Release Date: November 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xiaomi Corp (XIACF, Financial) reported a total revenue of RMB92.5 billion for Q3 2024, marking a 30.5% increase year-over-year.
- The company's handset IoT core business revenue reached RMB82.8 billion, up 16.8%, with a healthy gross margin of 20.8%.
- Xiaomi's premiumization strategy is showing success, with the Xiaomi 15 series achieving strong sales and increased market share in the high-end segment.
- The home appliance and IoT business saw a revenue increase of 20% to RMB26.1 billion, driven by innovative products and a focus on energy conservation.
- Xiaomi's global active user base reached 686 million, with significant growth in overseas markets, contributing to a 9.1% increase in internet service revenue.
Negative Points
- Despite the revenue growth, Xiaomi's innovative business segment, including smart vehicles, reported a net loss of RMB1.5 billion.
- The company faces fierce competition in the small screen handset market, with competitors launching similar products.
- Xiaomi's automobile business, while growing, requires significant investment in R&D and expansion of sales networks, impacting short-term profitability.
- The company's expansion into offline retail with plans to open 20,000 shops by 2025 involves substantial costs and logistical challenges.
- Xiaomi's premiumization efforts, while successful domestically, face challenges in replicating the same success in international markets due to varying consumer preferences and competitive pressures.
Q & A Highlights
Q: Can you share the future plans for Xiaomi's home appliances and the reasons behind the improved IoT gross margin? Also, what are the expectations for SG&A and R&D expenses in the automobile segment for 2025?
A: The growth in home appliances is just beginning, with innovations in air conditioners and washing machines driving premium offerings. We plan to strengthen upstream capabilities and expand sales channels. The IoT gross margin improvement is due to better product offerings and efficiencies. For the automobile segment, economies of scale and high efficiency are key, and we will continue investing in R&D to support future growth.
Q: With increased competition in small screen handsets, how does Xiaomi 15 maintain strong sales? Also, how will the offline retail network for automobiles develop?
A: The Xiaomi 15's success is due to superior design, battery life, and user experience. It's not just about downsizing; it's about enhancing the product. For offline retail, we have 130 shops with high productivity, and our model is cost-effective due to strategic locations and synergy with other Xiaomi products.
Q: What factors contributed to the ASP improvement in the automobile business, and what are the plans for production line expansion?
A: The ASP improvement is driven by a better product mix and increased contributions from higher-end models. We plan to release more factory capacity to shorten delivery cycles and meet customer demand.
Q: How does Xiaomi plan to enhance its market share globally, and what are the focus areas for growth?
A: We aim to sustain growth in all regions, with a focus on increasing brand influence and premium offerings. Markets like Africa and Latin America show significant potential, and we expect to achieve 20% growth in these areas.
Q: How does the synergy between Xiaomi's handset and automobile businesses benefit the overall brand and sales?
A: The synergy enhances brand influence and attracts a broader customer base. Customers who start with Xiaomi handsets may eventually purchase other Xiaomi products, including vehicles, creating cross-influence and driving sales across different segments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
