Investing.com — Lenovo Group (HK:) on Thursday reported its financial performance for the first quarter of its fiscal year 2024/25.
Lenovo reported a 20% year-on-year increase in revenue, reaching $15.4 billion, beating analyst expectations. This growth marks the third consecutive quarter of revenue gains, following a challenging period of five straight quarters of decline, largely due to the post-pandemic slowdown in the global market.
One of the key drivers of Lenovo’s success in this quarter was its work in the emerging market of AI PCs. After launching its first AI-powered PCs in May 2024, Lenovo received positive feedback, particularly in the Chinese market.
Anticipation is building for further global launches at major events like IFA and Tech World later this year. Lenovo is positioning itself to lead the AI PC market, which is projected to account for more than 50% of the total PC market by 2027.
The company’s net income also saw a significant boost, rising 65% year-on-year to $315 million on a non-HKFRS basis. On a standard basis, net income attributable to equity holders increased to $243 million, exceeding estimates.
Lenovo’s strategic diversification efforts have paid off, with non-PC revenue contributing a record 47% of total revenue, up five percentage points from the previous year.
The Intelligent Devices Group (IDG), Lenovo’s core business segment, generated $11.4 billion in revenue. This represented double-digit growth compared to the same period last year, coupled with a nearly one percentage point improvement in operating margin.
Lenovo maintained its leadership in the global PC market, securing a 23% market share in shipments, a testament to its dominance as the industry shows signs of recovery.
Meanwhile, Lenovo’s Infrastructure Solutions Group (ISG) recorded a remarkable quarter, achieving a record revenue of $3.2 billion, a 65% year-on-year increase. This growth was primarily driven by the Cloud Service Provider business, which benefited from the surge in demand for cloud infrastructure and services.
ISG also showed improved profitability, narrowing its operating losses compared to previous quarters. Notably, the division’s Neptune™ liquid-cooled servers saw revenue grow by over 50%, reflecting the increasing demand for sustainable and efficient solutions to support AI workloads.
The Solutions and Services Group (SSG) continued to be a cornerstone of Lenovo’s profitability, posting its 13th consecutive quarter of double-digit revenue growth, with Q1 revenue reaching $1.9 billion.
The segment maintained a strong operating margin of over 20%, reinforcing its role as a key growth engine for the company. As AI services are expected to outpace the general IT services market, Lenovo is focused on embedding AI across its offerings and developing AI-native services that help customers achieve measurable returns on their AI investments.
Looking forward, Lenovo remains committed to innovation, evidenced by a 6% year-on-year increase in R&D spending to $476 million. The company is also strengthening its global footprint through strategic partnerships, such as its collaboration with Alat, a subsidiary of PIF. This partnership is set to enhance Lenovo’s supply chain capabilities with a new manufacturing hub in the Middle East, further diversifying its operational base.
“Looking ahead, we are both well-prepared and uniquely positioned in the market with our full-stack AI portfolio to lead in the era of hybrid AI and seize the enormous growth opportunities across our entire business,” said Yuanqing Yang, chairman and chief executive at Lenovo.
