Xiaomi Corporation-W will release its Q3 2025 earnings report on November 18 (post-market in Hong Kong). According to Tiger International APP data forecast, Xiaomi's total revenue for the third quarter is expected to be approximately RMB 116.5 billion, a year-on-year increase of about 28%. Earnings per share are expected to be RMB 0.39, a year-on-year increase of 75%.
Specifically, the smartphone business still faces some pressure, with gross margin expected to be affected by rising storage chip prices. Nonetheless, the high-end smartphone strategy is continuing, and overall revenue is expected to be supported. The growth rate of IoT and lifestyle products is expected to slow down, mainly due to the reduction of subsidies in China, but the gross margin remains resilient. In the electric vehicle business, with the continuous growth in delivery volume, Xiaomi's automotive division is expected to achieve profitability for the first time.
Review of Last Quarter
Revenue: RMB 115.96 billion, a year-on-year increase of 30.5%, hitting a record high and exceeding the expected RMB 114.94 billion.
Adjusted net profit: RMB 10.83 billion, a year-on-year increase of 75.4%, also hitting a record high, exceeding the expected RMB 10.23 billion.
Operating profit: RMB 13.44 billion, exceeding the expected RMB 10.43 billion.
Gross margin: 22.5%, a slight decrease of 0.3 percentage points sequentially.
R&D expenditure: RMB 7.76 billion, a year-on-year increase of 41.2%, exceeding the expected RMB 7.18 billion.
Performance of Various Businesses:
Smart electric vehicle: Revenue of RMB 21.3 billion, delivery of 81,302 new cars, with a gross margin of 26.4%. Operating losses narrowed to RMB 300 million, far exceeding market expectations.
Smartphone business: Global shipments increased by 0.6% year-on-year to 42.4 million units, but revenue declined by 2.1% year-on-year to RMB 45.5 billion, mainly due to the lower average selling price (ASP) of low-end models. Gross margin fell from 12.1% to 11.5%.
AIoT business: Revenue increased by 44.7% year-on-year to RMB 38.7 billion, hitting a record high. Performance of major smart home appliances (air conditioners, refrigerators, washing machines) was particularly outstanding, with revenue increasing by 66.2% year-on-year, and gross margin rising to 22.5%.
Highlights for This Quarter
The key highlights of this quarter's financial report mainly focus on the following aspects:
The first profitability of the electric vehicle business: The electric vehicle business is expected to achieve quarterly profitability for the first time, becoming the biggest highlight of this quarter's earnings report. As delivery volumes gradually increase, Xiaomi’s electric vehicle business will become a key driver for future growth. Delivery volumes are expected to be about 109,000 units, with revenue of RMB 28.6 billion and a gross margin above 26%. The profitability of the electric vehicle business will not only enhance Xiaomi's overall financial performance but also increase market confidence in its future growth potential.
Smartphone business facing pressure: Smartphone gross margin is under pressure, mainly due to the rising prices of storage chips. Huatai Securities estimates that third-quarter smartphone revenue might slightly decline by about 1%. However, Xiaomi's continuous push into the high-end market, especially with the increase in the proportion of high-end models in the 17 series (Pro/Pro Max), will still provide some support for the overall revenue structure. The high-end strategy will help offset some cost pressures in the short term and improve profitability in the long term.
IoT business growth slowdown: The IoT business faces certain challenges, mainly due to the reduction of government subsidies and increased market competition. Nevertheless, the IoT gross margin remains resilient. CCB International predicts that IoT revenue growth in the third quarter may slow to 5%, but because Xiaomi has avoided a large-scale price war, its gross margin will remain at a high level. Continuous expansion in overseas markets, especially in Europe and India, may become new growth highlights for the IoT segment.
Acceleration of globalization: As Xiaomi continues to expand in global markets, especially in India and Southeast Asia, it is expected to gradually make up for the slowdown in the domestic market. Goldman Sachs predicts that with Xiaomi strengthening its global retail operations, contributions from overseas markets will accelerate growth and become an important factor driving overall revenue growth.
Institutional Views
Major institutions have generally lowered their target prices for Xiaomi, but remain optimistic about its long-term growth potential. Here are some views from major institutions:
Huatai Securities: The institution maintains a "Buy" rating for Xiaomi, expecting third-quarter revenue to grow year-on-year by 23%, largely driven by the strong performance of the electric vehicle business. Huatai Securities expects Xiaomi's third-quarter electric vehicle shipments to be 109,000 units, with the electric vehicle business likely to achieve profitability for the first time. Despite pressure on smartphone gross margins, Huatai remains bullish on Xiaomi's continued push into the high-end market and maintains a target price of HKD 65.4, down about 5% from the previous estimate.
Citi: Citi slightly adjusts Xiaomi's target price from HKD 66 to HKD 65. Citi expects Xiaomi's third-quarter electric vehicle revenue to achieve profitability, but smartphone gross margins and IoT revenue growth may not meet expectations. Citi believes that in the short term, Xiaomi's smartphone business will face significant pressure, but in the long term, growth in emerging businesses such as AIoT and electric vehicles will support its overall performance.
Goldman Sachs: Goldman Sachs significantly lowers Xiaomi's target price from HKD 66 to HKD 56.5. Goldman points out that rising storage chip prices will put pressure on smartphone gross margins, and delays in the second phase of the electric vehicle factory may affect delivery schedules. However, Goldman also highlights that as electric vehicle deliveries increase and globalization accelerates, Xiaomi's profit structure will further optimize, especially with AIoT and internet services continuing to support overall profitability.
BOCI: Bank of China International maintains a "Buy" rating for Xiaomi and slightly lowers the target price to HKD 74.4. The institution believes that despite the short-term impact of declining smartphone gross margins, Xiaomi's long-term growth potential remains strong, particularly with continuous efforts in the electric vehicle and high-end smartphone markets. BOCI sees Xiaomi's current valuation as attractive, presenting a long-term investment opportunity.
Summary
Xiaomi's upcoming Q3 2025 earnings report is expected to depict a mixed picture. The breakthrough in the profitability of the electric vehicle business may become a highlight, driving overall performance growth, while the smartphone and IoT businesses are likely to face some growth slowdown and gross margin pressure. Despite short-term challenges, institutions generally maintain "Buy" ratings, reflecting confidence in Xiaomi's long-term growth potential.
Investors should focus on the performance of three core businesses: the profitability of electric vehicles, changes in smartphone gross margins, and the growth dynamics of the IoT business. If these businesses perform as expected, especially with the continuous profitability of the electric vehicle business, Xiaomi's stock price may rebound in the coming months.
In conclusion, despite short-term pressures, Xiaomi retains strong long-term growth potential. Investors should pay attention to short-term earnings reports while seizing Xiaomi's development opportunities in high-end smartphones, electric vehicles, and global market expansion.
This content is based on Tiger AI-generated data and is for reference only.