Lenovo Group has announced record quarterly results, with historic highs for both profit and revenue.

Lenovo’s performance delivered significant year-on-year improvements, with net income growing 65% year-on-year to US$512 million (€452m) and net income margin improving by 0.7 points, on track towards the Group’s goal of doubling in three years. Pre-tax income was US$742 million (€655m) , up 58% year-on-year, and Group revenue continued its strong growth trajectory hitting US$17.9 billion (€15.8bn) , up 23% year-on-year. Operating cashflow doubled year-on-year to US$1.6 billion (€1.41bn) , and at the same time the Group’s R&D expenses for the quarter were up almost 60% owing to increased investments in innovation.

In an official statement, the company says that looking ahead, the strategy to drive sustainable profit improvements and growth will continue to focus on high margin businesses and segments, at the same time doubling investments in R&D over three years as announced last quarter. This focus will support the Group’s continued transformation, developing technology focused on the New IT opportunities and the technology architecture of ‘Client-Edge-Cloud-Network-Intelligence’ brought about by changing customer needs.

“Lenovo’s New IT technology architecture of ‘Client-Edge-Cloud-Network-Intelligence’ is gaining momentum and more accepted across the industry,” said Yuanqing Yang, Lenovo Chairman and CEO. “Through the strong execution of our 3S strategy (Smart Devices/IoT, Smart Infrastructure, Smart Vertical), last quarter, both our net income and revenue achieved new records, and we are on track to double our net margin in three years. At the same time, our R&D investment greatly increased by almost 60%” “Looking ahead, we will continue to drive to our goal to double R&D spending over three years, and further drive our service-led intelligent transformation.”

The demand for PCs and other smart devices remains strong. This is driven by commercial demand recovering, with market reports showing commercial PCs (excluding Chromebooks) growing 18% year-on-year last quarter, as well as increased demand expected from the launch of Windows 11. Lenovo expects PC demand to be in line with industry assessments of 340-355 million units a year for the next few years. The global smartphone market still presents tremendous opportunities to grow, as does the surging IoT market which is expecting to grow by 11% CAGR through 2025.

Q2 performance:

• Excellent results with revenue growth of 21% year-on-year to US$15.3 billion, with even stronger profitability growth – up 34% year-on-year to US$1.2 billion, on already high base.
• Premium PC segments delivered high growth with premium Yoga and workstation revenue each more than doubling year-on-year. Commercial PC revenue grew 29% year-on-year and SMB PC grew 48% year-on-year.
• Smartphones had its best quarter ever, with profit reaching a new historic high of US$89 million, while revenue grew 27% year-on-year to the highest in 15 quarters. All geographies delivered high profitable growth – not only in the traditional strongholds of Latin America and North America, but also expansion markets of EMEA and Asia Pacific. Tablet revenue grew 20% year-on-year and accessories business grew 31% year-on-year.

Looking ahead:

• Lenovo will further invest in premium segments to drive increased profitability and average selling price. Adjacent non-PC products like smartphones, tablets, smart meeting collaboration, and embedded computing will further increase the non-PC business mix.

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