xiaomi investor presentation

Xiaomi is an internet company with smartphones and smart hardware connected by an IoT platform at its core.

Our mission is to make high quality products that touch people’s hearts with accessible and honest prices, and to empower everyone to enjoy technology.

Under the leadership of Lei Jun, Xiaomi was founded in 2010 by a group of accomplished engineers and designers, who believed that high-quality and well-designed technology products and services should be accessible to the world. To achieve this, we are unwavering in our pursuit of advances in innovation, quality, design, user experience and efficiency in an effort to provide the best technology products and services that are accessibly priced to our users.

Our Mi Fans

We have a large and highly engaged global user base with approximately 190 million monthly active MIUI users as of March 2018. We believe that our user base is differentiated by our “Mi Fans,” a large global community of passionate users who are intensely loyal to the Xiaomi brand, are highly engaged on our platform and actively contribute feedback and feature ideas to our product development. As of March 31, 2018, over 1.4 million users had more than five connected Xiaomi products (excluding smartphones and laptops). In addition, our users are very vocal on our MIUI forum, which has over nine million MAUs in March 2018.

Our Milestones

Our unique mission, vision and core values have made the following significant achievements possible since our inception in 2010:

• 2012: Annual sales exceeded US$1 billion (two years after inception)
• 2014: Number one smartphone company in mainland China by unit shipments, according to IDC (three years after launching our first smartphone)
• 2014: Annual sales exceeded US$10 billion, four years after inception, which is the fastest in history, according to iResearch.
• 2015: MIUI MAUs exceeded 100 million
• 2017: The world’s largest consumer IoT platform in terms of the number of connected devices (excluding smartphones and laptops), according to iResearch
• 2017: Number one smartphone company in India by unit shipments in the fourth quarter of 2017, according to IDC (three and a half years after officially entering the India market)
• 2017: Fastest growing internet company and second fastest growing company globally, as measured by organic revenue growth compared to publicly-listed profitable companies with revenue of over RMB100 billion in 2017, according to iResearch

Our Strategies

• Unwavering focus on innovation, quality, design and user experience
• Maintain relentless efficiency
• Expand killer product offerings
• Deepen internet services
• Invest in and expand our ecosystem
• Broaden international expansion

Triathlon Business Model

Our unique and powerful triathlon business model is comprised of three synergistic pillars of growth – (i) innovative, high quality and well-designed hardware focused on exceptional user experience, (ii) highly efficient new retail to make our products accessible and (iii) engaging internet services.

We offer a broad range of hardware products developed in-house or in collaboration with our ecosystem partners. Innovation, quality, design and user experience are ingrained in all of our products regardless of whether they are developed in-house or in collaboration with our partners.We strive to offer our products at price points that are accessible to the widest user base to enjoy road adoption and high retention. For our core in-house products, we focus on designing and developing a range of cutting-edge hardware products including smartphones, laptops, smart TVs, AI speakers and smart routers. We curate a wide range of additional products by investing in and managing an ecosystem of over 210 companies, among which more than 90 companies were focused on the development of smart hardware and lifestyle products as of  March 31, 2018. We had over 100 million connected devices, excluding  smartphones and laptops, as of March 31, 2018. This active and integrated suite of connected technology products enhances the lives of our users and constitutes a proprietary delivery platform for our internet services. We also curate a range of lifestyle products to further drive brand awareness and traffic to our sales points.

Our highly efficient omni-channel new retail distribution platform is a core component of our growth strategy, allowing us to operate efficiently while simultaneously extending our user reach and enhancing our users’ experience. Since our inception, we have focused on direct online sales of our products to maximize efficiency and build a direct digital relationship with users. We were number one in terms of smartphone unit shipments online in both mainland China and India in the fourth quarter of 2017, according to IDC. Since 2015, we have significantly expanded our direct offline retail network, for example, through our self-operated Mi Home stores. Our direct offline retail capability allows us to broaden our reach and provide a richer user experience, while maintaining similar efficiency and the same product prices as our online channels. Our efficient omni-channel sales strategy enables us to provide our products at accessible price points to the largest user base.

Internet Services

We provide internet services to give our users a complete mobile internet experience. In March 2018, we had approximately 190 million MAUs on MIUI, our proprietary operating system built on the Android kernel. MIUI fully embraces the Android ecosystem, including all mobile apps. It functions as an open platform for us to deliver our wide range of internet services, such as content, entertainment, financial services and productivity tools. The connectivity between our devices and the seamless integration between hardware and internet services enable us to provide our users with better user experience. Furthermore, we have a proven track record of developing killer apps. In March 2018, we had 38 apps with more than 10 million MAUs and 18 apps with more than 50 million MAUs, including our Mi App Store, Mi Browser, Mi Music and Mi Video apps. Our users spent an average of approximately 4.5 hours per day on our smartphones in March 2018. Compared to other internet platforms that acquire new users at high costs, we leverage the sale of our hardware to acquire users at a profit.

Network Effects

Our unique and powerful triathlon business model comprises three synergistic pillars that are closely connected. We strive to offer killer products that are high quality, high performance, well designed and honestly priced. These products in turn bring additional traffic to our retail channels. We deliver our products to users at accessible prices through our highly efficient new retail channels such as our e-commerce platforms and our Mi Home stores. With our internet services, we closely engage and interact with users on our platform, thus increasing user stickiness and monetization opportunities.

Lei Jun was part of the founding team of Kingsoft in 1992 and became CEO in 1998. A year later, he founded the IT information service and download website Joyo.com. After Kingsoft successfully completed their IPO, Lei Jun stepped down from his position and became Vice Chairman at Kingsoft. In the early 2000’s, he invested in many successful start-up companies like YY, UC and Vancl as an angel investor, and on April 6, 2010, he founded Xiaomi. In July 2011, he returned to Kingsoft as Chairman of the Board. Lei Jun is currently the Chairman and CEO of Xiaomi.

Lin Bin graduated from Sun Yat-sen University in 1990, where he obtained an Electronic Engineering degree. He received his Master’s Degree in Computer Science at Drexel University in 1992. Soon after, he joined Microsoft, where he worked as Lead Project Engineer, Senior Development Manager of MSRA, and Engineering Director of MSRA. Lin Bin also contributed to the R&D of Microsoft products, including Windows Vista and IE 8. In 2006, he joined Google as the Vice President of the Google China Institute of Engineering and the Engineering Director of Google Global. He was in charge of building and managing Google China’s Mobile Search and the Android App Localization teams.

Wanqiang is the Chief Brand Officer of Xiaomi. He co-founded Xiaomi in 2010 and has previously led MIUI and mi.com e-commerce. A significant contributor to both hardware and software design, he is also the creative mind behind popular internet keywords like “F-code”, “Mi Fan Festival” and more. Wanqiang joined Kingsoft in 2000 and co-founded their UIUX Design Centre. He served in several positions including Kingsoft Dictionary General Manager, Chief UI Designer, Design Center Director, and Internet Content Director. One of the earliest UI and HCI experts in China, he also played key roles in developing well-known software projects like Kingsoft Antivirus, Kingsoft Dictionary and WPS Office.

Hong Feng leads the MIUI division at Xiaomi. He graduated from Shanghai Jiao Tong University where he obtained a computer science & engineering degree. He continued his academic career at Purdue University, where he received a Master’s Degree in Computer Science. From 2001 to 2005 Hong Feng worked at Siebel and then joined Google as Senior Software Engineer in 2006. While at Google Headquarters, Mr. Hong oversaw Google Calendar, Google Maps and Google 3D Street View. From 2006 to 2010, he worked as Senior Product Manager of Google China and led the Google China team to develop a series of localized products like Google Music and Google Pinyin Input.

Liu De leads Xiaomi's industrial design and Ecosystem development programs. He graduated with a Master’s Degree in Industrial Design from Art Center College of Design located in California, USA, where he is one of only 20 Chinese students to receive a diploma during the institution’s 80-year history. He returned to China to establish the Industrial Design Department at Beijing University of Technology, where he served as the department’s dean.

Wang Chuan is the director for Internet TV related products such as Mi TV and Mi Box. He graduated from Beijing University of Technology with a Master’s Degree in Computer Science in 1993. He founded Thunder Stone Technology Ltd. in 1997 and led the company to be the largest audio-visual entertainment equipment supplier in China. In 2010, Wang Chuan founded Beijing Duokan Technology Co., Ltd where he currently serves as the CEO. He also helped co-found Xiaomi and in 2012 joined Xiaomi as a Co-founder and Vice President.

Wang Xiang joined Xiaomi in 2015 and leads global business, intellectual property rights and legal affair teams. He was previously with Qualcomm for 13 years, and has over 20 years of experience in the semiconductor and communications industry. He led business operations as Senior VP and President of Greater China at Qualcomm, helping the company rapidly expand and deepen its relationships in China. He also held senior management positions in sales and marketing at leading companies including Motorola and Lucent/Agere. Wang Xiang graduated from Beijing University of Technology with a Bachelor’s degree in Electronic Engineering.

