Lenovo Group Limited · HKEX:992
Lenovo — Q3 2020 Earnings Presentation
28 slides from Lenovo's earnings presentation, Feb 20, 2020
Slide 1: Q3FY20 Earnings Announcement
Q3FY20 Earnings Announcement 2020 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 expectations and plans for the future and include, without limitation, statements regarding Lenovo’s future results of operations, financial condition or business prospects as well as
Slide 3: Yuanqing Yang, Chairman & CEO
Yuanqing Yang Chairman & CEO 2020 Lenovo Internal. All rights reserved.
Slide 4: Strong Group Performance – Record Revenue, PTI
Strong Group Performance – Record Revenue, PTI* • Revenue: $14.1B, an all-time record • Pre-Tax Income: $390M, an all-time record, up 11% YOY • Net income: $258M, up 10.9% YOY Revenue ($B) PTI ($M) Net Income ($M) 390 +0.5% +11% 14.1 14 350 258 +10.9% 233 Q3 1819 Q3 1920 Q3 1819 Q3 1920 Q3 1819 Q3 1
Slide 5: IDG PCSD – Record Results
PCSD Revenue ($M) IDG PCSD* – Record Results +3.2% 11074 10729… • Overcame severe supply shortage with operational excellence. • Record breaking results: § Revenue: $11.1B § PTI: $684M, up 17.2% YOY Q3 1819 Q3 1920 § PTI margin: 6.2%, up 0.7 points YOY PCSD PTI ($M) PCSD PTI Margin (%) 684 584 +17.2
Slide 6: IDG PC – Maintain Leading Position
Global PC Volume Growth YOY (%) IDG PC – Maintain Leading Lenovo Mkt Position 7.0% 5.2% • #1 in PC again outgrew the market with Q3 1819 Q4 1819 Q1 1920 Q2 1920 Q3 1920 record shipments Segment Volume Growth vs Market YOY (%) • Outgrew market by double-digits across Workstation Thin & Light high-gro
Slide 7: IDG PCSD Drive growth through innovation
IDG PCSD Drive growth through innovation Lenovo 5G PC ThinkPad X1 Fold TIME named ThinkBook Plus ThinkPad X1 Fold 2019 Best Innovation 7
Slide 8: IDG PCSD - Outlook
IDG PCSD - Outlook • Proven operational excellence ThinkPad X1 • Continuing innovation Foldable • Outgrow the market and drive leading profitability 2018 Lenovo Internal. All rights reserved. 8
Slide 9: IDG Mobile – Continued Profitability
Mobile PTI ($M) IDG Mobile – Continued Profitability 8 5 4 3 3 • 5th consecutive profitable quarter • Latin America: volume outgrew market by 18.9 points while improving profitability -49 Q21819 Q3 1819 Q4 1819 Q1 1920 Q2 1920 Q3 1920 LA Volume Growth vs Market (%YOY) Lenovo Market 23% 4.1% Q3 1819
Slide 10: IDG Mobile - Outlook
IDG Mobile - Outlook • Strengthen profitability while driving growth in new markets • Motorola razr Foldable well received; re-entry to premium segment Motorola razr Foldable 10
Slide 11: Data Center – Continued Improvement
DCG Rev. Growth YOY ($M) DCG PTI Growth($M) Data Center – Continued 1600 1601 Improvement • Profitability improvement continued -47 -55 +$8M • Server volume up 18% YOY Q3 1819 Q3 1920 Q3 1819 Q3 1920 • Non-hyperscale revenue grew 16% YOY Non-Hyperscale Rev PRC Non-Hyperscale Growth YOY (%) Rev Growt
Slide 12: Data Center - Outlook
Data Center - Outlook • Resume revenue growth • Hyperscale: § Expand in server + storage § Acquire new customers • Non-Hyperscale: § Drive premium to market growth § Increase customer diversity § Accelerate and expand indirect channels 2018 Lenovo Internal. All rights reserved. 12
Slide 13: Intelligent Transformation – Continued Hypergrowth
Intelligent Transformation – Software & Service Revenue ($M) Continued Hypergrowth 1023 +41% • Smart IoT revenue quadrupled YOY • Smart Infrastructure revenue, up 50%+ YOY • Smart Vertical revenue doubled YOY • Software & Services revenue* reached $1 Billion per quarter, up 41% YOY Q3 1819 Q4 1819 Q
Slide 14: Succeed in any circumstances
Our core competence of geographical balance, operational excellence, and strategic execution gives us the ability to succeed in any circumstances. 14
Slide 15: Wong Wai Ming, Chief Financial Officer
Wong Wai Ming Chief Financial Officer 2020 Lenovo Internal. All rights reserved.
