Lenovo reports strong third FQ, increased momentum in AR & VR

Lenovo Group has announced positive results for its third fiscal quarter ended December 31, 2017. It reported revenue was US$12.9 billion (A$16 billion), a 6.3 per cent increase year-over-year, and 10 per cent increase over the second fiscal quarter of FY2017/18. Lenovo continued to enjoy significant revenue gains in PCs and smart devices (PCSD) and the Data Center Group (DCG). Lenovo’s Mobile Business Group (MBG) performed as expected for the quarter. Lenovo showed strong pre-tax income growth in the quarter, up sharply to US$150 million, a four-fold increase from last quarter, and nearly a 50 percent jump from the same period a year earlier.

In their press statement, Lenovo management credited the performance to execution of its “three-wave strategy,” which emphasises leadership in its core businesses, growth in key segments, and investment in emerging technologies. During the quarter, Lenovo drove growth in PC sales, solid data centre and mobile performance, and strong momentum in the developing areas of device plus cloud and infrastructure plus cloud technologies.

“Lenovo is accelerating its transformation to become a world leader across every part of our business. We continue to see significant improvement and strong performance in some of the most exciting technology market sectors, smart devices and data center. We saw revenue, margins, profit, innovation, performance and customer experience all extend the momentum that developed during the prior quarter, and these results reaffirm the transformation strategy we are executing,” said Yang Yuanqing, Lenovo Chairman and CEO.

The company’s PC and Smart Devices (PCSD) business continued to show strength in the third quarter. Lenovo tracked solid momentum in this unit and signs of the overall worldwide market trending higher. Industry numbers met expectations on the quarter, validating Lenovo’s belief in taking advantage of developing high-growth opportunities in this market segment. During the quarter, the company enhanced its momentum in emerging technology areas, including Augmented Reality (AR) and Virtual Reality (VR).

Lenovo’s Data Center Group (DCG) continues its transformation, tracking not only to its commitments for the third consecutive quarter but also delivering its highest revenue in the last two years. This progress has been fueled by consistent momentum across all segments and all geographies.

The Company’s gross profit increased 9.8 per cent year-over-year to US$1.8 billion, which was an 8.6 per cent improvement quarter-to-quarter. Gross margin was 13.5 per cent, a slight increase compared to last year. Operating profit increased by US$114 million quarter-to-quarter.