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 audited consolidated results for the year ended December 31, 2022. Amid the global macroeconomic headwinds in 2022, Xiaomi harnessed its strong strategic execution capabilities and continuously improved operational efficiency to achieve total revenue of RMB280 billion and adjusted net profit of RMB8.5 billion, slightly beating market estimates.
In the fourth quarter of 2022, Xiaomi’s total revenue amounted to RMB66.0 billion and its adjusted net profit was RMB1.5 billion, which included RMB1.2 billion in expenses related to its smart EV and other new initiatives, as well as a one-time charge of approximately RMB0.7 billion, resulting from an adjustment of its after-sales service policy for certain series of its smartphones to improve customers’ after-sales service experience in November 2022.
Xiaomi has capitalized on its technological competitiveness to exploit new growth opportunities in the highly-anticipated smart electric vehicle (“EV”) industry. In 2022, Xiaomi invested RMB3.1 billion in smart EVs and other initiatives. Xiaomi’s smart EV research and development team now has a headcount of over 2,300, and the Group is on track to achieve its goal of mass production in the first half of 2024.
“Dual emphasis on scale and profitability” is Xiaomi’s new 2023 operating strategy. With the newly established Group Business Operation Committee and Group Human Resources Committee, Xiaomi will coordinate and optimize its strategic structure, operational management, and resource allocation. The focus will be on improving quality, bolstering efficiency, and developing a viable long-term governance system. The aim is to further unleash the potential of consumption demand and technological innovation, following the gradual easing of macroeconomic pressures.
Global smartphone ASPs rise for four consecutive years, unlocking growth potential of premiumization
Global smartphone shipments declined amid macroeconomic headwinds. That said, the Group managed to effectively insulate its business against single market risks by capitalizing on the strengths of its local operations, and having an excellent sales and marketing structure. As a result, the Group’s smartphone business posted revenue of RMB167.2 billion for the year, demonstrating its long-term and sustainable competitiveness. The average selling price (“ASP”) of its smartphones also rose for four consecutive years to reach RMB1,111.
According to Canalys, Xiaomi maintained its No. 3 ranking in the global smartphone market with a shipment of 150.5 million units in 2022. Xiaomi’s market share of smartphone shipments in 2022 ranked among the top three in 54 countries and regions and among the top five in 69 countries and regions globally.
Xiaomi’s premium smartphone business has reached a noteworthy milestone, with the debut of several models in collaboration with Leica, boosting both sales volume and reputation. After three years of relentless execution of smartphone premiumization strategy, the debut of blockbuster Xiaomi 13 series has been well received in the market. In mainland China, the series achieved the No. 1 smartphone market share among Android vendors in the RMB4,000 to RMB6,000 price segment for seven consecutive weeks. As of January 12, 2023, the series has received over 99% positive ratings on JD.com.
While Xiaomi brand continues to make a successful foray into the premium market, the Redmi brand remains focused on fortifying its position in the mass market. In December 2022, Xiaomi launched the first Redmi model with wireless charging technology, the Redmi K60 Series. The Redmi K60 Pro Series are all powered by the Qualcomm Snapdragon flagship processor and achieved sales exceeding 300,000 units in the first five minutes after its market debut.
Xiaomi has ranked No. 1 in brand loyalty among Android smartphone brands in mainland China for two consecutive years. According to third-party data, 50.1% of users of the Xiaomi brand continued to choose the same brand when replacing their smartphones, exceeding the percentage for other Android smartphone brands. Meanwhile, its 5G smartphones’ performance has been highly recognized by China Mobile. According to the “2022 China Mobile 5G Smartphone Performance Assessment Report”, Xiaomi’s premium model, the Xiaomi 12S Ultra, ranked No. 1 in a broad array of categories, including overall product performance, camera performance, and video recording performance. In addition, several of its products ranked among the top three in the 5G smartphone performance assessment in various price segments, such as the Xiaomi 12 Series and the Redmi K50 Series.
Redefining the industry by pushing boundaries of AIoT scenarios with technology innovation
In 2022, revenue from Xiaomi’s IoT and lifestyle products amounted to RMB79.8 billion. Within this segment, revenue in 2022 Q4 increased by 12.5% quarter-over-quarter to RMB21.4 billion.
The number of connected IoT devices (excluding smartphones, tablets, and laptops) on Xiaomi’s AIoT platform reached a new record high of 589 million. In December 2022, the monthly active users (MAU) of AI Assistant (“小愛同學”) reached 114.6 million, up 7.1% year-over-year, and the MAU of Mi Home App grew to 75.8 million, representing a year-over-year increase of 18.6%.
Xiaomi continued to enrich its portfolio of smart large home appliances. In 2022, the Group’s global smart TV shipments reached 12.4 million, while revenue from its smart large home appliances grew over 40% year-over-year. Air conditioner shipments also grew over 50% year-over-year while refrigerator shipments grew by approximately 100% year-over-year. Washing machine shipments also grew by over 39% quarter-over-quarter.
For the office and home entertainment segment, Xiaomi’s tablet shipments reached a new quarterly high in mainland China in the fourth quarter of 2022, with full-year shipments increasing by 160% year-over-year. According to Canalys, Xiaomi’s tablet market share ranking in mainland China rose to No. 3 in 2022, gaining a leading position in the market.
Monetization efficiency continues to improve with overseas internet services revenue hitting a record high
Xiaomi’s internet services segment maintained solid growth in 2022 owing to the Group’s strong business ecosystem and precise digital operation management. Revenue from internet services reached $28.3 billion, of which revenue from overseas internet services increased by 35.2% year-over-year to RMB6.8 billion. In the fourth quarter of 2022, revenue from overseas internet services reached another record high to RMB1.9 billion.
Amid industry headwinds, Xiaomi’s global advertising and gaming businesses outperformed the market and achieved steady growth in 2022. Advertising revenue reached RMB18.5 billion for the full year, and RMB4.7 billion in the fourth quarter of 2022. The Group’s gaming revenue also reached RMB4.1 billion in 2022, up 4.4% year-over-year, fuelled by its two-pronged premiumization strategy and optimized operating efficiency. In the fourth quarter of 2022, gaming revenue reached RMB1.0 billion, up 8.7% year-over-year, marking the sixth consecutive quarter of year-over-year improvements.
With the continuous enhancement of competitiveness in the premium market, Xiaomi’s global internet user base reached a new record high. As of December 31, 2022, global MAU of MIUI reached 582.1 million, an increase of 14.4% year-over-year, while MAU of MIUI in mainland China reached to 143.7 million, up 10.7% year-over-year.
Prioritizing long-term development by strengthening technology innovation to enhance efficiency
Technology innovation continues to propel Xiaomi’s development. In 2022, research and development expenses reached RMB16.0 billion, increasing at a 5-year compound annual growth rate (“CAGR”) of 38.4%. Xiaomi will continue to invest an estimated over RMB100 billion in research and development over the five-year period beginning in 2022 through 2026. As of December 31, 2022, research and development personnel accounted for an increasing proportion of the Group’s total headcount at approximately 50%.
Additionally, the Group released its first white paper on intellectual property rights in December 2022, which highlights Xiaomi’s intellectual property achievements and technological innovation capabilities. As of December 31, 2022, Xiaomi has obtained more than 30,000 patents worldwide, covering more than 60 countries and regions. In addition, Xiaomi revealed several exciting new technology advancements in February 2023, including 300W wired fast charging technology, solid state battery technology and Xiaomi Wireless AR Glass Discovery Edition. The Group will continue exploring self-developed technologies while striving to create and innovate.