XIAOMI(HK:01810)2022-05-19 11:30Financial Data and Key Metrics Changes - Total revenue for the first quarter of 2022 reached RMB 73.4 billion, with an adjusted net profit of RMB 2.9 billion, which included RMB 425 million in expenses related to smart EV and other new initiatives [2][5][12] - The overall gross margin declined by 1.1 percentage points year-over-year to 17.3%, with smartphone gross margin decreasing to 9.9% [12][13] - R&D expenses increased by 60% year-over-year to RMB 3.5 billion, representing 4.8% of total revenue [3][12][13] Business Line Data and Key Metrics Changes - Smartphone revenue was RMB 45.8 billion, with global shipments of 38.5 million units, maintaining the number three position globally with a market share of 12.6% [5][7][12] - IoT revenue reached RMB 19.5 billion, an increase of 6.8% year-over-year, with a record high gross margin of 15.6% [9][12] - Internet services revenue was RMB 7.1 billion, up 8.2% year-over-year, with advertising revenue growing by 16.2% to RMB 4.5 billion [11][12] Market Data and Key Metrics Changes - Xiaomi maintained its number three position in global smartphone shipments, ranking top three in 49 markets and top five in 68 markets [2][8] - In Mainland China, MIUI MAU reached 136 million, a net increase of 17 million year-over-year [8][11] - Overseas internet services revenue increased by over 70%, contributing nearly 22% of total internet service revenue [3][11] Company Strategy and Development Direction - The company is focusing on optimizing cost structure and improving operational efficiency while investing in new initiatives, including smart EV development [2][4] - Xiaomi continues to strengthen its premium smartphone market position, with a strategy that includes expanding offline retail presence and enhancing user experience through innovative technology [3][6][7] - The company is actively promoting ESG initiatives and has set multiple environmental targets [4][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant challenges from supply shortages, COVID-19, and macroeconomic headwinds, but expressed confidence in the company's resilience and growth potential [2][5] - The outlook for the smartphone market remains uncertain, but improvements in supply and promotional events are expected to drive shipments in the second quarter [15][16] - The IoT business is anticipated to face challenges due to logistical issues and macroeconomic conditions, particularly in Europe, but management remains optimistic about growth opportunities [17][19] Other Important Information - The company has merged various departments to enhance operational efficiency and promote sustainable growth [4][12] - Xiaomi's cash resources remain robust, reaching RMB 95 billion as of the end of March [13] Q&A Session Summary Question: What is the management's take on the demand outlook for smartphones in the following quarters? - Management noted uncertainty in the global environment and COVID-19 impacts but observed potential improvements in supply for Q2, with promotional events expected to drive shipments [15][16] Question: Can you explain the reason for the IoT gross margin improvement to 15.6%? - The improvement was attributed to lower component costs, particularly in the TV business, and higher margins from new product categories [17] Question: How does the company view its competitive strength in Africa and Latin America? - Management highlighted strong growth in Latin America, with a market share of about 15%, and emphasized the potential for further growth through partnerships with carriers [20][21] Question: What impact has the pandemic had on the company's main businesses? - The pandemic, particularly in Shanghai, affected store operations and logistics, but improvements are expected as the situation stabilizes [22][23]