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Xiaomi’s Revenue Up 13.6% YoY in Q1 2020
Top and Bottom-line Grow Despite Headwinds, Both Beat Market Consensus
Major Products Sales Experience Solid Recoveries and Return to Pre-pandemic Level
Hong Kong, 20 May 2020 — Xiaomi Corporation (“Xiaomi” or the “Group”; stock code:1810), an internet company with smartphone and smart hardware connected by an Internet of Things (“IoT”) platform at its core, today announced its unaudited consolidated results for the three months ended March 31, 2020.
In the first quarter of 2020, Xiaomi achieved solid growth across all business segments. Its total revenue amounted to RMB49.7 billion, representing an increase of 13.6% year-on-year (“YoY”). Adjusted net profit was RMB2.3 billion, increasing by 10.6% YoY.
According to Canalys, a market research firm, Xiaomi successfully navigated the market downturn and were able to achieve the highest YoY growth in shipments among the top five smartphone companies worldwide. Meanwhile, Xiaomi’s smartphone 5G penetration rate in China was 25.9%, surpassing the industry average, reflecting its leading position in the 5G smartphone market, and the effective execution of the “5G + AIoT” dual-engine strategy.
Q1 2020 Financial Highlights:
• Total revenue was approximately RMB49.7billion, up 13.6% YoY, beating market consensus
• Gross profit was approximately RMB7.56 billion, up 44.9% YoY
• Non-IFRS adjusted net profit was RMB2.3 billion, up 10.6% YoY, beating market consensus
• R&D expenses was RMB1.9billion, up 13.4% YoY
Xiaomi Founder, Chairman and CEO Mr. Lei Jun said, “Although the industry is facing severe challenges, the Group still experienced growth in all segments despite the market downturn, which fully reflects the flexibility, resilience and competitiveness of Xiaomi’s business model. In the first quarter of 2020, we successfully issued the first U.S. dollar bond, which was 7.5 times oversubscribed; we also featured on the ‘Forbes’ Global 2000 list’ again this year, which highlights the international capital market’s recognition of Xiaomi. We believe a crisis is the ultimate litmus test for a company’s value, business model and growth potential. As the impact of the pandemic starts to ease, we will continue to focus on the ‘5G + AIoT’ strategy and strengthen our scale of investment, in order to let everyone in the world enjoy a better life through innovative technology.”
Q1 2020 Performance Review
Dual-Brand Strategy Yields Excellent Results
Occupy the Leading Position in 5G Market
In the first quarter of 2020, Xiaomi’s revenue in the smartphones segment reached RMB30.3 billion, an increase of 12.3% YoY; its shipment of smartphones reached 29.2 million units in the same period, an increase of 4.7% YoY. According to Canalys, in the first quarter of 2020, Xiaomi ranked 4th globally in terms of smartphone shipments, and its market share rose to 11.1%, making Xiaomi one of only two of the top five smartphone companies worldwide to maintain YoY growth in shipments.
Xiaomi continued to execute its dual-brand strategy, which delivered excellent results, in the first quarter of 2020. Shipments of Mi 10 and Mi 10 Pro exceeded 1 million units two months after their launch in February 2020. The Redmi brand continued to introduce highly competitive products at different price points. Redmi launched its flagship K series Redmi K30 Pro and Redmi K30 Pro Zoom Edition. On the back of the highly popular Redmi Note 8 series, the second best-selling smartphone model globally in the first quarter of 2020 according to Canalys, Xiaomi launched Redmi Note 9S and Redmi Note 9 Pro in overseas markets.
Boosted by the premium smartphone models, the average selling price (“ASP”) of Xiaomi’s smartphones increased by 7.2% YoY in the first quarter of 2020, and the ASP of its smartphones in mainland China and overseas markets increased by 18.7% and 13.7% respectively.
IoT Business Grows Continuously
Driven by Solid Business Foundation
In the first quarter of 2020, Xiaomi’s revenue of the IoT and lifestyle products segment was RMB13.0 billion. Due to Xiaomi’s diversified IoT product offerings and solid business foundation, the Group achieved a YoY increase of 7.8% in revenue despite the pandemic.
As the world’s leading consumer IoT platform, the number of connected IoT devices (excluding smartphones and laptops) on Xiaomi’s IoT platform grew to 252 million units as of March 31, 2020, an increase of 42.6% YoY. Moreover, the number of users who have five or more devices connected to the Company’s IoT platform (excluding smartphones and laptops) reached 4.6 million, an increase of 67.9% YoY. In March 2020, AI assistant“小愛同學” had 70.5 million monthly active users (“MAU”), an increase of 54.9% YoY; Mi Home app had 40.0 million MAU, an increase of 53.3% YoY.
In the first quarter of 2020, despite the overall decline in TV shipments globally due to the pandemic, Xiaomi’s global shipments of smart TVs still increased by 3% YoY to 2.7 million units, and its smart TV business continued to maintain its leading position in both mainland China and overseas markets. According to research firm All View Cloud (“AVC”), in the first quarter of 2020, Xiaomi’s TV shipments in mainland China ranked 1st for the fifth consecutive quarter and its global TV shipments ranked among the top five.
In February 2020, Xiaomi introduced the AX3600, a WiFi 6 enabled AIoT router, making Xiaomi the first brand in China to support WiFi 6 technology from terminals to routers. The sales of its routers increased by 124% YoY in the first quarter of 2020, and according to AVC, Xiaomi ranked 2nd in China in terms of online router shipments. Also, sales of its Mi True Wireless Earphones, Mi Band, Mi Electric Scooter and Mi Robot Vacuum increased by 619.6%, 56.0%, 40.7% and 40.0% YoY respectively.