Qi Yan joined Xiaomi in 2012 and leads platform, internal operations and external public affairs. She has a Masters degree from the Academy of Social Sciences, and an EDP from Peking University’s Guanghua School of Management. She was a China Democratic National Construction Association leader and a principal of the Beijing Jianhua Experimental School. She founded two electronic stores “Silicon Valley Computer City” and “Electronics Computer City” in 1998 and 2003 respectively. In 2004, she joined aigo as CEO.

Shouzi joined the Xiaomi leadership team in 2015 as CFO, leading the Finance, Investment and HR teams. A Singaporean national, he joined DST in 2010 and was actively involved in the firm's investments in Xiaomi, JD.com, Alibaba and Didi, among others. Prior to DST, Chew worked at Goldman Sachs in London. Chew received a BSc in Economics from University College London and a MBA from Harvard Business School.

Having joined Xiaomi in 2013, Shang Jin leads Mi Talk, gaming business integration and is responsible for Xiaomi’s interactive entertainment business. He joined Kingsoft in 1999, contributing to its WPS and gaming areas in both Zhuhai and Beijing locations. In 2002, he became Lei Jun’s technical advisor. Shang Jin left Kingsoft in 2005 and founded several gaming companies such as Changyou, youxigu.com and 70yx.com. In 2010, he was awarded Zhongguancun’s leading talent and was named one of the top 10 most influential leaders of the year.

Zhang Feng joined Xiaomi in September 2016, responsible for the supply chain for Xiaomi’s mobile phone business. In October 2013, Mr. Zhang founded and has since served as the general manager at Jiangsu Zimi Electronic Technology Co., Ltd., which developed power banks for Xiaomi and became one of Xiaomi’s ecosystem partners. He held various positions in the Inventec group between September 1993 and February 2012, including as the director of research and development and the general manager of the group’s Nanjing branch. Mr. Zhang received a bachelor’s degree in radio electronics from Shanghai Technology and Science University on July, 1991.

Manu joined Xiaomi in 2014, and heads Xiaomi’s business in India. Prior to joining Xiaomi, Manu co-founded a leading e-commerce company in India: Jabong.com, and also worked with McKinsey & Company for 5 years. He is an engineering graduate from IIT Delhi, and an MBA from IIM Calcutta, India.

Wang Lingming joined Xiaomi in 2017 and leads sales and service team. Prior to joining Xiaomi, Wang Lingming served in several positions including the board member of T.World and Vice President of K-touch. He has significant experience in supply chain, marketing and retail.

Mr. Yan joined Xiaomi in October 2010. As one of the earliest employees at Xiaomi, he has participated in the research and development, mass production, and quality control of all major smartphone models, including the first generation Mi 1. Since February 2017, he has been responsible for all hardware research and development for the smartphone business, and has also served as the Vice-Chairman of the Xiaomi Smart Phone business Quality Committee. Prior to joining Xiaomi, he worked as a chief Mechanical engineer at Motorola China, and participated in the research and development of many world-class products. He has more than 20 years of experience in telecommunications product design, research and development, and quality control.

Announcements and circulars

• Prospectus-E
• Formal Notice-E
• Yellow Form
• Allotment Results
• Full Exercise Of The Over-Allotment Option
• Next day disclosure and DI form
• Stabilizing Actions and End of Stabilization Period
• Monthly Return
• AsPrint Fullset
• Reply Form ESS
• First Letter ESS

Corporate Governance

Interim results conference call, xiaomi corporation 2018 second quarter and interim results announcement date.

Xiaomi Corporation (HKEX stock code: 1810) plans to announce 2018 Second Quarter and Interim Results on Wednesday, August 22, 2018.

Senior executives of the Company will host a conference call to review the Company’s business and financial performance and discuss the Company’s future plans.

Details of the conference call are as follows: Date: Wednesday, 22 August Time: 8:00pm (Hong Kong Time) / 8:00am (the U.S. Eastern Time) Language: English / Mandarin For the dial-in details, please contact Hill+Knowlton Strategies Asia: Tel: (852) 2894 6238 Email: [email protected]

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Categories Consumer , Earnings Call Transcripts , Technology

Xiaomi Corp (01810) Q2 2022 Earnings Call Transcript

01810 earnings call - final transcript.

Xiaomi Corp  ( HKG : 1810 ) Q2 2022 earnings call dated Aug. 19, 2022

Corporate Participants:

Anita Chan  —  Head of Investor Relations

Wang Xiang  —  President, Partner

Alain Lam Sa Wai  —  Vice President and Chief Financial Officer

Andy Meng  —  Morgan Stanley — Analyst

Kyna Wong  —  Credit Suisse — Analyst

Timothy Zhao  —  Goldman Sachs — Analyst

Hexin Wang  —  CICC — Analyst

Yingbo Xu  —  CITIC — Analyst

Thompson Wu  —  UBS — Analyst

Leping Huang  —  Huatai International — Analyst

Gokul Hariharan  —  J.P. Morgan — Analyst

Presentation:

Ladies and gentlemen, thank you for standing by, and welcome to Xiaomi 2022 Interim Result Announcement Conference Call. [Operator Instructions]

I’d now like to hand over the conference to your host today, Ms. Anita Chan, Head of Investor Relations and Corporate Finance. Please go ahead, madam.

Good evening, ladies and gentlemen. Welcome to the investor conference call hosted by Xiaomi Corporation regarding the company’s 2022 interim results.

Before we start the call, we would like to remind you that the call may include forward-looking statements, which are underlined by a number of risks and uncertainties that may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of Xiaomi. This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for the company’s financials prepared in accordance with IFRS.

Joining us on the call today are Mr. Wang Xiang, Partner and President of Xiaomi Corporation; and Mr. Alain Lam, Vice President and Chief Financial Officer of Xiaomi Corporation; CEO of Airstar Digital Technology. To start, Mr. Wang will share recent strategic updates of the company. Thereafter, Mr. Lam will review the business and financial performance for the first half of 2022. Following that, we will move on to the Q&A session.

I will now turn the call over to Mr. Wang.

Yeah. Thank you, Anita. Nice meeting you here again. Thank you for joining our second quarter 2022 earnings call.

In this quarter, our industry has faced many challenges, including rising global inflation, foreign exchange fluctuation, complex geopolitical environment, COVID-19 resurgence in Mainland China, so on and so forth. These challenges significantly impact overall market demand and our financial results for the period. In the face of marketing pressure from both domestic and overseas markets, we remain focused on stabilizing our core business and leveraged our global scale to mitigate risk in any single market, more so than any other time.

In times of difficulty, it is vital to strengthen our core capabilities and invest in R&D and technological innovation to enhance our long-term competitiveness. With this in mind, we continue to advance our business strategies and strengthen our foundation. Our second quarter total revenue reached RMB70.2 billion with smartphone revenue reaching RMB42.3 billion, IoT and the lifestyle product revenue of RMB19.8 billion and the Internet services revenue of RMB7 billion. Meanwhile, we have been actively developing our smart EV and other new initiatives. Our adjusted net profit reached RMB2.1 billion in the second quarter of 2022, which included RMB611 million of expenses related to our smart EV and other new initiatives.

In the complicated and the ever-changing international market, our core advantage is our ability to mitigate risks in any single market with our global scale and footprint. In the second quarter, we maintained our number three position in global smartphone shipments and continue to advance our market position quarter-over-quarter. In the second quarter, our smartphone market share grew quarter-over-quarter to 14% globally, 16% in Mainland China and 22% in Europe. Meanwhile, our smartphone market share ranked top three in 55 markets and among the top five in 77 markets.

We continue to attract new users through our increasing popular new smartphones, both globally as well as in Mainland China. Our global MIUI MAU reached 547 million in June 2022 and our Mainland China MIUI MAU increased for seven consecutive quarters, reaching 140 million. It is worthwhile to note that our overseas Internet services revenue increased by over 50% year-over-year, contributed nearly 24% of total Internet services revenue in this quarter. This is a record high.

We continue to invest in R&D and strengthened our competitiveness with technology breakthroughs and deliver ultimate user experience. In the second quarter, our R&D expenses reached RMB3.8 billion, an increase of 23% year-over-year. Our R&D expenses are expected to reach RMB17 billion this year and more than RMB100 billion over the next five years. Spanning from smartphones to wearable devices from smart homes to smart manufacturer from smart EV to bio robots, Xiaomi has been constantly exploring innovations in various technologies to better connect people in the world and building ever-evolving Xiaomi technologies ecosphere.

