Xiaomi Surges 134% in Q2 Profit as EV Sector Accelerates

On August 20, a leading Chinese consumer electronics and electric vehicle manufacturer announced a remarkable 134% rise in net profit for the second quarter, primarily driven by the impressive performance of its electric vehicle and smart home appliance divisions.

The company’s net income reached CNY11.9 billion (approximately USD1.7 billion) in the three months ending June 30, compared to CNY5.1 billion (around USD709.8 million) a year earlier, according to its latest earnings report released yesterday.

Quarterly revenue jumped 31%, totaling CNY116 billion (about USD16.1 billion), marking a record for the fifth consecutive quarter.

In the second quarter, the company invested CNY7.8 billion in research and development, representing an increase of over 41% from the same period last year, with a record 22,641 R&D employees as of June 30. The company has set a goal to spend a total of CNY30 billion on R&D this year.

As of June 30, the firm held CNY36 billion in cash and equivalents, with total cash resources of CNY235.9 billion, and generated CNY23.5 billion in operating cash flow during the quarter.

The company’s shares [HKG: 1810] were trading slightly higher, up 0.1%, at HKD52.45 (about USD6.72) as of 1:50 p.m. in Hong Kong today. The stock has appreciated approximately 53% so far this year.

Electric Vehicles as a Growth Catalyst

Revenue from the smart electric vehicle sector, artificial intelligence, and other new initiatives reached CNY21.3 billion in the second quarter, with CNY20.6 billion derived from its electric vehicle operations.

Although the EV division reported operational losses of CNY300 million (around USD41.8 million), it maintained a robust gross margin of 26.4%.

Between April and June, the company delivered 81,302 electric cars, with an average selling price of CNY253,662 (about USD35,300) per vehicle.

“The success of our EV division showcases the strength of our model and approach,” the company’s president stated during the earnings call. “We entered directly into the high-end market segment rather than starting at the entry level.”

In June, the company launched its first SUV model, the YU7, which received over 240,000 pre-orders within 18 hours. Offered in three variants—the base YU7, the YU7 Pro, and the YU7 Max—prices range from CNY253,500 to CNY329,900, targeting the luxury SUV market.

Management expressed confidence in meeting its annual target of delivering 350,000 units this year and forecasts that the electric vehicle segment will achieve quarterly profitability in the latter half of the year.

The company also announced plans to expand into the European electric vehicle market by 2027.

Smartphones and AIoT Developments

The core smartphone and AIoT segment generated revenue of CNY94.7 billion (approximately USD13.2 billion) in the second quarter, marking nearly a 15% increase from the previous year, with a gross margin improving to 21.6%.

Smartphone revenue declined slightly by 2.1%, totaling CNY45.5 billion, despite a modest 0.6% increase in global shipments to 42.4 million units. The average selling price per device dropped by 2.7% to CNY1,073 (around USD150).

The company maintained strong positions in key markets, ranking first in Southeast Asia with an 18.9% share and second across Europe, the Middle East, and Latin America, with shares of 23.4%, 18.7%, and 19.6%, respectively. Domestically in China, it led in smartphone activation volume.

The gross margin for the smartphone division fell to 11.5% from 12.1% last year, influenced by rising memory prices and export restrictions on semiconductor materials, according to the company president. Additionally, only six new smartphone models were launched in the first half of the year, compared to dozens by competitors.

“We anticipate smartphone gross margins will recover in the fourth quarter with upcoming product launches,” he noted. “Long-term margin growth will depend on adopting a premium strategy, investing continuously in chips, operating systems, and AI.”

Revenues from the IoT and lifestyle products sector soared 45%, reaching a record CNY38.7 billion in the second quarter, with a gross margin of 22.5%, up from 19.7%. Notably, revenue from smart large appliances increased by over 66%, driven by a surge in shipments of air conditioners, refrigerators, and washing machines—up 60%, 25%, and 45%, respectively.

Connected IoT devices (excluding smartphones, tablets, and laptops) reached 989.1 million units, increasing by 20.3% during the period. The number of users with five or more connected devices grew nearly 27% to 20.5 million.

In June, the company introduced its first-generation AI glasses, which feature ultra-light 40-gram frames with a 12-megapixel optical system and high-quality open-ear headphones. The product was well received, earning a 98% positive rating on JD.com.

Income from internet services increased 10% year-over-year to CNY9.1 billion, holding a gross margin of 75.4%. Monthly active users worldwide soared to an all-time high of 731.2 million in June, reflecting an 8.2% growth compared to last year.

International internet services revenue rose 13% to a new high of CNY3 billion, accounting for roughly one-third of the company’s total internet revenue. Advertising income grew 15%, totaling CNY6.8 billion, while gaming revenue also increased by 5.1% to CNY1.1 billion.