Fourth quarter and full year 2023/24 results

Lenovo's growth accelerates in Q4 FY24 – Seizing the Hybrid AI opportunity

Hong Kong, 23 May 2024–(Business Wire)–Lenovo Group (HKSE: 992) (ADR: LNVGY) today announced its fourth quarter and full year financial results for the 2023/24 financial year. After resuming growth in the third quarter, the Group reported year-on-year revenue growth across all its operating groups in the fourth quarter, with Group revenue increasing nearly 10% year-on-year to US$13.8 billion and net profit doubling year-on-year to US$248 million, with non-PC revenue mix reaching a historic high of 45%. Group Q4 and Overall Q2^n.d. The half-year performance demonstrates how Lenovo weathered the industry downturn over the past year and seized the tremendous growth opportunities presented by AI, accelerating momentum across its business. Full-year revenue was US$56.9 billion and net income was US$1.0 billion. Starting in the second half of the fiscal year, Lenovo delivered 6% year-over-year revenue growth, and net income margins recovered from a year-over-year decline in the first half to flat in the second half.

With our pocket-to-cloud portfolio, strong ecosystem and partnerships, and full-stack AI capabilities, we are leading in an era of unprecedented AI opportunity. Since announcing its AI strategy at the annual event Tech World in October 2023, Lenovo has unveiled its first AI PC and AI capabilities covering other smart devices, smart infrastructure, and smart solutions and services. I've been doing it. The Group expects that AI PCs with natural interactions, heterogeneous computing, personal AI agents based on personal knowledge bases, connected to an open AI application ecosystem, and with privacy and security protection will grow from the current premium. I'm predicting it. Over the next three years, we will establish a mainstream position and drive a new refresh cycle for the industry. Hybrid AI is also increasing demand on AI infrastructure, with customers increasingly seeking customized AI solutions and services, especially AI consulting, design, implementation, and maintenance.

With continuous efforts and investments in innovation focusing on the core technologies of AI and computing, Lenovo is realizing its vision of “Smart AI for All” and further leading the way in the AI ​​era. Last year, the Group's R&D headcount reached a record high of 26.2%, and the R&D expenditure-to-sales ratio was 3.6%.

Looking ahead, the Group is encouraged by its second quarter performance and momentum.^and Halfway through its fiscal year, the company remains optimistic about the future and plans to continue to lead in AI, invest in innovation and seize the unprecedented opportunities presented by hybrid AI to accelerate growth and sustainable profitability across its business.

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Lenovo's board of directors declared a final dividend for the fiscal year ending March 31, 2024 of 3.8 U.S. cents or 30.0 HK cents per share.

Comments from Chairman and CEO Yang Yuanqing:

“Lenovo's fourth quarter results clearly demonstrate that we have not only resumed growth across all of our businesses, but also that the unprecedented opportunities presented by hybrid AI are accelerating our business momentum. Driven by an intelligent transformation strategy and years of investment in innovation, we have built a full stack of AI capabilities and are at the forefront of pioneering the innovative AI PC market. Smarter AI for everyone. Backed by strong execution, continuous innovation, operational excellence, and ecosystem partnerships, we believe we can deliver sustainable growth and improved profitability next year. I'm confident.”

Financial Highlights:

Solutions & Services Group (SSG): Driving AI solutions with high growth and profitability

Fourth quarter and full year 2023/24 results:

• Reinforcing SSG's position as a growth engine and profit contributor with year-over-year revenue growth of over 10% to US$1.8 billion and strong profitability with operating margins exceeding 21% (12th consecutive year of double-digit revenue and operating margins). Full year revenue was US$7.5 billion, with year-over-year growth of 12% and operating margins approaching 21%.

• Managed services and project and solution services revenue mix increased 5 percentage points year over year and accounted for 55% of SSG's overall business for the quarter.

• Hero products such as TruScale for digital workplace solutions and hybrid cloud have all achieved rapid growth.

Opportunities and sustainable growth:

• SSG will continue to meet growing customer demands by moving quickly to build AI-native and AI-embedded solutions and services.

