Lenovo Group: Second Quarter Financial Results 2024/25
Lenovo delivers robust, sustainable, and accelerated growth - focus on hybrid AI driving market differentiation and industry leadership
HONG KONG--(BUSINESS WIRE)--November 14, 2024--
Lenovo Group Limited (HKSE: 992) (ADR: LNVGY), together with its subsidiaries ('the Group'), today announced Q2 results for fiscal year 2024/25, reporting significant increases and growth in net income, year-on-year revenue growth for the 4th consecutive quarter, and strong double-digit year-on-year revenue increases from all its business groups. Group revenue increased 24% year-on-year to US$17.9 billion. Net income was up 48% year-on-year to US$404 million on a non-Hong Kong Financial Reporting Standards (non-HKFRS)([1]) basis, and non-PC revenue mix was up five points year-to-year to 46%. The Group's results reflect its clear strategy, operational excellence, investment in R&D, innovations in hybrid AI, and global footprint.
The Group's hybrid AI strategy and years of continuous investment in R&D and innovations are paying off, with its first phase of AI PCs, launched in China in May 2024, already reaching double digit share of its total notebook shipments in the China market. Recent launches of AI PCs for the global market with Lenovo AI Now have also been received positively. For enterprise AI, the Group is leveraging its full-stack hybrid infrastructure as well as Lenovo Hybrid AI Advantage to capture growth opportunities. This relentless focus on AI innovation as well as investment in R&D (up 10% year-on-year to US$548 million) is firmly establishing the Group's market differentiation and industry leadership.
Looking ahead to growth, Lenovo will drive continued innovation in hybrid AI to further accelerate growth and profitability increases and is optimistic its current momentum will continue through the rest of the fiscal year.
Lenovo's Board of Directors declared an interim dividend of 8.5 HK cents per share.
Chairman and CEO quote -- Yuanqing Yang:
"Last quarter, we achieved strong, sustainable, and accelerated growth, marking another period of revenue expansion across all business groups. This significant momentum is driven by our clear strategy, innovation investment, operational excellence, and global presence, as well as our commitment to hybrid AI, where we are further strengthening our market differentiation and industry leadership. As we look ahead, we are confident that our ongoing innovation advancements in hybrid AI will continue to accelerate growth and profitability, propelling us forward for the rest of the fiscal year."
Financial Highlights:
Q2 FY 24/25 Q2 FY 23/24
US$ millions US$ millions Change
---------------------------------------- ------------- ------------- ------
Group Revenue 17,850 14,410 24%
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Pre-tax income 473 358 32%
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Net Income (profit attributable to
equity holders) 359 249 44%
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Net Income (profit attributable to
equity holders -- non-HKFRS) ([1]) 404 273 48%
---------------------------------------- ------------- ------------- ------
Basic earnings per share (US cents) 2.92 2.09 0.83
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Intelligent Devices Group (IDG): Significant growth and leading profitability, accelerating in personal AI
Q2 FY24/25 performance:
--
IDG delivered a strong quarter of double-digit year-on-year revenue
growth with revenue of US$13.5 billion, up 17% year-on-year.
--
The PC business expanded its market leadership to almost 24% market
share, widening the lead to the number two player to four points and with
AI PCs reaching double digit share of total notebook shipments for the
Group in the China market.
--
Both the smartphone and tablet businesses delivered high double-digit
revenue growth, up 43% and 19% year-on-year respectively, with
hypergrowth for smartphones in North America, EMEA and Asia Pacific
markets.
Opportunities and Sustainable Growth:
--
The PC market is expected to steadily recover and enter a new refresh
cycle driven by AI PCs, gradually growing to represent around 80% of the
PC industry landscape by 2027.
--
The new development of AI technologies is also expected to drive a
refresh in the smartphone market.
--
IDG will continue to leverage its five-feature AI PCs to establish
leadership in the AI PC market, while at the same time building a richer
AI device portfolio.
