Lenovo has announced its results for the first quarter of its fiscal year, a period in which the group has managed to enter 12,900 million dollars, and has achieved profits of 191 million dollars. Notable in the results were Lenovo’s non-PC revenues, which reached 41% of the total, with service-related areas posting strong growth and sustained profitability.
This data therefore shows that Lenovo’s Intelligent transformation strategy continues to pay off as the company continues to work to maintain sustainable profitability and Expense-to-Revenue ratio resilience. But this does not mean that Lenovo will not invest in its transformation and development, quite the contrary.
The company continues with its commitment to double its investment in innovation in the medium term, which is part of the additional investment of 1,000 million dollars in three years to accelerate the deployment of Artificial Intelligence for companies. This investment will be used to facilitate its advancement in solutions, devices and infrastructure.
Lenovo’s Solutions and Services Group has revenue of more than $1.7 billion, up 18% year-on-year. Among other things, this is due to an operating margin of over 21%. In addition, it has been possible to protect the support services business as a key engine for achieving profits. It also improved the expansion of the Managed Services and Project Services and Solutions areas. Together they currently account for more than half of the group’s income, improving them by 4 points compared to the same period of the previous year.
This group is embracing the “as a service” trend, with digital services for the workplace, sustainability services and hybrid cloud, scaling its key offerings and moving towards vertical solutions so that Lenovo customers can improve the experience and productivity of their employees.
Lenovo’s Infrastructure Solutions Group (ISG) decreased revenue 8% from the prior quarter by 8%. Thus, they remained at 1.9 billion dollars, mainly due to the general decline in the server market for cloud service providers (CSPs), the limitations of GPUs that impacted the demand for AI and a slower-than-expected sectoral transition. expected.
Its areas of Storage, Software, Services and High Performance Computing grew remarkably. The first one stands out, which exceeded 100%, and led Lenovo to become the 4th largest storage provider in the world. In addition, ISG continues to have strong AI-related results, demonstrating more than 100% growth in the second half of 2022.
Lastly, Lenovo’s Smart Devices Group saw its year-over-year revenue decline by 28% from the prior year. Thus, it entered 10,300 million dollars due to market problems. However, Lenovo remains the leader in sales in this sector and continues to hold the largest share of the PC market, with 23.2% of the total.
Yan Yuanqing, CEO and Chairman of Lenovohas highlighted that «andhe past quarter, the macroeconomic environment was challenging and our hardware business remained in a phase of adjustment, but we have persisted in executing on our strategy. Our services-led business has posted strong growth and sustained profitability. The revenue mix from non-PC businesses increased from last year, demonstrating the effectiveness of our diversified growth drivers, and I am therefore cautiously optimistic about our business recovery over the coming quarters. As we continue to drive innovation and smart transformation, I am confident that our long-term position will bring us sustainable profitability and growth well into the future.«·
