Baidu releases Q1 2017 results, CFO takes a new role of Baidu Capital CEO

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Chinese search engine internet Baidu has announced the unaudited consolidated results for Q1 2017 today, reporting the second consecutive decline in quarterly net profit.

The company reported a net profit of RMB 1.78 billion for 2016, down 10.6% from the previous year, on revenue of RMB 16.89 billion, up 6.8 percent, according to the financial report.

The biggest chunk of revenue still comes from online marketing, which made up 87.25% of the company’s total revenue in Q1.

The company’s online marketing revenue fall slowed to 1.3% in Q1, compared with the 6.7% and 8.2% decline in the previous two quarters. This may be a sign that the business segment started to pick up after the company was hit hard by the advertising scandal last April, coupled with the ensuing implementation of the Interim Measures on Internet Advertising Management last September.

The reduction in net profit can be attributed to the company’s soaring costs on bandwidth, content, research and development and equity incentives. The increased costs are largely related to AI, an area that Baidu is hoping will improve their future growth.

“We are pleased to report solid performance in the first quarter, as we focused on our core business and AI-enabled new business initiatives including our AI-cloud, financial services, DuerOS, and autonomous driving, all of which hold tremendous long-term potential,” said Lu Qi, Baidu’s vice chairman and COO.

Content distribution is Baidu’s other business focus. In a bid to build its content ecosystem and diversify its revenue source, Baidu has spent heavily on online video unit iQiyi (爱奇艺 in Chinese). The video streaming service did not let the internet giant down, as it has become the top player in the country’s video streaming sector.

iQiyi recently inked a deal with Netflix to obtain licensed content from the latter, a step that can enhance their content distribution.

One of the changes of the new quarterly report is that it has adopted news ways to disclose the progress of its core businesses. In this report, the company discussed their core strategies in general rather than revealing information on its MAUs, mobile maps MAU, gross merchandise value for transaction services and Baidu Wallet activated accounts.

In addition, Baidu also announced that Jennifer Li will no long serve as Baidu CFO, but take a new role of CEO of Baidu’s investment arm Baidu Capital. This is a move widely seen as Baidu’s efforts to accelerate progress in its M&A endeavors.