Lenovo Group Limited · HKEX:992
Lenovo — Q4 2024 Earnings Presentation
30 slides from Lenovo's earnings presentation, May 24, 2024
Slide 1: Q4 and FY23/24 Earnings Announcement
Q4 and FY23/24 Earnings Announcement May 23, 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 May 23, 2024 2024 Lenovo Internal. All rights reserved.
Slide 4: Accelerating growth, navigated downturn; capturing hybrid AI opportunity
Accelerating growth, Capturing navigated downturn hybrid AI opportunity 2023 Lenovo Internal. All rights reserved. 4
Slide 5: Group: Q4 2023/24 Performance
Q4 2023/24 Q4 Performance Group: • Revenue $13.8B, up 9.5% YTY Growth accelerated, • Net income $248M, up 118% YTY Capturing Hybrid AI opportunities • Net income margin up 0.9pts YTY • All businesses resumed YTY growth • Non-PC revenue mix up 1.5pts YTY to 44.7%, record high 2023 Lenovo Internal. Al
Slide 6: Group: Opportunities & Sustainable growth
Opportunities & Sustainable growth Group: Hybrid AI creates huge opportunities for devices, Growth accelerated infrastructure, solutions & services Capturing Hybrid AI ⚫ PC market resumed YTY growth opportunities ⚫ Hybrid AI drives hybrid infrastructure ⚫ Increasing demand for customized AI solution
Slide 7: SSG: Q4 2023/24 Performance
Q4 2023/24 Q4 Performance SSG • Revenue $1.82 billion, up 10% YTY Solutions & Services Group: Strong growth & profitability, • Operating margin 21.4%, up 1.7pts YTY Driving AI solutions • Managed Services, Project & Solution Services revenue mix reached 55%, up 5pts YTY • Hero offerings, e.g. Digita
Slide 8: SSG: Opportunities & Sustainable growth
Opportunities & Sustainable growth SSG • New IT services market expected Solutions & Services Group: stable growth (CAGR 11.3%, Strong growth & profitability, 2024-2027) Driving AI solutions • Increasing demand for AI-native services • Build AI-native & AI-embedded solutions & services 2023 Lenovo I
Slide 9: ISG: Q4 2023/24 Performance
Q4 2023/24 Q4 Performance ISG Infrastructure Solutions Group: • Revenue resumed YTY growth, up 15%, Regained momentum to record high for Q4 • Third consecutive quarter of revenue QTQ growth • Combined revenue from Storage, Software and Services up 52% YTY • HPC revenue record high • Edge revenue rec
Slide 10: ISG: Opportunities & Sustainable growth
Opportunities & Sustainable growth • ICT market continues shifting to ISG hybrid AI infrastructure Infrastructure Solutions Group: ⚫ AI servers to grow twice as fast as broad Regained momentum server market ⚫ Hybrid infrastructure supported by “Client-Edge-Cloud-Network-Intelligence” architecture •
Slide 11: IDG: Q4 2023/24 Performance
Q4 2023/24 Q4 Performance IDG • Revenue $10.5 billion, up 7% YTY Intelligent Devices Group: • Strong profitability, operating margin 7.4%, Solid growth up 0.6pts YTY Strengthened leadership • PC: market share 22.9%, market leadership strengthened (6pts premium-to- market); industry leading profitabi
Slide 12: IDG: Opportunities & Sustainable growth
Opportunities & Sustainable growth IDG Hybrid AI creates huge Intelligent Devices Group: opportunities for AI device market: Solid growth • PC market volume to recover to Strengthened leadership higher than pre-Covid level • AI PC to gradually grow from premium to mainstream, driving new refresh cyc
Slide 13: Group: 2023/24 Full Year Performance
FY 2023/24 Full Year Performance Group: • Group: faced with macro challenges, revenue and profit declined YTY; but Steady growth resumed revenue growth YTY and Profitability improvement improved net margin in the H2 • R&D expense-to-revenue ratio, headcount & its percentage all record highs • SSG: r
Slide 14: Capture the hybrid AI opportunities
Capture the hybrid AI opportunities Investment in innovation Full-stack portfolio Resilient operations Ecosystem partnerships 2023 Lenovo Internal. All rights reserved. 14
Slide 15: Wong Wai Ming, Chief Financial Officer
Wong Wai Ming Chief Financial Officer May 23, 2024 20242023 Lenovo Lenovo Internal. Internal. All rights All rights reserved. reserved. *all figures in the following slides are in million US$ unless otherwise stated
Slide 16: Accelerated Recovery: Performance – Q4 FY23/24
