Baidu Announces Third Quarter 2012 Results

                  Baidu Announces Third Quarter 2012 Results

PR Newswire

BEIJING, Oct. 29, 2012

BEIJING, Oct. 29, 2012 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU), the leading
Chinese language Internet search provider, today announced its unaudited
financial results for the third quarter ended September 30, 2012(1).

(Logo: http://photos.prnewswire.com/prnh/20081103/BAIDULOGO)

Third Quarter 2012 Highlights

  o Total revenues in the third quarter of 2012 were RMB6.251 billion ($994.6
    million), a 49.7% increase from the corresponding period in 2011.
  o Operating profit in the third quarter of 2012 was RMB3.297 billion ($524.6
    million), a 48.1% increase from the corresponding period in 2011.
  o Net income attributable to Baidu in the third quarter of 2012 was RMB3.008
    billion ($478.6 million), a 59.8% increase from the corresponding period
    in 2011. Diluted earnings attributable to Baidu per ADS for the third
    quarter of 2012 were RMB8.59 ($1.37); diluted earnings attributable to
    Baidu per ADS excluding share-based compensation expenses (non-GAAP) for
    the third quarter of 2012 were RMB8.76 ($1.39).

(1) This announcement contains translations of certain RMB amounts into U.S.
dollars at specified rates solely for the convenience of the reader. Unless
otherwise noted, all translations from RMB to U.S. dollars are made at a rate
of RMB6.2848 to US$1.00, the effective noon buying rate as of September 28,
2012 in The City of New York for cable transfers of RMB as certified for
customs purposes by the Federal Reserve Bank of New York.

"We are pleased to report a solid performance for the third quarter driven by
encouraging customer growth and improvements to our monetization platform,"
said Robin Li, chairman and chief executive officer of Baidu.

"During the quarter, we worked to improve user experience by more closely
integrating Baidu's suite of market-leading vertical products with Web
search," continued Mr. Li. "Mobile and cloud represent our vision for the
future of China's Internet, and Baidu will continue to proactively drive the
development of this crucial ecosystem. We stand ready to meet the challenges
and capture the opportunities the PC-to-mobile transition presents."

Jennifer Li, Baidu's chief financial officer, commented, "In the third
quarter, we saw solid profitability as we continued our strategy of investing
in key areas of future growth, particularly mobile and cloud. In the quarters
ahead, we will look to accelerate the pace of investment to achieve long-term,
sustainable growth."

Third Quarter 2012 Results

Baidu reported total revenues of RMB6.251 billion ($994.6 million) for the
third quarter of 2012, representing a 49.7% increase from the corresponding
period in 2011.

Online marketing revenues for the third quarter of 2012 were RMB6.246 billion
($993.8 million), representing a 49.6% increase from the corresponding period
in 2011. Baidu had approximately 390,000 active online marketing customers in
the third quarter of 2012, representing a 28.3% increase from the
corresponding period in 2011 and a 10.8% increase from the second quarter of
2012. Revenue per online marketing customer for the third quarter was
approximately RMB16,000 ($2,546), a 16.8% increase from the corresponding
period in 2011 and a 3.2% increase compared to the second quarter of 2012.

Traffic acquisition cost (TAC) as a component of cost of revenues was RMB538.2
million ($85.6 million), representing 8.6% of total revenues, as compared to
8.0% in the corresponding period in 2011 and 8.3% in the second quarter of
2012.

Bandwidth costs as a component of cost of revenues were RMB266.9 million
($42.5 million), representing 4.3% of total revenues, compared to 4.0% in the
corresponding period in 2011. Depreciation costs as a component of cost of
revenues were RMB279.9 million ($44.5 million), representing 4.5% of total
revenues, compared to 4.2% in the corresponding period in 2011. These
increases were mainly due to an increase in network infrastructure capacity.

Selling, general and administrative expenses were RMB642.8 million ($102.3
million), representing an increase of 39.7% from the corresponding period in
2011, primarily due to an increase in marketing- and personnel-related
expenses.

