Lenovo delivers strong performance driven by AI – growth and momentum across all core businesses

Last quarter, thanks to our strategic foresight, continuous innovation and operational excellence, Lenovo delivered strong growth across all core businesses, driving significant increase of overall group revenue and profit. We are also pleased that the adoption and application of AI is accelerating, driven by innovative technologies that are more efficient and lower cost, creating huge growth opportunities. We continue to lead in personal AI with our AI device innovations, while proactively leverage hybrid infrastructure and our Hybrid AI Advantage to build enterprise AI, so as to further drive sustainable growth and profit improvement.

Group: Strong growth of revenue & profit , hybrid AI landing accelerates

Last quarter, our group revenue grew double-digit year on year for three quarters in a row. Profit growth was even stronger, with group net income more than doubled year on year on a HKFRS basis. Such a fantastic result is attributed to the excellent performance of all core businesses, from the successful turnaround of ISG driven by its continuous fast growth, to the double-digit YTY revenue growth momentum of both IDG and SSG. Our diversified growth engines continued to accelerate, propelling our non-PC revenue mix to more than 46%.

We continued to increase investment in R&D, with focus on AI, dedicated to building a foundational AI technology platform, exploring use case breakthroughs in agentic AI, as well as continuously developing technologies and their applications into products. At CES 2025 held last month, we launched a series of innovative products, including the world’s first rollable AI laptop, the world’s first gaming device that allows gamers free choice of Windows OS or Steam OS, as well as Moto AI, winning wide attention and high praise.

Right now, the AI boom is clearly creating enormous opportunities for continued growth in the markets of device, IT infrastructure and IT services. The recent phenomenal rise of the new model, with its higher inferencing efficiency and lower computing power cost, is providing a more realistic path for the democratization and application of AI. This will not only accelerate the maturity process of on-device AI and edge AI, but also promote and accelerate the deployment and customization of enterprise AI, which aligns seamlessly with the vision of hybrid AI that Lenovo pioneered. With our constantly improving full-stack AI capabilities and portfolio, Lenovo is well prepared to drive the realization of personal AI and enterprise AI.

Now let me talk about each of our businesses.

IDG: Double-digit revenue growth, leading in AI devices????

Let’s start with our Intelligent Devices Group, or IDG. Its revenue once again achieved double-digit growth year on year. For PC, we strengthened our market leadership position, with the gap with the 2nd player further enlarged to almost 5pts, while maintaining the industry leading profitability. Within six months of its launch in the China market, our five-feature AI PC has exceeded our expectations of its mix in the total notebook volume well ahead of the original plan. For smartphone, we continued the momentum of double-digit revenue growth with particularly hypergrowth in the Asia-Pacific and EMEA markets, which significantly drove up our shares in many markets.

Looking ahead, we will continue to drive the convergence of more powerful computing and more efficient models into various types of devices, while driving device form factor innovation. We will also optimize our AI agent capabilities, enhance our multi-device connectivity, build our key applications ecosystem, so as to provide seamless user experience across devices and across ecosystems.

ISG: Fast growth, Breaking even, Heading toward profitable growth

Next, our Infrastructure Solutions Group, or ISG. Last quarter, ISG delivered an almost 60% year-on-year growth in revenue and achieved breakeven. This was driven by the continued hypergrowth of our CSP, or Cloud Services Provider business that reached historic high, as well as the steady growth of our Enterprise/SMB business. Our AI server business started generating steady revenue and our industry-leading Neptune liquid cooling solutions also made headway beyond supercomputing and academia into wider vertical industries.

Indeed, it was no small feat turning around our ISG business. The credit here has to go to the firm execution of our right strategy. Back when the market started shifting to cloud computing, we had set our minds to developing both the traditional E/SMB and the emerging CSP businesses, and never to lose sight of one or the other. Over the years, we have built a CSP business from the ground up with a unique ODM+ model, sticking with it despite its impact on our overall profitability at certain phases. Today we are on the way to building a $10B CSP business with self-sustained profitability.?We are leveraging the scale that we built with CSP to improve the cost effectiveness of our E/SMB business and ultimately secure the sustainable profitability of our overall ISG business. Looking ahead, as hybrid AI needs to be supported by hybrid infrastructure, there will be a lot of demand for public clouds, as well as on-premise data centers, private clouds and edge computing. We are confident that by continuing with our strategy, and through further simplifying our product portfolio, strengthening our go-to-market capabilities, and optimizing our E/SMB business model, we will achieve sustainable profitable growth with our ISG business. ?

SSG: Record Revenue & high profitability, building Hybrid AI Advantage

Our SSG, Solutions & Services Group, has continued its double-digit revenue growth to a record high, with operating margin of 20%. While Support Services remained our strong profit engine with improved profitability, the revenue mix combined from Managed Services and Project & Solutions services as our growth engines has grown 5pts year on year to a record high of almost 60% of SSG’s total business. Our AI solution business also started to build lighthouse cases for top customers, for example we delivered an enterprise AI agent platform for a leading dairy company that can seamlessly integrate diverse AI applications.

Looking ahead, we will continue to build capabilities under Hybrid AI Advantage framework and establish Advanced AI Tech Center to empower our enterprise customers with intelligence.

Reflection & Closing

Before I close, I want to emphasize that to succeed in the large-scale high-tech manufacturing industry that we are in, scale is the key. In PCs we drove the expansion of consumer business as a complementary to our stronghold in commercial business, and became the global leader and firmly stay there. In mobile phones, we refused to settle for the Latin American and North American markets, and made our move firmly into the Asia-Pacific and the EMEA, even if we need to invest a lot of resources both financially and time wise, all with the aim to build a more scaled business foundation for sustainable and profitable growth.

The same can be said of our infrastructure business where we endured temporary losses for our strategic intent, just as I explained earlier.

Therefore, you can say that through the years, for each of our core businesses, we have consistently chosen to be flexible and adaptable, scaling to secure a "Win" first, and greater profitability will naturally follow as a result.

Looking ahead, equipped with our continuous investment increase on AI innovation, our global footprint expansion with our Alat strategic partnership, our brand equity through FIFA and F1 partnerships, and our excellent and resilient global operation, we will continuously navigate macro uncertainties and realize our vision of smarter AI to all in the near future.

*Read our earnings press release here.