Xiaomi's financial report for the first quarter of 2020

Xiaomi First Quarter 2020 Financial Report: Overview


On May 20, Xiaomi Group announced its earnings report for the first quarter of 2020. This is also Xiaomi's first quarterly financial report after the impact of the epidemic has occurred. Total sales reached 49.7 billion yuan ($ 6.96 billion), an increase of 13.6% over the previous year. Adjusted net income was 2.3 billion yuan ($ 0.32 billion), an increase of 10.6% over the previous year. Although the growth in sales and profits has slowed, it has continued to grow steadily during the epidemic.

Xiaomi's smartphone sales in the first quarter of 2020 were 30.3 billion yuan ($ 4.25 billion), an increase of 12.3% over the previous year; Deliveries reached 29.2 million units, an increase of 4.7% over the previous year. Powered by 5G high-end models, the average sale price of Xiaomi smartphones increased by 7.2% in the first quarter of 2020.

In addition, Xiaomi also has new prospects for globalization this quarter. According to Xiaomi's financial report, sales in the overseas market were 24.8 billion yuan ($ 3.48 billion), an increase of 47.8% over the previous year. And the share of total sales reached 50% for the first time.

Dual brand strategy and 5G increase ASP by 7.2%.

In 2019, Xiaomi shared the Xiaomi brand and the Redmi brand. In addition, the 4G to 5G change of the Xiaomi brand that started in 2019 offered a certain opportunity.

During the epidemic, Xiaomi released the flagship series Xiaomi Mi 10 5G. According to Xiaomi's financial report, deliveries exceeded 1 million units within 2 months of sale.

 Xiaomi MI 10

Powered by 5G high-end models, the average selling price of Xiaomi smartphones rose by 7.2% in the first quarter of 2020. Among other things, the average selling price of smartphones in China increased Mainland compared to the previous year by 18.7% and the overseas market by 13.7% compared to the previous year.

Based on the average selling price of Xiaomi smartphones this quarter, it is 1038 yuan (145 USD) . If we compare the dimensions of each quarter of the Xiaomi calendar year, we peak after 1052 yuan ($ 147) in the third quarter of 2018. However, when we compare it to Huawei and Apple in the same industry, there is still a certain gap. The Xiaomi brand needs to be further improved here.

The Redmi brand also set several price segments in this quarter. For example, the K30 Pro was launched with the Snapdragon 865 processor for the premium market. In the low-end note series, worldwide sales of the Redmi Note 8 series exceeded 30 million units.

 Xiaomi's first quarter 2020 financial report

In terms of gross margin for smartphones, it rose from 3.3% in the first quarter of 2019 to 8.1% in the first quarter of 2020. Xiaomi said that With the continued promotion of the double brand strategy, it is expected that the average sales price of Xiaomi smartphones will continue to increase in 2020.

The steady growth of the IoT business affects transportation and installation.

Xiaomi's financial report shows that the consumer goods industry has been severely affected by the epidemic. The production, transportation and sale of white goods and television were affected by the epidemic. Xiaomi's IoT and consumer goods business continued to grow this quarter. During the reporting period, sales reached 13 billion yuan ($ 1.82 billion), an increase of 7.8% over the previous year.

 Xiaomi IOT

In the reporting period to March 31, 2020 without With smartphones and laptops, the number of connected IoT devices on the Xiaomi IoT platform reached 252 million units, an increase of 42.6% compared to corresponds to the previous year. The number of users of Xiaomi IoT platform devices increased by 67.9% to 4.6 million compared to the previous year.

In the first quarter of 2020, 2.7 million units of Xiaomi Smart TV were delivered worldwide. According to Xiaomi's financial report, it rose 3% year over year as the overall scale of the Chinese mainland market contracted.

Xiaomi President Wang Xiang said in a conference call that there were several categories this quarter, including TVs, which were very difficult to install. The second quarter is on the upswing. In addition, Wang Xiang said that Xiaomi has also launched a larger television, added new categories, expanded TV products in various price segments and opened up new market areas. For example, Xiaomi released Redmi Smart TV's "MAX98" giant television at a price of 19999 yuan ($ 2802) during the reporting period.

