Lenovo Group Limited · HKEX:992
Lenovo — Q3 2024 Earnings Presentation
28 slides from Lenovo's earnings presentation, Feb 22, 2024
Slide 1: Q3 FY24 Earnings Announcement
Q3 FY24 Earnings Announcement Feb 22, 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 February 22, 2024 2024 Lenovo Internal. All rights reserved.
Slide 4: Resumed year-on-year growth, capturing hybrid AI opportunity
Smart solutions Resumed Capturing year-on-year growth hybrid AI opportunity 2023 Lenovo Internal. All rights reserved. 4
Slide 5: Group Performance: Growth Resumed & Transformation Accelerating
Group: Performance Growth Resumed & • Revenue $15.7B, up 3% YTY, back to YTY Transformation Accelerating growth trajectory • Non-HKFRS net income $357M, net margin QTQ improvement for two consecutive quarters • Non-PC revenue mix up 1.3 pts YTY to 42%, driven by accelerated transformation 2023 Lenov
Slide 6: Group Opportunities & Sustainable Growth
Group: Opportunities & Sustainable growth Growth Resumed & Hybrid AI creates opportunities for devices, Transformation Accelerating infrastructure, solutions & services ⚫ AI PC stimulates refresh cycle, 50%+ of PCs to be AI capable by 2026 (Canalys) ⚫ Hybrid AI drives hybrid infrastructure ⚫ Increas
Slide 7: SSG Performance: Record Revenue & Profit
SSG Performance Solutions & Services Group: Record Revenue & Profit • Revenue reached $2 billion milestone, up 10% YTY to historic high Driving AI Solutions & Services • Record operating profit, high operating margin 20.4% • Protected Support Services & Software as core profit engine • Managed Servi
Slide 8: SSG Opportunities & Sustainable Growth
SSG Opportunities & Sustainable growth Solutions & Services Group: Record Revenue & Profit • New IT services market expected Driving AI Solutions & Services stable growth in mid-term (CAGR 11.2%, 2023-2026) • Hybrid AI opens up new horizons for AI native solutions & services • Embed AI into vertical
Slide 9: ISG Performance
ISG Performance Infrastructure Solutions Group: Capturing Opportunities in • External headwinds remained, demand shift AI Infrastructure to AI continues • Revenue achieved QTQ growth for the second consecutive quarter • Combined revenue from Storage, Software and Service reached record high $1 billi
Slide 10: ISG Opportunities & Sustainable Growth
ISG Opportunities & Sustainable growth Infrastructure Solutions Group: Capturing Opportunities in • ICT market continues shifting to hybrid AI Infrastructure AI infrastructure ⚫ AI Server to grow twice as fast as the total server market • Grow key strategic partnership • Build more sophisticated AI
Slide 11: IDG Performance
IDG Performance Intelligent Devices Group: Resumed Growth & • Revenue resumed growth, up 6.7% YTY Solidified Leadership • Strong profitability, operating margin 7.4% • PC: industry leading profitability; shipment resumed YTY growth with 5.8 pts premium- to-market; market share 23.8%, highest since C
Slide 12: IDG Opportunities & Sustainable Growth
IDG Opportunities & Sustainable growth Intelligent Devices Group: Resumed Growth & Hybrid AI drives huge opportunities: Solidified Leadership • Expect strong demand for AI client devices • Accelerated refreshment cycle • More growth potential • Improving profitability • Invest in innovation • Build
Slide 13: Capture the tremendous opportunities in AI
Capture the tremendous opportunities in AI Commitment to Partnerships with AI innovation other key leaders 2023 Lenovo Internal. All rights reserved. 13
Slide 14: Wong Wai Ming, Chief Financial Officer
Wong Wai Ming Chief Financial Officer Feb 22, 2024 20242023 Lenovo Lenovo Internal. Internal. All rights All rights reserved. reserved. *all figures in the following slides are in million US$ unless otherwise stated
Slide 15: Embracing Hybrid AI Performance
Embracing Hybrid AI Performance Revenue • Accelerated product launches to monetize Hybrid AI opportunities; revenue grew QTQ 15,267 14,410 15,721 for 3rd consecutive quarter by 9%; revenue 12,635 12,900 and operating profit improved sequentially across all three business groups Q3 22/23 Q4 22/23 Q1
