BAIDU, INC. 
By (Logo: http://www.newscom.com/cgi-bin/prnh/20041011/BAIDULOGO )
(1): This announcement contains translations of certain RMB amounts into
U.S. dollars at specified rates solely for the convenience of the reader.
Unless otherwise noted, all translations from RMB to U.S. dollars are made at
a rate of
Second Quarter 2008 Highlights
-- Total revenues in the second quarter of 2008 increased to
-- Operating profit in the second quarter of 2008 increased to
-- Net income in the second quarter of 2008 increased to
-- Diluted earnings per share ("EPS") for the second quarter of 2008 were
-- The number of active online marketing customers during the second quarter grew to over 181,000, an increase of 12.4 % from the previous quarter.
"This quarter saw impressive growth for Baidu," said
In order to better serve customers' needs, Baidu recently launched "My
Marketing Center", which is a customized platform integrating industry
information, market trends and business and industry news and reports to aid
existing customers in their sales and marketing efforts. The platform combines
Baidu's vast resources in online information search and aggregation to help
customers make better use of search marketing tools to improve customer
targeting, increase sales and enhance brand impact. From the inception of the
company, Baidu's objective has been to provide the best way for people to find
information, My Marketing Center tailors this objective to serve the Chinese
enterprises that participate in
Second Quarter 2008 Results
Baidu reported total revenues of
Online marketing revenues for the second quarter were
Traffic acquisition costs (TAC) as a component of cost of revenues were
Bandwidth costs as a component of cost of revenues were
Selling, general and administrative expenses were
Research and development expenses were
Share-based compensation expenses, which were allocated to related
operating cost and expense line items, increased in aggregate by 229.9% to
Operating profit was
Adjusted EBITDA (non-GAAP), which is defined in this announcement as
earnings before interest, taxes, depreciation, amortization, other non-
operating income and share-based compensation expenses, were
Income tax expense was
Net income was
Net income excluding share-based compensation expenses (non-GAAP) was
As of
Outlook for Third Quarter 2008
Baidu currently expects to generate total revenues in an amount ranging
from
Conference Call Information
Baidu's management will hold an earnings conference call on
Dial-in details for the earnings conference call are as follows:
US: +1 617.786.2963
UK: +44.207.365.8426
Hong Kong: +852.3002.1672
Passcode for all regions: 14473564
A replay of the conference call may be accessed by phone at the following number until 07/30/2008:
International: +1 617.801.6888
Passcode: 63806335
Additionally, a live and archived webcast of this conference call will be available at http://ir.baidu.com .
About Baidu
Baidu.com, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu's ADSs, each of which represents one Class A ordinary share, currently trade on the NASDAQ Global Select Market under the symbol "BIDU".
Safe Harbor Statement
This announcement contains forward-looking statements. These statements
are made under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar statements. Among
other things, the outlook for the third quarter of 2008 and quotations from
management in this announcement, as well as Baidu's strategic and operational
plans, contain forward-looking statements. Baidu may also make written or oral
forward-looking statements in its periodic reports to the U.S. Securities and
Exchange Commission, in its annual report to shareholders, in press releases
and other written materials and in oral statements made by its officers,
directors or employees to third parties. Statements that are not historical
facts, including statements about Baidu's beliefs and expectations, are
forward-looking statements. Forward-looking statements involve inherent risks
and uncertainties. A number of factors could cause actual results to differ
materially from those contained in any forward-looking statement, including
but not limited to the following: our growth strategies; our future business
development, results of operations and financial condition; our ability to
attract and retain users and customers; competition in the Chinese language
and Japanese language Internet search markets; competition for online
marketing customers; changes in our revenues and certain cost or expense items
as a percentage of our revenues; the outcome of ongoing, or any future,
litigation or arbitration, including those relating to copyright and other
intellectual property rights; the expected growth of the Chinese language and
Japanese language Internet search markets and the number of Internet and
broadband users in
About Non-GAAP Financial Measures
To supplement Baidu's consolidated financial results presented in accordance with GAAP, Baidu uses the following measures defined as non-GAAP financial measures by the SEC: adjusted EBITDA, operating profit excluding share-based compensation expenses, net income excluding share-based compensation expenses, and basic and diluted EPS excluding share-based compensation expenses. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" and "Reconciliation from net cash provided by operating activities to adjusted EBITDA" set forth at the end of this release.
Baidu believes that these non-GAAP financial measures provide meaningful
supplemental information regarding its performance and liquidity by excluding
certain expenses and expenditures that may not be indicative of its operating
performance from a cash perspective. We believe that both management and
investors benefit from referring to these non-GAAP financial measures in
assessing our performance and when planning and forecasting future periods.
These non-GAAP financial measures also facilitate management's internal
comparisons to Baidu's historical performance and liquidity. Baidu computes
its non-GAAP financial measures using the same consistent method from quarter
to quarter, except that the non-GAAP measures for the quarter ended
Baidu.com, Inc.
