Most smartphone OEMs have been predicting that the market is set to slow down a bit in 2019, but based on last year's numbers, Xiaomi may end up being an exception. The company saw an astounding 118.1% increase in international revenue, with total revenue increases of 52.6%. That works out to 174.9 billion yuan in revenue, or around 26 billion dollars. When all was said and done, the company made around two billion dollars in gross profit last year.
Ok, so from a certain perspective, these are rookie numbers. Samsung made around 53.5 billion dollars before taxes last year according to its yearly profit/loss reports (direct link warning). But on the other hand, Samsung saw less than a 2% increase in revenue compared to 2017. Xiaomi's growth numbers are downright explosive in comparison, even if the end result is still on the smaller side.
It's not hard to see why Xiaomi was able to secure such tremendous growth in the international market, either. Recent efforts like the Pocophone have been quite successful in the few places you can pick one up, with the company previously claiming over 700K units sold in a bit over 3 months. Again, these aren't strong numbers in an absolute sense, but for the first entry in a new series, they compare well against other companies. And having used the phone myself on vacation, it's not hard to see why so many people loved it.
Most of the company's growth is a result of increases in smartphone sales volumes, as well as an increase in average prices, resulting in 118.7 million units sold, an increase of 29.8% since 2017. This is in the face of a 4.1% total year-on-year decline in phone sales, as well. Other divisions, including IoT, lifestyle products, and smart TVs also saw significant growth, with the last seeing an astounding 225% increase in shipments.
Xiaomi says that it plans on entering more markets in 2019 — hopefully, they include the US, as previously rumored. The company is also banking hard on 5G in 2019, but it remains to be seen if consumer interest in the new technology is enough to carry sales.
XIAOMI ACHIEVES STRONG GROWTH ACROSS ALL BUSINESS SEGMENTS IN FY2018
MAR 19, 2019 BY XIAOMI TEAM TAGS: EARNINGS
Xiaomi Achieves Strong Growth Across All Business Segments in FY2018
Revenue Soars 52.6% to RMB174.9 Billion
International Revenue Up 118.1% to RMB70.0 Billion
Net Profit Reaches RMB13.478 Billion
(Hong Kong, March 19, 2019) – Xiaomi Corporation (“Xiaomi” or the “Group”; Stock Code: 1810), an internet company with smartphones and smart hardware connected by an Internet of Things (“IoT”) platform at its core, today announced its audited consolidated results for the year ended December 31, 2018 (“FY2018”).
The Group recorded a strong revenue of approximately RMB174.9 billion, representing a year-on-year increase of 52.6%, among which international revenue grew 118.1% year-on-year to RMB 70.0 billion, accounting for 40% of its total revenue. Net profit for year 2018 was approximately RMB13.478 billion. Adjusted net profit (Non-IFRS Measure) grew by 59.5% year-on-year to RMB8.6 billion.
FY2018 Financial Highlights
- Total revenue was RMB174,915.4 million, an increase of 52.6% year-on-year
- Gross profit was RMB22,191.9 million, an increase of 46.4% year-on-year
- Net profit was RMB13.48 billion
- Non-IFRS adjusted net profit was RMB8,555 million, an increase of 59.5% year-on-year
- Earnings per share were RMB0.843
Xiaomi Founder, Chairman and CEO Mr. Lei Jun, said: “In 2018, Xiaomi continued to shine – even in the face of fierce competition from domestic and international peers – thanks to our unique and powerful “triathlon” business model. During 2018, our large home appliances business emerged from a nascent vertical to a robust business unit, and we also entered the white goods market. Besides, 2018 also marked the start of our overseas IoT business expansion. The strategies to which Xiaomi adheres, such as adopting multi-brand strategy in our smartphone business, strengthening the performance of the high-end market, accelerating the development of new retail channels and focusing on AI development and application, all yielded remarkable results during FY2018. In 2019, we officially launched the “smartphone + AIoT” dual-engine strategy. With the upcoming 5G deployment, we believe there will be more opportunities available for AIoT in the future. We expect to invest over RMB10.0 billion in the development in AIoT in the next 5 years to capture this exciting opportunity. A strong growth across all business segments in 2018 reinforces our confidence in the business and we are positive that we are able to reach our full potential in 2019.”
FY2018 Results Review
Rapid growth across all business segments. In FY2018, Xiaomi’s smartphones segment recorded revenue of approximately RMB113.8 billion, up 41.3% year over year, which was mainly driven by notable grown in both smartphone sales volume, and the average selling price (“ASP”). Compared with the 4.1% year-on-year decline of shipments in the global smartphone market, according to IDC Consulting (Beijing) Ltd. (“IDC”), Xiaomi’s smartphone shipments reached 118.7 million units, representing an increase of 29.8% over the previous year.
