Good evening, ladies and gentlemen. Welcome to the Investor Conference Call hosted by Xiaomi Corporation regarding the company’s 2020 Third Quarter Results.

I am Steve Lin, Director of Corporate Finance and Company Secretary. Before we start the call, we would like to remind you that this call may include forward-looking statements, which are underlined by a number of risks and uncertainties and may not be realized in the future for various reasons.

Information about general market conditions is coming from a variety of sources outside of Xiaomi. This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for, company’s financials prepared in accordance with IFRS.

Joining us on the call today are Mr. Lei Jun, Founder and President of Xiaomi Corporation; Mr.

Alain Lam, Chief Financial Officer and Vice President of Xiaomi Corporation. To start with, Mr.

Jun will provide an overview of company performance and share strategic initiatives of the company. Mr.

Lam will then review the detailed and financial update that could-- Following that, we'll move on to Q&A session. I will turn the call over to Mr.

Jun.

Thank you. Thank you, Steve.

Hello, everyone. Thank you for joining our third quarter 2020 earnings call.

Before my presentation, actually, I want to take this opportunity to introduce our new member, Alain Lam, who is joining us about one and a half months ago. So, we're happy to introduce him as a new friend -- our old friend to you all.

I think many of you may know him well, but yeah -- say a few words.

Hey, everyone. Good to meet you all over the phone.

I joined Xiaomi on October 9th. It's been a very interesting seven weeks since I joined and I look forward to sharing more with you guys, both online and offline.

Thank you.

Thank you. Thank you, Alain.

So, actually, this quarter, we delivered another -- a very solid result across all our business segments as we relentlessly focused on the execution of our core strategies. In this quarter, we posted historical highs in both revenue of RMB72.2 billion and adjusted net profit of RMB4.1 billion up 34.5% and 18.9% year-over-year respectively.

Our commitment to our core strategy of Smartphone×AIoT continue to underpin our robust performance. I'm very pleased to share that our global smartphone shipments rose to number three in the third quarter of 2020, first time since 2014, actually is a record high market share is about 13.5%.

That's a record high in Xiaomi history. We continue to execute our dual brand strategy driving our success in the premium smartphone market, supported by our well received two premium smartphone models, including Mi 10 series, we sold more than 8 million premium smartphones as of October 31st, 2020, driven by a higher percentage of sales from our premium smartphone models, our smartphone ASP maintain an upward trend year-over-year, especially in Mainland China.

Our relentless effort to pursue technological innovation bolsters our remarkable achievements in the smartphone market. For example, one of our primary R&D achievements is the camera performance.

We achieved the number one position in DXOMARK two times this year. These achievements were made possible as a result of our dedicated team of close to 1,000 camera-focused engineers in nine global R&D centers across the world, from Beijing to Paris, to Tokyo to San Diego.

Another example of our efforts in technological innovation is Xiaomi's Smart Factory, which demonstrates major progress in our smart manufacturing. Xiaomi's Smart Factory is equivalent with an annual production capacity of a 1 million premium smartphones, not only serving as a mega levered [ph] lab that engages in the R&D of new materials, cutting edge technologies, but also as an experimental base for next generation manufacturing equipment and automated production lines.

This marks another step towards the elevating China's smart manufacturing capability as well as increasing manufacturing efficiency for all Xiaomi partners. Looking forward, we'll continue to invest in R&D, being at more front of the rapid changing technologies in smartphones on 5G era and key technological features that advance the smartphone industry as a whole.

Lastly, we have significantly strengthened our management team this year. Today, I'm very proud to introduce Mr.

Alain Lam and also -- we also have other Executive members joining us, including Adam [Indiscernible], including other members and also Peng Zhibin, joining us as our Chief HR Officer in the company. Actually, I may spend a few words to introduce Alain.

Alain actually is a seasoned capital markets professional with an in-depth understanding of the industry. With Alain joining the team, I'm sure he will bring his experience and expertise to his work with Xiaomi.

Now, I think it's time for Alain to discuss more details of our third quarter earnings results and the business updates. Alain please.

Yes, thank you, Lei Jun. Hello, everyone.

As I said before, I'm very honored to join this big family of Xiaomi and to share with you our latest results. As you may have read from our press release in the third quarter of 2020, we achieve a record revenue of RMB72.2 billion, which is up 34.5% year-over-year.

