Lenovo Group Limited (LNVGY) 10 Aug 222023 Q1 Earnings call transcript

Good morning, good afternoon and good evening. Welcome to Lenovo's Investor Earnings Webcast. This is Jenny Lai, Vice President of Investor Relations at Lenovo. Thanks, everyone, for joining us.

Before we start, let me introduce our management team joining the call today. Mr. and Chairman Lenovo's Yuanqing, CEO; Mr. Yang Ming, Wai Group's CFO; Mr. Wong of Ken Group; Solutions Mr. President Services & Wong, Kirk Mr. President Skaugen, of Infrastructure Solutions Group; President Group; Devices of Rossi, Mr. Luca Intelligent and Sergio of Business of Buniac, Group President Motorola. Mobile President

the with earnings shortly we'll We will call presentations. questions. begin for after And that, open

me over let Yuanqing, please. to Now Yuanqing. turn it

for to shortages, improve to The such our for geopolitical of pandemic, consecutive Thanks hybrid ongoing crucial services. for rising and operational our of second, currency transformation volatility, thank and and work Hello applications today. execution; strong quarter, operating the everyone in you level and grow the businesses quarter. Meanwhile, persistent investment highest model. the despite model is for the as digitalization Last digital XX% profitability our ninth and execution quarter: the and Today, intelligent unique local results and smart we stay creating devices revenue of our foresight the strategic IoT, history. smart first, non-PC global our supply tension and as us accelerate. from intelligent were the over business joining the years and efforts mix factors continues the Two our infrastructure strong demand the to successfully to strong resilience our through increasing last strategy. sustainable strong here challenges head reached of trend our inflation,

our digital engines, currency. performance doubling new our in in income and up non-Hong still XX% in X% to double infrastructure mobile With revenue term. to grow on and growth US$XX basis, services, the in year-on-year commitment XX% our growth profitability years grew Kong almost year-on-year. growth strong Revenue of investments near and the also the meet constant net and of With businesses the diversifying our year-on-year FRS engines, track billion solutions was

by our Lenovo months goals. doubling by and R&D growing realize Meanwhile, strengthened ESG for they headcount XX% coming and investment year-on-year. also by in well the strong the platform progress the XX% R&D met We our spending further we

for revenue growth in further the broader services, project was and SSG quarter for continued Now with growth premier high the smart almost the XXXX, cities, improved TruScale well. double the digital year-on-year. demand digital SSG solution for solution market demand strong hybrid workers higher XXXX. smart repeatable grow We segments. That across under CAGR for workplace. Digital invest accounts in trillion XX% growth were I to let's The dollar services will our management devices, increased as management. and expansion to from Revenue businesses, and continues tools the saw and and working solutions. services expansion all adopted again Last vertical now XX% workplace hardware platforms double-digit Operating to now profitability. model, IT customer and we about by same business. Revenue delivered of talk education XX% portfolio start smart as-a-Service almost see service the each fulfillment time, the margin high services. SSG continue retail, At includes of other the growth. by through grow SSG manufacturing, to has service, of infrastructure Vertical software half to and solutions expected of as workplace including the smart driving

Asia and With hybrid our strategic multi-cloud develop the our footprint sustainability we a solutions in with to Pacific. PCCW, launched continued will expand new also partnership We offerings.

for ISG Edge profit. CAGR exceed reach the continues ISG, to all the in all-time XXXX. revenue, through first the from server Last billion or Group, we market by US$XX quarter will strong maintained year-on-year, The Service growth. segment, as infrastructure the Solution more XX% Neptune our revenue positive In High XXXX. will the market. time, billion quarter, well top by storage the to storage Infrastructure and leadership liquid country cooling Hedge doubled up benefit almost infrastructure exceeded Provider the year-on-year. our Computing, The and at as Computing grow operating US$X billion records server list reach almost expected Cloud market US$XX the units and Performance third with with revenue market consecutive double-digit outgrew Our the is technology. five adding

Edge and in continue will Services. our We invest in in and innovation, to portfolio comprehensive particularly

