Home Business Xiaomi executives: hope that Internet business will become a growth engine and will adhere to high-end strategies

Xiaomi executives: hope that Internet business will become a growth engine and will adhere to high-end strategies

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Sina Technology News November 23 afternoon news,MilletThe group today released its third quarter financial report ending September 30, 2021. The financial report shows that the Xiaomi Group’s third-quarter revenue was 78.06 billion yuan, an increase of 8.2% year-on-year, and the market was estimated to be 77.46 billion yuan. Under non-International Financial Reporting Standards, adjusted net profit was 5.176 billion yuan, a year-on-year increase of 25.4%; Xiaomi’s third-quarter earnings per share were 0.03 yuan, and the market expected 0.22 yuan.

After the financial report was released, Xiaomi President Wang Xiang, CFO Lin Shiwei, Finance Vice President Sun Qian, and Public Relations General Manager Wang Hua attended the subsequent earnings conference call to interpret the key points of the earnings report and answer questions from reporters.

The following is the main content of the Q&A at the press conference:

  Securities Daily reporter asked: Yesterday, the company announced that MIUI monthly active users exceeded 500 million, and the company’s Internet service business performed well, setting a record high in the third quarter. What are the reasons for the rapid management growth? Is this growth sustainable?

Wang Xiang: First of all, the continuous growth of MIUI users shows that our products have been well developed in terms of globalization and have met the needs of more and more users. The increase in the number of MIUI monthly active users drives our Internet A very important engine for revenue growth. There may be two more points. First of all, we are very concerned about the development of the mid-to-high-end market. Our development in the mid-to-high-end market has driven the growth of international MIUI revenue, and this number has continued to grow in the past few quarters. , And reached a record 20% this quarter, which is also a very gratifying phenomenon. At the same time, the number of domestic MIUI users has reached 127 million, which has also given birth to the growth of many Internet services.

Lin Shiwei: The number of Internet users of the company has increased a lot this year. From the beginning of 2021 to the present, our global MIUI new monthly active users are about 100 million, and the domestic monthly active users have increased to 18.65 million. The growth of users has also driven the company’s Internet business revenue growth. ‍‍Second, the proportion of our high-end mobile phones (increased) has also driven the growth of different Internet revenues, such as pre-installation and search. There is also the ARPU (average revenue per user) of the company’s gaming business. The contribution from Xiaomi’s high-end mobile phones and gaming mobile phones will also be significantly higher than our mid- and low-end mobile phones. As the proportion of our high-end mobile phones further increases, the game ARPU It also grows. Third, the company’s overseas Internet business revenue in the third quarter increased by 110% year-on-year, and the overall Internet business revenue increased by nearly 20%. Fourth, our TV Internet revenue is actually very good. The ARPU of TV membership services has increased year-on-year, which has also boosted the growth of our Internet business revenue. In the future, with shipments, ARPU (growth) of users, and interaction with user growth, we also hope to improve user experience and user service capabilities, and hope that Internet business can become our growth engine and bring to the company Contribution of revenue and profit.

  SohuTechnology reporter asked: ‍Xiaomi’s adjusted net profit for the quarter increased by 25% year-on-year, but the profit during the period decreased by 83.8% year-on-year. What caused this? ‍The second question is about the current setup of the Xiaomi car executive team, can you tell us about it?

Lin Shiwei: ‍Our profits under the International Financial Reporting Standards will be affected by the fluctuations in the stock prices of the companies in our investment portfolio. The investment income of our peer companies is also affected to varying degrees, because the stock prices of Chinese technology stocks are still affected in the third quarter. It had a certain impact, so it produced a loss of about 3.5 billion, but this does not truly reflect our operating performance. Therefore, since our listing, we have not included investment gains or losses in adjusted net profit. The previous quarters There is a profit, but we did not take it into account. Investors still need to pay attention to our adjusted net profit. This quarter has a year-on-year growth of about 25%.

