Nov. 3, 2022 — Lenovo today announced second quarter results for the Group, with profitability improving year-on-year for the 10th consecutive quarter. Second quarter net income grew 6% year-on-year to US$541 million and Group revenue grew to US$17.1 billion, up 3% year-on-year in constant currency.
All main businesses contributed positive operating profit, demonstrating further progress towards the Group’s goal of doubling profitability in the medium-term. Additionally, the diversified growth engines continued to drive strong performance with both the solutions and services business, as well as the infrastructure business, seeing high double-digit year-on-year growth. Non-PC businesses now make up more than 37% of total group revenue. The Group’s healthy cash balance means it remains committed to doubling investments in Research and Development (R&D) in the medium-term, having grown R&D spending 15% year-on-year in the quarter.
While current external challenges persist, Lenovo remains agile and focused on pursuing its strategy and ensuring ongoing profitability by rebalancing resources towards its diversified growth engines and driving efficiencies and expense reduction through the business. It sees long-term opportunities built on its foundation of New IT – client, edge, cloud, network, and intelligence – as the global trends of digitalization and intelligent transformation accelerate.
Last quarter’s results, as well as the past three years, have demonstrated that the combination of Lenovo’s strategy, strong execution, and resilient operations are enabling it to transcend the industry cycle. This, combined with its high-quality and innovative portfolio, unique hybrid manufacturing and supply chain, global/local principle and capability, as well as healthy liquidity will help drive further opportunities to deliver sustainable growth, and improve profitability.
Solutions and Services Group (SSG)
Q2 FY22/23 Performance
- In the last quarter, SSG revenue grew by 26% year-on-year, further improving its operating margin to 21.4%.
- All segments again delivered high profitability and strong growth.
- For the first time, revenue from non-hardware-tied solutions and services accounts for more than half of SSG’s business.
SSG continues to build comprehensive horizontal solutions for vertical industries, for example, SSG’s Digital Store solution embedded with Lenovo AI Edge Server is now powering one of the world’s largest food retailers to reduce over 75% of its self-checkout errors without the need for employee intervention.
Development of SSG’s portfolio of sustainability offerings continues, with the CO2 offset services extended to more products.
The newly formed Lenovo PCCW Solutions, launched in August 2022, has achieved initial success with business synergies as it looks ahead to future opportunities.
Infrastructure Solutions Group (ISG)
Q2 FY22/23 performance
- Record revenue of US$2.6 billion, up 33% year-on-year, with operating profit reaching an all-time high of US$36 million, marking the 4th consecutive quarter of profitability.
- The Cloud Service Provider and Enterprise/SMB segments both outgrew the market forecast.
- Revenue from Edge Computing almost quadrupled and Storage more than doubled year-on-year, both setting new records.
ISG continues to enhance its comprehensive infrastructure portfolio and invest in innovation, particularly in Edge and Services.
Operational resilience was further strengthened, as production ramped up at new factories in China, Hungary, and Mexico.
ISG remains focused on being one of the fastest growing and ultimately the largest end-to-end infrastructure solutions provider in the world, while maintaining a sustainable, profitable business model.
For further information and to read the remainder of Lenovo’s report, click here.