Lenovo reports Q3 revenue boom driven by solutions and services
This marks the vendor’s third quarter of double digital growth in a row
Lenovo reported double-digit growth in Q3 amid deep reshuffle in its leadership team.
Revenue climbed 20 per cent year-on-year to $18.8bn (£14.85bn), compared to $15.7bn last year, marking it its third consecutive quarter of double digital growth.
That increase was turbocharged by double-growth in all three of its units.
Solutions and services group (SSG) went up 12 per cent, reaching £2.3bn compared to $2bn at the same time last year, with an operating margin of 20 per cent.
Revenue from non-hardware solutions and services were SSG’s main growth stream.
The combined revenue mix from non-hardware related businesses now makes up for around 60 per cent of SSG’s revenue, a five per cent year-on-year increase, combined with AI-powered solutions for hardware-attached services, and the upward evolving traction of the company’s AI solution business.
The intelligent devices group (IDG)’s revenue rose by 12 per cent to $13.8bn in Q3 FY24/25, strengthened by the PC business, as well as smartphones creating double-digit revenue growth year-on-year in both EMEA and APAC markets.
The infrastructure solutions group (ISG) segment delivered almost 60 per cent growth in revenue year-on-year, standing at $3.9bn this quarter, propelled by what the vendor refers to as “hyper-growth” in the cloud services provider (CSP) business, and continued economic expansion in the enterprise and SMB sector.
AI server revenue also contributed to ISG development, as well as Lenovo Neptune liquid cooling solutions which journeyed beyond supercomputing and academia to other vertical industries.
“Lenovo’s revenue and profit both achieved significant growth last quarter, with strong performance across all core businesses,” said Yuanqing Yang, chairman and CEO of Lenovo.
“Notably, the ISG business returned to profitability and the smartphone business experienced rapid growth.”
Net income also skyrocketed 106 per cent year-on-year to $693m, from $337m last year.
Looking ahead
Lenovo expects the upward trend to continue, with SSG building up capabilities under the Lenovo Hybrid AI Advantage framework.
By optimising AI agent capabilities in its IDG segment, the brand will aim to bolster multi-device connectivity and build application ecosystems, to try and provide better user experiences across devices and ecosystems, it said.
In the meantime, ISG braces itself for increased demand for hybrid infrastructure linked to the ongoing boom in AI, especially for public clouds, on-premises datacentres, private clouds, and edge computing.
To foster its future growth, the vendor is also continuing to invest in R&D, with research and development expenses climbing nearly 14 per cent year-on-year to $621m.
This investment is reportedly heavily focused on AI, as the vendor wants to build a “foundational AI technology platform”, to potentially drive “breakthoughs” in agentic AI, and develop technologies and their applications into products.
“AI technology, with higher efficiency and lower costs, is accelerating the maturation of personal AI, particularly on-device AI and edge AI,” said Yang.
“It has also accelerated the enterprise adoption of AI.
“This aligns perfectly with the direction of hybrid AI we’ve been driving and leading.
“Looking ahead, our continued investment in innovation, combined with our exceptional and resilient global operations, positions us well for sustained and profitable growth in the future.”
Leadership reshuffle
To try and develop its growth momentum, the group also announced changes in its leadership team.
The company’s EVP and CFO WaiMing Wong, who held this position for the past 17 years, as well as its SVP and chief legal officer Laura Quatela, are set to retire.
Both are taking on non-exec roles.
Winston Cheng will replace Wong as CFO, less than a year after he joined Lenovo as SVO and deputy CFO.
David Carroll will now assume the role of CLO after serving as general counsel of intelligent devices group and group operations ever since he joined Lenovo in 2014, as part of the vendor’s buyout of Motorola Mobility, where he worked as general counsel.
The Chinese tech powerhouse also reshuffled its board committee, as John Thornton, independent non-exec director and member of the nomination and governance committee of the company, has been appointed as the lead independent director of the organisation’s board.
Gordon Orr is also going from independent non-executive director and member of the compensation committee and the audit committee to chairman of the compensation committee of the company.
These appointments follow the resignations of independent non-exec directors William Grabe and Tudor Brown, who respectively had a seat at the board for 19 and 12 years.