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Xiaomi reported Q1 2026 total revenue of RMB 99.1 billion, down 10.9% year-on-year, as a deliberate pullback in mid-to-low-end smartphone shipments weighed on the top line. Adjusted net profit of RMB 6.1 billion exceeded expectations, supported by record smartphone ASP and a strong IoT gross margin of 25.2%.
Performance Highlights
Xiaomi delivered Q1 2026 total revenue of RMB 99.1 billion, down 10.9% year-on-year but broadly in line with the company's own strategic framing, as adjusted net profit of RMB 6.1 billion beat consensus on the back of disciplined cost and mix management. Group gross margin held at 22.0%, while the Smartphone x AIoT segment gross margin improved 2.5 percentage points quarter-on-quarter to 22.5%, demonstrating resilience despite significant memory cost inflation.
The most important operating driver was Xiaomi's deliberate trade-up in smartphone mix, which lifted ASP to a record RMB 1,310, up 8.2% year-on-year, even as global shipments fell 19.2% to 33.8 million units. IoT gross margin expanded sharply to 25.2%, up 5.1 percentage points quarter-on-quarter, with overseas IoT revenue hitting a record high on double-digit year-on-year growth, partially offsetting a domestic IoT softness caused by a high subsidy base. The EV segment delivered 80,856 vehicles and posted segment revenue of RMB 19.9 billion, though gross margin declined to 20.1% due to purchase tax subsidy timing and rising battery costs, leaving an operating loss of RMB 3.1 billion.
Management Outlook and Forward Catalysts
Management reiterated confidence in the full-year EV delivery target of 550,000 units, citing strong new-generation SU7 locked-in orders of over 80,000 in 48 days and the May launch of the YU7 GT at RMB 389,900, which holds the Nürburgring SUV lap record. R&D investment surged 33.4% year-on-year to RMB 8.95 billion, with AI and EV accounting for 45.6% of CapEx, signalling that Xiaomi views the next several quarters as a period of deliberate capability-building rather than near-term profit maximisation.
The central investor debate centres on whether accelerating EV volume recovery in Q2 and beyond can compress the per-unit fixed-cost burden enough to narrow the segment operating loss, while bulls will monitor MiMo token monetisation and AI OS adoption as early indicators of a longer-term software margin layer. Bears will watch memory cost pressure, which management expects to remain elevated through at least 2027, alongside execution risk on the 2027 European EV market entry and the pace of mainland smartphone share recovery.
Adjusted EPS vs. consensus breakdown — primary performance driver, segment revenue contribution, and gross margin trajectory relative to prior guidance...
Segment-by-segment revenue analysis, margin profile, and management commentary on demand trajectory vs. consensus range expectations...
Forward guidance implications for the sector, supply chain read-throughs, and investment implications for the broader competitive landscape...
