Lenovo Group Limited · HKEX:992
Lenovo — Q2 2025 Earnings Presentation
28 slides from Lenovo's earnings presentation, Nov 15, 2024
Slide 1: Q2FY25 Earnings Announcement
Q2FY25 Earnings Announcement Nov 15, 2024 2024 Lenovo Internal. All rights reserved. 2024 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 Nov 15, 2024 2024 Lenovo Internal. All rights reserved.
Slide 4: Accelerated Growth Sustained
Accelerated Sustained Growth Momentum 2023 Lenovo Internal. All rights reserved. 4
Slide 5: Group Performance
Group: Performance Accelerated growth, Profit increase, • Revenue $17.9 billion, up 24% YTY Hybrid AI investment paying off • Net income (Non-HKFRS) $404 million, up 48% YTY • All businesses achieved double-digit YTY revenue growth • Non-PC revenue mix up 5pts YTY to 46% 2023 Lenovo Internal. All ri
Slide 6: Group Opportunities & Sustainable Growth
Group: Opportunities & Sustainable growth Accelerated growth, Hybrid AI creates huge opportunities for devices, infrastructure, solutions & services Profit increase, ⚫ Hybrid AI becomes industry consensus Hybrid AI investment paying off ⚫ Accelerating development & application of personal/enterprise
Slide 7: IDG Performance
Performance IDG Intelligent Devices Group: • Revenue $13.5 billion, up 17% YTY Significant growth & • Strong profitability, operating margin 7.3% leading profitability, • PC: revenue up 12% YTY; market share 23.8%, industry accelerating in personal AI leading profitability • Smartphone: revenue up 4
Slide 8: IDG Opportunities & Sustainable Growth
IDG Opportunities & Sustainable growth Intelligent Devices Group: Hybrid AI creates huge opportunities for AI device Significant growth & market: leading profitability, • PC market entering new refresh cycle accelerating in personal AI • AI PC to represent ~80% of PC industry landscape by 2027 • Dri
Slide 9: ISG Performance
ISG Performance Infrastructure Solutions Group: Hypergrowth, • Revenue $3.3 billion, up 65% YTY, record high building hybrid infrastructure • Further narrowed operating losses, heading to breakeven • Combined revenue from Storage, Software and Services up 35% YTY, record high • Revenue from Neptune
Slide 10: ISG Opportunities & Sustainable Growth
ISG Opportunities & Sustainable growth Infrastructure Solutions Group: • ICT market continues shifting to hybrid AI Hypergrowth, infrastructure building hybrid infrastructure ⚫ Hybrid infrastructure supported by “Client-Edge-Cloud-Network-Intelligence” architecture ⚫ AI servers expected strong growt
Slide 11: SSG Performance
SSG Performance Solutions & Services Group: High margin & • Revenue $2.2 billion, up 13% YTY, double-digit growth double-digit growth, for 14 consecutive quarters unleashing Hybrid AI Advantage • Operating margin 20% • Managed Services and Project & Solution Services revenue mix 59%, up 3pts YTY • S
Slide 12: SSG Opportunities & Sustainable Growth
SSG Opportunities & Sustainable growth Solutions & Services Group: High margin & • New IT services market expected double-digit growth for mid-term double-digit growth, (CAGR 10%, 2024-2027) unleashing Hybrid AI Advantage • AI services growth more than twice as fast as the overall market • Hybrid AI
Slide 13: Lead in the Hybrid AI Era
Lead in the Hybrid AI Era Differentiated Operational Ecosystem Globalization Innovations Excellence Partnerships Capabilities 2023 Lenovo Internal. All rights reserved. 13
Slide 14: Wong Wai Ming, Chief Financial Officer
Wong Wai Ming Chief Financial Officer Nov 15, 2024 2024 Lenovo Internal. All rights reserved.
