On August 19, Xiaomi Group released its second quarter 2022 results announcement. Total revenue for the reporting period was 70.2 billion yuan and net profit was 2.1 billion yuan, which included 611 million yuan of expenses for innovative businesses such as intelligent electric vehicles.

 

 

The volatile global macro environment in the second quarter of this year, combined with the rebound of the domestic epidemic, led to continued weak consumption and overall pressure on the global cell phone market. Market data showed that global smartphone shipments in the second quarter fell 8.9% year-on-year and 7.7% quarter-on-quarter. China's smartphone shipments were 67.4 million units, down 10.1% year-on-year.

 

 

 

 

Against this backdrop, Xiaomi Group demonstrated extreme operational resilience, driven by its core strategy of mobile x AIoT and solid operations in the global market. Xiaomi's global smartphone market share improved sequentially for two consecutive quarters on a year-over-year basis. According to market data, Xiaomi maintained its global ranking of third in smartphone shipments in Q2 2022, with a market share of 13.8%, up 1.2 percentage points sequentially, and ranked in the top three in 55 countries and regions worldwide. Among them, it ranked second in Europe, with market share improving to 21.7% YoY. As of June 2022, the number of monthly active users of MIUI reached 547 million and 140 million globally and in mainland China, respectively. Offshore Internet service revenue of RMB1.7 billion reached a new quarterly high and increased its share of overall Internet service revenue to 23.9%.

 

 

Based on the increasingly sophisticated product matrix and the comprehensive evolution of technology development, the competitiveness of the new Xiaomi Technology Eco has been significantly enhanced. As of June 30, 2022, the number of connected IoT devices (excluding smartphones, tablets and laptops) on Xiaomi's AIoT platform reached 527 million, up 40.7% year-over-year. The number of users with 5 or more devices (excluding smartphones, tablets and laptops) connected to the AIoT platform exceeded 10 million for the first time, reaching 10.2 million. Q2 2022 Xiaomi smart TV global shipments bucked the trend and has been No. 1 in China for 14 consecutive quarters. Meanwhile, air conditioning products have achieved strong growth, and as of July 2022, Xiaomi's air conditioning product shipments have exceeded 2 million units for the whole year of 2021.

 

 

Adhering to the technology-based approach, Xiaomi has increased its R&D investment and upgraded its innovative technologies across the board.

 

 

Xiaomi spent RMB 3.8 billion on R&D in Q2 2022, an increase of 22.8% year-on-year. Lei Jun said since 2017, Xiaomi R&D investment compound growth rate reached 39.7%, this year is expected to invest RMB 17 billion in R&D, the next five years will exceed RMB 100 billion in R&D investment. From smartphones, wearable devices to smart homes to smart cars and smart manufacturing, Xiaomi is gradually improving the construction of "Xiaomi Technology Ecology" and gradually opening up more imaginative development space.

 

 

 

 

Global strategy is effective, cell phone share increased for two consecutive quarters

 

 

 

In the first half of this year, the global economy continued to be in the doldrums, market consumer demand plummeted, and global smartphone shipments continued to decline. According to Canalys data this quarter, global smartphone shipments declined 8.9% year-on-year and 7.7% quarter-on-quarter.

 

 

Against this backdrop, Xiaomi's smartphone base showed extreme business resilience. 2022 Q2, Xiaomi's smartphone business revenue of RMB 42.3 billion and global smartphone shipments of 39.1 million units, up 1.5% YoY. According to Canalys data, in Q2 2022, Xiaomi ranked third in the global market in terms of smartphone shipments, with a market share of 13.8% and two consecutive quarter-on-quarter market share gains. It also ranked fourth in mainland China with a 15.7% market share, up 1.7 percentage points sequentially.

