Baidu’s ad sales boost revenue

China’s Baidu tops profit, revenue expectations on ad sales growth —Reuters

What happened: Baidu’s revenue and profit exceeded expectations as a result of the company’s core ad business. Its net income rose by 45% to RMB 6.4 billion in the second quarter. Ad revenue increased by 25%, reaching RMB 21.1 billion. The company’s total revenue increased by 24.4%, topping the expected 22.4% rise.

Why it’s important: Baidu has learned to negotiate the increasingly strict regulation in China. While other online platforms have been censured for ineffectively policing content, Baidu has managed to emerge unscathed, which reflects in their financial results. The company has also been investing heavily in artificial intelligence (AI) as part of a countrywide push to move from traditional manufacturing to more high tech production. This push would have helped the company as a whole. However, the technology is still in its nascent stage, and analysts believe it will take some time before margin growth increases.