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Baidu Announces Fourth Quarter and Fiscal Year 2016 Results
"AI is an enormous opportunity that will revolutionize the Internet and traditional industries.
"During the fourth quarter we largely completed our initiative to ensure that new and existing customers meet our stringent quality requirements," said
Fourth Quarter and Fiscal Year 2016 Operational Highlights
- Mobile search monthly active users (MAUs) were 665 million for the month of
December 2016 , an increase of 2% year-over-year - Mobile maps MAUs were 341 million for the month of
December 2016 , an increase of 13% year-over-year - Gross merchandise value[2] (GMV) for Transaction Services totaled
RMB18.1 billion ($2.6 billion ) for the fourth quarter of 2016, an increase of 23% year-over-year - Baidu Wallet activated accounts reached 100 million at the end of
December 2016 , an increase of 88% year-over-year
Changes to Board Composition
Effective on
- Dr. Qi Lu,
Baidu's Group President and Chief Operating Officer, has been appointed as a director and the vice chairman of the board of directors of the Company. - Mr.
Greg Penner , who has served as a board member sinceJuly 2004 , will step down from the board and all the committees on the board. - Mr.
Yuanqing Yang has been appointed as a member of the audit committee and as a member of the corporate governance and nominating committee of the board of directors of the Company.
Fourth Quarter and Fiscal Year 2016 Financial Highlights
- Total revenues in the fourth quarter of 2016 were
RMB18.212 billion ($2.623 billion ), a 2.6% decrease from the corresponding period in 2015, and flat year-over-year, excluding Qunar[3] in the fourth quarter of 2015. Mobile revenue represented 65% of total revenues for the fourth quarter of 2016, compared to 56% for the corresponding period in 2015. - Total revenues in fiscal year 2016 were
RMB70.549 billion ($10.161 billion ), a 6.3% increase and 11.9% year-over-year increase excluding Qunar from 2015. Mobile revenue represented 63% of total revenues in 2016, compared to 53% in 2015. - Operating profit in the fourth quarter of 2016 was
RMB2.185 billion ($314.7 million ), a 38.2% decrease from the corresponding period in 2015. Transaction Services reduced non-GAAP operating margins by 22.9 percentage points and iQiyi further reduced non-GAAP operating margins by 9.8 percentage points for the fourth quarter of 2016. - Operating profit in fiscal year 2016 was
RMB10.049 billion ($1.447 billion ), a 13.9% decrease from 2015. Transaction Services reduced non-GAAP operating margins by 23.8 percentage points and iQiyi further reduced non-GAAP operating margins by 7.9 percentage points for the fiscal year 2016. - Net income attributable to
Baidu in the fourth quarter of 2016 wasRMB4.129 billion ($594.7 million ). Diluted earnings attributable toBaidu per ADS for the fourth quarter of 2016 wereRMB11.40 ($1.64) ; non-GAAP net income attributable toBaidu [4] in the fourth quarter of 2016 wereRMB4.606 billion ($663.4 million ); non-GAAP diluted earnings per ADS[5] in the fourth quarter of 2016 wereRMB13.23 ($1.91) ; diluted earnings attributable toBaidu per ADS excluding net gain recognized as a result ofBaidu's exchange ofUber China shares with Didi for the fourth quarter of 2016 wereRMB6.49 ($0.93) . - Net income attributable to
Baidu in fiscal year 2016 wasRMB11.632 billion ($1.675 billion ). Diluted earnings attributable toBaidu per ADS for the fiscal year 2016 wereRMB31.86 ($4.59) ; non-GAAP net income attributable toBaidu in fiscal year 2016 wereRMB13.219 billion ($1.904 billion ); non-GAAP diluted earnings per ADS in fiscal year 2016 wereRMB38.03 ($5.48) ; diluted earnings attributable toBaidu per ADS excluding net gain recognized as a result ofBaidu's exchange ofUber China shares with Didi in fiscal year 2016 wereRMB26.94 ($3.88) .
In the following section, comparison and analysis are provided based on reported consolidated financial results. For ease of comparison, a table with apples-to-apples adjusted financials and metrics excluding Qunar can be found at the end of the following section.
