Written by|Planet
Source|Beduo Finance
On November 20, Xiaomi Group (HK:01810, hereinafter referred to as "Xiaomi") released its third quarter results announcement as of September 30, 2023.
The financial report shows that against the background of declining smartphone shipments and falling average selling prices, Xiaomi bucked the trend and achieved positive revenue growth for the first time in six quarters, and achieved good profit results relying on the Internet and IoT services. Reduce costs and increase efficiency to develop new momentum.
However, with the launch of Xiaomi cars, Xiaomi's strategy of "equal emphasis on scale and profits" may still go through a thorny road in the foreseeable future as its automobile business is put into mass production. Going through the cold winter, is Xiaomi on the right path? Can you stand still if you start a business again?
1. The mobile phone business is declining and revenue growth has been stalled for a long time.
The financial report shows that Xiaomi’s revenue in the third quarter of 2023 was 70.894 billion yuan, an increase of 0.6 percentage points from 70.474 billion yuan in the same period of 2022, and a month-on-month increase of 5.3%. A review of previous financial reports shows that Xiaomi’s single-quarter revenue has been in a state of negative growth since 2022.
Specifically, Xiaomi's single-quarter revenue growth rates in the four quarters of 2022 are -4.6%, -19.95%, -9.7% and -22.8% respectively. Throughout 2022, Xiaomi Group's total revenue was 280.044 billion yuan, a decrease of 14.7% from 328.309 billion yuan in the same period of 2021.
After entering 2023, Xiaomi's single-quarter revenue performance has not improved yet, with revenue growth rates in the first and second quarters of 2023 being -18.9% and -4.0% respectively. Until the third quarter, Xiaomi's revenue growth of 0.6% temporarily broke the deadlock of its continuous decline in revenue growth rate.
However, it should be pointed out that Xiaomi’s revenue in the first three quarters of 2023 was 197.727 billion yuan, still 7.6% lower than the 214.00 billion yuan in the same period in 2022; net profit was 12.751 billion yuan, and the adjusted net profit under non-IFRS accounting standards was 143.63 billion.
In fact, the smartphone market, which is the backbone of Xiaomi's performance, has been affected by macro disturbances since 2022, and the overall demand has been weak.
Canalys data shows that global smartphone shipments will fall by 11.7% year-on-year in 2022, the lowest since 2014, and may be the "initiator" of Xiaomi's revenue decline. In contrast, Huawei achieved sales revenue of 642.3 billion yuan in 2022, a year-on-year increase of 0.9%; net profit was 35.6 billion yuan, a year-on-year decrease of 68.7%.
In 2022, the smartphone business, which accounted for 59.7% of Xiaomi's total revenue, achieved revenue of 167.217 billion yuan, a decrease of 19.9% from 208.869 billion yuan in the same period of 2021; shipments also dropped by 20.9% from 190 million units in 2021 to 2022. 151 million units.
In the third quarter of 2023, Xiaomi's smartphone business segment revenue was 41.649 billion yuan, a year-on-year decrease of 2.04%, but the revenue decline was significantly narrower than the -13.42% revenue decline in the first half of 2023; global smartphone shipments were approximately 41.8 million units , a year-on-year increase of 4.0% and a month-on-month increase of 27.0%.
Xiaomi stated in its financial report that the decline in revenue from its smartphone business was mainly due to the decline in the average selling price (ASP) of Xiaomi mobile phones, which decreased from 1,058.2 yuan in the third quarter of 2022 to 997.0 yuan in the third quarter of 2023. is 5.8%.
It should be pointed out that the decrease in the average selling price of Xiaomi mobile phones is mainly due to the increase in shipments in emerging markets with low ASP such as Latin America, Africa and the Middle East. Lin Shiwei, CFO of Xiaomi Group, also said at the third quarter earnings conference call that the average selling price of Xiaomi mobile phones in China has increased.
2. Double-digit profit growth, significant results in cost reduction and efficiency increase
In contrast, Xiaomi's performance on the profit side is better than the revenue side.
In the third quarter of 2023, Xiaomi's net profit was 4.869 billion yuan, turning a loss into a profit compared with -1.474 billion yuan in the same period of 2022, a month-on-month increase of 32.8%; the net profit in the first three quarters was 12.751 billion yuan, which also reversed the decline in 2022. A loss of 639 million yuan during the same period.
Under non-IFRS accounting standards, Xiaomi's adjusted net profit in the third quarter of 2023 was 6.00 billion yuan, an increase of 182.9% from 2.117 billion yuan in the same period of 2022, and a month-on-month increase of 16.5%; the adjusted net profit in the first three quarters The profit was 14.363 billion yuan, a year-on-year increase of 103.5%, and the growth rate was also considerable.
