Xiaomi’s Q2 Profit Plunged, but Its Phone Shipments Outdid Industry

The “many challenges” the tech industry faced in the second quarter, including rising global inflation, foreign exchange fluctuations, a “complex political environment” and the COVID-19 “resurgence” in China, “significantly impacted overall market demand” for smartphones and Xiaomi’s financial results for the period, said President Wang Xiang on an earnings call Friday. Xiaomi’s Q2 revenue declined 20.1% year over year to 70.17 billion yuan ($10.29 billion), and its operating profit plunged 83.8% to 11.77 billion yuan ($1.73 billion).

Amid “mounting pressure” in Xiaomi’s domestic and overseas markets, “we remain focused on stabilizing our core business,” said Wang. “In the complicated and ever changing international market, our core advantage is our ability to mitigate risks in any single market with our global scale and footprint,” he said.

Xiaomi maintained its No. 3 share in global smartphone shipments in Q2 and continued to “advance our market position quarter over quarter, said Wang. Xiaomi exited the second quarter with nearly 14% smartphone share globally, including 16% in China and 22% in Europe, he said. “Our smartphone market share was among the top 3 in 55 markets and among the top 5 in 77 markets,” said Wang, citing Canalys data.

Q2 shipments in the global smartphone industry declined nearly 8% quarter over quarter, said Chief Financial Officer Alain Lam. “Despite this, our smartphone shipments still achieved quarter-over-quarter growth,” he said. “We have managed to increase our global market share for two consecutive quarters,” from 12.5% in Q4 to 13.8% in Q2, he said. Xiaomi’s investments in its “premiumization” strategy “resulted in increased market share in the premium smartphone market” in China, he said.

Smartphone demand in the second half will be sparked by “a lot of overseas events” promotionally, including the Diwali festival of lights observances in India that begin Oct. 24, the Double-11 online shopping extravaganza Nov. 11 in China, and Black Friday Nov. 25 in the U.S. and many Western European markets, he said. “In a normal market cycle, the second half for smartphone shipments tends to be better than the first half,” he said.

Xiaomi launched the Xiaomi Mix Fold 2 this month, its second-generation foldable smartphone, with "ultra-thin" glass and a “self-developed” hinge called Micro Waterdrop, said Lam. Xiaomi achieved a thickness on the Mix Fold 2 of 5.4 millimeters (0.21 inches) unfolded and a weight of 262 grams (9.2 ounces), he said. “It’s one of the thinnest foldable smartphones in the market.” Its camera is embedded with Leica Summicron lenses, following Xiaomi’s Leica partnership announced in May.