BEIJING— Baidu Inc. reported it was making more money off Chinese using smartphones and other gadgets, a sign that the company is keeping up with a seismic shift
in the world's largest online market.
The Chinese search giant—sometimes known as China's Google —said on Thursday its first-quarter net profit rose 24% from a year earlier. Speaking on an earnings call, Baidu Chief Executive Robin Li said the company had more than 160 million daily active users of its search application. By comparison, he said, that figure was 130 million two quarters ago.
"Mobile traffic is growing fast, but mobile monetization is growing faster," Mr. Li said, adding that advertisers were briskly targeting smartphone users via Baidu.
The company also offered a positive outlook. For the second quarter, Baidu forecast revenue of 11.82 billion yuan ($1.89 billion) to 12.11 billion yuan. Analysts polled by Thomson Reuters had expected 11.57 billion yuan.
In recent years Baidu has dominated the Chinese search market for personal computers, but Chinese people are getting online via smartphones and other gadgets in increasing numbers. The country's total number of mobile Internet users rose to 500 million at the end of 2013 from 420 million at the end of 2012, according to a report in January by the government-established China Internet Network Information Center.
Analysts have been concerned that less screen space on smartphones hurts company's ability to advertise. Others have also argued that due to the focus on mobile applications on smartphones, fewer of China's 500 million smartphone users will land on Baidu's mobile search engine.
The company, which makes the bulk of its top line from search advertising, has been spending heavily to migrate its desktop search advertising prowess to mobile devices such as tablets and smartphones. During its earnings call, Chief Financial Officer Jennifer Li said the primary driver of operation costs would be sales and marketing, an indication the company plans to continue to spend to attract advertisers and users of its smartphone services.
Selling, general and administrative expenses in the first quarter were two billion yuan, more than doubling from the same period a year earlier, while research and development expenses rose 58% to 1.28 billion yuan.
Beyond search, Baidu has invested aggressively to expand its smartphone offerings, acquiring a major Chinese app store, popular online video sites and another service that helps shoppers find group deals online.
Mr. Li said for now app store 91 Wireless, which Baidu purchased last summer for $1.9 billion, wouldn't be a significant contributor to the company's earnings. Still, Mr. Li said the acquisition had helped Baidu surpass 100 million mobile application downloads a day
. That makes Baidu one of China's largest resources for downloading smartphone applications, the in-phone programs that users spend by far the most time on.
"As integration continues, we expect to realize huge value in this important space," Mr. Li said.
Mr. Li said the company was also focusing on an array of other services including gaming, security, cloud storage and online travel bookings.