We made great progress on smart EV and other new initiatives. Last week, we officially announced that we will adopt our self-developed autonomous driving technology. We plan to invest in R&D of RMB3.3 billion in the Phase 1. We have established the R&D team of more than 500 world-class professionals and plan to create a fleet of 140 test vehicles in Phase 1, aiming to become an industry leader in smart EV by 2024. Meanwhile, we introduced our first self-developed humanoid robot, CyberOne. Robotics is considered the crown jewel of manufacturing. With humanoid robots being the ultimate goal for many across the industry, this new breakthrough represents a milestone in our exploration of new technology frontiers.

In August 2022, Xiaomi was named on the Fortune Global 500 for the fourth consecutive year and ranked 266, advancing 72 spots from last year. As a global company, we actively practice corporate social responsibility. In July 2022, Xiaomi was selected into Forbes China’s 2022 Best Employers of the Year. Meanwhile, we established Beijing Municipal Natural Science Foundation, Xiaomi Joint Innovation Fund, to support fundamental research in fields, including AI, digital information, smart manufacturing.

Furthermore, we customized the Redmi Note 11E for the elderly to bring convenience to their lives, bring a more elder-friendly and accessible environment with our advanced technology. We believe it is necessary for us to spearhead social responsibility either against macroeconomic headwinds faced with macroeconomic uncertainties and the challenges. What we can do is to firmly execute our core business fundamentals to strengthen our capabilities and to invest in technological innovation and self-improvement. We believe these will lay the foundation for our healthy and sustainable development over the long-term. And together with all of you, our unwavering passion will help us discover opportunities and find the silver lining behind the cloud as we make the world a better place.

With that, I will hand it over to Alain to discuss our second quarter results in greater details. Alain, please.

Yeah. Thank you, Xiang. Good evening everyone. I’d like to walk you through more details of our second quarter performance. As Xiang mentioned, this quarter we faced multiple challenges in our business, including continued macroeconomic headwinds, which caused global inflation to rise significantly as well as extreme volatility in foreign exchange rates. And in Mainland China, we have witnessed a resurgence in COVID-19, which caused significant disruptions to our offline business. Despite these challenges, we continue to focus on executing our core business strategies and strengthening our long-term competitiveness.

In the second quarter, our revenue reached RMB70.2 billion and adjusted net profit reached RMB2.1 billion, which included expenses of RMB611 million for smart EV and other new initiatives. Our three major business segments remained resilient despite the continued challenging macro environment. We maintained our number three position in terms of global smartphone shipments. The number of connected devices on our AIoT platform increased more than 40% year-over-year. Our MIUI MAU reached 547 million globally and 140 million in Mainland China, both hitting record highs.

Our brand continue to gain recognition worldwide. In August, we were named on the Fortune Global 500 list for the fourth consecutive year and ranked 266, up 72 spots from 2021. In the second quarter of 2022, global smartphone industry shipments dropped nearly 8% quarter-over-quarter. Despite this, our smartphone shipments still achieved quarter-over-quarter growth and we have managed to increase our global market share for two consecutive quarters from 12.5% in Q4 2021 to 13.8% in Q2 2022.

Our investments in premiumization strategy have resulted in increased market share in the premium smartphone market in Mainland China. In this quarter, according to third-party data, our market share in the RMB3,000 to RMB4,000 price segment in Mainland China increased 3.5 percentage points year-over-year to 18.2%. And in the RMB4,000 to RMB5,000 price segment, our market share rose 2 percentage points year-over-year to 15.5%. We delivered strong results during the 618 Shopping Festival. Our cumulative paid GMV from all those channels exceeded RMB18.7 billion during this festival and we ranked number one among Android smartphones in terms of both sales volume and sales value on JD.com, Tmall.com and other platforms. Our IoT and lifestyle products also achieved remarkable results. On JD.com and Tmall.com, we took 148 number one ranking across AIoT categories.

Our new retail strategy in Mainland China has been making good progress. As of June 30, we had over 10,600 offline retail stores and our offline smartphone market share in Mainland China increased to 8% this quarter. Our offline new retail strategy is highly complementary to our premiumization strategy. According to third-party data, in Mainland China, the proportion of our premium smartphone shipments sold through the offline channels increased over 5 percentage points year-over-year this quarter. In addition, our offline stores have helped us cross-sell more IoT products. In this quarter, the proportion of our offline store GMV derived from IoT products increased over 11 percentage points year-over-year. Due to improved efficiency, our average single store GMV in June rose more than 20% compared to December 2021.

Next I’ll discuss our latest technologies in greater detail, some of which we debuted in our launch event last week. Technology advancement is our foundation and we continue to push the frontiers in technological innovation. This year, we expect R&D expenses to reach RMB17 billion, which represents a 40% compound annual growth rate of 2017 and we expect to invest over RMB100 billion in the next five years. At the same time, we are building an ever-expanding technology ecosphere, spanning smartphones, wearable devices, smart home, smart manufacturing, smart EVs and bionic robots to better connect people to the world around them and improve their lives.

In August, we launched our second-generation foldable smartphone, which we call Xiaomi MIX Fold 2, with a revolutionary ultra-slim and lightweight design. Xiaomi MIX Fold 2 features our self-developed Micro Waterdrop Hinge and flexible ultra-thin glass, achieving width of 5.4 millimeter unfolded and the weight of 262 grams and it’s one of the thinnest foldable smartphones in the market. Xiaomi MIX Fold 2 is also equipped with the Eco2 OLED flexible display, which greatly increases light transmittance, while reducing power consumption. Furthermore, it is also equipped with the Snapdragon 8+ Gen 1 processor, the Leica Summicron lenses and MIUI Fold 13, which is designed specifically for foldable smartphones.

We also launched our new premium variable products alongside Xiaomi MIX Fold 2 last week. Our new TWS earbuds, the Xiaomi Buds 4 Pro offer improvements in sound quality, noise cancellation and dimensional audio so that users can experience immersive life-like sound. Our smart watch, Xiaomi Watch S1 Pro provide a truly luxurious experience with its exquisite appearance, full range of fitness mode and multiple health functions, both represent the highest price TWS ear buds and smartphone we have launched today.

In the smart home category, we also vastly upgraded our products to bring healthier smartest appliances to our users. Our large capacity Mijia Dual-Drum Washer Dryer integrate many functions such as separate and simultaneous washing and drying and bacteria and mites removal. Our Mijia Purifying Range Hood uses advance technology to capture smoke fumes and PM2.5 particles to protect air quality, while cooking. Both of these represent our application of innovative science and technology to home appliances.

Last week, we also provided an update on our latest autonomous driving technology. We plan to adopt a self-developed full stack approach, covering driving scenarios, including highways, urban landscapes, parking lot and more. At present, our autonomous driving team has more than 500 employees and we plan to invest RMB3.3 billion in the first R&D phase with the goal of becoming a first-tier player by 2024. We also launched our first full-size humanoid bionic robot CyberOne last week, demonstrating our exploration of new cutting-edge technology. CyberOne is capable of bipedal-motion balancing using mechanical joint motors and full-body control algorithms. Furthermore, it can detect human emotions and reconstruct 3D virtual environments of the real world using our self-developed audio and vision of algorithms.

Next let us dive deep into each segment, starting with smartphones. In this quarter, macroeconomic headwinds as well as COVID-19 resurgence impacted overall smartphone demand and global smartphone industry shipments declined 8% quarter-over-quarter. Against this challenging backdrop, we successfully increased our smartphone shipments by 1.5% quarter-over-quarter to reach 39.1 million units. Our smartphone revenue reached RMB42.3 billion.

We announced our partnership with Leica in May. And in July, we launched the Xiaomi 12s series, our first smartphone series with an imaging system co-engineered with Leica. Xiaomi 12S Ultra is powered by the Snapdragon 8+ Gen 1 processor and two of our proprietary chips, the Surge G1 battery management chip and Surge P1 charging chip, offering faster performances and lower power consumption. Xiaomi 12S Ultra also delivers a truly exceptional imaging experience. It features Leica Summicron lenses and the extra-large Sony IMX989 one-inch image sensor along with the Leica Authentic Look and the Leica Vibrant Look imaging profiles, pushing imaging technology to new heights. It’s outstanding photography experience has won rave reviews. And all three models of our Xiaomi 12S series has achieved over 98% positive ratings on JD.com.

We are committed to bringing cutting-edge technologies to the mass markets. In August, we launched Redmi K50 Ultra, which is equipped with the Snapdragon 8+ Gen 1 processor, a customized 1.5K display that balances image quality with battery life and a 5,000mAh battery with support for 120 watt fast-charging. Despite the challenging macro environment — macroeconomic environment, we continue to advance our overseas business and maintained leading positions in major global markets. In this quarter, our market share improved quarter-over-quarter in Europe, in Mainland China, in the Middle East, in Southeast Asia, Latin America and Africa. Furthermore, our ranking improved quarter-over-quarter in Europe, Mainland China and the Middle East.

