Baidu’s Q2 exceeds expectations

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Members of staff work at the Baidu booth during Global Mobile Internet Conference (GMIC) at the National Convention in Beijing, China April 27, 2018. REUTERS/Damir Sagolj

BEIJING (Reuters) – Chinese internet search giant Baidu (BIDU.O) beat expectations for quarterly profit and revenue on the back of strong growth in its core online advertisement business, easing the pressure of funding a major expansion into new technology areas.

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Consecutive quarters of strong profits also show Baidu has learnt to navigate regulatory potholes in China after previous missteps even as competitors suffer temporary bans and fines for failing to censor content.

Baidu said online advertising revenue rose by 25 percent to 21.1 billion yuan ($3.10 billion) in the second quarter ended June 30, partly driven by growth attributed to its growing newsfeed product, an app similar to Facebook Inc’s (FB.O) feed. Total revenue rose by nearly a quarter to 26.0 billion yuan, topping estimates of a 22.4 percent rise.

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Net income rose 45 percent to 6.4 billion yuan, or 18.14 yuan per American depositary share, compared to an estimated 13.4 percent rise by 18 analysts.

Several competing video platforms and feeds have been impacted by censorship restrictions in recent months, including Bilibili Inc (BILI.O), which saw its stock drop almost 4 percent since last week after announcing its app would be temporarily removed from app stores by authorities.

“We are able to maintain a high standard and a close dialogue with regulators,” Robin Li, Baidu’s chief executive, said on a call with analysts yesterday, referring to the company’s news feed. “We’ve seen changes or fluctuations from time to time and we are able to cope with that going forward.”

Baidu has more than doubled its profits in several recent quarters. That followed a rough period in 2016 when a Chinese government crackdown on suspect medical ads gutted Baidu’s search ad business.

The firm has since sold off its food delivery business and folded its group buying site Nuomi and other units.

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