• Care of One platform, Cyber ​​Resiliency as a Service, and decision-making tool Lenovo Intelligent Sustainability Solutions Advisor (LISSA) leverages the power of AI to deliver highly personalized employee experiences, increased productivity, and security. and enable sustainable IT choices.

Infrastructure Solutions Group (ISG): Regaining Momentum

Fourth quarter and full year results for the fiscal year ending February 2024:

• Fourth quarter revenue growth resumed, growing double digits at 15% year over year, bringing ISG's quarterly revenue to US$2.5 billion, its highest fourth quarter ever.

• Storage, Software and Services all experienced strong growth, with combined revenue increasing more than 50% year over year, and High Performance Computing revenue reached an all-time high.

• For the full year, ISG achieved three consecutive quarters of sequential revenue growth and its second-highest fiscal year revenue ever.

Opportunities and sustainable growth:

• As the market shifts to AI infrastructure, AI servers are expected to grow nearly twice as fast as the broader server market.

• ISG will expand its portfolio and transform its pipeline to capture new opportunities, while leveraging its traditional strengths in server, edge, storage, software and services to capture growth and restore profitability.

Intelligent Devices Group (IDG): Solid Growth, Strengthening Leadership

Fourth quarter and full year results for the fiscal year ending February 2024:

• IDG continued its strong quarterly performance and strengthened its leadership in the global PC market. With a market share of 22.9%, we have a significant market advantage and our profitability is among the best in the industry. Revenue for the quarter was $10.5 billion, and for the year, $44.6 billion.

• The PC business ranked number one in four of five regions and achieved its highest market share ever in North America.

• The smartphone business experienced impressive growth, with both shipments and revenue growing by double digits year-on-year, delivering a significant premium to the market.

• IDG's full-year revenue was strong despite weaker-than-expected markets in the first half of the fiscal year, with PCs, tablets and smartphones all returning to growth in the second half.

Opportunities and Sustainable Growth:

• Going forward, the size of the PC market is expected to recover to pre-COVID levels, and smartphones have already returned to rapid double-digit growth compared to the previous year.

• AI PCs will move from premium to mainstream over the next three years as Lenovo ships first wave of AI PCs and more PCs ship in coming quarters, driving another refresh cycle in the PC market It is expected to grow gradually.

• Extend AI from your PC to your phone or tablet and create seamless collaboration between devices with Smart Connect software solutions.

ESG and Company Highlights

Achievements, announcements and notable initiatives from the past quarter include:

• The Group was also awarded “Best Value Chain Initiative'', “Best Green Product'' and received a “Highly Commended'' rating in the “Circular Economy Company of the Year'' category at the global CRN Sustainability Tech Summit. I did.

• In February, Lenovo joined UNESCO's Responsible AI Initiative, which calls on companies to apply timely measures to “prevent, mitigate or remediate” the potential negative impacts of AI. This effort is in addition to Lenovo's own internal Responsible AI Committee, his governance framework that covers ethics, legal, safety, privacy, and accountability for AI products, services, and solutions.

[1] Non-HKFRS measures include net fair value changes in financial assets measured at fair value through profit or loss, amortization of intangible assets arising from mergers and acquisitions, merger and acquisition related costs, restructuring and other costs, and replacement of written put option liabilities. Adjusted by excluding measurement benefits and, if applicable, the corresponding income tax effects.

About Lenovo

Lenovo is a global technology giant with revenues of US$57 billion, No. 217 on the Fortune Global 500, and serves millions of customers every day in 180 markets. Focused on our bold vision of bringing smarter technology to everyone, Lenovo is committed to providing AI-enabled, AI-enabled, and AI-optimized devices (PCs, workstations, smartphones, and tablets), infrastructure ( data center, storage, edge, high performance computing, software-defined infrastructure), software, solutions, and services. By continuously investing in world-changing innovations, Lenovo is building a fairer, more trusted, and smarter future for everyone, everywhere. Lenovo is listed on the Hong Kong Stock Exchange as Lenovo Group Limited (HKSE: 992) (ADR: LNVGY). For more information, visit https://www.lenovo.com and read the latest news on StoryHub.

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contact address

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