Chinese smartphone maker Xiaomi reported better-than-expected financial results for its first quarter this year. The results, which were released on Wednesday, managed to beat initial analysts' estimates, with the company attributing its performance to an increase in sales of its higher-priced 5G smartphone models.
For its first quarter, Xiaomi reported a 13.6 percent increase in its revenue when compared to the same period last year to around $7 billion. The figure managed to beat average analysts' expectations of around $6.7 billion for the quarter. Its profits for the quarter had also surged by 10.6 percent year-on-year, reaching around $320 million. Xiaomi attributed the increase in sales to the increase in pricing of its newer 5G-enabled smartphone models, which have become popular abroad.
In its first-quarter earnings release, Xiaomi stated that it was still able to achieve a relatively healthy performance during the first three months of the year despite the disruptions caused by the coronavirus pandemic. Xiaomi CEO, Lei Jun, stated that the company's performance during the quarter is a reflection of its resilience, flexibility, and continued competitiveness in the sector. To further ease the impact of economic disruptions, Lei stated that the company will continue to focus on its 5G and Artificial Intelligence-Enabled Internet of Things (AIot) strategy.
While the figures may have managed to beat expectations, it is still significantly lower than the company's performance in previous quarters. Most investors understandably had expected less from the company given the challenges that faced its business during the first few months of the year. However, analysts have pointed out that there could be a much larger impact in the second quarter due to the lockdowns imposed in Europe in April and May. Europe is currently one of the company's fastest-growing markets.
In recent years, Xiaomi has been facing increased competition in its home market from larger companies such as Huawei Technologies. To offset the contraction of its domestic sales, Xiaomi has been heavily focusing on selling its products overseas. For its first quarter, Xiaomi's shipment of smartphones to local consumers fell by more than 25 percent, which is reflected in the 18 percent decline in its domestic sales for the period.
For now, Xiaomi stated that it has seen a rebound in smartphone demand in Asia, particularly in China. The company stated that the majority of its production in the region has resumed and its supply chains have mostly recovered. The company's optimism is a stark contrast to the outlook of other smartphone manufacturers such as Apple and Samsung, which have both warned of tougher times ahead.