As we mentioned before, our scale as well as our global operations help us mitigate volatility risk in any single market. According to Canalys, in the second quarter of 2022, we ranked top three in 55 markets and top five in 67 markets globally. We continue to strengthen our operations in the overseas carrier channel. In this quarter, our carrier channel market share in Europe increased by 1 percentage point quarter-over-quarter to 18%. And our carrier channel market share in Latin America increased by 1.6 percentage points quarter-over-quarter to 19.3%. Furthermore, our smartphone market share through carrier channels ranked top three in 40 overseas markets.

Now let’s look at the IoT business. Performance of our AIoT business was resilient, benefiting from solid growth in Mainland China. In the second quarter, our IoT and lifestyle product revenue reached RMB19.8 billion, up 1.7% quarter-over-quarter. As of June 30, the number of connected devices on our AIoT platform reached 527 million, up over 40% year-over-year. The number of users with five or more connected AIoT devices exceeded 10 million for the first time, up 37% year-over-year. In June, MAU of our AI Assistant reached 115 million, up nearly 13% year-over-year and MAU of our Mi Home App reached 70.8 million, up over 25% year-over-year.

Let’s go into more details on the key IoT categories. In the second quarter, our global smart TV shipments achieved year-over-year growth to reach 2.6 million units against an overall industry decline and we maintained our top five global rank. In Mainland China as well as India, we were able to maintain our number one position.

Our smart white goods business is growing steadily and making good progress in the premium markets. In this quarter, revenue of our white goods business grew by more than 25% year-over-year and achieved a record high. Shipments of air conditioners exceeded 1.2 million units in the second quarter, an increase of over 35% year-over-year. Furthermore, cumulative shipments of air conditioners in the first seven months of 2022 already exceeded the 2 million units we shipped in 2021. Meanwhile, our refrigerators and washing machines are also gaining market recognition. In this quarter, refrigerators shipment reached approximately 116,000 units, an increase of 30% year-over-year and washing machine shipment exceeded 240,000 units.

Last week, we launched our new tablet, Xiaomi Pad 5 Pro, featuring a 12.4-inch 2.5K display, Snapdragon 870 processor, 20 megapixel front camera on the long side and ultra-long battery life. It also comes equipped with MIUI Pad 13, which offers customized system functions adapted for tablets, offering a compelling experience for both office use as well as entertainment.

We continue to be a leader in wearable products globally. Our TWS shipments ranked number three globally and our ranking in Mainland China rose to the number one position in the second quarter. Furthermore, our Xiaomi Smart Band 7 Pro has been well received with its brand new design. It features a large rectangular display with a thin lightweight design as well as a built-in GPS, 117 fitness modes and all day health tracking. Since launched in July, it has shipped more than 400,000 units in Mainland China.

Now let’s look at the Internet services. In this quarter, our global and Mainland China MAU both achieved record highs. Our global MAU in June reached 547 million, an increase of 93 million year-over-year. And our Mainland China MAU reached 140 million, an increase of 16 million year-over-year. In addition, our global TV MAU reached 53 million, showing very healthy growth momentum. Our Internet services revenue remained stable despite pressures in Mainland China. In this quarter, Internet services revenue reached RMB7 billion.

Our Internet services gross margin rose 2.3 percentage points quarter-over-quarter to 73% as a result of higher revenue contribution from the advertising business. Our global advertising revenue remained stable despite the decline in industry advertising budget in Mainland China. Thanks to the expansion of our overseas user space, especially in the developed markets, our overseas Internet services revenue achieved a quarterly high. In this quarter, overseas Internet services revenue reached RMB1.7 billion, up 52.1% year-over-year and accounted for a record high 23.9% of total Internet services revenue.

Benefiting from multiple monetization engines, our advertising business enjoyed solid performance. In this quarter, performance and brand advertising revenue in Mainland China was down quarter-over-quarter due to the impact of COVID-19, which resulted in lower advertising budget. However, our overseas ad revenue hit another quarterly high, driven by strong operations of our content and services. Our global search revenue has continued to achieve record highs now for the eight consecutive quarters. Besides the growth in Mainland China, improved monetization capability and our expanding MAU base in the overseas market have also helped our overseas search revenue to achieve another quarterly high.

Furthermore, as our pre-installed units increased and as we work with more global partners, our pre-installation revenue in both Mainland China and overseas markets increased quarter-over-quarter. Our TV Internet services revenue continued its robust growth momentum. Driven by enriched content and expanded user scenarios, our TV value-added services revenue increased by about 25% year-over-year.

Now let’s move on to the more detailed financials. First, a look at the top-line performance of each segment. In the second quarter, total revenue was RMB70.2 billion and 48.4% came from overseas. Smartphone revenue was RMB42.3 billion, IoT revenue was RMB19.8 billion and Internet services revenue was RMB7 billion. In the second quarter of 2022, our gross margin reached 16.8%. Smartphone gross margin decreased year-over-year to 8.7%, mainly due to enhanced promotional efforts to clear our inventory, especially during the 618 Shopping Festival in Mainland China as well as an increase in costs due to U.S. dollar appreciation.

IoT gross margin increased year-over-year to 14.3%, mainly due to decreased price of key components such as display panels. Smartphone and AIoT gross margin decreased quarter-over-quarter due to enhanced promotional efforts during the 618 Shopping Festival. Internet services gross margin decreased slightly year-over-year to 73% as a result of lower pre-installation revenue related to smartphone shipments and increased quarter-over-quarter driven by higher contribution from our advertising business. In the second quarter, overall operating expense ratio was 14.8%, which included expenses related to smart EV and other new initiatives of RMB611 million. We’ll continue to invest in R&D and our R&D expense ratio reached 5.7% in this quarter. Our cash resources remained robust, reaching RMB102.5 billion as of June 30.

Lastly, I would like to provide an update on our ESG initiatives. We actively practice corporate social responsibility and feel honored to have been recognized for our efforts. In July, Forbes placed Xiaomi on its 2022 Best Employer of the Year list and we were named as China’s Best Employer of the Year, China’s Most Sustainable Employer of the Year and China’s most Digitally Responsible Employer of the Year. Furthermore, we won the Best ESG in the Technology Hardware sector in II’s 2022 Asia Pacific Ex-Japan Executive Team awards.

We continuously strive to improve accessibility options and strengthen our data security. For accessibility, Xiaomi unveiled the My Own Voice project, which create a unique and customer voice for users with speech disorders using our self-developed text-to-speech technology. Meanwhile, we collaborated with the Xinyang Government to customize the Redmi Note 11E for the elderly and bring convenience to their lives.

With respect to data security, we launched Xiaomi Electric Scooter 4 Pro, which is the world’s first scooter with pro level certification in Underwriter Laboratories IoT Security Rating. All these demonstrate our commitment to using technology for good and our mission of letting everyone in the world enjoy better life through innovative technology.

Finally, we have always been committed to public welfare initiatives. After the flood disaster in Henan Province in July last year, Beijing Xiaomi Foundation reconstructed 79 village schools and modernized their teaching equipment. In August, we donated RMB1 million to Hainan Red Cross Society to support the pandemic prevention and control there and the procurement of related supplies. We also try to give back to our community through talent development. Recently, Beijing Xiaomi Foundation has committed to donate RMB500 million to Beijing Municipal Natural Science Foundation Committee to support research and education. In addition, since February of this year, Xiaomi Young Scholar Program has been rolled out to over 10 universities in Mainland China, including Peking University and Tsinghua University.

This concluded our prepared remarks. Let’s open the call to questions from investors.

Thank you, Alain. We will now proceed to the Q&A session. Please ask no more than one question at a time so that we could allow more investors to ask your question. Meanwhile, please read your question in Mandarin, followed by English recap. Thanks. Operator?

Questions and Answers:

Thank you. [Operator Instructions] Our first question is come from Andy Meng with Morgan Stanley. Andy, please go ahead.

[Foreign Speech]

I will do the English translation. My question is related to the smartphone volume and gross margin. In the second quarter, the smartphone shipment has seen slight increase versus first quarter, but the gross margin has seen quarter-over-quarter decline. The management have mentioned June 18 promotion and FX issue. Looking into the third quarter, we have seen the continuous launch of high-end smartphone models, including Xiaomi 12S series, MIX Fold 2. Will those high-end products into this positive impact on the gross margin? Given there is no June 18 promotion festival in the third quarter, how should we think about the smartphone volume and gross margin trends in the coming quarters? Thank you.

Thanks, Andy. Let me try to answer your question in English. As I mentioned in my prepared remarks, so obviously there are few factors that drove the decline in gross margin in Q2. 618, I think is one. Obviously, that’s a big festival in China. The FX — the U.S. dollar appreciation obviously increased our cost versus last year. And so that has also impacted our gross margin somewhat.