According to Canalys, Xiaomi ranked 1st in terms of electric scooter and wearable bands shipments and 3rd in terms of True Wireless Stereo (“TWS”) shipments globally in 2019. According to iResearch, Xiaomi also ranked 1st in terms of electric scooter shipments globally in 2019.
Overseas Business Grows Despite Headwinds
Half of Total Revenue from Overseas Markets
Xiaomi’s overseas revenue increased by 47.8% YoY to RMB24.8 billion in the first quarter of 2020, accounting for 50.0% of its total revenue. Overseas revenue contributed to half of its total revenue for the first time.
In the first quarter of 2020, Xiaomi’s smartphone captured a market share of approximately 31.2% of shipments in India, and ranked 1st for the 11th consecutive quarter, according to IDC. Xiaomi leveraged its leading position in India, which also accelerated its growth in adjacent markets. According to IDC, Xiaomi ranked 1st in smartphone shipments in Nepal in the first quarter of 2020 with a market share of 30.9%, the equivalent of the market share of the 2nd and the 3rd ranked smartphone companies combined.
Besides, Xiaomi experienced remarkable growth in major overseas markets. According to Canalys, in the first quarter of 2020, its smartphone shipments grew by 58.3% YoY in the European market, accounting for 14.3% market share and ranking among the top four. Xiaomi also ranked among the top four in Italy, France and Germany. According to Canalys, Xiaomi’s smartphone shipments in Western Europe increased by 79.3% YoY. In Spain, it became the No. 1 smartphone company by shipments with a 28.0% market share. In Latin America, its market share ranked 5th following a 236.1% YoY increase in smartphone shipments, against a decline for the overall market. In addition, its smartphone shipments in the Middle East and Africa grew by 55.2% and 284.9% respectively.
Internet Services Revenue Grows Steadily
Xiaomi’s internet services revenue amounted to RMB5.9 billion in the first quarter of 2020, representing an increase of 38.6% YoY. User activity and time spent on its devices increased in the first quarter of 2020. In March 2020, the MAU of MIUI increased by 26.7% YoY to 330.7 million, while the mainland China MAU of MIUI reached 111.5 million.
By using diversified monetization methods, including search, pre-installation and news feeds, its expanded advertiser base across a variety of industries, and the optimization of its recommendation algorithms, advertising revenue reached RMB2.7 billion, an increase of 16.6% YoY. Besides, due to the fast-growing online gaming market in mainland China and higher online gaming average revenue per user from its premium smartphone users, its online gaming revenue increased by 80.5% YoY to RMB1.5 billion in the first quarter of 2020. Its internet services revenue outside of advertising and gaming from mainland China smartphones, including those generated from the Youpin e-commerce platform, fintech business, TV internet services and overseas internet services, increased by 71.5% YoY in the first quarter of 2020.
Video streaming and other subscription services provided on Xiaomi’s TVs became a major entertainment choice for many consumers amid the pandemic. As users grew accustomed to paid subscription services on Xiaomi’s platforms, its subscription revenue grew rapidly. In March 2020, MAU of its smart TVs and Mi Box reached 30.4 million, representing an increase of 46.8% YoY. As of March 31, 2020, the number of paying subscribers increased by 53.7% YoY to 4.3 million.
Impact of Covid-19 outbreak
Xiaomi spared no efforts to combat the coronavirus. Xiaomi was among the first internet companies to fight the pandemic in Hubei province, donating and delivering critical medical supplies to more than 30 hospitals in the province. Besides combatting the pandemic in China, Xiaomi actively fought to help address the global emergency and made large donations of medical supplies, including masks, protective suits and ventilators, to more than 30 countries around the world.
In mainland China, as the impact of the pandemic began to ease, the sales of Xiaomi’s major products experienced solid recoveries. The Group proactively worked with its supply chain partners to help them ramp up production capacities. Its production in mainland China has mostly resumed, and smartphone demand has rebounded quickly. Since April, its mainland China smartphone shipments have gradually returned to the pre-pandemic level, and its smart TV shipments have also largely recovered.
In overseas markets, Xiaomi’s extensive global reach allowed the Group to quickly strategize and deploy resources across different markets in response to the pandemic. As lockdown measures in various markets are gradually lifted, sales are starting to recover. As of the third week of May, the weekly number of smartphone activations in the European market had returned to over 90% of the average weekly level in January 2020.
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About Xiaomi Corporation
Xiaomi Corporation was founded in April 2010 and listed on the Main Board of the Hong Kong Stock Exchange on July 9, 2018 (1810.HK). Xiaomi is an internet company with smartphones and smart hardware connected by an IoT platform at its core.
With an equal emphasis on innovation and quality, Xiaomi continuously pursues high-quality user experience and operational efficiency. The company relentlessly builds amazing products with honest prices to let everyone in the world enjoy a better life through innovative technology.
Xiaomi is currently the world’s fourth-largest smartphone brand, and has established the world’s leading consumer IoT platform, with 252 million smart devices connected to its platform, excluding smartphones and laptops. Xiaomi products are present in more than 90 countries and regions around the world.
In July 2019, the company made the Fortune Global 500 list for the first time, ranking 468th among all, and 7th among internet companies. Xiaomi is the youngest company on the 2019 Fortune Global 500 list. In May 2020, the company made the Forbes Global 2000 List again and its ranking jumped to 384th.