Q1 FY24/25 performance:

• Driven by strong growth in its Cloud Service Provider business, ISG delivered a record quarterly revenue of US$3.2 billion, up 65% year-on-year, and narrowed operating losses both quarter-on-quarter and year-on-year.
• Combined revenue from storage, software and services achieved significant growth of 59% year-on-year, setting a new record.
• Revenue from ISG’s Neptune ^TM liquid cooled servers grew more than 50%, driven by its unique sustainability benefits amidst the industry’s growing AI workload needs.

Opportunities and Sustainable Growth:

• ISG is focused on driving the recovery of profitability by optimizing the business model for its enterprise and SMB business, in particular simplifying portfolios and improving operations.
• It will continue to leverage the industry-leading liquid cooling technology to meet growing AI workload demands, as well as the new growth opportunities in the market for AI servers and storage.
• In addition, ISG will continue to grow key strategic partnerships and build infrastructure platforms that support hybrid AI solutions.

Solutions and Services Group (SSG): High margin with double-digit growth, building enterprise AI

Q1 FY24/25 performance:

• SSG delivered its 13^th consecutive quarter of double-digit year-on-year revenue growth, with revenue of US$1.9 billion.
• Operating margin in Q1 was over 20% – strengthening its position as the Group’s growth engine and profit contributor.
• Managed services and project and solutions services revenue mix grew three points year-on-year to account for 55% of SSG’s revenue.

Opportunities and Sustainable Growth:

• AI services are expected to grow almost twice as fast as the market in general to become the primary driver of the IT services market over the next few years.
• Lenovo will continue to embed AI in its key offerings, such as Digital Workplace Solutions, Hybrid Cloud and Sustainability solutions.
• SSG will develop more AI native services to drive adoption and measurable ROI of AI for customers and accelerate their transformation.

ESG and corporate highlights

Achievements, announcements, and notable commitments over the past quarter include:

• Lenovo has been ranked as one of the world’s best supply chains, ranking tenth in the list of global companies across all industries with the most exceptional supply chains in the world in the Gartner Supply Chain Top 25 for 2024. The renowned annual ranking evaluates across multiple criteria including financial and corporate social responsibility data and community opinion.
• Lenovo has appointed Doug Fisher as Chief Security and AI officer, expanding his existing remit of security to include overall AI governance including championing the Group’s corporate AI policy and working with its Responsible AI Committee.
• In July, Lenovo announced the appointment of Dr. Tolga Kurtoglu as the group’s new Chief Technology Officer, succeeding Dr. Yong Rui in further accelerating the Group’s technology vision and AI leadership. At the same time, it also announced the formation of a new Emerging Technology Group that is charged with incubating and commercializing new technologies. The Emerging Technology Group is being led by Dr. Yong Rui.

[1] Non-HKFRS measure was adjusted by excluding net fair value changes on financial assets at fair value through profit or loss, amortization of intangible assets resulting from mergers and acquisitions, mergers and acquisitions related charges, gain on deemed disposal of a subsidiary, impairment and write-off of intangible assets; and the corresponding income tax effects, if any.

About Lenovo

Lenovo is a US$57 billion revenue global technology powerhouse, ranked #248 in the Fortune Global 500, and serving millions of customers every day in 180 markets. Focused on a bold vision to deliver Smarter Technology for All, Lenovo has built on its success as the world’s largest PC company with a full-stack portfolio of AI-enabled, AI-ready, and AI-optimized devices (PCs, workstations, smartphones, tablets), infrastructure (data center, storage, edge, high performance computing and software defined infrastructure), software, solutions, and services. Lenovo’s continued investment in world-changing innovation is building a more equitable, trustworthy, and smarter future for everyone, everywhere. Lenovo is listed on the Hong Kong stock exchange under Lenovo Group Limited (HKSE: 992) (ADR: LNVGY). To find out more visit https://www.lenovo.com, and read about the latest news via our StoryHub.