Lenovo Q3 Earnings: 20% Revenue Jump, AI PCs and Smartphones Power Market Expansion

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On Thursday, Chinese PC company Lenovo Group Ltd (OTC: LNVGY) reported fiscal third-quarter revenue growth of 20% year-on-year to $18.796 billion, beating the analyst consensus estimate of $15.58 billion. This marked the highest quarterly sales in the past three years and the second highest in the Group’s history.

All three business groups achieved double-digit year-over-year revenue growth for the third consecutive quarter.

Also Read: Baidu’s AI Cloud, Robotaxi Growth And Accelerated Buybacks Position It For Strong 2025: Analyst

The quarter’s results were driven by the Group’s focused hybrid AI strategy, the turnaround of the Infrastructure Solutions Group, and double-digit growth for both the Intelligent Devices Group and Solutions and Services Group.  

The Solutions and Services Group (SSG) posted revenue growth of 12% Y/Y to $2.26 billion, a firm operating margin of 20.4%. The segment accounted for 31% of the total operating profit of the three business groups.

Managed services and Project & Solution Services revenue experienced double-digit growth.

The Infrastructure Solutions Group (ISG) revenue grew 59% Y/Y to $3.94 billion, driven by solid cloud momentum and strengthening enterprise business. The segment operating margin loss improved to 0.0% versus (1.5)% Y/Y.

Intelligent Devices Group (IDG) increased 12% to $13.78 billion, driven by substantial market share gain in PC and smartphone premium sales. It marked the company’s highest PC market share in 5 years.

The PC business expanded its market leadership to almost 24.3% market share. Hybrid AI created growth opportunities for the device market, with the PC market entering a new refresh cycle and driving the smartphone market refresh cycle.

AI PC can represent ~80% of the PC industry landscape by 2027. The segment operating margin stood flat at 7.3%. Motorola’s market share is at a 5-year high, with hypergrowth in Asia Pacific and EMEA. The non-PC revenue mix during the quarter stood at over 46%. 

Gross margin declined to 15.7% versus 16.5% a year ago due to a higher sales contribution from ISG’s cloud business, which has a lower profitability profile. The expenses-to-revenue ratio was 12.0% vs. 12.6% the prior year. 

Net income grew by 106% Y/Y to $693 million. EPS per ADR rose to $0.0535 from $0.0264 a year ago.

As of December 31, 2024, cash and equivalents stood at $3.93 billion. 

Price Action: LNVGY stock is down by 2.77% to $31.10 premarket at the last check on Thursday.

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Photo by Robert Way via Shutterstock

Got Questions? Ask
Which AI PC manufacturers could thrive next?
How will cloud providers benefit from ISG growth?
Are smartphone makers set for a sales surge?
Which premium PC brands may gain market share?
How will Lenovo's strategy influence competitors?
Which companies are innovating in hybrid AI tech?
Could managed services see increased demand?
How might Asian markets impact Lenovo's growth?
Will infrastructure firms benefit from cloud momentum?
Which emerging markets are ripe for tech investments?
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