Baidu logs big jump in sales and profits

Revenues at Baidu doubled year-on-year to $117m

Baidu.com, China's most popular search engine, reported an 87 per cent increase in profits in the second quarter to $38m. Revenues doubled year-on-year to $117m.

The company said that the progress was due to the appreciation of paid search by small and medium sized customers, as well as a "growing appreciation" of search engine marketing by large enterprises in China.

"The scalability of our business, aided by increasing numbers of large enterprise customers, helped Baidu post record results this quarter, despite some impact from the devastating earthquake in May," said chairman and chief executive Robin Li.

Baidu's revenue is generated by activities it describes as "online marketing ", which include advertising and paid placement of search results.

Online marketing customers increased 12.4 per cent quarter on quarter to 181,000 in the second quarter, representing an increase of 41.4 per cent from one year earlier.

"In the second quarter of 2008, we were able to produce steady increases in the number of active online marketing customers and revenues per active online marketing customer," said chief financial officer Jennifer Li.

"We are also pleased to report that our operating margin improved from previous quarters, reflecting the scalability of our search business."

Research and development costs were up 123 per cent to $10.4m, as the company increased its research staff.

Baidu predicts a slightly slower rate of revenue increase to between $132m and $136m for the third quarter, reflecting "temporarily altered user behaviour during the Beijing Olympic Games".