Xiaomi shipped 33.3 million units smartphones in Q3 2018, a 20,4% growth year-on-year. That recorded approximately US$5.04 billion in revenue, an increase of 36.1% year-on-year. Xiaomi Mi 8 ranked 1st in terms of sales volume on Singles’ Day shopping festival 2018. Xiaomi smartphone shipments for Western Europe grew 386% year-on-year and ranked fourth in terms of smartphone shipments in Q3 2018. The global sales volume of Xiaomi smart TVs grew 198.5% year-on-year for Q3 2018.
Xiaomi generated 50.8 billion yuan (US$7.31 bn) in revenue in Q3 2018, an increase of 49.1% year-on-year.
Revenue from international markets accounted for 43.9% of the total. Adjusted profit grew by 17.3% year-on-year to 2.9 billion yuan (US$417.58 mn). The IoT and lifestyle products segment experienced the fastest growth.
Xiaomi Smartphones
Xiaomi shipped over 100 million units smartphones for 2018 on October 26, 2018. Xiaomi smartphones recorded approximately 35.0 billion yuan (US$5.04 bn) in revenue for Q3 2018, an increase of 36.1% year-on-year. Smartphone sales volume reached 33.3 million units in Q3 2018, up 20.4% year-on-year.
Shipment of Xiaomi flagship Mi 8 series had reached 6 million units by October 9, 2018. During the Singles’ Day shopping festival in 2018, Xiaomi Mi 8 ranked 1st in terms of sales volume in the 2,000 yuan to 3,000 yuan price range in the smartphone category on Tmall.com and JD.com, as well as in the 2,000 yuan to 2,499 yuan price range in the smartphone category on Suning.com.
Xiaomi smartphone average selling price (ASP) in mainland China was 16% higher over Q3 2017 and was 4% higher over Q2 2018. The smartphone ASP outside mainland China also increased by 18%, which can be attributed to the increase in the proportion of shipments in Western Europe. The percentage of revenue from smartphones over 2,000 yuan accounted for 31% of total smartphones revenue in Q3 2018.
Xiaomi IoT and lifestyle products
Revenue of the IoT and lifestyle products segment increased by 89.8% year-on-year to 10.8 billion yuan in Q3 2018. This revenue increase was primarily due to a rapid growth in the sales of smart TVs. Besides that, laptops and several Xiaomi ecosystem products such as Mi Band and Mi Electric Scooter also experienced robust sales growth.
The global sales volume of Xiaomi smart TVs grew 198.5% year-on-year for Q3 2018. The global sales volume of Xiaomi smart TVs reached 5.2 million units in the first nine months of 2018. Xiaomi smart TVs monthly sales volume exceeded 1 million for the first time in October 2018.
During the Singles’ Day shopping festival in 2018, the sales volume and sales value of Xiaomi smart TVs both ranked 1st among all the TV brands on Tmall.com, JD.com, and Suning.com, respectively. Xiaomi launched its smart TVs in the India market in February 2018, which is now the leading smart TV brand in India, according to IDC Consulting (Beijing) Ltd. (“IDC”).
Xiaomi launched Mi Air Conditioner on July 23, 2018, which received positive reviews from users. There were about 1.98 million users who own more than five Xiaomi IoT devices as of September 2018, excluding smartphones and laptops, representing a quarter-on-quarter rise of 16.5%.
Internet services
Revenue from Xiaomi internet services segment grew 85.5% year-on-year to 4.7 billion yuan in Q3 2018. Advertising revenue grew by 109.8% year-on-year to 3.2 billion yuan. Revenue from internet value-added services also grew 49.7% year-on-year to 1.5 billion yuan, of which 652.5 million yuan were from gaming, a 12.0% year-on-year increase.
Revenue from other internet value-added services grew by 98.6% year-on-year to 892.7 million yuan, primarily due to an increase in revenue contribution from the internet finance business and Youpin e-commerce platform.
Monthly active users (“MAU”) of MIUI increased 43.4% from 156.5 million in September 2017 to 224.4 million in September 2018. The average revenue per MIUI user (“ARPU”) for the quarter under review increased by 29.4% year-on-year to 21.1 yuan.
