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Baidu's revenue/ad customer jumps in Q3; spending remains aggressive

  • After rising 11% Q/Q and 3.9% Y/Y in Q2, Baidu's (BIDU) revenue per online ad customer surged 18.6% Q/Q and 19.4% Y/Y in Q3 to $3,121. Q/Q drops in Q1 and Q4 '12 had stoked concerns competition (particularly from Qihoo) and mobile were impacting ad spend.
  • On the other hand, Baidu's active customer accounts fell 0.9% Q/Q to 464K, albeit while remaining up 19% Y/Y. Active accounts rose 14.1% Q/Q and 33% Y/Y in Q2.
  • Traffic acquisition costs amounted to 11.7% of revenue, up slightly from Q2's 11.6% and more sharply from 8.6% a year ago. Baidu once more attributes its TAC growth to a mix shift towards contextual (ad network) ads and promotions for its hao123 directory site.
  • While revenue rose 42% Y/Y, SG&A spend soared 115% to $226.2M, something Baidu largely attributes to mobile promotions. R&D spend rose 77.5% to $178.2M. Content spend (largely online video-related) made up 2.5% of revenue, up from 2% in Q2 and just 0.5% a year ago.
  • Baidu says mobile search revenue "continued to grow at an exciting pace," but doesn't provide any numbers. The company stated in July mobile had grown to account for over 10% of revenue.
  • Shares +5.4% AH. Q3 results/Q4guidance, PR.
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