Chinese search engine Baidu has revised its revenue guidance for the second quarter of 2016 and provided an update on recent business developments. Baidu currently expects estimated second quarter 2016 revenue to be in the range of CNY 18.1 billion (approximately USD 2.8 billion) to CNY 18.2 billion (USD 2.8 billion). This compares to previous estimations of CNY 20.1 billion to CNY 20.5 billion.
The revenue guidance revision was mainly attributable to various factors, the company said. First, regulatory authorities continue to review the online marketing practices of medical, pharmaceutical, healthcare and other similar businesses, and have also implemented stricter advertising regulations for medical organizations. The review is being rolled out with varied timing with different levels of implementation and interpretation across geographies. While the review is underway, Baidu has observed a reduction or delay in spend from a significant portion of medical customers.
The implementation of and compliance with new regulations could take place over a prolonged period of time. Baidu believes that high quality medical customers who have reduced or delayed spend would likely be compliant with new regulations over time. As such, the company expects spend from these customers to recover gradually.
Second, the Company has reduced the number of sponsored links across the platform. This measure impacts revenue over the short term but enhances user experience and will drive benefit to Baidu over the long term, the company also said.
