Xiaomi Corporation (“Xiaomi” or the “Group”; Stock Code:1810), an internet company with smartphone 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, 2019.
In 2019, Xiaomi achieved solid growth across all business segments. The Group’s total revenue exceeded RMB200 billion for the first time, reaching RMB205.8 billion, up 17.7% year-on-year (“YoY”), representing a 9-year CAGR of 112%. Adjusted net profit was RMB11.5 billion, up 34.8% YoY.
In the fourth quarter of 2019, Xiaomi’s total revenue grew by 27.1% to RMB56.5 billion. Adjusted net profit was RMB2.3 billion, increasing by 26.5% YoY.
2019 Financial Highlights
4Q2019 Financial Highlights
“While the entire world is still under the dark shadows of COVID-19, we have maintained our keen focus on efficiency to tide over this economic ‘black swan’ with everyone. At Xiaomi, we firmly believe that our long-term business success is underpinned by technological innovations, and to that effect, we plan to invest RMB50.0 billion in the next five years, as we relentlessly focus on technological innovation and user experience to grow our loyal Mi Fan base. Overall, we remain committed to using technology to connect and improve lives everywhere in future.”
Annual Performance Review
Multi-Brand Strategy Off to a Good Start, Smartphone Business Seized 5G Market Share
In 2019, Xiaomi’s revenue of the smartphones segment reached RMB122.1 billion, up 7.3% year-over-year. In the fourth quarter of 2019, revenue of the smartphones segment was RMB30.8 billion, an increase of 22.8% year-over-year. For 2019, Xiaomi shipped 124.6 million units of smartphones while in the fourth quarter, shipments were approximately 32.6 million, up 30.5% year-over-year. According to Canalys, for the fourth quarter of 2019, Xiaomi achieved the highest year-over-year smartphone shipments growth among the top five smartphone companies.
Since January 2019, Xiaomi and Redmi were separated into two standalone brands to operate, and the dual-brand smartphone strategy has made solid progress during the year. The Redmi brand continued to pursue the ultimate price-performance ratio across different price points and make innovative technologies readily accessible to the mass market.
According to Canalys, the Redmi Note 7 was the best-selling smartphone model among all models made by Chinese companies in terms of global shipments in 2019. In December 2019, Redmi launched its first 5G smartphone, Redmi K30 5G, with pricing starting from RMB1,999, making it the first 5G smartphone priced below RMB2,000, accelerating the adoption of 5G smartphones by a larger population.
The Xiaomi brand, on the other hand, focuses on pioneering advanced technologies and successfully established a solid foothold in the premium smartphones segment. It launched the flagship 5G smartphone models the Mi 10 and Mi 10 Pro in February 2020. The Mi 10 Pro received the highest scores from DxOMark for overall camera, video and photography performance.
In 2019, the average selling price (“ASP”) of the Group’s smartphones increased by 2.2% year-over-year. and the gross margin of the smartphone segment increased to 7.2% from 6.2% in 2018. In 2020, Xiaomi will continue to focus on 5G smartphones development and strengthen its presence in the premium smartphones segment, which will lead to further ASP expansion.
IoT Business Growing from Strength to Strength
2019 is the first year for the Group’s implementation of its “Smartphone + AIoT” dual engine strategy. In 2019, Xiaomi’s revenue of the IoT and lifestyle products segment was RMB62.1 billion, an increase of 41.7% year-over-year and accounted for 30% of the total revenue from 25% in 2018. In the fourth quarter of 2019, revenue was RMB19.5 billion, up 30.5% year-over-year.
In 2019, the annual Xiaomi smart TVs shipments in mainland China exceeded 10 million units, which is believed to set an unprecedented result in China’s TV industry. The global TV shipments reached 12.8 million units, up 51.9% year-over-year. According to AVC, Xiaomi TV shipments ranked first in mainland China and fifth globally in 2019. Xiaomi also ranked first in India in terms of smart TV shipments for seven consecutive quarters as of the fourth quarter of 2019, according to IDC.