Slide 16: Financial Highlights
Financial Highlights Q3 Highlights 1 1 All-time high revenue thanks to strong US$ Million Revenue execution in PCSD business and improvement of DCG business; Software 14,103 14,000 14,035 13,522 and Services revenue* up 41% YTY 12,512 11,710 2 Record profit: PTI up 11% YTY, driven by the highest PTI
Slide 17: Cash and Working Capital
Cash and Working Capital Q3 Highlights Operating Cashflow 1 Operating cashflow and net debt position US$ Million reflecting improvement in inventory and 1,800 1,548 1382 accounts payable management being offset 1,300 1 by reduced AR factoring volume 800 538 300 2 Inventory days lowered by 1 day YTY;
Slide 18: Intelligent Devices Business Group (IDG)
Intelligent Devices Business Group (IDG)* US$ Million Revenue 1 Q3 Highlights 14,000 12,435 12,191 12,502 11,156 10,459 11,000 11. All-time high revenue thanks to robust share gain in PCSD 8,000 2. New milestone set on pre-tax profit 2 5,000 and margin thanks to sales mix Q3 FY2018/19 Q4 FY2018/19 Q
Slide 19: IDG - PC & Smart Device Business Group (PCSD)
IDG - PC & Smart Device Business Group (PCSD) US$ Million Revenue 1 12,000 Q3 Highlights 11,074 10,729 10,656 11,000 10,000 9,631 11. Record PCSD revenue despite severe 8,892 shortage of a key component; reinforced 9,000 global no. 1 position in PC market 8,000 7,000 22. Pre-tax profit up 17% YTY on
Slide 20: IDG - Mobile Business Group (MBG)
IDG - Mobile Business Group (MBG) US$ Million Revenue Q3 Highlights 2,000 1,669 1 1,545 1,503 1,510 1,500 1,381 11. Slower revenue momentum due to component supply constraint 1,000 500 22. Positive PTI for 5th consecutive quarter: margin expansion in 0 Q3 FY2018/19 Q4 FY2018/19 Q1 FY2019/20 Q2 FY201
Slide 21: Data Center Business Group (DCG)
Data Center Business Group (DCG) US$ Million Revenue Q3 Highlights 2,000 1 1,600 1,601 1. Server shipments grew 18% YTY despite 1 1,500 1,356 1,331 limited revenue growth; average selling 1,251 price compression on the lingering 1,000 impact of commodity price cut 500 2 2. Encouraging growth in ente
Slide 22: Outlook Statement
Outlook Statement Ø Group Mission is to be the Leader and Enabler of Intelligent Transformation Ø Near-term supply challenge from Novel coronavirus outbreak Ø IDG: Drive premium-to-market growth and industry-leading profitability • PCSD: Target to maintain premium to market growth with industry-lead
Slide 23: Appendix
Appendix - Financial Summary - Condensed Consolidated Income Statement - Condensed Consolidated Balance Sheet - Condensed Consolidated Cash Flow Statement 2020 Lenovo Internal. All rights reserved. 23
Slide 24: Financial Summary
Financial Summary 2020 Lenovo Internal. All rights reserved. 24
Slide 25: Condensed Consolidated Income Statement
Condensed Consolidated Income Statement 2020 Lenovo Internal. All rights reserved. 25
Slide 26: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet 2020 Lenovo Internal. All rights reserved. 26
Slide 27: Condensed Consolidated Cash Flow Statement
Condensed Consolidated Cash Flow Statement 2020 Lenovo Internal. All rights reserved. 27
Slide 28: thanks.
thanks. Different is better kenovo