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 and six months ended September 30, 2021.
In the third quarter of 2021, Xiaomi’s total revenue amounted to RMB78.1 billion, representing an increase of 8.2% year-over-year, adjusted net profit for the period was RMB5.2 billion, an increase of 25.4% year-over-year. Impacted by global macro-environment as well as market sentiment towards technology sector in China in the third quarter, Xiaomi’s long-term investments measured at fair value through profit or loss in the current period have generated unrealized financial losses, which have had a substantial impact on Xiaomi’s net profit. Nonetheless, Xiaomi’s core business profitability maintained steady growth. Xiaomi showcased excellent business model and operation with total revenue and adjusted net profit both maintained solid growths.
Meanwhile, Xiaomi global MIUI 30-day active users has exceeded 500 million as of 22 November, 2021, marking another milestone for Xiaomi’s “Smartphone x AIoT” strategy.
Q3 2021 financial highlights:
Xiaomi Corporation said, “During the third quarter of 2021, we continue to strengthen our core ’Smartphone × AIoT’ strategy and advance in the premium smartphone market. We ranked 1st in terms of smartphone shipments in 11 countries and regions. We continued to explore and innovate in product and technology to further enhanced our competitiveness in the premium market. Our internet services revenue reached new quarterly high and we remain committed to investing in research and development that underpins our products’ core competitiveness.” As of 22 November, 2021, Xiaomi’s global MIUI 30-day active users exceeded 500 million, marking another milestone for the “Smartphone x AIoT” strategy.
Quarterly Performance Review
Internet services revenue reaching new quarterly high
In the third quarter, Xiaomi’s profitability continued to strengthen as internet services revenue reached RMB7.3 billion, reaching a new quarterly high, representing an increase of 27.1% year-over-year. The gross profit margin of the internet services segment was 73.6%, 13.1 percentage points higher than the same period of last year.
Meanwhile, the Group’s global internet user base continued to expand rapidly in the third quarter. As of November 22, 2021, global MIUI 30-day active users exceeded 500 million for the first time, marking another milestone for Xiaomi’s global expansion. In September 2021, the MAU of MIUI increased 32.0% year-over-year to 485.9 million, among which the number of MAU in Mainland China rose to 127.3 million, a year-over-year increase of 16.4% and a net gain for the fourth consecutive quarter. In September 2021, MAU of Xiaomi’s global smart TV and Xiaomi Box expanded over 33.0% year-over-year. As of September 30, 2021, the Group’s number of TV paid subscribers was 4.7 million, a 13.5% increase on a year-over-year basis.
In the third quarter of 2021, Xiaomi’s advertising revenue reached RMB4.8 billion, up 44.7% year-over-year, primarily due to expanding user base, higher percentage of premium smartphone users and stronger monetization capabilities. Xiaomi’s gaming revenue reached RMB1.0 billion, increasing 25.0% year-over-year due to the strong performance of high-quality new games and higher gaming average revenue per user (“ARPU”) driven by premium and gaming smartphones. Xiaomi’s revenue from other value-added services amounted to RMB1.6 billion in the third quarter. In the second quarter of this year, Xiaomi’s Youpin ecommerce platform rolled out its new consumer brand, Life Element, which offers a wide range of high-quality day-to-day products at competitive prices. Most recently, in November 2021, Youpin also launched its UP paying membership system to consistently improve the online shopping experience of its users.
In the third quarter of 2021, Xiaomi’s overseas internet services revenue increased by 110.0% year-over-year to RMB1.5 billion, accounting for 19.9% of total internet services revenue, setting another quarterly record. Going forward, we will continue to expand and deepen collaborations with the Group’s global business partners and actively explore new internet service offerings in the overseas markets.
Xiaomi remains committed to investing in research and development, which boosts its products’ core competitiveness. In the first three quarters of 2021, the Group’s cumulative research and development expenditures reached RMB9.3 billion, representing an increase of 51.4% year-over-year. In September 2021, Xiaomi introduced Xiaomi Smart Glasses, boasting a visualized information display and interactive features. In November 2021, Xiaomi launched Loop LiquidCool Technology, which improves smartphone heat dissipation under heavy usage. As of September 30, 2021, Xiaomi’s research and development team totaled 13,919 employees, accounting for more than 44% of total employees.
Robust overseas revenue with smartphone shipments ranked No. 1 in 11 countries and regions
Xiaomi’s revenue from overseas markets reached RMB40.9 billion during the third quarter of 2021, accounting for 52.4% of total revenue. Despite the global shortage of key components, Xiaomi solidified its market position by optimizing global market resource allocation and reinforcing its channels in accordance with local market conditions. According to Canalys, Xiaomi’s market share of smartphone shipments in the third quarter ranked No. 1 in 11 countries and regions and among the top five in 59 countries and regions globally.
