Technology Author: Contributor, 施放, Fuller Wang May 19, 2022 08:18 PM (GMT+8)

Xiaomi’s Q1 2022 Financial Report indicated the global smartphone market’s condition. Whether Xiaomi’s new research on smart electric vehicles can succeed or not had caught huge attention due to the high cost of the early-stage research.

Xiaomi's Headquarter

Xiaomi published its Q1 2022 Financial Report on May 19, 2022. In the report, Xiaomi gained total revenue of CNY 73.4 billion (USD 10.9 billion), down 4.6% compared with CNY 76.9 billion (USD 11.5 billion) in Q1 2021. The adjusted net profit was CNY 2.9 billion (USD 432.2 million), which had a huge decrease compared with CNY 6.1 billion (USD 909.1 million) last year. It was down 52.9%, which brought massive attention from the public. The cost of innovative businesses was CNY 425 million (USD 63.3 million), which mainly focused on the development of smart electric vehicles.

The 52.9% decrease in net profit was mainly influenced by COVID-19, the global smartphone market environment, target customers’ purchasing power, the costs of labor and parts, and the shortage of core parts, such as chips. The revenue of the smartphone business line decreased by 11.1%. Xiaomi concluded the reasons to be mainly affected by the decrease in the production of goods and the increase in the main component costs. 

The revenue of the smartphone business line was CNY 45.8 billion (USD 6.8 billion), down 11.1% year-over-year. Its gross profit margin was 9.9%, which has a 3% difference compared with the 12.9% of Q1 2021. Xiaomi concluded the reasons for the promotions of certain models of smartphones. The dynamic clearing policy of the China government also reduced the purchasing power of major consumers. Therefore, the consumption expectation was declined. People tended to delay their replacement of smartphones or wait for big discounts on the products. Xiaomi might has a huge increase in the revenue on the big discount day such as the upcoming 6.18 day.

Whether Xiaomi’s strategy in the smart electric vehicles will be a success or not has attracted a vast number of investors’ attention. And those, who care about whether the corresponding cost of the research of this project can be returned or neglected from this quarter’s financial report, are all waiting for this answer.