China-based smartphone manufacturer Xiaomi has shared its financials for the third quarter of this year, revealing that the company has beaten analysts estimates and ended the quarter with a profit.
In the Q3 2018, the company ended the quarter with CNY 2.48 billion ($357.2 million) profit, which is a big step up from Q3 of 2017’s CNY 11 billion loss.
The company also said that its operating profit sank about 38.4 percent to CNY 3.6 billion in the third quarter but the revenue grew 49.1 percent to CNY 50.9 billion. The reason for the mixed results seems because of the slowdown in the purchase of Xiaomi’s devices in its home market.
In the third quarter, Xiaomi’s smartphone division grew revenue by 36.1 percent while its internet service division grew 85.5 percent. But phones made up 64.6 percent of total sales, while internet services made up 9.3 percent.
The company is also aiming to transform itself from a smartphone firm into a software company. During its IPO preparation, Xiaomi’s founder Lei Jun touted internet services – namely advertisements – as its future and a key differentiator from other handset brands.
While it may not have seen favorable results in China, India — it’s most important market outside China — continues to bring success to the company. Xiaomi revealed that India is currently the fastest-growing market for the company, thanks to the success of its Redmi series of smartphones.
Apart from its presence in countries like Indonesia and Thailand, it also expanded its presence to the European market, the UK being the latest one where Xiaomi established its presence. However, as per the analysts, the company needs to expand to new markets and also sell more higher-priced devices with wider profit margins because of the global market slowdown.
Xiaomi has also introduced two new smartphone brands this year targeting niche customers — Pocophone (Poco in India) and Black Shark. While Pocophone aims to offer “affordable flagship” smartphones, the Black Shark is focused on gaming customers. The company has also announced a partnership with China-based Meitu to sell smartphones under its brand.