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The Xiaomi Q3 2022 report reveals that the company netted a slightly less-than-expected 70.17 billion in revenue amid China’s harsh Covid measures.
Xiaomi Corp posted its Q3 2022 earnings report on Wednesday, showing a substantial 9.7% fall in revenue year-over-year (YoY). This development saw Xiaomi rake in 70.17 billion yuan for the third quarter – a tad below the consensus estimate. In addition, the Chinese smartphone maker also reported a 59.1% drawdown in net income for the period ending September 30th. Although Xiaomi’s net income came in at 2.12 billion yuan, it was still enough to top analysts’ expectations for the same period.
Xiaomi Q3 2022 Performance Impacted by Stringent Covid Controls
Xiaomi’s Q3 2022 outing took a significant hit from China’s Covid restrictions and waning consumer demand. Its 70.17-billion-yuan sales for the third quarter is a step down from the 78.063 billion yuan the smartphone maker accrued a year ago. In addition, the latest sales figure is also slightly off the 70.52 billion yuan that analysts were expecting. Meanwhile, the company’s latest net income for the third quarter is less than half of the 5.176 billion yuan it realized in Q3 2021.
China’s consumer consumption has been hamstrung by Covid controls implemented across its various cities. These cities enforced lockdowns to stem the spread of the Omicron variant. Over the weekend, China recorded three deaths linked to the Covid virus, its first since May, and talks of intensified control measures already abound. These policies may not change anytime soon due to fresh outbreaks.
Waning consumer demand in the East Asian nation also weighs heavily on its electronics sector. For instance, research firm Canalys reported that shipments of smartphones in the third quarter dropped 11% in China, as well as 9% globally.
Xiaomi on Back Foot Following Initial Huawei-Induced Boon
Xiaomi lost 11.1% in smartphone revenue. This smartphone revenue constitutes approximately 60% of the company’s total sales. Last year, the Chinese smartphone manufacturer experienced a sales surge after it seized market share from rivals Huawei Technologies Co Ltd. The latter saw its operability impacted by US sanctions back in 2019, meaning Huawei cannot buy components and technology from US companies without US government approval. After adding Huawei to its export blacklist at the time, the American government subsequently pressed allies like the UK and Japan to take similar steps. The steps included eliminating the Chinese multinational tech corporation from their tech sphere.
Despite the perceived boost in sales, the Huawei development granted Xiaomi, this boon proved to be temporary. In May, Xiaomi reported its first-ever quarterly revenue decline since its public listing in 2018. Three months later, the smartphone maker also saw revenue for the second quarter fall 20% YoY. In addition, Xiaomi’s share price has also tumbled roughly 50% since the turn of the year.
Xiaomi Digs New Grounds
Owing to its decline in fortune, it is no surprise that Xiaomi is exploring new areas for growth. In 2021, the company formally announced that it was venturing into electric vehicles (EVs). Xiaomi also stated that it would begin mass production of said vehicles within the first half of next year.