Over 18 operating metrics hitting record high capitalizing on the Group’s continued advancement of premiumization strategy
Xiaomi Corporation, denoted as “Xiaomi” and listed under stock code 1810, a prominent player in the consumer electronics and smart manufacturing domain, rooted in smartphones and smart hardware interconnected by an Internet of Things (“IoT”) platform, has divulged its unaudited consolidated performance results for the three-month period culminating on June 30, 2023 (referred to as “2023 Q2” or “the Period”). Following the strategic pivot towards “dual emphasis on scale and profitability” executed two quarters ago, Xiaomi has experienced substantial growth in both profit margins and business metrics, reaching unprecedented highs. In the second quarter of 2023, Xiaomi’s total revenue surged to RMB67.4 billion, reflecting an impressive quarter-on-quarter (“QoQ”) increase of 13.2%. The adjusted net profit also achieved a remarkable year-on-year (“YoY”) growth of 147.0%, amounting to RMB5.1 billion. This marks the highest quarterly profit since the fourth quarter of 2021, significantly surpassing market expectations. For the first half of 2023, Xiaomi’s adjusted net profit approached the level of the previous year’s adjusted net profit.
Throughout this period, Xiaomi remained steadfast in executing its core corporate strategy and made steady progress in its endeavor to elevate smartphone quality. The Group attained a historic high in its gross profit margin, standing at an impressive 21.0%. This improvement extended across all three business segments, encompassing smartphones, IoT and lifestyle products, and internet services. Xiaomi actively pursued internal efficiency enhancements and overall performance improvements, which involved cost reduction initiatives and enhanced inventory management measures, further strengthening the Group’s long-term sustainability. During this quarter, the Group’s overall expenses amounted to RMB10.2 billion, marking a 2.3% YoY decrease. Total inventory reached RMB38.5 billion, a notable 33.5% YoY decline, marking its lowest point in the past ten quarters. The collective cash resources of the Group reached an all-time high, surpassing RMB113.2 billion. This abundance in cash resources underscores Xiaomi’s sound and efficient operational model, bolstering its foundation for future growth.
The smartphone business segment achieved an unprecedented gross profit margin, driven by the resounding success of the premiumization strategy. Despite a softening global demand in the smartphone market, Xiaomi displayed agility and seized opportunities. According to Canalys, Xiaomi’s global smartphone market share increased by 1.6 percentage points to 12.9% QoQ, with global smartphone shipments reaching 32.9 million units in the second quarter of 2023. This translated to a revenue of RMB36.6 billion for the smartphone division, marking a 4.6% QoQ rise. Notably, the gross profit margin for the smartphone business reached an impressive 13.3% in this quarter, indicating a YoY increase of 4.7 percentage points, an all-time high.
According to Canalys, Xiaomi’s smartphones secured top-three rankings in 51 countries and regions globally and were among the top five in 61 countries and regions globally during the second quarter of 2023. The Group’s smartphone shipments ascended to the second position in both the European and Middle Eastern markets, further solidifying its overseas market leadership. Xiaomi continued to leverage its expertise in cutting-edge technologies within the premium smartphone segment. In August, the Group launched the Xiaomi MIX Fold 3 in mainland China, which witnessed remarkable success, surpassing its predecessor’s sales by 2.25 times within the first five minutes of availability. Third-party data indicated that Xiaomi’s smartphone units sold in the RMB4,000–RMB6,000 price range in mainland China garnered a market share of 12.7%, marking a YoY increase of 6.2 percentage points. Additionally, Xiaomi’s smartphones priced at or above RMB3,000 constituted a growing percentage of the Group’s overall units sold in mainland China, experiencing consecutive YoY growth for four quarters. In the second quarter of 2023, the average selling price (“ASP”) of Xiaomi smartphones in mainland China also rose significantly by over 24% YoY.
The IoT segment continued its growth trajectory, with revenue from smart large home appliances surging by over 70%. Xiaomi recorded revenue of RMB22.3 billion from IoT and lifestyle products, reflecting a YoY increase of 12.3%, with a gross profit margin of 17.6%, up by 3.3 percentage points YoY, setting a new record. Xiaomi continued to enhance interconnectivity across various user scenarios. By June 30, 2023, the number of connected IoT devices (excluding smartphones, tablets, and laptops) on the Group’s AIoT platform had reached an impressive 654.5 million, marking a YoY increase of 24.2%. The number of users with five or more devices connected to the Group’s AIoT platform (excluding smartphones, tablets, and laptops) reached 13.0 million, reflecting a YoY increase of 27.8%. In June 2023, the monthly active users (“MAU”) of the Mi Home App surged to 82.9 million, demonstrating a YoY increase of 17.1%.
During the Period, revenue from smart large home appliances, including air conditioners, refrigerators, and washing machines, experienced remarkable growth, surging by more than 70% YoY. Xiaomi’s air conditioner shipments surged by over 90% YoY, with its refrigerator and washing machine businesses also outperforming the market. Xiaomi’s refrigerator shipments exceeded 500,000 units, while washing machine shipments surpassed 300,000 units. According to All View Cloud (“AVC”), Xiaomi’s TV shipments secured the top position in mainland China during the first half of 2023.
The internet ecosystem continued its thriving trajectory, with various operational metrics achieving record highs. Xiaomi’s global internet user base continued to expand, with the Monthly Active Users (MAU) of MIUI globally and in mainland China reaching 606.0 million and 149.3 million, respectively, as of June 2023, marking YoY increases of 10.8% and 6.5%. In the second quarter of 2023, Xiaomi’s internet services revenue reached RMB7.4 billion, reflecting a YoY increase of 6.8%, marking a quarterly record high. Additionally, the gross profit margin for internet services reached an impressive 74.1%.
During the second quarter of 2023, Xiaomi’s advertising revenue achieved RMB5.1 billion, reflecting a 13.0% YoY increase, setting a new record high. Revenue from both domestic and overseas performance-based and brand advertising also registered new quarterly highs. Xiaomi’s gaming revenue reached RMB1.0 billion, marking a 7.5% increase, enjoying YoY growth for the eighth consecutive quarter. In the realm of overseas internet services, Xiaomi adopted an open and positive approach to partnership opportunities worldwide. In the second quarter of 2023, Xiaomi’s revenue from overseas internet services surged by 19.7% YoY, reaching RMB2.0 billion, marking a record high and accounting for 26.8% of total internet services revenue, up by 2.9 percentage points YoY.
Xiaomi has undertaken a comprehensive R&D strategy upgrade, with more than 3,000 top-tier AI professionals joining its ranks. Amid the ongoing
