Baidu Inc.'s profit more than doubled in the third quarter -- helped in part by the sale of its takeout delivery business -- but it reported rising expenses as part of its aggressive push into artificial intelligence.
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However, the company fell short of Wall Street's forecast on revenue in the latest quarter and guided revenue in the current quarter below estimates.
The company's American depositary receipts, which last week set a record in New York trading, fell 10% to $234 after hours.
Research and development costs reached 3.24 billion yuan ($487 million) in the latest period, up 24% from a year ago. Baidu has pledged to deliver a self-driving bus by the end of next year and fully autonomous cars by 2021, and has been investing heavily.
This summer, it sold its takeout delivery business to Alibaba Group Holding Ltd.-backed Ele.me, as it continues to lift its spending on artificial intelligence.
"If you think about search, it's the most natural AI application." co-founder and Chief Executive Robin Li said at The Wall Street Journal's WSJ D.Live technology conference.
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Founded in 2000, Baidu built its business around search but stumbled as it expanded into other online services as it sought to compete in China's fierce online-to-offline market.
Revenue from online marketing, which contributes the bulk of Baidu's sales overall, rose 22% as Baidu continued to make more money from each advertiser.
The result comes as Baidu reported a 7% decline in active online marketing customers. The Beijing-based company came under government scrutiny last year and was forced to overhaul operations following a scandal over medical listings. The tougher requirements forced Baidu to drop advertisers.
In the latest period, profit rose to 7.95 billion yuan, or 24.05 yuan an ADR, from 3.10 billion yuan, or 8.51 yuan an ADR a year earlier. Excluding stock-based compensation and other items, profit surged to 25.94 yuan an ADR from 9.92 yuan a year earlier.
Meanwhile, revenue rose 29% to 23.49 billion yuan -- within Baidu's guidance of 23.13 billion yuan to 23.75 billion yuan.
Analysts surveyed by Thomson Reuters had expected 13.55 yuan in adjusted profit on 23.64 billion yuan in revenue.
For the current quarter, Baidu projected revenue of 22.23 billion yuan to 23.41 billion yuan, compared with analysts' estimates of 24.78 billion yuan.
Write to Maria Armental at email@example.com
(END) Dow Jones Newswires
October 26, 2017 18:33 ET (22:33 GMT)