Xiaomi Posts Record Q2 Results — EVs Emerge as Key Growth Engine

TradingKey - Xiaomi Group (01810.HK) (ADR.US) delivered its strongest financial performance in history for the second quarter of 2025, with both revenue and profit hitting new highs. The company reported Q2 revenue of RMB 116 billion, a 30.5% year-over-year increase, surpassing market expectations. Adjusted net profit reached RMB 10.8 billion, up 75.4% and marking a record high — exceeding the consensus forecast of RMB 10.227 billion. Following the results, Xiaomi’s U.S.-listed shares rose approximately 1.8%.

Smart EVs emerge as the biggest growth driver.Xiaomi delivered 81,302 electric vehicles in Q2, bringing its H1 2025 total to over 157,000 units — putting it on track to surpass 2024’s full-year volume. The new YU7 SUV, launched at the end of June, has seen strong demand, driving automotive revenue to RMB 2.06 billion in the quarter. The company expects its auto division to turn profitable in the second half of 2025. However, the delivery waitlist for the YU7 has already exceeded one year, raising concerns about production capacity constraints.

While the EV business surges ahead, smartphone growth has slowed. The segment generated RMB 45.5 billion in revenue with 42.4 million units shipped, up only 0.6% year-over-year. Intense competition during the “618” shopping festival — particularly against Apple and Huawei — pressured margins.

In contrast, IoT and internet services remained solid.

• The Xiaomi IoT platform now connects 989 million devices, up 20.3% YoY.
• Revenue from smart home products grew 30%–40%, supported by rising market share in white appliances and China’s national subsidy program.
• Internet services revenue reached RMB 9.1 billion, up 10.1%, with a remarkably high gross margin of 75.4%.

Xiaomi continues to ramp up R&D investment:

• R&D spending hit RMB 7.8 billion in Q2, up 41.2% YoY.
• The company now employs over 22,000 R&D personnel.
• It recently unveiled its 3nm Xring O1 chip and plans to invest $7 billion over the next decade to deepen its strategic focus on semiconductors and AI.

According to Bloomberg, Xiaomi’s overall gross margin improved to 22.5% year-over-year, driven by economies of scale in its auto business and optimization in IoT product mix. However, this marks a slight decline from Q1, primarily due to smartphone promotions and rising costs.

Despite an autonomous driving incident involving the SU7 earlier this year, Xiaomi has successfully regained market confidence.

Notably, during the earnings call, Xiaomi stated it plans to enter the European electric vehicle market by 2027, signaling its ambition to become a global player in the EV space.