Lenovo delivers record fourth quarter results and new fiscal year milestone

A year ago, as we faced great uncertainty, I told you we would continue to be resilient and strive for new heights. Today I am pleased to say that we have indeed seen phenomenal growth in every part of our business and have achieved both a record fourth quarter and a new milestone for our fiscal year.

Starting with our historic fourth quarter results, Group revenue reached US$15.6 billion, growing 48% year-on-year, our fastest growth in almost a decade. Pre-tax income soared to US$380 million and Net income reached US$260 million both around 5-6 times as much as last year. All our core businesses achieved high double-digit growth in revenue at the same time for the first time in 6 years, demonstrating our progress in diversifying our businesses.

 For Intelligent Devices Group, PC and Smart Devices had its best fourth quarter ever, with revenue of US$12.4 billion, up 46% year-on-year. Even more, profitability hit an all-time high at 6.7%. All of our geographies realized high double-digit growth in revenue. Particularly, in China we grew 80% year-on-year.

Our PC volume outgrew the market to further strengthen our leading position. Tablet volume also had breakthrough growth of 157% year-on-year, around three times as fast as the market. Our consistent strategy to focus on and invest in high-growth and premium segments keeps delivering strong results as Gaming PC, Thin & Light, Chromebook and Visuals volume each grew at a more than double-digit rate and outgrew the market. 

Our Mobile group continued its momentum of profitable growth with terrific results. Revenue achieved hypergrowth, up 86% year-on-year. Pre-tax income reached US$21 million, a record high since the Motorola acquisition. With expanded carrier relationships and strong product portfolio, particularly 5G products, our volume grew at a triple-digit rate in North America, Europe and Asia Pacific. Latin America remains a stronghold, with market share reaching a new record of nearly 21%.

Our Data Center group had a tremendous quarter. Revenue grew at a strong 32% year-on-year, the fifth straight quarter of premium-to-market growth. Profitability improved 4.4 points year-on-year, the biggest increase in over two years. Both our Cloud Service Provider segment and Enterprise & SMB segment achieved year-on-year growth. In particular, the CSP business grew 73% year-on-year. Our Storage, Software Defined Infrastructure and Software businesses all had record fourth quarter revenue. Particularly, storage revenue achieved high growth of 73% year-on-year.

Our service-led transformation accelerated, fueled by ongoing strong growth in software and services, with revenue up 44% year-on-year. Managed Services revenue, including DaaS and TruScale, nearly doubled, and Solutions revenue grew 65% year-on-year.

A record fiscal year

This historic quarter ensured we reached a significant fiscal year milestone. For the first time, group revenue surged to over US$60 billion, adding more than US$10 billion in just one year. Profit grew even faster to reach new records, with pre-tax income of almost US$1.8 billion and Net Income was almost US$1.2 billion. Both were up more than 70% year-on-year.

Our Intelligent Devices Group and Data Center Group achieved revenue growth of 20% and 15%, respectively, as both reached historic highs. Our Software and Services revenue grew twice as fast as the overall group revenue, at almost 40% year-on-year, to a record US$4.9 billion, which now makes up 8% of overall company revenue. This demonstrates our solid progress in our Service-led transformation.

These results come from excellent performance across all our businesses, delivering to the new needs in the New Normal, leveraging our clear strategy, innovative product, operational excellence, and our Global/Local model.

Looking Forward

While we completed a truly historic and record year, we are not stopping here. Looking forward, we will further drive our Service-led transformation to capture growth opportunities created by both the New Normal and new technologies. We see three important industry trends now and post-pandemic:

The first trend is consumption upgrade as people spend more time on their devices, leading them to buy more devices and upgrade more often as we work/ learn/ entertain from home. At the same time, the adoption of commercial 5G is driving the shift from computer to computing, making more traditional devices intelligent.

The second trend is infrastructure upgrade. The ever-growing use of online applications has not only increased the demand, but also raised the bar for ICT infrastructure. Infrastructure not only refers to traditional data center products like server, storage, networking, but also edge or cloud total solutions for computing power from design and deployment to operation and maintenance.

The third trend is the application upgrade from digitalization to intelligent transformation with A.I. at its core. An industry survey by a leading consulting company shows that the digitalization and intelligence transformation of enterprises have accelerated by 3-4 years to enable more productive and efficient processes and remote working conditions. The massive amounts of data from business digitalization and various smart devices are stored, organized, and analyzed with computing power from Edge and Cloud. Then, by combining the data and computing power with algorithms based on industry knowhow, we build intelligent solutions to transform industries.

At our last earnings call in February, I shared that Lenovo was making changes to align our organizational structure to our 3S strategy. Under the new structure, Intelligent Device Group or IDG, Infrastructure Solutions Group or ISG, and Solutions and Services Group or SSG will each focus on the unique opportunities created by these three upgrade trends, to achieve sustainable long-term growth. 

In the year ahead, IDG will continue to drive leadership in PC and Tablets through innovation and operational excellence, and further penetrate in new areas such as embedded computing, Smart Office, Smart Edge, and AR/VR. And Mobile will continue profitable growth as we take advantage of increased market demand and a changing competitive landscape, and maintain strong momentum in North America, Europe and Asia Pacific, and keep our stronghold in Latin America.

ISG will continue premium to market growth. We will further expand our Cloud Service Provider customer base and grow our channel business through our newly integrated One Lenovo sales organization structure. We will drive storage, software defined infrastructure, software and services to further improve profitability, and ramp up Truscale Infrastructure-as-a-Service.

Our new business group, SSG will strengthen our attached services portfolio and increase attach rates, expand managed services, and develop repeatable solutions in key vertical industries.

Meanwhile, we have reduced greenhouse gas emissions by 92% over the past decade and set new Science-Based Targets to continue making progress in sustainability. In fact, we’ve been recognized by the annual Corporate Knights Index as one of the world’s 100 most sustainable companies.

The past year certainly presented many challenges that reminded us of the importance of adaptability and resilience. But the past year also created opportunities for Lenovo to empower our customers and society to do more than just survive in the new normal, but to thrive and achieve even greater success. We will continue to turn challenges into opportunities and build even smarter future in the year ahead.

*Read our earnings press release here.