Xiaomi is undoubtedly one of the world’s largest technology companies. The Chinese manufacturer owes its rapid rise to not only its successful products but also its aggressive pricing strategies. However, although the high value-for-money ratio and low-profit margins of its products have helped Xiaomi grow, they haven’t been especially favorable in financial reports.
As a result, the company recently changed its strategy to focus on increasing profit margins and shifting towards more expensive devices. Apparently, this change has been effective, as Xiaomi’s profits doubled in the second quarter due to strong sales of premium smartphones. However, the danger still remains. Here are the details…
Xiaomi’s High-End Smartphone Sales Soar in Second Quarter, Driven by Xiaomi 13 Series
Xiaomi has released its financial reports for the second quarter of the year. Despite facing numerous challenges, the company has managed to create success. The tech giant’s total revenue for the quarter soared to RMB 67.4 billion, marking a 13.2% growth compared to the previous quarter. This is noteworthy in the highly competitive tech industry. In terms of profitability, Xiaomi reported a net profit of RMB 5.1 billion, which is an impressive 147% increase compared to the same period last year. This is the company’s highest quarterly profit since the fourth quarter of 2021.
The company managed to hit a 21% gross profit margin across its various business segments, including smartphones, IoT products, and internet services. This is the highest it’s been, indicating a more profitable portfolio. Xiaomi’s smartphone business did exceptionally well this quarter, showing a 13.3% gross profit margin, the highest to date. Revenue from smartphones increased by 4.6% compared to the last quarter, reaching RMB 36.6 billion.
Moving beyond smartphones, the IoT and lifestyle products segment also saw a revenue hike of 12.3% YoY, totaling RMB 22.3 billion. The gross profit margin here was 17.6%,also a new high. Internet services are a vital part of Xiaomi’s ecosystem, and they didn’t disappoint. The sector saw a revenue increase of 6.8% YoY to RMB 7.4 billion. The gross profit margin for this segment was a jaw-dropping 74.1%.
Impressively, Xiaomi was able to reduce its total inventory to RMB 38.5 billion, a 33.5% decrease YoY. The company’s overall expenses also dipped, falling by 2.3% YoY to RMB 10.2 billion. Both metrics show greater efficiency and cost management. Last but certainly not least, the cash reserves reached an unprecedented RMB 113.2 billion, giving Xiaomi ample resources for future R&D and strategic acquisitions.