Xiaomi Corp

Ladies and gentlemen, thank you for standing by and welcome to Xiaomi 2021 First Quarters Results Announcement Conference Call. Today's conference is being recorded. If you have any objections, you may now disconnect. If you have any questions you would like to raise during the Q&A section later, please press star 1 on your telephone keypad. If you wish to cancel the questions, please press star 2. I now would like to hand over to conference to Ms. Your host today, Ms. Anita Chen, Head of Investor Relations. Please go ahead, Ms. Chen.

Good evening, ladies and gentlemen. Welcome to the investor conference hosted by Xiaomi Corporation regarding the company's 2021 third quarter results. Before we start the call, we would like to remind you that the call may include forward-looking statements, which are underlined by a number of risks and alternatives and may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of Xiaomi. This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for the company's financials prepared in accordance with IFRS. Joining us on the call today are Mr. Wang Xiang, partner and president of Xiaomi Corporation, and Mr. Alan Lam, vice president and CFO of Xiaomi Corporation. To start, Mr. Wang will share recent strategic initiatives of the company. Thereafter, Mr. Lam will review the business and financial performance for the quarter. Following that, we'll move on to the Q&A session. I will now turn the call over to Mr. Wang.

Yeah. Thank you. Thank you, Anita. Hello, everyone. Thank you for joining our 2021 third quarter earnings call. This quarter, actually, under the background of global supply shortage, all our business segments continued to grow. Total revenue reached 78.1 billion RMB, up about 8.2%, and a just net profit reached 5.2 billion RMB up 25.4% year over year. And our global smartphone shipment remained strong despite the shortage of key components. In the third quarter, we ranked number three globally in terms of smartphone shipments. In the first three quarters of 2021, our global smartphone shipment reached 146 million units equivalent to our 2020 full year shipments. This allow us to support our market positions as much as possible across our key market globally. At the same time, our smartphone gross margin reached 12.8% this quarter and increased by 4.4% year over year and 1% quarter over quarter. We continue to strengthen our position in the premium smartphone market. In the first three quarters of 2021, we shipped around 18 million premium smartphones globally. It accounted for more than 12% of total smartphone shipments compared with less than 8% in the same period of last year. The growth of premium smartphone shipment has also led to an increase in our overall ASP. Meanwhile, we are using different product lines to penetrate different target market segments and to attract new Xiaomi smartphone users. Among our new smartphone product launched this year, over half of users are new users. Similarly, our stylish Xiaomi CV attracted over 50% female users. We remain committed to technology innovation to deliver best product and user experience. In China Telecom's 5G smartphone performance test in November, we ranked number one across all price categories, a result of our relentless focus on user needs and R&D investments. In the first three quarters, our R&D expenses reached 9.3 billion RMB up more than 50% year over year. As we continue to make amazing products, actually, we are also strengthening our distribution channels. In online channel, we were the clear leader in the year's double 11 shopping festival. We rank as the number one smartphone brand by sales volume. At the same time, we continue to expand our offline channel. By now, we have over 10,000 stores in mainland China. Going forward, we will seize the growth opportunity in lower tier offline markets and continue to strengthen our market share. This quarter, internet service performance remains strong. In September, our global MIUI MAU reached 486 million. At the same time, our mainland China MIUI MAU increased for the full consecutive quarters, reaching 127 million. As we grow our user base and increase our premium smartphone shipments, internet service revenue and advertising revenue both achieved record highs in this quarter. Furthermore, our overseas internet services revenue contribute to nearly 20% of total internet service revenue. And we are happy to share that as of yesterday, our global MIUI MAU exceeded 500 million users. It took only 10 months for our global MIUI MAU to increase from 400 million to 500 million. And this marks an important milestone for our smartphone times AIoT strategy. I'd like to invite Alan to discuss our third quarter earnings result in greater details.