What cap? Xiaomi is reporting huge profit numbers.

Again in 2018, Xiaomi pledged to cap its web revenue margin for {hardware} at 5%. The corporate’s strikes to supply premium pricing for numerous merchandise have put this declare to query lately. Now, the corporate has posted its Q1 2023 monetary outcomes, and it’s making huge revenue numbers.

Xiaomi’s most up-to-date monetary outcomes present that its gross revenue margin throughout the board hit a excessive of 19.5% (up from 17.3% in Q1 2022). In the meantime, the corporate says its gross revenue margin on smartphones reached a excessive of 11.2% (up from 9.9% a 12 months in the past). The corporate additionally highlighted a document 15.7% gross revenue margin for its IoT and life-style merchandise, in addition to a 72.3% margin on web providers.

The hardware-related figures seemingly contradict the corporate’s 2018 declare that it could cap the revenue margin on {hardware} gross sales at 5%. “We are going to at all times maintain to an general 5% revenue margin throughout all of our {hardware} enterprise,” Xiaomi reiterated to Android Authority in 2021.

So does that imply Xiaomi’s 5% revenue margin cap is a factor of the previous? Effectively, a 2021 earnings presentation notes that if the web revenue margin for {hardware} exceeds 5.0%, the corporate will “return the surplus above 5.0% to our customers.” This echoes a earlier declare by the model.

The identical 2021 earnings presentation famous that the corporate’s {hardware} enterprise made lower than 2.o% web revenue in 2021. So it’s attainable that Xiaomi is developing with a loophole to tout a low revenue.

We’ve however requested Xiaomi whether or not this 5% revenue cap is a factor of the previous in gentle of those current earnings. We’ll replace the article if/when the corporate will get again to us.