 

 

 

 

It is worth mentioning that Xiaomi has continued to consolidate its international brand strength by orderly advancing deeper development in the global market. Benefiting from the mature business model and the advantages of localization experience, Xiaomi achieved a year-over-year increase in smartphone market share in multiple regions, including Europe, Latin America, Southeast Asia, the Middle East and Africa. The main market share remains solid. According to Canalys, Xiaomi ranked top three in 55 countries and regions and top five in 67 countries and regions in the world in Q2 2022 by smartphone shipments, with a market share of 21.7% in Europe, ranking second. In Western Europe, the market share of 15.8%, ranked third, of which, Spain smartphone market share ranked first.

 

 

Meanwhile, Xiaomi continues to deepen its overseas operator market channel. According to Canalys data, Xiaomi's market share in the operator channel in Europe rose to 18.0% in Q2 2022 from 17.0% in Q1; and its market share in the operator channel in Latin America rose to 19.3% from 17.7% in Q1.

 

 

Xiaomi continues to be recognized for its strength in the global market, and in August 2022, Xiaomi was ranked 266th on the Fortune 500 list for the fourth consecutive year, the fastest-rising Chinese technology company in the same timeframe.

 

Increase R&D based on long-term development, high-end force fully evolved

 

Xiaomi has been pursuing technological innovation and quality upgrades, and is committed to strengthening its independent R&D capabilities and improving its core competitiveness. in the second quarter of 2022, Xiaomi's R&D spending reached RMB 3.8 billion, up 22.8% year-on-year. At the recent Xiaomi new product launch, Lei Jun mentioned that since 2017, Xiaomi's R&D investment has grown at a CAGR of 39.7% and is expected to reach RMB17 billion in 2022 and exceed RMB100 billion in the next five years.

 

 

During the reporting period, Xiaomi not only launched the new self-researched Pharma G1 battery management chip to optimize the performance of cell phone products' battery life, but also continued to strengthen the strength of high-end products, with significant breakthrough power in imaging technology and cell phone form.

 

 

 

 

In May 2022, Xiaomi announced a long-term imaging strategy partnership with Leica, a comprehensive upgrade of the imaging strategy, becoming another key step in Xiaomi's high-end process. In July this year, Xiaomi released the first model of Xiaomi12S series jointly developed by both parties, of which Xiaomi12SUltra is equipped with Leica professional optical lens, Sony IMX989 one-inch image sensor, with Leica classic and vivid dual image quality, providing a highly textured cell phone imaging experience. With the release of Xiaomi12S series, the third generation of Xiaomi high-end "performance first, experience first" has fully emerged. According to the Jingdong platform, the positive feedback rate of Xiaomi12S series is as high as 98% and above, which is positively recognized by the market.

 

 

On August 11, Xiaomi released the second generation of folding screen flagship phone XiaomiMIX Fold 2 again to the high-end market impact, with self-research micro water drop form spindle, successfully break through the folding screen feel heavy historical problems, with 5.4mm ultra-thin pure flat design, leading the folding screen phone into the era of thin and light, and this has become another milestone technology change on the road of high-end Xiaomi.

 

 

According to third-party data, in the second quarter of 2022, Xiaomi's smartphone market share in the RMB 3,000 to 4,000 price segment in mainland China increased by 3.5 percentage points year-on-year to 18.2%, while its market share in the RMB 4,000 to 5,000 price segment increased by 2.0 percentage points year-on-year to 15.5%. It can be seen that the steady advancement of Xiaomi's premiumization strategy has become a strong driving force for Xiaomi's steady progress.

 

 

In addition, Xiaomi is actively exploring the future and focusing on long-term technology value. It has made phased progress in the fields of autonomous driving technology and humanoid bionic robots.

 

 

On August 11, Xiaomi's first full-stack self-research humanoid bionic robot CyberOne was officially unveiled. The self-research attack on cutting-edge technology shows Xiaomi's strong high-tech leadership, and also greatly advances the overall evolution and enhancement of Xiaomi's high-end capabilities.

