Baidu (ticker: BIDU) reported Q2 2005 earnings results today that were in-line with previous management guidance. There were no analyst estimates. Key stats from the quarter:

Q2 Results:
(all percentage changes and comparisons are year on year, unless stated otherwise; assumes conversion of RMB 8.2765 : US $1)

• Total revenue rose 188.6% to $8.4 million, and rose 52.6% sequentially.
• Net revenue rose 185.5% to $7.9 million, and rose 52.9% sequentially.
• Online marketing services revenue rose 211.9% to $8.1 million, and rose 55.1% sequentially.
• Enterprise search software and related services revenue rose 24.6% to $315,000.
• Portal search services revenue fell 43.5% to $46,000.
• Gross margin was 70.0% vs 65.9%.
• Operating expenses rose 155.8% to $4.4 million.
• SG&A expenses rose 194.6% to $2.9 million.
• R&D expenses rose 204.5% to $837,000.
• Share-based compensation expenses rose 51.6% to $745,000.
• GAAP operating income rose 687.6% to $1.4 million, and rose 336.8% sequentially.
• Operating margin was 17.2% vs 6.3%.
• Non-GAAP operating income rose 224.6% to $2.2 million, and rose 104.2% sequentially.
• GAAP net income rose 625.5% to $1.5 million, and rose 381.8% sequentially.
• Net margin was 17.3% vs 6.9%.
• Non-GAAP net income rose 218.0% to $2.2 million, and rose 110.8% sequentially.
• Diluted EPS of $0.05 vs $0.01.

Balance Sheet
(assumes conversion of RMB 8.2765 : US $1)

• Cash and equivalents of $25.5 million as of June 30, 2005.

Other Stats

(all percentage changes and comparisons are year on year, unless stated otherwise; assumes conversion of RMB 8.2765 : US $1)

• Active online marketing customers rose 142.6% to 41,248, and rose 29.8% sequentially.
• Average revenue per online marketing customer rose 28.3% to $195, and rose 18.9% sequentially.
• Traffic acquisition costs fell to 6.1% of total revenue from 11.4% in Q2 2004.

Q3 Guidance
(assumes conversion of RMB 8.10469 : US $1)

• Total revenue of $9.6 - $10.0 million.

BIDU chart.

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Ezra Marbach

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