Lenovo Delivers Record First Quarter, Doubling Net Income as Strategy Continues to Drive Sustainable Profitability Increases and Long-Term Growth

HONG KONG, August 11, 2021 – Lenovo Group (HKSE: 992) (ADR: LNVGY) today announced record fiscal first quarter results for the Group. Opportunities created by accelerated digitalization, intelligent transformation and IT upgrades in devices, infrastructure, and applications around the world continue to fuel the Group’s long-term and sustainable profitability increases.

Seizing these opportunities, Lenovo’s performance delivered significant year-on-year profitability improvements, with pre-tax income almost doubling to US$650 million (up 96%), and net income also more than doubled (up 119%), as net income margin reached 2.8%, the highest in many years. First quarter Group revenue continued hypergrowth to US$16.9 billion, up 27% year-on-year.

Looking ahead, the company sees continued opportunities for sustainable growth and profitability improvements across its business, in areas such as vertical solutions, infrastructure solutions, premium PCs, and adjacent non-PC devices such as tablets, smartphones, embedded computing, and other smart devices. Additionally, innovation will continue to help drive profitable, sustainable growth. Having increased R&D expense in the first quarter by 40% year-on-year, Lenovo will further invest in innovation and double its R&D investments over the next three years.

This quarter is the first time the company is reporting under the new business group structure of Solutions and Services Group (SSG), Infrastructure Solutions Group (ISG), and Intelligent Devices Group (IDG) that was announced earlier this year.

“The accelerated digital and intelligent transformation has created significant market opportunities globally. Lenovo is successfully seizing these as we transform from a device company to a services and solutions provider. The proof is in our performance – this quarter alone we’ve doubled profitability year-on-year while net income margin reached the highest in many years,” said Yuanqing Yang, Lenovo Chairman and CEO.  “Going forward, we will continue to increase R&D investment, aiming to double it over the next three years; we will further improve our operational excellence; and we remain committed to green innovation and corporate citizenship to achieve long-term sustainable profitability increases.”

The industry is transforming with customers needing more sophisticated IT services, creating huge opportunities for solution services and managed services, including the subscription-based as-a-Service model. It’s estimated that the IT services market will be worth over US$1 trillion through 2025.

Infrastructure Solutions Group (ISG): accelerating profitability and significantly outgrowing the market quarter after quarter

ICT infrastructure is the foundation to digital and intelligent transformation, with ICT infrastructure predicted to be a near US$250 billion market through 2025. After investing in building a strong foundation, Lenovo is well positioned as a “full-stack” ICT provider.

The pandemic has changed how people live and work, with PCs returning to the center of digital lives. The PC refreshment cycle has shortened, the penetration rate has increased and the total PC demand until 2025 will at least remain at current levels, with commercial demand rebounding quickly. At the same time, the IoT market is expected to surge by 11% CAGR through 2025. And new opportunities in non-PC businesses are growing rapidly.

Operational highlights and investing for the future

Lenovo (HKSE: 992) (ADR: LNVGY) is a US$60 billion revenue Fortune Global 500 company serving customers in 180 markets around the world. Focused on a bold vision to deliver smarter technology for all, we are developing world-changing technologies that power (through devices and infrastructure) and empower (through solutions, services and software) millions of customers every day and together create a more inclusive, trustworthy and sustainable digital society for everyone, everywhere. To find out more visit www.lenovo.com and read about the latest news via our StoryHub.