Xiaomi Corporation reported a 6.1% year-over-year revenue decline to RMB 108.9 billion for the second quarter of 2026. Net profit for the period fell 20.3% to RMB 9.5 billion, while adjusted net profit dropped 42.6% to RMB 6.2 billion, reflecting a challenging environment characterized by rising component costs and intense competition.
Key Financial Highlights
- Revenue: RMB 108.9 billion (-6.1% YoY)
- Adjusted Net Profit: RMB 6.2 billion (-42.6% YoY)
- Gross Margin: 19.8% (vs. 22.5% in 2Q25)
- Basic EPS: RMB 0.37
The core Smartphone × AIoT segment saw revenue contract 11.3% to RMB 84.0 billion. Smartphone shipments fell 26.5% to 31.2 million units as the company optimized its portfolio away from low-end models. While average selling prices (ASP) hit a record RMB 1,351, smartphone gross margins compressed to 8.5% from 11.5% a year ago, primarily due to soaring memory costs.
Conversely, the Smart EV, AI and new initiatives segment provided a silver lining, with revenue rising 17.1% to RMB 24.9 billion. Vehicle deliveries reached 104,199 units, a 28.2% increase, though the segment still posted an operational loss of RMB 2.6 billion as Xiaomi continues to scale production.
Earnings were significantly bolstered by non-operational gains. Fair value changes on financial instruments provided a RMB 6.5 billion boost, up from RMB 3.4 billion last year. Subsidy income also rose sharply, driving Other Income to RMB 2.2 billion. On the expense side, R&D spending jumped 18.9% to RMB 9.2 billion as the firm doubled down on AI infrastructure and EV technology.
Xiaomi maintains a fortress balance sheet with RMB 219.3 billion in total cash resources against RMB 39.3 billion in total borrowings. Management is pivoting toward “proactive home intelligence” and expanding its automotive lineup with the Xiaomi SkyNomad SUV series, slated for a September 2026 launch. Despite current margin pressure, the firm’s strategic shift toward premiumization and embodied AI remains the central narrative for its “Human × Car × Home” ecosystem.
