Xiaomi Corporation Reports Strong Operating Results in Second Quarter 2018

- Revenue Soars 68.3%,Net Profit Reaches RMB14.633 Billion

- Demonstrates Rapid Growth Across All Business SegmentsStrong Momentum in International Business

HONG KONG,Aug. 22,2018 --Xiaomi Corporation ("Xiaomi" or the "Group"; Stock Code: 1810),an internet company with smartphones and smart hardware connected by an Internet of Things (IoT) platform at its core,today announced its unaudited consolidated results for the second quarter ("2Q2018") and first half of 2018 ("1H2018") ended June 30,2018.

In the second quarter of 2018,Xiaomi recorded outstanding operating results,proving the strength and resilience of its unique and powerful "triathlon" business model,which encompasses hardware,new retail and internet services. The Group recorded revenue of approximately RMB45,235.5 million,representing an increase of 68.3% year-on-year,among which international revenue grew 151.7% year-on-year to RMB16,412 million,accounting for 36.3% of its total revenue. Net profit for the second quarter was RMB14,633 million. Adjusted profit (Non-IFRS Measure) increased by 25.1% year-on-year to RMB2,117 million.

1H2018 Financial Highlights

Total revenue was RMB79,648 million,an increase of 75.4% year-on-year

Gross profit was RMB9,953 million,an increase of 57.7% year-on-year

Net profit was RMB7,605 million

Non-IFRS adjusted profit was RMB3,816 million,an increase of 62.2% year-on-year

Earnings per share were RMB0.759

2Q2018 Financial Highlights

Total revenue was RMB45,an increase of 68.3% year-on-year

Gross profit was RMB5,652 million,an increase of 46.9% year-on-year

Net profit was RMB14,633 million

Non-IFRS adjusted profit was RMB2,117 million,an increase of 25.1% year-on-year

Earnings per share were RMB1.409

Xiaomi Founder,Chairman and CEO Mr. Lei Jun,said: "On 9 July this year,Xiaomi listed on the Main Board of the Hong Kong Stock Exchange,marking a significant milestone in our journey. Eight years ago,I came up with a crazy idea,which was to build a smartphone business based on the business model of an internet company,transforming the global image of 'Made in China' products and benefiting everyone across the globe with amazing products at honest pricing. The interim results that Xiaomi has announced today prove that this idea has become reality. Tapping on the Hong Kong capital market,we are full of confidence and truly excited by the prospects of the Group. Xiaomi will continue building on our unique and powerful 'triathlon' business model to further penetrate the high-end smartphone market,introduce more IoT products to international markets,and expand our range of internet services,laying strong foundations for our revenue growth in the future ahead."

2Q2018 Results Review

Rapid growth across all business segments. In the second quarter of 2018,Xiaomi's smartphones segment recorded revenue of approximately RMB30.50 billion,representing year-on-year growth of 58.7%,which was driven by an increase in both smartphone sales volume and the average selling price ("ASP"). The fastest growth in revenue was seen in the IoT and lifestyle products segment,growing 104.3% year-on-year to RMB10.38 billion. Revenue from the internet services segment grew 63.6% year-on-year to RMB3.96 billion,driven primarily by increasing monetization in mainland China.

Strong growth momentum in international business. According to Canalys,Xiaomi's smartphone shipments continued to grow at a rapid rate in India,ranking first in terms of market share by shipment. Recording impressive growth,Xiaomi also ranked second in Indonesia in terms of smartphone shipments. In Western Europe,Xiaomi expanded into France and Italy in May 2018. Smartphone shipments in Western Europe grew over 2700% year-on-year. As of the second quarter of 2018,Xiaomi ranked among the top five in the smartphone markets of 25 countries and regions.

Growth in scale,value and loyalty of users. Monthly active users ("MAU") of Xiaomi's proprietary MIUI operating system increased 41.7% from 146 million in the second quarter of 2017 to 207 million in the second quarter of 2018,driven by increasing smartphone shipments and user adoption. Average revenue per user ("ARPU") increased 15.4% year-on-year to RMB19.1. As of the second quarter of 2018,over 115 million IoT devices were connected to Xiaomi's IoT platform,representing a 15% quarter-on-quarter growth. Nearly 170 million users now own more than five Xiaomi IoT devices,representing a 19% quarter-on-quarter growth.

Focusing on innovation,quality and efficiency to drive long-term growth

As an innovation-driven technology company,Xiaomi released a series of products featuring cutting-edge technologies in the second quarter of 2018. To mark the 8th anniversary of Xiaomi,the Group started to sell its flagship smartphone Mi 8 series on 5 June 2018. Shipments of Mi 8 series exceeded 1.1 million units in June,demonstrating solid progress in the Group's strategy of gaining a strong foothold in the high-end smartphone market.

The Group has also been making breakthroughs in artificial intelligence ("AI") technology. Its AI assistantreceived the "2018 Leading Scientific and Technological Achievement Award - Cool Technologies" and "2018 Leading Scientific and Technological Achievement Award - New Product" at the China International Big Data Industry Expo held in May 2018. As of July 2018,its AI assistant exceeded 30 million MAUs,while the accumulated number of activations for its AI speaker exceeded 2 billion within the first year of its launch. Meanwhile,the Group also broadened its IoT product portfolio globally,and continued to expand its range of innovative IoT products.

At Xiaomi,product quality is the main priority and the Group is continuously making improvements in this aspect. Xiaomi recently appointed Mr. Yan Kesheng as its Vice President and Chairman of the quality committee to lead this task.

With an unwavering focus on pursuing world-class efficiency,the Group also continued to expand its efficient offline channels while strengthening its online channels in the second quarter of 2018. As of June 30,2018,Xiaomi had more than 400 Mi Home stores in mainland China,mainly in first- and second-tier cities. Xiaomi also had over 360 authorized stores and built a direct supply network which exceeded 37,000 locations.

About Xiaomi Corporation

Xiaomi Corporation was founded in April 2010 and listed on the Main Board of the Hong Kong Stock Exchange on 9 July,2018 (1810.HK). Xiaomi is an internet company with smartphones and smart hardware connected by an IoT platform at its core. With the vision of being friends with its users and being the "coolest company" in the hearts of its users,Xiaomi is committed to continuous innovation,with an unwavering focus on quality and efficiency. The company relentlessly builds amazing products with honest prices to let everyone in the world enjoy a better life through innovative technology. Xiaomi is currently the world's fourth-largest smartphone brand,and has established the world's largest consumer IoT platform,with more than 115 million smart devices (excluding smartphones and laptops) connected to its platform. Currently,Xiaomi products are present in more than 70 countries and regions around the world and have a leading foothold in many markets.