Internet business became the largest source of profit
In the recent financial reports released intensively by various large manufacturers, Xiaomi's financial report is definitely worth paying attention to.
Judging from the financial reports for the whole year of 2021 and the fourth quarter of 2021 that were freshly baked last night, Xiaomi's performance growth rate in 2021 exceeded market expectations.
For the whole of last year, Xiaomi's revenue was 328.3 billion yuan, an increase of 33.5% year-on-year, and its adjusted net profit was 22.04 billion yuan, up 69.5% year-on-year. Whether it is from the perspective of mobile phone sales, or core business indicators such as revenue and profit, growth has reached the high point in recent years.
While the annual performance is gratifying, Xiaomi's performance growth in a single quarter seems to release more signals.
In the fourth quarter of last year, the achievements of the Internet business were particularly remarkable. In the total revenue of the quarter, although the Internet business accounted for only 8.5% of the total revenue of the quarter, the gross profit margin reached a new high of 76.1%, becoming the largest source of profit for Xiaomi Q4 with 5.5 billion yuan.
You know, in the previous quarters, Xiaomi's biggest source of profit has been occupied by the mobile phone business for a long time. The main reason for this change is the soaring revenue of the advertising business.
Xiaomi's Internet business includes other value-added services such as advertising, games, and Internet finance. In the fourth quarter, the total revenue of the Internet business was 7.27 billion yuan, an increase of nearly 17% year-on-year, and a slight decline from the previous quarter. Revenue from other value-added services was $1.5 billion, unchanged from last year; game revenue was $900 million, up 9.5% year-on-year; and advertising revenue was the largest at $4.9 billion, up 34% year-on-year.
That is to say, Xiaomi's advertising revenue in the four quarters of last year was 3.9 billion yuan, 4.5 billion yuan, 4.8 billion yuan and 4.9 billion yuan, respectively, since the second quarter of last year, advertising revenue has maintained a steady growth, and finally the total annual revenue of advertising was 18.1 billion yuan, an increase of 42.3% year-on-year.
The ferocious growth of the advertising business is of great significance to Xiaomi, because it reflects Xiaomi's high-end road, at least so far, which has been very successful.
At the same time as the scale of Xiaomi users is growing, Xiaomi's high-end mobile phone shipments are also changing more and more, and the proportion of high-net-worth users is increasing, which means that Xiaomi's commercialization ability is also getting stronger and stronger.
To put it simply, the more high-end Xiaomi is, the more the number of xiaomi ads, and the more expensive the unit price set, then the more income Xiaomi gets from advertisers.
On the surface, on the one hand, the increase in mobile phone revenue brought about by taking the high-end road, on the other hand, the increase in advertising revenue caused by each other, software and hardware income are all-you-can-eat, and it seems to be a good calculation.
But in fact, the problem is not so simple. The increase in advertising prices brought about by high-end business means that Xiaomi needs more advertising targets for high-net-worth users.
The increase in the number of ads may be a good thing for Xiaomi and its investors, but not necessarily for Xiaomi users. The new machine purchased is mandatorily pre-installed with the APP, and when searching in the app store, the advertiser gets the ranking results after the purchase of the auction, which is a very bad experience. So, the poor user experience, can it be said that it is a good thing for Xiaomi?
Some people have questioned, not only Xiaomi, other mobile phone manufacturers will not pre-install the APP, in the app store high bidding rankings?
Taking huawei mobile phones recognized as having the most high-net-worth users in domestic mobile phones, for example, from the number of advertisements to the form, they are not as "rich" as Xiaomi.
From a long-term point of view, excessive advertising is bound to accumulate to a certain extent, and there will be a reaction. But at this stage, the growth of the advertising business means that the high-end road that Xiaomi has single-mindedly pursued is on the way.
Xiaomi is heading for the high end
To say that in the past two years, the most popular, the biggest and fastest brand in the mobile phone industry must not be able to get around Xiaomi.
Since the high-end was proposed in 2021, xiaomi in the past seems to have taken a 180-degree turn.
