Xiaomi Corp

Ladies and gentlemen, thank you for standing by and welcome to Xiaomi 2022 First Quartus Results Announcement Conference Call. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. If you have any questions you would like to raise during the Q&A section later, please press star 1 on your telephone keypad to register your questions. Should you wish to cancel your 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 Capital Markets. Please go ahead, Madam.

Good evening, ladies and gentlemen. Welcome to the Investor Conference Hall hosted by Xiaomi Corporation regarding the company's 2022 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 uncertainties and may 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-IFI financial measures that should be considered in addition to, but not as a substitute for, the company's financial prepared in accordance with IFRS. Joining us on the call today are Mr. Wang Xiang, partner and the president of Xiaomi Corporation, and Mr. Alan Lam, vice president and the chief financial officer of Xiaomi Corporation and chairman of Airstar Digital Technologies. 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 third 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. Good evening, everyone. Thank you for joining our third quarter earnings call. Since 2022, our whole industry faced many challenges, including rising global inflation, foreign exchange fluctuation, a complex geopolitical environment, and a COVID resurgences in mainland China. These challenges have not changed materially in the third quarter of 2022 and have continued to impact overall market demand significantly. The global smartphone market declined nearly 10% year over year in the first three quarters of this year. And in this quarter, global smartphone shipment hit the lowest point compared to the third quarter over the past nine years. Despite the challenging environment due to our global scale, our long operating histories in global markets, and our brand and the channel advantages, our business remained resilient. In the third quarter, our total revenue adjusted net profit smartphone shipments, and the smartphone margin all achieved growth quarter over quarter. More so than any other time, in times of difficulty, it is vital to invest in our long-term capabilities to lay the foundation for high-quality sustainable growth. With this in mind, we continue to advance our business strategies and strengthen our foundations. The third quarter, total revenue reached 70.5 billion RMB, with smartphone revenue reaching 42.5 billion, IoT and lifestyle product revenue of 19.1 billion, and the internet services revenue of 7.1 billion. Meanwhile, we have been actively investing in advancing our Smart EV, and other new initiatives. Our adjusted net profit reached $2.1 billion in the third quarter of 2022, which included $829 million of expenses related to Smart EV and other new initiatives. In the complex and ever-changing overseas market, We cooperate openly with our global partners, leveraging our global scale to mitigate single market risks. In the third quarter, we maintain our number three position in global smartphone shipments, with market share of 14%. And in Europe, we rank number two, with market share growing year over year and quarter over quarter to 23%. In this quarter, more than 75 percent of our smartphones shipped to overseas markets, and our smartphone market share ranked top three in 52 markets and among the top five in 64 markets. We further strengthened our position in the premium smartphone market, and our newly launched premium smartphones have been very popular Xiaomi 12S series and a Xiaomi MIX Fold 2 received over 98% and 99% positive ratings, respectively, on JD.com. In this quarter, in mainland China, our smartphone market share in 4,000 to 5,000 RMB price segments grew year over year of 5 percentage points, and it grew over year year over year of two percentage points in RMB 6,000 and above, demonstrating the competitiveness of our premium products. We continue to invest in R&D and strengthen our long-term core competitiveness. In the third quarter, our R&D expenses reached 4.1 billion, an increase of 26 year over year. 26% year-over-year. Among over 30,000 employees at Xiaomi, nearly half are R&D personnel. In terms of SmartEV and other new initiatives, we have invested over 1.8 billion in the past three quarters. Our SmartEV business is advancing smoothly and has established an R&D team of more than 1.8,000 professionals. We believe the global total addressable market for Smart EV exceeds trillions of dollars, while the current market is still very fragmented and very early in its development, leaving plenty of room for us. We have been actively promoting sustainable corporation development In August 2022, Forbes China released its first China ESG50 report to recognize companies that follow best practices in ESG and it lists Xiaomi on its China ESG50 list. In October 2022, Xiaomi was selected into Forbes World Best Employers list for the second consecutive year. In addition, we participated in education equality initiatives in Malaysia, Thailand, Vietnam, and Singapore, providing digital education improvements to local students. We believe it is necessary for us to spread ahead social responsibilities, even against macroeconomic headwinds. In the coming new year, despite the challenges at home and abroad, we remain confident in our ability to seek certainty in times of uncertainty. Thanks to our relentless investment in our core capabilities, our global scale advantage, and our strong cash resources. More importantly, we will remain agile and strategically balance profitability and scale while improving operating efficiency. Meanwhile, we will commit to investing in R&D and long-term driving forces to lay the foundation for healthy and high-quality sustainable growth. And together with all of you, we will fall against the headwinds weather every season, as no winter lasts forever, and no spring skips its turn. With that, I will hand it over to our CFO, Allen, to discuss our third quarter results in greater detail. Allen, please.