Key Highlights
- Shares of Xiaomi surged 5.6% to HK$27.64 after releasing second quarter 2026 financial results
- Second quarter revenue reached RMB 108.9 billion ($16.15 billion), declining 6.1% annually but surpassing analyst projections
- The smartphone division achieved record-high average selling prices with an 8.5% gross margin that exceeded forecasts despite elevated memory component expenses
- The electric vehicle division shipped 104,199 units in Q2; worldwide monthly active users reached an all-time high of 766.5 million
- Executives indicated that memory component price escalations are moderating, while advance orders for the Pengcheng EV exceeded company projections
Shares of Xiaomi climbed 5.6% to HK$27.64 on Tuesday following the release of second quarter 2026 financial results that exceeded Wall Street estimates, alleviating investor worries about escalating component expenses and weakening smartphone market conditions.
Second quarter revenue totaled RMB 108.9 billion, equivalent to approximately $16.15 billion. While this represented a 6.1% year-over-year decline, it showed 9.9% growth compared to the first quarter of 2026 and exceeded consensus analyst estimates.
Gross profit decreased 17.2% year-over-year to RMB 21.6 billion. Operating profit slipped 19.1% annually to RMB 10.9 billion. These annual declines underscore the challenges from elevated memory component pricing and intensified market competition that the company previously highlighted.
Adjusted net income for the three-month period stood at RMB 6.2 billion, representing a 2.4% increase compared to Q1 2026.
While year-over-year comparisons showed declines, market participants concentrated on the quarter-over-quarter improvements and management’s forward-looking commentary regarding expense trends.
Mobile Device Division Shows Resilience
The mobile phone business delivered encouraging results. Average selling prices reached an all-time high during the quarter, while the division’s gross margin of 8.5% surpassed market forecasts, despite memory costs remaining at historically elevated levels.
Worldwide smartphone shipments amounted to 31.2 million units in the second quarter, representing a 6% decrease versus the corresponding period in 2025.
Worldwide monthly active users climbed to a record 766.5 million, marking a 4.8% year-over-year increase. The internet services division maintained a gross margin of 76.8%.
Electric Vehicle Operations Continue Strong Momentum
Xiaomi’s automotive and smart electric vehicle division shipped 104,199 vehicles throughout the quarter. This continues the strong growth trajectory the company has maintained since launching its EV operations.
Advance purchase orders for the recently introduced Pengcheng EV model surpassed the company’s internal forecasts, providing investors with additional confidence regarding the division’s short-term growth prospects.
Company leadership commented that the rate of memory cost inflation is transitioning to a more moderate pace. This statement was viewed as an important signal by investors, considering memory pricing had been a primary concern affecting the stock.
Xiaomi acknowledged that geopolitical tensions, increasing component expenses, and fierce competitive pressures all remained challenges for the business throughout the quarter. The company also highlighted artificial intelligence development as an important factor influencing the industry environment.
The shares were among the limited number of significant gainers in Hong Kong trading on Tuesday, while the broader Hang Seng index finished essentially unchanged.
Xiaomi’s adjusted net income of RMB 6.2 billion for the second quarter of 2026 represented a sequential improvement of 2.4% versus the first quarter of 2026.
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