Lenovo’s latest quarterly revenues rose as AI opportunities drive growth and profitability.
Revenue of $13.83 billion was generated in the fourth fiscal 2024 quarter ending March 31, up 9.5 percent year-on-year, with profits up 117.5 percent to $248 million. The Hong Kong-based firm said full fy2024 revenues were $59.6 billion, down 8.1 percent and net profit came in at $1 billion, 37.8 percent less than the prior financial year.
Chairman and CEO Yuanqing Yang’s prepared quote said: “Lenovo’s fourth quarter results clearly demonstrate that we have not only resumed growth across all our businesses but that our business momentum is accelerating, driven by the unprecedented opportunities brought by Hybrid AI. … Supported by our strong execution, persistent innovation, operational excellence, and ecosystem partnerships, we are confident we can deliver sustainable growth and profitability improvement in the coming year.”
Lenovo said that, from the second half of the fiscal year, it achieved year-on-year revenue growth of 6 percent and net margin recovered from a first half year-on-year decline to be flat in the second half.
The company has three business units, Solutions & Services Group (SSG), Infrastructure Solutions Group (ISG – servers and storage) and Intelligent Devices Group (IDG – PCs and smartphones), with all three showing year-on-year revenue growth.
IDG, the largest business unit (BU), reported $10.5 billion in revenues, up 7.2 percent on the year. ISG reported $2.5 billion in net income, 13.6 percent higher, while SSG brought in $1.8 billion, an increase of 9.1 percent. IDG is so large that the other BUs can’t do much to swing Lenovo’s profitability dial one way or the other.
Still Lenovo was complimentary about all its BUs. It said the results “strengthened SSG’s position as a growth engine and profit contributor” by delivering its year-on-year revenue growth “and high profitability with an operating margin exceeding 21 percent.”
ISG “resumed growth” with a record fourth quarter but it made an operating loss in all four quarters of the year. Lenovo’s “storage, software and services businesses all achieved hypergrowth, with the combined revenue increasing more than 50 percent year-on-year. High Performance Computing revenue hit a record high.” The growth percentage was actually 52 percent. Lenovo resells a lot of NetApp storage so that Sunnyvale business will be pleased.
IDG had a solid quarter, Lenovo said: “strengthening its global market leadership for PCs with a market share of 22.9 percent.” Lenovo’s PCs, tablets, and smartphones all resumed growth in the second half of its fy2024.
Yuanqing said: ”We’ve built a full stack of AI capabilities and are at the forefront of pioneering the revolutionary AI PC market.” Lenovo expects the AI PC to grow from its current premium position to mainstream over the next three years, driving a new refresh cycle for the industry, and bolstering its revenues substantially.
Lenovo hopes to accelerate growth and have sustainable profitability increases across its entire business in fy2025. The driver will be hybrid AI with every product sector getting an infusion of AI.
