Chinese internet giant Baidu Inc. posted a 7 percent year-over-year drop in total sales in the first three months this year to 22.5 billion yuan ($3.18 billion) as a result of a plunge in online marketing revenue caused by a global health crisis, but laid down an upbeat outlook despite the hiccup.
The company's online marketing sales were down almost 20 percent to 14.1 billion yuan, its unaudited financial results released Monday showed, following the halt in market activities in the US.
However, Baidu's other sources of income improved 28 percent to 8.3 billion yuan, steered primarily by robust growth in Cloud services, smart gadgets and membership in video streaming. Amid the drop in sales that eluded analyst estimates, Baidu's stock climbed a decent 10 percent.
Baidu's market projection outperformance underscores how investment interests on content intended to keep competitors such as ByteDance Ltd. and Tencent Holdings at bay are starting to produce decent results.
The Chinese online behemoth has undertaken massive efforts to diversify its advertising income sources partly because Tencent and Bytedance had started to snag a huge slice of the customer pie to more engaging platforms like ByteDance's Douyin, the local version of TikTok.
Baidu's Netflix-style auxilliary iQiyi lifted subscriber figures 11 percent in the first quarter this year, Chief Financial Officer Herman Yu told market strategists during a conference call, as the company fast-tracks activity in hiring for the second quarter amid the ongoing crisis.
Baidu's adjusted profits of $1.25 per share came out well ahead of the 57 cents that analysts estimated. The online search conglomerate had anticipated sales of $3 billion to $3.3 billion for the quarter.
As this developed, Baidu bared that it will shell out a $70.3 million investment into the live-streaming market, as the company sets in motion new strategies that will enable it to better deal with the rise of rival, Douyin.
The development comes as these players jockey for a solid position for leadership in the midst of a see-saw allegations and as Baidu made public its better-than-projected sales late Monday for its March performance that was responsible for the increase in its US-listed stocks during after-hours session.
For its long-term ventures, Baidu will be allocating more cash in artificial intelligence technology, and hinge its optimism on the marketability of this innovation by way of smart speakers and state of the art autonomous vehicles.
Meanwhile, Baidu was granted new projects in March from the local governments in cities, including Hefei and Chongqing, to develop and put up smart transport infrastructure like sophisticated road monitoring systems, part of China's blueprint to lift the economy through technological investments.
