Xiaomi Reports Surprising Profit In Q2 2018 Following IPO

Xiaomi on Wednesday reported a surprising profit in the second quarter of the calendar year, revealing it concluded the three-month period ending June 30 some $2.1 billion in the black. The result is a major improvement over its performance a year ago when the company posted a loss of $1.74 billion, with the development coming shortly after Xiaomi's initial public offering in Hong Kong which disappointed many industry watchers, leaving the company with a valuation of $45 billion, well below its top $80-billion target.

During a conference call with analysts, Chief Financial Officer Chew Shou Zi said the second-quarter results are in line with internal expectations and represent irrefutable proof that Xiaomi is well-positioned to continue growing moving forward as it expands its global footprint and moves into new categories of consumer electronics and services. The manufacturer's revenue surpassed $6.6 billion over the same period, up more than 68-percent year-on-year, almost half of which was attributed to smartphone sales. The earnings report indicates that while Xiaomi's profit margins in the hardware segment remain slim, its digital service strategy is already paying dividends, with its overall financial state being healthy.

Following its success in the entry-level and mid-range markets, Xiaomi is now moving to take on the world's largest smartphone makers in the high-end price bracket, having resolved to do so with the newly introduced Poco line. While its domestic operations have been aggressively challenged by the likes of Huawei and BBK-owned OPPO and Vivo, it's still adamant to continue committing massive resources to China while simultaneously growing its global brand, with that ambitious strategy being one of the main reasons why the firm opted to file for an IPO in the first place given the sheer amount of financial backing required by its new business model. The company's financials were reported after the Hong Kong market closed on Wednesday, though its stock is likely to surge first thing tomorrow.

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