Baidu Q1 earnings miss estimates, but mobile revenues on the rise

Chinese search giant Baidu released its latest earnings report today, and the numbers are less than stellar.

Operating profit, excluding share-based compensation expenses, came in at RMB 2.4 billion (US$394.6 million), marking a 3.8 percent decrease year-on-year, and net income hit RMB2.449 million (US$395.1 million), marking a 3.4 percent decrease year-on-year. Revenues hit RMB12.73 billion ($2.05 billion), a 34 percent increase year-on-year, but that growth is stagnating. In the quarter ending in September 2014, growth was at 52 percent annually, and the following quarter it dipped to 47.5 percent.

Mobile revenues, however, continued to rise. Of the company’s total revenues, 50 percent came from mobile properties, up from 42 percent the previous quarter.

Baidu didn’t give a reason for the lull in its earnings release. But the company arguably lags behind Alibaba in terms of owning a killer mobile property. Tencent is using its ubiquitous WeChat messenger to move into ecommerce, and delivery services. The Alibaba-affiliated Alipay Wallet has become China’s default mobile payments app thanks to its legacy on desktop. Baidu’s best mobile assets include its Android app store (which doubles as a portal), its maps app, and its traditional search engine.

On the investment front, unlike its competitors, Baidu seems to be more focused on the future of computing than seizing the present. The company has poured resources into deep machine learning and artificial intelligence, and is building a semi-autonomous car. It has also invested in several companies involved in automobies, including Uber, Tiantian Yongche, 51Yongche, and Uxin.