Baidu expects to generate 12.645 billion to 13.065 billion yuan in current quarter revenue

Baidu shares fell 9.58% to $194.11 after the Internet giant issued current quarter outlook that disappointed investors. Baidu reported 47.5% jump in Q4 revenue, helped by stronger advertising revenue. The company generated 14.05 billion yuan ($2.26 billion) in sales, in line with its expectations of 13.85 billion to 14.25 billion yuan. However, Q4 revenue fell short of the consensus estimate of 14.12 billion yuan.

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Baidu reports 53.6% jump in full-year revenue

The Beijing-based company’s December quarter revenue was driven by an impressive growth in online marketing sales, which jumped 46% to 13.85 billion yuan. The number of active online advertising customers increased 16% YoY to 523,000 in the fourth-quarter. Revenue per online marketing customer also soared 26% during the quarter.

Overall, Baidu earned 3.23 billion yuan ($520.4 million) or 9.01 yuan per American depository share in the latest quarter, up from 2.78 billion yuan in the same quarter a year earlier. Excluding one-time charges, earnings came in at 9.97 yuan per ADS, beating the consensus estimate of 9.95 yuan. Profit growth slowed from 27% in Q3, 2014 to 16% in Q4, 2014. Baidu continues to spend heavily on strengthening its mobile services.

For full-year 2014, revenue jumped 53.6% to 49 billion yuan ($7.9 billion) and profits increased 25.4% to 13.2 billion yuan ($2.1 billion). However, full-year operating margins declined from 35% in 2013 to 26% in 2014.

Baidu’s Q1 guidance misses estimates

Investors were disappointed by the company’s guidance for the current quarter. Baidu forecasts Q1, 2015 revenue between 12.645 billion to 13.065 billion yuan ($2 billion to $2.1 billion). Analysts polled by Thomson Reuters were expecting Q1 revenue of 13.62 billion yuan. The company attributed weaker Q1 revenue guidance to the timing of this year’s Lunar New Year holiday, which begins on February 19.

As most of the users will be on the move during the holiday period, traffic on mobile devices is expected to increase significantly. But mobile generates less advertising and paid search revenue than desktop. Baidu is expanding its services to healthcare, education, finance and taxi-hailing to attract more mobile users. Earlier this week, the company launched StockMaster app to help retail investors analyze stock data with the help of artificial intelligence.