On August 21, Xiaomi announced its second quarter results as of June 30, 2024. The financial report showed that the company's total revenue in the second quarter of 2024 was 88.89 billion yuan, a year-on-year increase of 32.0%; gross profit was 18.39 billion yuan, A year-on-year increase of 29.9%; operating profit was RMB 5.89 billion, a year-on-year increase of 45.7%; profit before income tax was RMB 6.68 billion, a year-on-year increase of 34.8%; period profit was RMB 5.07 billion, a year-on-year increase of 38.3%; adjusted net profit It was RMB 6.18 billion, a year-on-year increase of 20.1%.

What is the profitability of Xiaomi's various businesses?

• Smartphone business

In the second quarter of 2024, Xiaomi's smartphone business achieved significant growth, with revenue jumping from 36.6 billion yuan in the same period of 2023 to 46.5 billion yuan, an increase of 27.1%. The main driver of this growth is the significant increase in smartphone shipments, which increased from 32.9 million units to 42.2 million units, an increase of 28.1%, while the global smartphone market only increased by 11.9% year-on-year.

In fact, competition in the smartphone market is fierce, and Xiaomi insists on continuing to fight a "price war" to cater to the growing demand for lower-priced smartphones in emerging markets. The average selling price (ASP) of Xiaomi smartphones will rise from second place in 2023 to The quarterly revenue dropped from 1,112.2 yuan to 1,103.5 yuan, a decrease of 0.8%, highlighting Xiaomi's strategic flexibility in maintaining product competitiveness and market appeal.

• IoT and consumer products business

In the second quarter, revenue from the IoT and consumer products business soared to 26.8 billion yuan from 22.3 billion yuan in the same period in 2023, setting a record high. This growth was mainly due to increased revenue in multiple areas, especially smart home appliances in mainland China, tablets in overseas markets, and wearable products in global markets.

Revenue in the field of smart home appliances increased by 38.7% year-on-year, indicating that Xiaomi's products in the field of smart home appliances are well received by consumers and has a solid position in the local market; revenue in the tablet business increased by 67.6% year-on-year, according to Canalys data It shows that this growth rate far exceeds the market average, reflecting Xiaomi's competitiveness and influence in the global tablet market; revenue in the wearable product field increased by 31.0% year-on-year, this growth was mainly due to smart watches and Increase in TWS headset shipments.

• Internet services

Internet service revenue increased by 11.0% from RMB7.4 billion in the second quarter of 2023 to RMB8.3 billion in the second quarter of 2024, a record high, mainly due to the increase in advertising business revenue.

• Innovative businesses such as smart electric vehicles

In the second quarter, revenue from innovative businesses such as smart electric vehicles was RMB 6.4 billion, with a gross profit margin of 15.4% (the first echelon of new energy vehicle companies, namely Tesla, BYD, and Ideal, have a gross profit margin of around 20%). Excluding other innovative businesses, smart electric vehicle revenue was RMB 6.2 billion. In the second quarter, Xiaomi delivered a total of 27,307 Xiaomi SU7 series vehicles. The ASP for smart electric vehicles is RMB 228,644 per vehicle.

Xiaomi Group stated that it is expected to complete the target of cumulative delivery of 100,000 new cars of the Xiaomi SU7 series in November 2024 ahead of schedule, and will sprint towards the new target of cumulative delivery of 120,000 new cars of the Xiaomi SU7 series in 2024.

Xiaomi Motors' bicycle losses exceeded 60,000 yuan

In the second quarter, Xiaomi Group's innovative business segments such as smart electric vehicles achieved revenue of 6.4 billion yuan, but had an adjusted net loss of 1.8 billion yuan. At the same time, Xiaomi's main competitors also faced losses during the same period: JK Motors' adjusted net loss was 864 million yuan, Xpeng Motors's 1.22 billion yuan, and Leapmotor's 1.2 billion yuan. Although in terms of loss amount, the single-quarter losses of these competitors are lower than Xiaomi.

According to financial report data, as of June 30, 2024, Xiaomi Group's ending cash and cash equivalents balance was 39.335 billion yuan, a year-on-year increase of nearly 8 billion yuan. This abundant cash flow significantly alleviated the financial pressure caused by the loss of 1.8 billion yuan in innovative businesses such as smart electric vehicles in the quarter.

Currently, Xiaomi Auto’s spending levels are relatively high. The financial report disclosed that the operating expenses of innovative business segments such as smart electric vehicles in the second quarter of 2024 were as high as 2.9 billion yuan. Xiaomi Group’s expenses in research and development, sales and promotion, and administrative management have all increased. These increases are closely related to the development of smart electric vehicle business.

Despite facing higher expenses, Xiaomi Auto's gross profit margin has reached a satisfactory level. The company's current main task is to achieve economies of scale to spread high R&D, administrative and marketing costs. Judging from the current situation, the market prospects of Xiaomi Auto are very optimistic. In July 2024, Xiaomi Motors' sales reached 13,000 units, surpassing Model 3 and becoming the leader in the pure electric coupe field. This achievement was achieved despite limited production capacity and only one model. It is foreseeable that with the launch of new models and the increase in production capacity, Xiaomi Motors is expected to become one of the emerging automakers that achieves profitability the fastest.

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