Slide 15: Accelerated Strength Performance – Q2 FY24/25
Accelerated Strength Performance – Q2 FY24/25 • Group revenue up 24% YTY, the 4th consecutive quarter of double-digit growth Revenue Geographical Sales (%) +24% Asia Pacific 19 +35% YTY 17,850 • Non-HKFRS net income up 48% YTY on 14,410 15,721 15,447 China 24 +30% YTY 13,833 operational excellence a
Slide 16: Robust Financial Management
Robust Financial Performance Management Free Cash Flow +583% 741 • Free cash flow grew by nearly 6-times 487 290 YTY on strength of business recovery 109 9 and profitability gains, boosting cash Q2 Q3 Q4 Q1 Q2 FY23/24 FY23/24 FY23/24 FY24/25 FY24/25 balance • Robust free cash flow enabled Cash Balan
Slide 17: IDG Performance
IDG Performance Intelligent Devices Group1 Revenue +17% • Revenue and OP both expanded by 20,000 16,000 13,514 12,362 17% YTY driven by strong market share 12,000 11,515 10,463 11,422 8,000 gain in both PC and smartphone. 7.3% 4,000 operating margin topped industry, 0 Q2 Q3 Q4 Q1 Q2 thanks to operat
Slide 18: ISG Performance
ISG Performance Infrastructure Solutions Group Revenue • Record quarterly revenue achieved at +65% above-market growth of 65% YTY, driven 4,000 2,533 3,160 3,305 2,473 by strong cloud momentum and 2,002 strengthening enterprise business; High 0 double-digit revenue growth for Storage Q2 FY23/24 Q3 F
Slide 19: SSG Performance
SSG Performance Solutions & Services Group Revenue • Quarterly revenue hit a record high with 4,000 +13% operating margin at 20%. SSG 1,918 2,021 1,820 1,885 2,165 accounted for 32% of the total operating profit of the three business 0 Q2 Q3 Q4 Q1 Q2 FY23/24 FY23/24 FY23/24 FY24/25 FY24/25 groups Op
Slide 20: Q2 FY2024-25 ESG Highlights
Q2 FY2024-25 ESG Highlights Environmental Governing Social impact responsibility with integrity • Presented the SEAL • Recognized as a 2024 Best • Maintained an AA rating in the Sustainable Innovation Award Place to Work for Disability 2024 Hang Seng Corporate for the newly launched LISSA1 Inclusion
Slide 21: Outlook
Outlook Group Mission is to Lead and Enable Intelligent Transformation • Improve net income margin in the medium-term; Leverage Digital Transformation to drive secular growth • Strategically positioned for Hybrid AI revolution with products and services from device to edge to cloud • Confident of co
Slide 22: Supplemental Financial Materials
Supplemental Financial Materials - Financial Summary - Condensed Consolidated Income Statement - Condensed Consolidated Balance Sheet - Condensed Consolidated Cash Flow Statement - Supplemental Non-HKFRS Measures 2024 Lenovo Internal. All rights reserved. 22
Slide 23: Financial Summary
Financial Summary US$ Million Q2 23/24 Q2 24/25 Y/Y% Revenue 14,410 17,850 24% Gross profit 2,522 2,796 11% Operating expenses (2,008) (2,145) 7% Operating profit 514 651 27% Operating profit (non-HKFRS) 512 692 35% Other non-operating expenses (156) (178) 13% Profit before taxation 358 473 32% Prof
Slide 24: Condensed Consolidated Income Statement
Condensed Consolidated Income Statement US$ Million Q2 23/24 Q2 24/25 Revenue 14,410 17,850 Cost of sales (11,888) (15,054) Gross profit 2,522 2,796 Selling and distribution expenses (792) (868) Administrative expenses (638) (747) Research and development expenses (498) (548) Other operating income/
Slide 25: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet US$ Million As of Sept 30, 2023 As of Sept 30, 2024 Current assets 23,409 28,206 Bank deposits and cash 3,799 4,239 Trade, notes and other receivables 12,935 14,377 Inventories 6,170 9,119 Others 505 471 Non-current assets 15,848 16,258 Property, plant and equipm
Slide 26: Condensed Consolidated Cash Flow Statement
Condensed Consolidated Cash Flow Statement US$ Million Q2 23/24 Q2 24/25 Net cash generated from operating activities 454 987 Net cash used in investing activities (469) (205) Net cash used in financing activities (575) (627) (Decrease)/increase in cash and cash equivalents (590) 155 Effect of forei
Slide 27: Supplemental Non-HKFRS Measures
Supplemental Non-HKFRS Measures US$ Million Q2 23/24 Q2 24/25 Profit before Profit for the Profit Profit before Profit for the Profit Operating profit taxation period attributable to Operating profit taxation period attributable to equity holders equity holders As reported 514 358 289 249 651 473 38
Slide 28: Smarter technology thanks. Lenovo
Smarter technology thanks. Lenovo