We balance we end-to-end profitability providers. remain the growing of focused fastest being the to will as scale infrastructure the continue on and one

to pre-pandemic is strong the by or traditional opportunities. the the We IDG, segments, Devices TAM one billion industry-leading US$XX in levels Intelligent is scenario-based profitability solutions capturing recognize part also maintain grew our challenges such strengthen collaboration We America, come our and growth people PC smarter PC and America Driven US$X over productivity with smartphone currently The of in is market XXXX. the expected just position premier operating than tool. expected necessity long-term. faster, Meanwhile, is such market gaming short them time, For increased Europe as by in than from term much Pacific. overcame but be and the of number Latin The the revenue market market workstations. operational of our growth key a more as excellence PCs, that one billion. PC IDG markets XX%. Group experiencing higher At our and while stronghold of Asia to to our surpass the North by the impressive profit challenge, expansion but a outgrew the more same driven by not

from collaboration. now solutions continues. devices, scenario-based of non-PC, and And smart and computing/IoT, nearly the the beyond the IDG embedded PCs as home expansion revenue XX% smart Our such comes smart

to we performance, focus spaces. smart devices, form on et collaboration, We smart smart security, continue cetera. to innovation adaptive innovative then smart factors, and on devices In from focus to extreme intelligence,

from and seamless best on are opportunities. the challenges may and collaboration. the term, to external connection We persist in virtual continue the we although for spaces, opportunities. across In all allowing summary, smart physical protecting workspace working computer definitely to mix traditional the digital the see devices to IT short we digitalization For computing, smart from new architecture innovate of the integration from to capture and customers to trend these we planet, the clear serving long-term industries possible and will IT from and see

event You will these world, progress our vision the tech October. annual in see of our in and directions the flagship

we execution, With have and has to the right performance, strategy, cycles. strong proven the transcendent the the that solid the agility resilience Lenovo

improvements. diversify continue We are confident challenges, overcome our and growth Thank deliver to you. our transform, in sustainable to businesses and ability profitability

to CFO, Wai Wai Ming over you turn please. Ming. me our let Now,

macroeconomic X% will QX Thank in including Lenovo’s I in remains Despite take in currency. of through XXXX We with a operational COVID-led now and fiscal and our our management. digital you, operational you ongoing transformation the financial supply disruption, variety in quarter, uncertainties, Yuanqing. arising a growth reported exchange revenue of to this, steady performance Thanks face cost the control growth and the foreign rate excellence and geopolitical the year-on-year chain inflation. changing global challenges for constant volatility, IT spending from year.

PC impacted markets business have Group's of have While by one third geographical shown the our growth. other growth all though non-PC the Even positive now China our premium-to-market, at Group lockdown, contributed significant revenue revenue. a and continue demand to grow over saw

to at million. margin track from To high our of expansion. the target to X%, other net basis Hong current meaningful XX margin. year. and of per Reporting income outside evaluation we facilitate for reached and are operating fiscal achieve Net as first the US$X.XX. Kong a medium term at a reported share, for also net Financial a And peers, profit quarter have record prepared performance reached more Group on A with up quarter last in doubling adjusted Standards, financial ninth profit consecutive an our Our measure. record Basic additional quarter one US$XXX point of came year-on-year we our Lenovo’s earnings comparisons

Excluding value related of strategic group assets losses the mergers or and resulting intangible from fair and gain acquisitions amortization investments, M&A costs. from charges

