How Do Baidu's Q2 Numbers Stack Up Against Google?

Baidu, Inc BIDU reported second-quarter FY21 revenue growth of 20% year-on-year to $4.86 billion, beating the analyst consensus of $4.78 billion. In contrast, Alphabet, Inc. GOOG GOOGL reported Q2 revenue growth of 62% Y/Y to $61.88 billion, beating the consensus of $56.16 billion.

Segments: Baidu Core revenue increased 27% Y/Y to $3.72 billion as AI cloud grew 71% Y/Y, Online marketing revenue expanded 18% Y/Y to $2.95 billion, Non-online marketing revenue jumped 80% Y/Y to $771 million, driven by cloud and other services, and Revenue from iQIYI increased 3% Y/Y to $1.18 billion. 

YouTube revenue grew 83% Y/Y to $7.34 billion, beating the consensus of $6.37 billion. Google Cloud revenue rose 53.8% Y/Y to $4.63 billion, exceeding analyst consensus of $4.4 billion.

Baidu's non-GAAP operating income rose 1% Y/Y to $876 million as SG&A and R&D expenses increased 29-30% Y/Y from higher channel spending, promotional, and personnel-related expenses. Baidu Core's non-GAAP operating income stood flat at $1 billion. 

Margins: The non-GAAP Baidu Core operating margin decreased 700 bps to 27% as costs climbed 21% Y/Y to $2.46 billion due to higher traffic acquisition costs and new AI business costs. Google's TACs also totaled $10.93 above the analyst consensus of $9.74 billion.

Baidu's adjusted EBITDA margin contracted 400 bps to 23%. Baidu Core's margin declined 800 bps to 33%.

Baidu's Non-GAAP EPS of $2.39 beat the analyst consensus of $2.07. In contrast, Google's EPS of $27.26 beat the consensus of $19.34.

Baidu held $27.9 billion in cash and equivalents and generated $1.2 billion in operating cash flow. It returned $566 million to shareholders via a share buyback, reaching $2.5 billion since 2020.

Baidu's search and feed business was solid, and it continues to lead on its new AI business, including AI cloud, autonomous driving, and intelligent assistant.

In Jun., Baidu MAUs reached 580 million, and daily logged-in users reaching 77%. The iQIYI subscribers reached 106.2 million in Jun.

Outlook: Baidu sees Q3 revenues between $4.7 billion - $5.2 billion, representing a growth of 8% - 19% Y/Y compared to the analyst consensus of $5.14 billion. It implies that Baidu Core revenue will grow between 9% - 20% Y/Y.

Price Action: BIDU shares traded lower by 1.84% at $161.92 in the premarket session on the last check Thursday.

Photo by simone brunozzi via Wikimedia