Profitability and Margin Development#

Despite higher input costs and R&D intensity, Xiaomi sustained its gross profit margin at 20.92%, a slight dip from 21.21% in the prior year. Operating income rose to CNY 24.5 billion, up from CNY 20.01 billion, but the operating margin narrowed to 6.70% versus 7.38% in FY2023. Net income increased to CNY 23.66 billion, delivering a 6.47% net margin, effectively stable with the prior year’s 6.45%.

Table 1: Income Statement Snapshot (FY2022–FY2024)

Metric	2024 (CNY B)	2023 (CNY B)	2022 (CNY B)	YoY % Change
Revenue	365.91	270.97	280.04	+35.04%
Gross Profit	76.56	57.48	47.58	+33.17%
Operating Income	24.50	20.01	2.82	+22.45%
Net Income	23.66	17.48	3.93	+35.38%

Source: Xiaomi FY2024 Income Statement

The uplift in net income outpaced revenue gains, indicating disciplined expense management despite a 26% increase in R&D expenditure to CNY 24.05 billion. Selling, general and administrative (SG&A) costs rose to CNY 30.99 billion, reflecting expanded distribution channels and brand-building initiatives. Xiaomi’s R&D-to-revenue ratio of 6.50% (TTM) remains at the upper end among consumer electronics peers, evidencing its commitment to innovation in smartphones, smart home devices and software platforms.

Balance Sheet and Cash Flow Health#

Xiaomi ended FY2024 with total assets of CNY 403.16 billion against total liabilities of CNY 213.95 billion, yielding stockholders’ equity of CNY 188.74 billion. Cash and short-term investments stood at CNY 101.77 billion, down modestly from CNY 107.83 billion in FY2023. Notably, net debt shifted to CNY 2.35 billion, compared with a net cash position of CNY 3.81 billion in the prior year—a function of increased working capital absorbtion.

Free cash flow generation remained robust at CNY 32.0 billion, supported by CNY 39.3 billion in operating cash flow and CNY 7.3 billion in capital expenditures. A surge in receivables and inventory drove a CNY 32.1 billion working capital outflow, underscoring the need to monitor turnover ratios as the company scales its channel inventory. Xiaomi’s share buyback program consumed CNY 4.73 billion, reflecting management’s preference for capital return over dividend payouts.

Key Ratio Analysis#

Xiaomi’s key trailing-12-month metrics paint a picture of stable leverage and efficient capital use. The current ratio of 1.29x and debt-to-equity of 0.11x reflect conservative funding, while a return on equity (ROE) of 17.35% and return on invested capital (ROIC) of 11.57% illustrate strong profitability relative to invested assets. The company’s price-to-sales ratio sits at 2.87x, and the enterprise value-to-EBITDA multiple stands at 32.13x, in line with peers in high-growth consumer technology.

Table 2: Select Key Metrics (TTM)

Metric	Value
P/E Ratio (TTM)	34.13x
Forward P/E (2025E)	32.31x
EV/EBITDA (TTM)	32.13x
ROE (TTM)	17.35%
ROIC (TTM)	11.57%
Current Ratio (TTM)	1.29x
Net Debt/EBITDA (TTM)	-0.19x

Source: Bloomberg, Company Filings

The forward P/E multiple is projected to decline to 24.79x by FY2026, driven by earnings growth forecasts of 18.51% EPS CAGR and 19.63% revenue CAGR through FY2029. This anticipated de-leveraging of the valuation multiple may narrow the discount to key competitors as Xiaomi expands higher-margin services and software revenue.

Competitive and Sector Context#

In the global smartphone market, Xiaomi ranks among the top three vendors, competing on price-to-performance and ecosystem integration. The FY2024 results stand against SoftBank and other peers facing component shortages and macroeconomic headwinds. Xiaomi’s expanded IoT & lifestyle product range—covering smart TVs, wearables and home appliances—now accounts for over 20% of revenues, diversifying reliance on smartphone cycles.

While gross margin compression from 21.21% to 20.92% reflects component cost inflation, its relative stability contrasts with peers posting steeper declines. Xiaomi’s heavy R&D push aims to accelerate proprietary chip development and proprietary software layers, supporting higher-ticket devices and services uplift.

What This Means For Investors#

Xiaomi’s FY2024 financials demonstrate that top-line momentum and disciplined margin management can coexist amid intensifying competition and elevated investment levels. Strong free cash flow and a de-leveraged balance sheet underpin management’s flexibility to pursue strategic investments, share repurchases, or potential bolt-on acquisitions without compromising liquidity.

However, investors should monitor working capital dynamics as Xiaomi scales global channel inventories. Sustained R&D spending may weigh on short-term margins, even as it positions the company for higher-value hardware and services. Finally, the downward trajectory of forward valuation multiples suggests that upcoming upgrades in earnings estimates could anchor further multiple expansion.

Conclusion#

Xiaomi [1810.HK] delivered a landmark FY2024 with 35% revenue growth, stable profitability and robust cash generation, all while reinvesting heavily in R&D and returning capital to shareholders. Its strong balance sheet and diversified segment mix enhance resilience in a cyclical smartphone market. As the market pivots toward software and IoT ecosystems, Xiaomi’s financial strength and valuation de-leverage set the stage for sustainable long-term value creation.