Fourth Quarter 2016 Results
Online marketing revenues for the fourth quarter of 2016 were
Traffic acquisition cost as a component of cost of revenues was
Bandwidth costs as a component of cost of revenues were
Depreciation costs as a component of cost of revenues were
Operational costs as a component of cost of revenues were
Content costs as a component of cost of revenues were
Selling, general and administrative expenses were
Research and development expenses were
Share-based compensation expenses, which were allocated to related operating costs and expense line items, were
Operating profit was
Other income, net was
Income tax expense was
Net income attributable to
Non-GAAP net income attributable to
As of
Adjusted EBITDA was
Summary of adjusted financial information (excluding Qunar) [7]
(RMB in millions, unless otherwise noted)
Three months ended |
YoY variance |
|||||
2016 |
2015 |
|||||
Adjusted Revenues |
18,212 |
18,209 |
0.0% |
|||
Adjusted online marketing revenues |
16,166 |
17,267 |
(6.4%) |
|||
Active online marketing customer (000) |
452,000 |
555,000 |
(18.6%) |
|||
Revenue per active online marketing customer (RMB) |
35,400 |
31,000 |
14.2% |
|||
Adjusted cost of revenues |
9,722 |
7,935 |
22.5% |
|||
Adjusted selling, general and administrative expenses |
3,334 |
4,259 |
(21.7%) |
|||
Adjusted research and development expenses |
2,971 |
2,379 |
24.9% |
|||
Adjusted operating profit |
2,185 |
3,636 |
(39.9%) |
Fiscal Year 2016 Results
Total revenues in 2016 were
Online marketing revenues in 2016 were
Traffic acquisition costs in 2016 were
Bandwidth costs as a component of cost of revenues were
Depreciation costs as a component of cost of revenues were
Operational costs as a component of cost of revenues were
Content costs as a component of cost of revenues were
Selling, general and administrative expenses in 2016 were
Research and development expenses totaled
Share-based compensation expenses, which were allocated to related operating cost and expense line items, were
Operating profit in 2016 was
Other income, net was
Income tax expense was
Net income attributable to
Non-GAAP net income attributable to
Net operating cash inflow in 2016 was RMB22.258 billion (
Adjusted EBITDA was
Summary of adjusted financial information (excluding Qunar)
(RMB in millions, unless otherwise noted)
Year ended |
YoY variance |
|||||
2016 |
2015 |
|||||
Adjusted Revenues |
70,549 |
63,073 |
11.9% |
|||
Adjusted online marketing revenues |
64,525 |
61,205 |
5.4% |
|||
Active online marketing customer (000) |
982,000 |
915,000 |
7.3% |
|||
Revenue per active online marketing customer (RMB) |
65,300 |
66,700 |
(2.1%) |
|||
Adjusted cost of revenues |
35,279 |
26,329 |
34.0% |
|||
Adjusted selling, general and administrative expenses |
15,071 |
14,275 |
5.6% |
|||
Adjusted research and development expenses |
10,150 |
9,027 |
12.5% |
|||
Adjusted operating profit |
10,049 |
13,442 |
(25.2%) |
Outlook for First Quarter 2017
Conference Call Information
Dial-in details for the earnings conference call are as follows:
International: |
+65 67135090 |
China |
4006208038 |
US: |
+1 8456750437 |
UK: |
+44 2036214779 |
Hong Kong: |
+852 30186771 |
Passcode for all regions: |
67004023 |
A replay of the conference call may be accessed by phone at the following number until March 3, 2017:
International: |
+61 2 8199 0299 |
Passcode: |
67004023 |
Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com.
About
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 first quarter 2017 and quotations from management in this announcement, as well as
About Non-GAAP Financial Measures
To supplement
Non-GAAP operating profit represents operating profit excluding share-based compensation expenses.
Non-GAAP net income attributable to
Non-GAAP diluted earnings per ADS represents diluted earnings per ADS calculated based on non-GAAP net income attributable to
Adjusted EBITDA represents operating profit excluding depreciation, amortization and share-based compensation expenses.
Free cash flow represents net cash provided by operating activities less capital expenditures.
For more information on non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures".
