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Overseas growth carries Xiaomi through China’s COVID-19 outbreak

Xiaomi beats analyst expectations in Q1 on the back of strong international sales. However, with COVID-19 now hampering economies worldwide, the growth may not last.

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Chinese electronics giant Xiaomi (HKG: 1810) booked RMB 49.7 billion (USD 7 billion) in revenues in the first first-quarter of 2020, a 13.6% increase year-on-year (YoY), after shipping 29.2 million smartphones, up 4.7% YoY, and reporting a 7.8% rise in revenues in the firm’s Internet of Things (IoT) and lifestyle division.

Xiaomi’s performance exceeded market expectations of RMB 47.5 (USD 6.7 billion), as revenue from overseas markets increased 37% YoY, accounting for a record of 50% of total revenues, the company announced on Wednesday.

Xiaomi’s core smartphone business generated RMB 30.3 billion (USD 4.27 billion) in the March quarter, an increase of 12.3% YoY, accounting for 61% of total revenue.

Within this segment, domestic smartphone sales slumped 26% YoY as the COVID-19 pandemic forced China into lockdown, according to research firm Canalys. The domestic decline was however offset by success overseas, as smartphone shipments in Europe and the Middle East increased by 53.8% and 55.2% respectively.

Xiaomi’s smartphones gained popularity in emerging markets, as shipments to Latin America and Africa more than tripled during the first quarter, bringing the firm to rank 4th globally in terms of smartphone shipments, said Xiaomi citing Canalys.

Beijing-headquartered Xiaomi also claimed the top spot in Spain for the first time with a 28% market share during Q1.

Xiaomi’s IoT and lifestyle products segment generated RMB 13 billion (USD 1.83 billion), up 7.8% YoY despite the pandemic’s disruption to sales of larger home appliances. The number of connected IoT devices worldwide on Xiaomi’s network grew by 42.6% YoY to 252 million units as of March 31, 2020.

The firm also booked RMB 5.9 billion in revenue from its internet services segment, up 38.6% YoY, accounting for a record high of 11.9% of total revenue. Online gaming revenues within this segment increased by 80.5% yearly to RMB 1.5 billion, while the firm also experienced growth in video streaming, fintech, and other subscription services.

As COVID-19 continues to disrupt economies around the world, Xiaomi admitted that its overseas business will be at risk for at least the second quarter. The company specifically voiced concerns about lockdown restrictions imposed since March in India, which could seriously damage sales in one of Xiaomi’s most important markets.