Adjusted net profit for the period also hit a record high of RMB4.1 billion, which was up 18.9% year-over-year. All of our business segments achieved robust growth, which demonstrates the strength and the resilience of our business.

I'd like to share with you some key updates and then walk you through each of our segments performance for the third quarter. The first point that I would like to highlight is our record-breaking performance in global smartphone shipments.

In the third quarter, we regained our top three position globally, with an all-time high market share of 13.5% and year-over-year growth of 44.6%, which was the highest among the top five smartphone manufacturers. In the quarter, we continue to execute our dual brand strategy for our smartphone business, which propels our successful entry into the premium smartphone segment.

In spite our outstanding performance following the debut of Mi 10 Pro, in August of this year, we launched Mi 10 Ultra, sourcing [ph] our most cutting edge technologies and the prices starting from RMB50 to RMB99, which has become highly sought-after upon its launch. Just as an illustration of how popular our premium models are this year.

In the first 10 months of this year, we have sold more than 10 million premium smartphones worldwide, which we define as retail price point at or above RMB3,000 in Mainland China or €300 in the overseas market. The third point I would like to talk about is our relentless pursuit of innovation, which is one of Xiaomi's core values and we believe that is becoming the most important factor in our industry.

One of the testaments of our advanced technologies lies in our camera development. We achieved the number one position globally on the DXOMARK camera score with three of our flagship products; CC9 Pro, Mi 10 Pro, Mi 10 Ultra.

Another area of our technological leadership is our fast charging technology. In October we debuted our 18-watt new wireless charging technology, which enables full wireless charging of a 4,000 mAh battery in 19 minutes.

We also try to make technological breakthrough in advanced manufacturing. As Mr.

Jun mentioned earlier, we introduced our Smart Factory in Beijing in August of this year. The factory has three major roles.

Number one, -- our annual capacity of one million premium smartphones. The transparent edition of our flagship Mi 10 Ultra was actually manufactured in this factory.

Number two, a lab -- a laboratory that engaged in R&D of new materials and cutting edge technology. And number three, an experimental base for our next generation manufacturing equipment and automated production lines.

Last but not least, we have strengthened our senior management team significantly by bringing in top talent with a wide breadth of seasoned experienced this year. We brought in Mr.

[Indiscernible] this year for our smartphone business and we brought in Mr. Peng Zhibin, who is acting as our Chief Human Resources Officer.

I'm very pleased and honored to be among this crew presented here and to work with -- together with them to drive the long-term value for all of our stakeholders. Now, let me further discuss our smartphone business segment.

In the third quarter, our smartphone business grew significantly reaching number three position globally in terms of smartphone shipments as I mentioned before. Our smartphone revenue reached a record high of RMB47.6 billion, which is up 47.5% year-over-year, with global shipments of 46.6 million units.

In the third quarter of 2020, our smartphone market share in Mainland China climbed to 12.6% from 9% in the third quarter of 2019, which represent an 18.9% increase year-over-year in terms of shipment, becoming the only one of the top five smartphone company to achieve positive growth in Mainland China, according to Canalys. Our overseas smartphone business also continued to experience robust momentum this quarter.

Driven by market share extension across all the major markets, we ranked top three in the overseas smartphone market with a market share of 13.8%, up 54.1% year-over-year. Excluding India, where we have been the number one smartphone brand for 13 consecutive quarters, our overseas smartphone shipments almost doubled on a year-over-year basis.

We further expanded our advantages in the online channel in Mainland China. Our online smartphone market share increased to 25.7% in the last quarter from 18.5% in the first quarter of this year.

During the Single's Day Shopping Festival in 2020, we ranked number one in sales volume among all Android smartphone brands on Tmall.com, JD.com, and Suning.com. If you look at our ASP, our smartphone ASP for the quarter, increased by 1.6% year-over-year, with Mainland China smartphone ASP increased 14.7% year-over-year, which was driven by the higher proportion of sales from our premium smartphone.

ASPs -- smartphone ASP in the overseas market decreased slightly due to a shift in our product mix. In particular, our entry level Redmi 9 series has been extremely popular and we sold more than 14 million units worldwide as of the end of September.

We continue to expand our product portfolio at different price points. First, Mi 10 series including Mi 10 Ultra, Mi 10 Pro, priced at RMB4,000 and beyond further strengthening our position in the premium smartphone market.

