Baidu Announces Fourth Quarter and
Fiscal Year 2005 Results
Company Expanded Market Share in China's Rapidly Growing Search Market
BEIJING, Feb. 21, 2006 -- Baidu.com, Inc. (Nasdaq: BIDU), the leading
Chinese language Internet search provider, today announced its unaudited
financial results for the fourth quarter and fiscal year ended December 31,
2005(1).
Fourth Quarter and Fiscal Year 2005 Highlights
* Fourth quarter 2005 total revenues increased to RMB114.9 million ($14.2
million), representing a 29.2% increase from the previous quarter and a
167.7% increase from the corresponding period in 2004.
* Fiscal year 2005 total revenues increased to RMB319.2 million ($39.6
million), representing a 171.8% increase from 2004.
* Fourth quarter 2005 net income increased to RMB24.5 million ($3.0
million), representing a 188.7% increase from the previous quarter and a
285.6% increase from the corresponding period in 2004. Basic and diluted
earnings per share ("EPS") for the fourth quarter 2005 were RMB0.75
($0.09) and RMB0.71 ($0.09), respectively; basic and diluted EPS
excluding share-based compensation expenses (non-GAAP) for the fourth
quarter of 2005 were RMB1.06 ($0.13) and RMB1.01 ($0.13), respectively.
* Fiscal year 2005 net income increased to RMB47.6 million ($5.9 million),
representing a 296.5% increase from 2004. Basic and diluted EPS for 2005
were RMB2.40 ($0.30) and RMB1.49 ($0.18), respectively; basic and
diluted EPS excluding share-based compensation expenses (non-GAAP) for
2005 were RMB4.10 ($0.51) and RMB2.53 ($0.31), respectively.
* The number of active online marketing customers during the fourth
quarter grew to over 63,000, an increase of 18.6% from the previous
quarter.
"We are pleased that Baidu has achieved another quarter of strong revenue
and earnings growth despite increased efforts by our peers in the Chinese
language search market," said Robin Li, Baidu's Chairman and CEO. "The
strength of the Baidu brand has helped us further enhance our market
leadership position in 2005. We are proud to have won the confidence of
millions of Chinese search users."
"Continued traffic growth, customer base expansion and the scalability
inherent in our pay-for-performance business model contributed to strong
financial results for the quarter," said Shawn Wang, Baidu's CFO.
"We achieved robust earnings growth while making significant investments in
search technology, products, network capacity, sales and distribution, and
most importantly, in people," continued Mr. Wang.
Baidu was named one of China's Top Ten Employers of the Year in 2005 by
China Central Television.
"Going forward, we will continue to make aggressive yet focused investments
in order to take advantage of the vast potential of China's search market,"
Mr. Wang concluded.
Fourth Quarter 2005 Results
Baidu reported total revenues of RMB114.9 million ($14.2 million) for the
fourth quarter ended December 31, 2005, representing a 29.2% increase from
the previous quarter and a 167.7% increase from the corresponding period in
2004. This result exceeded the top end of our previous revenue guidance of
RMB106 million ($13.1 million) for the fourth quarter of 2005.
Online marketing revenues for the fourth quarter were RMB111.7 million
($13.8 million), representing a 30.1% increase sequentially and a 179.3%
increase from fourth quarter 2004. The growth was driven by the increases in
both the number of customers and revenue per customer. Baidu had more than
63,000 active online marketing customers as of December 31, 2005,
representing an 18.6% increase from the previous quarter. Revenue per online
marketing customer for the fourth quarter was RMB1,772.9 ($219.7),
representing a 9.7% increase from the previous quarter.
Depreciation expenses of servers and other equipment as a component of cost
of revenues were RMB9.1 million ($1.1 million). Bandwidth costs as a
component of cost of revenues were RMB6.7 million ($0.8 million). Both
figures increased slightly from the previous quarter. Capital expenditures
for the fourth quarter of 2005 were RMB21.2 million ($2.6 million), compared
to RMB38.9 million ($4.8 million) for the previous quarter. We substantially
completed the expansion of a major data center by the end of the third
quarter, and as a result, depreciation expenses and bandwidth cost in the
forth quarter remained at similar levels as the previous quarter, and
capital expenditures in fixed assets declined.
Traffic acquisition cost as a component of cost of revenues was RMB8.9
million ($1.1 million), representing 7.8% of total revenues, compared to
7.0% in the corresponding period in 2004.
Selling, general and administrative expenses for the fourth quarter were
RMB42.4 million ($5.3 million), representing an increase of 40.5% from the
previous quarter and 210.9% from the corresponding quarter in 2004, mainly
due to expansion of direct sales force as well as incremental expenditures
associated with being a public company.
Research and development expenses were RMB11.0 million ($1.4 million),
remaining stable from the previous quarter and representing an increase of
197.0% from the corresponding period in 2004 primarily due to the expansion
of R&D headcount.
Operating profit on a GAAP basis was RMB14.2 million ($1.8 million),
representing a 105.6% increase from the previous quarter and a 137.1%
increase from the corresponding period in 2004. Operating profit excluding
share-based compensation expenses (non-GAAP) was RMB24.7 million ($3.1
million) for the fourth quarter of 2005, a 39.2% increase sequentially and a
124.6% increase from the corresponding period in 2004.
