Though Youku (YOKU -6.2%) beat Q1 EPS estimates, revenue of $112.7M missed a $114.2M consensus. Moreover, the company is guiding for Q2 revenue of RMB940M-RMB1B ($150.6M-$160.3M), below a $163.5M consensus.
Maxim Group (PT cut to $16) blames the growth slowdown on Youku's attempts to lower purchases of long-form content preferred by advertisers.
It believes a "weak content portfolio" led Youku to lose its Chinese online/mobile video leadership positions in Q1 to Baidu's (BIDU +1.7%) iQiyi and PPS platforms. Baidu has been busy promoting iQiyi/PPS throughout its Web empire.
"Top-line growth seems to be on a deceleration trend," writes Deutsche (PT cut to $21) in response to Youku's numbers. The firm and thinks the Q2 guidance points to weaker advertiser budget hikes.
Cost controls helped EPS beat estimates: Youku's content spend fell to 44% of revenue in Q1 from 49% a year ago. Bandwidth costs fell to 29% of revenue from 31%, and opex only grew 9% Y/Y (compares with 36% rev. growth).
Q1 results, PR