 

 

Build a new "Xiaomi Technology Ecology" and layout a full-scene intelligent life

 

Driven by innovation, Xiaomi's XAIoT strategy has been further upgraded to build a new "Xiaomi Technology Ecology" to continuously extend the technology scenario and provide a richer smart terminal experience. As of June 30, 2022, the number of connected IoT devices (excluding smartphones, tablets and laptops) on Xiaomi's AIoT platform reached 527 million, up 40.7% year-on-year. The number of users with 5 or more devices (excluding smartphones, tablets and laptops) connected to the AIoT platform exceeded 10 million for the first time, reaching 10.2 million, up 37.0% year-on-year.

 

 

 

 

Xiaomi continued to promote the integration of the whole scenario of intelligent life and build a more diverse matrix of intelligent ecological products. Although the demand for non-essential products in overseas markets is weak in the short term due to the macro environment, the growth momentum of many categories in the domestic market remains strong.

 

 

Xiaomi smart TV Q2 global shipments reached 2.6 million units, achieving a counter-trend rise, and thanks to the scale effect brought about by the cost advantage and the decline in the price of core components, the quarter smart TV gross margin increased significantly year-on-year. According to Aowei Cloud, Xiaomi TV shipments ranked first in China for 14 consecutive quarters, and firmly in the top five globally.

 

 

In Q2 2022, the revenue of smart home appliance categories (air conditioners, refrigerators and washing machines) grew by over 25% year-on-year, a record high, with Xiaomi air conditioner shipments growing by over 35% year-on-year in Q2. It is worth mentioning that as of July 2022 Xiaomi air conditioner shipments have exceeded 2 million units for the whole of last year, while in the first half of 2022 Xiaomi tablet cumulative shipments also exceeded 1.5 million units.

 

 

While maintaining hot sales in the large appliance category, Xiaomi continues to empower life with technology. The new launch of Mijia zoning washing and drying machine 15KG, Xiaomi Tablet 5Pro 12.4, Xiaomi Bracelet 7Pro, XiaomiBuds 4 Pro, XiaomiWatch S1Pro, Mijia Smart Net Smoker P1 and many other new products, covering cell phones, wearable devices, smart home, smart manufacturing, smart electric cars, bionic robots, a comprehensive construction "Xiaomi Technology Ecology", which empowers high-end experience and high-end capabilities to evolve comprehensively.

 

 

 

MIUI users reach another record high, global profitability continues to be optimized

 

Amidst the volatility of the macro environment, Xiaomi's Internet services have shown strong commercial vitality, supported by a strong user base.

 

 

Xiaomi's Internet service revenue achieved RMB 7 billion in Q2 2022. Among them, overseas Internet service revenue reached a quarterly high of RMB1.7 billion, up 52.1% year-on-year, and further increased its share of overall Internet service revenue to 23.9%. While the offshore Internet business continues to broaden its diversified real estate capabilities, it also ensures the resilience of overall Internet revenue growth and is expected to continue to optimize Xiaomi's profitability.

 

 

 

 

The continued high number of monthly active users of MIUI strengthens the anti-risk capacity of the Internet business and lays a solid foundation for the long-term development of the Internet business. As of June 2022, the number of global and mainland China MIUI monthly active users reached a record high of 547 million and 140 million respectively. Q2 saw a net addition of over 17 million MIUI monthly active users globally and 4.6 million in mainland China.

 

 

During the quarter, overseas advertising revenue grew steadily by more than 50% year-over-year as a result of continued growth in user base in overseas regions, deepening of content and service ecology, and upgrading of global partner service capabilities.

 

 

TV Internet user scale grew steadily driven by smart TV shipments. in June 2022, Xiaomi Smart TV (including Xiaomi Box and Xiaomi TV Stick) had approximately 53 million monthly active users globally. Thanks to the expansion of user scale and continuous optimization of content operation, Xiaomi's TV value-added service revenue in mainland China grew nearly 25% year-on-year in Q2 2022.

 

 

In Q2 2022, facing the test of economic volatility and demand slowdown brought by special periods, Xiaomi's long-term accumulated capacity building supports its development resilience and injects confidence into the market, while strong endogenous momentum will lead Xiaomi through short-term volatility and reshape its long-term development pattern.