In addition to that, last year — I mean, I think it’s worth mentioning that in Q2 of last year, obviously, we have a number of high-end products launching in that quarter. This year due to the fact that we are waiting for the new Qualcomm chipsets to be shipped, the new 8+ Gen, we delayed our launch, the launch of our premium products, the Ultra, the 12S series, etc., to the third quarter of this year. And as a result, I think they are more old products that we’re trying to sell and clear in second quarter, which had — which has caused the margin to decline.

Now looking forward to the second half, obviously, we were trying to make sure that the gross margin will stay at a healthy level with the new products that we’re launching, with some of these new products that we’ll be launching in the overseas market, etc., we will hopefully be able to maintain our gross margin at a healthier level. But in terms of the shipment forecast, obviously, we are trying to — with the — it depends on a lot of factors in the market, but obviously, we are hoping that the second quarter will be better than the first quarter as usual.

Second half.

Second half will be better than first half as usual normal with the fact that there are a lot of overseas events, including Diwali, including the Double 11 event, including the Black Friday, Christmas, etc., etc. So in the normal market cycle, the second half for smartphone shipment tends to be better than the first half.

Okay. Thank you very much.

Thank you. And our next question is come from Kyna Wong with Credit Suisse. Kyna, please go ahead.

Thanks for taking my question. So I have a follow-up question on the smartphone business as well. We see the inventory — we find two things. One is the provision of inventory impairment that increased in the first half. And what kind of the inventory the company has applied a provision to wipe out? The second thing is we see the inventories — finished goods actually up 35% year-over-year as well, in which that we — how should we expect in the second half along with the new product launch and also the sales promotion in the second half as well? How that will impact to the gross margin, which I [Indecipherable] second half to be seeing a healthy level. But what should we understand that implication from the inventory perspective?

Yeah. Thanks, Kyna. Thanks for your question. In terms of our provision for inventory — provision for impairment for inventory, we strictly followed the IFRS accounting standards. And for the long-dated inventory, we will be taking provisions on those long-held products. So obviously, once we sell those products, and depending on how much we provisioned, we’ll be able to — well, if we are selling [Phonetic] more than we provisioned, then we’ll be able to reclaim it back, right? But that’s something that, as many people highlighted and as Xiang also highlighted, we spent Q2 clearing some of our old inventory, but there is still something that we need to clear out over time. Obviously, we also said that during the 618 festival, we have been successful in clearing a lot of those inventories, especially in China. So in China, our inventory has come down to a pretty healthy level at this point in time, right?

In terms of — you mentioned the finished goods being much higher in our inventory this quarter, a lot of this is due to the overseas markets. The overseas market, the inventory has stayed relatively high. And as we mentioned, this is due to some of the lower consumption power in the overseas market due to inflation, due to FX, etc., etc., which we won’t go into. We will obviously spend second half trying to dissolve some of these finished products using a number of means, including promotions, including adjustment to our production schedules, etc., etc., to remain — to take that back down to a more normal level.

It’s also fair to say that if we look at the inventory funnel, although it is high, we don’t think that — we think that a lot of these are not really big problem for us. A lot of these I think can be cleared with sufficient measures. So I hope that answered your question.

Thank you. And our next question is come from Timothy Zhao with Goldman Sachs. Timothy, please go ahead.

Thank you, Xiang and Alain, for taking my question. My question is about the Internet services revenue. Could management provide some guidance or outlook on how we should look at the MAU and advertising revenue growth into the second half this year, especially as China’s macro become more stabilized in second half? How should we look at the advertising revenue in the second half in China?

And also related to this, because premium phone is quite important for the Internet services revenue growth. Could management share some color on the proportion of premium phone shipments as a percentage of total shipment in the second quarter? And whether we have any target to achieve for this year? Thank you.

Thanks, Timothy. Let me address your questions and then see if Xiang have more to add. In terms of our Internet service and in terms of MAU, obviously, as you can see that our MAU has continued to grow pretty healthy. We added close to 19 million MAUs globally. We added 40 million MAUs in China over the last year. And if you look at the past two quarters, in China alone we added close to 10 million — over 10 million MAUs. So that shows that a lot of the new users are coming to Xiaomi are willing to try out our phones, especially the premium smartphones that we offer. And that was — that will set a very strong foundation for our Internet services revenue going forward, both in China as well as in the overseas market.

So obviously, in the near-term, we are, in China especially, the overall ad budget has not been healthy, as you know, given the COVID, given some of the regulatory constraint and whatnot had impacted the overall ad budget. I think that’s something that we’ve noted many times in the past. This quarter, the sudden lockdown of certain cities in China has caused the brand ad budget to drop as well. So what we’ve seen is — and I see that coming from several of our peers as well mentioning that the brand advertising budget has come down in the second quarter of this year. So that has cut the overall size of the growth. But at the same time, as we mentioned that we’ve seen quite healthy growth coming from the overseas market with the help of the MAU growth that we’ve seen.

I think in the second quarter — in the second half, I think we have to see how the market develops. Obviously, the overall ad budget for this year I don’t think people are having a pretty robust forecast, and obviously that will filter down to us. But at the same time, I think the overseas market has been quite healthy for us, especially if we continue to add MAUs to our user base. So I hope that answered your first question.

In terms of the second question, with respect to the premium smartphones, the one focus that we have this year is to improve the quality of our premium smartphone. I mean, that’s a very important focus for this year. And I think that as you can see from the recent launches of the 12S as well as our Fold product, I think those have received pretty good review from our users. I think that’s something that we prioritized this year, making sure that these premium smartphones are of high quality. And I think that’s something that will set us up with our brand image as well as set us up for much improved premium smartphone shipments in the coming quarter.

The other thing is, obviously, we did not compare it year-over-year also because there was some delay in our schedule this year because of the launch of Qualcomm. So that’s something that we don’t think is quite comparable with what we disclosed in the first half of last year.

Yeah. Actually the improved market share of high-end smartphones is sort of a long effort. So we will continue to make improvement in the overall quality of the high-end smartphones. So we see a good sign from the market that we get a very, very positive feedback from the market about our 12 Ultra, 12S and also Fold. I think that’s a very — give us the confidence that we will continue to be [Indecipherable] And also the high-end smartphone can also help us to drive the Internet service revenue. So we will continue to improve the user experience so that in the longer term we can grow the Internet service revenue. The good signal is that will continue to increase the MAU in China and outside of China. And as Alain just mentioned, so we’ll keep growing the overseas Internet service revenue, that’s also very, very good for us.

Thank you. And our next question is come Hexin Wang with CICC. Hexin, please go ahead.

For the Internet business, could management share the driver for the strong growth of Internet business in overseas market for third quarter and our long-term strategy for the overseas Internet business? And we are very interested about our robot, CyberOne. Could management share some color about our long-term strategy in this area? Thank you.

Let me first address that and then Xiang can talk about the robot. On the overseas Internet revenue, we mentioned a few factors that has brought the growth in the overseas Internet revenue. Number one is our pre-installation. As the shipments — as our smartphone shipments continue to increase in the overseas market, the ARPU which we were able to achieve on a per installed smartphone has also increased. So that has helped the pre-installation revenue to increase. Second is our search revenue. As our MAU continues to grow, the search revenue, the search volume will grow. And as a result, our search revenue continues to improve. I think this is quite straightforward.

Also I think to note that in the search revenue, revenue coming from a user in the more developed market is higher than coming from — than a user coming from a developing market. So as we have more users in the developed market using our search engines or using other people’s search engines, we’re able to receive a share of that revenue — of search revenue.

As we look forward, we do think that there are still a lot of room to grow the overseas Internet revenue. And because we are continuing to penetrate our market share, continue to increase our market share, we got to Europe, we’ve got to number two in Europe this quarter. So we think that there is still a lot of room to improve our monetization in those areas. At the same time, we are also exploring other ways of monetization, not just advertising. We have scope to improve our monetization, for example, in gaming, in literature, etc. Those are the stuff that we have been exploring.

Xiang, do you want to answer the question?

And also, as we continue to increase our market share in Europe, especially in Western European market, that will also help us to increase our Internet service revenue. Also regarding to the robotics, so I think this is — the CyberOne is also — although it’s a second generation of our category, but still very, very early stage. So actually we — the initial idea is to create an open platform so that — let more engineers get involved or get interested into those areas that can help us in the longer term and also we can also let a lot of the engineers outside Xiaomi also participate those innovation. So that’s also — the current CyberOne is also very, very — in a very early stage. The cost is still very high. So we will continue to invest and to explore for the future.

Thank you. And our next question is come from Yingbo Xu with CITIC. Yingbo, please go ahead.