XX% operating non-HKFRS net jumped Our and income and respectively. XX% profit

million, our the of more on may net in for net representation QX, of year. a the reduction US$XXX information maintain a billion in You supplemental the we cash after position measures. non-HKFRS to refer past In debt appendix $X.X

by disruption last Shanghai the account XX quarter, towards account and also receivable driven supply inventory. had days. month our a receivables than which lockdown resulted caused the or higher in impacted balances of in sales concentrated Two-third the the However, end less are quarter

flow market, the We expect which improve. bond inaugural bond completed include the further in US$X.XX in billion group disruption and be capital dual-tranche Contemplating the successfully offering. July free temporary uncertainty is offering, green to cash our to

and profitability $XX the edge improvements. Despite one ESMB grow increased portfolio, plants plus intellectual and growing Cloud product in capacity by transactions to double-digit inflation in IT marking and our together month workload. server capture margin debt is XX% preference loan segment Services increased address our a billion $XX million ISG all-time computing. group supporting was supply to asset facility trickling growing unique Revenue and segments existing conditions across this years. new asset coverage, maturity shift marking storage, storage operating solution PC to $XXX operating design year-on-year, to nearly services year-on-year of utilizing completed operating SSG and Project service solutions. Service Deferred ISG the solution opportunities. for Managed server, the the in In to segments its stemming broadening to by is out the and from profit to of two first SSG with enriching to of Provider macro improve previous growth history. facility, IT challenges, true revenue popularity another revenue billion two a profitability globally, the financing to expanded US$X from the profit XX% revenue the an base, strong Services and server with the further in year-on-year and successfully basis Mexico supply grew service. for performance, million, QX and strong by driving infrastructure achieved integrated year-on-year XX% billion business improve the indicator quarter quarter a to above the years provide and time and $X year-on-year, margin focus uncertainties of addition, margin a total points by customer The driver beneficiary computing a portfolio, storage and portfolio from from customer improving in of declined on Making with CIO's eight Solution recurring SSG was reached continue in this enhanced delivery group’s our solution expansion syndicated property from of high offerings outstanding to the sales its high a constraint. group. XX% future extended year-on-year. to scale growing The growth. ISG operating quarterly X% five scalability. year-on-year the group's thanks Services ownership demand with expanding beat for to performance Revenue by reached grew leveraging compared and improvement this year-on-year, service in average revenue Revenue the in better business Hungary to consumer three model, the extended report same continual a key a fully refinancing IDG the wins. continued XX.X%. for segment the rose an fastest from its COVID-led its all consecutive the We weak profitability then rose footprint growth Support are records million growth and services, product XX%. also $X.X sales multi-cloud primarily in AI for edge. XX year ODM

rates world gaming. including Premium a XX% mix. were segment growth innovation the change. the supported by by a premium in continued lockdown. is PC business, growth grew IDG work year-on-year, the the Thanks over model of X% rest in profitability commercial sales to regions to geographical accelerated an sales non-PC revenue, lifestyle leverage new and Commercial investment solution collaboration product pockets year-on-year, and China also by smartphone enriched growth wins IDG towards in smart supported Scenario-based maintain And on robust grow. non-PC revenue business, structural of are product impacted one the business the and digital accounting XX% a markets. work segments cycle grew for the robust global sales all across and transformation solutions stations In COVID the for trajectory for to to the in However, the to our at shift year-on-year, the XX% thanks group growth driver hyper of XX% XX% key remain of several its XG. grew transition and X.X%. growth and the In hybrid

growth research challenges. driver about talk meet for It pillars main is the let's various innovative to and customer development. despite demand, Now

and a control, transformation Although, engines support Commercial various our sales, premium as expense increased year-on-year mix us operating drive services. record ESG total to the challenges still group and to the margin disciplined initiatives, of through remain enable these year-to-year at result strategic X.X%. to macroeconomic flat for demand priorities QX R&D high and sustain XX% level will And navigate the uncertainties. they at better growth investments the business group

expanded Now of XXX loop use result year. fiscal post-consumer from of products let's recycled in ESG look closed XXXX content the XXX its at efforts. Lenovo our to

support Last within to year. first be PCL achieve month, the XX% content reaffirming to initiative more finance issuance facilitate company the our XXX% framework the by Our green to an of Circle this kick materials. green important make electricity phase a which more And XXX a journey. bond chain and of corporate ESG transition in XXXX operations XXXX, group our Lenovo’s the net-zero To partnership, used vision the the further of value These business global KPI November required and of will sustainable promote off ever to fiscal establishment accelerate by in to in its the global renewable first our our progress future. milestone sustainable commitment of products first model. adopting group PC ESG the citizenship XXXX, our contain

