Xiaomi Corporation (“Xiaomi” or the “Group”; stock code:1810), a consumer electronics and smart manufacturing company with smartphones and smart hardware connected by an Internet of Things (IoT) platform at its core, announced its unaudited consolidated results for the three months ended March 31, 2022.
In the first quarter of 2022, Xiaomi’s total revenue reached RMB73.4 billion. Adjusted net profit was RMB2.9 billion. Investment related to technological innovation and other new initiatives amounted to RMB425 million. Research and development expenses reached RMB3.5 billion, an increase of 16.0% year-over-year.
Despite continued supply shortage of key components, resurgence of COVID-19 and global macroeconomic headwinds, the Group continued to build on its business model and technological innovation capabilities combined with the company’s long-term investment in new initiatives. The company has continued to advance its business strategies while strengthening its foundation.
Global MIUI MAUs reach 529 million as Xiaomi’s premiumization strategy makes strides
In the first quarter of 2022, global smartphone shipments significantly declined due to global macroeconomic headwinds and the resurgence of the COVID-19. Building on Xiaomi’s premiumization strategy, its dual-brand strategy, continued advancements in core technologies and enhanced channel operations, the company maintained steady growth despite industrial headwinds.
In the first quarter of the year, Xiaomi’s global smartphone shipments amounted to 38.5 million units. According to Canalys, the Group’s market share of smartphone shipments ranked top three in 49 countries and regions. Driven by its premiumization strategy, global shipments of smartphones with retail prices at or above RMB3,000 in mainland China and EUR300, or equivalent, in overseas markets reached nearly 4 million units. The global average selling price (“ASP”) of smartphones grew 14.1% year-over-year to RMB1,189. According to third-party data, Xiaomi’s market share ranked No. 1 among Android smartphone vendors in the first quarter of the year for smartphones with retail prices between RMB4,000 and RMB6,000 in mainland China.
Xiaomi remained committed to executing its dual-brand strategy in the quarter bringing innovative user experiences and significantly expanding its target user base. For example, Xiaomi 12 series, Redmi K50, Redmi K50 Pro and Xiaomi Civi 1S have attracted over 50% new users.
In addition, Xiaomi’s new retail channel continued to empower its product strategy fortifying the company’s leading position in the online channel during the period. According to third-party data, the Group led the market with a 32.3% market share in the online smartphone shipment market in mainland China during the quarter. At the same time, the offline channel accounted for over 50% of premium smartphone shipments in mainland China.
Continued to elevate interconnectivity experience with a leading smart ecosystem
Xiaomi’s “smartphone x AIoT” strategy continues to grow in significance. As of March 31, 2022, the number of connected devices (excluding smartphones, tablets and laptops) on its AIoT platform reached 478 million, an increase of 36.2% year-over-year; the number of users with five or more devices connected to its AIoT platform (excluding smartphones, tablets and laptops) reached 9.5 million representing a year-over-year increase of 38.7%. In March 2022, the MAU of AI Assistant (“小愛同學”) reached 115.3 million, up 23.9% year-over-year, and the MAU of Mi Home App grew to 65.8 million, an increase of 33.8% year-over-year.
Xiaomi’s IoT and lifestyle products revenue achieved robust growth primarily due to a diverse product portfolio and refined business management. In the first quarter, revenue from IoT and lifestyle products reached RMB19.5 billion, an increase of 6.8% year-over-year. Gross profit margin reached a quarterly high of 15.6%.
Capitalizing on Xiaomi’s robust smart ecosystem and compelling user experience, its smart TV again achieved growth against the industry trend. In the first quarter of 2022, global shipments of smart TVs reached 3 million units, an increase of over 15% year-over-year. According to All View Cloud (“AVC”), Xiaomi’s smart TV shipments ranked No. 1 in mainland China for the 13th consecutive quarter and maintained a top five ranking globally.
At the same time, Xiaomi remains committed to product quality and innovation and further drove synergy among key product categories. Its smart large home appliance category (comprising air conditioners, refrigerators and washing machines) continued to deliver strong growth with revenue increasing more than 25% year-over-year in the first quarter of 2022. Xiaomi Pad 5 series continued to gain traction with steady increases in both shipments and market share. According to Canalys, Xiaomi’s tablet shipments ranked No. 3 in mainland China in the first quarter of 2022. Xiaomi Pad 5 series has become one of the top revenue-generating IoT categories since its launch in August last year.
