Baidu shares plunged as much as 3.40% to $211.55 after the company reported disappointing first-quarter results. The Chinese search engine giant witnessed its lowest revenue growth in nearly seven years. However, Baidu’s (NASDAQ:BIDU) heavy investments in its mobile products and services have started bearing fruit. Mobile accounted for 50% of the company’s Q1 revenue, up from 37% last year.
Baidu’s revenue growth decelerating
Baidu (NASDAQ:BIDU) said its revenue for the March quarter came in at $2.05 billion, up 34% over the corresponding quarter a year ago. But its revenue growth has been decelerating dramatically. The company’s revenue jumped 47.5% in Q4, 2014; an impressive 52% in Q3, 2014, and 58.5% in Q2, 2014. Though Baidu’s revenue was in line with the management’s guidance, it fell short of the Wall Street estimate of $2.08 billion.
The Beijing-based company reported an operating profit of 2.15 billion yuan ($347.7 million), representing a decline of 9.2% from Q1, 2014. Net income also went down 3.4% YoY to $395.1 million or $1.09 per share in the latest quarter. The company had earned $409 million or $1.16 a share in the corresponding quarter a year earlier.
Baidu is still dealing with the impact of users moving from desktop to mobile, which generates less revenue than desktop. The company has added a plethora of features to its map and search apps that allow users to find deals, buy movie tickets and make hotel reservations. Baidu CFO Jennifer Li said that the company will continue to invest in mobile opportunities.
Baidu offers lukewarm Q2 guidance
Baidu (NASDAQ:BIDU) said its SG&A expenses increased 47.2% YoY to $477 million as the company continued to aggressively promote its mobile offerings. The company’s online marketing revenue inched up 34% to $2.02 billion. The number of active online advertising customers rose 18% YoY to 524,000, though the figure showed little growth on a sequential basis. Revenue per online advertising customer rose 14% during the quarter.
For the current quarter, Baidu (NASDAQ:BIDU) guided revenue between $2.64 billion and $2.7 billion, compared to the Wall Street consensus of $2.69 billion.