On the eighth day of the first month of this year, the second day of the new year, Xiaomi held a high-end strategy seminar inside. The outcome of the meeting was the formation of a special working group, which is expected to invest 100 billion yuan in 5 years and strive to send Xiaomi to the throne of the first domestic high-end mobile phone market share within three years.
The starting point of Xiaomi's mobile phone to enter the high-end, the earliest is actually traced back to 2019. At that time, the more low-end red rice had just been spun off from xiaomi, and Lei Jun held the xiaomi 9 in a high-profile announcement to enter the high-end market.
Two years later, in December last year, Lei Jun once again held the Xiaomi Mi 12, announced the impact on the high-end market in a high-profile manner, and shouted out the slogan of "comprehensive benchmarking apples".
From "dry overturning Huawei" to "comprehensive benchmarking apple", Lei Jun's ambitions and Xiaomi's wild hopes are undoubtedly revealed.
So what is the sales of Xiaomi's high-end mobile phones?
The financial report shows that throughout last year, Xiaomi sold a total of 24 million high-end machines priced at more than 3,000 yuan in Chinese mainland and more than 300 euros abroad, accounting for 13% of the proportion from 7% in 2020 to 13% in terms of shipments, which is also closely related to the outbreak of xiaomi shipments in the second quarter of last year.
In July last year, just after Lei Jun topped the list of forbes China's best CEOs, Canalys and IDC, two internationally renowned data companies, announced a global mobile phone market share ranking, xiaomi, which has always shown a low-end image, surpassed Apple for the first time in history, which is flaunted by high-end, and "dreamily" sat in the second position in the world, second only to Samsung.
Obviously, the overall outbreak of mobile phone sales in the second quarter accounted for a large proportion of the overall sales of Xiaomi's high-end machines last year.
But unfortunately, this transcendence is only temporary, whether in the international market or in the domestic market, the sales of Xiaomi mobile phones in the third and fourth quarters are not far from the good results in the second quarter.
The short-lived boom cannot be used to illustrate the big picture. In 2021, it can be said that Xiaomi is getting closer and closer to "high-end", but to say that Xiaomi has truly achieved high-end, I am afraid that it will be marked with a question mark.
2021 means a lot to Xiaomi
2021 is a very busy year for Xiaomi.
At the beginning of last year, Lei Announced that All in the car was built and made a decade-long plan for the automobile business, investing $10 billion in the first phase and saying that it would invest another $10 billion in the next decade.
Last year, the total number of Xiaomi offline stores exceeded 10,000, 7,000 new stores were opened, and an average of 19 new stores were opened every day.
Last year was also a year when Xiaomi beat the gong and drum to go to the high-end, and no one expected that the Xiaomi Mi 12 could directly target the iPhone 13 and shout out the slogan of "comprehensive benchmarking Apple".
2021 is also a crucial year for Xiaomi.
On the eve of New Year's Day in 2022, Lei Jun, who likes to share, wrote a small essay on Weibo, looking back at the gains made by Xiaomi in the past year: "We have achieved unprecedented achievements, and the mobile phone business has reached the second place in the world in the second quarter; we have also opened a new journey in the new decade, and the automobile business has set sail..."
In August last year, the 2021 Fortune Global 500 list was announced, and Xiaomi ranked 338th, becoming the fastest-improving Internet company in the top 500 at the magical speed of improving 84th!
Xiaomi ushered in the highlight moment, Lei Jun's excitement overflowed into words, he said in Weibo: Thank you for the global rice noodles, because of your love and support, there is such a vigorous and sharp millet. There was an unconcealed excitement in the tone.
But as Lei Jun himself said, Xiaomi in 2021 has "joys and worries".
From proposing 10 billion cars to 100 billion high-end battles, building cars and making high-end mobile phones are the two most important things for Xiaomi in 2021.
Xiaomi, which has always shown its "cost performance", wants to break the long-term cognition and stuff a high-end brand into the user's brain, and it still has a long way to go. If you want to achieve the goal of "winning the world's first place in three years" and reach the top of the global sales championship, you must speed up the speed.
Overall, in 2021, Xiaomi has undergone a lot of changes, and while uncertainty has increased, it has also given the outside world more expectations for it.
Author: Li Ying