Baidu, owner of China’s dominant search engine, reported a lower-than-expected 47.5 percent rise in quarterly revenue as more users switched from PCs to mobile devices, which have less space for more lucrative forms of advertising.
Shares of the U.S.-listed company fell 7.8 percent to $198 in extended trading on Wednesday.
Baidu, sometimes referred to as China’s Google, reported revenue of 14.05 billion yuan, or $2.26 billion, for the fourth quarter, falling short of the average analyst estimate of 14.12 billion yuan, according to Thomson Reuters I/B/E/S.
Mobile revenue represented 42 percent of total revenue, up from 36 percent in the third quarter, Baidu said.
“In December, for the first time search revenue from mobile surpassed PC,” Chief Executive Robin Li said in a statement.
Baidu forecast revenue of 12.65 billion-13.07 billion yuan ($2.04 billion-$2.12 billion) for the current quarter. Analysts on average expected revenue of 13.62 billion yuan.
The forecast reflects the combined impact of the late timing of Chinese New Year and increased contribution from mobile as a percentage of overall revenue, the company said.
Baidu is facing increased competition on smartphones as companies such as Alibaba and Tencent invest in apps and content to keep users engaged.
Others, including Qihoo 360 Technology and Sohu.com’s Sogou, are moving aggressively into the search business.
“The investments we’ve made in mobile over the last two years have clearly paid off and set the stage for Baidu to capture an even larger market opportunity,” Chief Financial Officer Jennifer Li said in a statement.
Net income attributable to Baidu jumped 16 percent to 3.23 billion yuan, or $520.4 million, for the fourth quarter.
Excluding share-based compensation expenses, Baidu earned 9.97 yuan per share, or $1.61 per ADS, beating the average analyst estimate of 9.94 yuan per share, according Thomson Reuters I/B/E/S.
Baidu shares closed at $214.67 on the Nasdaq on Wednesday.
(Reporting by Supantha Mukherjee in Bengaluru and Paul Carsten in Beijing; Editing by Ted Kerr)
This article originally appeared on Recode.net.