Xiaomi Corp

Hello, everyone. Thank you for joining our 2021 second quarter earnings call. Firstly, I'm very, very excited to share with you our remarkable results to achieve this quarter. Building on our strong growth momentum, both quarterly revenue and adjusted net profit reached record highs. Our total revenue reached 87.8 billion RMB And our adjusted net profit reached 6.3 billion RMB, up 64% and 87.4% year-over-year, respectively. We have been included on the Fortune Global 500 list for the third consecutive year, ranking 338 in 2021, up 84 slots from last year. Our smartphone business achieved significant milestones this quarter. We became the world number two smartphone company in terms of global shipments as we increased the market share across all key regions. Notably, we ranked number one in Europe for the first time and increased our market share in the region to 28.5%. Our premium smartphones continue to gain popularity and attract new Xiaomi users. In the first half of 2021 alone, our premium smartphone shipments exceeded 12 million units globally, compared with around 10 million units in all of 2020. To further advance our smartphone multiplies AIoT strategy, we recently launched multiple exciting new products. This includes Xiaomi MIX 4, our new premium smartphone featuring a stunning full-screen display with camera under panel. Xiaomi Tab 5 series, our first tablet since 2018. Xiaomi Sound, our first premium smart speaker companion. All of these products reflect our relentless pursuit of technological breakthrough in our premium products. Our ability to offer innovative technologies comes from our people. To recognize employees who have made outstanding contributions in July, we announced two equity award grants totaling about 190 million shares to about 4,000 participants. We believe This is an important step for us to attract and retain the best talent and allow us to maintain our long-term technology leadership. We owe our success to our users, and the user experience has always been our priority. To celebrate the 10-year anniversary of Mi One, our first smartphone, we decided to give back to our first group of ME1 customers the RMB1999 they paid to demonstrate our deep gratitude for their support. Going forward, we'll continue to be friends with our users and offer the coolest product. Now, I'd like to invite Alan to discuss our second quarter earnings. and the business updates, you know, greater details.

Alan. Okay. Thank you, Changjo. Good evening, everyone. Thank you for joining us today for our second quarter 2021 earnings call. As Changjo mentioned, building on our momentum recently, we delivered another set of record-breaking results in the second quarter. Our revenue and net profit, our global market share, user base, and our IoT platform all achieved remarkable growth in this quarter, which I'll discuss in more detail in this presentation. We achieved record quarterly revenue and adjusted net profit this quarter. In the second quarter, our total revenue grew 64% year-over-year to 87.8 billion RMB. Our gap net profit grew 83.9% to 8.3 billion RMB. And our adjusted net profit grew 87.4% year-over-year to 6.3 billion RMB. We have built Xiaomi into one of the most recognizable brands worldwide. Xiaomi has been included on the Fortune Global 500 list for the third consecutive year. This year, we ranked 338, up 84 slots from last year. We were also selected among BrandZ's total top 100 most valuable global brands, again for the third consecutive year. And we ranked 70 this year, up 11 spots from last year. If you look at our smartphone market share, in the second quarter, we achieved the number two position in smartphone shipment with a market share of 16.4%. our global smartphone shipment increased 82.9% year-over-year, which again was the highest growth rate among the top smartphone companies. Similarly, we continued our stellar growth in the mainland China smartphone market. Despite a year-over-year decline in the overall market, our mainland China smartphone shipment grew 35.1% year-over-year, again the highest growth rate among the top smartphone vendors. As a result of this, we rose to the number three position and improved our market share to 16.8% in the last quarter. The robust performance of our smartphone business was supported by our increasingly competitive position in the premium smartphone market. Our premium smartphone shipment exceeded 12 million units globally, in the first half of 2021 alone, compared with around 10 million units in all of 2020. If you look at this chart, we've expanded our market share in mainland China across multiple premium price categories from 3,000 RMB and above. Our ability to continuously innovate in the premium segment is due in large part to our investment in R&D. In the second quarter of 2021, our R&D expenses increased by 56.5% year over year to reach 3.1 billion R&D. The latest example of our technology innovation is well represented by our Xiaomi Mi 4, our flagship premium smartphone that we launched on August 10th. Equipped with the camera under panel technology, Mix 4 has a full-screen display that allows the front camera to be completely hidden under the screen. It is also the first domestic smartphone to support the UWB point-to-connect technology, enabling seamless connectivity with our AIoT products, such as our smart TVs and our smart speakers. We also launched CyberDock in August, which exemplifies our achievements in AI and robotics. DataDoc leverages Xiaomi smartphone imaging technology to perceive its surroundings and its advanced AI is capable of countless tasks and personalized interactions. It is built upon open source algorithms and will formally establish a robotics laboratory along with an open source community for engineers to share their latest innovations. On the smart manufacturing side, We've also achieved a major breakthrough. In July 2021, we officially broke ground on our smart factory phase two in the Changping district of Beijing. Leveraging our phase one R&D capability, the new smart factory will have an annual production capacity of 10 million premium smartphones, and it's expected to begin production by the end of 2023. We are confident that our smart factories will leverage our cutting-edge technologies to deliver transformative efficiency gains for China manufacturing industry. In July, we announced two separate share award grants to employees who share our mission and values and have made outstanding contributions to our business. to over 3,900 young engineers, fresh graduates, and other core staff. On July 5th, we awarded over 119 million shares to 122 technology specialists, our core management, and the initial recipients of our new 10-year entrepreneur program. We believe these share awards will help us attract and retain the best talents and motivate the and motivate them to create a long-term value for us. An update on our smart EV business. Since our announcement, 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. In particular, we announced 500 new positions in July for our self-driving division to develop L4 autonomous driving technology in-house. Today, as many of you may have noticed, we also announced that we will acquire a company called DeepMotion, one of the leading providers of L4 autonomous driving technology. We are very confident that we'll continue to attract the best talent to this very new and important business. With that overview, let's dive deeper into each of our segments starting with smartphones. In the second quarter, our smartphone business continued to grow rapidly.

Revenue grew 86.8% to $59.1 billion, up 86.8% year over year.