Lenovo Delivers Strong Performance with Highest Quarterly Revenue in Four Years

Data Center Group enjoyed continued hyper growth in Hyperscale and Software Defined Infrastructure, and increased its lead as #1 in the world’s TOP500 supercomputer rankings

Lenovo Group has announced results for its third fiscal quarter ended December 31, 2018. Lenovo posted its highest group revenue in four years of US$14 billion, up 8.5% YOY (12.8% YOY excluding currency impact).  The company reported strong pre-tax income of US$350 million (up 133% / +US$200 million over the previous year) - an all-time record for the company as all businesses continued to report profit improvements.

The Group recorded a net profit of US$233 million for the fiscal quarter, significantly improved from the net loss of US$289 million in the same quarter of last year. Basic earnings per share in the third fiscal quarter was 1.96 US cents or 15.35 HK cents.

“When we set out on our journey of Intelligent Transformation, our goal was to restore and then accelerate Lenovo’s business momentum, while providing our customers and partners with the best technologies in smart IoT, smart infrastructure and smart vertical solutions. We’ve done exactly that and more - our strength and position as the industry’s most prolific global technology organization is firmly established.  What I’m most pleased to see is how Lenovo is bucking the current industry trend – we’re strong, have delivered record-breaking results this quarter and are only getting stronger”, said Yang Yuanqing, Lenovo Chairman and CEO.

Business Group Overview:

The Intelligent Devices Group (IDG) posted record revenue and profit; powered by its third straight quarter since inception of revenue growth - up 6.2% YOY to US$12.4 billion.

During the quarter, the PC and Smart Devices (PCSD) business under IDG reported US$10.7 billion in revenue, up 11.6% YOY, and sequentially extending the Group’s momentum from the previous quarter. PC revenue grew 16% YOY, outperforming the market by more than 17 points with PTI margin also improving by 1 percentage point. Lenovo maintained its position as the world’s undisputed leader in PC sales with record market share of 24.6%. A focus on high-growth and premium segments saw Workstations, Thin and Light devices, and Visuals revenue outgrow the market by more than 30 points, Gaming by 16 points and Chromebook by over 220 points.

The Mobile Business Group (MBG) under IDG posted its first worldwide profit since the Motorola acquisition in October 2014. This notable achievement came from masterful execution on Lenovo’s strategy to reduce expenses, streamline the Group’s product portfolio and focus on core markets.  Notably North America saw a breakthrough quarter for the Group with volumes outgrowing the market by a staggering 40 points. Additionally, MBG’s focus on other specific geographies is also showing significant results: Lenovo retains the #2 position in Latin America, despite currency fluctuations and supply constraints.  In China, thanks to a range of new products under the Lenovo brand, the Group continued to build on the momentum quadrupling revenue and reporting strong growth in PTI margin.

Lenovo’s Data Center Group (DCG) reported its fifth consecutive quarter of profit growth (PTI margin up 3.6 percentage points YOY) on a 31% YOY increase in revenue to US$1.6 billion. In fact, DCG recorded YOY revenue growth in all geographies, highlighted by triple-digit growth in North America, and double-digit growth in Asia-Pacific, EMEA and Latin America.  The NetApp joint venture, which is now operational in China, will further strengthen the portfolio and expand business opportunities.  Hyperscale once again served as a significant contributor with triple-digit revenue growth and Software Defined Infrastructure (SDI) revenue grew almost 70% YOY. The Group not only remained #1 on the TOP500 list of supercomputers globally, but also increased its lead.