Baidu Releases Quarterly Financial Report, Set to Buy JOYY’s Livestreaming Operations in China
On Nov. 17, Baidu released its financial results for the third quarter of 2020, ending on Sept. 30. The report showcases positive revenue growth, and the company has already announced it will acquire JOYY’s Chinese livestreaming business for $3.6 billion.
Overall, Baidu generated 28.2 billion yuan in revenue, with an increase of 1% year-on-year. On average, analysts had expected the company’s revenue to be 27.53 billion yuan, according to IBES data from Refinitiv.
The revenue of Baidu Core reached 21.4 billion yuan, rising 2% year-over-year. The cost of revenue decreased by 22% compared to the same period last year to 12.8 billion due to the decrease in content costs, traffic acquisition costs and costs of goods sold.
“Our revenue growth turned positive in the third quarter with many advertising verticals turning around, putting Baidu in a good position to further benefit from a recovery in the Chinese economy,” the financial report mentions Baidu CEO Robin Li as saying.
As for Baidu’s iQIYI, the Chinese Netflix-like streaming platform that had been under investigation by the US Securities and Exchange Commission (SEC), subscribers touched 104.8 million in September and membership revenue increased 7% from last year, according to the report.
Baidu expects its fourth quarter’s revenue to be between 28.6 billion and 31.3 billion, representing a growth rate of -1% to 8% year-over-year while Baidu Core’s revenue could end up between -1% and 10%.
Shares of Baidu dropped 1.6% to $145.48 after the results were released.
Meanwhile, the Beijing-based tech giant also announced it has reached a definitive agreement with Chinese video-based social media platform JOYY to acquire the latter’s domestic entertainment livestreaming unit YY Live for about $3.6 billion. The purchase will include the YY app, YY.com website, and PC YY.
SEE ALSO: Baidu Nearing Deal To Acquire JOYY’s Domestic Operations
The deal will be subject to conditions and the transaction is expected to be closed in the first half of 2021.
JOYY argued that the purchase will help its livestreaming business to thrive through Baidu’s extensive internet ecosystem, which covers 1 billion monthly active users (MAU.)
“The transaction will allow YY Live to access Baidu’s massive user traffic, boost its business growth, and enhance its ecosystem’s monetization capabilities to unleash greater value in a larger ecosystem,” said David Xueling Li, JOYY’s Chairman and CEO, in the statement regarding the purchase.
Baidu’s vibrant mobile ecosystem will also enable the fast growth of its own non-advertising revenues by increasing log-in users and expanding offerings like membership, livestreaming and online games, according to Robin Li, CEO of Baidu. He added that the transaction would turn the tech giant into a leading platform for live streaming and diversify the company’s revenue source.