LENOVO GROUP: FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2024/25
Lenovo delivers strong first quarter of fiscal year — improves profitability across all businesses, makes significant progress in leveraging hybrid AI capabilities
Kyiv, August 16, 2024 — Lenovo Group Limited (HKSE: 992) (ADR: LNVGY), together with its subsidiaries (the 'Group'), today announced its first quarter results for fiscal year 2024/25, reporting improved profitability across all businesses and significant progress in leveraging hybrid AI capabilities. The Group's revenue grew 20% year-on-year to $15.4 billion, net profit increased 65% year-on-year to $315 million on a non-HKFRS basis[1], and the share of non-PC revenue increased five points year-on-year to an all-time high of 47%. The Group's results reflect its clear strategy and effective execution, its continued focus on innovation and operational excellence, and the benefits it derives from the globalization of its business.
Commentary by Yuanqing Yang, Chairman of the Board and CEO of Lenovo:
“The excellent start to our fiscal year was made possible by our clear strategy and its effective execution, our continued innovation and operational excellence, and our globalization advantages. Looking ahead, we are well-positioned and uniquely positioned with our broad AI product portfolio to lead the way in the hybrid AI era and capitalize on the tremendous growth opportunities across our business. I am confident that the combination of our strong performance and continued progress in hybrid AI will enable us to continue to achieve sustainable growth and improved profitability as the ICT market recovers.”
Financial performance:
Quarter 1 24/25 $ million | Quarter 1 23/24 $ million | Change | ||
Group revenue | 15,447 | 12,900 | 20% | |
Income before taxes | 313 | 228 | 37% | |
Net profit (an indicator of the profit of the company's shareholders) | 243 | 177 | 38% | |
Net income (non-HKFRS measure of profit to shareholders) [1] | 315 | 191 | 65% | |
Basic earnings per share (US cents) | 1.99 | 1.48 | 0.51 | |
Results of the first quarter of FY24/25:
- IDG delivered a strong quarter with double-digit year-over-year revenue growth to $11.4 billion and an almost 1-point improvement in operating margin compared to the same period last year.
- The PC business retained its market leadership both in terms of shipments and the number of activated devices, taking 23% of the global market and outpacing the market in terms of growth.
- The smartphone and tablet businesses demonstrated strong year-on-year revenue growth of around 30%, with premium smartphones growing faster than others.
Opportunities and sustainable growth:
- IDG is encouraged by the positive feedback from the first launch of AI computers in the Chinese market, as well as further global launches at IFA and Tech World later this year.
- The PC market is entering a new cycle of renewal thanks to AI PCs. This category is expected to account for more than 50% of the total PC market by 2027. The Group is confident that it will be the industry leader in terms of market share of next-generation AI PCs.
- IDG will continue to innovate across its portfolio to realize the full potential of the AI personal agent, while leveraging and deepening its strategic partnerships to create a more diversified portfolio and richer ecosystem.
Results of the first quarter of FY24/25:
Driven by the rapid growth of the cloud services provider's business, ISG generated record quarterly revenues of USD 3.2 billion, up 65% year-on-year, and reduced operating losses both quarterly and year-on-year.
The combined revenue from storage, software and services reached a significant growth of 59% year-on-year, setting a new record.
Revenue from ISG's NeptuneTM liquid-cooled servers grew by more than 50% due to their unique resiliency advantages amid the industry's growing demand for AI workloads.
Opportunities and sustainable growth:
ISG is focused on restoring profitability by optimizing the business model of the entire enterprise and small and medium-sized business segments. In particular, by simplifying portfolios and improving operations.
The company will continue to leverage its industry-leading liquid cooling technology to meet the growing demands of AI workloads, as well as new growth opportunities in the AI server and storage market.
In addition, ISG will continue to develop key strategic partnerships and build infrastructure platforms that support hybrid AI solutions.
IllustrationPhoto: Provided by Lenovo
Solutions and Services Group (SSG): High margins with double-digit growth, creation of enterprise AI
Results of the first quarter of FY24/25:
For the 13th quarter in a row, SSG has demonstrated double-digit year-on-year revenue growth, reaching USD 1.9 billion.
Operating profitability in the first quarter was over 20%, which strengthened its position as the Group's growth driver and source of profit.
The structure of revenues from managed services and project and solution services grew by three points year-on-year and accounted for 55% of SSG's total revenue.
For the 13th quarter in a row, SSG has demonstrated double-digit year-on-year revenue growth, reaching USD 1.9 billion.
Operating profitability in the first quarter was over 20%, which strengthened its position as the Group's growth driver and source of profit.
The structure of revenues from managed services and project and solution services grew by three points year-on-year and accounted for 55% of SSG's total revenue.
Opportunities and sustainable growth:
AI services are expected to grow almost twice as fast as the overall market and become the main driver of the IT services market over the next few years.
Lenovo will continue to integrate artificial intelligence into its key offerings, such as Digital Workplace Solutions, hybrid clouds, and sustainability solutions.
SSG will develop more AI-based services to evaluate the ROI of AI and its implementation for clients and accelerate their transformation.
ESG and corporate aspects
Achievements, announcements and important commitments in the last quarter include the following:
Lenovo's supply chain is recognized as one of the best in the world. The company was ranked tenth in the Gartner Supply Chain Top 25 for 2024, a list of global companies across all industries with the most exceptional supply chains. The well-known annual ranking evaluates companies on a number of criteria, including data on financial and corporate social responsibility, as well as public opinion.
Lenovo has appointed Doug Fisher as Chief Security and AI Officer, expanding his security responsibilities to include overall AI governance, including supporting the Group's corporate AI policy and working with the AI Responsible Use Committee.
In July, Lenovo announced the appointment of Dr. Tolga Kurtoglu as its new CTO, succeeding Dr. Yong Rui in further accelerating the group's technology vision and strengthening its leadership in AI. At the same time, the company announced the creation of a new division, the Emerging Technology Group, which will support and develop new technologies in the development stage and further commercialize them. The Emerging Technology Group is headed by Dr. Yong Rui.
Lenovo's supply chain is recognized as one of the best in the world. The company was ranked tenth in the Gartner Supply Chain Top 25 for 2024, a list of global companies across all industries with the most exceptional supply chains. The well-known annual ranking evaluates companies on a number of criteria, including data on financial and corporate social responsibility, as well as public opinion.
Lenovo has appointed Doug Fisher as Chief Security and AI Officer, expanding his security responsibilities to include overall AI governance, including supporting the Group's corporate AI policy and working with the AI Responsible Use Committee.
In July, Lenovo announced the appointment of Dr. Tolga Kurtoglu as its new CTO, succeeding Dr. Yong Rui in further accelerating the group's technology vision and strengthening its leadership in AI. At the same time, the company announced the creation of a new division, the Emerging Technology Group, which will support and develop new technologies in the development stage and further commercialize them. The Emerging Technology Group is headed by Dr. Yong Rui.
[1] The non-GAAP measure has been adjusted to exclude changes in the net fair value of financial assets at fair value through profit or loss, amortization of intangible assets resulting from mergers and acquisitions, merger and acquisition-related costs, gain on the conditional disposal of a subsidiary, impairment and write-down of intangible assets, and related income tax effects, if any.
