It appears that Lenovo's core business has fully recovered and grown.

On May 23, Lenovo Group (LNVGY) announced its financial results for the fourth quarter and the full fiscal year of 2023/24, ending on March 31, 2024.

The financial report shows that Lenovo Group's revenue for the fourth quarter was CNY 99.4 billion, a nearly 10% increase year-on-year; the core business has fully recovered and grown, with a net profit of CNY 1.78 billion, up 118% year-on-year; the proportion of non-PC business is nearly 45%, setting a historical high. For the entire fiscal year of 2023/24, Lenovo Group's revenue was CNY 407.4 billion.

The continuous recovery of the global PC market has been further confirmed. Lenovo's core business, personal computers, continued to expand its leading advantage in the fourth quarter: the global market share was 22.9%, with a growth rate nearly 6 percentage points higher than the market, and it ranked first in four out of the top five regional markets globally.

Amidst the global productivity revolution driven by generative AI, Lenovo has established a leading position in the new field of AI PCs. It was the first to define the five key features of a true AI PC, and the related products have also been launched ahead of schedule recently.

Lenovo's mobile business continued to make significant progress in the fourth quarter, with both shipments and revenue achieving double-digit growth, at 23% and 14% respectively, far exceeding the market growth rate.

As a new growth engine for Lenovo, the SSG Solutions and Services Business Group also performed strongly in the fourth quarter: revenue was CNY 13.1 billion, a 10.3% increase year-on-year, with an operating profit margin of 21.4%. Among them, the proportion of operational maintenance services and project and solution services in the overall SSG revenue increased by 5 percentage points year-on-year, reaching 55%.

The server business has reached an inflection point in the fourth quarter: the ISG Infrastructure Business Group has regained growth momentum, with a year-on-year revenue growth rate of 15.1%, setting a historical high for the same period. The total revenue of storage, software, and services business increased by more than 50% year-on-year, and the high-performance computing business also set a new high.

Throughout the entire fiscal year of 2023/24, the global macroeconomic challenges remained very severe, and the group remained resilient while firmly innovating. As a reward, the group's performance has continued to improve since the second half of the fiscal year, entering a recovery cycle: the revenue in the second half of the fiscal year increased by 5.9% year-on-year.

Among them, the IDG continued to outperform the market, with personal computers, tablet computers, and smartphone businesses all recovering growth in the second half of the fiscal year. SSG achieved a full-year revenue growth of over 12%, with an operating profit margin exceeding 20%. ISG achieved revenue growth for three consecutive quarters and resumed growth.

The new generation of AI revolution is reshaping thousands of industries. Lenovo Group has increased investment in the two anchor technologies of artificial intelligence and computing during the fiscal year of 23/24, and the full-year R&D expenditure rate and the total number and proportion of R&D personnel have set a historical high.

On May 22, the world's most authoritative supply chain list Gartner Top 25 announced the latest ranking for 2024, and Lenovo Group has been ranked in the top 10 for three consecutive years, being the only high-tech manufacturing enterprise listed in China and the Asia-Pacific region, and this is also the 10th time Lenovo Group has been listed, continuing to maintain the record for the most times listed by Chinese enterprises.

In the future, the end-side revolution of artificial intelligence will bring huge growth opportunities. AI PCs with personalized intelligent entities, local heterogeneous computing power, personal knowledge bases, open application ecosystems, and privacy and security protection capabilities are expected to gradually move from high-end to mainstream within three years, and the personal computer market will also usher in a new replacement cycle.

At the same time, the trend of hybrid artificial intelligence is driving the growth of hybrid infrastructure demand, and customers are increasingly in need of customized artificial intelligence solutions and services, and the demand for AI consulting, design, deployment, and maintenance services is growing rapidly. 

"Entering the new fiscal year, our determination is very firm, that is to fully utilize the unprecedented development opportunities brought by hybrid artificial intelligence to drive the accelerated growth of the 3S business," said Yang Yuanqing, Chairman and CEO of Lenovo Group. "Continuous investment in innovation, a full-stack product portfolio, resilient operations, and strong ecosystem partnerships will all help Lenovo achieve strong and sustainable growth in revenue and profitability."  

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