Second, our Redmi K30 series and Redmi 10X 5G Series priced between RMB1,000 to RMB3,000 support our devotion to making 5G technology accessible to the mass market. And third, to fulfill the need of global consumers amidst macro-economic uncertainties, we also introduced highly competitive entry level smartphones including the Redmi 9A series with pricing starting from RMB499, setting a new standard for entry level smartphones worldwide.

We will continue to execute our dual brand strategy to strengthen our position in the premium smartphone market, while also making 5G technology accessible to the mass market. Now, let's move on to the IoT and lifestyle products.

Built on our Smartphone×AIoT strategy, our large user base and our leading position in IoT market, IoT and lifestyle product revenue reached RMB18.1 billion in the first quarter of 2020, up 16.1% year-over-year, showing significant recovery from the pandemic. As the global leading consumer AIoT platforms, we continued to expand our global IoT user base this quarter.

The number of connected IoT devices as of the end of September reached 289.5 million, up 38.8 -- up 35.8% year-over-year. Moreover, the number of users who have five or more devices connected to Xiaomi's IoT platform reached 5.6 million this quarter, up 59% year-over-year.

Our AI assistant had 48.4 million MAUs in September, an increase of 35.5% year-over-year. Finally, our Mi Home app MAU reached 43.1 million increasing 34.2% year-over-year.

We also continue to lead in the smartphone -- sorry in the smart TV industry as our global shipment of our smart TV reached 3.1 million units in the third quarter of this year. This quarter also marked the seventh consecutive quarter that Xiaomi TV shipments ranked number one in Mainland China according to ADC.

As the market leader in smart TVs, we continue to innovate and make leading technologies accessible to the market. In the third quarter, we introduced a number of premium TVs within the Mi TV Master series, further solidifying our position in the premium TV market.

These products improved the debut of the Mi TV Lux transparent edition, which was the world's first mass produced transparent TV. In September of 2020, we launched the Mi TV Lux 82 inch and the Mi TV Lux 82 inch Pro.

The Mi TV last 82 inch Pro was priced at RMB49,999 and introduce a cutting edge mini LED backlight technology that enriches images with incredible detail. The Mi TV Luv 82 inch has a great price to performance ratio among all 4K TVs, with prices starting from RMB99,999.

One of the major drivers of our IoT business this quarter is the overseas market. In the third quarter of 2020, revenue from overseas IoT and lifestyle products increased by 56.2% year-over-year, driven by our leading position across major overseas IoT product.

Notably, overseas revenue from certain key IoT categories already surpassed in Mainland China in this quarter, such as wearable band, electric scooters, and robot vacuum cleaners. Given these products' huge growth potential, we intend to leverage our highly efficient new retail channels and large user base to introduce more popular IoT products in the overseas markets.

Let's move on to the Internet services segment. In the third quarter, our Internet services revenue reached RMB5.8 billion, up 8.7% year-over-year.

Revenue from advertising hit a quarterly record high of RMB3.3 billion, which was up 13.7% year-over-year due to the enhancement of our monetization efficiency and a strong growth in overseas advertising revenue. Our overseas Internet services revenue also reached historical high, which was another driver for Internet services revenue growth.

Our user base also grew significantly in the third quarter. Our global Mi UI MAU increased 26.3% year-over-year for record high of 368.2 million, 109.4 million UI MAU in Mainland China.

Meanwhile, the MAU of our smart TV and Mi Box increased by 49.9% year-over-year to 38 -- 35.8 million, with pay subscribers reaching 4.2 million. I'd like to add a bit more color on our rapid growth in overseas Internet services.

In the first quarter, overseas Internet revenue increased by 75.6% year-over-year and accounted for 12% of the total Internet services revenue. This growth was boosted by increasing overseas smartphone sales volume and the expansion of our overseas user base, especially in Europe and in other developed markets.

We also continue to enrich our overseas service offerings. For example, our Mi Music app ranked number one on Xiaomi smartphones by DAU among all music app in India, in Indonesia, and in Russia.

Next, let's talk about our overseas business. In the third quarter, revenue from the overseas market reached RMB39.8 billion, up 52.1% year-over-year, again marking a quarterly record high in overseas revenue.

We continue to hold our solid market position in major markets worldwide. According to Canalys, in the third quarter, our market share ranked number one in 10 markets globally, top three in 36 markets, and top five in 54 markets.

We're very proud to report for the first time, our smartphone shipment ranked top three in Western Europe with a 13.3% market share and year-over-year growth of 107.3%. The surge in Western Europe was driven by continued robust performance in several key countries.