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Wang Xiang: The establishment of our automotive team has exceeded our expectations in terms of progress and quality. Now more than 500 members have joined our automotive team, including many senior executives, and the core framework of the entire automotive business has been basically completed. In this sense, it exceeded our expectations. So far, we can share with you the situation.

 A reporter from Hong Kong Economic Times asked: According to third-party data, Xiaomi’s mobile phone shipments did not grow much in the second half of the year. Will there be any improvement in the performance in the fourth quarter and the first half of next year? ‍In addition, is there room for further increase in the level of mobile phone gross profit?

Wang Xiang: Let me talk about the supply situation first. This year is an extreme shortage of global semiconductor supply. The shortage in the third quarter has intensified. Because the space has become smaller and smaller, the shortage of semiconductors is a cyclical behavior. In the third and fourth quarters, we will all be under pressure from this aspect. Because our global market has more than 100 countries, it is indeed a challenge for us to maintain a balanced development in these markets, so we will face such challenges in the third and fourth quarters. Based on our current research and close communication with our supplier partners, we can see that the overall supply situation should change next year, especially in the second half of the year. There may still be some supply problems in the first half of the year. Our overall judgment.

‍Lin Shiwei: In the third quarter, the company’s mobile phone gross profit margin reached 12.8%, which is a very healthy level. There are several reasons. The first is that in the global shortage of goods, everyone does not have so many promotional activities; second, the proportion of our high-end mobile phones has further increased; the third is that as our shipments become larger and larger, many The fixed costs of ‍‍ can be allocated to a relatively large amount of data, so the gross profit margin presents a very healthy level. The future situation is difficult to judge now, because there are still different reasons that will affect our mobile phone gross profit margin.

  A reporter from Bloomberg asked: The loss this time is relatively large, so has the company made some changes in its future investment choices to reduce the relevant impact? In addition, the company’s mobile phone business will still face greater pressure in the fourth quarter. Can the management make an estimate of the mobile phone shipments for the whole year of this year?

Wang Xiang: ‍With regard to the issue of investment portfolio, Xiaomi attaches great importance to the construction of ecology. ‍We will make a very balanced investment portfolio to support the development of the main business. The volatility of the capital market and stock market is a normal phenomenon, we will treat it very carefully, and our investment income is not included in the adjusted net profit. We will pay great attention to the changes in the capital market, because it will have cyclical or industry-specific changes. In my opinion, it is a short-term change. So we don’t worry too much. Our overall investment It is very, very healthy. Many of our invested companies are also supporting our supply chain system and ecological chain system, all of which are developing very healthy.

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Regarding the issue of supply, in the case of supply shortage this year, we have reached the level of last year in the first three quarters, and have reached 146 million smartphone shipments, so the overall performance is still very good. The pressure in the third quarter is slightly greater, but (the annual mobile phone shipments) should reach about 190 million.

‍Lin Shiwei: ‍Going back to the problem of investment portfolios, many companies we invest in are based on the mentality of strategic investment, not for financial gains, but to consider how to build a good ecosystem, and how to build an investment ecosystem .

  A reporter from China Business News: ‍The first question, the company’s smartphone revenue and sales have both declined sequentially this quarter. Can you tell us the reasons and plans for the fourth quarter and next year? ‍The second question is that the average selling price of the company’s high-end mobile phones has increased significantly this quarter. Can you tell us the current high-end mobile phones accounted for in our total mobile phone shipments?

Wang Xiang: ‍The company’s high-end mobile phone market share continues to increase. According to our definition, the annual shipment volume of smartphones worth more than 3,000 yuan last year was 10 million. In the first three quarters of this year, it has reached 18 million, and the proportion has reached 12.8%, compared with less than 8% last year, the growth is still very fast. We will continue to follow the path of high-end strategy, but we are also very patient. We have to make continuous efforts in several directions. One is to steadily improve user experience, and to address the concerns of high-end consumers. Good product, especially basic user experience. Another direction is to continue to enhance the brand’s influence, and gradually allow high-end mobile phone consumers to recognize our products and services. I think we are moving in this direction.

