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Lenovo Group: First Quarter Financial Results 2024/25

Lenovo delivers strong FY Q1 performance - improves profitability across all businesses, significant progress in capturing hybrid AI opportunities

HONG KONG — (BUSINESS WIRE) — August 14, 2024Lenovo Group Limited (HKSE: 992) (ADR: LNVGY), together with its subsidiaries (‘the Group’), today announced Q1 results for fiscal year 2024/25, reporting profitability improvements across all areas of the business and making significant progress in capturing hybrid AI opportunities. Group revenue increased 20% year-on-year to US$15.4 billion, net income was up 65% year-on-year to US$315 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 reaching a historic high of 47%. The Group’s results reflect its clear strategy and strong execution, persistent focus on innovation and operational excellence, as well as the advantages it reaps from being a globalized business.

The Group is both uniquely positioned and well-prepared to lead in an era of hybrid AI with its full-stack portfolio featuring AI devices like AI PCs, AI servers that support all major architectures, as well as rich AI native and AI embedded solutions and services. User feedback from Lenovo’s AI PCs, defined by five key characteristics, have been encouraging, with the first AI PCs having launched in May and many more to come during IFA and Tech World later this year. The Group is confident that it will lead the industry in market share for next-generation AI PCs, which overall are expected to be more than 50% of the PC landscape by 2027, as well as lead in seizing the enormous growth opportunities across the IT market. The Group continued its commitment to innovation, with R&D spending up 6% year-to-year to US$476 million.

Looking ahead to growth, in May 2024 Lenovo announced a strategic collaboration with Alat, a subsidiary of PIF, an investment in the form of convertible bonds from Alat, and a warrants issuance. These transactions will greatly benefit the Group’s efforts to accelerate its transformation through greater financial flexibility, seize the enormous business growth momentum in the Middle East, and further diversify and strengthen its supply chain footprint with a new manufacturing hub in the Middle East. The transactions are subject to shareholder and regulatory approvals.

Chairman and CEO quote – Yuanqing Yang:

“The great start to our fiscal year has been driven by our clear strategy and strong execution, our persistent innovation and operational excellence, as well as our globalization advantages. Looking ahead, we are both well-prepared and uniquely positioned in the market with our full-stack AI portfolio to lead in the era of hybrid AI and seize the enormous growth opportunities across our entire business. I’m confident that, with a recovering ICT market, the combination of our solid performance and continued progress in hybrid AI will keep enabling us to achieve sustainable growth and profitability increases.”

Financial Highlights:

 

Q1 FY 24/25

US$ millions

Q1 FY 23/24

US$ millions

Change

 

 

Group Revenue

15,447

12,900

20%

 

Pre-tax income

313

228

37%

 

Net Income (profit attributable to equity holders)

243

177

38%

 

Net Income (profit attributable to equity holders – non-HKFRS) [1]

315

191

65%

 

 

 

Basic earnings per share (US cents)

1.99

1.48

0.51

 

Intelligent Devices Group (IDG): Double-digit revenue growth with leading profitability, winning in personal AI

Q1 FY24/25 performance:

Opportunities and Sustainable Growth:

Infrastructure Solutions Group (ISG): Hypergrowth with improved profitability, driving hybrid infrastructure

Q1 FY24/25 performance:

Opportunities and Sustainable Growth:

Solutions and Services Group (SSG): High margin with double-digit growth, building enterprise AI

Q1 FY24/25 performance:

Opportunities and Sustainable Growth:

ESG and corporate highlights

Achievements, announcements, and notable commitments over the past quarter include:

[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, gain on deemed disposal of a subsidiary, impairment and write-off 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 (data center, 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

FINANCIAL SUMMARY

For the quarter ended June 30, 2024

(in US$ millions, except per share data)

 

 


Q1 24/25


Q1 23/24


Y/Y CHG

Revenue

 

15,447

12,900

20%

Gross profit

 

2,560

2,252

14%

Gross profit margin

 

16.6%

17.5%

(0.9) pts

Operating expenses

 

(2,066)

(1,862)

11%

R&D expenses
(included in operating expenses)

 

(476)

(451)

6%

Expenses-to-revenue ratio

 

13.4%

14.4%

(1.0) pts

Operating profit

 

494

390

27%

Other non-operating income/(expenses) - net

 

(181)

(162)

12%

Pre-tax income

 

313

228

37%

Taxation

 

(60)

(45)

33%

Profit for the period

 

253

183

38%

Non-controlling interests

 

(10)

(6)

47%

Profit attributable to equity holders

 

243

177

38%

Profit attributable to equity holders- non-HKFRS [1]

 

315

191

65%

EPS (US cents)
Basic
Diluted

 


1.99
1.92


1.48
1.43


0.51
0.49

 



Contact:

Hong Kong – Angela Lee, angelalee@lenovo.com, +852 2516 4810
London – Charlotte West, cwest@lenovo.com, +44 7825 605720
Zeno Group - LenovoWWcorp@zenogroup.com