Research and development expenses were RMB614.5 million ($97.8 million), a
60.6% increase from the corresponding period in 2011. The increase was
primarily due to an increase in the number of research and development
personnel.

Share-based compensation expenses, which were allocated to related operating
costs and expense line items, were RMB56.7 million ($9.0 million) in the third
quarter of 2012, compared to RMB39.4 million in the corresponding period in
2011 and RMB53.9 million in the second quarter of 2012.

Operating profit was RMB3.297 billion ($524.6 million), representing a 48.1%
increase from the corresponding period in 2011. Operating profit excluding
share-based compensation expenses (non-GAAP) was RMB3.354 billion ($533.6
million), a 48.0% increase from the corresponding period in 2011.

Income tax expense was RMB467.7 million ($74.4 million), compared to an income
tax expense of RMB317.6 million in the corresponding period in 2011. The
effective tax rate for the third quarter of 2012 was 13.5% as compared to
14.5% for the corresponding period in 2011 and 7.9% in the second quarter of
2012.

Net income attributable to Baidu was RMB3.008 billion ($478.6 million),
representing a 59.8% increase from the corresponding period in 2011. Basic and
diluted earnings per ADS for the third quarter of 2012 amounted to RMB8.60
($1.37) and RMB8.59 ($1.37), respectively.

Net income attributable to Baidu excluding share-based compensation expenses
(non-GAAP) was RMB3.064 billion ($487.6 million), a 59.5% increase from the
corresponding period in 2011. Basic and diluted earnings per ADS excluding
share-based compensation expenses (non-GAAP) for the third quarter of 2012
amounted to RMB8.76 ($1.39) and RMB8.76 ($1.39), respectively.

As of September 30, 2012, the Company had cash, cash equivalents and
short-term investments of RMB21.287 billion ($3.387 billion). Net operating
cash inflow for the third quarter of 2012 was RMB3.779 billion ($601.3
million). Capital expenditures for the third quarter of 2012 were RMB504.3
million ($80.2 million).

Adjusted EBITDA (non-GAAP), defined as earnings before interest, taxes,
depreciation, amortization, other non-operating income and share-based
compensation expenses, was RMB3.724 billion ($592.5 million) for the third
quarter of 2012, representing a 48.4% increase from the corresponding period
in 2011.

Outlook for Fourth Quarter 2012

Baidu currently expects to generate total revenues in an amount ranging from
RMB6.155 billion ($979.3 million) to RMB6.345 billion ($1.010 billion) for the
fourth quarter of 2012, representing a 37.6% to 41.8% year-over-year increase.
This forecast reflects Baidu's current and preliminary view, which is subject
to change.

Conference Call Information

Baidu's management will hold an earnings conference call at 8:00 PM today,
October 29, 2012, U.S. Eastern Time (8:00 AM on October 30, 2012, Beijing/Hong
Kong Time).

Dial-in details for the earnings conference call are as follows:

     International:             +65-6723-9381
     US:                        +1-718-354-1231
     UK:                        +44-20-3059-8139
     Hong Kong:                 +852-2475-0994
    Passcode for all regions:   39526117

A replay of the conference call may be accessed by phone at the following
number until November 5, 2012:

     International: +61-2-8235-5000
     Passcode:      39526117

Additionally, a live and archived webcast of this conference call will be
available at http://ir.baidu.com.

