China's Baidu tops profit estimates on advertising growth, shares jump

Chinese internet search giant Baidu Inc’s quarterly profit topped analysts’ forecasts, led by growth in its online advertising business.

U.S.-listed shares of Baidu rose 5.8 percent to $252.55 in after-hours trading.

Baidu’s revenue rose about 24 percent to 20.91 billion yuan ($3.30 billion) in the first quarter ended March 31. The growth rate was the slowest in three quarters but topped analysts’ average prediction of a 19.8 percent increase, according to Thomson Reuters I/B/E/S.

Baidu has been trying to reignite sales growth since the advent of strict search ad regulations in 2016.

The rules prompted a major strategy shift and the company has since sold or withdrawn from a number of businesses to focus on autonomous driving, artificial intelligence and its news feed product.

The company expects second-quarter revenue of between 24.91 billion yuan ($3.93 billion) and 26.19 billion yuan ($4.13 billion).

The high costs of content for its newly listed online video unit iQiyi as well as money spent to acquire AI engineers is expected to weigh on Baidu’s profit margins for some time.

Net income attributable to Baidu rose to 6.69 billion yuan ($1.06 billion) or 18.68 yuan per American depositary share (ADS) in the first quarter, from 1.78 billion yuan ($281 million) or 4.63 yuan per ADS from a year earlier.

Baidu’s net income was also boosted by a new accounting standard that requires companies to report the value of their investments in private companies.

Excluding one-time items, Baidu reported earnings of 16.30 yuan per ADS, above expectations of 10.57 yuan.