Earnings Report | Xiaomi's second-quarter gross margin hits a record high, with adjusted net profit surging by 147%.

On Tuesday, Xiaomi Group released its Q2 earnings report.

The report shows that Xiaomi's Q2 revenue was 67.35 billion yuan, with market expectations at 65.13 billion yuan, a YoY decrease of 4% and a QoQ growth of 13.2%. The adjusted net profit was 5.14 billion yuan, a YoY increase of 147% and a QoQ increase of 59%.

In Q2 2023, Xiaomi firmly executed its core business strategy of "emphasizing both scale and profit," maintaining its industry-leading position while further reducing costs and increasing efficiency, resulting in higher profit delivery.

Q2 Operational Data

According to Canalys data, Xiaomi ranked among the top three in global smartphone shipments this quarter, with a market share of 12.9%, an increase of 1.6 percentage points QoQ. We have consistently ranked among the top three globally for twelve consecutive quarters.

At the same time, the global monthly active users of MIUI reached a new historical high.

In June 2023, the global monthly active users of MIUI reached 606.0 million, a YoY increase of 10.8%.

As of June 30, 2023, the number of IoT devices connected to the AIoT platform has increased to 654.5 million, a YoY increase of 24.2%.

According to third-party data, in Q2 2023, the market share of smartphones priced between 4,000 and 6,000 yuan in mainland China increased by 6.2 percentage points YoY to 12.7%.

The proportion of high-end smartphones in the overall smartphone sales in mainland China increased by 3.3 percentage points to 20.1%. This quarter, the average selling price (ASP) of smartphones in mainland China also increased by over 24% YoY.

Q2 Financial Indicators

Xiaomi's Q2 revenue was 67.35 billion yuan, a YoY decrease of 4% and a QoQ growth of 13.2%.

The adjusted net profit was 5.14 billion yuan, a YoY increase of 147% and a QoQ increase of 59%. This includes the expenses of innovative businesses such as smart electric vehicles, amounting to 1.4 billion yuan.

In Q2, the group's overall gross margin reached 21.0%, reaching a new historical high.

In Q2, R&D expenses reached 4.6 billion yuan, a YoY increase of 21.0%.

In Q2, the group's overall expenses were 10.2 billion yuan, a YoY decrease of 2.3%.

The overall inventory amount was 38.5 billion yuan, a YoY decrease of 33.5%, the lowest level in the past ten quarters.

Q2 Segment Business Data

In Q2, IoT and consumer products achieved synchronized growth in revenue and gross margin. Among them, the revenue was 22.3 billion yuan, a YoY increase of 12.3%, and the gross margin reached 17.6%, an increase of 3.3 percentage points YoY, reaching a new historical high. In the second quarter, the revenue of the smartphone business was 36.6 billion yuan, a YoY decrease of 13.4%. The gross profit margin of the smartphone business reached 13.3%, an increase of 4.7 percentage points YoY, reaching a historical high.

In the second quarter, the revenue of internet services was 7.4 billion yuan, a YoY growth of 6.8%, achieving a historical high in revenue. At the same time, the gross profit margin of internet services in this quarter reached 74.1%, an increase of 1.1 percentage points YoY.

In the second quarter, the revenue of the advertising business was 5.1 billion yuan, a YoY growth of 13.0%, reaching a historical high in revenue.

The revenue of the gaming business increased by 7.5% YoY to 1 billion yuan, achieving a YoY growth in revenue for 8 consecutive quarters.

The revenue of overseas internet services increased by 19.7% YoY to 2 billion yuan, reaching a historical high.