Xiaomi reports profit down 59% year-on-year

Xiaomi is giving investors the jitters, with the latest Q3-2022 earnings bulletin confirming profits down 59% from the same period last year. Even more interestingly, the steeply declining profit is reported amid a revenue decline of only 10%.

Apparently, Xiaomi chose to bet on further profits resulting from keeping prices at the same competitive level that the Chinese manufacturer has accustomed us to in recent years. In other words, Xiaomi has absorbed much of the cost increases resulting from inflation and the price of essential components, while reinvesting much of the profits made. Thus the main culprit for the profit booked at a level well below expectations would be the company’s expansion into the smart EV segment of electric cars and investment in other potential projects.

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At the same time, the investor bulletin also shows that Xiaomi increased spending on research activities by 25.7% compared to last year. Thus, in September 2022, about 48% of the company’s staff was involved in research in one way or another.

According to analyst firm Canalys, Xiaomi ranks 3rd in smartphone shipments, a 13.6% market share globally. At the same time, the company ranks 3rd in smartphone sales in 52 countries and regions.

At least for the past year, the main regions where Xiaomi has reported sustained market share gains are Europe, Latin America and the Middle East. For example, Xiaomi ranks No. 2 in Europe with a 23.3% share of the smartphone market up 1.8% from last year.

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Xiaomi has also increased its market share in the premium phone segment, with the average selling price of smartphones increasing by 9% year-on-year, or 14% if we refer only to the mainland China region.

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