Baidu (BIDU) earnings preview: Key factors to note in Q4

Baidu Inc. (NASDAQ: BIDU) is slated to report fourth quarter 2019 earnings results on Thursday, February 27, after the market closes. Analysts have projected earnings of $2.72 per share on revenue of $3.96 billion.

The company’s quarterly results are likely to benefit from strength in its mobile ecosystem and voice assistant DuerOS. Last quarter, Baidu App’s average daily active users increased 25% while publisher accounts for Baijiahao newsfeed network rose 57% year-over-year. Monthly active users for Baidu’s Smart Mini Program jumped 157%.

Monthly voice queries on DuerOS surpassed 4.2 billion last quarter, up more than 4.5 fold year-over-year. This momentum is expected to have continued into the fourth quarter fuelling growth. Baidu’s investments in artificial intelligence and cloud computing are also likely to have benefited the results in the quarter.

In addition to this, Baidu’s initiatives in the autonomous vehicles space are also likely to have helped the quarterly numbers. The company’s total autonomous driving licenses currently stand at 150 and account for over half of the total autonomous driving licenses granted in China.

Baidu is also likely to benefit from strength in its online entertainment service segment iQIYI, which saw a 31% increase in subscribers last quarter. However, higher costs are likely to weigh on the bottom line numbers. The company also continues to face tough competition from giants like Alibaba (NASDAQ: BABA).

Also read: Baidu Q3 2019 Earnings Conference Call Transcript

In the third quarter of 2019, Baidu beat revenue and earnings estimates. Revenues increased 3% year-over-year to $3.93 billion while adjusted earnings per ADS fell 36% to $1.76.

For the fourth quarter, Baidu expects revenue to increase 4-6% to a range of $4.06 billion to $4.15 billion. Baidu Core revenue is expected to grow 4-6% year-over-year. Reported net income is expected to be $0.89 billion to $0.97 billion while adjusted net income is estimated to come in the range of $1.28 billion to $1.36 billion.

Shares of Baidu have declined 23% in the past one year and were down 1.1% in afternoon trade on Tuesday.

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