Xiaomi Corp

Ladies and gentlemen, thank you for standing by and welcome to the Xiaomi 2022 Interim 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 question and answer section later, please press star 1 on your telephone keypad to register your questions. Should you wish to cancel your question, please press star 2. I'd now like to hand over the conference 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 interim 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 may not be realized in the future for various reasons. Information about the 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 Chief Financial Officer of Xiaomi Corporation, CEO of Airstar Digital Technology. To start, Mr. Wang will share recent strategic updates of the company. The year after, Mr. Lam will review the business and financial performance for the first half 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. Nice meeting you here again. Thank you for joining our second quarter 2022 earnings call. In this quarter, our industry has faced many challenges, including rising global inflation, foreign exchange fluctuations, complex dual political environment, COVID-19 resurgence in mainland China, so on and so forth. These challenges significantly impact overall market demand and our financial result for the period. In the face of mounting pressure from both domestic and overseas markets, we remain focused on stabilizing our core business and leverage our global scale to mitigate risk in any single market, more so than any other time. In times of difficulty, it is vital to strengthen our core capabilities and invest in R&D and technological innovation to enhance our long-term competitiveness. With this in mind, we continue to advance our business strategies and strengthen our foundation. Our second quarter total revenue reached 70.2 billion, with smartphone revenue reaching 42.3 billion RMB. IoT and the lifestyle product revenue of 19.8 billion, and the internet services revenue of 7 billion. we have been actively developing our Smart EV and other new initiatives. Our just net profit reached $2.1 billion in the second quarter of 2022, which included $611 million of expenses related to our Smart EV and other new initiatives. In the complicated and ever-changing international market, our core advantage is our ability to mitigate risks in any single market with our global scale and footprint. In the second quarter, we maintained our number three position in global smartphone shipments and continue to advance our market position quarter over quarter. In the second quarter, our smartphone market share grew quarter over quarter to 14% globally, 16% in mainland China, and 22% in Europe. Meanwhile, our smartphone market share ran top three in 55 markets and among the top five in 77 markets. We continue to attract new users through our increasing popular new smartphones. both globally as well as in mainland China. Our global MIUI MAU reached 547 million in June 2022, and our mainland China MIUI MAU increased for seven consecutive quarters, reaching 140 million. It is worthwhile to note that our overseas internet services revenue increased by over 50% year-over-year, contributing nearly 24% of total internet services revenue in this quarter. This is a record high. We continue to invest in R&D and strengthen our competitiveness with technology breakthroughs and deliver ultimate user experience. In the second quarter, our R&D expenses reached 3.8 billion, an increase of 23% year-over-year. Our R&D expenses are expected to reach 17 billion this year and more than 100 billion over the next five years. Spending from smartphones to wearable devices, from smart homes to smart manufacturing, from smart EV to bio robots, Xiaomi has been constantly exploring innovations in various technology settings to better connect people in the world and building an ever-evolving Xiaomi technology ecosphere. We made great progress on Smart EV and other new initiatives. Last week, we officially announced that we will adopt our self-developed autonomous driving technology. We plan to invest in R&D of 3.3 billion in the phase one. We have established an R&D team of more than 500 world-class professionals and plan to create a fleet of 140 test vehicles in phase one, aiming to become and industry leader in smart EV by 2024. Meanwhile, we introduced our first self-developed humanoid robot, CyberOne. Robotics is considered the crown jewel of manufacturing. With humanoid robots being the ultimate goal for many across the industry, this new breakthrough represents a milestone in our exploration of new technology frontiers. In August 2022, Xiaomi was named on the Fortune Global 500 for the fourth consecutive year and ranked 266th, advancing 72 spots from last year. As a global company, we actively practice corporate social responsibility. In July 2022, Xiaomi was selected into Forbes China's 2022 best employers of the year. Meanwhile, we established Beijing Municipal Natural Science Foundation. Xiaomi joined Innovation Fund to support fundamental research in fields including AI, digital information, smart manufacturing. Furthermore, we customized the Redmi Note 11E for the elderly to bring convenience to their lives, bring a more elder-friendly and accessible environment with our advanced technology. We believe it is necessary for us Spirit has social responsibility even against macroeconomic headwinds. Faced with macroeconomic uncertainties and challenges, what we can do is to firmly execute our core business fundamentals to strengthen our capabilities and to invest in technological innovation, and self-improvement. We believe these will lay the foundation for our healthy and sustainable development over the long term. And together with all of you, our unwavering passion will help us discover opportunities and find the silver lining behind the cloud as we make the world a better place. I will hand it over to Alan to discuss our second quarter results in greater detail.