Xiaomi’s in the Black

Shares of Xiaomi Inc. closed down 1.4% to HK$17.44 ($2.22) on Thursday, despite revealing in its first earnings report since its July listing that it had made a profit in the second quarter.

Its intraday high hit HK$18.96 and intraday low was at HK$17.44, with HK$2.1 billion worth of shares changing hands. Hong Kong’s benchmark Hang Seng Index closed down 0.5% to 27,790 points.

The world’s No. 4 smartphone-maker reported a profit of 14.6 billion yuan ($2.13 billion) for the three months ending June, from a loss of 11.9 billion yuan a year earlier. Revenue soared 68% to 45.2 billion yuan.

The company reported a loss of 7 billion yuan in the first quarter.

“Xiaomi ramped up efforts in an overseas push for its core business — smartphones — in the second quarter,” said Jia Mo, a Shanghai-based analyst with research firm Canalys. “A rising average selling price (ASP) of its smartphones also helped lift revenue.”

Revenue growth in the international market was faster than in Xiaomi’s home market, surging over 150% year-on-year to 16.4 billion yuan for the second quarter, according to its financial statement. That accounted for 36% of total revenue. 

Xiaomi’s smartphone shipments ranked among the top five in 25 countries, and the company was No. 1 in India, the world’s second-largest smartphone market, and No. 2 in Indonesia, a rising battlefield for phone-makers, the statement said, citing research firms’ data. Shipments in Western Europe shot up by 27 times year-on-year after Xiaomi expanded into France and Italy in May.

Xiaomi said its smartphone ASP rose to 953 yuan, driven by launches of mid- and high-end models.

In conjunction with its earnings release, Xiaomi unveiled Wednesday its first sub-brand, Poco. Targeted at India, Poco phones will be available from Aug. 29, with price tags between 20,999 rupees ($300) and 29,999 rupees. There are plans to sell Poco handsets globally at a later stage.

“Xiaomi will continue building on our unique and powerful ‘triathlon’ business model,” company founder and CEO Lei Jun said in the statement. Under this model, the company aims to further penetrate the high-end smartphone market, introduce more internet of things (IoT) products to international markets, and expand its range of online services, he said.

However, analyst Jia cautioned that Xiaomi’s description of itself as an “internet” company instead of a “hardware” company will be put to the test going forward as its internet-related revenue still trails that of its smartphone business.

Xiaomi said internet services, including online advertising, contributed 8.8% of total revenue in the second quarter, while IoT devices, such as smart TVs and laptops, made up 22.9%. Smartphones took up the bulk of revenue at 67.4%.

Contact reporter Jason Tan (jasontan@caixin.com)