Baidu revenue contracts but beats estimates on cloud business growth

China’s search engine giant Baidu Inc beat quarterly revenue estimates on Tuesday, underpinned by growth in its cloud business, even as it reported its first year-on-year quarterly revenue contraction in two years.

Total revenue shrank by 5% to 29.65 billion yuan ($4.43 billion) in the second quarter, compared with analysts’ average estimate of 29.30 billion yuan, according to Refinitiv data.

U.S.-listed shares of the company rose 3.2% in premarket trading.

Even as Baidu’s core advertising sales continue to be soft, customers are signing up for its cloud services – a key area of growth globally – as demand for internet applications increase.

Revenue at Baidu’s AI Cloud unit grew 31% year-on-year in the quarter.

Baidu has also been doubling down on self-driving technologies, in which it has heavily invested over the past five years.

It started to charge fees for its robotaxi service Apollo Go on open roads from last year. Apollo Go operated 287,000 rides over the quarter and has so far accumulated a total of more than one million rides.

The Beijing-based company posted a net profit of 3.64 billion yuan,or 1.49 yuan per American Depository Share (ADS).

China’s tech companies reported weak results for the April-June period as they struggle with the economic slowdown and Beijing’s regulatory crackdown.

Earlier this month, Alibaba Group reported its first-ever flat quarterly revenue and Tencent Holdings posted its first-ever quarterly revenue decline.

(1 Chinese yuan = $0.1449)


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