Xiaomi has reported a decline of 9.7% YoY in its Q3 2022 revenue at RMB 70.5 billion (or $9.8 billion). The Chinese smartphone giant stayed largely flat in QoQ terms. The revenue decline was attributed to a slowdown in the company’s three major segments – smartphones, AIoT and internet services. The smartphone segment suffered the biggest decline among the three, with revenue down 11.1% YoY.
Smartphone sales see biggest hit
According to Counterpoint’s Market Monitor Service, Xiaomi’s shipments were down 8.8% YoY in Q3 2022 with a global market share of 13.4%. The decline in shipments was also accompanied by a decrease in the average selling price (ASP). Xiaomi’s smartphone ASP declined 2.2% QoQ from RMB 1,081.7 (or $151) per unit in Q2 to RMB 1,058.2 per unit (or $148) in Q3. The fall in ASP can be largely attributed to promotional activities in overseas markets to clear out inventory, offsetting the increase in ASP in China’s market.
The smartphone market continues to face headwinds both in China and globally. In Xiaomi’s home market, ongoing COVID-19 restrictions on mobility and weak economic environment have led to sluggish smartphone sales throughout 2022, which is expected to register a double-digit YoY decline, according to Counterpoint’s estimates. The frequent lockdowns across the country are impacting Xiaomi’s strategy to grow its offline channels, which is seen as a key weakness of the company when compared to Oppo and Vivo. Coupled with fierce competition from local players Oppo, Vivo and Honor, as well as Apple’s latest series, Xiaomi’s market position dropped one rank to reach fifth during the quarter.
Xiaomi’s inventory level in China has normalized after the mid-year ‘618’ shopping festival in Q2. However, to clear its inventory for the global market, the company will have to wait till at least Q4, when festive season promotions are launched.
IoT and lifestyle products hurt by global headwinds
Xiaomi’s IoT and lifestyle products segment saw a 9% YoY decline and 4% QoQ decline in Q3. The slowdown in this segment is largely due to weak consumer sentiment. Commenting on the performance of this segment, Senior Analyst Ivan Lam said, “The IoT and lifestyle products remain an important segment for Xiaomi, accounting for 27% of its revenue during the quarter. Despite the segment’s slowing growth, Xiaomi made strong progress in the smart large appliances, such as air conditioners, refrigerators and washing machines, with revenue growing 70% YoY. Smart large appliances are necessities that can better withstand economic downturns. We expect the innovative features of Xiaomi’s smart large appliances to continue to drive demand, especially among younger customers, and become a larger contributor to the IoT and lifestyle products segment.”
Internet services feel slowdown pinch
Internet services revenue was also muted, declining 3.7% YoY while growing 1.4% QoQ. The segment was particularly hurt by slower China advertisement demand despite growth in overseas markets. Research Analyst Archie Zhang said, “Although the monthly active users of MIUI have reached record highs both globally and in China, monetizing the traffic is challenging during the difficult macro environment and will likely carry through to 2023.”
Smartphone sales see biggest hit
According to Counterpoint’s Market Monitor Service, Xiaomi’s shipments were down 8.8% YoY in Q3 2022 with a global market share of 13.4%. The decline in shipments was also accompanied by a decrease in the average selling price (ASP). Xiaomi’s smartphone ASP declined 2.2% QoQ from RMB 1,081.7 (or $151) per unit in Q2 to RMB 1,058.2 per unit (or $148) in Q3. The fall in ASP can be largely attributed to promotional activities in overseas markets to clear out inventory, offsetting the increase in ASP in China’s market.
The smartphone market continues to face headwinds both in China and globally. In Xiaomi’s home market, ongoing COVID-19 restrictions on mobility and weak economic environment have led to sluggish smartphone sales throughout 2022, which is expected to register a double-digit YoY decline, according to Counterpoint’s estimates. The frequent lockdowns across the country are impacting Xiaomi’s strategy to grow its offline channels, which is seen as a key weakness of the company when compared to Oppo and Vivo. Coupled with fierce competition from local players Oppo, Vivo and Honor, as well as Apple’s latest series, Xiaomi’s market position dropped one rank to reach fifth during the quarter.
Xiaomi’s inventory level in China has normalized after the mid-year ‘618’ shopping festival in Q2. However, to clear its inventory for the global market, the company will have to wait till at least Q4, when festive season promotions are launched.
IoT and lifestyle products hurt by global headwinds
Xiaomi’s IoT and lifestyle products segment saw a 9% YoY decline and 4% QoQ decline in Q3. The slowdown in this segment is largely due to weak consumer sentiment. Commenting on the performance of this segment, Senior Analyst Ivan Lam said, “The IoT and lifestyle products remain an important segment for Xiaomi, accounting for 27% of its revenue during the quarter. Despite the segment’s slowing growth, Xiaomi made strong progress in the smart large appliances, such as air conditioners, refrigerators and washing machines, with revenue growing 70% YoY. Smart large appliances are necessities that can better withstand economic downturns. We expect the innovative features of Xiaomi’s smart large appliances to continue to drive demand, especially among younger customers, and become a larger contributor to the IoT and lifestyle products segment.”
Internet services feel slowdown pinch
Internet services revenue was also muted, declining 3.7% YoY while growing 1.4% QoQ. The segment was particularly hurt by slower China advertisement demand despite growth in overseas markets. Research Analyst Archie Zhang said, “Although the monthly active users of MIUI have reached record highs both globally and in China, monetizing the traffic is challenging during the difficult macro environment and will likely carry through to 2023.”
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