Net income on a GAAP basis was RMB24.5 million ($3.0 million), representing
a 188.7% increase from the previous quarter and a 285.6% increase from the
corresponding period in 2004. Net income excluding share-based compensation
expenses (non-GAAP) was RMB35.0 million ($4.3 million), an 81.3% increase
from the previous quarter and a 208.3% increase from the corresponding
period in 2004. Basic and diluted EPS for the fourth quarter of 2005
amounted to RMB0.75 ($0.09) and RMB0.71 ($0.09), respectively. Basic and
diluted EPS excluding share-based compensation expenses (non-GAAP) for the
fourth quarter of 2005 was RMB1.06 ($0.13) and RMB1.01 ($0.13),
respectively.
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 RMB36.6 million
($4.5 million) for the fourth quarter of 2005, representing a 31.6% increase
from the previous quarter and a 143.5% increase from the corresponding
period in 2004.
Fiscal Year 2005 Results
Total revenues for 2005 were RMB319.2 million ($39.6 million), representing
a 171.8% increase from the previous year.
Online marketing revenues were RMB307.4 million ($38.1 million),
representing a 187.6% increase from the previous year.
Depreciation expenses of servers and other equipment as a component of cost
of revenues were RMB25.3 million ($3.1 million), representing a 257.2%
increase from the previous year. Bandwidth costs as a component of cost of
revenues were RMB21.3 million ($2.6 million), representing a 151.0% increase
from the previous year. Capital expenditures totaled RMB88.7 million ($11.0
million) for 2005, representing a 248.8% increase from the previous year.
These increases were primarily attributable to expenses and costs associated
with the major data center expansion to strengthen our ability to support
increasing traffic.
Traffic acquisition costs in 2005 were RMB21.2 million ($2.6 million),
representing 6.6% of total revenues compared to 9.3% in 2004, reflecting the
faster growth of our organic traffic compared to that of union traffic for
the whole year.
Selling, general and administrative expenses in 2005 were RMB112.0 million
($13.9 million), representing an increase of 187.1% from the previous year,
mainly due to increased investment in branding, expansion of direct sales
force, strengthening of our distributor network, and incremental
expenditures associated with being a public company in the third and fourth
quarters.
Research and development expenses totaled RMB34.4 million ($4.3 million) in
2005, representing a 201.7% increase from 2004 primarily due to expansion of
R&D headcount.
Operating profit in 2005 on a GAAP basis was RMB35.8 million ($4.4 million),
a 225.7% increase from 2004. Operating profit excluding share-based
compensation expenses (non-GAAP) in 2005 was RMB69.4 million ($8.6 million),
representing a 152.3% increase from 2004.
Net income in 2005 on a GAAP basis was RMB47.6 million ($5.9 million),
representing a 296.5% increase from 2004. Net income excluding share-based
compensation expenses (non-GAAP) in 2005 was RMB81.2 million ($10.1
million), reflecting a 184.7% increase from 2004. Basic and diluted EPS for
2005 amounted to RMB2.40 ($0.30) and RMB1.49 ($0.18), respectively. Basic
and diluted EPS excluding share-based compensation expenses (non-GAAP) for
2005 was RMB4.10 ($0.51) and RMB2.53 ($0.31), respectively.
Adjusted EBITDA (non-GAAP) were RMB103.2 million ($12.8 million) in 2005,
representing a 175.6% increase from 2004.
As of December 31, 2005, the Company had cash and cash equivalents of
RMB900.6 million ($111.6 million). Full year net operating cash flow and
capital expenditures were RMB162.4 million ($20.1 million) and RMB88.7
million ($11.0 million), respectively. We made a pre-payment of RMB77.2
million ($9.6 million) against non-current asset in 2005 in connection with
our acquisition of the land use right for approximately 44,000 square meters
of land intended for building a new headquarter in Beijing. The aggregate
consideration for acquiring the land use right is approximately RMB92.4
million ($11.4 million).
As of December 31, 2005, Baidu had 1,307 full time employees, up from 349 at
the end of 2004.
Outlook for First Quarter 2006
Baidu currently expects to generate total revenues in an amount ranging from
RMB125 million ($15.5 million) to RMB130 million ($16.1 million) for the
first quarter of 2006, representing a 174% to 185% increase from the
corresponding period in 2005. This forecast reflects Baidu's current and
preliminary view, which is subject to change.
Conference Call Information
Baidu's management will hold an earnings conference call at 8 P.M. on
February 21, 2006 U.S. Eastern Standard Time (9 AM on February 22, 2006
Beijing/Hong Kong time).
Dial-in details for the conference call are as follows:
US: 617 847 8705
UK: 44 207 365 8426
Hong Kong: 852 3002 1672
Passcode for all regions: 86834403
A replay of the conference call may be accessed by phone at the following
number until 11 P.M. on February 24, 2006 U.S. Eastern Standard Time.
International: 617 801 6888
Passcode: 89696538
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 individual 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 Market under the symbol
"BIDU".
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