Xiaomi Unveils Big Loss as It Prepares to Hawk IPO to Investors

Xiaomi revealed it lost more than $1 billion in the first three months, as the Chinese smartphone maker prepares for the largest IPO since 2014, according to Bloomberg.

The company has begun gauging demand for a first-time share sale intended to fuel its expansion beyond China and bankroll the development of devices and media services. It also published its first prospectus for the sale of China Depositary Receipts in Shanghai on Monday, saying it plans to use about 40 percent of the proceeds to enlarge its global footprint. Xiaomi reported a 7 billion yuan ($1.1 billion) net loss on revenue of 34.4 billion yuan in the first quarter.

Xiaomi is one of the most hotly anticipated Hong Kong coming-out parties in years, taking advantage of new regulations aimed at attracting major homegrown technology companies to Hong Kong and China. The company, led by billionaire co-founder Lei Jun, is said to be seeking about $10 billion in an IPO that could become the world’s largest first-time share sale since Alibaba listed in the U.S. in 2014.

“In 2018, the company plans to enter or consolidate positions in Southeast Asian and European markets,“ Xiaomi said in its Chinese prospectus, which didn’t mention a fundraising target. The company opened its first store in Paris last month, while Senior Vice President Wang Xiang has said multiple times the company is looking to sell smartphones in the U.S. and compete against Apple.

The company saw sales from more lucrative smart-home devices and internet services grow as a proportion of overall revenue in the first quarter. Roughly 31.8 percent of Xiaomi’s revenue in 2018’s first three months came from products such as air purifiers and scooters and online services such as mobile apps, according to the filing. Those two segments contributed 29 percent of sales in 2017. Its biggest business, smartphones that barely make a profit, declined in importance to just 67.5 percent of sales from more than 70 percent in 2017. Xiaomi said it made a profit excluding one-time items of 1.038 billion yuan in the first quarter.