China‘s search engine giant Baidu Inc surpassed quarterly revenue estimates on Thursday as a resurgence of COVID-19 in China and accompanying restrictions boosted demand for its cloud and artificial intelligence (AI) products.
The news drove Baidu’s U.S.-listed shares more than 5% up in pre-market trading even as the company cautioned that the second quarter would be more challenging.
Revenue for the three months to March 31 rose 1% to 28.41 billion yuan ($4.22 billion), the slowest growth in six quarters, but topped an analysts’ average estimate of 27.82 billion, IBES data from Refinitiv showed.
It posted a net loss of 885 million yuan, or 2.87 yuan per American Depository Share (ADS), amid an economic downturn and pandemic resurgence in China.
A year earlier it had posted a profit of 25.65 billion yuan, or 73.76 yuan per ADS.
“Since mid-March, our business has been negatively impacted by the recent COVID-19 resurgence in China,” Robin Li, Baidu’s founder and chief executive, said in a statement, adding that challenges related to the virus will continue to pressure its operations in the near term.
Revenue for Baidu Core, which includes online ad sales and non-ad sales from its AI-powered products including AI cloud, rose 4% to 20.48 billion yuan.
Its online ad revenue dropped 4% year-on-year to 15.7 billion yuan.
The second quarter will be more challenging for the company, compared with the first quarter, Baidu’s Chief Financial Officer Luo Rong said during a conference call.
Sales from Baidu AI cloud, part of the non-ad revenue and one of its fastest-growing sectors, jumped 45%, according to Luo.
Founded as a search engine tool, the company has expanded into cloud services, autonomous driving and robotaxis in recent years as competition rises for its core search platform and advertisement business.
Last month Baidu received permits to deploy robotaxis without humans in the driving seat on open Chinese roads for the first time.
Apollo Go, Baidu’s robotaxi service, currently available in 10 Chinese cities, operated around 196,000 rides during the quarter.
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