Xiaomi Inc, China's second-biggest smartphone vendor, more than doubled Internet services revenue in 2015 to about $564 million, an internal document reviewed by Reuters showed, but still fell well short of an internal target of $1 billion.
Lei Jun, founder and chief executive of China's most valuable startup, had set the $1 billion target last year. Like peers such as Apple Inc, Beijing-based Xiaomi is trying to sidestep a slowdown in the world's largest handset market by coaxing smartphone buyers to also purchase Internet services.
Xiaomi's Internet services revenue, which include games and mobile payment apps, surged 150 percent to 3.71 billion yuan ($563.94 million) from 1.48 billion yuan a year earlier, the internal document showed.
Within its Internet services business, Xiaomi recorded revenue from mobile games alone of 2.6 billion yuan in 2015, more than double 1.21 billion yuan a year earlier, the document showed. It didn't disclose total revenue for the company.
A spokeswoman for Xiaomi declined to comment on revenue for 2015.
The privately owned firm has grown rapidly since it started up in 2010. Xiaomi's last publicly disclosed valuation was $45 billion at the end of 2014, but that has since been questioned as the firm has struggled to maintain its early growth surge.
Xiaomi missed its global shipment target by 12 percent, selling 70 million handsets last year, when domestic rivals such as Lenovo Group Ltd and top player Huawei Technologies Co Ltd countered at home with similar Internet-only device sales campaigns.
"Given that Xiaomi's valuation has always been based on the company being more than a commodity handset manufacturer, missing their services revenue goal by such a significant margin is even more concerning than missing their handset target," said Ben Thompson, a tech analyst at Stratechery.
"That said, the company did increase their services revenue per handset sold, so they are moving in the right direction. It's just a question of if they can move fast enough."
The slowdown in China's smartphone market has left most players wavering, including Apple.
On Tuesday, it forecast its first revenue drop in 13 years and reported the slowest-ever increase in iPhone shipments as the Chinese market weakened.
($1 = 6.5798 Chinese yuan renminbi)
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