Xiaomi will see a slowdown in sales across all of its core offerings, from smartphones, AIoT, and internet services, the third-quarter earnings report showed. The smartphone and electronics maker reported quarterly revenue of RMB 70.5 billion ($9.9 billion), a 9.7% year-over-year decline.
Why: As electronics manufacturers around the world navigate a market downturn, Xiaomi, the world’s third-largest smartphone maker, could provide investors and fans with some sign of the fast pace ahead.
Smartphone: Among the three categories mentioned above, the smartphone business saw a significant year-on-year decline of 11.1%, delivering 8.8% fewer units in the third quarter, according to to Counterpoint Research. Sales prices also saw a 2.2% quarterly decline, averaging RMB 1,058 per unit.
- Xiaomi’s strategy of developing a large network of offline stores in China has been affected by the many outbreaks of Covid and strict control measures, making it less competitive with rivals such as Oppo, Vivo, and Honor, the report said.
- The company also performed poorly during the Chinese Singles Day shopping holiday this year, with sales down 11.9% year over year.
- “Overseas shipments account for more than 75% of Xiaomi’s total shipments. The sluggish macro environment, rising prices, and fluctuating foreign exchange rates have affected Xiaomi’s sales in the market on the bright side, we can see that Xiaomi continues to grow its market share in Europe, Latin America, and the Middle East,” wrote analyst Mengmeng Zhang from Counterpoint Research.
IoT and life: Xiaomi’s IoT and residential business saw a 9% year-over-year decline and a 4% quarterly decline due to “customer weakness.” However, the industry posted a 39.5% year-over-year increase in connected IoT devices, reaching 558.3 million as of September 30.
- “Despite slow growth in the sector, Xiaomi made strong progress in smart home appliances, such as air conditioners, refrigerators and washing machines, with revenue increasing by 70%. Smart home devices are an important factor that will make us more resilient to economic downturns,” said Ivan Lam, senior analyst at Counterpoint Research. Lam expected Xiaomi’s home appliances to continue to take off, especially among younger consumers.
Internet Services: Xiaomi’s internet service performed well, with a 3.7% year-over-year decline but a slight 1.4% increase from the last quarter.
- “Although MIUI’s monthly active users have reached global and Chinese records, traffic is difficult to monetize in the difficult macro environment and will continue until 2023,” said Archie Zhang, is an analyst at Counterpoint Research.
Context: Despite the pressure on the market, the company invests heavily in research and development: Spending on this sector increased by 25.1% annually in the third quarter of 2022. A successful example of such investment is development of innovative 1-inch CMOS camera. , worked with Sony. Xiaomi covered half of the $15 billion in development expenses, Xiaomi CEO Lei Jun said on Weibo.
- The company’s growth strategy aims to push its products into the more affordable market and raise the prices of its upcoming Xiaomi 13 phones by 15% to 20%, according to reports. and the Paper is Chinese.