Xiaomi, the Chinese electronics company, announced on Tuesday that its net profit for the second quarter more than doubled compared to the previous year. This significant increase was primarily driven by higher earnings from its smartphone and tablet businesses, as well as increased advertising revenue.
The company reported a net profit of 3.67 billion yuan ($503.4 million) for the quarter ended June 30, surpassing the estimate of 3.21 billion yuan projected by a poll of analysts from S&P Global Market Intelligence. Meanwhile, revenue declined by 4.0% from the previous year to 67.35 billion yuan. Despite this decline, Xiaomi showed improvement in gross profit margin, which increased to 21.0% from 16.8% year-on-year.
Xiaomi's smartphone business saw a 33% rise in gross profit from the previous year, reaching 4.87 billion yuan. This was mainly attributed to increased contributions from premium smartphone shipments, lower prices of key components, and reduced inventory impairment provisions in overseas markets. However, revenue from the smartphone segment decreased by 13% compared to the previous year, with smartphone shipments declining by 16% to 32.9 million units.
On the other hand, Xiaomi's Internet of Things and lifestyle products segment, which includes tablets, televisions, and laptops, experienced a significant increase in gross profit of 38% year-on-year, amounting to 3.91 billion yuan. This growth was driven by higher sales of tablets.
Furthermore, Xiaomi's internet services business, encompassing advertising, online gaming, and fintech services, saw an 8.4% increase in gross profit from the previous year, totaling 5.52 billion yuan. This growth can be partly attributed to the rise in advertising revenue.
Overall, Xiaomi's strong second-quarter results demonstrate the company's ability to generate substantial profit from its core businesses, particularly in smartphones and tablets. These positive financial indicators position Xiaomi favorably in the competitive electronics market.