On May 19, baidu released its financial report for the first quarter of 2020 (as of March 31, 2020). According to the financial report, Baidus revenue in the first quarter was 22.5 billion yuan, down 7% year-on-year, and its net profit (non GAAP) was 3.1 billion yuan, up 219% year-on-year. Baidus shares rose 8.19% after the financial report was released. Securities companies such as Morgan Stanley and Goldman Sachs gave Baidu optimistic ratings of buy, increase and outperform the market.
Baidus performance in this quarter did exceed expectations. Most of Baidus small and medium-sized enterprise customers suffered heavy losses under the epidemic, but the company still has relatively optimistic revenue. At the same time, Baidus cloud computing, intelligent hardware and other income accounted for an increase, reflecting the diversity and resilience of its business.
Moreover, during the epidemic period, users demand for professional knowledge rose sharply. The information consultation provided by Baidu increased the number of daily active users of its app by 28% to 222 million, and the search volume in the app increased by 45% year-on-year. The traffic ecology of Baidu mobile terminal has achieved results.
Baidu stock price trend chart
Over the past year, unrest and anxiety have remained Baidus main theme. In the past, you could make money by lying on your back, but with the shrinking of advertising business, the prospect of commercialization of newly invested AI, driverless and other businesses is bleak. Baidu, once one of the three Internet giants bat, has fallen behind again and again, and the gap with Alibaba and Tencent has been more than ten times.
Baidus falling behind has even been made up into a joke by netizens. Baidu has become a market value measurement unit and a major obstacle in the industry - Alibaba and Tencent are equivalent to more than a dozen Baidu, meituan, Jingdong and pinduoduo can top more than two Baidu. Netease has recently surpassed Baidu, even Xiaomis market value has caught up with it, and Baidus market value ranking has fallen to the eighth place.
Today, Baidus core search advertising business reaches the ceiling and continues to shrink, AI plate is slow to achieve results, live and short video layout has not yet taken shape, and the chips in hand are limited. From the perspective of giant ranking, baidu is not only unable to make up the gap with at, but also challenged or even surpassed by the emerging giants. In the future, unless there is subversive innovation, Baidu will not be easy to fight a turnaround.
Baidu rebounded to the bottom after its first quarter earnings exceeded expectations
But in fact, Baidu has shown a strong ability to resist risks. In addition, compared with the latest data, the 2019 Q1 financial report is Baidus first loss since listing, which has been a relative historical low. Therefore, Baidus financial report in this quarter exceeded expectations.
According to the financial report, the revenue from Baidu core (Baidu dassou) was 15.3 billion yuan, down 13% year-on-year, while iqiyis revenue reached 7.6 billion yuan, up 9% year-on-year. Iqiyi members revenue grew 35% year-on-year, but was offset by a 27% year-on-year drop in online advertising revenue.
Despite the decline in revenue in the first quarter, Baidus total revenue fell only 7% year-on-year, due to our diversified revenue sources, including marketing services for Guangdong industry, Xinai company and iqiyi. With the epidemic under control in China and offline activity rebounding, Baidu will benefit from the restart of the Chinese economy. Baidu CEO Robin Li said.
However, Zhang Xu, a former employee of Baidu, infers that Baidus advertisers should be affected by the epidemic, but Baidus delivery is pre paid in advance, with a certain lag. Part of the revenue in this quarter may be the revenue recognized by the end of 2019. During the epidemic, the delivery of newly developed enterprises should be affected, so the impact of the epidemic on Baidu may be reflected in the second quarter In the financial report.
At the same time, the financial report shows that Baidus sales and general management expenses in the first quarter were 3.9 billion yuan, down 36% year-on-year, mainly due to the reduction of investment in channel expenditure and promotion marketing, as well as the decrease of personnel related expenditure, that is to say, Baidus net profit was largely saved when its revenue dropped.
In addition, the number of daily active users of Baidu app reached 222 million, a year-on-year increase of 28%, the search volume of APP end increased by 45% and the length of information flow users increased by 51% year-on-year, and Baidu app, baijiahao, smart applet and hosting page businesses continued to consolidate.
According to quest mobile, the number of users of Baidu products in 2019 exceeded 1 billion, which is in line with the 1 billion users of Alibaba and Tencent. This shows that in the field of professional knowledge, baidu is still the main channel for users to obtain information. However, in a short time, these growth has not turned into gold and silver.
Weak core advertising revenue and limited new business revenue
Since then, in the second and third quarters, Baidus revenue growth first dropped to single digits, and then there was negative growth, falling into the growth bottleneck. In terms of profit, the second quarter just recovered, the third quarter fell into a larger loss, the fourth quarter was not easy to get better, and the beginning of 2020 saw another epidemic.
Baidu, which has experienced a great shock in personnel and business, turns around to find that the industry pattern has quietly changed, with the market value of meituan, Jingdong, pinduoduo, Netease and Xiaomi surpassing Baidu. For a while, Baidu has become a market value unit. In the industry, one degree is used as a market value measurement standard. Some people specially draw pictures to list the Internet companies that are about equivalent to several Baidu companies.