In particular, we ranked number one in Spain for the third consecutive quarter with a 33.9% market share in that market. We ranked number two in Italy, number three in France, and number four in Germany, with year-over-year growth of over 100% in each of these markets.

We continue to expand our overseas online sales channels, first through our own mi.com which is now available in 32 countries and regions. And second through various e-commerce platforms, such as Amazon, Lazada and [Indiscernible].

In the first nine months of this year alone, we shipped over 10 million smartphones via online channels in overseas markets, excluding India. We are also making solid headway on expanding our overseas carrier channel.

We partner with 50 carriers, covering over 100 of networks in 50 countries. As a result, in the first nine months of 2020, our smartphone shipments via carrier channel grew by more than 200% year-over-year.

Our carrier channel market share in Western Europe doubled to 4.6% in the first quarter of 2020. We obtained leading market share in multiple major areas in Europe.

We believe we are very well-positioned to capture the huge growth potential in the overseas market with this rapidly growing carrier channel market share. Next, I'd like to go through our financials.

As I mentioned before, in the third quarter, our total revenue reached a record high of RMB72.2 billion, up 34.5% year-over-year and 44.8% quarter-over-quarter. Robust topline growth was mainly driven by our strong momentum in the smartphone business, as well as very encouraging performance in the IoT and Internet services segment.

Despite a stagnant global smartphone market, largely due to the impact of COVID-19, in the third quarter, our revenue from smartphones was 46 -- RMB47.6 billion, up 47.5% year-over-year and 50.5% quarter-over-quarter. Revenue from IoT and lifestyle products grew to RMB18.1 billion, up 16.1% year-over-year and 18.8% quarter-over-quarter, while revenue from Internet services reached RMB5.8 billion, up 8.7% year-over-year and slightly decreased by 2.3% quarter-over-quarter.

Our overall gross margin was 14.1% in the third quarter, slightly lower than the previous quarter due to the stronger growth in our smartphone business. Looking at the breakdown by segments, gross margin for our smartphone segment remained steady at 8.4% this quarter.

The gross margin of our IoT and lifestyle product segments increased to 14.2%, mainly due to the strong growth in our IoT products with high gross margin and the improvement in our smart TV gross margin. The gross margin of our Internet services segment was 60.4% in the third quarter, largely stable compared to the last quarter.

While we continue to step up investments in brand building and R&D, our strongest sales performance gave us significant operating leverage. As a result, you can see that our operating expense ratio decreased to 94% in the third quarter compared to 11.2% in the second quarter of this year and 10.1% in the third quarter of 2019.

As a result of all this, we have seen a steady growth in adjusted net profit. In the third quarter of 2020, our adjusted net profit reached record high of RMB4.1 billion, which was up 18.9% year-over-year.

Our adjusted net profit margin was 5.4 -- sorry 5.7% in the quarter. At the same time, we continue to manage our working capital in a very efficient way.

Our inventory turnover days decreased to 54 days this quarter from 72 days in the second quarter. Our cash conversion cycle was very healthy at negative 22 days.

We have strong cash flow in the third quarter. Now cash resources reached RMB75.5 billion RMB as of September 30th, 2020.

The net cash generated from operating activities reached RMB4.3 billion this quarter. Finally, we continue to see strong growth in our investment performance with an increasing number of our investment companies going public in both the Mainland China and overseas.

Most recently was Ninebot's successful listing on the Science and Technology Innovation Board of The Shanghai Stock Exchange. As of the end of last quarter, we invested in over 300 companies.

In the third quarter, we generated an after-tax net gain of RMB713.5 million from the disposals of investments. In fact, we have probably seen that we have been generating realized investment gains consistently in the past few quarters.

As of the end of last quarter, the total amount of our investments are reflecting mark-to-market for the listed companies reached RMB50.6 billion, which equals to HKD2.4 per share. We will continue to leverage our group resources and advantages to empower our ecosystem companies and transform more manufacturing industries globally.

With that, this concludes our prepared remarks. We shall now open the line for questions.

Thank you, Mr. Lam.

We'll now proceed to the Q&A session. Please limit your questions to maximum two so we can allow more investors to ask their questions.

Thank you.

Thanks Alain, Steve, thanks for taking my question. My first question is about the -- in response to the Honor's [Indiscernible], you were independently going forward, what's Xiaomi's strategy to compete with the separated brand, do you see this an opportunity to beat your peers?

