Xiaomi Q3 2025 Earnings Report Analysis - Traditional Business Under Pressure, EV Business Surging Ahead

Today, $XIAOMI-W(01810.HK) announced its Q3 2025 financial report. Due to the mediocre performance of its core businesses, this report appears relatively flat compared to the previous two "strongest-ever" quarterly reports.

However, with a 22.3% revenue growth rate, 80.9% net profit growth, quarterly revenue of 113.1 billion yuan, and net profit of 11.3 billion yuan, this growth and scale are already at the top level in China. In the current environment, it's almost impossible to find another large company with both revenue and net profit growth exceeding 20%. Well-known companies like Tencent, Alibaba, Moutai, and the once shining star among Chinese concept stocks, Pinduoduo, all fail to reach this growth rate.

I've written many reports on Xiaomi's financials, from 2022 to 2025. I didn't write one last quarter because there was nothing noteworthy—it was largely similar to previous reports. My views on Xiaomi haven't changed much over the past year, so last quarter's report can be referenced for the same insights. This time, however, Xiaomi's car business, after its initial success, is facing new challenges, and its stock price has seen a significant pullback among Chinese concept stocks. Therefore, I'm updating my analysis of Xiaomi's financials and my personal views on the company.

Key highlights:

1. Total revenue continued to break the 100-billion-yuan mark, growing by 22.3%, primarily driven by orders for the SU7 and YU7. The EV business grew by 198%, with revenue reaching 28.3 billion yuan. The core businesses grew by only 1.3%, with smartphones showing negative growth, IoT growth dropping from 45% last quarter to 2.6%, and internet services maintaining 10% growth. Both smartphones and IoT performed poorly, largely due to the impact of state subsidies, highlighting the inherent instability of these businesses. Although Xiaomi has maintained its position as the world's third-largest smartphone vendor in recent years, breaking through in this market is challenging. Xiaomi's stock price rise to 60 was largely due to the potential unlocked by its EV business, so whether the stock can return to 60 will depend more on the EV performance.

2. Adjusted net profit for the quarter was 11.3 billion yuan, with the EV business already turning a profit of 700 million yuan. Rough estimates suggest annual net profit could reach 40 billion yuan, meaning Xiaomi is no longer the "unprofitable" company many perceived. Even without considering EV growth or overseas expansion, a 25x P/E ratio would value Xiaomi at 1 trillion yuan, making the current price of 40 seem inexpensive. Moreover, investment is about the future: Xiaomi's car deliveries are expected to double next year, and its smartphone and IoT businesses have been very successful overseas—its EV business is likely to replicate this success. Personally, I believe Xiaomi at 40 is relatively cheap.

3. The EV business generated 28.3 billion yuan in revenue in Q3, with a net profit of 700 million yuan, making it the fastest new EV maker to achieve profitability—a commercial miracle. In contrast, XPeng, which has been highly praised this year, has yet to turn a profit after many years. Xiaomi's car deliveries are expected to exceed 350,000 units in 2025, and with further capacity expansion next year, annual deliveries of 700,000 units should be achievable, corresponding to nearly 200 billion yuan in revenue. Next year, Xiaomi will still be a high-growth company, but the challenge won't be production capacity—it may be orders.

4. Of course, we must mention Xiaomi's PR issues, which have indeed had a tangible impact on car orders and reputation. But this is an inevitable part of a mature company's growth in China. Tesla and Apple have gone through similar experiences, and Li Auto is a more recent example. As the core idea of "Antifragile" states: "What doesn't kill me makes me stronger." These issues arose partly due to malicious actions by competitors and partly because Xiaomi's rapid growth outpaced some internal capabilities, creating opportunities for competitors. Xiaomi should learn from Huawei and BYD—a strong company must be strong in all aspects, including legal, after-sales, and not just products.

5. I've held Xiaomi for nearly five years, with a cost basis of 12.5. I sold one-third at my first target price of 37.5 and another third at around 52, leaving me with one-third remaining. Now that Xiaomi's stock has fallen from a high of 60 to around 40, I consider this a cheap price. Based on current profits, the P/E is just 20x. Below is my valuation of Xiaomi's core + EV businesses from February this year—I underestimated the EV business back then. Even if we only consider next year, Xiaomi's fair value should be around 60. Looking to 2027 is another story. Therefore, I will buy back Xiaomi at 40! Attached: My Xiaomi valuation process from earlier this yearIs Xiaomi Worth 1 Trillion?—Xiaomi Valuation Calculation

1. Overall Financial Data

The overall financial data is as follows:

2. EV Business

3. Smartphone Business

4. IoT Business

5. Internet Services

Attached: Xiaomi's Historical Financial Reports   

Xiaomi Q1 2025 Earnings Review—The Strongest Ever Quarter, IoT Business Soars

Xiaomi Q4 2024 Earnings Review—The Strongest Ever, Both Old and New Businesses Fly

Is Xiaomi Worth 1 Trillion?—Xiaomi Valuation Calculation

Xiaomi Q3 2024 Earnings Review—Clear Second Growth Curve, "Strongest Performance in History"

Xiaomi Q2 2024 Earnings Review—"The Most Outstanding Quarterly Report in History"

Xiaomi Q4 2023 Earnings Review—Double-Digit Smartphone Growth, Future Valuation Depends on Cars

Xiaomi2023 Q3 EarningsReview—Smartphone Recovery, EVs Arrive

Xiaomi Xiaomi2023 Q2 EarningsReview—Net Profit Surges, But Hope Lies in Xiaomi Cars Xiaomi

2023 Q1Earnings Review—Report Exceeds Market Expectations, But Challenges Remain

Xiaomi Q4 2022 Earnings Review—Waiting for a Rebound Xiaomi

2022 Q3 Earnings Review -- Expected Decline, Looking for a Rebound in Adversity

Disclaimer: This article represents personal views only and does not constitute any investment advice! Original content is hard work—your support through follows and likes is the best encouragement!