Xiaomi reported an 84 per cent increase in second quarter net profit on the back of strong smartphone sales as the company announced it has agreed to buy autonomous driving technology company Deepmotion for $77.4 million to strengthen its position in the fast-growing industry.
The world’s second-largest smartphone manufacturer’s adjusted net profit rose to nearly 8.3 billion Chinese yuan ($1.3bn) in the three month period to the end of June. Revenue during the period rose 64 per cent to 87.8bn yuan, beating analysts' estimates of 85bn yuan.
“Building on our strong growth momentum, both quarterly revenue and adjusted net profit reached record highs,” Xiaomi’s president Wang Xiang said during an earnings call with investors.
“Our smartphone business achieved significant milestones this quarter … our premium smartphones continued to gain popularity and attract new Xiaomi users,” he said.
Smartphone revenue amounted to 59.1bn yuan in the April-June period, an increase of 86.8 per cent on an annual basis.
In the second quarter, Xiaomi surpassed Cupertino-based Apple to become the second largest maker of smartphones for the first time. It shipped 53.1 million smartphones and grabbed 16.9 per cent of the market, according to Massachusetts-based researcher International Data Corporation.
South Korea's Samsung maintained its top position with 18.8 per cent market share in the second quarter, selling 59 million smartphones in three months.
Xiaomi’s Internet of Things and lifestyle products segment sales grew almost 36 per cent annually to 20.7bn yuan in the second quarter. Global shipments of its smart TVs surpassed 2.5 million units during the period.
Revenue from the internet services arm climbed to 7bn yuan, reaching a record high and representing an increase of 19.1 per cent year on year. In June 2021, the monthly active users of MIUI – a version of the Android operating system primarily developed for the Chinese market – increased 32.1 per cent year on year to 453.8 million.
Shortly after reporting its earnings results, Xiaomi announced it will buy the four-year-old Deepmotion to strengthen its position in the crowded field of autonomous technology and electric vehicles.
“We have been focusing on building the best team for this important initiative. In the last couple of months, we have received over 20,000 applications for our smart EV business,” said Alain Lam, vice president and chief financial officer of Xiaomi.
“We will acquire a company called Deepmotion, one of the leading providers of L4 autonomous driving technology. We are very confident that we will continue to attract the best talent to this very new and important business,” Mr Lam said.
The Beijing-based company in July announced 500 new positions for its self-driving division to develop L4 autonomous driving technology in-house. Per industry standards, L4 is considered fully autonomous driving.
In March, Xiaomi entered the EV industry and said it plans to invest 10bn yuan over the next 10 years in building the business.
Xiaomi, which went public on the Hong Kong Stock Exchange in July 2018 with a $54bn valuation, has joined other Chinese tech companies from Baidu to Alibaba that are tapping into the EV boom.
Internet company Baidu is reportedly working with Geely Automobile to make EVs for the Chinese market, while Alibaba has teamed up with state-owned SAIC Motor to explore production of smart vehicles.
Xiaomi’s research and development expenses increased 56.5 per cent to 3.1bn yuan in the second quarter, primarily due to the increase in compensation for R&D personnel and the expansion of its research projects, it said.
As of June 30, it had invested in more than 330 companies with an aggregate book value of 57.9bn yuan, 57.3 per cent more than in the previous year period. It had cash and cash equivalents worth 31.9bn yuan at the end of the second quarter.