In addition, Xiaomi continues to enrich its IoT category. In February 2020, Xiaomi launched the AX3600, a Xiaomi AIoT router that supports WiFi6. During the reporting period, Xiaomi's router sales rose 124% year over year, ranking second in China in terms of sales. In smart wearable devices, Xiaomi's sales of wireless Bluetooth headsets increased 619.6% year over year. It is third in the world. Xiaomi's smartband sales grew year-over-year, increasing 56%. He was the number one worldwide.

Internet business was more than 10%, the gross margin declined.

During the period, Xiaomi's Internet service revenue was 5.9 billion yuan ($ 0.83 billion), an increase of 38.6% over the previous year. And its share of total sales was over 10% and reached 11.9%.

 MIUI

User activity from Internet services increased significantly. According to Xiaomi's financial report, monthly active MIUI users reached 330 million in March 2020, an increase of 26.7% over the previous year. Among them, MIUI's monthly active users on the mainland are 110 million.

Also read: Xiaomi Active Users exceed 500 million worldwide

Although affected by the epidemic, the advertising budget in some industries has decreased. According to Xiaomi's financial report, Xiaomi's Internet advertising business grew 16.6% over the previous year.

At the same time, the diversity of the Internet business continued to grow. Emerging companies are internet services other than advertising and games in mainland China. These include TV-Internet, Youpin E-Commerce, FinTech and Übersee-Internet. During the reporting period, this portion of revenue increased 71.5% year over year and accounted for 38.1% of total Internet revenue.

Wang Xiang said that the significant increase in Internet service revenue is due in part to the fact that users are spending more and more time on smartphones. This enables many of our smartphone companies, such as gaming, to grow.

Xiaomi's financial report, however, shows that the gross profit margin of the Internet business this quarter was 57.1%, a year-on-year figure and decrease from the previous month. Xiaomi's senior vice president and international division president said this was mainly due to the decline in gross profit margin in the financial technology business. To cope with the epidemic, Xiaomi increased the bad debt provision. In addition, the decline in the gross profit margin is also related to the product mix. The growth rate of the games business and value-added services was higher than that of the advertising business in the first quarter. The gross profit margin of the advertising business is highest among these business areas. The decrease in the share of advertising revenue also led to a decrease in the overall gross margin of Internet services.

In the first quarter of 2020, Xiaomi's overseas market sales reached 24.8 billion yuan ($ 3.48 billion) a year – a 47.8% increase over the previous year, and overseas market sales accounted for 50% of total sales out. This is the first time in Xiaomi's history that overseas income contribution has reached half, and that share was 44.3% in 2019.

According to Canalys, the delivery of Xiaomi smartphones in Europe rose by 58.3% per year. in the first quarter of 2020 over the previous year, and the market share was over 10% to 14.3%. This is of great importance for the expansion of the operator channels. At the same time, smartphone shipments in the Western European market rose by 79.3% compared to the previous year. Among them, the market share in Spain came first with a market share of 28%. It is among the top 4 in Italy, Germany and France.

According to IDC statistics, Xiaomi smartphones held the number one position in India in eleven consecutive quarters in the first quarter of 2020 in the Indian market with a market share of 31.2%. Xiaomi is also accelerating in Latin America and the Middle East, as well as in the design of the African region.

After the epidemic in China, however, it broke out on a large scale. This also puts some pressure on Xiaomi's second quarter results.

Xiaomi President Wang Xiang said 100% of the Chinese supply system has been restored and India's resumption of work is still in its infancy. The country's government has just started to gradually lift the ban. The recovery is expected to take some time. He announced that India is currently recovering by 60%. However, future changes will depend on the prevention and control of the epidemic.

Wang Xiang said that the recovery situation was better on the European market than on the Indian market. Xiaomi's smartphone activation rate on the European market is currently around 90%, which is above the normal level. It is a good signal. However, we still believe that the second quarter will be a challenge for our business growth. “



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