Lenovo Group: Second Quarter Financial Results 2024/25
Lenovo's focus on hybrid AI drives market differentiation and industry leadership while delivering strong, sustainable, and rapid growth.
Lenovo Group Limited, along with its subsidiaries, announced impressive Q2 results for FY24/25. The Group achieved a 24% year-on-year revenue growth, reaching $17.9 billion, marking the fourth consecutive quarter of revenue increases. Net income rose by a remarkable 48% year-on-year to $404 million, calculated on a non-Hong Kong Financial Reporting Standards (non-HKFRS) basis. The non-PC revenue mix also grew by five percentage points to 46%. These achievements highlight Lenovo’s robust strategic execution, operational excellence, investment in R&D, and leadership in hybrid AI innovation.
AI Innovation Driving Growth
Lenovo’s commitment to hybrid AI and R&D is paying dividends. Following the launch of its first AI PCs in China in May 2024, these devices now represent a double-digit share of Lenovo’s total notebook shipments in the country. Global market releases under Lenovo AI Now have also been positively received. R&D investments increased by 10% year-on-year to $548 million, further reinforcing the Group’s competitive edge. By leveraging its full-stack hybrid infrastructure and the Lenovo Hybrid AI Advantage, Lenovo is capturing opportunities in both consumer and enterprise AI markets.
Future Outlook
Looking ahead, Lenovo is optimistic about sustaining its growth trajectory through continued innovation in hybrid AI. The company remains focused on driving profitability while leveraging its momentum. The Board of Directors declared an interim dividend of 8.5 HK cents per share, reflecting confidence in the company’s financial stability.
Chairman and CEO quote – Yuanqing Yang: “Last quarter, we achieved strong, sustainable, and accelerated growth, marking another period of revenue expansion across all business groups. This significant momentum is driven by our clear strategy, innovation investment, operational excellence, and global presence, as well as our commitment to hybrid AI, where we are further strengthening our market differentiation and industry leadership. As we look ahead, we are confident that our ongoing innovation advancements in hybrid AI will continue to accelerate growth and profitability, propelling us forward for the rest of the fiscal year.”
Intelligent Devices Group (IDG): Market Leadership and Expansion
Q2 FY24/25 Highlights
> Revenue Surge: IDG recorded $13.5 billion in revenue, up 17% year-on-year.
> PC Market Leadership: Expanded market share to 24%, outpacing competitors by four points, with AI PCs becoming a significant contributor.
> Smartphone & Tablet Growth: Smartphone revenue grew by 43%, while tablets saw a 19% increase, driven by strong demand across North America, EMEA, and Asia Pacific.
Growth Opportunities
> AI-Driven PC Market: The global PC market is projected to recover, with AI PCs comprising 80% of the industry by 2027.
> Smartphone Innovation: Advances in AI are expected to drive a refresh cycle in the smartphone segment.
> Portfolio Expansion: IDG aims to lead the AI PC market while diversifying its offerings with richer AI-enabled devices.
Infrastructure Solutions Group (ISG): Leading the Hybrid AI Infrastructure
Q2 FY24/25 Performance
> Record Revenue: ISG achieved $3.3 billion, a 65% year-on-year increase, driven by strong cloud demand.
> Improving Margins: Operating losses narrowed significantly, bringing the group closer to breakeven.
> Strategic Growth: Storage, software, and services revenue surged by 35%, while Neptune™ liquid-cooled server revenue grew by 48%.
Future Strategies
> Enterprise & SMB Focus: ISG plans to simplify portfolios, enhance operations, and diversify its cloud customer base.
> Energy Efficiency Leadership: Lenovo’s liquid cooling technology will address the growing demands of AI workloads.
> Partnership Development: Strengthening collaborations to advance hybrid AI infrastructure solutions remains a priority.
Solutions and Services Group (SSG): Sustained Double-Digit Growth
Q2 FY24/25 Achievements
> Revenue Growth: SSG recorded $2.2 billion in revenue, maintaining a 20% operating margin and extending its growth streak to 14 quarters.
> Diversified Offerings: Managed services and project solutions contributed to nearly 60% of total revenue, with strong performance in Digital Workplace Solutions, Hybrid Cloud, and Sustainability Solutions.
Strategic Focus Areas
> AI Services Expansion: AI is projected to be the key growth driver for the IT services market, with Lenovo embedding AI in core offerings.
> AI-Native Solutions: SSG is developing new AI-native services to help customers adopt hybrid AI solutions effectively.
ESG and Corporate Highlights
Recognition and Leadership
> Innovation Leader: Lenovo ranked #1 on Fast Company’s list of the 100 Best Places to Work for Innovators and topped the AI and robotics category.
> Sustainability Achievements: The Group earned the highest environmental score in the 2024 Hang Seng Corporate Sustainability Index and joined the European Commission’s AI Pact.
> Leadership Update: Lenovo welcomed Ashley Gorakhpurwalla as the new head of ISG, bringing experience from Western Digital, Dell, and Compaq.
Lenovo’s Q2 performance underlines its leadership in AI-driven transformation and innovation, setting a strong foundation for continued growth in the years to come.
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