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• Group Revenue: Increased by 21% year-on-year to USD 69 billion.

• Net Income: Non-HKFRS net profit surged by 36% year-on-year to USD 1.4 billion.

• Operating Cash Flow: Remained robust at USD 1.1 billion.

• Cash Balance: Reached USD 4.7 billion.

• Inventory Days: Increased by 5 days year-on-year.

• IDG Revenue Growth: 13% year-on-year with an operating margin of 7.2%.

• ISG Revenue: Reached an all-time high of USD 15 billion, a 63% year-on-year growth.

• SSG Revenue: Increased by 13% year-on-year to USD 8.5 billion with a record operating profit of USD 1.8 billion.

• Fourth Quarter Revenue: USD 17 billion, up 23% year-on-year.

• Fourth Quarter Net Income: Non-HKFRS net income grew 25% year-on-year to USD 278 million.

• Dividend: Total dividend for fiscal year '25 will be HKD 0.39 per share.

• R&D Investment: USD 2.3 billion, an increase of more than USD 260 million year-on-year.

• Warning! GuruFocus has detected 5 Warning Signs with LNVGF.

Release Date: May 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Lenovo Group Ltd (LNVGF) reported a robust 21% year-on-year revenue growth, reaching USD69 billion, marking the second highest in the company's history.

• The company achieved a 36% increase in net income year-on-year on a non-Hong Kong FRS basis, showcasing strong profitability.

• Lenovo's Intelligent Devices Group (IDG) expanded its market leadership in PCs, with innovative products like foldable and rollable laptops setting market trends.

• The Infrastructure Solutions Group (ISG) experienced hyper growth with record revenue and achieved profitability for two consecutive quarters.

• The Solutions & Services Group (SSG) delivered double-digit revenue growth and maintained a strong operating margin of 21%, driven by AI-driven offerings and solutions.

Negative Points

• Lenovo faced challenges from unexpected tariff impacts, which significantly affected their performance, particularly with a 25% tariff announced suddenly in March.

• The company's operating expenses were impacted by a USD118 million fair value loss on derivative financial liabilities related to warrants.

• Lenovo's smartphone business, while growing, still faces challenges in expanding its market share outside of its traditional strongholds.

• The company is navigating uncertainties in the geopolitical landscape, which could impact its global operations and supply chain.

• Lenovo's inventory days increased, leading to a longer cash conversion cycle, primarily due to the sales mix shift towards the ISG business.

Q & A Highlights

Q: How mature are AI PC and AI smartphone this year, and which applications will drive AI PC demand? What are the commercial opportunities for Lenovo from AI agents? A: Luca Rossi, Executive Vice President and President of the Intelligent Devices Group, explained that Lenovo is leading in AI PC innovation, being the number one Windows AI PC OEM globally. The AI software stack is gradually releasing AI-driven experiences, with more innovation expected in 2025 and 2026. Lenovo's AI agents, like Xiaotian and AI Now, are pioneering developments. The commercial opportunities lie in monetization through scale and reenergizing PC demand, potentially driving growth in the next few years.