third quarter was RMB150 million, primarily focused on capacity expansion and the Baidu Campus building. Adjusted EBITDA, again a non-GAAP measure, was RMB223 million, representing a 99% increase year over year.
During the quarter, Baidu launched several new products.
Some of them include the Olympic Channel, the Game Channel and Baidu TV, a new form of advertising that the firm is offering to its members. This joined the firm’s already established list of products such as Baidu Knows and Baidu Says, which continue to grow in popularity.
