Lenovo Group Limited · HKEX:992
Lenovo — Q4 2022 Earnings Presentation
35 slides from Lenovo's earnings presentation, May 26, 2022
Slide 1: Q4FY22 Earnings Announcement
Q4FY22 Earnings Announcement May 26, 2022 2022 Lenovo Internal. All rights reserved.
Slide 2: Forward-Looking Statement
Forward-Looking Statement This presentation contains “forward-looking statements”, which are statements that refer to the expectations and plans for the future and include, without limitation, statements regarding Lenovo’s future results of operations, financial condition or business prospects as we
Slide 3: Yuanqing Yang, Chairman & CEO
Yuanqing Yang Chairman & CEO May 26, 2022 2022 Lenovo Internal. All rights reserved.
Slide 4: Sustainable Profitable Growth
Sustainable Profitable Growth OPPORTUNITIES PERFORMANCE SUSTAINABLE GROWTH 2022 Lenovo Internal. All rights reserved. 4
Slide 5: Group: New IT, New Milestones
OPPORTUNITIES Group: New IT, New Milestones Accelerated digital/intelligent transformations: • 50%+ companies developing digitalization strategy • Hybrid work model driving demand • Smart devices • Data center infrastructure • Scenario-driven solutions 2022 Lenovo Internal. All rights reserved. Sour
Slide 6: Group: New IT, New Milestones - Performance of FY2021/2022
PERFORMANCE of FY2021/2022 Group: Group Net Income ($M) New IT, 9.6% +72% 1.2 New Milestones 16.1% 2,030 1 0.8 0.6 1,178 • Record net income $2 billion, 665 0.4 0.2 up 72% YTY 0 0 FY 19/20 FY 20/21 FY 21/22 • Record revenue $71.6 billion, up 18% YTY Group Revenue ($M) +10.9B • All main businesses pr
Slide 7: Group: New IT, New Milestones - Sustainable Growth
Group: SUSTAINABLE GROWTH New IT, New Milestones ⚫ Strengthen competitiveness to drive sustainable profitable growth ⚫ On track to double R&D investment in 3 years from FY2021/2022 ⚫ Realize ESG goals 2022 Lenovo Internal. All rights reserved. 7
Slide 8: SSG High Margin, Strong Growth - Opportunities
SSG OPPORTUNITIES Solutions & Services Group: Trillion-dollar IT services market High Margin, keeps expanding Strong Growth • Hybrid work model drives growth for workplace services • Digital workplace services market: $93 billion by 2025 • 90% of CIOs welcomes as-a-Service Lenovo’s strategic intent:
Slide 9: SSG High Margin, Strong Growth - Performance
SSG PERFORMANCE of FY2021/2022 Solutions & Services Group: SSG Operating Profit ($M) & Margin (%) SSG Revenue ($M) High Margin, 1500 40% 1,195 0.4 30% 5,442 Strong Growth 1400 1300 0.35 1200 0.3 4,193 1100 855 1000 0.25 900 800 • Operating margin 22%, 0.2 700 600 22.0% 20.4% 0.15 500 400 0.1 300 ope
Slide 10: SSG High Margin, Strong Growth - Sustainable Growth
z SSG SUSTAINABLE GROWTH Solutions & Services Group: • Invest in software tools, platforms and High Margin, repeatable vertical solutions with own IP Strong Growth • Drive deeper in vertical solutions: • Manufacturing • Healthcare • Education • Smart City • Retail • Expand TruScale portfolio to incl
Slide 11: ISG Profitable with Record Revenue - Opportunities
ISG OPPORTUNITIES Infrastructure Solutions Group: Profitable with ICT Infrastructure upgrade continues By 2025: Record Revenue • Data center market to reach $183 billion • Edge infrastructure to exceed $41 billion • Hybrid Cloud to exceed $120 billion • Data creation to double Lenovo’s strategic int
Slide 12: ISG Profitable with Record Revenue - Performance
ISG PERFORMANCE of FY2021/2022 Infrastructure Solutions Group: ISG Operating Results ($M) & Margin(%) Profitable with 0.5 7 0.002 Record Revenue -1.5 -3.5 0.1% -0.003 -0.008 -0.013 -5.5 -0.018 -7.5 -2.1% -0.023 -130 • Milestone : full year profitability -9.5 -0.028 FY 20/21 FY 21/22 Operating Result
Slide 13: ISG Profitable with Record Revenue - Sustainable Growth