My second question is about Internet business. In the second quarter, we noticed that the gross margin declines were loss due to my strong gaming which has a lower gross margin, but this quarter we see that Intel and also gaming mix likely to decrease.

What's the driver behind to see these gross margins staying relatively stable sequentially? Or should we expect when, like the mix to improve going forward?

And the Fintech, what is the strategy for the Fintech going forward because of the some kind of like regulatory change. And also, we see that you're rebranding the business.

So what's the strategy going forward in that? Thank you.

Okay. Thank you.

Thank you for the question. So, actually, we heard the news from the media.

So, actually, Xiaomi was born from the very competitive environment back to China 10 years ago. So we are -- we have a strategy to expand our business, not only in China, but to many, many different countries in the markets.

I believe we have a right strategy. The strategy, we will focus on the strategy we are having now, which is number one from the product side.

So we got the Smartphone×AIoT strategy focused two major areas. Smartphone as a cornerstone, but also the AIoT, millions of consumer IoT products in our system so that we can have a multiplier effect, we'll do that.

Also, we will continue to invest into technologies like a camera, like a chargers, continue to invest into the technology area, so that we can have the ability to keep inventing new things to offer – continue to offer a good product not only for China domestic market, but for the overseas market as well. I think we will focus on those strategies.

We will focus on the growth potential, not only in China, but also in many different markets like Europe. As Alain just mentioned, we have achieved a significant growth in the last quarter, actually, since early this year actually we see the continued growth of our business in many, many markets.

European market is one good example, and also Latin America, and also Southeast Asian countries, while we are keeping our position in Indian market. So we are very confident, we will grow market share in those markets.

And also, we will definitely monitor any market dynamics to us as a very normal environment for us. I don't see any change in our strategy.

We should focus on the product, focus on the customers and also focus on the channel -- channels, online channel and offline channels. So this is one -- this is our position.

And then regarding -- a question regarding on the gross margin rates, I think you asked about, like with Fintech and gaming are growing slower this quarter, other than our gross margin improved, because traditionally, Fintech and gaming were lower gross margin, I think this was a good question. So, in the past few quarters, I think we explained that Fintech did have a negative impact to our gross margin, because of the regulatory environment together with COVID-19; we have additional credit allowance in the past quarter.

We have been actively controlling the risks since then. And we have the close the following all the compliance -- compliance all the regulations on them, On the sort of the credit perspective, is on the upward trend.

But I think this quarter we also talk about for gaming, because of the change in the customer mix, because gaming gross margin was lower this quarter. So, I think with all these factors together, the gross margin was flat compared to last quarter.

We think the current gross margin reflect the current state of the business situation across each business segment Internet service. Going forward, depending on the product mix on how to -- so I think that's the answer to your gross margin question.

Overall, Fintech, we believe having a stronger regulation is beneficial for the development in that entire industry. Since the beginning of our business, we have been closely following all the regulations; we have all the necessary licenses in related finance.

We have been strictly following all the no matter interest rate on the different type of those relationships. So we believe internet, finance constantly to be very good business for us long-term.

And in the additional to and we talked about in the announcement, the current focus in addition to retail finance, consumer finance, we're also actively to believe Supply Chain Finance, which we believe leveraging or large supply chain relationship and our technology capability should offer good growth prospects going forward.

Thank you.

Okay. Thank you for taking my question.

So I have two questions. One is about the, your future room of growth in the smartphone business.

So you outperform the market quite a lot in both in China and overseas. So -- and achieve a very good muggish [ph] in a few European countries.

So looking forward where you think your major room of growth? And what is the reasonable market share you plan to achieve including Europe and in South America?

This is my first question. And the second question is that we see that the internet business is roughly Q-on-Q flat at least since the beginning of this year.

So how we should look the internet business going forward? And what's the correlation between the growth of your MAU and growth of your smartphone user base versus the internet?

So how or the other way how many quarter we need to wait before we can see strong growth on internet? Thank you.

Yeah, thank you. Thank you for the question.

The first question is regarding to the future growth, the trend. So, actually, I see very big room for us to grow.

Although, we have achieved a very high growth rate in a quarter three of 2020. Given Europe as an example, right now, although, we reached the top three position in European market.

Actually, if you look at the market share, we are still in the 12%, 13% range. So that means we have a big room to grow even in Europe, right?

