Baidu Inc. recently posted revenue results that were stronger than analysts expected. Sales increased 33% to $2.9bn (18.7 yuan) during Q4 2015. Mobile revenue made up 56% of total sales during the quarter, up from 42% the year over.
With the rise of mobile device usage in China, Baidu has been able to establish a dominance in search. The group stated an interest in expanding the business into home delivery and online video, a move that could help compete with rivals Alibaba and Tencent.
Baidu posted stronger-than-expected revenue
Source: LIU JIN/AFP/Getty Images
Online marketing revenues rose 27% during Q4 2015. Marie Sun, Analyst, Morningstar Investment Service, told Bloomberg:
“Baidu still holds an upper hand when it comes to attracting advertisements compared with the smaller players. Its development in mobile search also shows it’s hard to be replaced.”
Robin Li, Co-Founder, Chairman and CEO, Baidu, added that mobile advertising was being particularly effective for Baidu and revenues could surpass those on desktop.
“On mobile we can be more targeted. We know more about the user, we know the location of the user and we can enable all kinds of user actions. The nature of the queries on mobile are more toward local services, which inherently have more commercial value.”
China’s top Internet companies are spending heavily in order to compete more effectively. However, as Bloomberg highlights, Baidu faces a dilemma between eroding operating margins due to such heavy spending on Internet services.
Baidu faces a disparity between operating margins and revenue