• Group reve­nue up by almost 7% year-on-year to US$13.3 billion
• Pre-tax inco­me (PTI) of US$332 mil­li­on, up 38% year-on-year
• Net inco­me up 31% year-on-year to US$213 million
• Soft­ware and ser­vices reve­nue* grew 38% year-on-year, to more than US$1 bil­li­on – now accoun­ting for around 7.6% of Group revenue

HONG KONG, August 13, 2020 – Leno­vo Group (HKSE: 992) (ADR: LNVGY) today announ­ced Group reve­nue in the first quar­ter of US$13.3 bil­li­on, up almost 7% year-on-year (up 10% year-on-year exclu­ding cur­ren­cy impact). Pre-tax inco­me grew 38% com­pared to the same quar­ter a year ear­lier, to US$332 mil­li­on, while net inco­me also increased by 31% year-on-year to US$213 mil­li­on. Basic ear­nings per share for the first quar­ter were 1.80 US cents or 13.95 HK cents.

“Our out­stan­ding per­for­mance last quar­ter pro­ves that Leno­vo has quick­ly regai­ned momen­tum from the impact of the pan­de­mic and is cap­tu­ring the new oppor­tu­ni­ties emer­ging from remo­te working, edu­ca­ti­on and acce­le­ra­ted digi­ta­liza­ti­on,” said Yang Yuan­qing, Leno­vo Chair­man and CEO. “While the world con­ti­nues to face chal­lenges, Leno­vo is focu­sed on deli­ve­ring sus­tainable growth through our core busi­nesses as well as the new ser­vices and solu­ti­ons oppor­tu­ni­ties pre­sen­ted by our ser­vice-led intel­li­gent transformation.”

Glo­bal eco­no­mic factors

The last quar­ter has pre­sen­ted mul­ti­ple indus­try-wide busi­ness chal­lenges, inclu­ding ongo­ing geo-poli­ti­cal uncer­tain­ties and the COVID-19 pan­de­mic. To chart a path through the­se chal­lenges, Leno­vo con­ti­nues to levera­ge its core com­pe­ten­ci­es of ope­ra­tio­nal excel­lence and a ‘glo­bal sourcing, local deli­very’ approach. Loo­king to the geo-poli­ti­cal land­scape, Leno­vo con­ti­nues to belie­ve that coope­ra­ti­on in trade, tech­no­lo­gy and cul­tu­re pro­vi­des signi­fi­cant eco­no­mic bene­fits to all mar­kets and will ensu­re that tech­no­lo­gy can bene­fit and empower ever­yo­ne in society.

Busi­ness Group Overview

Lenovo’s Intel­li­gent Devices Group (IDG) con­ti­nues to lead the company’s strong per­for­mance. The PC and Smart Devices Group (PCSD), one of the two IDG busi­ness units, grew reve­nue by dou­ble digits year-on-year to US$10.6 bil­li­on. Pre-tax inco­me rea­ched US$670 mil­li­on, up near­ly 28% year-on-year, while indus­try-lea­ding pro­fi­ta­bi­li­ty impro­ved by almost 1 point to a new record of 6.3%. The PC mar­ket signi­fi­cant­ly out­per­for­med the indus­try fore­cast of a mar­ket decli­ne, with Leno­vo retai­ning its #1 lea­der­ship posi­ti­on in the world­wi­de PC Devices mar­ket (PC and Tablets). Simi­lar­ly, the­re was strong year-on-year growth (45%) in Con­su­mer busi­ness reve­nue world­wi­de.  Dri­ven by the­se suc­ces­ses, reve­nue grew 30% in EMEA and 18% in Chi­na. Volu­me in high-growth and pre­mi­um cate­go­ries such as Gam­ing, Thin & Light, Visu­als, and Chrome­books all con­tin­ued to grow at high dou­ble-digits. The world­wi­de e‑Commerce busi­ness was a nota­b­ly stel­lar per­for­mer, with reve­nue growth over 50% year-on-year.

Loo­king to the future, the com­pa­ny expects this strong PC demand will be a long-term trend. As a result, Leno­vo will focus on inno­va­ti­ve pro­ducts that adapt to the new glo­bal envi­ron­ment, fur­ther streng­then its glo­bal sup­p­ly chain to meet the fast-gro­wing demand, con­ti­nue to deve­lop its e‑Commerce plat­form and focus on high-growth seg­ments to dri­ve pre­mi­um-to-mar­ket growth with lea­ding profitability.