Right now we are -- another example is that right now, we are number one in Spain, right? Our market share in Spanish smartphone market in Q3 was about 34%.

It’s a very high percentage. But compared to other regions, other countries, we are still below 20%, or in the 10%, 10-plus-percent.

So, that's a huge growth areas. That's Europe.

So -- and you’re talking about the Latin American market, it’s huge market, even bigger markets space for us to grow. Right now, we are only in the -- maybe -- in some countries we are 10%, some countries maybe below 10%.

We see a huge potential. We are in Latin American market only a year, only one year.

So we just established our partnership in the offline channels, online channels and carrier channels as well. So we keep investing in those markets.

So we see -- also see a very big potential to grow. Indian market, we are -- right now we have -- we are number one for I think 13 quarters already.

So we will -- we see in Indian market actually, there -- there's about, I think, 130 million to 150 million smartphones every year. But the particular growth areas at the same time, actually we have -- the Indian market, you can also see another 150 million feature phones.

So that means, we have a lot of work to do, right? We should continue to innovate to make a very cost effective high-performance smartphones to serve the Indian consumers.

We should go build the channels down to the countryside, the villages to serve the people there so that they can be equipped with a mobile internet so that we can -- we hope we can change their lives and help them to have a better life with the access to the internet. This is our plan.

So overall, I think we have -- we're very, very optimistic about the future growth for the next maybe five years.

Yeah. And the second question regarding the flat fee on internet service revenue, right.

So we talked about the reason for the slower revenue growth this quarter was mainly one because we're actively controlling the risk -- capacity. And second is because of the gaming business.

And third is as [Indiscernible] mentioned, we see a very, very good momentum and a strong potential for user again. So I think we will focus more on user acquisition, then resulting on the monetization.

We will focus more on user experience to gain more users. But going forward, we do see a lot of growth prospects for internet business.

I think first, as you grow your shipment, you will start to accumulate more users. So with that, we see a very strong potential for that.

And second, talk about this quarter our oversea internet service revenue grew rapidly. Overseas internet revenue grew over 75% year-on-year this year and accounted for about 12% of our internet service revenue already.

And third, as we increase our shipment in the higher and premium smartphone market, based on our data, we do see smartphone advertising, smartphone internet service revenue on high-end phones as much higher than normal. So that would naturally also drive the ARPU.

And fourth, we didn't talk much, but this quarter the TV internet service revenue was also very strong. As we continue to be number one in China in terms of smartphone shipments, we are accumulated more and more users.

On the same time, we are improving our monetizing capability, so together we do see a very strong potential for TV internet service. We believe all of these will give us a very large growth potential for internet service business.

But I think at the moment, as [Indiscernible] mentioned, I think focus is really on the user acquisition.

Yes, user acquisition is the most important thing. We don't even started the monetization in the overseas market yet.

But you can see from our report, actually the internet revenue from overseas market grow very, very fast. But we definitely will focus on the user acquisition in the coming years.

Okay. Thank you very much.

Thank you for taking my question. My first question is about the China MAU progression, which has dropped slightly on a quarter-by-quarter basis, even though your market share has gained quite significantly.

And that is also not made progress when we look at it on a year-on-year basis. So how do we co-relate or how do we draw the correlation between customer improvement that we're seeing, and the fact that this line has not improved over the same period of time, despite the significant market share gains we've seen with your smartphone volumes?

That's my first question. The second question concerns, how you think of market share on a worldwide basis as well as back at home.

If you could just take us through, so you've got a peak market share in Spain in the 30s, you've got very high market share in India. And overall, you've done very, very well in many countries, how do we go from there to looking at your market share in the countries where you don't have that market share and going back to China overall market share as well as 5G market share.

So if you could just give us a qualitative assessment of how you think through those points that would be fantastic? Thank you very much.

Thank you. Regarding to your first question is about the MAU, right.

So actually, this has stabilized, the MAU -- our MAU is stabilized, is around 110, 108, 109, right. But the little difference is because of the time of the way you do the calculation of statistics, there's a time difference cost, but not the number difference, so stabilizes.

We will continue to drive the local domestic China market share. So actually, China is a very unique market.

So we are growing our market share online. But China has a huge offline market.

And we need to build our stores, not only the Tier 1 cities, but we have to get into the Tier 3, Tier 4, Tier 5, Tier 6 cities, it takes time for us to build our Xiaomi stores, our authorized stores and also other stores have covered those rural areas. This takes a little time, but we will continue to drive the market share growth in the online channel.