Slide 16: Prudent Financial Management
Prudent Financial Performance Management Finance cost Total Borrowings • The Group showed greater resilience by 198 197 balancing finance cost and liquidity amid a 190 4,499 higher interest rate environment. Finance 185 3,955 3,969 3,932 3,621 cost down $10M YTY and $16M QTQ, 174 thanks to a prudent
Slide 17: SSG Performance: Solutions & Services Group
SSG Performance Solutions & Services Group Revenue 2,500 • Revenue reached a new milestone of 2,000 1,836 1,650 1,713 1,918 2,021 $2.0B; operating profit up 11% YTY with 1,500 1,000 margin expanding 22 bps YTY to 20.4% 500 - Q3 22/23 Q4 22/23 Q1 23/24 Q2 23/24 Q3 23/24 • Strong momentum for TruScale
Slide 18: ISG Performance: Infrastructure Solutions Group
ISG Performance Infrastructure Solutions Group Revenue • Revenue and operating profit improved for 2,855 2,473 2nd consecutive quarter by 24% and $16M 2,200 1,914 2,002 QTQ, driven by order recovery from key cloud and enterprise customers and Q3 22/23 Q4 22/23 Q1 23/24 Q2 23/24 Q3 23/24 successes in
Slide 19: IDG Performance: Intelligent Devices Group
IDG Performance Intelligent Devices Group1 Revenue • Premium-to-market growth resulting in 15,000 11,586 11,515 12,362 9,796 10,261 7% YTY sales increase; industry-leading 10,000 operating margin of 7.4%, driven by 5,000 operational excellence and premium mix - Q3 22/23 Q4 22/23 Q1 23/24 Q2 23/24 Q3
Slide 20: Q3 FY23/24 ESG Updates
Q3 FY23/24 ESG Updates 300 million pounds EPEAT® 100% Climate+TM Champion3 post-consumer recycled content plastics in Lenovo recognized with more than 2023 ThinkPad1 lines deploying products by FY 2025/26, cumulatively 400 products that are plastic-free primary packaging Environmental since 20052 EP
Slide 21: Outlook
Outlook Group Mission is to Lead and Enable Intelligent Transformation Improve net income margin in the medium-term; Turbocharge innovation; Increase brand premium; Drive hybrid AI with pocket to cloud deployment; Leverage Digital Transformation to drive secular growth SSG: Serve as a New Growth Eng
Slide 22: Supplemental Financial Materials
Supplemental Financial Materials - Financial Summary - Condensed Consolidated Income Statement - Condensed Consolidated Balance Sheet - Condensed Consolidated Cash Flow Statement - Supplemental Non-HKFRS Measures 2024 Lenovo Internal. All rights reserved. 22
Slide 23: Financial Summary
Financial Summary US$ Million Q3 22/23 Q3 23/24 Y/Y% Revenue 15,267 15,721 3% Gross profit 2,612 2,601 -0% Operating expenses (1,862) (1,988) 7% Operating profit 750 613 -18% Operating profit (non-HKFRS) 729 630 -14% Other non-operating expenses (145) (142) -2% Profit before taxation 605 471 -22% Pr
Slide 24: Condensed Consolidated Income Statement
Condensed Consolidated Income Statement US$ Million Q3 22/23 Q3 23/24 Revenue 15,267 15,721 Cost of sales (12,655) (13,120) Gross profit 2,612 2,601 Selling and distribution expenses (871) (869) Administrative expenses (480) (591) Research and development expenses (579) (547) Other operating income/
Slide 25: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet US$ Million As of Dec 31, 2022 As of Dec 31, 2023 Current assets 26,131 23,228 Bank deposits and cash 5,081 3,533 Trade, notes and other receivables 13,222 13,088 Inventories 7,502 6,219 Others 326 388 Non-current assets 15,617 16,276 Property, plant and equipmen
Slide 26: Condensed Consolidated Cash Flow Statement
Condensed Consolidated Cash Flow Statement US$ Million Q3 22/23 Q3 23/24 Net cash generated from operating activities 74 364 Net cash used in investing activities (407) (364) Net cash used in financing activities (301) (324) Decrease in cash and cash equivalents (634) (324) Effect of foreign exchang
Slide 27: Supplemental Non-HKFRS Measures
Supplemental Non-HKFRS Measures US$ Million Q3 22/23 Q3 23/24 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 750 605 482 437 613 471 37
Slide 28: Smarter technology for all, thanks
Smarter technology thanks. Lenovo