For investor inquiries, please contact:
Tel: +86-10-5992-4958
Email: ir@baidu.com
[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 RMB6.9430 to US$1.00, the effective noon buying rate as of December 30, 2016, in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. |
Baidu, Inc. |
|||||||
Condensed Consolidated Statements of Income |
|||||||
Three Months Ended |
Twelve Months Ended |
||||||
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|||
(In RMB thousands except for share, per share (or ADS) information) |
2015 |
2016 |
2016 |
2015 |
2016 |
||
Unaudited |
Unaudited |
Unaudited |
audited |
Unaudited |
|||
Revenues: |
|||||||
Online marketing services |
17,610,379 |
16,490,040 |
16,165,751 |
64,037,006 |
64,525,115 |
||
Other services |
1,088,415 |
1,762,719 |
2,046,634 |
2,344,723 |
6,024,249 |
||
Total revenues |
18,698,794 |
18,252,759 |
18,212,385 |
66,381,729 |
70,549,364 |
||
Operating costs and expenses: |
|||||||
Cost of revenues (note 1, 2) |
(8,149,327) |
(9,256,370) |
(9,721,570) |
(27,458,030) |
(35,278,945) |
||
Selling, general and administrative (note 2) |
(4,527,813) |
(3,595,985) |
(3,334,168) |
(17,076,383) |
(15,070,586) |
||
Research and development (note 2) |
(2,486,778) |
(2,613,573) |
(2,971,521) |
(10,175,762) |
(10,150,753) |
||
Total operating costs and expenses |
(15,163,918) |
(15,465,928) |
(16,027,259) |
(54,710,175) |
(60,500,284) |
||
Operating profit |
3,534,876 |
2,786,831 |
2,185,126 |
11,671,554 |
10,049,080 |
||
Other income: |
|||||||
Interest income |
572,725 |
627,308 |
631,346 |
2,362,632 |
2,341,631 |
||
Interest expense |
(299,372) |
(319,899) |
(294,193) |
(1,041,394) |
(1,157,562) |
||
Foreign exchange income, net |
106,007 |
20,361 |
310,206 |
181,802 |
508,312 |
||
Income(loss) from equity method investments |
23,119 |
(248,460) |
(105,642) |
3,867 |
(1,025,727) |
||
Other income, net |
24,294,280 |
1,271,932 |
1,795,684 |
24,728,162 |
3,793,473 |
||
Total other income |
24,696,759 |
1,351,242 |
2,337,401 |
26,235,069 |
4,460,127 |
||
Income before income taxes |
28,231,635 |
4,138,073 |
4,522,527 |
37,906,623 |
14,509,207 |
||
Income taxes |
(3,579,909) |
(1,045,184) |
(400,937) |
(5,474,377) |
(2,913,594) |
||
Net income |
24,651,726 |
3,092,889 |
4,121,590 |
32,432,246 |
11,595,613 |
||
Less: net loss attributable to noncontrolling interests |
(60,085) |
(9,441) |
(7,695) |
(1,231,927) |
(36,656) |
||
Net income attributable to Baidu |
24,711,811 |
3,102,330 |
4,129,285 |
33,664,173 |
11,632,269 |
||
Earnings per share for Class A and Class B ordinary shares: |
|||||||
Net income attributable to Baidu -Basic |
711.02 |
85.27 |
114.32 |
954.56 |
319.47 |
||
Net income attributable to Baidu -Diluted |
709.15 |
85.06 |
113.98 |
951.49 |
318.62 |
||
Earnings per ADS (1 Class A ordinary share equals 10 ADSs): |
|||||||
Net income attributable to Baidu -Basic |
71.10 |
8.53 |
11.43 |
95.46 |
31.95 |
||
Net income attributable to Baidu -Diluted |
70.92 |
8.51 |
11.40 |
95.15 |
31.86 |
||
Weighted average number of Class A and Class B ordinary shares outstanding: |
|||||||
Basic |
34,588,703 |
34,678,734 |
34,712,363 |
34,921,782 |
34,665,238 |
||
Diluted |
34,679,673 |
34,764,579 |
34,816,049 |
35,034,470 |
34,757,086 |
||
(1) Cost of revenues are detailed as follows: |
|||||||