Could you please give us more colors about the IoT market and overseas market? Thank you.

On the IoT market side, this quarter — the upside is that we enjoyed pretty healthy growth in the China market Q-over-Q driven by some of the new products that we launched which are super competitive, including smart white goods, including our pad product which continues to be very competitive and our wearable products. The low light is the overseas IoT market. As we said last year I believe, some of our overseas businesses, IoT business was hit by very high logistical costs, which continues to stay high as the fuel cost continue to increase. So that’s one that has hurt our shipments to those market as well as our pricing in those markets.

Second is some of the macro factors that we’ve talked about, including high inflation, high interest rate, etc., has really hit the consumption for a lot of our users in the overseas market. So they cut down on some of the discretionary electronic spent such as our robot cleaners, our scooters, etc. So I think that’s something that we’ve seen what happened this quarter. Obviously, as we said previously, we all think that IoT in the overseas market is a huge market.

So we continue to be optimistic that the market will rebound in the future. But obviously, in the short-term, I think they have to be grappled with some of the factors we mentioned about high inflation, even high U.S. dollars, which obviously caused the consumption power to drop as well as some of these geopolitical uncertainty that has limited the outflow of U.S. dollars in some of these more developing countries. So I think that hopefully these macro factors will come and go, Yingbo, and then we’ll be able to see the growth pick-up again in the overseas market.

Operator, next question, please.

And our next question is come from Thomas Wu with UBS. Thomas, please go ahead.

Hello, Xiang, Alan. Thank you again for allowing me to ask a question. Just a very quick one. In the overseas smartphone businesses, especially in Latam, India and Africa, can you give us a quick update on demand and overall environment?

Yeah. We will continue to be very, very positive on the growth potential in many, many international markets, for example, the Latin American market and other nation which market Latin America, India and Africa. So, Africa and Latin America, right now we are doing very good. So I think we’ll continue to grow our business in Latin America and Africa, India also.

So once we solve the supply issues in India, I think we will take the Diwali to ship lot of products into that India market. In the first half actually, we had some issues on the entry level supply. So I think now we are — we have the improvement and we will continue to work with our partners online and offline in the second half, especially on the Diwali. So yeah, I think — yeah, that’s the question.

Alain, do you have anything?

Thompson, I think the questions that you have is the — I don’t know is the overall demand or you’re seeing our demand. So I think the overall smartphone market I think in many of these areas that you talked about this year in Q2 has seen year-over-year drop just like the — there is a global market. I think that for us, obviously, we talk about some of the areas that we’ve been focusing on such as Latin America. India, I think that there is obviously more competition coming through.

And so some people asked whether — Y-o-Y our market share dropped in India, but that’s also due to some of the supply in the lower end market, which we don’t have. And so we don’t think that losing market share is a lot — at all detrimental to our business. In Latin America, obviously, you’ve seen that our shipment despite the overall market difficulty has continued to increase quarter-over-quarter and we’ve been able to pick up market share in those areas. Does it make sense?

Yeah. For example, in Latin America, our market share grew by 3%. I see the shipment increased 24%. We think it’s very, very healthy. In Colombia, we’re keeping number one position. And also, Chile, we maintained our number two position. So I think there is still a lot of potential in Mexico, Brazil and other countries in Latin America.

Thank you. And our next question is coming Leping Huang with Huatai. Leping, please go ahead.

Thank you for taking my questions.

So Xiaomi maintained a very high operating efficiency in last few years, including the gross margin 17.7% and 10.9% for the operating margin last year, because I see that the revenue was — digital revenue declined, we see operating efficiency was declining last few quarters. I fully understand that you need to balance the future investment especially on electric vehicle, but I want to know how you keep the balance in between the investment and operating efficiency in this difficult time? Thank you.

So actually, we are — we continue to invest into the R&D. So if you look at the R&D investment volume actually has increased significantly. So I think the challenge for us is because of the demand issue, our revenue dropped. So that will impact the efficiency. So that’s the issue. But we continue to — we are very, very confident in long-term. So we will continue to invest into the R&D, including the mid and high-tier products and the new initiatives. So we believe that that will help us in the longer term. And at the same time, of course, we will do everything possible to increase our shipments and our market share in China and also in many, many other strategic regions, like I just mentioned, Latin America, Europe and China.

Do you have minimum requirement on this operating margin the way you operate the company? Thank you.

I think — I mean, obviously like a lot of our peers, we’re also trying to control costs as well. If you look at the disclosure on our headcount, you will see that we reduced our headcount Q2 versus Q1. Not a lot, but obviously, the effect will take some time to come through to the bottom line. Obviously, at the same time, while we are reducing our headcount, we are also increasing our headcount in some of these new areas like electric vehicles. But they will take time for these effects to come. So we are doing like what a lot of our peers in the industry are doing, trying to extract more efficiency into our business, number one, while balancing the increase in expenses related to the new initiatives. So I think that’s one.

Two is obviously, we’re also trying to improve the core profitability of our business, the profitability of our core business at the same time. We think that there is a lot of room to grow our operating profit. And so that’s something that we are looking to do in the future.

And the third thing is, in terms of the pocket we have been mind, I mean obviously, if you look at historically, our operating margins have been in kind of the 10% to 12% area. The operating expense ratio was about 10% to 12% area. And so this is something that if we see the improved — environment improved, well, we’d like to get back to that level.

Okay. Thank you very much. Thank you.

Thank you. We will now invite the last questions. And the question is coming from Gokul Hariharan with J.P. Morgan. Gokul, please go ahead.

Yeah. Thank you. My question is regarding EV. So it looks like Xiaomi is following more of a full stack strategy on the EV development, including in-house manufacturing, developing the full autonomous driving stack, etc. Could we talk a little bit about how Xiaomi decides what to do in-house, what to go out with other vendors given that in the smartphone side and other IoT devices, you had taken a very asset-light and more partner-centric kind of approach to address this market? And also on the autonomous drive, would you consider Xiaomi given that you showcased your solution recently, what us — should we think of Xiaomi as competitor to Baidu, Apollo or Huawei or you’re going to be more like a partner to those softwares and the companies? Thank you.

I think, Gokul, on the EV side, we look at all possibilities. I think as you can see from the past, we’ve done some of these we’ve done self-development, we’ve also acquired companies like Deepmotion, we’ve also invested in a lot of these related technology companies through our investments team. So I think we are taking a fairly flexible approach in terms of — open approach, I should say, I shouldn’t — I should say, open, in terms of whether we do it in-house, whether we partner whether we use investments and the vehicle, etc., etc. I think that’s something that we look at all possibilities and we find the best thing for us to do, I’ll put it this way. So that’s how we approach this. Number one. Number two, in terms of autonomous driving technology, at this point in time, I think we are just looking to use all these technology in-house for our own car. We haven’t thought about licensing out to other people or enabling other technologies. So this is also similar approach that we take in our smartphone business. So I hope that answers your questions.

Okay, understood.

[Operator Closing Remarks]

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Xiaomi Corporation

Kyg9830t1067, phones & handheld devices.

• Xiaomi : 2021 Q3 Results Presentation

By attending the meeting where this presentation is made, or by reading the presentation materials, you agree to be bound by the following limitations:

The information in this presentation has been prepared by representatives of Xiaomi Corporation (the "Company", and together with its subsidiaries, the "Group") for use in presentations by the Group and does not constitute a recommendation regarding the securities of the Group. No part of this presentation should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.

No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information, or opinions contained herein. Neither the Company nor any of the Company's subsidiaries, affiliates, advisors or representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially.

This presentation is based on the economic, regulatory, market and other conditions in effect on the date hereof. It should be understood that subsequent developments may affect the information contained in this presentation, which neither the Company nor its subsidiaries, affiliates, advisors or representatives are under an obligation to update, revise or affirm.

The information communicated in this presentation may contain certain statements that are or may be forward looking. These statements typically contain words such as "will", "may", "expects", "forecasts", "plans" and "anticipates" and words of similar import. By their nature forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There may be additional material risks that are currently not considered to be material or of which the Company and its advisors or representatives are unaware. Against the background of these uncertainties, readers should not rely on these forward-looking statements. Neither the Company nor its subsidiaries, affiliates, advisors or representatives assume any responsibility to update forward-looking statements or to adapt them to future events or developments.

This presentation and the information contained herein does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities of the Company or any of its subsidiaries or affiliates in any jurisdiction. The securities of the Company have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered, sold or delivered within the United States or to U.S. persons absent from registration under or an applicable exemption from the registration requirements of the United States securities laws.

In addition, certain information related to other companies and market in general presented in this presentation has been obtained from publicly available information. The accuracy and appropriateness of that information has not been verified by the Company and cannot be guaranteed.

