Lenovo announced record fiscal first quarter results – fuelled by opportunities created by accelerated digitalization, intelligent transformation and IT upgrades in devices, infrastructure, and applications.
Lenovo reported revenue of $16.9 billion (+27 percent), pre-tax income of $650 million (+96 percent), net income of (+119 percent) with net income margin of 2.8 percent.
Lenovo increased R&D expense in the first quarter by 40 percent. Lenovo will invest in innovation and double its R&D investments over the next three years.
Solutions and Services Group (SSG)
Significant Q1 revenue growth (38 percent year-on-year to US$1.18 billion) across three key segments of SSG (support services, managed services/as-a-Service, vertical solutions) with an operating margin of 22 percent, much higher than the traditional hardware businesses.
Support services profitability was up almost three points; revenue from managed service/as-a-Service achieved double-digit growth year-on-year, and contract value for vertical solutions achieved triple digit growth year-on-year.
Success has come from several new high profile smart city and smart retail deals, as well as hybrid cloud solutions using Lenovo IP.
Infrastructure Solutions Group (ISG)
ISG delivered record revenue of $1.8 billion, has outperformed the market for six straight quarters, while achieving the best results in five years.
Lenovo is #3 in the global x86 Server market and #2 in mainstream storage.
Intelligent Devices Group (IDG)
IDG posted profit of US$1.1 billion (+43 percent) and revenue of $14.7 billion (+28 percent) year-on-year – driven by a combination of strong performance in PCs and growing performance of non-PC segments, which now account for 18 percent of IDG’s total revenue.
Lenovo strengthened its #2 position in the Android tablet market, and smartphone business delivered 60 percent revenue growth and is now a self-sustainable healthy business, with record operating margin for the quarter of almost 5 percent.