Solid growth in internet services business fueled by diversified revenue streams
Internet services business maintained solid growth in the first quarter of 2022 driven by the company’s continued expansion of its internet user base and diversified revenue streams. Internet services revenue reached RMB7.1 billion, an increase of 8.2% year-over-year. In March 2022, global MIUI MAUs reached 529 million, an increase of 104 million year-over-year, and MIUI MAUs in mainland China reached 136 million, an increase of 17 million year-over-year, both achieving historical highs. MIUI MAUs in mainland China have increased for six consecutive quarters laying a solid foundation for the development of the internet business in the future.
Driven by the platform strategy, expansion of content offerings and high-end brand advertising, both Xiaomi’s TV value-added service revenue and TV advertising revenue achieved a quarterly high. In March 2022, MAU of smart TVs (including Xiaomi Box and Xiaomi TV Stick) exceeded 50 million for the first time. As of March 31, 2022, the number of TV paid subscribers reached 5.5 million. In the first quarter of 2022, advertising revenue reached RMB4.5 billion, an increase of 16.2% year-over-year, primarily attributable to the growth of search revenue, performance and brand advertising revenue.
With solid growth in its global user base, Xiaomi’s overseas internet business maintained a robust growth trajectory. In the first quarter of 2022, overseas internet services revenue reached RMB1.6 billion, an increase of 71.1% year-over-year. Contribution of overseas internet services revenue to total internet services revenue continued to grow and reached 21.9%, a quarterly high.
Overseas internet services maintained growth momentum as global business operations continue to expand
Xiaomi’s overseas business operations has maintained healthy development as the company continued to execute its globalization strategy. In the first quarter of 2022, revenue from overseas markets reached RMB37.5 billion and accounted for 51.1% of total revenue.
According to Canalys, in the first quarter of 2022, its market share of smartphone shipments ranked top three in 49 countries and regions and among the top five in 68 countries and regions globally. For smartphone shipments in Europe, Xiaomi continued to rank No. 3 in the first quarter of 2022 with 19.7% market share.
Xiaomi continued to penetrate the overseas carrier channel. According to Canalys, Xiaomi shipped more than 5.7 million smartphones through carrier channels in overseas markets (excluding India, Sri Lanka, Nepal and Bangladesh) in the first quarter of 2022, an increase of more than 10% year-over-year. Xiaomi’s smartphone market share through carrier channels ranked top three in 38 overseas markets.
Technology for good to drive sustainable development
Technology advancement remains the bedrock of Xiaomi’s business and the company has remain committed to the relentless pursuit of technological innovation and product quality. In the first quarter of 2022, research and development expenses reached RMB3.5 billion, an increase of 16% year-over-year. Investment related to technological innovation and other new initiatives amounted to RMB425 million. As of March 31, 2022, Xiaomi had over 26,000 patents granted and over 53,000 patent applications globally.
Xiaomi continues to push the latest innovations in imaging and charging technologies. It had more than 980 granted patents and more than 2,400 patent applications globally related to imaging technology. In relation to charging technology, the Group had over 1,550 patent applications globally, including over 390 patent applications for wired fast-charging. A comprehensive and diversified patent portfolio has been a strong source of support for Xiaomi to help it achieve breakthroughs in terms of brand and overall quality.
In addition, Xiaomi has fully incorporated environmental, social and governance into its business operations and management actively promoting the development of a sustainable economy. It has set multiple environmental goals related to energy, greenhouse gas emissions and water based on its operations. Xiaomi aims to reduce per capita energy consumption and greenhouse gas emissions in its self-operated office parks by 5% and 4.5% in 2026 respectively, compared to 2020 levels. Meanwhile, it has decreed that per capita water consumption level in 2026 should not exceed 2020 levels in self-operated office parks.
With precise understanding of different stakeholders’ needs in the society, Xiaomi has made remarkable achievements in early disaster warnings. In 2021, its earthquake early warning system covered over 90% of densely populated earthquake-prone regions across mainland China. In March 2022, the company officially launched the trial operation of Earthquake Early Warning smartphone function in Indonesia to help users secure precious time to seek refuge.
In addition, Xiaomi has deepened its involvement with public welfare initiatives, talent development and technology education in recent years. In January 2022, Xiaomi Foundation Limited in Hong Kong set up the Xiaomi Sports Scholarship with total donation of RMB10 million expected over the next five years. In April 2022, to promote cutting-edge research and technological innovation at Peking University in the fields of integrated circuits, psychology and cognition, Beijing Xiaomi Foundation has also officially launched the Peking University Xiaomi Innovation Fund.
Finally, the Group has provided RMB120 million in subsidies since 2021 to offline store partners showing how it is keen to work alongside employees and partners to overcome industrial headwinds and the impact of COVID-19.