No invitation is made by this presentation or the information contained herein to enter into, or offer to enter into, any agreement to purchase, acquire, dispose of, subscribe for or underwrite any securities or structured products, and no offer is made of any shares in or debentures of a company for purchase or subscription except as permitted under relevant laws.

Q3 2021 Key Highlights

Leading Smartphone

Robust Financial Performance

Market Position 2

Growing User Base Leading AIoT Platform

• Defined as profit for the period, as adjusted by adding back (i) share-based compensation, (ii) net fair value changes on investments, (iii) amortization of intangible assets resulting from acquisitions, (iv) changes of value of financial liabilities to fund investors, and (v) income tax effects of non-IFRS adjustments
• According to Canalys, by shipments in 3Q 2021

4 As of September 30, 2021, excluding smartphones, laptops and tablets

Growing Revenue and Adjusted Net Profit

Total revenue was RMB78.1 billion, up 8.2% YoY

Adjusted net profit 1 was RMB5.2 billion, up 25.4% YoY

1 Defined as profit for the period, as adjusted by adding back (i) share-based compensation, (ii) net fair value changes on investments, (iii) amortization of intangible assets resulting from acquisitions, (iv)

Successfully Attracting New Smartphone Users

Percentage of New Users Since Product Launch 1

Mainland China MIUI MAU Millions

1 As of October 31, 2021; new user is defined as first-time Xiaomi user or returning user who switches back to Xiaomi smartphone products after using other smartphone products for longer than 30 days, based

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Xiaomi's EV Launch Propels Market Value by $4 Billion, Near GM and Ford

Xiaomi's EV Launch Propels Market Value by $4 Billion, Near GM and Ford

Visitors film around Xiaomi's first electric vehicle, the SU7, displayed at an event in Beijing, China December 28, 2023. REUTERS/Florence Lo/File Photo

By Sarah Wu

BEIJING (Reuters) -Shares of China's Xiaomi surged as much as 16% on Tuesday as the electronics maker's sporty electric vehicle launched last week drew strong interest, though a brokerage forecast the firm would lose nearly $10,000 per car this year.

The stock touched its highest since January 2022 on the first day of trading since the Thursday launch of Xiaomi's debut car, which draws styling cues from Porsche. It later pared gains to close 9% higher, adding $4 billion to its market value.

At the day's highest, the Chinese company had a valuation of $55 billion at a share price of HK$17.34 - higher than that of traditional U.S. automakers General Motors and Ford, at $52 billion and $53 billion, respectively.

Xiaomi's SU7 - short for Speed Ultra 7 - enters a crowded China EV market with an attention-grabbing price tag - under $30,000 for the base model, cheaper than Tesla's Model 3 in China.

While the world's largest auto market is challenging for newcomers due to a cut-throat EV price war and slowing demand, analysts have said Xiaomi has deeper pockets than most EV startups and its smartphone expertise gives it an edge in smart dashboards - a feature prized by Chinese consumers.

Xiaomi has advised potential buyers of its sedan that they could face wait times of four to seven months, a sign of robust demand. On Friday, the company said it had received 88,898 pre-orders for the car in the first 24 hours of sales.

The company, which earns the majority of its $37.5 billion revenue from selling smartphones, has already produced 5,000 SU7 vehicles it dubbed the "Founder's Edition" that it says come with additional accessories for early buyers.

On Tuesday, Xiaomi founder and CEO Lei Jun said on his social media account that deliveries from that first batch would start across 28 Chinese cities on Wednesday, marked by a ceremony at its Beijing factory.

The SU7 launch fulfils the ambition of Lei, who announced the company's foray into EVs in 2021, pledging to invest $10 billion in the auto business as "the last major entrepreneurship project" of his life.

Xiaomi has said it expects to lose money on the SU7, and some analysts predict the loss would be substantial.

"We maintain our cautious view that ultimately everyone could be a loser" within the 200,000 to 300,000 yuan ($27,649.90 to $41,474.85) segment, Citi Research analysts said in a note on Tuesday.

Based on a projected volume of 60,000 units this year, Citi estimates the SU7 could generate a net loss of 4.1 billion yuan ($566.82 million) - on average, 68,000 yuan ($9,400.96) per car.

Following the SU7 launch, other Chinese EV brands with comparable models announced price cuts and subsidies. In 2024, the 200,000 to 300,000 yuan segment will see around 240 EV models vying for sales, up by almost a fifth versus the previous year, Citi analysts said.

Due to surging demand, Xiaomi has asked suppliers to raise the SU7's monthly production capacity to 10,000 units, up from 3,000 in March and 6,000 in May, Chinese financial news outlet Yicai reported, citing sources.

Xiaomi did not immediately respond to a request for comment.

($1 = 7.2333 Chinese yuan renminbi)

(Reporting by Sarah Wu in Beijing; Additional reporting by Anne Marie Roantree in Hong Kong and Brenda Goh in Shanghai; Editing by Tom Hogue, Muralikumar Anantharaman and Devika Syamnath)

Copyright 2024 Thomson Reuters .

Tags: Hong Kong

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Smartphone maker Xiaomi switches from Apple to Tesla challenger as its first EV racks up 120,000 orders in 36 hours

Anyone who’s tried a Xiaomi smartphone knows it’s a worthy competitor to the iPhone. Now the question is, will Xiaomi present the same kind of challenge to Tesla as to Apple? 

On Thursday, the Chinese juggernaut launched its first electric vehicle, the SU7 sedan. Billionaire founder and CEO Lei Jun—a household name in China— said at the presentation in Beijing, “Many people ask me who the Xiaomi SU7 is built for. My answer is, isn’t it time for Tesla Model 3 users to upgrade?”

The entry of yet another deep-pocketed rival in China comes at a difficult time for Elon Musk’s carmaker. Last week, Bloomberg reported that Tesla had reduced EV production at its Shanghai factory amid intense competition and sluggish growth in China. Tesla’s market cap has fallen about 30% this year, spurring the company to scrap Musk’s no-advertising mantra . Tesla also faces competition from China’s Warren Buffett–backed BYD , which dethroned it a few months ago as the world’s top EV seller.

Of course, Tesla has already proved itself as a leading EV maker, while Xiaomi is new in the space.

“In the three years of developing this car, my biggest realization is that making cars is extremely difficult,” Lei said on Thursday. “Even a giant like Apple gave up on it.”

In February, Lei responded to Apple ending its EV project, saying he was “ shocked ” by the decision. He’s cited Apple cofounder Steve Jobs as a primary inspiration to become an entrepreneur.

Xiaomi, which also makes smart TVs and home appliances, enjoys Apple-like popularity in China.

Big bet on EVs

Lei claimed on Thursday that the SU7, available only in China to start, beats the Tesla Model 3 on 90% of specifications, with Xiaomi needing a few more years to catch up on the rest. He said the sedan had a minimum driving range of 700 kilometers (nearly 435 miles) versus 606 for the Model 3. The base model will sell for under $30,000, cheaper than the Model 3 in China.

Lei admitted his company will be losing money on every vehicle it sells for the time being. In December, he said that Xiaomi would spend 10 times the labor and investment carmakers usually commit to a new model. But, he added on Thursday, “Xiaomi has enough cash reserves to cope with any fierce competition in the next five years.” 

Time will tell if Lei made the right call by entering the EV market or if Xiaomi should have veered away as Apple did. Plenty of EV startups once valued in the billions are now struggling .

“The risk is that they focus too much on the EV space and lose focus on the sectors and products that got them there,” Tu Le, founder of consultancy Sino Auto Insights, told Reuters.

But Xiaomi is off to a strong start , at least, with the company reporting that it had received 120,000 firm orders for the SU7 in 36 hours, meaning this year’s production capacity is sold out.

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Event Details

Xiaomi corporation 2022 annual results announcement.

Xiaomi Corporation (HKEX stock code: 01810) plans to announce 2022 Annual Results on Friday, March 24, 2023. There will be an investor conference call / audio webcast (Click here for webcast) on Friday, March 24, 2023 08:30pm (Beijing Time). Senior executives of the Company will review the financial and business performance of 2022, and share their perspectives on the future development of the Company.  

For details, please contact Sico Wu of Hill+Knowlton Strategies Asia:  Tel: (852) 2894 6231 Email: [email protected]  

Supporting Materials

2022 Q4 Results Presentation 3.1 MB

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Press Release Details

Nvidia announces financial results for fourth quarter and fiscal 2024.

• Record quarterly revenue of $22.1 billion, up 22% from Q3, up 265% from year ago 
• Record quarterly Data Center revenue of $18.4 billion, up 27% from Q3, up 409% from year ago
• Record full-year revenue of $60.9 billion, up 126%

SANTA CLARA, Calif., Feb. 21, 2024 (GLOBE NEWSWIRE) -- NVIDIA (NASDAQ: NVDA) today reported revenue for the fourth quarter ended January 28, 2024, of $22.1 billion, up 22% from the previous quarter and up 265% from a year ago.

