Xiaomi’s overseas sales offset slowing China growth, Q1 revenue surges 27%

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A Xiaomi clerk answers questions in Shanghai on March 22, 2019. (Image credit: TechNode/Cassidy McDonald)

Chinese smartphone maker Xiaomi on Monday said its first-quarter revenue rose 27% from a year earlier to RMB 43.8 billion (around $6.3 billion), driven by steady growth in overseas sales, and exceeding analyst expectations by a solid margin.

Xiaomi’s adjusted net profit for the first quarter increased 22.4% year over year to RMB 2.1 billion.

Xiaomi’s results show that the world’s fourth-largest smartphone maker by sales volume is weathering a shrinking smartphone market in China, the world’s biggest. It is increasing focus on markets such as India and Europe. Markets outside China brought in 38.0% of its total revenue in the first quarter, representing a 34.7% year-on-year increase, according to the company.

A report from research firm Counterpoint showed that Chinese smartphone market sales volume declined 7% year-on-year in the first quarter. Xiaomi said it believed that on-going government stimulus, including the reduction of value-added tax, would “greatly benefit the entire smartphone industry” in China.

On a call with reporters, Xiaomi CFO Shou Zi Chew said that smartphone sales were experiencing a period of decline before the “5G spring” came, but the company was adopting a multi-brand strategy and focusing on expanding business in “selected markets” such as India.

Chew also said the company had not been affected by the recent restriction on Huawei from using Google services on its future Android smartphones, adding that the company had long been developing its own MIUI, an Android-based mobile device operating system.

The company’s smartphone segment recorded approximately RMB 27.0 billion in revenue in the first quarter, representing a year-over-year increase of 16.2%. The company said its smartphone sales volume in the first quarter reached 27.9 million units, exceeding the more than 27.5 million units the company revealed ahead of the earnings report to dispute a low estimate by market research firm IDC.

As of the end-March, the number of internet connected devices excluding smartphones and laptops on Xiaomi’s internet of things (IoT) platform reached 171.0 million units, a year-on-year increase of 70.0%, according to the company. Xiaomi said it would continue to invest more to develop its artificial intelligence-powered IoT platform to enhance the appeal of its products.