Xiaomi Group Reports Record First-Quarter Results, with Net Profit Reaching RMB 6.1 Billion, Up 163.8% Year on Year

According to China.com Finance, on May 26, Xiaomi Group released its financial report for the first quarter of 2021. The report showed that Xiaomi Group's total revenue for the quarter reached RMB 76.9 billion, up 54.7% year on year; adjusted net profit amounted to RMB 6.1 billion, a year-on-year increase of 163.8%; both total revenue and adjusted net profit hit record highs for a single quarter.

On the revenue front, the smartphone segment's revenue increased by 69.8% from RMB 30.3 billion in the first quarter of 2020 to RMB 51.5 billion in the first quarter of 2021. In the first quarter of 2021, Xiaomi shipped 49.4 million smartphones, compared with 29.2 million units in the first quarter of 2020. The average selling price (ASP) of smartphones was RMB 1,042.1 per unit in the first quarter of 2021, up from RMB 1,038.0 per unit in the first quarter of 2020.

Revenue from the IoT and Consumer Products segment increased by 40.5% from RMB 13.0 billion in the first quarter of 2020 to RMB 18.2 billion in the first quarter of 2021, primarily driven by rapid sales growth in several IoT products, including smart TVs, robotic vacuum cleaners, and electric scooters. Revenue from smart TVs and laptops rose by 21.7% from RMB 4.6 billion in the first quarter of 2020 to RMB 5.6 billion in the first quarter of 2021, largely reflecting a recovery from the sales decline experienced in the first quarter of 2020 due to the impact of the COVID-19 pandemic.

Revenue at the Internet Services segment increased by 11.4% from RMB 5.9 billion in the first quarter of 2020 to RMB 6.6 billion in the first quarter of 2021, primarily driven by growth in Xiaomi's advertising business. MIUI's monthly active users rose by 28.6% from 3.307 million in March 2020 to 4.253 million in March 2021, with monthly active users in mainland China increasing by 6.4% year on year to 1.186 million in March 2021, thanks to robust growth in smartphone shipments.

Other income increased by 17.2% from RMB 492.6 million in the first quarter of 2020 to RMB 577.1 million in the first quarter of 2021, primarily driven by growth in materials sales and maintenance service revenue.

Cost of sales increased by 48.8% from RMB 42.1 billion in the first quarter of 2020 to RMB 62.7 billion in the first quarter of 2021.

The cost of sales for the smartphone segment increased by 60.9% from RMB 27.9 billion in the first quarter of 2020 to RMB 44.9 billion in the first quarter of 2021, primarily due to higher smartphone sales.

The cost of sales for the IoT and Consumer Products segment increased by 38.7% from RMB 11.2 billion in the first quarter of 2020 to RMB 15.6 billion in the first quarter of 2021, primarily due to higher sales revenue in the IoT and consumer products categories.

The cost of sales for the Internet Services segment decreased by 28.2% from RMB 2.5 billion in the first quarter of 2020 to RMB 1.8 billion in the first quarter of 2021, primarily due to lower costs in the financial technology business resulting from a reduction in credit loss provisions.

Cost of sales for other segments decreased by 8.5% from RMB 499.4 million in the first quarter of 2020 to RMB 456.7 million in the first quarter of 2021.

In terms of gross profit and gross margin, gross profit increased by 87.4% from RMB 7.6 billion in the first quarter of 2020 to RMB 14.2 billion in the first quarter of 2021. The gross margin rose from 15.2% in the first quarter of 2020 to 18.4% in the first quarter of 2021.

The smartphone segment's gross margin increased from 8.1% in the first quarter of 2020 to 12.9% in the first quarter of 2021, primarily due to reduced promotional activities resulting from supply shortages and an upgrade in the product mix.

The gross margin of the IoT and Consumer Products segment increased from 13.4% in the first quarter of 2020 to 14.5% in the first quarter of 2021, driven by a higher revenue contribution from certain high-margin IoT products.

The gross margin of the Internet Services segment increased from 57.1% in the first quarter of 2020 to 72.4% in the first quarter of 2021, primarily due to a higher proportion of revenue from our advertising business and improved gross margins in both the advertising and fintech segments.

Sales and marketing expenses increased by 58.6% from RMB 2.6 billion in the first quarter of 2020 to RMB 4.2 billion in the first quarter of 2021, primarily due to higher packaging and transportation costs and increased compensation for sales and marketing personnel. Packaging and transportation expenses rose by 90.6% from RMB 600 million in the first quarter of 2020 to RMB 1.1 billion in the first quarter of 2021, largely driven by the expansion of overseas operations during the period. Compensation for sales and marketing personnel increased by 93.6% from RMB 400 million in the first quarter of 2020 to RMB 800 million in the first quarter of 2021, mainly reflecting a rise in the number of sales and marketing staff during the quarter.

Administrative expenses increased by 26.4% from RMB 781.5 million in the first quarter of 2020 to RMB 987.7 million in the first quarter of 2021, primarily due to higher compensation for administrative personnel.

R&D expenses increased by 61.0% from RMB 1.9 billion in the first quarter of 2020 to RMB 3.0 billion in the first quarter of 2021, primarily due to higher compensation for R&D personnel and an increase in R&D projects.

In March 2021, Xiaomi Group unveiled a brand-new Xiaomi logo and identity, embarking on a new decade with a refreshed brand image.

On March 30, 2021, Xiaomi Group officially announced the establishment of a wholly owned subsidiary to oversee its smart electric vehicle business, with an initial investment of RMB 10 billion and a projected total investment of USD 10 billion over the next decade. Mr. Lei Jun, CEO of Xiaomi Group, will concurrently serve as the CEO of the smart electric vehicle business.

As of March 31, 2021, Xiaomi had invested in more than 320 companies, with a total book value of RMB 51.9 billion, up 60.8% year on year. As of the same date, the aggregate fair value of these investments stood at RMB 69.7 billion. In the first quarter of 2021, Xiaomi recorded after-tax net gains of RMB 400 million from the disposal of investments.

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