IDG’s second busi­ness unit, the Mobi­le Busi­ness Group (MBG), while still impac­ted by COVID-19 and chal­len­ging cur­ren­cy exch­an­ge rates, has impro­ved momen­tum with reve­nue incre­asing by 33% over the last quar­ter. Alt­hough reve­nue decli­ned year-on-year, volu­me out­grew the mar­ket year-on-year in key mar­kets like Latin Ame­ri­ca, North Ame­ri­ca and Euro­pe, with record high mar­ket share in both Latin Ame­ri­ca and North Ame­ri­ca. Loo­king for­ward Leno­vo will con­ti­nue to levera­ge its strong pro­duct port­fo­lio, inno­va­ti­ve tech­no­lo­gy, par­ti­cu­lar­ly in 5G, and expand car­ri­er ran­ging to resu­me pro­fi­ta­ble growth.

The Data Cen­ter Group (DCG) resu­med hyper­growth, with reve­nue gro­wing almost 20% to US$1.6 bil­li­on and pro­fi­ta­bi­li­ty impro­ving year-on-year. Nota­ble suc­ces­ses included Cloud Ser­vice Pro­vi­der busi­ness (pre­vious­ly cal­led hypers­ca­le), which grew more than 30% year-on-year, set­ting a new reve­nue record by cap­tu­ring strong public cloud infra­struc­tu­re demand dri­ven by increased digi­tal con­sump­ti­on due to COVID-19 lock­downs. Mean­while, the cus­to­mer base con­ti­nues to grow thanks to cus­to­mi­zed in-house design and manu­fac­tu­ring capa­bi­li­ties and an expan­ded cloud ser­vices pro­vi­der sales­force. Enter­pri­se and SMB busi­ness (pre­vious­ly cal­led non-hypers­ca­le) deli­ver­ed year-on-year reve­nue growth, led by dou­ble-digit reve­nue growth in high-growth seg­ments such as Soft­ware Defi­ned Infra­struc­tu­re and Ser­vices, as well as High-Per­for­mance Com­pu­ting. Loo­king ahead, we expect long-term growth in the Cloud Ser­vice Pro­vi­der seg­ment and will levera­ge the team’s exis­ting strength in public and pri­va­te cloud to expand the Edge com­pu­ting business.

Lenovo’s Intel­li­gent Trans­for­ma­ti­on con­ti­nues to show strong pro­gress as a result of deter­mi­ned exe­cu­ti­on of the 3S stra­tegy. Over­all Soft­ware and Ser­vices reve­nue* grew 38% year-on-year to over US$1 bil­li­on, now accoun­ting for around 7.6% of Group reve­nue. Smart IoT reve­nue* grew 39% year-on-year, Smart Infra­struc­tu­re was up 16% and Smart Ver­ti­cals* up 65%, dri­ven by Smart City solu­ti­ons in Chi­na and Smart Health­ca­re solu­ti­ons in North Ame­ri­ca. Atta­ched Ser­vice* grew 32% year-on-year, Mana­ged Ser­vice* (inclu­ding fast gro­wing Device as a Ser­vice) grew 48% year-on-year and Solu­ti­ons* grew 54% year-on-year.

* invoi­ced revenue

About Leno­vo

Leno­vo (HKSE: 992) (ADR: LNVGY) is a US$50 bil­li­on For­tu­ne Glo­bal 500 com­pa­ny, with 63,000 employees and ope­ra­ting in 180 mar­kets around the world.  Focu­sed on a bold visi­on to deli­ver smar­ter tech­no­lo­gy for all, we are deve­lo­ping world-chan­ging tech­no­lo­gies that crea­te a more inclu­si­ve, trust­wor­t­hy and sus­tainable digi­tal socie­ty. By desig­ning, engi­nee­ring and buil­ding the world’s most com­ple­te port­fo­lio of smart devices and infra­struc­tu­re, we are also lea­ding an Intel­li­gent Trans­for­ma­ti­on – to crea­te bet­ter expe­ri­en­ces and oppor­tu­ni­ties for mil­li­ons of cus­to­mers around the world. To find out more visit https://www.lenovo.com, fol­low us on Lin­ke­dIn, Face­book, Twit­ter, You­Tube, Insta­gram, Wei­bo and read about the latest news via our Sto­ry­Hub.