China's Baidu reported third-quarter revenue above market expectations on Monday and said it would buy social media platform JOYY 's video-based live streaming business in China for about $3.6 billion (roughly Rs. 26,800 crores).
The company said through the deal it aims to diversify its revenue source, the bulk of which comes from ad sales on its core search engine platform.
Baidu's vibrant mobile ecosystem enables the fast growth of its non-advertising revenue by increasing log-in users and expanding offerings like membership, live streaming and online games, Chief Executive Officer Robin Li said in a statement.
The company benefited from higher paid subscribers on Baidu's video streaming service iQIYI and a recovery in advertisement spending by businesses on its core search engine platform in the quarter.
As China's economy gradually emerges out of the COVID-19 slump, advertisement spending by businesses have also picked up from their lows during the peak of the pandemic. In September, China's industrial output rose faster than expected and retail sales gained.
The company said it expects current-quarter revenue to be between CNY 28.6 billion (roughly Rs. 32,400 crores) and CNY 31.3 billion (roughly Rs. 35,500 crores) compared with estimates of CNY 28.98 billion (roughly Rs. 32,900 crores).
Subscribers for iQIYI touched 104.8 million in September and membership revenue rose 7 percent from a year earlier, the company said.
Baidu's Netflix-like service is in the middle of a probe by the US Securities and Exchange Commission related to accusations of inflating user numbers, revenue and the prices it pays for content by short-seller firm Wolfpack Research.
The company's total revenue rose 1 percent to CNY 28.23 billion (roughly Rs. 32,000 crores) in the quarter ended September 30. Analysts on average had expected revenue of CNY 27.45 billion (roughly Rs. 31,100 crores), according to IBES data from Refinitiv.
The company's US-listed shares, which edged up initially, were down 2 percent after the bell.
© Thomson Reuters 2020
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