Xiaomi makes money, soft and hard at the same time

Author 丨 Qiu Xiaofen, Editor 丨 Su Jianxun

On March 22, Xiaomi issued a good financial statement.

According to the data, Xiaomi's revenue for the whole year of 2021 reached 328.3 billion yuan, about 30% more than the same period last year; the adjusted net profit for the whole year was 22 billion yuan, 70% more than last year. In the fourth quarter of the peak season of mobile phone sales and the accumulation of many new xiaomi products, the performance of each sub-item revenue is not inferior.

It is worth noting in this financial report that many of the data in the fourth quarter are basically the highest values since the listing.

In terms of hardware, the overall revenue of Xiaomi IoT and the gross profit margin of mobile phone business have reached a record high, which means that in the two hardware directions of mobile phones and IoT, Xiaomi's commercialization ability is becoming stronger; in terms of software, the gross profit margin of Xiaomi's Internet business, as well as the income of advertising business and the income from foreign investment have reached the highest peak.

In the past year, in addition to the long-term business growth point of intensive layout and car manufacturing, Xiaomi has also undergone a vigorous expansion of offline channels and the overall high-end expansion of the overall product. With the help of these two big strategies, Xiaomi has made more money from various businesses.

Outside of mobile phones, there is basically no lag

A good business data, but there is no shortcoming.

What is remarkable in this quarter is the overall revenue of the IoT business, reaching 25 billion yuan, an increase of 5 billion yuan compared with the previous quarter, whether it is quarterly data or full-year data, it is the highest since the listing. From the perspective of year-on-year growth, it is also a warm-up of Xiaomi's IoT business after several consecutive quarters of downturn.

There are two main reasons for the surge in this part of the income. Xiaomi TV has always been the main product of Xiaomi's IoT business, and driven by the overall high-end, the average unit price (ASP) of Xiaomi TV has also risen, which has led to an increase in the overall revenue plate.

Second, the revenue of IoT products other than TVs has also increased significantly. Xiaomi has been dividing IoT revenue into two sectors in its earnings report, "TV computer revenue" and "income other than TV". In Q4, the latter's revenue reached 16.3 billion, the highest quarterly figure since its listing.

Xiaomi mentioned for the first time in the financial report the shipment of IoT products outside the TV category - in 2021, Xiaomi air conditioners sold more than 2 million units, an increase of 70% year-on-year, reflected in revenue, Xiaomi's home appliance revenue (including refrigerator air conditioners, etc.), in 2021 revenue increased by more than 60% year-on-year.

The increase in sales of major appliances is not unrelated to the expansion of Xiaomi's offline channels. At the end of October last year, Xiaomi completed the goal of building 10,000 new stores, and opened stores at a rate of more than 1,000 stores a month in the first three quarters of last year, and Q4 also happened to be a period of time when Xiaomi's offline channels laid out the results in the early stage. The purchase of major appliances is strongly related to the offline experience, and it is also a profit supplement for offline stores.

In terms of Internet revenue, what is clearly visible in this quarter is that the monetization ability of commercialization has increased greatly - in terms of gross profit margin, reaching 76.1%, the highest point since listing; most of Xiaomi's Internet revenue comes from advertising revenue, which is also the highest level in history.

The improvement of Xiaomi's Internet revenue monetization ability can also be disassembled into two reasons. On the one hand, in addition to looking for an increase in hardware sales, Xiaomi's overseas hardware has been exploring the overseas Internet business market since last year.

In Q4, the revenue of this part of the overseas Internet reached 1.6 billion yuan, although the data does not seem to be much, but it has increased by 70% year-on-year, and by the end of last year, it has been 1/5 of the revenue of the entire Internet sector, and there is still a large room for development.

Secondly, the upward jump in the price segment of Xiaomi's own products has gathered more users with stronger spending power, which is also a positive for the Internet business.

Internet revenue is broken down into game revenue and advertising revenue, Xiaomi mentioned in the financial report meeting, taking game income as an example, this part of the income of high-end mobile phone users is 11.5 times that of non-high-end mobile phone users, in addition, in high-end mobile phones, advertising, pre-installed applications are more likely.

