New consumer goods association | daily on November 24, dispatch (reporter Tang Zhi Xiao), millet announced in the third quarter of 2022, during the reporting period income 70.5 billion yuan, down 9.7% year-on-year, the adjusted net income of 2.1 billion yuan, down 59.1% year-on-year. The percentage of revenue from smartphone business continued to decline, while the percentage of business such as IoT and consumer products increased slightly.

The overseas market accounted for more than 50% of the total revenue, and the overseas Internet service revenue reached 1.7 billion yuan, a record high for a single quarter. Wang Xiang, president of Xiaomi Group, said that the following overseas shopping seasons, such as Black Friday and Christmas, will further help Xiaomi reduce channel inventory, and will also push more AIoT products to overseas markets in the future.

As of the close of trading on Nov. 24, Xiaomi offered HK $9.8, giving it a total market value of about HK $243.879 billion.

Mobile phone business pressure, AIoT business pick up the baton

According to the financial data, the gross profit of Xiaomi Group in the third quarter of 2022 was 11.722 billion yuan, down 18% from 14.292 billion yuan in the same period last year, and down 0.4% from 11.77 billion yuan in the previous quarter.

Operating loss was 1.361 billion yuan, compared with operating profit of 2.729 billion yuan a year ago and profit of 1.733 billion yuan in the previous quarter; The loss for the period was 1.474 billion yuan, compared with a profit of 789 million yuan in the same period a year ago and a profit of 1.365 billion yuan in the previous quarter.

Xiaomi ranked third in the global smartphone market by shipments in the third quarter of 2022, with a market share of 13.6 percent, down slightly from 13.8 percent in the previous quarter, according to Canalys. The corresponding share of mobile phone revenue fell 1% from the same period last year.

In addition to the mobile business, AIoT, the other pole of Xiaomi's "phone x AIoT" strategy, continued to maintain steady growth: the number of connected IoT devices (excluding smartphones, tablets and laptops) on Xiaomi's AIoT platform reached 558.3 million, up 39.5% year on year.

The number of users of devices (excluding smartphones, tablets and laptops) with five or more pieces connected to Xiaomi's AIoT platform reached 10.9 million, up 35.4% year on year.

The growth of smart home appliances was relatively bright. The shipment of smart air conditioners exceeded 1 million units, with a year-on-year growth of over 70%, and the shipment of refrigerators exceeded 340,000 units, with a year-on-year growth of over 150%.

Although the repeated impact of the epidemic on Xiaomi's offline stores continues, thanks to the instant retail that integrates offline and online, the GMV of offline stores during the "Double 11" shopping festival increased by 12% year-on-year, and the cumulative GMV of instant retail reached 190 million yuan.

"Currently we have access to more than 3,500 stores on Jingdong Daojia and Meituan. Not only mobile phones, but all products that support delivery in the stores have been online," Wang said. "Our basic goal is to cover consumers within 3 to 5 kilometers, and we will continue to increase our operations and investment in this area."

Overseas revenue accounted for more than 50%, and continued destocking

Xiaomi's revenue from overseas markets was 35.6 billion yuan, accounting for more than 50.5% of the total. According to Canalys data, in the third quarter of 2022, Xiaomi ranked the top three smartphone shipments in 52 countries and regions, and the top five smartphone shipments in 64 countries and regions, and achieved year-on-year market share increase in Europe, Latin America, the Middle East and other regions.

Xiaomi has stepped up sales promotion in overseas markets due to the "Black Friday" and "Christmas shopping season" in the fourth quarter, as well as the "diwali" shopping season in India. Wang Xiang, president of Xiaomi Group, said he hoped to use these sales seasons to reduce overseas inventory to a healthy level in the fourth quarter.

"Domestic inventories have returned to a healthy level and we are using these promotional seasons to deal with our overseas inventory," Mr Wang said. "At present, our inventories are down 9 per cent year-on-year and month-on-month, which is a good trend."

Specific to the single country market, Xiaomi will bring more AIoT products, especially smart TVS and sweeping robots, to Europe, Asia-Pacific and other regions in the future.

In the face of increasingly fierce competition in the Indian market, Wang Xiang admitted that the situation is complicated. Besides the epidemic and economic situation, factors such as geopolitics must also be taken into account. Therefore, in the Indian market, Xiaomi will pay more attention to the quality of operation and profitability, rather than the number of product shipments.

On the US side of the chip ban, Wang Xiang said that the current business has no impact, chip supply is stable, but later will pay attention to the trend of the entire industry to make corresponding adjustments.

Steady progress has been made in making cars more high-end

According to data provided by Strategy Analytics, Q3 smartphone shipments in China fell 16% year-on-year to 66.9 million units in 2022. "We expect China's smartphone market to remain sluggish in the coming quarters," said Wu Yiwen, senior analyst at Strategy Analytics. In an uncertain economy, the high end of the market will outperform the mass market, driven by budget users."

In terms of its mobile phone business, Xiaomi launched two high-end flagship products, the Mi 12S Ultra and Mi MIX Fold2, in September 2022. In November, Xiaomi released the Mi 12S Ultra concept, which can connect the professional Leica M Series camera lens to a smartphone. The first two models received 98.5 percent and 99.6 percent favorable reviews on JD.com's platform, respectively

In the third quarter of 2022 in mainland China, Xiaomi's smartphone shipments priced at RMB3,000 and above increased by approximately 14% year on year, and smartphone ASP (average unit sales price) increased by approximately 9% year on year.

In terms of promoting high-end smartphone strategy, Xiaomi is still advancing steadily and no longer pursuing an overnight success. "High-end brands take time to build up, and the idea of relying on one or two products for 'quick wins' is not correct," Mr Wang added. "High-end products are not only about metrics, but also about the reputation of the user experience."

According to the financial statement, Xiaomi's R&D expenditure reached 4.1 billion yuan in the third quarter of 2022, an increase of 25.7% year-on-year and 8.1% quarter-on-quarter, mainly due to the increase of R&D expenditure related to innovative businesses such as electric vehicles, which amounted to about 830 million yuan.

"We are still progressing smoothly and are confident that we will be able to officially launch mass production in the first quarter of 2024," Wang said. "Our total investment in the first three quarters is 1.86 billion yuan, which will not have a significant impact on the operation of the whole group."

Lin Shiwei, vice president and CFO of Xiaomi Group, revealed that the company bought back 190 million shares worth HK $2.3 billion in the first three quarters, and now has 94.3 billion yuan in cash reserves.