Due to a growth in mobile search users, Chinese internet service provider Baidu Inc. presents a strong performance during its first quarter of the fiscal year on Thursday, and beat expectations with its garnered quarterly profit.
Chairman Robin Li stated during the company’s first quarter earnings call that they had an exceptional start to 2016. “Weve made great strides toward realization of our vision to connect people with information and services and provide an integrated solution to our customers.
The stock rose 3 percent during the pre-market trading on Friday after announcing unexpected positive results for both top and bottom-line. Baidu also reported adjusted earnings per share of $1.06, outdoing the Street’s estimation of 5 cents.
Quarterly revenue was reported at $2.45 billion, beating the $2.44 billion estimates. Total revenues rallied approximately 24 percent on a year-over-year basis. Revenues propelled mainly by a rise in advertisement on the company’s main search engine.
The company experienced a 9 percent YoY growth in its mobile search monthly active users during the first quarter. Mobile Map Users climbed to 321 million, up 19 percent when compared to the first quarter the previous year, and merchandise value for transaction services jumped to a notable 268 percent, to $2.5 billion.
A surge of 152 percent YoY came for activated accounts for Baidu Wallet that reached 65 million at the end of March. It should mentioned that the Chinese company had revealed plans for mapping service expansions previously to over 150 countries by the end of the present fiscal year.
Brean Capital upgraded the stock from Hold to Buy with a price target of $235 after the earnings report has been released. According to analyst Fawne Jiang, Baidu has progressed on various fronts, including O2O product quality along with actively investigating different prospects to tap into the value of its assets.
Jiang also emphasized that the Chinese ISP has been able to grow traffic and conversion on the basis of enhance user experience and expanded local merchant permeation. The sell-side firm expects a development in the earnings visibility in the future quarters.
Piper Jaffray also raised the price target on the stock from $220 to $235, while upholding an Overweight rating. Analyst Gene Munster advises investors that the O2O investment phase could begin to pay off later this year and could push upwards to consensus estimates.
The CEO also acknowledged more investment in robot cars and on-demand services over the next five years. The company predicted to mass produce self-driving cars by 2020, two years following the autonomous vehicles’ first hit on the road, despite the lack of a business plan or specific target markets outside of China, according to Li.
“We are aggressively beefing up research and development in this area both here in China and our U.S. R&D center in Silicon Valley,” Li told analysts on a post-earnings conference call. “We will worry about the business model later on.”
The quarterly earnings established the strength of the internet service provider’s core business, allowing Baidu to spend billions delving into new areas from artificial intelligence and robot cars to on-demand services.
The internet behemoth said it also expects increased revenue of $3.12 billion to $3.19 billion for the second quarter as advertising goes mobile and online, while Street estimates revenues at $3.10 billion.