Xiaomi's Q3 2022 earnings report likely didn't carry much expectation. Most of the information was predictable, such as the inevitable decline in total revenue due to the global smartphone business slowdown, and net profit falling with the decrease in revenue. Additionally, the electric vehicle segment is consuming part of the profits. Therefore, I think this Q3 earnings report was one without much anticipation, but for Xiaomi research purposes, the financial data is still worth analyzing. Here, I’ll start by sharing my personal perspective on the earnings report:
1. Overall, the earnings report met expectations. Revenue in the third quarter was RMB 70.47 billion, estimated at RMB 70.16 billion; adjusted net profit was RMB 2.12 billion, estimated at RMB 1.99 billion. The results were close to estimates—neither surprising nor unexpected.
2. In Q3, except for Apple, nearly all smartphone manufacturers experienced year-over-year shipment declines. Xiaomi’s Q3 smartphone revenue was RMB 42.51 billion, down 11.1% year-over-year but up 0.6% quarter-over-quarter, showing some rebound. However, even though Xiaomi’s 12S series has been considered as entering the high-end market, the average selling price was only RMB 1,058, a 3% year-over-year decrease with a slight quarter-over-quarter increase, which is somewhat disappointing. Xiaomi needs to focus on whether its high-end strategy can improve, when consumer demand will recover, and how domestic market share can be increased.
3. The IoT business data looks impressive at first glance. IoT connected users are still growing at double-digit rates. Besides TVs, both refrigerators and washing machines have seen a 70% high growth rate. However, overall revenue declined by 10%, marking the second consecutive quarter of decline. Before electric vehicles generate profit, the IoT business should be Xiaomi’s second growth curve. Over the past two quarters, there has been data growth but no performance improvement. Xiaomi needs to put in more effort.