Beido Finance found that Xiaomi’s improvement in profit scale is inseparable from the optimization of its revenue structure. In the third quarter of 2023, Xiaomi's IoT and consumer products segment's revenue was 20.673 billion yuan, an increase of 8.5% from 19.059 billion yuan in the same period of 2022, mainly driven by smart home appliances.
Thanks to the strong growth of Xiaomi tablets and several domestic consumer products, Xiaomi's IoT and consumer products business achieved a gross profit margin of 17.8% in this quarter, an increase of 4.3% from the same period in 2022 and a month-on-month increase of 0.2 percentage points.
At the same time, the Internet service business with the highest gross profit margin among Xiaomi's business segments achieved revenue of 7.756 billion yuan this quarter, a year-on-year increase of 9.7%; of which overseas revenue increased significantly, up 35.8% from 1.7 billion yuan in the third quarter of 2022. to 2.3 billion yuan. The gross profit margin of this business was 74.4%, a year-on-year increase of 2.3%.
It is worth mentioning that due to continued destocking in overseas markets and product structure optimization in the domestic market, the gross profit margin of Xiaomi’s smartphone business has also increased, from 13.3% in the second quarter of 2023 to 16.6% in the third quarter of 2023. An increase of 7.7 percentage points compared with the third quarter of 2022.
As of the end of the third quarter of 2023, Xiaomi's overall inventory amount was 36.8 billion yuan, a year-on-year decrease of 30.5%, the lowest level in eleven quarters. From this perspective, its strategy of "paying equal attention to scale and profits" has been implemented, and its cost reduction and efficiency improvement have been quite fruitful.
3. With the arrival of Xiaomi cars, the “money-burning” moment is coming
Xiaomi stated in its financial report that after entering the new decade (2020-2030), it will begin large-scale research and development of underlying core technologies, and plans to invest 100 billion yuan in research and development within five years (2022-2026), striving to become a global new technology. A generation of hard-core technology leaders.
In the third quarter of 2023, Xiaomi's R&D expenses were approximately 5 billion yuan, a year-on-year increase of 22.0% from 4.1 billion yuan in the same period of 2022, mainly due to an increase in R&D expenses related to smart electric vehicle business and other innovative businesses.
Xiaomi's car-making dream set sail in 2021. At that time, Xiaomi Chairman Lei Jun once said: "This is the last major entrepreneurial project in my life. I am willing to stake all my reputation in life, personally lead the team, and fight for Xiaomi cars!" In In the field of car manufacturing, Xiaomi is expected to invest US$10 billion within 10 years.
After the official establishment of Xiaomi Auto Co., Ltd., the Xiaomi Auto project will build the Xiaomi Auto headquarters base, sales headquarters, and R&D headquarters. It will build a vehicle factory with an annual output of 300,000 vehicles in two phases, of which the first and second phases have a production capacity of 150,000 units each. It is expected that the first vehicle will roll off the assembly line and achieve mass production in 2024.
Just recently, Xiaomi cars appeared in the new product announcement list of the 377th batch of "Road Motor Vehicle Manufacturers and Product Announcements" of the Ministry of Industry and Information Technology. The declared models are SU7 and SU7 Max, produced by BAIC Motor Off-Road Vehicle Co., Ltd. This also means that the official launch of Xiaomi cars is not far away.
It is worth mentioning that Xiaomi announced the group's latest strategy in October, which is to upgrade from "mobile phones × AIoT" to "a full ecosystem of people, cars and homes", and will undertake it through the newly launched Xiaomi Pascal OS system to achieve a people-centered , integrated into an organic whole to protect the intelligence of Xiaomi cars.
In the third quarter financial report conference call held on November 20, Xiaomi Group partner and president Lu Weibing said that Xiaomi Motors will soon conduct a second winter test. The current progress is in line with expectations, and the mass production target for the first half of 2024 remains unchanged. Change.
Regarding the widely circulated news that "Lei Jun expects Xiaomi car sales to reach 100,000 units", Lu Weibing responded that Lei Jun has not announced the sales target of Xiaomi cars, but Xiaomi has high goals for entering the electric car market and hopes to take advantage of 15 It became one of the top five automobile companies in the world between 2000 and 2020.
Xiaomi Motors' first new car is about to be released, which also means that Xiaomi Group will soon enter the rhythm of "burning money and mass production", and the birth of new businesses will not only affect Xiaomi's business segment structure, but also its performance and income. It will be quite a challenge.
Looking back at the past, Jia Yueting of LeTV and Xu Jiayin of Evergrande also had great aspirations for building cars.