Xiaomi's net profit plummets by 43% in Q1

Under the triple pressures of memory shortage, intense market competition, and weak demand, Xiaomi delivered a disappointing performance in the first quarter of 2026.

The financial report shows that Xiaomi's GAAP net profit in the first quarter of 2026 plummeted by 57% year-on-year to 4.72 billion yuan, which is not only twice the decline of the previous quarter but also far exceeds analysts' previous expectation of a 52% decrease; adjusted net profit fell by 43% to 6.1 billion yuan, also below the market expectation of 6.4 billion yuan. Revenue fell by 11% to 99.1 billion yuan, slightly below analysts' expectations of 103.4 billion yuan, marking the first negative year-on-year growth in quarterly revenue in nearly three years.

The smartphone business is the core source of this quarter's performance pressure. Affected by the decline in shipments, smartphone revenue dropped by 12.5% year-on-year to 44.3 billion yuan; squeezed by the rise in key component prices and intensified competition in the domestic market, the gross margin of the smartphone business further narrowed to 10.1%. The ongoing AI boom continues to siphon off a large amount of memory capacity, driving up memory prices, and is systematically eroding the profit margins of mobile phone manufacturers.

The IoT and consumer product business suffered the most severe decline. Revenue in this division plummeted by 24% to 24.7 billion yuan, mainly due to the withdrawal of government subsidies leading to a significant reduction in domestic income, and the growth in overseas markets failed to make up for the shortfall, although the segment's gross margin remained basically stable at 25.2%.

Relatively speaking, the electric vehicle business is one of the few bright spots. Benefiting from increased deliveries, EV division revenue slightly increased by 5.1% to 19 billion yuan, but this upward trend was also partly offset by a decrease in average selling prices. Overall, the company's gross margin slid from 22.8% in the same period last year to 22.0%.

Before the release of the financial report, Xiaomi's Hong Kong stock closed down 0.8% that day, and the cumulative decline for the year has expanded to 24%.