May 21 (NBD) -- Chinese tech giant Xiaomi Corporation (1810.HK) released its earnings report for the first quarter of 2019 ended March 31 this year.

The company generated 43.8 billion yuan (6.3 billion U.S. dollars) in revenue, up 27.2 percent compared with the same period of the previous year, and its adjusted net profit for the quarter surged by 22.4 percent to 2.08 billion.

National Business Daily (NBD) noted that this is the first financial results since Xiaomi announced its "Smartphone + AIoT (AI+IoT)" dual-engine strategy in early January.

Xiaomi is building a balanced revenue structure, as the contribution of Xiaomi's smartphone business to the total income continues to decline, and that of IoT business maintain rising, an analyst in the Internet field noted.

File photo/Zhang Jian (NBD)

Multi-brand strategy adopted to boost smartphone sales

This quarter, the smartphone sales and IoT and lifestyle products business contributed 89.2 percent of the total revenue.

According to the report, Xiaomi shipped 27.9 million smartphones in the period, with a year-over-year decline of 1.7 percent. The company ranked 4th globally in smartphone sales volume in the quarter, data from international market research organization IDC shows.

Despite dropping shipment, the revenue brought by smartphone sales recorded an increase of 16.2 percent year on year to 27 billion yuan, which was driven by raising average sales price (ASP) of its smartphone products and the continued optimization of the product portfolio.

To shake off the label of "low cost" and better execute its multi-brand strategy, Xiaomi decided to make its cost-effective Redmi line an independent brand in January this year. The company now operates five brands targeting different markets and users.

Achieving a surge in ASP though, Xiaomi will face greater competition in the next quarters resulting from the overall falling mobile phone market this year,the above mentioned analyst said. Also, Redmi will be challenged by several brands positioning themselves in the same market where Redmi is targeting, added the analyst.

AIoT and investment business, new fuels to growth

To diversify business, Xiaomi released "Smartphone + AIoT" dual-engine strategy this January. The AIoT segment posted an outstanding performance for the first quarter of 2019.

The revenue of the IoT and lifestyle products segment rose by 56.5 percent to 12.0 billion yuan in the January-March period.

Besides, the number of connected IoT devices (excluding smartphones and laptops) on Xiaomi's IoT platform jumped by 70 percent to approximately 171 million units in the quarter and Xiaomi's AI assistant had over 45.5 million monthly active users, making it one of the most used AI voice interactive platforms in mainland China.

AIoT business, as the one of the cores for Xiaomi's dual-engine deployment, is expected to help Xiaomi build a balanced revenue structure.

The contribution of Xiaomi's smartphone business to the total income continues to decline, while that from IoT business continues to rise, and it grows much faster than other businesses, the Internet analyst said.

Apart from the smartphone and IoT business, Xiaomi's investments in other enterprises also created considerable revenue for the tech giant.

As of March 31, 2019, Xiaomi invested in over 270 companies worth a book value of 29 billion yuan, ten of which have been listed, including iQIYI, Inc., Bilibili Inc., Huami Corporation and Viomi Technology Co., Ltd. It is noted that Xiaomi reported an after-tax net gain of 592.5 million yuan from the investments.

The investments allow Xiaomi to form close partnerships with investee companies and provide it with recurring investment income, the company stated in its financial reports.

In an interview with NBD, Xiaomi's CFO Zhou Shouzi emphasized that Xiaomi is not an investment company and the main purpose of the investment is to empower its own business.

Email: gaohan@nbd.com.cn