Xiaomi reported an 8.2% increase in third-quarter revenue to 78 billion yuan on Tuesday, but thanks to unrealised losses from its investments amounting to 3.4 billion yuan, its net profit was slashed from the 4.86 billion yuan reported last year to 0.79 billion yuan.

Broken down by segment, smartphone revenue was bumped up 0.5% to 47.8 billion yuan but thanks to cost controls, it improved profitability by over four percentage points and posted RMB6.1 billion in gross profit. Xiaomi said it shipped 43.9 million devices, which was a 5.8% year-on-year decrease thanks to supply constraints.

The company touted that Canalys ranked it as having the highest market share in Spain, Poland, Ukraine, Belarus, Serbia, Croatia, Lithuania, Myanmar, Algeria, Peru, and India.

The company's internet services segment posted record revenue of 7.3 billion yuan, a 27% spike on last year. Xiaomi said it now has over 500 million 30-day active users on its MIUI platform. At the end of the quarter in September, it reported 486 million MIUI users, with 127 million coming from mainland China.

Of its internet services revenue number, advertising posted 4.8 billion yuan, which was also a record high due to "expanding user base, higher percentage of premium smartphone users, and stronger monetisation capabilities"; while gaming grew by a quarter to 1 billion yuan.

Xiaomi said its internet service revenue from outside China more than doubled to 1.5 billion yuan.

For its IoT and lifestyle segment, revenue increased 15.5% to a new record of 21 billion yuan, however, gross profit was slightly down to 2.4 billion yuan. The company said it faced "challenges in maritime shipping logistics overseas" during the quarter.

On its electric vehicle plans announced in March, the company says it has over 500 people on the team, and mass production would begin in the first half of 2024.

For its long-term investments, Xiaomi said as of September 30 it has 46 billion yuan mostly in the form of shares, and while its preferred share fair value increased by 1.3 billion yuan, its ordinary shares took a bath and had 3.4 billion yuan wiped off. For the nine months to the end of the quarter, its ordinary share portfolio has only increased by 1 billion yuan compared to a 5.1 billion yuan increase at the same stage in 2020.

Last week, compatriot Baidu reported a 13% boost in revenue to 31.9 billion yuan, and similar to Xiaomi, it too found its long-term investments hosed. In this case, it reported an 18.9 billion yuan investment net loss that helped send its net income from 13.7 billion yuan last year to a 16.6 billion yuan net loss for Q3.

"Baidu Core delivered another solid quarter, powered by our AI cloud revenue growing 73% year over year," Baidu CFO Rong Luo said. "With a diversified AI portfolio, including cloud services, smart transportation, smart devices, self-driving, smart EV and robotaxi, we are well-positioned for long-term growth."

The company expects fourth-quarter revenue to be around the same levels, but said the situation with COVID-19 in China continued to limit visibility.

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