Condensed Consolidated Balance Sheets
June 30 December 31,
(in RMB thousands) 2008 2007
Unaudited Audited
ASSETS
Current assets:
Cash and cash equivalents 1,791,003 1,350,600
Short-term investments 131,823 242,037
Accounts receivable, net 82,336 64,274
Prepaid expenses and other current
assets 79,973 65,996
Deferred tax assets, net 2,587 2,587
Total current assets 2,087,722 1,725,494
Non-current assets:
Fixed assets, net 760,483 678,886
Land use right, net 95,496 96,472
Intangible assets, net 36,370 40,460
Goodwill 51,083 51,093
Investments, net 25,831 15,439
Deferred tax assets, net 24,537 15,716
Other non-current assets 75,666 32,348
Total non-current assets 1,069,466 930,414
TOTAL ASSETS 3,157,188 2,655,908
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued expenses and other
liabilities 372,050 359,310
Customers' deposits 309,887 257,577
Deferred revenue 18,883 11,832
Deferred income 1,054 2,485
Total current liabilities 701,874 631,204
Non-current liabilities:
Long-term payable -- 3,000
Deferred income -- 332
Total non-current liabilities -- 3,332
Total liabilities 701,874 634,536
Shareholders' equity
Class A Ordinary Shares, Par value
US$0.00005 per share, 825,000,000
shares authorized, and 25,136,147
shares and 25,363,476 shares issued
and outstanding as of December 31,
2007 and June 30, 2008 11 10
Class B Ordinary Shares, Par value
US$0.00005 per share, 35,400,000
shares authorized, and 8,996,842
shares and 8,876,881 shares issued
and outstanding as of December 31,
2007 and June 30, 2008 4 4
Additional paid-in capital 1,233,773 1,171,575
Accumulated other comprehensive loss (121,793) (81,953)
Retained earnings 1,343,319 931,736
Total shareholders' equity 2,455,314 2,021,372
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 3,157,188 2,655,908
Baidu.com, Inc.
Condensed Consolidated Statements of Income
For the Three Months Ended
(in RMB thousands except for share, June 30, June 30, March 31,
per share information) 2008 2007 2008
Unaudited Unaudited Unaudited
Revenues:
Online marketing services 802,183 400,647 572,710
Other services 428 606 1,686
Total revenues 802,611 401,253 574,396
Operating costs and expenses:
Cost of revenues (note 1, 2) (280,980) (146,795) (228,592)
Selling, general and administrative
(note 2) (174,213) (93,728) (147,031)
Research and development (note 2) (71,078) (31,770) (51,406)
Total operating costs and expenses (526,271) (272,293) (427,029)
Operating profit 276,340 128,960 147,367
Other income:
Interest income 10,378 11,574 10,604
Exchange loss, net (204) 18 (1,708)
Other income, net 7,032 3,186 1,194
Total other income 17,206 14,778 10,090
Income before income taxes 293,546 143,738 157,457
Income taxes (28,561) (1,839) (10,859)
Net income 264,985 141,899 146,598
Earnings per share for Class A and
Class B ordinary shares:
Basic 7.74 4.19 4.29
Diluted 7.62 4.09 4.22
Weighted average aggregate number of
Class A and Class B ordinary shares
outstanding:
Basic 34,217,081 33,877,358 34,154,776
Diluted 34,786,342 34,709,957 34,765,164
(1) Cost of revenues are detailed as
follows:
Business tax and surcharges (49,511) (24,857) (35,071)
Traffic acquisition costs (101,693) (44,892) (76,632)
Bandwidth costs (43,012) (28,320) (38,365)
Depreciation costs (57,790) (33,941) (53,194)
Operational costs (27,795) (14,433) (24,415)
Share-based compensation expenses (1,179) (352) (915)
Total cost of revenues (280,980) (146,795) (228,592)
(2) Includes share-based compensation
expenses as follows:
Cost of revenues (1,179) (352) (915)
Selling, general and administrative (16,484) (3,442) (8,014)
Research and development (11,618) (5,083) (7,252)
Total share-based compensation
expenses (29,281) (8,877) (16,181)
Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (*) (in RMB thousands, unaudited)
Three months ended June 30, 2007
GAAP Adjustment Non-GAAP
Result Result
Operating profit 128,960 8,877 137,837
Three months ended June 30, 2007
GAAP Adjustment Non-GAAP
Result Result
Net income
141,899 8,877 150,776
Three months ended March 31, 2008
GAAP Adjustment Non-GAAP
Result Result
Operating profit
147,367 16,181 163,548
Three months ended March 31, 2008
GAAP Adjustment Non-GAAP
Result Result
Net income
146,598 16,181 162,779
Three months ended June 30, 2008
GAAP Adjustment Non-GAAP
Result Result
Operating profit 276,340 29,281 305,621
Three months ended June 30, 2008
GAAP Adjustment Non-GAAP
Result Result
Net income
264,985 29,281 294,266
(*) The adjustment is only for share-based compensation.
Reconciliation from net cash provided by operating activities to adjusted EBITDA(*) (in RMB thousands, unaudited)
Three As a Three As a Three As a
months % of months % of months % of
ended total ended total ended total
June 30, revenues March 31, revenues June 30, revenues
2007 2008 2008
Net cash
provided by
operating 276,963 69% 248,876 43% 403,378 50%
activities
Changes in
assets and
liabilities,
net of
effects of
acquisitions (84,538) -21% (21,273) -4% (37,893) -5%
Income taxes
expenses 1,839 0% 10,859 2% 28,561 4%
Interest
income and
other, net (14,778) -4% (10,090) -2% (17,206) -2%
Adjusted EBITDA 179,486 44% 228,372 39% 376,840 47%
(*) Definition of adjusted EBITDA: earnings before interest, taxes,
depreciation, amortization, other non-operating income, and share-
based compensation expenses.
For investor inquiries, please contact:
China
Helen Zhang
Baidu.com, Inc.
Tel: +86-10-8260-7558
Email: ir@baidu.com
Helen Plummer
Ogilvy Financial, Beijing
Tel: +86-10-8520-3090
Email: helen.plummer@ogilvy.com
US
Jeremy Bridgman
Ogilvy Financial, New York
Tel: +1-212-880-5363
Email: jeremy.bridgman@ogilvypr.com
SOURCE Baidu.com, Inc.