ISG SUSTAINABLE GROWTH Infrastructure Solutions Group: Profitable with • Enhance full stack capabilities supporting both CSP & E/SMB* Record Revenue • Invest in in-house design/manufacturing • Expand Edge and Cloud Services • Differentiate with green technology 2022 Lenovo Internal. All rights reser
Slide 14: IDG Record Revenue, Profitability Growth - Opportunities
OPPORTUNITIES IDG Intelligent Devices Group: Record Revenue, Hybrid work model brings growth opportunities Profitability Growth • PC: commercial demand remains strong • Smart Collaboration: $80 billion in 2025 Lenovo’s strategic intent: • Invest in innovation & premium segments • Expand business bey
Slide 15: IDG Record Revenue, Profitability Growth - Performance
IDG Intelligent Devices Group: PERFORMANCE of FY2021/2022 Record Revenue, IDG Operating Profit ($M) & Margin(%) Profitability Growth 5500 +27% 4,738 10.0% 4500 9.0% 3,744 3500 7.6% 8.0% 7.0% 2500 7.1% • Overcame challenges while 6.0% 1500 5.0% 500 capturing opportunities -500 FY 20/21 FY 21/22 4.0%
Slide 16: IDG Record Revenue, Profitability Growth - Smartphone and PC
IDG PERFORMANCE of FY2021/2022 Intelligent Devices Group: Record Revenue, Smartphone Revenue($M) 39% Smartphone Operating Profit($M) & Margin(%) Profitability Growth 7,902 110% 350 362 12.0% 5,669 10.0% 8.0% 250 173 4.6% • PC: maintained #1 position, 6.0% 150 4.0% 2.0% strong 30%+ premium segments 5
Slide 17: IDG Record Revenue, Profitability Growth - Sustainable Growth
IDG SUSTAINABLE GROWTH Intelligent Devices Group: Record Revenue, • Extend leadership in PC while maintaining industry leading Profitability Growth profitability through innovation • Expand in smartphones, tablets, Embedded Computing/IoT • Expand in scenario-based solutions: Smart Collaboration, Sma
Slide 18: Strong Q4 Performance, Sustained Momentum
PERFORMANCE Strong Q4 Performance, Group Net Income ($M) Sustained Momentum +58% 600 1.2 500 9.6% 1 412 400 0.8 16.1% • Managed the challenges, closed the 300 260 0.6 year with strong momentum 200 100 0.4 0.2 • Net income up 58% YTY, 0 Q4 20/21 Q1 21/22 Q2 21/22 Q3 21/22 Q4 21/22 0 7th consecutive q
Slide 19: Investment Pay-off, Stay Flexible & Resilient, Pillars of the Future
Investment Stay Flexible & Pillars of Pay- off Resilient the Future ISG & MBG profit contribution Clear strategy & strong execution Innovation New growth engines in place Global-local model Service-led transformation Balance of innovation & efficiency ESG 2022 Lenovo Internal. All rights reserved. 1
Slide 20: Wong Wai Ming, Chief Financial Officer
Wong Wai Ming Chief Financial Officer May 26, 2022 2022 Lenovo Internal. All rights reserved. *all figures in the following slides are in million US$ unless otherwise stated
Slide 21: A Record-Breaking Transformational Year
A Record-Breaking PERFORMANCE – FY21/22 Transformational Revenue Revenue Contribution & Year 51,038 50,716 60,742 71,618 Growth by Geography 45,350 • Another record year with over $10 +18% YTY billion added to revenue for the 2nd EMEA, 26%, PRC, 26%, +29% YTY consecutive year; double-digit growth in
Slide 22: Doubling Down on R&D to Drive Sustainable Growth
Doubling Down on PERFORMANCE R&D to Drive R&D Expenses and Ratio to Revenue 3.4% Sustainable Growth 3,000 2.8% 2.5% 2.6% 2.4% 2.9% 4.0% 3.0% 800 700 2.7% 576 3.0% 2.0% 2,500 600 2,073 2.0% • Bolstered R&D spending by 43% YTY to 2,000 1.0% 500 417 1.0% 400 facilitate “Client-Edge-Cloud-Network- 1,500
Slide 23: Stronger Balance Sheet
Stronger Balance PERFORMANCE Sheet Operating Cashflow 4,077 3,653 FY21/22 Highlights 2,210 1,462 +12% • Net cash generated from operating activities 1,473 YTY +143% YTY reached US$4.1 billion, setting a new record, 601 while free cash flow reached US$2.8 billion -756 • Strong profit generation and p