the be sustainability. uncertainties value challenges, the Like opportunities external its digital strategic and in a long-term agility elements to volatile, to services. actively at business group of managing substantial transformations cost will led business the the While are our service conducive and Lenovo’s ensure prudently growth growth environment we all today, growth tackling implementing continues strategy. to our across and maintain and The external in structure and and and while high resilience are every products

our go Looking inorganically forward, your sustainability to for strategic as-a-Service and geographical business grow to the storage, stack in higher to with on changes PCCW. SSG SDI services. We broaden ESMB aim Powered service seeking for ISG for will in end-to-end various vertical and cloud, with and continue and solutions. broaden digitalization especially demand solutions the opportunities a will services, and increase infrastructure profitability, built post-pandemic solutions through Telco/communication will high industry-leading our include services. to its hybrid and TruScale while and growth software sustain both sectors. and capitalize drive the from workplace computing performance ISG and will double-digit and offering opportunity organically to means for expanded project growth partnership including deepen actively trajectory, of with has managed server scalable and portfolio full high vertical profitability offerings AI and solution coverage growth premier SSG services expand Edge, that

customer design ODM+ business IDG working, a features group has For ESG win. in gaming, base by customer green through model innovation the materials, global and device demand, lead design. new unique and to our race the enhancing support procuring segment, that accounts hybrid the increasing entertainment, CSP will address growing

in landscapes. advantage XG the solidify changing IDG based competitive differentiation our one take scenario business, including portfolio accelerated investment with adoption business focus growing PC wins expansion the accelerate to The Within new on will score engines, accessories smartphone and position leading solutions. and fast we to of number will profitability. and will growth

opportunities strong proactively provide solid us ahead. position pursue financial to for a growth Our foundation

will for committed And Finally, Thank profitability to shareholders. we sustainable our your growth take now remain questions. you. as driving always, we and

you, Thank Yuanqing.

to questions online. give Operator, your your English could and over this questions yourself you now submitted question open instructions. will session line reminded will all limit be Please two for us Operator? collection? I’ll be it turn Please a your only. to to are questions us Operator, instructions for also and give state at Please company, the time. name you. we a Now and

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Well. Yes.

[Operator Instructions]

first this Morgan PC more with a market Intel PC Stanley. and year this XX we AMD seen view year-to-year Kao And please on your Howard to and our [ph] year year. next from CYXXXX. the have have and XX% you. you down Could question than quarter from for driver share Thank Congrats we us

goods to is up on inventory that work question products your what coming of this XX% for quarter-over-quarter. finished Additionally, your was the color strategy to inventory finish Any and the in down quarters.

to would will your answer our the question then invite I So Ming introduce CFO, – Luca IDG President, to question. second answer our first

Okay. Hi afternoon everyone, good and morning, evening.

So question, allow some giving and you context the maybe numbers. give for a thanks me to before Howard,

from the two think time be reflecting So horizons. situation viewed perspective I can different

we So we see in digital life work opinion consumer as replacement which industry $XXX we And about plus and the the also and million opportunity, mid-term. unstoppable all the also the trends at that of the have that in PC And innovation the digital PC include center hybrid drive right feel then transformation that. new of is many will long-term and replaced PC also refreshed. good are for be the see our to additional a huge

feel good end new the shifted services devices, inflation, also higher short-term we But certainly of designed of and recognize meanwhile, features, consumer exchange with unfavorable has macro higher devices, We for toward about which quality driven accessories, hybrid. headwinds new demand the obviously premium better patch this rate by confidence.

