Xiaomi reported a sharp slowdown in revenue growth in the third quarter, with sales up just 8 percent compared to around 60 percent growth in the first half of the year. The company blamed the slower growth on the global supply-chain problems and component shortages. Xiaomi's net profit also fell over 83 percent year-on-year, after a writedown on its investment portfolio due to the downturn in Chinese tech stocks.
Revenues for the three months rose 8.2 percent year-on-year to CNY 78.1 billion. Smartphone shipments fell to 43.9 million from 46.6 million reported in Q3 2020 and 52.9 million in Q2 this year. Xiaomi said it reached third place in the global market, second in Europe and first place in India still, according to Canalys data. In addition, the company passed the milestone of 500 million monthly active users for the MI UI in the period.
With lower smartphone and TV shipments, Xiaomi's only growth area in the quarter was other IoT and lifestyle products. Revenues from these products were up 15.5 percent year-on-year to CNY 20.5 billion. Xiaomi said it was also on track with its plans to develop electric vehicles, with mass production expected to start in the first half of 2024.
With a strong improvement in smartphone gross margins, Xiaomi's quarterly gross profit was up 40.6 percent to CNY 14.3 billion. Net profit however fell 83.8 percent year-on-year to CNY 789 million after valuation losses of around CNY 3.5 billion on Xiaomi's extensive investment portfolio. Excluding one-time items, adjusted net profit was up 25.4 percent to CNY 5.18 billion.
Xiaomi said the portfolio was hurt by global macroeconomic uncertainty as well as "market sentiment towards technology sector in China". In total the investments in over 360 companies were valued at CNY 68.5 billion at the end of September.
