The latest quarterly financial report of Xiaomi Group for the first quarter of 2026 shows that due to multiple external factors such as weak global demand for consumer electronic terminals, intense competition in the industry's mature stage, and rising prices of core components from the upstream, the company's overall revenue and profit levels experienced a temporary setback.

On May 26th, Xiaomi Group (01810.HK) released its 2026 first-quarter financial report. During the reporting period, due to multiple external factors such as weak global demand for consumer electronic terminals, intense competition in the industry's mature stage, and rising prices of core components from the upstream, the company's overall revenue and profit levels experienced a temporary setback.

The data shows that the group achieved a total revenue of 99.142 billion yuan in the current period, a year-on-year decrease of 10.9% and a quarter-on-quarter decrease of 15.2%. This was mainly due to the seasonal weakness in the consumer electronics industry and the continuous decline in terminal demand. The profit end contracted more significantly, with a profit of 4.735 billion yuan in the current period, a significant year-on-year decline of 56.5% and a quarter-on-quarter decline of 27.6%; the adjusted net profit after excluding one-time gains and losses was 6.072 billion yuan, a year-on-year decline of 43.1% and a quarter-on-quarter decline of 4.4%.

In terms of profit quality and cash flow, the company's overall gross margin for the current period was 22.0%, a slight decline compared to the previous year, mainly due to the narrowing of the profit margin of traditional hardware business and the increased upfront investment in emerging businesses. The net cash flow from operating activities for the reporting period was -1.79 billion yuan, experiencing a temporary net outflow, mainly due to the new business capacity layout and the concentrated investment in research and development expenses.

The R&D end maintained a high-intensity strategic investment, with R&D expenditure reaching 9 billion yuan in the first quarter, a year-on-year increase of 33.4%, and the R&D team size expanded to 26,048 people, with resources mainly tilted towards the core tracks of intelligent vehicles and general artificial intelligence. The company's annual R&D investment target exceeded 40 billion yuan, continuously building a long-term technical competitive barrier.

By business segment, the mobile × AIoT business achieved revenue of 79.3 billion yuan, a year-on-year decline of 14.5%. Among them, the smartphone business revenue was 44.3 billion yuan, with global shipments of 33.8 million units, remaining in the top three globally for 23 consecutive quarters, but still declining by 19.2%. The global average selling price increased by 8.2% year-on-year, reaching a new historical high. The sales share of high-end smartphones in the Chinese mainland reached 23.5%. Due to the increase in upstream storage chips prices, the intensification of domestic mobile phone market competition, and the slowdown in the breakthrough pace of high-end models, the business gross margin dropped to 10.1%.

The IoT and lifestyle consumer goods business revenue was 24.7 billion yuan, a year-on-year decline of 23.7%. Industry subsidy policies withdrawal and insufficient demand for civilian smart hardware consumption were the main constraints. In the ecosystem operation aspect, the number of deep ecological users with 5 or more IoT devices reached 23.6 million, a year-on-year increase of 22.3%. The Internet service business performed relatively steadily, with revenue of 9.5 billion yuan in the current period, a year-on-year increase of 4.3%. The number of monthly active users in the Chinese mainland reached 196 million, reaching a new historical high, and the monthly active user number of Xiaoice Assistant steadily increased to 169 million.

The intelligent electric vehicle and artificial intelligence innovation business was the only business segment of Xiaomi that achieved high growth in this quarter, becoming the core pillar of the company's second growth curve. The revenue of this business segment in the first quarter reached 19.9 billion yuan, a year-on-year increase of 6.9%, and 80,856 new vehicles were delivered, continuously releasing the scale delivery capability.

However, affected by vehicle purchase tax subsidies and the increase in core component prices, the gross margin of the intelligent electric vehicle and AI innovation business division decreased from 22.7% in the previous quarter to 20.1%. In the artificial intelligence field, the company's core model and intelligent agent technical indicators ranked in the first echelon globally, with sufficient technical reserves. At the same time, the company has implemented a long-term strategic plan, planning to invest 60 billion yuan in the research and development of AI technology and its application in scenarios over the next three years. This will fully empower the "people, vehicles, and homes" full-scenario ecosystem and achieve deep collaboration and integration between artificial intelligence and hardware terminals.

In the capital market, to hedge against the valuation pressure caused by short-term performance fluctuations and stabilize the expectations of the secondary market and investor sentiment, the company has launched a share repurchase plan of up to 20 billion Hong Kong dollars. This large-scale repurchase initiative fully demonstrates the management's confidence in the long-term strategic value of the company and the implementation prospects of its technology business, effectively offsetting the negative impact of short-term performance and maintaining the stability of the company's capital market valuation.

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