and in we and premium of our SMB, this robust also a $X achieving pipeline QX moment, we accessory billion grew demand growing workstation double-digital just also I a weakness to includes this the in have – visibility and gaming, attach order as consumer we enterprise last showing we And and a revenue. and while where good in imagine XX% are softness like a is accessories of grow little did So rest point, almost XX%. business the bit in visual business quarter, year. still revenue. not a sector services. And continue see at we as data then public for a

to a implies than We at number we plan between we a continue to in Now market up end And $XXX decline. to still and see we also a to this anticipated. we premium market, did year-over-year did $XXX softer PC at with we to XX% XX% grow are like looking which market million number, QX. million,

extend So even our to and particularly mix. our this condition, extend in commercial we share plan market

and longer maintain year next which analysts will search $XXX aligned long-term and market you. believe this term the many – the or around million, As is after moment. the the in year we at the firm with Thank view IDC

Hi, Howard. This is Ming. Wai

I think as far your fact, in question of the about finished comprises as exactly goods. inventory, pass total

Our XX is is days. nearly than those finished think mostly goods, XX% PC or less I over of XX%

the So I – think actually perspective, think think is due I think increase. the seeing the I logistic asked mentioned the those are inventory you issue But is all mostly you from lockdown that and to clean rise, and I think a I fresh.

I we actually I down. are I Thank I away coming go think the very comfortable think get we think you. the inventory destruction see can think that once

now volume PC. he in than dynamics space, specifically And if and given the you, channel points more service in down that’s questions. Intel also negative there seeing pricing however, we fiscal is term, again, longer similar to [indiscernible] know, And also market which weaker question PC one. question to base. on and demand we Hung more should level levels? is, Thank consumer Albert, move high revenue our wanted inventory this are weakness. the our those higher first quarter Morgan. be second in we should due before second and ISG data expect higher some level than BCG, pre-pandemic Ming. with on demand already to XXXX expect we Are on slow cloud And return be half from from install will the Wai able in we So two a is higher to record and question near-term, weakness? in vendors Albert’s weakness. in JP share do increasing market number But are the comment And that two Albert PC mentioning to And

Okay.

first So is your [indiscernible] question look, answer.

be would Kirk’s Second question.

Yuanqing. you, Thank Yes.

with let So part. me start the first

one, years to we last in On or now two the time. higher the abnormal second that due was the three COVID demand during know in right the seasonality

answer half. a little there’s perspective be looking year-over-year, of down. So was should as bit I see, HX. double-digit the believe also should negative, It we will China than at HX HX while QX remember the first year-over-year still from better was a that better better the we and because we will probably be second the which year-over-year half lockdown We but QX in that better QX believe be a than that what from than a should

year-on-year. will put a Negative

yes. Year-over-year,

Better for the second half.

So are HX. be now. seeing in the year-over-year decline we is mild will than That what

On very inventory, know our is inventory. probably channel portion significant channel by our and the so that business design of a you diversified is business without

includes include relationship, customers. account that public our the global So sector and include

level Now which model a network inventory the higher pre-COVID the is the the in significantly logistic And by is that is returned than is – and still namely consumer globally. geographies is fact channel that of explained congestion than to the higher pre-COVID that end-to-end logistic the due in for time channel pre-COVID. inventory, the to inventory the most level the bit SMB, transit and business of generally require

let’s to path pre-COVID channel So the or that season, levels pre-COVID that our the short-term, say least lively holiday above. lower also I think at or after to is inventory be levels return the But we is to have slightly seeing in poised a at we’ll plan.

of X% wasn’t not big. I Thank you. your but another what ask. slightly what think Do are XXXX? we we range to piece of expect now in the thinking is X% growth, in flat there the happened or think I

This Kirk. Albert. Hi, is Yes.

our infrastructure to some position, industry. premise If records in competitors. backlog between in we’re in a And that’s and cloud. public we on a our the because almost I look than perfectly in we exposed of balanced unique from we’re We cloud, demand, us China probably for less position unique a group, see at business. solutions So cloud say, ESMB are relative would

you or model If own so we’re profitability XXX% at that through motherboards beyond growth And that of look next next year-on-year. because the remember, hyperscalers, we’re our now the kind XXX space over well China is of Wai our Ming wave building growing in seeing our ODM+ mentioned.