For the quarter, GAAP earnings per diluted share was $4.93, up 33% from the previous quarter and up 765% from a year ago. Non-GAAP earnings per diluted share was $5.16, up 28% from the previous quarter and up 486% from a year ago.

For fiscal 2024, revenue was up 126% to $60.9 billion. GAAP earnings per diluted share was $11.93, up 586% from a year ago. Non-GAAP earnings per diluted share was $12.96, up 288% from a year ago.

“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations,” said Jensen Huang, founder and CEO of NVIDIA.

“Our Data Center platform is powered by increasingly diverse drivers — demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies. Vertical industries — led by auto, financial services and healthcare — are now at a multibillion-dollar level.

“NVIDIA RTX, introduced less than six years ago, is now a massive PC platform for generative AI, enjoyed by 100 million gamers and creators. The year ahead will bring major new product cycles with exceptional innovations to help propel our industry forward. Come join us at next month’s GTC, where we and our rich ecosystem will reveal the exciting future ahead,” he said.

NVIDIA will pay its next quarterly cash dividend of $0.04 per share on March 27, 2024, to all shareholders of record on March 6, 2024.

Q4 Fiscal 2024 Summary

Fiscal 2024 Summary

Outlook NVIDIA’s outlook for the first quarter of fiscal 2025 is as follows:

• Revenue is expected to be $24.0 billion, plus or minus 2%.
• GAAP and non-GAAP gross margins are expected to be 76.3% and 77.0%, respectively, plus or minus 50 basis points.
• GAAP and non-GAAP operating expenses are expected to be approximately $3.5 billion and $2.5 billion, respectively.
• GAAP and non-GAAP other income and expense are expected to be an income of approximately $250 million, excluding gains and losses from non-affiliated investments.
• GAAP and non-GAAP tax rates are expected to be 17.0%, plus or minus 1%, excluding any discrete items.

NVIDIA achieved progress since its previous earnings announcement in these areas: 

Data Center

• Fourth-quarter revenue was a record $18.4 billion, up 27% from the previous quarter and up 409% from a year ago. Full-year revenue rose 217% to a record $47.5 billion.
• Launched, in collaboration with Google, optimizations across NVIDIA’s data center and PC AI platforms for Gemma , Google’s groundbreaking open language models.
• Expanded its strategic collaboration with Amazon Web Services to host NVIDIA ® DGX™ Cloud on AWS.
• Announced that Amgen will use the NVIDIA DGX SuperPOD ™ to power insights into drug discovery, diagnostics and precision medicine.
• Announced  NVIDIA NeMo™ Retriever , a generative AI microservice that lets enterprises connect custom large language models with enterprise data to deliver highly accurate responses for AI applications. 
• Introduced NVIDIA MONAI™ cloud APIs to help developers and platform providers integrate AI into their medical-imaging offerings. 
• Announced that Singtel will bring generative AI services to Singapore through energy-efficient data centers that the telco is building with NVIDIA Hopper™ architecture GPUs.
• Introduced plans with Cisco to help enterprises quickly and easily deploy and manage secure AI infrastructure.
• Supported the National Artificial Intelligence Research Resource pilot program , a major step by the U.S. government toward a shared national research infrastructure.
• Fourth-quarter revenue was $2.9 billion, flat from the previous quarter and up 56% from a year ago. Full-year revenue rose 15% to $10.4 billion.
• Launched GeForce RTX™ 40 SUPER Series GPUs , starting at $599, which support the latest NVIDIA RTX™ technologies, including DLSS 3.5 Ray Reconstruction and NVIDIA Reflex.
• Announced generative AI capabilities for its installed base of over 100 million RTX AI PCs, including Tensor-RT™ LLM to accelerate inference on large language models, and Chat with RTX, a tech demo that lets users personalize a chatbot with their own content.
• Introduced microservices for the NVIDIA Avatar Cloud Engine , allowing game and application developers to integrate state-of-the-art generative AI models into non-playable characters.
• Reached the milestone of 500 AI-powered RTX games and applications utilizing NVIDIA DLSS, ray tracing and other NVIDIA RTX technologies.

Professional Visualization

• Fourth-quarter revenue was $463 million, up 11% from the previous quarter and up 105% from a year ago. Full-year revenue rose 1% to $1.6 billion.
• Announced adoption of NVIDIA Omniverse ™ by the global automotive-configurator ecosystem.
• Announced the NVIDIA RTX 2000 Ada Generation GPU , bringing the latest AI, graphics and compute technology to compact workstations.
• Fourth-quarter revenue was $281 million, up 8% from the previous quarter and down 4% from a year ago. Full-year revenue rose 21% to $1.1 billion.
• Announced further adoption of its NVIDIA DRIVE ® platform , with Great Wall Motors, ZEEKR and Xiaomi using DRIVE Orin™ to power intelligent automated-driving systems and Li Auto selecting DRIVE Thor™ as its centralized car computer.

CFO Commentary Commentary on the quarter by Colette Kress, NVIDIA’s executive vice president and chief financial officer, is available at https://investor.nvidia.com .

Conference Call and Webcast Information NVIDIA will conduct a conference call with analysts and investors to discuss its fourth quarter and fiscal 2024 financial results and current financial prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA’s investor relations website, https://investor.nvidia.com . The webcast will be recorded and available for replay until NVIDIA’s conference call to discuss its financial results for its first quarter of fiscal 2025.

Non-GAAP Measures To supplement NVIDIA’s condensed consolidated financial statements presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income from operations, non-GAAP other income (expense), net, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, and free cash flow. For NVIDIA’s investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude acquisition termination costs, stock-based compensation expense, acquisition-related and other costs, IP-related costs, other, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, and the associated tax impact of these items where applicable. Free cash flow is calculated as GAAP net cash provided by operating activities less both purchases related to property and equipment and intangible assets and principal payments on property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user’s overall understanding of the company’s historical financial performance. The presentation of the company’s non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company’s financial results prepared in accordance with GAAP, and the company’s non-GAAP measures may be different from non-GAAP measures used by other companies.

About NVIDIA Since its founding in 1993, NVIDIA (NASDAQ: NVDA) has been a pioneer in accelerated computing. The company’s invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined computer graphics, ignited the era of modern AI and is fueling industrial digitalization across markets. NVIDIA is now a full-stack computing infrastructure company with data-center-scale offerings that are reshaping industry. More information at https://nvidianews.nvidia.com/ .

Certain statements in this press release including, but not limited to, statements as to: demand for accelerated computing and generative AI surging worldwide across companies, industries and nations; our Data Center platform being powered by increasingly diverse drivers, including demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies; vertical industries led by auto, financial, services and healthcare now at a multibillion-dollar level; NVIDIA RTX becoming a massive PC platform for generative AI enjoyed by 100 million gamers and creators; the year ahead bringing major new product cycles with exceptional innovations to help propel our industry forward; our upcoming conference at GTC, where we and our rich ecosystem will reveal the exciting future ahead; NVIDIA’s next quarterly cash dividend; NVIDIA’s financial outlook and expected tax rates for the first quarter of fiscal 2025; the benefits, impact, performance, features and availability of NVIDIA’s products and technologies, including NVIDIA AI platforms, NVIDIA DGX Cloud, NVIDIA DGX SuperPOD, NVIDIA NeMo Retriever, NVIDIA MONAI cloud APIs, NVIDIA Hopper architecture GPUs, NVIDIA GeForce RTX 40 SUPER Series GPUs, NVIDIA DLSS 3.5 Ray Reconstruction, NVIDIA Reflex, NVIDIA TensorRT-LLM, Chat with RTX, microservices for the NVIDIA Avatar Cloud Engine, NVIDIA DLSS, ray tracing and other NVIDIA RTX technologies, NVIDIA Omniverse, NVIDIA RTX 2000 Ada Generation GPU, NVIDIA DRIVE platform, NVIDIA DRIVE Orin and NVIDIA DRIVE Thor; and our collaborations with third parties are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements to our existing product and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; and unexpected loss of performance of our products or technologies when integrated into systems, as well as other factors detailed from time to time in the most recent reports NVIDIA files with the Securities and Exchange Commission, or SEC, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

© 2024 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, GeForce RTX, NVIDIA DGX, NVIDIA DGX SuperPOD, NVIDIA DRIVE, NVIDIA DRIVE Orin, NVIDIA DRIVE Thor, NVIDIA Hopper, NVIDIA MONAI, NVIDIA NeMo, NVIDIA Omniverse, NVIDIA RTX and TensorRT are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated. Features, pricing, availability and specifications are subject to change without notice.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/38343cb8-8bc8-42b0-aa76-e3d280ae5507

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