Sales tax and surcharges |
(1,259,925) |
(1,220,377) |
(1,238,965) |
(4,644,357) |
(4,718,468) |
||
Traffic acquisition costs |
(2,616,319) |
(2,594,452) |
(2,636,455) |
(8,860,861) |
(10,372,516) |
||
Bandwidth costs |
(1,000,957) |
(1,240,986) |
(1,235,400) |
(3,716,747) |
(4,716,416) |
||
Depreciation costs |
(692,046) |
(802,257) |
(811,529) |
(2,559,623) |
(3,074,893) |
||
Operational costs |
(1,181,667) |
(1,158,554) |
(1,186,252) |
(3,881,609) |
(4,429,713) |
||
Content costs |
(1,381,875) |
(2,211,373) |
(2,570,729) |
(3,745,063) |
(7,863,585) |
||
Share-based compensation expenses |
(16,538) |
(28,371) |
(42,240) |
(49,770) |
(103,354) |
||
Total cost of revenues |
(8,149,327) |
(9,256,370) |
(9,721,570) |
(27,458,030) |
(35,278,945) |
||
(2) Includes share-based compensation expenses as follows: |
|||||||
Cost of revenues |
(16,538) |
(28,371) |
(42,240) |
(49,770) |
(103,354) |
||
Selling, general and administrative |
(100,353) |
(116,646) |
(113,709) |
(486,760) |
(429,234) |
||
Research and development |
(224,129) |
(273,045) |
(475,984) |
(850,588) |
(1,227,400) |
||
Total share-based compensation expenses |
(341,020) |
(418,062) |
(631,933) |
(1,387,118) |
(1,759,988) |
Baidu, Inc. |
|||
Condensed Consolidated Balance Sheets |
|||
December 31, |
December 31, |
||
(In RMB thousands except for number of shares and per share data) |
2015 |
2016 |
|
Audited |
Unaudited |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
9,959,932 |
10,898,463 |
|
Restricted cash |
95,997 |
317,521 |
|
Short-term investments |
57,969,242 |
78,943,065 |
|
Accounts receivable, net |
3,926,986 |
4,109,324 |
|
Loans and interest receivable, net |
227,107 |
1,800,397 |
|
Amounts due from related parties |
1,940,559 |
345,594 |
|
Other assets, current |
4,113,840 |
3,344,516 |
|
Total current assets |
78,233,663 |
99,758,880 |
|
Non-current assets: |
|||
Fixed assets, net |
10,627,127 |
11,294,348 |
|
Intangible assets, net |
3,334,619 |
3,872,227 |
|
Goodwill |
15,395,573 |
15,342,096 |
|
Long-term investments, net |
37,958,591 |
45,690,363 |
|
Amounts due from related parties |
9,725 |
11,153 |
|
Deferred tax assets, net |
1,008,174 |
1,100,230 |
|
Loans and interest receivable, net |
122,093 |
2,708,817 |
|
Other assets, non-current |
1,163,743 |
2,219,277 |
|
Total non-current assets |
69,619,645 |
82,238,511 |
|
Total assets |
147,853,308 |
181,997,391 |
|
LIABILITIES AND EQUITY |
|||
Current liabilities: |
|||
Short-term loans |
100,000 |
1,115,000 |
|
Accounts payable and accrued liabilities |
17,840,192 |
28,654,086 |
|
Customer advances and deposits |
5,420,230 |
6,031,681 |
|
Deferred revenue |
375,672 |
596,460 |
|
Deferred income |
559,855 |
566,104 |
|
Long-term loans, current portion |
974,820 |
3,468,296 |
|
Notes payable,current portion |
- |
5,203,315 |
|
Capital lease obligation |
46,088 |
8,416 |
|
Amounts due to related parties |
785,945 |
458,687 |
|
Total current liabilities |
26,102,802 |
46,102,045 |
|
Non-current liabilities: |
|||
Deferred income |
17,413 |
27,828 |
|
Long-term loans |
3,239,676 |
6,822,109 |
|
Notes payable |
30,702,116 |
27,648,477 |
|
Deferred tax liabilities |
3,441,290 |
3,589,235 |
|
Capital lease obligation |
8,435 |
348 |
|
Other non-current liabilities |
125,860 |
64,954 |
|
