Xiaomi Posts Another Strong Quarter as Car Sales, IoT Drive Growth
Analysts had expected another solid quarter from Xiaomi 1810 -1.23%decrease; red down pointing triangle, and it has delivered, posting record-high revenue from its Internet-of-Things business and robust EV sales.
The Beijing-based company said Tuesday that its second-quarter net profit more than doubled to 11.90 billion yuan, equivalent to $1.66 billion. Revenue jumped 30% to a record 115.96 billion yuan.
That handily beat the expectations of analysts polled by Visible Alpha, which had expected the Chinese smartphone and electronics marker to post profit of 9.04 billion yuan on revenue of 88.89 billion yuan.
Revenue from Xiaomi’s smartphone business fell 2.2% to 45.5 billion yuan in the second quarter amid intense competition in the Chinese market. The decline was largely due to lower average selling prices, the company said, noting that shipments rose.
Revenue from the Internet-of-Things and lifestyle products segment set a new high at 38.7 billion yuan, up 45% from a year earlier. The division’s gross profit margin rose to 22.5%. The outperformance was fueled by sales of large home appliances, certain lifestyle products, and wearables like smartwatches in China, where government subsidies have helped boosted purchases of the product categories. Demand for Xiaomi’s tablets overseas also contributed, the company said.
The company’s electric-vehicle business—its newest and fastest-growing division—did well during the quarter despite headwinds in China’s auto market. Revenue from smart EVs more than tripled to 20.6 billion yuan compared with 6.2 billion yuan a year earlier, thanks to higher vehicle deliveries and average selling prices, Xiaomi said.
The launch of the YU7 sports utility vehicle, seen as a challenger to Tesla’s Model Y, generated record orders for Xiaomi in June, far exceeding market expectations and pushing shares to a record high.
Analysts will watch to see if the company can build on the success of its flagship SU7 sedan with its new pipeline, especially as carmakers in China face slowing demand, fierce competition and tougher regulator scrutiny.
Xiaomi’s EV, AI and other new initiatives segment reported a margin of 26.4% in the second quarter, up from 15.4% a year earlier.
Shares finished the day down 1.2% ahead of the earnings, leaving year-to-date gains at 52%.