Xiaomi : 2021 Q3 Results Announcement

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XIAOMI CORPORATION

小米集團

(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)

(Stock Code: 1810)

RESULTS ANNOUNCEMENT

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2021

The board (the "Board") of directors (the "Directors") of Xiaomi Corporation 小米集團 (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (collectively, the "Group") for the three and nine months ended September 30, 2021. These interim results have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and reviewed by PricewaterhouseCoopers, the independent auditor of the Company, in accordance with International Standard on Review Engagements 2410 "Review of interim financial information performed by the independent auditor of the entity" issued by the International Auditing and Assurance Standards Board. The interim results have also been reviewed by the audit committee of the Company (the "Audit Committee").

In this announcement, "we", "us", and "our" refer to the Company and where the context otherwise requires, the Group.

KEY HIGHLIGHTS

		Unaudited
		Three months ended
			Year-		Quarter-
	September 30,	September 30,	over-year	June 30, over-quarter
	2021	2020	change	2021	change
	(Renminbi ("RMB") in millions, unless specified)
Revenue	78,062.9	72,162.8	8.2%	87,789.0	-11.1%
Gross profit	14,292.3	10,165.7	40.6%	15,148.1	-5.6%
Operating profit	2,729.8	6,696.6	-59.2%	10,725.7	-74.6%
Profit before income tax	1,787.2	5,450.7	-67.2%	9,678.5	-81.5%
Profit for the period	788.6	4,864.4	-83.8%	8,263.3	-90.5%
Non-IFRS measure:
Adjusted Net Profit	5,175.6	4,128.3	25.4%	6,321.5	-18.1%

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		Unaudited
	Nine months ended
	September 30,	September 30,	Year-over-
	2021	2020	year change
	(RMB in millions, unless specified)
Revenue	242,734.0	175,402.8	38.4%
Gross profit	43,601.5	25,425.6	71.5%
Operating profit	21,613.1	14,432.8	49.7%
Profit before income tax	20,532.5	12,772.6	60.8%
Profit for the period	16,840.7	11,517.7	46.2%
Non-IFRS measure: Adjusted Net Profit	17,566.4	9,802.0	79.2%

BUSINESS REVIEW AND OUTLOOK

1. Overall performance

In the third quarter of 2021, our total revenue amounted to RMB78.1 billion, representing an increase of 8.2% year-over-year; adjusted net profit for the period was RMB5.2 billion, an increase of 25.4% year-over-year. Our total revenue and adjusted net profit both maintained solid growth despite the shortage of key components globally.

We continued to execute our core "Smartphone × AIoT" strategy. In the third quarter of 2021, despite the global shortage of key components, our global smartphone shipments still reached 43.9 million. According to Canalys, in the third quarter of 2021, our global smartphone shipments ranked No. 3 with a market share of 13.5%. In September 2021, the global monthly active users ("MAU") of MIUI reached 485.9 million, representing an increase of 32.0% year-over-year. Our AIoT platform also continued to scale up. As of September 30, 2021, the number of connected IoT devices (excluding smartphones, tablets and laptops) on our AIoT platform exceeded 400 million for the first time in our corporate history, and the number of users with five or more devices connected to our AIoT platform (excluding smartphones, tablets and laptops) exceeded 8 million.

We continued to make advancements in the premium smartphone market, while further broadening our user base. In the first three quarters of 2021, the global shipments of our smartphones with retail prices at or above RMB3,000 in mainland China and EUR300, or equivalent, in overseas markets totaled approximately 18 million units, accounting for more than 12% of total smartphone shipments. Notably, for many of our new smartphones launched this year, over half of the users are new Xiaomi users. On the channel front, we further built up our offline retail network, highlighted by over 10,000 offline retail stores in mainland China currently. Our highly digitalized omni-channel retail strategy enables us to generate high turnover and maximize efficiency, while broadening our customer reach and providing a richer user experience.

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We remain committed to investing in research and development, which boosts our products' core competitiveness. In the first three quarters of 2021, our cumulative research and development expenditures reached RMB9.3 billion, representing an increase of 51.4% year- over-year. In September 2021, we introduced Xiaomi Smart Glasses, boasting a visualized information display and interactive features. In November 2021, we launched our Loop LiquidCool Technology, which improves smartphone heat dissipation under heavy usage. As of September 30, 2021, our research and development team totaled 13,919 employees, accounting for more than 44% of our employees.

2. Smartphones

In the third quarter of 2021, our smartphone revenue totaled RMB47.8 billion with a gross margin of 12.8%, an increase of 4.4 percentage points year-over-year. Despite the global supply shortage of key components, our smartphone shipments in the quarter still reached 43.9 million. According to Canalys, our global smartphone shipments ranked No. 3 in the third quarter of 2021, with a market share of 13.5%.

As we continued to explore technology and product innovation, we gained a deeper understanding of user demand, and continued to improve our competitive position in the premium market. In the first three quarters of 2021, global shipments of our smartphones priced at or above RMB3,000 in mainland China and EUR300, or equivalent, in overseas markets, totaled approximately 18 million, accounting for more than 12% of total shipments. In overseas markets, total shipments of our smartphones priced at or above EUR300, or equivalent, grew by more than 180% year-over-year during the third quarter, mainly in Latin America, Western Europe and the Middle East.