Overseas internet services revenue accounted for 4.4% of Xiaomi’s total internet services revenue in Q3 2018. The MAU of Xiaomi Mi TV and Mi Box reached 15.9 million in September 2018. Xiaomi also saw a more significant contribution to internet services revenue from non-smartphone devices.
For example, TV internet services revenue accounted for 5.4% of its total internet services revenue in Q3 2018.
International markets
Xiaomi mainland China revenue grew 20.9% year-on-year to 28.5 billion yuan while international markets revenue grew 112.7% year-on-year to 22.3 billion yuan in Q3 2018. Revenue from international markets accounted for 43.9% of the total in Q3 2018.
Xiaomi smartphone shipments for Western Europe grew 386% year-on-year and ranked fourth in terms of smartphone shipments in Q3 2018, according to Canalys.
Xiaomi smartphone shipments for India grew 31% year-on-year in Q3 2018 and achieved the number one market share position in terms of shipments for four consecutive quarters, according to Canalys. Furthermore, Xiaomi recorded orders of more than 6 million smartphones and orders of more than US$1 billion for all of its products for the Diwali Festival in India this year, during the period from October 9, 2018 to November 8, 2018.
In Indonesia, Xiaomi ranked second in terms of smartphone shipments with year-on-year growth of 337%. It also ranked top five in the smartphone markets of 30 countries and regions in terms of shipments in Q3 2018, according to Canalys.
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Other business highlights
AI+IOT
Artificial intelligence (“AI”) + IoT forms one of Xiaomi’s core strategies. Xiaomi AI assistant (“小愛同學”) had more than 34 million MAU, making it one of the most used AI voice interactive platforms in mainland China as of September 2018.
At the World Internet Conference in November 2018, Xiaomi’s AI Open Platform for Smart Homes won the “World Leading Internet Scientific and Technological Achievements” award. At the 2018 China Big Data Industry Ecology Conference, Xiaomi was selected as one of the “Top 50 Chinese Big Data Enterprises”.
At the third AI WORLD 2018 World Artificial Intelligence Summit, Xiaomi was selected as one of the “TOP 10 AI Leading Enterprises in China”. At the 2018 World Artificial Intelligence Conference, Xiaomi AI assistant (“ 小愛同學 ”) was shortlisted for the SAIL Award, the conference’s most prestigious award.
During the third quarter of 2018, Xiaomi announced that Mobile AI Bench, its end-to-end benchmark tool for hardware and neural network frameworks testing on mobile devices, would become a fully open source platform. Empowered by AI, Xiaomi’s IoT platform continues to grow and maintain a leading position in the industry.
The number of connected IoT devices (excluding smartphones and laptops) on Xiaomi’s IoT platform reached approximately 132 million units as of the end of Q3 2018, an increase of 13.8% from the previous quarter.
Efficiency
Xiaomi had 499 Mi Homes in mainland China as of September 30, 2018, mainly in first- and second-tier cities. Moreover, to further penetrate lower-tier cities and rural areas of China, Xiaomi had more than 1,100 authorized stores in total by the end of Q3 2018, compared with more than 360 authorized stores in Q2 2018.
Despite the rapid expansion of its offline channels, Xiaomi’s overall operation remained highly efficient with the operating expense ratio at 8.5% for Q3 2018.
Brand Strategy
Xiaomi launched POCO, a new smartphone brand. The POCO smartphone, first released in India on August 22, 2018, is now available in most of Xiao’s international markets and is widely popular among tech enthusiasts.
It also launched a gaming smartphone brand, Black Shark, through one of its investee companies. Black Shark brings together powerful hardware, cutting-edge innovation, refined build and design, polished software, and gamer-centric services to deliver the ultimate gaming experience to users.
On November 19, 2018, Xiaomi and Meitu, Inc. (“Meitu”) entered into a strategic cooperation agreement in relation to, among others, the exclusive global license of the Meitu brand and global license of certain technologies and domain names in relation to all future Meitu branded smartphones under the cooperation and certain smart hardware products.
Through this strategic partnership, Meitu’s image-related algorithms and technologies can help Xiaomi to provide better photographic experiences to its users. At the same time, the strength of Meitu’s brand among females can also help Xiaomi continue to expand and diversify its user base.