Revenue from the IoT and lifestyle products segment continued to maintain a high speed of growth, surged 86.9% on a year-over-year basis to RMB43.8 billion. As of December 31, 2018, the global cumulative shipments of its smart TVs were 8.4 million units, representing a 225.5% year-on-year growth. In addition to smart TVs and laptops, we achieved outstanding sales performances across multiple product categories such as Mi Band, Mi Electric Scooter and Mi Robot Vacuum Cleaner.
Revenue from the internet services segment grew by 61.2% year-on-year to RMB16.0 billion. Meanwhile, advertising revenue grew by 79.9% year-on-year to RMB10.1 billion, primarily driven by continuous optimization of recommendation algorithm, and users’ increasing engagement with Xiaomi’s internet services. The MAU of MIUI increased 41.7% to 242.1 million in December 2018. In the fourth quarter of 2018, Xiaomi has successfully increased diversification of internet services revenue with over 30% of Xiaomi’s internet services revenue was from internet services outside of advertising and gaming from China smartphones.
Embraced a multi-brand strategy and consolidated its leading position in the smartphone markets. Xiaomi adopted a multi-brand strategy for its smartphones in 2018. Xiaomi and Redmi have become independent brands since January 2019. The Xiaomi brand will focus on pioneering advanced technologies, establishing itself in the mid- to high-end markets, and building online and offline new retail channels. The Redmi brand will pursue the ultimate price-performance ratio and focus on online channels. In addition, Black Shark, Meitu, and POCO brands will target games users, female users, and tech enthusiasts, respectively. This multi-brand strategy allows us to serve different user groups more effectively, and to further expand user base. Xiaomi’s smartphone ASP in Mainland China increased by 17.0% year-on-year, smartphone ASP in international markets also increased by 9.7% year-on-year.
Dual-engine strategy: Smartphone + AIoT. Xiaomi’s IoT platform continues to grow and maintain a leading position in the industry. As of December 31, 2018, the number of connected IoT devices (excluding smartphones and laptops) on Xiaomi’s IoT platform reached approximately 150.9 million units, a quarter-over-quarter increase of 14.7% and a year-on-year increase of 193.2%.
Xiaomi greatly enhanced the user experience of IoT devices through the empowerment of AI. As of December 31, 2018, its AI assistant (“小爱同学”) had more than 38.8 million monthly active users (“MAU”), making it one of the most used AI voice interactive platforms in mainland China. Xiaomi will further encourage increasingly more third-parties to join this open IoT platform and will continue to enrich the AIoT platforms by connecting more devices, providing more use cases.
2018 marked the commencement of Xiaomi’s overseas IoT business expansion with smart TVs launched in India in February 2018 and were ranked first in terms of online TV shipments in this market during 2018.
International revenue surged by 118.1% year-on-year to RMB70.0 billion, accounted for 40.0% of total revenue, 12ppts higher than its contribution last year. According to Canalys, Xiaomi’s smartphone shipments for Western Europe grew 415.2% year-on-year and were ranked fourth in terms of smartphone shipments in 2018.
Its smartphone shipments for India continued to demonstrate strong growth momentum and achieved the number one market share position for six consecutive quarters. In Indonesia, Xiaomi was ranked second in terms of smartphone shipments with year-on-year growth of 299.6%.
As an innovation-driven technology company, Xiaomi will continue to work on fundamentals; strengthen its capabilities in innovation, quality control and supply chain management; and promote its multi-brand strategy. With the upcoming 5G deployment in 2019, the Group will continue to invest in the development of its open AIoT platform, which is believed that there will be more scenarios available for AIoT in the future.
To further expand its global footprint, Xiaomi will continue to enter additional markets in 2019 and replicate the success in India in other key markets such as Indonesia and Western Europe.
The Group will focus on building efficient new retail channels by continuously strengthening its distribution capabilities and building an omni-channel, full-scene new retail network that delivers comprehensive product categories. While maintaining leading position in the e-commerce market, Xiaomi will also continue to optimize its offline distribution to further strengthen its advantage in efficiency.
The Group will further enhance and optimize its internet services in mainland China, and continue to expand its client base. Meanwhile, Xiaomi will actively expand its fast-growing IoT device-based internet services, such as TV internet services and overseas internet services, and continue to grow the services that have the potential to expand to non-Xiaomi smartphone users, such as internet finance and the Youpin e-commerce platform.
About Xiaomi Corporation
Xiaomi Corporation was founded in April 2010 and listed on the Main Board of the Hong Kong Stock Exchange on July 9, 2018 (1810.HK). Xiaomi is an internet company with smartphones and smart hardware connected by an IoT platform at its core. With the vision of being friends with its users and being the “coolest company” in the hearts of its users, Xiaomi is committed to continuous innovation, with an unwavering focus on quality and efficiency. The company relentlessly builds amazing products with honest prices to let everyone in the world enjoy a better life through innovative technology. Xiaomi is currently the world’s fourth-largest smartphone brand, and has established the world’s largest consumer IoT platform, with more than 150.9 million smart devices (excluding smartphones and laptops) connected to its platform. Currently, Xiaomi products are present in more than 80 countries and regions around the world and have a leading foothold in many markets.