Our user segmentation strategy and new products allowed us to broaden our user base. For many of our new smartphones launched this year, over half of the users are new Xiaomi users. We introduced the brand-newXiaomi Civi Series in September 2021. The Xiaomi Civi Series targets chic and fashion-conscious users with a distinctive, stylish and lightweight design.

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Adhering to the principles of making premium products accessible to the mass market while improving the quality of mass-market products, our Redmi brand launched the highly competitive Redmi Note 11 series in October 2021. The Redmi Note 11 Pro+ features 120W wired charging, enabling a 100% charge in just 15 minutes. It also boasts a 108MP ultra- clear imaging system and AMOLED display with a high refresh rate, creating a well-rounded smartphone with premium configurations sold at extremely competitive prices. The Redmi Note 11 series1 sold more than 1 million units in just 11 days following its market debut.

During November's Singles' Day Shopping Festival, Xiaomi and Redmi brand smartphones together ranked No. 1 in sales volume on Tmall.com, JD.com and Suning.com. Our premium smartphones also ranked No. 1 among Android smartphones priced above RMB4,000 on Tmall.com and JD.com. In addition, during the shopping festival, total sales volume of our smartphones from our offline channels increased by more than 110% year over year.

We are keenly aware that a smooth, stable, and secure smartphone operating system is critical for optimal user experience. In the third quarter, we unveiled the MIUI 12.5 Enhanced Version with multiple refinements ranging from underlying structural improvements to seamlessly embedded applications. Separately, Xiaomi and Redmi smartphones achieved top rankings across all price segments in mainland China in the 5G performance evaluation report released by China Telecom in November 2021, a testament to our industry leading position in 5G technology and products.

3. IoT and lifestyle products

Our IoT and lifestyle products segment revenue was RMB20.9 billion during the third quarter of 2021, increasing 15.5% year-over-year. Notably, our overseas IoT and lifestyle products revenue reached a new record high despite the challenges in maritime shipping logistics overseas this quarter.

In the third quarter, against the backdrop of a year-over-year decline in global sales volume of TVs, our global smart TV shipments reached 3.0 million with a year-over-year revenue increase of 19.5%. According to All View Cloud ("AVC"), our TV shipments ranked No. 1 in mainland China for the 11th consecutive quarter and among the top five globally in the third quarter of 2021. Furthermore, we have greatly improved our laptops' product design, embedded technologies as well as our production techniques. In September 2021, we unveiled the Redmi G 2021 series high-performance gaming laptops with upgraded GPUs and screens. These laptops provide an authentic gaming experience and have garnered widespread market recognition.

1 including Redmi Note 11, Redmi Note 11 Pro and Redmi Note 11 Pro+

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In addition, we have expanded our premium smart home appliances categories to help our users create a healthy and comfortable living environment. In the third quarter, we launched smart home appliances including the Xiaomi 550L Four-doorSmart Refrigerator and the Xiaomi Mini Washing Machine. Our smart ventilated air conditioners also performed well, leading the AC with ventilation category in terms of year-to-date cumulative sales volume on JD.com and Tmall.com for seven consecutive months between April and October 20212. During the November's Singles' Day Shopping Festival, our cumulative sales of home appliances ranked No. 3 on JD.com.

We continued to strengthen the competitiveness of our wearable products, and further enhanced interconnectivity between wearables and smartphones. According to Canalys, our global wearable bands market share ranked No. 2 in the third quarter. In September 2021, we rolled out Xiaomi's first adaptive active noise cancellation headphones, Xiaomi Buds 3 Pro, featuring deep 40dB noise cancellation and spatial audio. Priced at RMB699, this product affordably brings advanced technology to the mass market. Moreover, the sales volume and revenue of our smart watches grew rapidly during the third quarter. In October 2021, we rolled out the widely popular Redmi Watch 2, with initial sales across all channels exceeding RMB10 million within the initial two hours of sales.

We also launched new smart products with powerful connectivity to improve and integrate all aspects of users' smart living experience. For instance, we launched Xiaomi Smart Door Lock with Face Recognition X, Xiaomi Hi-temperature 3-in-1Cordless Floor Washing Vacuum Cleaner and Xiaomi Self-CleaningRobot Vacuum-MopPro for living room scenarios. We also introduced the Xiaomi Crossover Range Hood Stove Set S1 for the kitchen. Going forward, we will continue to make our users' lives more convenient and enjoyable through innovative technologies.

4. Internet services

In the third quarter of 2021, revenue from our internet services segment rose to RMB7.3 billion, reaching a new quarterly high, representing an increase of 27.1% year-over-year. The gross profit margin of our internet services segment was 73.6%, 13.1 percentage points higher than the same period of last year.

Our global internet user base continued to expand in the third quarter. In September 2021, the MAU of MIUI increased 32.0% year-over-year to 485.9 million, among which the number of MAU in mainland China rose to 127.3 million, a year-over-year increase of 16.4% and a net gain for the fourth consecutive quarter. In September 2021, MAU of our global smart TV and Xiaomi Box expanded over 33% year-over-year. As of September 30, 2021, the number of TV paid subscribers was 4.7 million, a 13.5% increase on a year-over-year basis.

As of November 22, 2021, global MAU of MIUI3 exceeded 500 million for the first time, marking another milestone of our global expansion.

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excluding Tmall Youpin and JD appliance channel

global MAU of MIUI as of November 22, 2021 refers to the number of active users in the last 30 days

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