Total non-current liabilities |
37,534,790 |
38,152,951 |
|
Total liabilities |
63,637,592 |
84,254,996 |
|
Redeemable noncontrolling interests |
3,947,879 |
5,491,976 |
|
Equity |
|||
Class A Ordinary Shares, par value US$0.00005 per share, |
12 |
12 |
|
Class B Ordinary Shares, par value US$0.00005 per share, |
3 |
3 |
|
Additional paid-in capital |
6,402,349 |
8,322,787 |
|
Retained earnings |
74,659,355 |
85,733,706 |
|
Accumulated other comprehensive loss |
(806,056) |
(1,782,966) |
|
Total Baidu, Inc. shareholders' equity |
80,255,663 |
92,273,542 |
|
Noncontrolling interests |
12,174 |
(23,123) |
|
Total equity |
80,267,837 |
92,250,419 |
|
Total liabilities, redeemable noncontrolling interests, and equity |
147,853,308 |
181,997,391 |
Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures (in RMB thousands except for share and per ADS information, unaudited) |
||||||||
Three months ended |
Twelve months ended |
|||||||
December 31, 2015 |
September 30, 2016 |
December 31, 2016 |
December 31, 2015 |
December 31, 2016 |
||||
Operating profit |
3,534,876 |
2,786,831 |
2,185,126 |
11,671,554 |
10,049,080 |
|||
Add: Share-based compensation expenses |
341,020 |
418,062 |
631,933 |
1,387,118 |
1,759,988 |
|||
Non-GAAP operating profit |
3,875,896 |
3,204,893 |
2,817,059 |
13,058,672 |
11,809,068 |
|||
Add: Depreciation of fixed assets |
772,684 |
898,890 |
911,578 |
2,886,254 |
3,451,422 |
|||
Add: Amortization of intangible assets |
166,632 |
125,839 |
126,292 |
715,108 |
531,550 |
|||
Adjusted EBITDA |
4,815,212 |
4,229,622 |
3,854,929 |
16,660,034 |
15,792,040 |
|||
Three months ended |
Twelve months ended |
|||||||
December 31, 2015 |
September 30, 2016 |
December 31, 2016 |
December 31, 2015 |
December 31, 2016 |
||||
Net income attributable to Baidu |
24,711,811 |
3,102,330 |
4,129,285 |
33,664,173 |
11,632,269 |
|||
Add: Share-based compensation expenses |
341,020 |
418,062 |
631,933 |
1,387,118 |
1,759,988 |
|||
Add: Gain associated with the dilution of equity method investees |
- |
(73,408) |
(155,515) |
- |
(172,958) |
|||
Non-GAAP net income attributable to Baidu |
25,052,831 |
3,446,984 |
4,605,703 |
35,051,291 |
13,219,299 |
|||
Weighted average number of ADS used in computing non- |
346,796,727 |
347,645,787 |
348,160,487 |
350,344,697 |
347,570,857 |
|||
Non-GAAP diluted earnings per ADS |
72.24 |
9.92 |
13.23 |
100.05 |
38.03 |
Reconciliation from net cash provided by operating activities to free cash flow (in RMB thousands, unaudited) |
|||||||||||
Three months ended |
As a % of |
Three months ended |
As a % of |
Three months ended |
As a % of |
Twelve months ended |
As a % of |
Twelve months ended |
As a % of |
||
December 31, 2015 |
total revenues |
September 30, 2016 |
total revenues |
December 31, 2016 |
total revenues |
December 31, 2015 |
total revenues |
December 31, 2016 |
total revenues |
||
Net cash provided by operating activities |
6,070,158 |
32% |
2,953,166 |
16% |
8,011,229 |
44% |
19,422,438 |
29% |
22,258,297 |
32% |
|
Less: Capital expenditures |
(1,423,527) |
-8% |
(1,182,627) |
-6% |
(1,201,360) |
-7% |
(5,229,616) |
-8% |
(4,189,187) |
-6% |
|
Free cash flow |
4,646,631 |
24% |
1,770,539 |
10% |
6,809,869 |
37% |
14,192,822 |
21% |
18,069,110 |
26% |
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