Xiaomi reported revenues for the third quarter of CNY 53.7 billion, up 5.5 percent from a year earlier. While smartphone revenues fell 7.8 percent to CNY 32.3 billion, the company said it improved gross margins and continued to grow its services business and in other consumer products.
Gross profit increased 25.2 percent to CNY 53.7 billion, and the adjusted net profit, excluding one-time items such as a loss on its stake in iQiyi and valuation changes, increased 20.3 percent to CNY 3.5 billion.
Xiaomi said it improved its smartphone gross margin to 9.0 percent, from 8.1 percent in Q2 and 3.3 percent in Q1, as it focused on the mid- to high-end of the market and a diversified product range. In total, the group shipped 32.1 million smartphones in the quarter, the same as in Q2. The group said its average selling price was up 4.6 percent in mainland China, where it launched a first 5G device in September. In other markets, the ASP fell 4.1 percent from a year ago.
IoT, lifestyle product revenue up 44%
Other consumer products contributed just over 29 percent of revenue, up from 21 percent in Q3 2018. Total revenues from the IoT and lifestyle products rose 44.4 percent to CNY 15.6 billion. Xiaomi said it shipped 3.1 million TVs in the period, up 59.8 percent year-on-year, putting it in the top five manufacturers worldwide.
Services revenue increased 12.3 percent to CNY 5.3 billion. Xiaomi said it had over 3.2 million paid subscribers to its smart TV and Mi Box platforms, up 68.8 percent from a year ago, and in total there were 292.1 million monthly active users of the MIUI in September, up 29.2 percent from a year earlier. Revenue from the fintech business also jumped 91 percent to CNY 1.0 billion following the expansion into consumer loans.
Xiaomi said it was taking a "prudent" approach to the market, working to limit risk given the challenges in the smartphone segment and the start of the transition to 5G in China. Xiaomi said it plans to introduce at least ten 5G models in 2020 in order to boost its growth and capture the mass market for the new generation of devices.
International sales up 17%
The company continues to expand outside China, with the international business accounting for 48.7 percent of revenues in Q3, led by the smartphone expansion in Western Europe. Total revenues abroad rose 17.2 percent to CNY 26.1 billion. Xiaomi also claimed the top position in the Indian smartphone market for the ninth consecutive quarter.
