424B5
BAIDU, INC. filed this Form 424B5 on 06/26/2017
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Table of Contents

Three months ended March 31, 2017 Compared to Three months ended March 31, 2016

Consolidated revenues. Our total revenues increased by 6.8% from RMB15.8 billion in the three months ended March 31, 2016 to RMB16.9 billion (US$2.5 billion) in the three months ended March 31, 2017. Our online marketing revenues decreased slightly by 1.3% from RMB14.9 billion in the three months ended March 31, 2016 to RMB14.7 billion (US$2.1 billion) in the three months ended March 31, 2017. The number of our active online marketing customers decreased by 23.2% from approximately 587,000 in the three months ended March 31, 2016 to 451,000 in the three months ended March 31, 2017, while the average revenue per online marketing customer increased by 26.8% from RMB25,400 in the three months ended March 31, 2016 to RMB32,200 (US$4,678) in the three months ended March 31, 2017. The decrease of our active online marketing customers was primarily due to the additional customer verification measures we have implemented since May 2016, which raised the standard for qualification as a marketing customer, in order to deliver a better user experience and build a safer and more trustworthy platform. Consistent with previously reported numbers, the number of active online marketing customers and average revenue per customer exclude those for our group-buying and delivery related businesses. Other revenues increased by 141.9% from RMB890.0 million in the three months ended March 31, 2016 to RMB2.2 billion (US$312.8 million) in the three months ended March 31, 2017, which was primarily due to the growth of subscription services of iQiyi.

Consolidated operating costs and expenses. Our total operating costs and expenses increased by 9.4% from RMB13.6 billion in the three months ended March 31, 2016 to RMB14.9 billion (US$2.2 billion) in the three months ended March 31, 2017. This increase was primarily due to the expansion of our business and, in particular, increases in content costs of iQiyi, research and development personnel-related costs and share-based compensation expenses, which were partially offset by the reduction of promotional spending relating to our transaction services.

Cost of Revenues. Our cost of revenues increased by 22.1% from RMB7.6 billion in the three months ended March 31, 2016 to RMB9.2 billion (US$1.3 billion) in the three months ended March 31, 2017. This increase was primarily due to the following factors:

 

    Traffic Acquisition Costs. Our traffic acquisition costs remained stable and was RMB2.2 billion (US$317.5 million) in the three months ended March 31, 2017, compared to RMB2.2 billion in the three months ended March 31, 2016. Traffic acquisition costs represented 12.9% of total revenues in the three months ended March 31, 2017, compared to 14.1% in the three months ended March 31, 2016.

 

    Bandwidth Costs and Depreciation Expenses. Our bandwidth costs increased by 22.7% from RMB1.1 billion in the three months ended March 31, 2016 to RMB1.3 billion (US$194.0 million) in the three months ended March 31, 2017. Our depreciation expenses of servers and other equipment increased by 16.4% from RMB707.3 million in the three months ended March 31, 2016 to RMB823.0 million (US$119.6 million) in the three months ended March 31, 2017. The absolute increases in these costs were mainly due to our investment in increasing our network infrastructure capacity.

 

    Sales Tax and Surcharges. Our sales tax and surcharges increased by 20.1% from RMB1.0 billion in the three months ended March 31, 2016 to RMB1.3 billion (US$182.8 million) in the three months ended March 31, 2017, which was mainly due to an additional portion of our revenues from online marketing services that has become subject to certain surcharges.

 

    Operational Costs. Our operational costs decreased by 12.2% from RMB1.1 billion in the three months ended March 31, 2016 to RMB958.7 million (US$139.3 million) in the three months ended March 31, 2017, primarily due to the decrease in iQiyi’s film distribution costs.

 

    Content Costs. Our content costs increased by 90.7% from RMB1.4 billion in the three months ended March 31, 2016 to RMB2.6 billion (US$382.9 million) in the three months ended March 31, 2017, primarily due to the increase in video content costs of iQiyi.

 

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