Baidu, Inc. (NASDAQ:BIDU) Q3 2019 Earnings Conference Call Transcript

Nov 06, 2019 • 09:15 pm ET

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Baidu, Inc. (NASDAQ:BIDU) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Hello, and thank you for standing by for Baidu's Third Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to turn the meeting over to your host for today's conference Juan Lin, Baidu's Director of Investor Relations.

Executive
Juan Lin

Hello, everyone, and welcome to Baidu's Third Quarter 2019 Earnings Conference Call. Baidu's earnings release was distributed earlier today and you can find a copy on our website as well as on Newswire services. On the call today we have Robin Li, our Chief Executive Officer; Herman Yu, our Chief Financial Officer; and Dou Shen, our Senior Vice President and in charge of Baidu's Mobile Ecosystem Group, our Search and Feed Business. After our prepared remarks, we will hold a Q&A session.

Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the SEC, including our Annual Report on Form 20-F. Baidu does not undertake any obligation on update any forward-looking statements except as required under applicable law.

Our earnings press release and this call include discussions of certain unaudited non-GAAP financial measures. We have made minor adjustments to our non-GAAP measures and retroactively applied these changes for comparison purposes. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures and is available on our IR website at ir.baidu.com. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will also be available on Baidu's IR website.

I will now turn the call over to our CEO, Robin.

Executive
Robin Li

Hello, everyone. Baidu's third quarter revenues reached RMB28.1 billion, above the midpoint of our guidance, with Baidu Core performing better than our original expectation. Baidu Core revenues grew 8% sequentially in third quarter on top of the 12% sequential growth in the second quarter, in spite of the slowing macro environment, industry specific policy changes and self-directed healthcare initiatives.

Baidu Core's quarterly sequential growth rate compared to last year's second and third quarter of 26% and 9% respectively excluding spin-off revenues have been narrowing. Our marketing services business is improving, in part due to a stabilizing market, as well as our efforts to strengthen our mobile ecosystem and our monetization capabilities.

We have made significant progress in strengthening Baidu's mobile ecosystem, centering around information and knowledge. We continue to push the limits of Baidu AI to better match users to the vast and diversified content pool in Baidu App. Our Top-1, satisfying user queries with the first search result has reached 56% compared to 40% a year ago.

On top of leading search and a comprehensive set of knowledge based products, Baidu App provides hosted solutions such as Baijiahao or BJH accounts, smart mini program and