About Baidu

Baidu, Inc. is the leading Chinese language Internet search provider. As a
technology-based media company, Baidu aims to provide the best way for people
to find information. In addition to serving individual Internet search users,
Baidu provides an effective platform for businesses to reach potential
customers. Baidu's ADSs trade on the NASDAQ Global Select Market under the
symbol "BIDU". Currently, ten ADSs represent one Class A ordinary share.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are
made under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates," "confident" and similar
statements. Among other things, the outlook for the fourth quarter 2012 and
quotations from management in this announcement, as well as Baidu's strategic
and operational plans, contain forward-looking statements. Baidu may also make
written or oral forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission, in its annual report to shareholders, in
press releases and other written materials and in oral statements made by its
officers, directors or employees to third parties.  Statements that are not
historical facts, including statements about Baidu's beliefs and expectations,
are forward-looking statements. Forward-looking statements involve inherent
risks and uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward-looking statement,
including but not limited to the following: our growth strategies; our future
business development, including development of new products and services; our
ability to attract and retain users and customers; competition in the Chinese
and Japanese language Internet search markets; competition for online
marketing customers; changes in our revenues and certain cost or expense items
as a percentage of our revenues; the outcome of ongoing, or any future,
litigation or arbitration, including those relating to intellectual property
rights; the expected growth of the Chinese language Internet search market and
the number of Internet and broadband users in China; Chinese governmental
policies relating to the Internet and Internet search providers and general
economic conditions in China, Japan and elsewhere. Further information
regarding these and other risks is included in our annual report on Form 20-F
and other documents filed with the Securities and Exchange Commission. All
information provided in this press release and in the attachments is as of the
date of the press relesae, and Baidu undertakes no duty to update such
information, except as required under applicable law.

About Non-GAAP Financial Measures

To supplement Baidu's consolidated financial results presented in accordance
with GAAP, Baidu uses the following measures defined as non-GAAP financial
measures by the SEC: adjusted EBITDA, operating profit excluding share-based
compensation expenses, net income excluding share-based compensation expenses,
and basic and diluted earnings per ADS excluding share-based compensation
expenses. The presentation of these non-GAAP financial measures is not
intended to be considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP. For more
information on these non-GAAP financial measures, please see the tables
captioned "Reconciliations of non-GAAP results of operations measures to the
nearest comparable GAAP measures" and "Reconciliation from net cash provided
by operating activities to adjusted EBITDA" set forth at the end of this
release.

Baidu believes that these non-GAAP financial measures provide meaningful
supplemental information regarding its performance and liquidity by excluding
certain expenses, particularly share-based compensation expenses, that may not
be indicative of its operating performance or financial condition from a cash
perspective. We believe that both management and investors benefit from
referring to these non-GAAP financial measures in assessing our performance
and when planning and forecasting future periods. These non-GAAP financial
measures also facilitate management's internal comparisons to Baidu's
historical performance and liquidity. Baidu has computed its non-GAAP
financial measures using the same consistent method from quarter to quarter
since April 1, 2006. We believe these non-GAAP financial measures are useful
to investors in allowing for greater transparency with respect to supplemental
information used by management in its financial and operational decision
making. A limitation of using these non-GAAP financial measures is that these
non-GAAP measures exclude share-based compensation charge that has been and
will continue to be for the foreseeable future a significant recurring expense
in our results of operations.  A limitation of using non-GAAP adjusted EBITDA
is that it does not include all items that impact our net income for the
period. Management compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from each non-GAAP measure.
The accompanying tables have more details on the reconciliations between GAAP
financial measures that are most directly comparable to the non-GAAP financial
measures.

For investor and media inquiries, please contact:

China

Victor Tseng
Baidu, Inc.
Tel: +86-10-5992-7244
Email: ir@baidu.com

Nick Beswick
Brunswick Group
Tel: +86-10-5960-8600
Email: baidu@brunswickgroup.com

U.S.

