Xiaomi Corp

Ladies and gentlemen, thank you for standing by and welcome to Xiaomi 2022 First Quarter Result Announcement Conference Call. Today's conference is being recorded. If you have any objections, you may now disconnect at this time. If you have any questions you would like to raise during the Q&A section, please press star 1 on your telephone keypad to register your questions. Should you wish to cancel the questions, please press star 2. I'd now like to hand the conference over to your host today, Ms. Anita Chan, Head of Investor Relations and Corporate Finance. Please go ahead, Madam.

Good evening, ladies and gentlemen. Welcome to the Investor Conference Call hosted by Xiaomi Corporation regarding the company's 2022 first 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 uncertainties that we not realize 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-IFRI financial measures that should be considered in addition to, but not as a substitute for, the company's financials prepared in accordance with IFRIs. Joining us on the call today are Mr. Wang Jiang, partner and president of Xiaomi Corporation, and Mr. Alan Lam, vice president and CFO of Xiaomi Corporation, and also the CEO of Airstar Digital Technology. To start, Mr. Wang will share recent strategic updates of the company, thereafter Mr. Lam will review the business and financial performance for the first quarter of 2022. Following that, we will move on to the Q&A session. I will now turn the call over to Mr. Wang.

Thank you. Thank you, Anita. Hello, everyone. Thank you for joining our 2022 first quarter earnings call. In the first quarter of 2022, our industry faced significant challenges from the continued supply shortage of the key components and the researchers supply shortage, resistance of COVID-19 and the global microeconomic headwinds exacerbated by Russian Ukraine situation. These challenges have also impacted our business and affected our financial performances and operating results. However, we are taking steps to optimize cost structure, and improve operating efficiency. More importantly, we are developing the next growth engine through continued investments in new initiatives. We have great confidence in our team and in our product and services. Difficult times remind us of our founding mission, and we will never cease to fulfill our mission of building amazing products at honest prices and to let everyone in the world to enjoy a better life through innovative technology. With that in mind, we continue to advance our business strategies and strengthen our foundation. Our first quarter total revenue reached RMB 73.4 billion. and our IoT lifestyle products business, and the internet service business, maintaining solid growth momentum. Meanwhile, we have been actively developing our smart EV and other new initiatives. Our adjusted net profit reached RMB 2.9 billion in the first quarter, which included RMB 425 million of expenses related to our Smart EV and other new initiatives. Under this challenging environment, we remain resilient due to our global scale. In the first quarter, we maintained our number three position in global smartphone shipments, and we continue to perform well in major regions globally. Our smartphone market share ranked top three in 49 markets and among the top five in 68 markets. Our scale and strategy allow us to benefit from higher growth in overseas markets while mitigating volatility risk in any single market. We continue to invest in R&D to create something new, creative, and better for our users. In the first quarter of 2022, our R&D expenses reached RMB 3.5 billion, an increase of 16% year over year. As a testament to our R&D capability, we continue to deliver industry-leading camera and charging technologies, including our pro-focus imaging and ultra-light video algorithm, which were recently awarded two CVPR NPI award championships, as well as an incredibly fast 120-volt single-cell battery design and our Xiaomi Surge P1 charging IC. Our relentless pursuit of cutting-edge technology has strengthened our position in the premium smartphone market. In this quarter, global shipments of our premium smartphones reached nearly 4 million units, and our smartphone ASP grew 14% year-over-year to RMB 1,189. We ranked number one among Android vendors for smartphone price between RMB 4,000 and 6,000 in mainland China. and as a solid proof that our new retail strategy is taking place. Our offline channel accounted for over 50% of our premium smartphone shipments in mainland China in this quarter. We have continued to attract new users both globally as well as in mainland China. Our global MIUI and MAU reached 529 million in March and that increase of over 100 million MAU from a year ago. And our mainland China MIUI MAU increased for six consecutive quarters, reaching 136 million. With our growing global user base and our diversified revenue streams, our internet service business maintained a solid growth in the first quarter of 2022. Furthermore, our overseas internet services revenue increased by over 70%, contributing nearly 22% of our total internet service revenue in this quarter, a record high. Since last year, we have been focusing building synergies between our businesses while reducing costs. For example, We merged the software department and IoT wearable team into the smartphone department, and we merged the European e-commerce department into the China region. The regionalization of business units will strengthen our smartphone multiplies AIoT strategy, improve operational efficiency, and promote sustainable growth of our business. We also continue to actively promote ESG and public welfare. Last month, we published our 2021 ESG report and set multiple environmental targets, including our targets of energy, greenhouse gas emissions, water resources, and waste management. We work hand in hand with our employees and business partners to overcome difficulties and actively fulfill our social responsibilities. Since the outbreak of COVID-19 in Shanghai in March 2022, we have proactively donated care packages to our employees in Shanghai. Since 2021, we have provided a total of RMB 120 million in subsidies subsidized to our offline store partners in response to the impact of COVID-19. I also want to take this chance to thank medical personnel on the front line. Thank our team and the business partners for their perseverance, and courage, and thank all of our investors, analysts, and friends who have supported us throughout this journey. These times remind us that we might continue to face challenges and uncertainties, but what is certain is that we shall never cease to strive for a better life for our users. and the friends around the world through our innovative technologies. With that, I will hand it over to our CFO Allen to discuss our first quarter results in greater detail.