Lenovo Delivers Record Quarter, as Strategy and Investments in Innovation Continue to Drive Sustainable Profitability Growth

HONG KONG, February 23, 2022– Lenovo Group (HKSE: 992) (ADR: LNVGY) today announced record quarterly results for the Group, with historic highs for both profit and revenue and the Group’s first US$20 billion quarter. The company’s focus on innovation and profitability, supported by its operational excellence, has helped it navigate wider industry supply challenges and delivered rapid growth and profitability across all key business groups and geographies.

Lenovo’s performance delivered significant year-on-year improvements. Net income grew at a rate of over 50% for the 6th consecutive quarter, with Q3 growing 62% year-on-year to a record US$640 million. Net income margin improved by nearly one point, on track towards the Group’s goal of doubling in three years. Pre-tax income was a record US$855 million, up 45% year-on-year, and Group revenue continued its strong growth trajectory hitting a record US$20.1 billion, up 17% year-on-year.

Lenovo continues to invest significantly in innovation, with R&D expenses for the quarter up 38% year-on-year, as part of the company’s wider commitment to double R&D investment over three years. Investments are aligned to driving Lenovo’s ongoing transformation to a solutions and services company, by developing technologies focused on the “New IT” full stack architecture of Looking ahead, the company remains focused on its 3S strategy (Smart devices/IoT, Smart Infrastructure, Smart Verticals) seeing continued opportunities for sustainable growth and profitability improvements across all areas of the business, keeping it on track to double net margin by the end of FY 2023/2024.

The Hang Seng Indexes Company Limited announced last week that effective March 7, 2022, Lenovo will be included as a constituent stock on the Hang Seng Index – Hong Kong’s benchmark stock gauge.

“Lenovo continued to embrace the opportunities driven by accelerated digital and intelligent transformation, and our New IT architecture prepared us well with capabilities. With another record quarter, we delivered the 6th quarter of more than 50% net income year-on-year growth, and the first US$20 billion revenue quarter in our history. We remain on track to double both our net margin and R&D investment in three years from FY20/21 levels.” said Yuanqing Yang, Lenovo Chairman and CEO. “Once again, we have shown that Lenovo’s innovation, transformation strategy, and strong execution can consistently deliver sustainable profitability increases for the future.”

Solutions and Services Group (SSG): delivering strong growth and high margins – driving higher overall profitability for the Group

The Solutions and Services Group continues to drive strong profitability and growth in a rapidly expanding market. As technology architecture becomes more complex, customers demand more sophisticated IT services, and the market is predicted to be worth over one trillion US dollars through 2025. This includes higher demand for premier support and customized fulfillment from knowledge workers, nearly half of whom now work remotely.

Opportunities continue to grow for ISG as ICT infrastructure modernization expands around the world. The ICT infrastructure market is expected to become a US$250 billion market through 2025. By that same time, the edge infrastructure market alone is expected to exceed US$41 billion.

The market for smart devices continues to benefit from the new normal of hybrid working and the PC market is forecasted to remain strong and stable, shifting to commercial and premium segments. In smartphones, the market reshuffling will bring more growth opportunities to Lenovo, and the penetration of 5G and development of the New IT of will provide more growth potential for emerging smart devices such as embedded computing/IoT, AR/VR driven by the metaverse, as well as smart home and smart collaboration solutions.

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.