As one of the world’s leading consumer IoT platforms, Xiaomi continued to expand its IoT user base. As of December 31, 2019, the number of connected IoT devices (excluding smartphones and laptops) on our IoT platform reached 234.8 million units, an increase of 55.6% year-over-year. Xiaomi AI assistant “小愛同學” had over 60.4 million MAU in December 2019, an increase of 55.7% year-over-year. In December 2019, MAU of MIUI increased by 27.9% year-over-year to 309.6 million.
According to Canalys, Xiaomi was the world’s largest smart wearable device (including smart watch and wristband) brand in 2019 by shipments. Besides, Xiaomi’s IoT products won over 50 renowned design awards around the world in 2019.
Nearly Half of Total Revenue from Overseas Markets
In 2019, Xiaomi’s revenue from overseas markets was RMB91.2 billion, up 30.4% year-over-year. In the fourth quarter of 2019, overseas revenue grew 40.7% year-over-year to RMB26.4 billion, accounting for 46.8% of total revenue. Currently, Xiaomi products are present in more than 90 countries and regions around the world. According to Canalys, Xiaomi’s smartphone shipments ranked top five in 45 countries and regions in 2019.
In the fourth quarter of 2019, Xiaomi was the largest smartphone brand in India by shipments for ten consecutive quarter, capturing a market share of approximately 28.7%, according to IDC.
In the Western Europe, Xiaomi continued to expand market share. According to Canalys, Xiaomi smartphone shipment in the region grew 115.4% year-over-year in the fourth quarter of 2019. Its smartphone shipments in Spain, France and Italy grew by 65.7%, 69.9% and 206.2% respectively.
In 2019, Xiaomi’s overseas IoT revenue grew rapidly, driven by the robust sales of the best-selling IoT products in overseas markets, including our smart TVs, wristbands, TWS earphones and electric scooters.
Diversified Internet Services Contributing Further to the Group’s Revenue
In 2019, Xiaomi’s revenue from Internet Service reached 19.8 billion, up 24.4% year-over-year. For the fourth quarter, revenue was RMB5.7 billion, up 41.1% year-over-year. In December 2019, the global monthly active users(“MAU”) of MIUI increased by 27.9% year-over-year to 309.6 million with mainland China’s MAU of MIUI standing at 109 million.
Xiaomi continued to make progress in diversifying revenue sources for Internet Services. For the fourth quarter of 2019, its Internet Services revenue outside of advertising and gaming from mainland China smartphones(including those generated from the Youpin e-commerce, fintech, TV internet services and overseas internet services) increased by 112.6% year-over-year and accounted for 43% of total internet services revenue, driving the growth of the internet business. In the fourth quarter, advertising revenue and gaming revenue were RMB3 billion and RMB874.4 million respectively, up 17.8% and 44.4% year-over-year respectively.
Impact of Covid-19 Outbreak
In early 2020, the COVID-19 epidemic spread across the world, Xiaomi experienced temporary disruption in production in February and March 2020, but the production capacity has since recovered to 80% – 90% of normal levels.
For mainland China market, during the peak of the outbreak, Xiaomi’s offline sales were affected as most of Mi stores were closed or operated at shortened hours with significantly lower customer traffic. However, due to its advantages in online channels, Xiaomi is relatively less affected.
For overseas market, with a strong global foothold and continuous expansion into new markets, Xiaomi remains optimistic about the long-term potential of the overseas markets.
Notably, user traffic of Xiaomi’s internet services, such as video and online games, recorded solid growth as people stay at home.
Investment and Development Strategy
As of December 31, 2019, Xiaomi had invested in more than 290 companies with an aggregated book value of approximately RMB30.0 billion. In February 2020, Roborock, one of Xiaomi’s investee companies, was successfully listed on the Science and Technology Innovation Board of Shanghai Stock Exchange (“STAR Market”) in China, becoming its first ecosystem investee company to list on the STAR Market. By expanding the ecosystem, Xiaomi will accelerate the rollout of new complementary products and services, enabling the Group to grow its user base in mainland China and globally.
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