Accelerated Recovery Performance – Q4 FY23/24 • Group net income surged 118% YTY, driven Revenue Gross Profit Margin by revenue growth of 9.5% YTY and solid 9.5% 4,000 17.0% 17.5% 17.5% 17.6% 19.0% performances across business groups; 15,721 4,000 16.5% 18.0% 17.0% 16.0% 15.0% 14,410 13,833 14.0% HK
Slide 17: Unleash Hybrid AI Growth Opportunities: Performance – FY23/24
Unleash Hybrid AI Growth Opportunities Performance – FY23/24 Revenue Gross Profit Margin • Operational excellence and Hybrid AI 80,000 70,000 -8% 20,000 17.2% 17.5% innovations fostered a 6% YTY rebound in 60,000 34,798 20,000 16.8% 17.0% 50,000 20,000 17.0% net income in H2, recovering from market
Slide 18: Robust Working Capital Management
Robust Working Performance Capital Management Cash Conversion Cycle 1 5 1 10 days 12 1 days 10 1 • Cash conversion cycle further improved 1 1 8 6 1 -4 days -2 days - 3 days to minus 4 days in FY24, driven by 1 -2 days 4 1 2 -5 0 - 0 -11 days combined improvement in days of 0 -5 days -4 days -2 0 -13
Slide 19: SSG Performance
SSG Performance Solutions & Services Group Revenue 9,000 10% • Record full-year and Q4 revenue; full 7,742 8,000 6,663 2,500 7,000 1,918 2,021 5,442 1,650 1,713 1,820 6,000 2,000 year operating profit reached 35% of 5,000 4,000 1,500 3,000 1,000 combined total of the three business 2,000 1,000 500 -
Slide 20: ISG Performance
ISG Performance Infrastructure Solutions Group 12,000 Revenue • Stronger momentum with record Q4 10,000 9,756 8,922 15% revenue, up 15% YTY 8,000 7,140 2,533 2,473 6,000 ➢ Second highest ever fiscal year revenue, with 2,200 2,002 1,914 4,000 25% growth over past 2 years 2,000 ➢ OP impacted by R&D in
Slide 21: IDG Performance
IDG Performance Intelligent Devices Group1 Revenue 7% 70,000 62,310 60,000 49,371 15,000 • FY revenue down 10% YTY but ending 50,000 44,599 11,515 12,362 9,796 10,261 10,463 40,000 10,000 30,000 with a 7% YTY increase in Q4, the 2nd 20,000 5,000 10,000 consecutive quarter of YTY growth, driven - - F
Slide 22: Q4 FY23/24 ESG Updates
Q4 FY23/24 ESG Updates Leadership Best Green Energy 1 year of progress Product of the Year band for CDP Climate Change for for Neptune liquid-cooling technology towards net-zero target validated by 5th consecutive year1 by CRN Sustainability Tech Award2 SBTi3 Environmental UNESCO Global 3 years 20%
Slide 23: 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 gr
Slide 24: 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. 24
Slide 25: Financial Summary
Financial Summary US$ Million Q4 22/23 Q4 23/24 Y/Y% FY22/23 FY23/24 Y/Y% Revenue 12,635 13,833 +9% 61,947 56,864 -8% Gross profit 2,143 2,428 13% 10,501 9,803 -7% Operating expenses (1,852) (1,939) 5% (7,832) (7,797) 0% Operating profit 291 489 68% 2,669 2,006 -25% Operating profit (non-HKFRS) 493
Slide 26: Condensed Consolidated Income Statement
Condensed Consolidated Income Statement US$ Million Q4 22/23 Q4 23/24 FY22/23 FY23/24 Revenue 12,635 13,833 61,947 56,864 Cost of sales (10,492) (11,405) (51,446) (47,061) Gross profit 2,143 2,428 10,501 9,803 Selling and distribution expenses (648) (849) (3,285) (3,309) Administrative expenses (599
Slide 27: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet US$ Million As of Mar 31, 2023 As of Mar 31, 2024 Current assets 22,941 22,687 Bank deposits and cash 4,321 3,625 Trade, notes and other receivables 11,886 11,930 Inventories 6,372 6,703 Others 362 429 Non-current assets 15,979 15,786 Property, plant and equipmen
Slide 28: Condensed Consolidated Cash Flow Statement
Condensed Consolidated Cash Flow Statement US$ Million Q4 22/23 Q4 23/24 FY22/23 FY23/24 Net cash generated from operating activities 244 543 2,801 2,011 Net cash used in investing activities (314) (250) (1,915) (1,283) Net cash used in financing activities (729) (155) (414) (1,337) (Decrease)/Incre
Slide 29: Supplemental Non-HKFRS Measures
Supplemental Non-HKFRS Measures US$ Million Q4 22/23 Q4 23/24 Profit Profit Profit Profit Operating Profit before for the attributable Operating Profit before for the attributable profit taxation period to equity profit taxation period to equity holders holders As reported 291 130 106 114 489 309 25
Slide 30: Smarter technology for all, thanks
Smarter technology thanks. Lenovo