Patricia Graue
Brunswick Group
Tel: +1-415-671-7676
Email: baidu@brunswickgroup.com

Baidu, Inc. 
Condensed Consolidated Statements of Income
                                       For the Three Months Ended
                                       September 30, September 30, June 30,
(In RMB thousands except for
share, per share (or ADS)              2012          2011          2012
information)
                                       Unaudited     Unaudited     Unaudited
 Revenues: 
 Online marketing services             6,246,009     4,173,869     5,451,555
 Other services                        4,711         1,596         4,677
 Total revenues                        6,250,720     4,175,465     5,456,232
 Operating costs and expenses: 
 Cost of revenues (note 1, 2)          (1,696,512)   (1,106,218)   (1,508,168)
 Selling, general and                  (642,788)     (460,212)     (587,626)
administrative (note 2) 
 Research and development (note        (614,541)     (382,706)     (545,549)
2) 
 Total operating costs and             (2,953,841)   (1,949,136)   (2,641,343)
expenses 
 Operating profit                      3,296,879     2,226,329     2,814,889
 Other income: 
 Interest income, net                  204,328       97,938        177,800
 Foreign exchange gain (loss),         (2,359)       (2,343)       864
net 
 Loss from equity method               (69,312)      (156,175)     (57,331)
investments 
 Other income (loss), net              29,656        27,457        47,581
 Total other income                    162,313       (33,123)      168,914
 Income before income taxes            3,459,192     2,193,206     2,983,803
 Income taxes                          (467,699)     (317,568)     (235,355)
 Net income                            2,991,493     1,875,638     2,748,448
 Less: Net loss attributable to        (16,208)      (5,993)       (21,422)
noncontrolling interests 
 Net income attributable to Baidu,     3,007,701     1,881,631     2,769,870
Inc. 
Earnings per share for Class A and
Class B ordinary shares:
Net income attributable to Baidu,      86.02         53.92         78.70
Inc.-Basic 
Net income attributable to Baidu,      85.94         53.81         78.59
Inc.-Diluted
Earnings per ADS (1 Class A
ordinary share equals 10 ADSs ):
Net income attributable to Baidu,      8.60          5.39          7.87
Inc.-Basic 
Net income attributable to Baidu,      8.59          5.38          7.86
Inc.-Diluted
Weighted average number of Class A and
Class B ordinary shares outstanding:
Basic                                  34,946,375    34,898,813    34,931,905
Diluted                                34,979,732    34,967,620    34,982,601
 (1) Cost of revenues are detailed
as follows: 
 Sales tax and surcharges              (427,146)     (302,855)     (392,544)
 Traffic acquisition costs             (538,192)     (334,120)     (453,687)
 Bandwidth costs                       (266,871)     (165,710)     (242,592)
 Depreciation costs                    (279,873)     (176,906)     (251,087)
 Operational costs                     (182,027)     (124,829)     (165,765)
 Share-based compensation              (2,403)       (1,798)       (2,493)
expenses 
 Total cost of revenues                (1,696,512)   (1,106,218)   (1,508,168)
 (2) Includes share-based
compensation expenses as follows: 
 Cost of revenues                      (2,403)       (1,798)       (2,493)
 Selling, general and                  (18,294)      (12,718)      (17,800)
administrative 
 Research and development              (36,023)      (24,845)      (33,571)
 Total share-based compensation        (56,720)      (39,361)      (53,864)
expenses 

 

