After seeing Xiaomi's second-quarter financial report, Lei Jun, who has always been a little nervous, may really be able to breathe a sigh of relief.

According to an announcement released by Xiaomi Group on the Hong Kong Stock Exchange on August 21, in the second quarter of 2024, Xiaomi Group's total revenue was 88.9 billion yuan, a year-on-year increase of 32%. The group's adjusted net profit was 6.2 billion yuan, a year-on-year increase of 20.1%. In addition, in the first half of 2024, Xiaomi Group's revenue was 164.395 billion yuan, a year-on-year increase of nearly 30%. The adjusted net profit was 12.67 billion yuan, a year-on-year increase of about 50%. This also means that Xiaomi Group made an average net profit of about 70 million yuan per day in the first half of the year.

From a more specific perspective, the "Mobile XAIoT" sector, which includes smartphones, IoT and consumer products, Internet services and other related businesses, accounted for the absolute majority with 82.5 billion in revenue.

Innovative businesses such as smart electric vehicles, which have entered the delivery process and are still developing rapidly, achieved revenue of 6.4 billion yuan in the second quarter, accounting for 7.2% of total revenue, and realized a gross profit of approximately 15.4% from vehicle manufacturing.

In this era, cash is king. As of June 30, 2024, Xiaomi Group's cash reserves reached 141 billion yuan, nearly 5 billion yuan more than at the end of 2023.

Unlike previous financial reports that were both good and bad, the rising figures made Lei Jun, the founder, chairman and CEO of Xiaomi, very excited. He wrote on Weibo, "This is the best quarterly report in Xiaomi's history!" His words were full of praise.

One day after the financial report was released, Lei Jun appeared in Guangdong and conducted a live broadcast of a self-driving trip in the Pearl River Delta. During the chat, he mentioned that the best-selling place in the country for Xiaomi SU7 is Guangdong, with the highest number of orders. At the same time, he also wanted to learn more about the application of Xiaomi car sun protection and other functions in the south.

From the video, we can see that he is wearing a yellow coat, with a relaxed expression and a rare sense of relaxation all over his body.

High-end mobile phones are finally on the rise

Four years, this is the time that has passed since Xiaomi launched its high-end strategy in 2020. Looking back, Lei Jun's feelings were once very complicated, "the most painful, but also the greatest gain."

The pain is that even though Mi Fans are not buying into the high-end mobile phone they have made with high-end parameters and materials.

The result is that Xiaomi has been making progress on the road to competing with the iPhone. The popularity of Xiaomi Mi 14 has also added fuel to the trend of Xiaomi mobile phones towards high-end.

The smartphone business, which is Xiaomi's main business, recorded revenue of 46.5 billion yuan in the second quarter of this year, up 27% from 36.6 billion yuan in the same period last year. Xiaomi's financial report pointed out that this was mainly due to the increase in smartphone shipments, which increased from 32.9 million units in the same period last year to 42.2 million units in this quarter.

This achievement also made Xiaomi the third largest smartphone manufacturer in the world in the second quarter of this year, with Xiaomi ahead of Xiaomi.Samsungandapple。

There is another set of rising points that excites Xiaomi and Lei Jun.

According to third-party data, in mainland China, Xiaomi's market share in the 3,000-4,000 yuan, 4,000-5,000 yuan, and 5,000-6,000 yuan price segments was 16.8%, 20.1%, and 8.9%, respectively, all of which increased year-on-year. In addition, Xiaomi's Q2 shipments of high-end smartphones with a retail price of 3,000 yuan or more increased by 2 percentage points year-on-year.

In his annual speech in July this year, Lei Jun introduced the first small folding screen mobile phone - Xiaomi MIX Flip. In Lei Jun's words, Xiaomi MIX Flip will end the current situation of small folding phones being "beautiful little waste" and create a new world.

Judging from the sales of Xiaomi's flagship store on JD.com, the sales of Xiaomi MIX Flip have exceeded 20,000 units at least. There are also many positive comments about its good looks, subtle creases on the inner screen, and smooth mobile phone system.

Xiaomi's goal is to sell its products to as many markets as possible. So far, Xiaomi's smartphone shipments rank among the top three in 58 countries and markets around the world, especially in Latin America, the Middle East, Africa and Southeast Asia.

According to Canalys data, in the Latin American market, Xiaomi ranked first and second with 6.2 million units shipped, which is also the highest record of Xiaomi's shipments in the region.

The increase in mobile phone sales and profits is a good thing, but the increase in revenue and the decline in the average selling price of mobile phones are also an indisputable problem. After all, the average selling price of a mobile phone brand also represents its market position to a large extent.

This quarter, Xiaomi's mobile phone ASP (average selling price per unit) fell slightly from 1,112.2 yuan in the same period last year to 1,103.5 yuan. The gross profit margin of mobile phones also fell from 13.3% to 12.1%.

In a conference call after the release of the financial report, Lu Weibing, partner and president of Xiaomi Group, explained the reasons for the decline. He bluntly stated that Xiaomi has entered a price adjustment cycle for many smartphone products. For example, the Xiaomi 14 series was released in the fourth quarter of last year and has entered a price reduction cycle in the second quarter of this year. In addition, the 6.18 promotion season will have an overall impact on profits. The increase in the cost of components such as memory costs and screens has also lowered the gross profit margin performance.

"Overall, the gross profit margin of 12.1% is still a very good level. In the subsequent third and fourth quarters, Xiaomi still has sufficient growth momentum," Lu Weibing emphasized.

Xiaomi SU7, rushing forward

In addition to mobile phones, five months after the launch of smart cars, Xiaomi’s financial report listed operating data separately for the first time.

