ZTE Corporation (0763.HK / 000063.SZ), a major international provider of telecommunications, enterprise and consumer technology solutions for the mobile internet, today has posted its financial results for the first three quarters of 2021.
According to the results, for the nine months ended 30 September 2021, ZTE has achieved operating revenue of RMB 83.83 billion, 13.1% higher than a year earlier. During the period, net profit attributable to holders of ordinary shares of the listed company reached RMB 5.85 billion, an increase of 115.8%, and net profit after extraordinary items attributable to holders of ordinary shares of the listed company amounted to RMB 3.34 billion, representing a year-on-year increase of 130.9%. Basic earnings per share was RMB 1.26.
ZTE’s operating revenue was up to RMB 30.75 billion for the third quarter of 2021, the highest single quarter in the past three years, representing a 14.2% year-on-year growth and a 14.6% quarter-on-quarter growth respectively. From July to September, the operating revenue from the company’s operator network has increased by about 25% quarter on quarter, and net profit attributable to holders of ordinary shares of the listed company reached RMB 1.77 billion, 107.6% higher than a year earlier. Net profit after extraordinary items attributable to holders of ordinary shares of the listed company for the third quarter amounted to RMB 1.23 billion, representing a year-on-year increase of 125.4%.
ZTE has been committed to optimizing its cost structure continuously, with its gross profit margin achieving sustained improvement. For the nine months ended 30 September 2021, ZTE’s gross profit margin rose by 4.7 percentage points on year-on-year basis to 36.8%. From July to September of 2021, the company’s gross profit margin reached 38.0%.
During the first nine months of 2021, the company kept strengthening its cash flow management, with its net cash flow from operating activities during the period growing by 188.7% year-on-year to RMB 11.17 billion, setting a record high.
During the period, ZTE insisted on high investment in R&D to continuously enhance its core competitive advantages and increase market shares. For the first nine months of 2021, the company’s R&D expense reached RMB 14.17 billion, making up 16.9% of 9-month revenue.
For the first three quarters of 2021, ZTE has stayed committed to becoming a “driver of digital economy”. To seize the opportunities of digital transformation, the company has been deeply involved in the large-scale constructions of 5G networks in China, while continuously optimizing its mainstream products for overseas markets and its major market landscapes. Meanwhile, ZTE has been focusing on innovations to continuously expand its government and enterprise business, consumer business, and the new businesses such as automobile electronics as well. The company continues to provide customers with the complete underlying cloud-edge-terminal products and solutions, helping them achieve the comprehensive transformation from CT to ICT enterprises.
In the first three quarters, ZTE’s three major businesses, including operator network, government and enterprise business and consumer business, have maintained a good growth momentum in both domestic and international markets.
In terms of operator network, ZTE, in the domestic market, has been dedicated to transforming itself from a mainstream supplier to a core supplier while continuously improving its capabilities in product innovation, R&D agility, and delivery efficiency. In the large-scale centralized procurement of operators during the second half of 2021, ZTE made great progress in key products such as high-end routers, high-end switches, servers, as well as storage devices. Meanwhile, the market share of key products such as 5G wireless, core networks, and transport networks continued to increase. With market opportunities like 4G modernization reconstruction, 5G infrastructure construction, fiber-based transformation of fixed networks, transport network upgrade, and upgrading of home broadband products, the company continued to optimize the landscape of its competitive products for healthy operation in overseas markets.
For government and enterprise business, ZTE has continuously increased investment in marketing, channels and solutions. Through the digital capabilities, the company has joined hands with customers and industry partners to empower thousands of industries. ZTE’s servers and storage products have been employed in multiple top enterprises in various industries including finance, internet, energy and beyond, and the revenue of those products doubled in the first three quarters of 2021. Specifically, as a leading financial-class distributed database, ZTE’s GoldenDB has been deployed commercially in the core systems of large commercial banks for over three years, and is expanding in other fields as well.
In the consumer business, ZTE has been making breakthroughs in branding, products and channels. With the comprehensive layout of a series of multi-form 5G terminals, ZTE has continued to promote the implementation of innovative 5G applications for individuals, families and industries. In the first three quarters of 2021, the revenue from mobile phones and home information terminals increased by about 40% and 90% year-on-year respectively. During this period, ZTE also released the new-generation under-display camera smartphone ZTE Axon 30, pioneering to update and iterate under-display camera technologies. Furthermore, the company launched the ZTE Axon 30 Ultra, featuring ZTE’s original Trinity triple main camera with quad array imaging system, and took the lead to add the computational photography.
The company’s 5G mobile internet products have cumulatively been sold in more than 30 countries and regions. Besides, for its terminals, the company, backed up with its core technologies and innovation capabilities, has also witnessed breakthroughs in cutting-edge technologies such as 5G radio frequency, human-computer interaction, computational photography and V2X cloud control platform, further facilitating the construction of the terminal “1+2+N” ecosystem.
With great commitment to new markets and new opportunities, ZTE has been exploring new paths for the company’s growth in the next strategy period by deploying innovative businesses such as automotive electronics and enterprise digitalization. In the automotive electronics business, the company positions itself as a provider of basic capabilities and core components of digital vehicles, as well as intelligent internet products and solutions, committed to providing customers with basic software and hardware platforms, chips and vehicle-road collaborative intelligent internet products related to automotive electronics. Currently, ZTE has entered into strategic cooperation with several car companies, including FAW-Volkswagen Automotive Co., Ltd. and SAIC-Volkswagen Automotive Co., Ltd.
Besides, ZTE has been enhancing its internal digital transformation, and created an all-cloud, intelligent and lightweight “Ultimate Cloud Company” in the fields of R&D, operation, office and production, further promoting the internal operation efficiency. Through its own digital practices, ZTE has a series of component-based digital products and service solutions, which are composed of cloud network infrastructure, data platforms, unified collaborative portals, digital office, digital production, digital security and others, thereby empowering all areas of enterprise operation.
While advancing the development of various businesses, ZTE regards the green and low-carbon strategy as one of its core development strategies for sustainable development, and is devoted to building a digital economic road with technological innovations.
While assisting operators in building a green and low-carbon digital foundation to achieve energy conservation and emission reduction in the ICT industry, ZTE employs digital innovations to empower the industry in enhancing energy efficiency. Also, the company， through green office, production and circular economy, adheres to green operation to realize its own low-carbon development, and then make contributions to the improvement of the social environment.
Moving forward, ZTE will keep solidifying its position with innovative initiatives to achieve the high-quality development. While ensuring the steady growth of core businesses, ZTE, through relentless innovations, will expand business boundaries, firmly boost digital transformation, and achieve a comprehensive improvement in operation efficiency and organizational resilience. Bolstered with its advanced product technologies and platform capabilities in the field of connectivity and computing power, the company, with an attitude of openness and win-win, will keep moving forward with industry partners to promote the development of the industry and the digital economy.