But at the same time, we have a plan to improve our offline coverage starting from this year. So it takes a little time.

But in the overseas market is more complicated. Every market is different.

So for example, in the European market, European markets, mainly, this is the offline market, online only represent, I think less than 10%. So -- but we're still working very closely with the online channels.

Amazon, in many countries, cities in France for example, and also other online channels in Europe, use those channels to do a lot of marketing a lot of communications with our fans and customers. But at the same time, actually, we invest a lot in that in building the partnership with the traditional offline channels, which are the major channels for the smartphone sales.

For example, a media market, media market is the largest, maybe the largest smartphone retail channel. So we have built a very, very strong partnership with the media market, in many, many European countries, from Germany, to Spain, to Italy, to many other countries, there are several others like a media market.

So we also build our Xiaomi authorized stores. In overseas market, we have I think over 700 stores.

So across the different regions, Europe, as I mentioned Europe is offline driven market. But if you talk about the Indonesia market, it's a -- thousands of the mom and pop stores, it's a IR market, you have to cover those hundreds of thousands of very small stores across the nation.

So we use another strategy to cover those markets. We see very good growth from Indonesia market in Q3 that's the result of building a model to cover the IR channel in Indonesia.

Indian market is similar, but Indian market has a very strong online channels and offline channels online channel close to 50%. So you need to have a more balanced approach, if you want to be successful in India.

So it's a very different from country to country. I think we know we're through -- I think three years after we understand.

We learn a lot from different models. So I think we'll continue to invest into different types of market.

Right now, we have established a system to cover the major market, including Europe, Latin America, Middle East, and Southeast Asian countries, and India. So yes, we are -- we are very optimistic or confidence for the future growth, especially for the next two to three years.

Thank you.

Yes. Hi.

Thanks for taking my question, and congrats on the good results. First of all, if you could give a little bit more color on the Fintech business, now that you are kind of reconfiguring the business, how should we think about the extent of some of credit pressures, etcetera?

I think Alain you mentioned that some of the credit pressures are starting to kind of bottom out as we look at the next year or so, on the Fintech side. How do we think about the thrust of growth?

Is it going to be still mostly consumer lending related? Or do we see more areas on the digital banks on the other areas like Supply Chain Finance, et cetera, start to become more prominent?

That's my first question. Second question, I know that it is early days, but since you call out the overseas revenues for internet for the first time, and it's not a small number, either 12% of your overall numbers.

Could we talk a little bit more in terms of the avenues of monetization that we are using in these overseas markets, given that we don't really have absolute presence in many of these markets, given the prevalence of global Playstore? Thank you.

Yes. Why don't -- hey, Gokul why don't take the first question on the Fintech business?

As we announced about a month ago, with our new Fintech strategy, we are focusing on three areas, consumer finance being one of them. We are increasingly going into the supply chain financing, as we see a lot more kind of positive, regulatory headwinds in that market.

But more importantly, we do believe we have very unique advantages in that area. And the third area is technology transfer, obviously, to use our technology to enable some more financial institutions to get into the supply chain financing side.

So, on the consumer finance, as you have seen in our -- in our results, and in the past two quarters, we have been changing the loan balance, which -- we're seeing the light at the end of the tunnel, I think we're seeing improvement in that business, in the past few months. Supply chain financing is obviously an area that we are going to focus on, again, given the fact that we have pretty unique advantages in that area, given that a lot of them are either our suppliers, or suppliers of our 12 suppliers.

So we've seen -- we've seen good data of their production in that area. And also that, a lot of them are rely on working capital to put their businesses, which we think we can help the process become more, more efficient using data, and using our technological advantage, technology advantages.

So that's an area that, I think you'll hear more from us in the future about the progress in that area. I think that's something that we are -- we are -- we are quite focusing on.

And then the third stage is obviously as the technology become more advanced, as the system become more advanced, we also want to export that technology to enabled our more, more financial institutions to join the game there. So that's the -- that's the Fintech -- that's the Fintech business.

On the overseas internet businesses, yes, of course, of course, we don't have the advantage of some of the bigger players in terms of App Store, and what not, but we do have significant revenue coming from advertising, as well as from preload in that area at this point in time.

Actually, we haven't started the monetization business from the -- from the overseas marketing yet. But we have seen a very good result for some of our apps.

