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After Hours: Baidu and iQiyi Report Starkly Different Q2s

Eric Volkman, The Motley Fool

Some investors are gazing across the Pacific tonight. That's because a pair of related Chinese tech companies, Baidu (NASDAQ: BIDU) and iQIYI (NASDAQ: IQ) , reported their Q2 of fiscal 2019 results after market close.

In numerous respects, it was a Tale of Two Techs. Here's the skinny:

Computer keyboard with Chinese flag graphic on one of the keys.

Image source: Getty Images.

Baidu Q2: Big profit surprise

Baidu is quite the recovery story tonight. Beaten down in the stock market lately , the internet service company delivered quarterly results that convincingly beat analyst expectations -- especially for profitability.

For its Q2, Baidu posted just over 26.3 billion yuan ($3.84 billion) on the top line. Although this was only 1% higher than in the same quarter last year, it topped the average analyst estimate of 25.8 billion yuan ($3.77 billion).

In terms of non-GAAP (adjusted) net profit, the company earned 3.6 billion yuan ($529 million), or $1.47 per American Depositary Receipt (ADR). As with revenue, this was far lower than in the same frame the previous year (7.7 billion yuan, or $1.1 billion). Yet it was significantly higher than the $0.88 projected by prognosticators.

Expectations were fairly muted due to concerns over the pace of Chinese economic growth. Yet Baidu saw significantly increased take-up of its mobile app, plus encouraging gains in website traffic.

Adding more gains to an already very bullish day for the stock, Baidu is up nearly 8% in after-hours trading.

iQiyi Q2: Bottom-line whiff

In contrast, video streaming specialist iQiyi -- which was founded and is still majority-owned by Baidu -- fell short of expectations on the bottom line.

The company's Q2 figures revealed a 15% rise in revenue to 7.1 billion yuan, or $1 billion. This was aided to no small degree by a 50% increase in the subscriber base (to over 100 million people) and a 38% improvement in membership services revenue.

However, on the bottom line iQiyi posted a net loss of 2.3 billion yuan ($339 million, or $0.49 per share). This was deeper than the 2.1 billion ($310 million) net loss of Q2 2018.

It was also deeper than the average analyst estimate of a $0.45-per-share deficit. Revenue, meanwhile, broadly met expectations.

In spite of the boosts to subscribers and membership services revenue, iQiyi was hit by another decline in online advertising services revenue . This quarter, it fell 16% on a year-over-year basis to land at 2.2 billion yuan ($321 million).

The company proffered net revenue guidance for its current Q3. It believes that line item will amount to 7.21 billion yuan ($1.03 billion) and 7.63 billion ($1.09 billion) for the quarter.

iQiyi's stock is also going in a different direction than that of its parent's. It's currently down by 9% tonight.


Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Baidu. The Motley Fool recommends iQiyi. The Motley Fool has a disclosure policy .

This article was originally published on Fool.com