In the second quarter, Xiaomi's innovative businesses such as smart electric vehicles generated revenue of 6.4 billion yuan, with an adjusted net loss of 1.8 billion yuan. In addition, smart electric vehicles generated revenue of 6.2 billion yuan.

In the second quarter, Xiaomi delivered 27,307 Xiaomi SU7 series cars. The ASP (average selling price per unit) of smart electric vehicles was close to RMB 230,000. The gross profit margin of innovative businesses such as smart electric vehicles was 15.4% in the second quarter.

At present, the industry's hot topics about Xiaomi Auto are mainly focused on gross profit margin and the loss of 1.8 billion.

Let's talk about gross profit margin first. Xiaomi is currently higher thanTeslaThe gross profit margin of automobile sales was 14.6% in the same period. Compared with the first-quarter gross profit margins of new car manufacturers such as NIO and Xpeng Motors, Xiaomi Motors still has an advantage.

At the performance meeting, Lu Weibing did not shy away from the importance of gross profit margin for Xiaomi SU7. After all, when there is a reasonable gross profit margin, various expenses can be shared by expanding the scale. In his opinion, as the first car of Xiaomi Group, it is satisfactory that SU7 can achieve such results.

On the other hand, although the company had a revenue of 6.4 billion yuan and delivered more than 27,000 vehicles in the quarter, its innovative business segments such as smart electric vehicles had a net loss of 1.8 billion yuan. Some people have estimated that Xiaomi's loss on each vehicle is more than 60,000 yuan.

Lei Jun, the head of Xiaomi Motors, quickly responded to the incident on Weibo. He said, "Making cars is hard, but success must be cool. Xiaomi Motors is still in the investment stage, and I hope everyone understands."

Screenshot of Lei Jun's personal Weibo

At the performance meeting, Lu Weibing also explained the reasons for the losses in detail.

First, the automobile industry is a typical manufacturing industry that needs to achieve economies of scale, and the current scale of Xiaomi Automobile is not enough. Second, Xiaomi's investment in the first car is very large, in Lei Jun's words, it is 10 times the investment. Finally, the first car Xiaomi made is a pure electric sedan, which also means expensive batteries and high costs.

"I believe that as the scale continues to increase, production capacity is continuously tapped, and delivery capabilities are improved, the losses will be further narrowed." After affirming that the automotive business exceeded expectations, Lu Weibing also expressed confidence in subsequent developments.

In fact, since its official launch in March this year, the Xiaomi SU7 series has made rapid progress in capacity expansion and delivery execution. More than 27,000 new cars were delivered in a single quarter, and more than 10,000 were delivered in a single month for two consecutive months from June to July.

In order to bring cars into the sight of more people, Xiaomi’s auto sales and service network is expanding and upgrading.

As of June 30, 2024, Xiaomi has covered 30 cities in mainland China and opened 87 car sales stores.

Xiaomi Auto’s new goal is to deliver a total of 120,000 new cars throughout the year.

Finally, Lei Jun can stop being anxious?

Lei Jun has changed a lot in the past few years of making cars. Some people say that Lei Jun has become more mature. And judging from several public appearances before the official launch of Xiaomi Auto, Lei Jun's face does look a little tired.

There are too many things to worry about. On one hand, there are high-end smartphones, and on the other hand, there are emerging smart electric vehicles. Not only are they facing strong competition, but there are also many problems that need to be overcome.

Especially when Xiaomi's annual revenue declined last year and Xiaomi's mobile phone market share in China was no longer among the top in the fourth quarter of 2023, Lei Jun faced even greater pressure.

Fortunately, according to the second quarter financial report this year, cars have finally entered a stable delivery period; mobile phones are also making continuous breakthroughs driven by new products.

A small detail is that Lu Weibing said at the financial report performance meeting that 42% of Xiaomi's small folding phone sales came from Apple users. It can be seen that continuous technology investment and in-depth user insights have played a good supporting role in high-end development.

Furthermore, sufficient cash reserves are a solid backing for Xiaomi's various business lines, enabling Xiaomi's mobile phone and automobile businesses to maintain their focus on technology and products in the fierce market competition, thereby enhancing their influence and competitiveness.

In addition to the good news in mobile phones and automobiles, other businesses also have highlights.

This quarter, Xiaomi's IoT and consumer products business revenue reached RMB 26.8 billion, a year-on-year increase of 20.3%, setting a new record. The market share of some key IoT categories continued to expand.

Xiaomi's Internet business continued to grow, with revenue reaching RMB 8.3 billion, also a record high.

existAI TechnologyXiaomi has also made progress in the development of . This quarter, Xiao Ai's multimodal recognition and understanding capabilities have been upgraded to supportAIWith functions such as document Q&A, AI smart filming, AI image expansion and image Q&A, the intelligent experience is improved.

Some analysts pointed out that with the continuous improvement of Xiaomi's AI technology capabilities, Xiaomi's "entire ecosystem for people, cars and homes" is expected to be further deepened.

Lu Weibing stated at the performance meeting that although the macro and industrial environments face challenges this year, Xiaomi's three growth curves have been laid out: one is personal devices centered on mobile phones, tablets, and wearable devices; the second is smart home devices centered on large appliances and production chains; and the third is smart travel devices centered on cars.

In his opinion, the closed loop of Xiaomi's "entire ecosystem of people, cars and homes" has just begun.

After achieving the "best performance in history", it means a lot to Xiaomi and Lei Jun. Although he loses 60,000 yuan for selling a car, Lei Jun will no longer be anxious about it.