Xiaomi posts bumper profits in first earnings report since IPO

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Can Chinese smartphone giant Xiaomi survive a trade war?

Xiaomi has posted a bumper revenue in its first earnings report since going public final month.

The Chinese language smartphone maker mentioned Wednesday it made 14.6 billion yuan ($2.1 billion) within the three months to June 30, beating trade estimates. Income grew 68% in comparison with the identical interval final yr to 45.2 billion yuan ($6.6 billion).

Xiaomi inventory closed up 1.6% in Hong Kong on Wednesday, forward of the earnings report. The corporate went public in Hong Kong in July after elevating $four.7 billion on the earth’s greatest tech IPO since Alibaba’s (BABA) New York itemizing in 2014.

The upbeat earnings come regardless of doubts over the corporate’s long-term enterprise mannequin.

Xiaomi is making an attempt to place itself as an web firm, asserting that it is greater than only a maker due to the companies it affords with its gadgets, resembling music and video streaming apps.

However web companies income grew at a slower tempo than general income within the quarter, and at four billion yuan ($584 million) accounted for about 9% of the entire. Apple (AAPL), by comparability, reported $9.55 billion in software program and companies income final quarter, about 20% of its complete income.

xiaomi store mongkok 2
A Xiaomi retailer in Hong Kong.

Xiaomi has aggressively pushed into markets outdoors of China.

It now rivals Samsung (SSNLF) because the primary smartphone vendor in India. Gross sales are wholesome elsewhere in Asia, and it is competing strongly in European nations like Spain and Greece.

However luring prospects into utilizing web companies outdoors China has been a problem.

“We do not see many individuals getting a Xiaomi cellphone as a result of they need to use Xiaomi’s web companies,” mentioned Kiranjeet Kaur, an analyst with analysis agency IDC. “Outdoors of China, there are lots of choices.”

The wrestle underlines analysts’ issues that Xiaomi can efficiently diversify away from smartphones, which is a really low margin enterprise for the corporate. Though Xiaomi sells lots of telephones in locations like India and Southeast Asia, most of them are low-cost fashions that value below $100.

Xiaomi additionally introduced final yr that it could cap smartphone revenue margins at 5%.

CNNMoney (Hong Kong) First printed August 22, 2018: 7:00 AM ET

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