Xiaomi Q3 sees stable smartphone revenue as investments hit bottom line

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Xiaomi on Tuesday announced an 8.2% increase in third-quarter revenue to 78 billion yuan, but thanks to unrealized losses on its investments amounting to 3.4 billion yuan, its net profit was reduced compared to 4.86 billion yuan reported last year at 0.79 billion yuan.

Broken down by segment, smartphone revenues grew 0.5% to 47.8 billion yuan, but thanks to cost containment, they improved their profitability by more than four percentage points and posted gross profit of 6 , 1 billion RMB. Xiaomi said it shipped 43.9 million devices, down 5.8% year-over-year thanks to supply constraints.

The company claimed that Canalys ranked it as having the highest market share in Spain, Poland, Ukraine, Belarus, Serbia, Croatia, Lithuania, Myanmar, Algeria, Peru and India.

The company’s Internet service segment recorded a record revenue of 7.3 billion yuan, an increase of 27% from last year. Xiaomi said it now has over 500 million 30-day active users on its MIUI platform. At the end of the quarter in September, it reported 486 million MIUI users, including 127 million from mainland China.

On the revenue of its Internet services, advertising posted 4.8 billion yuan, which was also a record due to “expanding the user base, a higher percentage of users of premium smartphones and enhanced monetization capabilities ”; while the games increased by a quarter to reach 1 billion yuan.

Xiaomi said its internet service revenues outside of China more than doubled to 1.5 billion yuan.

For its IoT and lifestyle segment, revenue increased 15.5% to a new high of 21 billion yuan, however, the gross margin fell slightly to 2.4 billion yuan. The company said it faced “challenges in overseas shipping logistics” during the quarter.

On its plans for electric vehicles announced in March, the company says it has more than 500 people on the team and serial production will begin in the first half of 2024.

For its long-term investments, Xiaomi said as of September 30 that it has 46 billion yuan mainly in the form of shares, and while the fair value of its preferred share has increased by 1.3 billion yuan, its common stock took a dip and lost 3.4 billion yuan. disabled. In the nine months leading up to the end of the quarter, its common stock portfolio only grew by 1 billion yuan compared to an increase of 5.1 billion yuan at the same stage in 2020.

Last week, compatriot Baidu announced a 13% increase in revenue to 31.9 billion yuan, and like Xiaomi, it also found its long-term investments watered down. In this case, he reported a net investment loss of 18.9 billion yuan which helped push his net income from 13.7 billion yuan last year to a net loss of 16.6 billion yuan. yuan for the third quarter.

“Baidu Core had another strong quarter, driven by 73% year-over-year growth in our AI cloud revenue,” said Baidu CFO Rong Luo. “With a diverse AI portfolio, including cloud services, smart transportation, smart devices, autonomous driving, smart electric vehicles and robotaxi, we are well positioned for long-term growth. ”

The company expects fourth-quarter revenue to be around the same levels, but said the situation with COVID-19 in China continued to limit visibility.

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