ZTE's Q3 revenue fell by 3.9% year-on-year, with a net profit decline of 8.2% | Financial Report Insights

ZTE's third-quarter revenue and net profit both declined, with domestic business under pressure due to a complex investment environment, while international business continued to achieve high growth, with double-digit growth in the first three quarters.

On the evening of the 21st, ZTE released its third-quarter financial report.

1) Key Financial Data:

In the third quarter, the company achieved operating income of 27.557 billion yuan, a year-on-year decrease of 3.94%;

Net profit attributable to common shareholders of the listed company was 2.174 billion yuan, a year-on-year decrease of 8.23%;

Net profit excluding non-recurring gains and losses was 1.935 billion yuan, a year-on-year decrease of 11.73%.

2) Assets and Cash Flow:

As of September 30, 2024, total assets were 199.694 billion yuan, a year-on-year decrease of 0.63%;

Net cash flow from operating activities was 1.049 billion yuan, a year-on-year decrease of 63.02%.

Looking at the first three quarters, ZTE's revenue and profit only saw slight growth: from January to September, revenue was 90.04 billion yuan, a year-on-year increase of 0.7%; net profit was 7.91 billion yuan, a year-on-year increase of 0.8%.

ZTE stated that this year, facing a complex external environment, the company has been precise and pragmatic, operating steadily, actively grasping the development pace of the ICT industry, accelerating technological and market innovation, enhancing its own management efficiency and operational effectiveness. In the first three quarters, the company's overall operations remained stable, with domestic operator network business under pressure due to the investment environment, while the international market continued to break through and maintain double-digit growth. At the same time, both consumer and government-enterprise businesses achieved rapid growth.

ZTE's A-shares rose by 2.7% on Monday, with a nearly 6% increase year-to-date.

Global No. 2 in 5G Base Stations and 5G Core Network Shipments, No. 1 in Cloud Terminal Shipments in China

ZTE stated that in the connectivity field, the company continues to lead in key products in the wireless and wired markets. According to the latest data from a telecom consulting agency, ZTE's cumulative shipments of 5G base stations and 5G core networks rank second globally, and its market share in fixed network products ranks second globally.

In the computing power field, ZTE has identified intelligent computing as a long-term strategic focus, providing a full-stack, all-scenario intelligent computing solution, creating an open, inclusive, and prosperous intelligent computing ecosystem. In terms of intelligent computing infrastructure and platform technology, ZTE has introduced an "one machine, multiple cores" open architecture AI server, compatible with mainstream GPUs, and launched a 2*200G network card based on self-developed chips. Additionally, ZTE focuses on infrastructure integration delivery, engineering services for large-scale model training and applications, and promotes the implementation of intelligent computing infrastructure projects in multiple regions and industries In terms of industry empowerment, ZTE relies on 5G+PON industrial field network and Digital Nebula, combined with Nebula Big Model, to comprehensively assist in the digitalization construction of many industries such as industry, transportation, emergency response, power, culture and tourism, education, and small and micro enterprises. Among them, the Smart Large Emergency System has won 50% market share in the national emergency aviation capability improvement project, and the large unmanned helicopter rescue platform provides support in multiple frontline disaster relief and rescue operations. Based on 5G+XR network media integration to empower digital cultural and tourism construction, the company and its partners jointly created the world's first 5G-A VR large immersive theater project.

According to ZTE, the company is creating a high-quality gigabit network experience for home users, continuously innovating FTTR products, and launching the industry's first AI screen-equipped product series RoomPON 6.0; cloud terminal products further enhance market competitiveness, with the first half of the year leading the domestic cloud terminal market in shipments.

Decline in R&D Expenses

In terms of research and development, ZTE's R&D expenses in the first three quarters were 18.64 billion yuan, accounting for 20.7% of operating income, lower than the 19.06 billion yuan in the same period last year. ZTE stated that it is actively promoting technological innovations such as 5G-A, all-optical networks, and full-stack intelligent computing, accelerating deep integration and application landing with various industries.

According to information from the State Intellectual Property Office, ZTE Corporation has obtained a patent titled "Receiving Skip Control Channel Information," with authorization announcement number CN 115398985 B and application date in May 2020.

Established in 1985, ZTE mainly provides information and communication technology solutions, with business coverage in more than 160 countries and regions globally. The company has a complete end-to-end product and solution portfolio in the ICT industry, integrating "design, development, production, sales, and service" into one