Regarding the decrease in our shipments, the core reason is the shortage of stocks. The third quarter is indeed facing a relatively big challenge. As I said just now, more than 100 countries around the world must balance it and provide services in a short period of time. Good global customers are indeed a big challenge. There will be a very good overall improvement next year, but there will still be structural shortages. For example, 4G mobile phones may be in short supply. However, many parts of the world are still using 4G products in large quantities. In addition, the shortage of goods in the second half of the year will happen. Better than the first half of the year.

  A reporter from Nihon Keizai Shimbun asked: ‍The shortage situation is still increasing. Some friends said that due to the shortage of semiconductors, their value of approximately US$6 billion in the third and fourth quarters may be affected. Does the company have any statistics? If there is no shortage, will our shipment target for this year be much higher than 190 million?

Wang Xiang: The impact of the shortage of chips on us should be in the range of 10 to 20 million units. ‍With the improvement of chip supply, we will continue to do a good job in product combination.

The Nikkei reporter asked: In addition, how will the increase in shipping and raw materials and changes in panel prices affect the company?

Wang Xiang: In terms of transportation, the biggest impact is the overseas business of our ecological chain products, which affects the company’s shipment of IoT products in overseas markets. The increase in freight will increase our cost pressure, but I believe that this problem is already in the process of gradual improvement. I hope that there will be a fundamental improvement in logistics next year.

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A reporter from the South China Morning Post asked: Many companies say that chip shipments have led to a decline in shipments. Do you also see changes in the consumer or demand side? Is the current demand side also relatively weak? Because I noticed that Xiaomi or other brands of mobile phones have not seen large-scale price increases. If it is because of the shortage of chips, then the terminal price has not increased?

Wang Xiang: Generally speaking, the situation in various markets around the world may be different. China’s smartphone market is declining. This is a consensus of everyone. Some markets in overseas markets are growing, while some markets are declining. Generally speaking, markets outside of China are stable. ‍For Xiaomi, the problem on the supply side (compared to the demand side) is relatively large. For example, we are targeting the global market, so we have a very large number of 4G users, and ‍4G products are extremely short in the second half of the year. , The impact is quite large. There are still many users using 4G products in the Asian, African, Latin American, and even European markets we serve. This may not have been noticed by everyone. Of course, there is a shortage of 5G products. Sometimes it is Misplaced, just like the situation I analyzed with you last quarter, when we needed this product, he didn’t have it, and we couldn’t supply the product that sold well, so it caused our production arrangements. Some challenges.

A reporter from a commercial radio station asked: Xiaomi’s homes exceeded 10,000 in October. Have you set a new store opening goal for this reason?

Wang Xiang: 10,000 rooms are an important milestone. At the same time, we have to do several things, one is to continuously improve our coverage, and the other is how to improve the average efficiency and turn those “raw” stores into “done” stores. I think of course we must continue to improve coverage in the future, but we also cannot ignore e-sales, and we must integrate sales and service coverage, which means doing sales and services at the same time, so that new users in the sinking market can use our products and products more conveniently. Service, all problems are solved in the store. This is also a very important direction and focus of our efforts. It is very important to sink the market.

  China Securities Journal: Regarding the company’s automotive business, besides mass production in 2024, is there any other information to share? For example, the choice of foundries or what other merger plans? ‍In addition, recent technology-based companies are very concerned about the next-generation Internet meta-universe. Does Xiaomi have a related layout?

Lin Shiwei: Regarding the car issue, we are still in the product definition and design stage. Of course, we have also contacted many different suppliers. We don’t have an answer to you yet. They are all in the process of research. As for the media saying which company we will acquire, we have no official information to provide, and it is not true.

Wang Xiang: Everyone has recently discussed Metaverse. We are still focusing on the various opportunities that can be generated around this concept. We have also made a lot of technical reserves to prepare for this market. Now There are not too many things worth sharing with everyone. We have made relatively long-term investments in the field of smart phones, in the field of wearable devices, including video and display. We have also cooperated with some famous foreign brands to realize augmented reality and virtual reality products. Successful sales on a global scale, this is what I can talk about now. (over)


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