So for example, the browser in some of the regions, our browser -- our browser has a higher MAU, than Google's Chrome. So that's a good signal for us.

So right now, we are focused still on the user acquisition, number one. Number two, we want to -- we want to improve the user experience so that we can -- we can keep the customer in our ecosystem.

So we continue to improve the user experience. So we continue to add to the user experience between smartphones and our IoT products.

So that's why we launched several features, Mi Share right. With Share, you can easily use your smartphone to control your IoT devices, for example, music, right, you're getting closer to the smart speakers, AI speakers, your music will automatically make a transfer from your smartphone to the AI speaker, and vice versa, right?

This -- the music in the -- in your home can easily transfer into your smartphone when you go out. So, this kind of feature and also we were using another technology kind of technology called UWB.

So with your smartphone, you can easily point your smartphone to your TV, and then you can easily turn your smartphone to a controller or you can transfer your content from your smartphone to the TV, the similar feature. So, we will continue to improve the user experience so that we can keep the customer.

And then we will think about the monetization in the future. But although, we have not started, but still see a very good trend for the internet, overseas internet revenue growth.

Yes.

Got it. Thank you.

Thank you very much both Lei Jun and Alain.

Hi, good evening, Alain and Lei Jun. Thank you for taking my question.

So my first question is about your long-term sales momentum. Given we do see the second wave also wave COVID-19 across the globe.

So do you see any sales impact in the past two months, especially in Western Europe? And, and also supply chain indicating some auto slowdown in Q4 in general, for Android 10.

So, just wondering, if you really do see some similar type of seasonality. This is first question.

And second question is about the your IoT GP margin because we reached a record high 14% GP margin in the segment, do we see -- it should be a new norm to learn to project your GP margin in IoT or they should be turned to low-teens in the coming few quarters? Thank you.

Okay. I can say for the first question, I can say like that, the COVID-19 definitely impacted our business in 2020, especially in the first quarter and the second quarter.

We see -- we have seen the recovery from the third quarter. But it's definitely impact.

But as I mentioned several times in the past, actually smartphone business kind of a resilient, right, people would need a smartphone, especially in the difficult time period. So demand is there.

But we are that -- we are facing several challenges despite the COVID-19. For example, the supplier shortage -- supply shortage is the one and the COVID-19 definitely is another one.

So we are closely monitor the status of the pandemic in Europe, in India. We hope that personally hope, actually, as a little optimistic, because the vaccine is almost ready.

But this winter is going to be, I hope is going to be the last winter for the pandemic. So, we remain optimistic for the next year.

As Alain just mentioned, we see the light at the end of the tunnel, right. So we are working very hard.

We try to help in the Q1 -- try to help to solve the problem. The pandemic issues in China, in Wuhan and also we have done some things -- for India, even European countries with our technology and our effort.

I think it will be over, it's a near term thing. Yes.

The second question --

IoT margin -- as for the IoT gross margin, right. So I think Xiaomi we are having a very strong position in IoT, the whole IoT industry.

We are having a lot of leadership in China IoT market across a lot of different categories. We are also expanding over the applied IoT market.

So while we're doing this, you will see a lot of the products we are growing right now. For example, in the small home appliance category, these naturally have higher gross margins than some of the products we traditionally have, for example, like Notebook and TV.

So I think on the product mix side this is pointing to benefiting on the gross margin. And the other number we share on this quarter is we're oversea IoT business also grew rapidly over the IoT tend to have higher gross margins than in Mainland China.

So with that, also a benefit for gross margins, but overall, I think from IoT, again, it's very similar to what we talked about smartphone, I think is still relatively early in terms of the industry development. For us, the key is still getting used to improving the experience and to gain more user as opposed to really optimizing the gross margin.

But I think despite not accurately doing so, because of the shipping product mix and the geography, it helps us on the gross margin.

Thank you very much.

Due to the time constraint, we will now take the question from the last investor.

Yes. I want to say thank you.

So, we are happy to achieve the good result. But we are actually -- we are working very hard for to prepare for the Q3, and also more importantly the year 2021.

There are challenges down the road. I think the supply shortage is this one of the issues near term.

We're working very hard on that. And also we continue to hire more engineers to send more the people to different market and region so a lot of work to do.

I want to take this opportunity to thank everyone in the call for your support, your understanding, and your questions to help us to help us to improve in many, many areas. Thank you.

This concludes the conference call today. Thank you everyone again for joining us.

You may now disconnect. Thank you.