Slide 24: SSG - Solutions & Services Group
SSG Solutions & Services Group PERFORMANCE FY21/22 Highlights Revenue 5,442 +28% YTY • Strong 1st year with revenue up 30% YTY; continued 4,193 1,498 1,396 to build recurring business, deferred revenue grew 1,184 1,363 1,088 30% YTY +30% • Vast service opportunities from the New IT trend, YTY hybrid
Slide 25: ISG - Infrastructure Solutions Group
ISG PERFORMANCE Infrastructure Solutions Group Revenue FY21/22 Highlights 3,000 • Achieved first full-year profit since IBM x86 7,500 7,140 -12% YTY 2,500 acquisition; Operating profit up $137 million YTY; 6,500 6,301 1,968 1,929 Revenue grew 13% YTY 5,500 +13% YTY 2,000 1,835 1,602 4,500 1,409 • A
Slide 26: IDG - Intelligent Devices Group
IDG PERFORMANCE Intelligent Devices Group1 Revenue FY21/22 Highlights +18% YTY Annual growth rate • Year of multiple records: All-time high revenue 70,000 62,310 +8% YTY and operating profit 60,000 53,007 18% 20,000 50,000 17,610 Other smart 17% 18,000 • Commercial2 segment revenue grew 23% YTY 16,0
Slide 27: Continuous Growth Despite Challenges - Q4 Performance
Continuous Growth PERFORMANCE – Q4 Despite Challenges Revenue Net income 3.0% 600 2.5% 20,000 2.5% • Net income up 58% YTY; the profit 16,694 500 412 2.0% 15,630 400 1.7% expansion was increasingly driven by SSG, 16,000 1.5% 300 260 ISG and beyond PC 12,000 +7% YTY 200 1.0% +58% YTY • Revenue grew 7
Slide 28: Q4 FY21/22 ESG Updates
Q4 FY21/22 ESG Updates ONE MILLION A LIST 100 Tons of greenhouse gas emissions to be 2021 CDP A list for supply chain and Recognized as one of the world’s 100 most removed from our supply chain by FY25/26 water, and received an A- for climate sustainable companies by the Global 100 Environmental Inc
Slide 29: Outlook
Outlook Group Mission is to Lead and Enable Intelligent Transformation Improve net income margin in medium term; Drive R&D to turbocharge innovation; Increase brand premium Overcome challenges from supply disruption and macro uncertainties SSG: Leverage Powerful Group Platform for High-Margin Servic
Slide 30: Supplemental Financial Materials
Supplemental Financial Materials - Financial Summary - Condensed Consolidated Income Statement - Condensed Consolidated Balance Sheet - Condensed Consolidated Cash Flow Statement 2022 Lenovo Internal. All rights reserved. 30
Slide 31: Financial Summary
Financial Summary US$ Million Q4 20/21 Q4 21/22 Y/Y% FY20/21 FY21/22 Y/Y% Revenue 15,630 16,694 7% 60,742 71,618 18% Gross profit 2,688 2,864 7% 9,768 12,049 23% Operating expenses (2,209) (2,275) 3% (7,588) (8,968) 18% Operating profit 479 589 23% 2,180 3,081 41% Other non-operating expenses (99) (
Slide 32: Condensed Consolidated Income Statement
Condensed Consolidated Income Statement US$ Million Q4 20/21 Q4 21/22 FY20/21 FY21/22 Revenue 15,630 16,694 60,742 71,618 Cost of sales (12,942) (13,829) (50,974) (59,569) Gross profit 2,688 2,864 9,768 12,049 Selling & distribution expenses (824) (963) (3,045) (3,746) Administrative expenses (821)
Slide 33: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet US$ Million As of Mar 31, 2021 As of Mar 31, 2022 Current assets 23,335 28,997 Bank deposits and cash 3,127 4,023 Trade, notes and other receivables 13,455 16,303 Inventories 6,381 8,301 Others 372 370 Non-current assets 14,655 15,514 Property, plant and equipmen
Slide 34: Condensed Consolidated Cash Flow Statement
Condensed Consolidated Cash Flow Statement US$ Million Q4 20/21 Q4 21/22 FY20/21 FY21/22 Net cash generated from operating activities 601 1,462 3,653 4,077 Net cash used in investing activities (280) (574) (976) (1,499) Net cash used in financing activities (1,225) (750) (3,228) (1,757) (Decrease)/i
Slide 35: thanks.
thanks. Smarter technology for all Lenovo