Xiaomi continued to deepen its global market presence in the third quarter. According to Canalys, in the third quarter of 2021, Xiaomi ranked No. 2 in Europe with a smartphone market share of 21.5%. In Western Europe, Xiaomi smartphone market share reached 17.0% and ranked among the top three in terms of shipments; in Central and Eastern Europe, Xiaomi ranked No.2 with 28.7% smartphone shipment market share. In the third quarter of 2021, Xiaomi sold over 6.8 million smartphones through carrier channels in overseas markets excluding India, representing an increase of over 130% year-over-year. According to Canalys, Xiaomi smartphone market share in Western Europe carrier channels increased from 4.6% in the third quarter of 2020 to 13.0% in the third quarter of 2021.
At the same time, Xiaomi continued to strengthen its competitiveness in emerging markets. According to Canalys, in the third quarter of 2021, Xiaomi market shares in Latin America, the Middle East and Africa reached 11.5%, 16.3% and 7.3%, respectively. In addition, Xiaomi has maintained No. 1 position in smartphone shipments in India for the 16th consecutive quarter.
Q3 smartphone shipments ranked 3rd globally with continuous advancements in the premium market
In the third quarter of 2021, despite the global shortage of key components, the Group’s global smartphone shipments still reached 43.9 million. According to Canalys, in the third quarter of 2021, the Group’s global smartphone shipments ranked No. 3 with a market share of 13.5%. The Group’ smartphone revenue totaled RMB47.8 billion with a gross margin of 12.8%, an increase of 4.4 percentage points year-over-year.
Xiaomi user segmentation strategy and new products allowed the Group to broaden its user base. For many of its new smartphones launched this year, over half of the users are new Xiaomi users. Xiaomi introduced the brand-new Xiaomi Civi Series in September 2021 and was well received by users.
In the first three quarters of 2021, global shipments of Xiaomi’ smartphones priced at or above RMB3,000 in mainland China and EUR300, or equivalent, in overseas markets, totaled approximately 18 million, accounting for more than 12% of total shipments. In overseas markets, total shipments of smartphones priced at or above EUR300, or equivalent, grew by more than 180% year-over-year during the third quarter, mainly in Latin America, Western Europe and the Middle East.
During November’s Singles’ Day Shopping Festival, Xiaomi and Redmi brand smartphones together ranked No.1 in sales volume on Tmall.com, JD.com and Suning.com. The Group’s premium smartphones also ranked No.1 among Android smartphones priced above RMB4,000 on Tmall.com and JD.com. In addition, during the shopping festival, total sales volume of Xiaomi’ smartphones from its offline channels increased by more than 110% year-over-year.
“Smartphone x AIoT” strategy continues, new retail growth efforts accelerated
Xiaomi IoT and lifestyle products segment revenue was RMB20.9 billion during the third quarter of 2021, increasing 15.5% year-over-year. Notably, the Group’s overseas IoT and lifestyle products revenue reached a new record high despite the challenges in maritime shipping logistics overseas this quarter.
In the third quarter, against the backdrop of a year-over-year decline in global sales volume of TVs, Xiaomi’s global smart TV shipments reached 3.0 million with a year-over-year revenue increase of 19.5%. According to All View Cloud (“AVC”), Xiaomi’s TV shipments ranked No. 1 in mainland China for the 11th consecutive quarter and among the top five globally in the third quarter of 2021.
In addition, Xiaomi has expanded its premium smart home appliances categories to help users create a healthy and comfortable living environment. In the third quarter, Xiaomi launched smart home appliances including the Xiaomi 550L Four-door Smart Refrigerator and the Xiaomi Mini Washing Machine. Xiaomi’s smart ventilated air conditioners also performed well. During the November’s Singles’ Day Shopping Festival, Xiaomi’s cumulative sales of home appliances ranked No. 3 on JD.com.
Xiaomi’s AIoT platform continues to expand. As of September 30, 2021, the number of connected IoT devices (excluding smartphones, tablets and laptops) on its AIoT platform exceeded the 400 million marks for the first time. The number of users with five or more devices connected to its AIoT platform (excluding smartphones, tablets and laptops) exceeded 8 million.
This year Xiaomi accelerated its new retail growth efforts, further solidified its lead in online channels while rapidly expanding offline channels. As of the date of this announcement, the total number of Xiaomi’s retail stores in mainland China surpassed 10,000. Xiaomi expects the further growth in lower-tier market penetration will allow the Group to serve more users in mainland China.