Is Xiaomi's amazing quarter because of cash injections to its EV business? As it turns out, no. Image: Xiaomi.
Xiaomi today (22 August 2024) shared its Q2 unaudited consolidated results for its financial quarter (three months ending June 2024), and things are looking optimistic for the Chinese electronics and Internet company.
It reported a Q2 revenue of CNY88.9 billion (S$16.29 billion), which is a 32% YoY increase. The resulting adjusted net profit of CNY6.2 billion (S$1.14 billion) is also 20.1% higher than the same period in the previous year.
Before you start banging on about how a bulk of it is the investments from Xiaomi’s EV efforts, Xiaomi pre-empted its naysayers by adding one more line to its earnings summary: the revenue from its EV business and new initiatives sits at CNY8.3 billion, which is barely one-tenth of the entire quarter’s revenue.
So what’s really driving Xiaomi’s profit for those three months?
Smartphone growth
While Q2 has been great to Xiaomi, the company isn't resting on its laurels in Q3 and Q4.
Xiaomi reported CNY46.5 billion in revenue from its smartphone business, 27.1% more than the previous year’s same quarter (and a significant chunk of its reported revenue above). It further cited Canalys’s ranking report, which said Xiaomi maintained its position as one of the top three phone brands with the largest market share for the 16th consecutive quarter.
Is this surprising to us? Not really. Xiaomi has produced high-quality smartphones (like the Xiaomi 14 Ultra, which was nominated for Best Premium Android Smartphone category in Tech Awards 2024) and the Xiaomi 14, which won Best High-end Android Smartphone). Clearly, the company has already shaken off its budget and value-for-money reputation and is thriving well in the premium category it has always coveted.
But we know that huge shipment numbers are usually because its midrange and entry-level alternatives are also performing well, so it’s not strictly because the brand has stronger phone offerings as of late. Xiaomi cited “third-party data” to share that its premium smartphones (CNY3,000 and above) accounted for 22.1% of total smartphone shipments in mainland China, as an example of its smartphone shipment split.
Xiaomi said it saw “accelerated expansion” in Latin America, Southeast Asia, the Middle East, and Africa. While this doesn’t say anything concrete, we’re hopeful that it means Xiaomi will finally pay more attention to markets like Singapore and our ASEAN neighbours.
Air conditioners hard-carry
A surprising bit was Xiaomi reporting that its IoT and lifestyle product business had a record-high revenue of RMB26.8 billion, a 20.3% YoY increase. It exceeded 3.3 million air-conditioner shipments, 40% more than the previous year’s numbers.
The refrigerators and washing machines too saw 600,000 and 400,000 respectively, which makes one wonder what exactly is the secret sauce in Xiaomi’s smart home appliances.
27,000 EVs delivered in Q2 2024
According to Xiaomi, it delivered 27,307 units of its Xiaomi SU7 series electric vehicle in Q2, and it managed to send out more than 10,000 units in two consecutive months.
Apparently, Xiaomi felt it was important enough to highlight that it’s able to meet EV demand, which has only risen with each passing year despite certain markets slowing down for affordable alternatives and inadequate infrastructure to support EVs.
Xiaomi then shared that it targets to deliver 100,000 EVs by November, which is ahead of schedule. It also said that its ample cash injections will be further used on “technology and product development amidst intense market competition”.
If you’ve not heard, a prototype version of the Xiaomi SU7 Ultra will be unveiled in October 2024. More details will be revealed then.
Of course, there’s AI too
Xiaomi said it has made breakthroughs in its Xiaomi AI innovation, especially in the smart EV business arm. That was at a cost of CNY5.5 billion, which is 20.7% more than last year’s expenditure on AI research and development.
It expanded the smartphone’s AI Assistant multimodal recognition to include document analytics and AI video generation. These features don’t exist yet on the current premium Xiaomi smartphones, so we’ll have to see how they fare when it rolls out.
Source: Xiaomi (newsroom)
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