Baidu, Inc. 
Condensed Consolidated Balance Sheets
                                                    September 30, December 31,
(In RMB thousands except for number of shares and  2012           2011
per share data)
                                                   Unaudited      Audited
ASSETS
    Current assets:
 Cash and cash equivalents                         2,574,160      4,127,482
 Restricted cash                                   422,068        483,387
 Short-term investments                            18,713,157     10,051,578
 Accounts receivable, net                          995,789        599,558
 Due from related parties                          232,503        149,728
 Deferred tax assets, net                          191,774        121,411
 Other assets, current                             238,375        315,012
    Total current assets                           23,367,826     15,848,156
    Non-current assets:
 Fixed assets, net                                 3,729,489      2,744,241
 Intangible assets, net                            899,437        928,511
 Goodwill                                          2,418,283      2,419,542
 Long-term investments, net                        1,093,557      734,360
 Due from related parties                          606,996        100,000
 Deferred tax assets, net                          52,144         52,125
 Other assets, non-current                         525,648        513,606
    Total non-current assets                       9,325,554      7,492,385
Total assets                                       32,693,380     23,340,541
LIABILITIES AND EQUITY
Less net loss attributable to noncontrolling
interests
Short-term loans                                   -              125,878
Accounts payable and accrued liabilities           3,144,258      2,545,445
Customer advances and deposits                     1,913,759      1,573,967
Deferred revenue                                   38,982         62,705
Deferred income                                    43,920         34,779
Due to related parties                             40,851         -
Long-term loans, current portion                   2,281,618      46,000
Capital lease obligation                           37,030         17,773
    Total current liabilities                      7,500,418      4,406,547
    Non-current liabilities:
Deferred income                                    223,516        19,942
Long-term loans                                    25,000         2,277,925
Due to related parties                             447,934        148,873
Deferred tax liabilities                           220,301        131,629
Capital lease obligation                           52,800         30,112
    Total non-current liabilities                  969,551        2,608,481
Total liabilities                                  8,469,969      7,015,028
Redeemable noncontrolling interests                945,066        935,978
Equity
Class A Ordinary Shares, par value US$0.00005 per
share, 825,000,000 shares authorized, and  
27,111,117 shares and 27,155,937 shares issued     12             12
and outstanding as at December 31, 2011 and
September 30, 2012
Class B Ordinary Shares, par value US$0.00005 per
share, 35,400,000 shares authorized, and 
7,803,000 shares and 7,803,000 shares issued and   3              3
outstanding as at December 31, 2011 and September
30, 2012
Additional paid-in capital                         2,014,057      1,771,770
Retained earnings                                  21,242,737     13,604,334
Accumulated other comprehensive loss               (74,880)       (84,403)
    Total Baidu, Inc. shareholders' equity         23,181,929     15,291,716
    Noncontrolling interests                       96,416         97,819
Total equity                                       23,278,345     15,389,535
Total liabilities and  equity                      32,693,380     23,340,541

 

Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (*)
(in RMB thousands, unaudited)
             Three months ended             Three months ended             Three months ended
             September 30, 2011             June 30, 2012                  September 30, 2012
             GAAP      Adjustment Non-GAAP  GAAP      Adjustment Non-GAAP  GAAP      Adjustment Non-GAAP
             Result               Results   Result               Results   Result               Results
Operating    2,226,329 39,361     2,265,690 2,814,889 53,864     2,868,753 3,296,879 56,720     3,353,599
profit
             Three months ended             Three months ended             Three months ended
             September 30, 2011             June 30, 2012                  September 30, 2012
             GAAP      Adjustment Non-GAAP  GAAP      Adjustment Non-GAAP  GAAP      Adjustment Non-GAAP
             Result               Results   Result               Results   Result               Results
Net income
attributable 1,881,631 39,361     1,920,992 2,769,870 53,864     2,823,734 3,007,701 56,720     3,064,421
to Baidu,
Inc.
(*) The adjustment is only for share-based compensation.

 

Reconciliation from net cash provided by operating activities to adjusted
EBITDA(*)
(in RMB thousands, unaudited)
                   Three               Three               Three
                   months    As a % of months    As a % of months    As a % of
                   ended               ended               ended
                   September total     June 30,  total     September total
                   30, 2011  revenues  2012      revenues  30, 2012  revenues
Net cash provided
by operating       1,761,126 42%       3,040,234 56%       3,779,180 61%
activities
   Changes in
assets and
liabilities, net   397,373   10%       100,205   2%        (360,530) -6%
of effects of
acquisitions
   Income taxes    317,568   7%        235,355   4%        467,699   8%
expenses
   Interest income 33,123    1%        (168,914) -3%       (162,313) -3%
and other, net
Adjusted EBITDA    2,509,190 60%       3,206,880 59%       3,724,036 60%
(*) Definition of adjusted EBITDA: earnings before interest, taxes,
depreciation, amortization,  other non-operating income, and share-based
compensation expenses.

SOURCE Baidu, Inc.

Website: http://ir.baidu.com