Shares of China's Baidu pop over 8% after earnings beat as CEO says 'temporary pain' will pay off

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Baidu posted better-than-expected earnings for the June quarter, swinging back to profit and managing to stabilize its core ad business.

shares surged over 8% in U.S. after-hours trade after it reported earnings for the second quarter that beat market expectations, as it managed to fend off newer rivals like TikTok parent ByteDance in the advertising space.Revenue of 26.3 billion yuan, or $3.83 billion, according to the exchange rate published in the company's earnings release. That represented a 1% year-on-year increase or 9% on the quarter. Revenue beat market expectations of 25.76 billion yuan.

Earnings per share of 10.11 yuan, beating estimates of 6.12 yuan. That was a 54% year-on-year decline but a more than 260% increase from the previous quarter., and investors were concerned about the impact of rising competition and stricter censorship from the Chinese government on online videos which could hurt ad revenue.

But Baidu reported numbers that pleased the market. After posting its first loss since 2005 in the first quarter of the year, the Chinese internet giant returned to a net profit in the second quarter. Its core advertising and marketing services business hit revenues of 19.5 billion yuan, decreasing 2% year-on-year but rising 12% on the quarter. Given that this makes up around three quarters of the company's revenue, the signs of stabilization were welcomed.

The search giant has also been criticized for its slow shift to mobile as consumers spend an increasing amount of time on so-called "super apps." These are products like

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