Infrastructure Solutions Group (ISG): Hypergrowth, building hybrid AI infrastructure
Q2 FY24/25 performance:
--
Driven by strong cloud momentum and recovering enterprise business, ISG
set a new quarterly record, increasing revenue 65% year-on-year to US$3.3
billion.
--
Operating losses continued to narrow, with the business group on track
to breakeven.
--
Combined revenue from storage, software and services grew 35%
year-on-year to a record high. Revenue from ISG's Lenovo Neptune TM
liquid-cooled servers grew 48% year-on-year.
Opportunities and Sustainable Growth:
--
ISG will continue to strengthen the enterprise and SMB business model,
including simplifying portfolios and improving operations, as well as
diversifying Cloud Service Provider customers.
--
It will continue to build differentiation with its industry-leading
liquid cooling technology to meet the increasing performance and energy
efficiency demands of AI workloads.
--
In addition, ISG will continue to grow key strategic partnerships to
develop hybrid AI infrastructure solutions.
Solutions and Services Group $(SSG.AU)$: High margin and double-digit growth, building hybrid AI Advantage
Q2 FY24/25 performance:
--
SSG extended its double-digit revenue growth streak to 14 straight
quarters, with revenue of US$2.2 billion and an operating margin of 20%.
--
Revenue mix from managed services and project and solutions services
grew three points year-on-year to account for nearly 60% of SSG's
revenue.
--
Hero offerings such as Digital Workplace Solutions, Hybrid Cloud, and
Sustainability Solutions also delivered strong growth.
Opportunities and Sustainable Growth:
--
The global IT services market is expected to see steady double-digit
growth over the next three years, with AI services growing more than
twice as fast as the market to become the primary driver of the IT
services market.
--
Lenovo will continue to embed AI in its key offerings, such as Digital
Workplace Solutions, Hybrid Cloud and Sustainability solutions.
--
SSG will develop more AI native services for customers to adopt AI use
cases and capture hybrid AI opportunities.
ESG and corporate highlights
Achievements, announcements, and notable commitments over the past quarter include:
--
Lenovo has been ranked #1 on Fast Company's sixth annual list of the
100 best places to work for innovators, and also topped the list of
companies in the artificial intelligence and robotics category.
--
ESG accolades and highlights include joining the European Commission's
AI Pact, maintaining a strong rating in the 2024 Hang Seng Corporate
Sustainability Index where the Group received the highest environmental
score in the IT industry, and achieving Ambassador status in the 2024
Workplace Pride Global Benchmark.
--
Lenovo recently named Ashley Gorakhpurwalla to lead the Infrastructure
Solutions Group. Ashley joined on November 11th following executive roles
at Western Digital, Dell, and Compaq.
[1] Non-HKFRS measure was adjusted by excluding net fair value changes on financial assets at fair value through profit or loss, amortization of intangible assets resulting from mergers and acquisitions, mergers and acquisitions related charges, impairment of intangible assets; and the corresponding income tax effects, if any.
About Lenovo
Lenovo is a US$57 billion revenue global technology powerhouse, ranked #248 in the Fortune Global 500, and serving millions of customers every day in 180 markets. Focused on a bold vision to deliver Smarter Technology for All, Lenovo has built on its success as the world's largest PC company with a full-stack portfolio of AI-enabled, AI-ready, and AI-optimized devices (PCs, workstations, smartphones, tablets), infrastructure (server, storage, edge, high performance computing and software defined infrastructure), software, solutions, and services. Lenovo's continued investment in world-changing innovation is building a more equitable, trustworthy, and smarter future for everyone, everywhere. Lenovo is listed on the Hong Kong stock exchange under Lenovo Group Limited (HKSE: 992) (ADR: LNVGY). To find out more visit https://www.lenovo.com, and read about the latest news via our StoryHub.
LENOVO GROUP LIMITED
FINANCIAL SUMMARY
For the quarter ended September 30, 2024
(in US$ millions, except per share data)
Q2 24/25 Q2 23/24 Y/Y CHG
------------------------------------------ --------- --------- ---------
Revenue 17,850 14,410 24%
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November 14, 2024 18:37 ET (23:37 GMT)
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