In addition, another revenue figure that Xiaomi is often overlooked is foreign investment. Net income after tax was recorded in the fourth quarter of $1.2 billion, the highest of all quarters this year.

The main business is readjusted back to rhythm

From the perspective of mobile phone business, Xiaomi in Q4 has gradually stepped out of the shadow of Q3, and the quarterly revenue of mobile phones has risen back to 50 billion.

Last quarter, the poor performance of Xiaomi's mobile phone business, in addition to the impact of the "lack of core" problem that Xiaomi officials have always emphasized, it is also related to the rhythm and collocation of mobile phone products themselves. The main models released in the Q3 period are the under-screen camera models Xiaomi Mix 4 and Xiaomi CIVI, which are more products with strategic significance, not counting the models that are volumetric.

This also led to a slowdown in the revenue of the mobile phone business in the last quarter, and shipments fell by 6% year-on-year. In the Q4 period, the Xiaomi 12 series made product price adjustments - on the Xiaomi 12 series, Xiaomi made a dual-size flagship design for the first time, although it shouted out the gimmick of "benchmarking Apple", the Xiaomi 12 standard version still made a selling point adjustment of "reducing the allocation and reducing the price" in an unconventional way to supplement the price absence of Xiaomi mobile phones in the 3,000 yuan price segment since the third quarter.

After the adjustment of product positioning and price segments, Xiaomi's business revenue and shipments in the fourth quarter have rebounded. In addition, in this quarter, the ASP of Xiaomi mobile phones was 1143 yuan, and the gross profit margin reached 17%, both of which are the highest quarterly data since listing.

In the fourth quarter, under the turn of the tide, in 2021, the sales of Xiaomi mobile phones above 3,000 yuan (including more than 300 euros overseas) were about 24 million, accounting for 13% of the total shipments, and almost one in every ten mobile phones sold was a more expensive model.

With product adjustment, there are also channel adjustments in overseas markets and domestic markets.

According to the financial report, in 2021, in overseas markets, the shipment of Xiaomi mobile phones from carrier channels exceeded 25 million units, an increase of more than 120% year-on-year. Among them, according to Canalys data, Xiaomi's collection of carrier channel market share in Europe increased from 8% in 2020 to 17% in 2021; in Latin America, this data rose from 5% to 12%. Xiaomi's channel construction in China does not need to be repeated.

However, Xiaomi also released a signal from time to time in this financial report - since entering Q4, Xiaomi's offline expansion speed in China has slowed down significantly.

After completing the big target of 10,000 stores at the end of October last year, although Lu Weibing said that he would continue to open 20,000 stores in three years on the basis of the original 10,000 stores and in a more sinking market. According to the financial report, there were fewer than 200 new stores in Xiaomi in the fourth quarter, which was far from the original growth rate of 1,000 / month.

However, Xiaomi has frantically expanded its stores during the period when Honor and Huawei have contracted its offline channels, and the benefits have emerged. In addition to the significant increase in the revenue of major appliances in the IoT business mentioned above, it is also mentioned in the financial report that in the financial report, taking Xiaomi 12 as an example, the purchase ratio of offline channels exceeds 50%, and the proportion of users who buy millet from offline stores is expanding.

However, with the core figures in charge of Xiaomi's offline channels, Gao Ziguang, head of new retail in Xiaomi China, and Shang Jin, general manager, successively left their jobs, Xiaomi mobile phones should really break the wrist with OV offline, and the continuous breakthrough in the offline hinterland is still impossible or missing.

To sum up, Xiaomi's business data performance this year is not bad, and the key factor is that in addition to the main business of mobile phones, the conventional businesses such as IoT business and Internet have not dragged their feet as in some past quarters.

These two large blocks of business also took advantage of Xiaomi's vigorous channel laying and high-end transformation to find an increase; and the main business of Xiaomi mobile phones, in the fourth quarter, was also stumbling, re-correcting, and found the product rhythm. And these have allowed Xiaomi to reserve more grain and grass ammunition for the next more important car building in the past 2021.