China’s Xiaomi posted a sharp drop in profit for its second quarter and its slowest revenue growth as a public company, losing smartphone market share around the world.

The company’s net profit in the quarter fell 87 per cent year-on-year to CNY1.97 billion ($279 million), with total revenue growing 14.8 per cent to CNY51.95 billion. International sales increased 33.1 per cent to CNY21.9 billion.

Smartphone revenue in Q2 was up 4.9 per cent to CNY32 billion, due to higher ASPs (the ASP of its smartphones in mainland China rose 13.3 per cent from a year earlier and overseas it increased 6.7 per cent), as shipments were flat at 32.1 million units. It lost market share in China and globally. A year ago, smartphone revenue jumped 59 per cent year-on-year.

Revenue from models priced at more than CNY2,000 accounted for 32.3 per cent of total smartphone revenue.

The vendor is putting focus on new markets outside smartphones, as a way to secure growth.

IoT and lifestyle products revenue in the quarter increased by 44 per cent to CNY14.9 billion, accounting for 28.8 per cent of total revenue in the quarter, compared with 22.9 per cent in the same period in 2018. Revenue from the internet services segment grew 15.7 per cent to CNY4.58 billion in the second quarter.

The number of connected IoT devices (excluding smartphones and laptops) on its IoT platform jumped 69.5 per cent year-on-year to about 196 million units at end-June. Monthly active users (MAUs) of the Xiaomi Home application reached 30.4 million globally, while MAUs of its AI assistant rose to 49.9 million.

Although the company has invested heavily in AI and smart home devices to diversify its offering, smartphones still account for more than 60 per cent of revenue.