Data deadline: May 19, 2020, cartography / fuel Finance
Todays Baidu, the market value only ranked eighth, was surpassed by the new giants.
In addition, the traffic from byte jumping, Tencent, Ali and other companies is divided, which threatens the main position of Baidus revenue.
According to his introduction, Baidus search end users have about 10 hits in 100 clicks. Baidus information stream has been clicked about 1 times for 100 times. If the launch area is Beijing, the search side will charge about 3-4 yuan, and the information flow will be about 2 yuan. Today, the information flow of the headlines is about 100 points hit by 10 transformations, and a click of about 1 yuan.
Baidus search volume is small, but it is more accurate. Todays headline accuracy rate is a little lower, but because of the large number of hits, although the efficiency is low, but the amount of more conversion will be more. Li Nan said.
Affected by the epidemic, Li Nans advertising orders fell by nearly 80% in February. Originally, there were about 50 enterprises in a month on average, and in February, there were less than 10.
Ge Jia, an Internet analyst, also mentioned that Baidus pricing system belongs to bidding. Several enterprises compete for a key word. Whoever offers a high price will rank first, which sometimes causes advertisers to be overwhelmed and forced to leave.
In addition to the shrinking core business, Baidus other income has increased, but it has not become a strong growth point. For example, Baidus other revenue in the first quarter was 8.3 billion yuan, accounting for 36.8% of its revenue. According to the financial report, it mainly came from iqiyi members, cloud services and small speakers. These businesses account for an increase in Baidus revenue, but the absolute amount is not large, and iqiyi is still in the red. All it can bring to Baidu is revenue growth rather than net profit.
Overall, affected by the epidemic, Baidus revenue continued to decline, especially the revenue from its core business. However, although the proportion of other incomes such as intelligent hardware and cloud computing has increased, it is difficult to stir up the beam. AI, automatic driving and other businesses have not yet contributed to the revenue in the financial data and are still in the investment stage.
Baidus turnaround hasnt come yet
Over the years, Baidu has been going downhill. Baidus anxiety is not only reflected in its information flow business, the introduction of good-looking videos by adding short video codes, but also in the fact that Baidu has entered the bureau with a high profile when it sees the live broadcasting of giants.
In live broadcast, Robin Li mentioned that Baidu has natural search advantages, but users are lack of interaction when looking for answers. However, it is hoped that in the future, users can directly go to a live room to share professional knowledge after searching, and can ask questions immediately if there is any question. Of course, he does not exclude the anchor from carrying goods on Baidu platform.
On the surface, the live broadcast is a traffic business. Baidu series products have a billion users in total, and there is a accumulation of search technology. The users behind it have a good label system. Users search with problems. Baidu associates live content with search, which may increase the stickiness of users and the precipitation value of live content, such as knowledge payment and medical content. Tiktok is different from the current Taobao live, Kwai, and live broadcast, and it seems to be very consistent with Baidus tonality.
But in fact, its not so easy to achieve.
Zhang Xu believes that Baidus original search tag is too strong, which is instead a kind of self-restraint. Todays headline is to deal with entertainment information, and Baidu has been doing professional information search. As a platform for entertainment information, its user volume, growth and stay time will be larger. Live broadcast is a kind of entertainment thing. Baidu insists on the live broadcast of professional knowledge. The goal of search is to get the answer and go. Live broadcast hopes that users can search something, have a look and stay for a while, which is very awkward.
This is in fact consistent with Robin Lis values. Zhang Xu mentioned that entertaining things are low in Robin Lis eyes, and he disdains to do things like Bos eyeballs. When he made headlines in the early days today, he said internally how to make news like this.
Zhang Xu explained: Baidu used to have a comfortable life relying on search tags, because search is cash flow, and the business model is the simplest. On the users demand path, you can find something and I will show you the advertisement, but the upper limit is there, not because the advertisement is pushed more and more accurately, the users demand for the advertisement is more and more.
For example, on the basis of users needs, Taobao may have no upper limit on its revenue as the more ads are pushed, the higher the transaction completion rate is. If Baidus commercial rate is over 15%, and the correlation is not so good, users will make complaints about Tucaos advertising and whats going on. If he only deals with professional information, he must accept that he is a small and beautiful business, and it is difficult to make it bigger.
In the era of PC, baidu is later than the three major portal sites, pushing Google to the top. But with the rise of mobile Internet, traffic growth to the top, Baidu, which shares food with internet giants on the same plate, has been squeezed out of the first camp of Internet giants.
Technical Baidu, AI may be the chips in its hands. Baidu needs something subversive. If it finds a business model in the field of AI and occupies the entrance, it may be great again. Zhang Xu said. Now, baidu is in short of an Android compared with Google.
To this day, Robin Li is still running for the revival of Baidu. He didnt give up on new things and even started his own live broadcast. In the first live show, he mentioned that the college entrance examination was the best one in the first place in Yangquan.
Debut is peak hope is not the end of Baidu. Baidu has a lot to do to regain the glory of bat era.
*At the request of interviewees, Zhang Xu and Li Nan are pseudonyms.
Source of this article: combustion finance editor: Wang Xiaowu_ NF