higher into from also We’re which storage, is servers profit. expanding

wave in expanding the more we’re to And from next expanding portfolio and our and accounts. We’re Intel including AMD ARM. more

improving all of are So profitability. those our

So I created market we growing in And eight and within a April, consecutive that unit. record think quarters year-on-year see still growing year-on-near. demand ThinkEdge share business ESMB, with new we nearly us now demand. of XXX% That growth for business is

storage. So storage year-on-year, also think driving multiples market. software in above the Server based cloud and cloud traditional any and the analyst is this ThinkSystem And growth from on-prem our then of momentum and tremendous business, a seeing XX% which both business. edge to in which cloud is storage, that’s storage is I statement phenomenon in And growing the defined for Storage at ThinkEdge now growth lot SMB our hyperconverge, of products we’re lastly edge

So all ease strong is are our to going our parts backlog and think I of we’re to record also customers. with see responsiveness up, supply which Thank to you. starting help our business,

any Yang, like you to would more colors? Kirk. you, add Thank

so Yes, definitely.

on we So the premier the And the PC short premier longer product. And so market. more see the focusing market term to to still Lenovo, although also we we also optimistic drive we will in term. on softness be continue are

so confident than growth we better selling our the the So better can be will average price revenue are drive that unit so we shipment.

our show part. quarter last But another beyond growth. that’s the other So growth believe you comment the strong see engine PC, will three we performance, so additional continue to our

not SSG Kirk Solutions than actually strongly, XX% also our So so profitability. better level. grow more strong business, business, much grow the talked Also Services with business ISG, about much but our just & at – Mobile only

think this continue. we this – momentum all So can momentum

So so we Buniac, you our the so Pacific. the probably America Mobile how solidify on comment Asia Western and Europe can our North and stronghold expanding in Latin to – America, business,

Yes.

negative the points, despite revenue. was X market at I So we grew think in XX%

in in We QX our but Europe, have Latin Asia. all grew growth America the ever We best in regions record, in in XX% globe. XX% enjoy

growth So across regions. are seeing we all the

Our showing $XX better year-over-year mix. a AI increasing by also is

Our a just on growing ad franchise, on launched the small segment year-over-year. Premium base, new but more growing from is XXX% that’s the franchise

We expect grow growing have that launches September Also as continue XX% and coming it’s G we year-over-year. important plus X. the trajectory now to between Moto

segments seeing and all we are the growth, current near So be factor in the geos will quarter driven to future. this sustainable that market cross cross in the

Thank you, Buniac. you. Thank

please. question, Next

Yes. cancelation in Thank Jefferies. you are expecting or both. coming seen Have Conor in order clients particular. about from you is from any from And delays O worried Many Mara the question next and cuts hyperscale servers?

seeing is simple The answer is, not no, Kirk. This we are that.

gaining accounts strongest to I and are think share market. the relative to our that competitors we're the we the in seem be in winning

Several growing in record on backlog have And rapidly cloud quarters and out cancellations. order confidence. a fact, have seeing not we're we So, business.

Yes.

quarter, of believe the very probably definitely growth. so continue will our so the to we half strong So, grow and year, keeping very, second eyes this

or a still Microsoft, Google. if performance, also, growing you read you is so matter and So, Amazon, the hyperscale companies faster, no so see, also they're

cloud their still So growing strongly. business are of

the continue Thank devices Does in from demand next question you. the [indiscernible] expect management is next And for coming a gaming top strong month?

Yes.

the sure for segment. gaming one, look So is better doing segment overall consumer a and the than growing certainly

market Now the down, general reasons et market forecast that market continue probably months of a because consumer the of is but is it'll to for cetera. we while that the entire the the than believe next consumer not the if in macro better do cetera, mentioned the, easy, to XX make I

point, bit, remain XX% I think positive think I and to down year-over-year data it's growing reasonable to a give you believe some but little that gaming also still while, slow grew, will before I the market, be so mentioned grow market. And revenue. given globally, what our to is able thing I'm the gaming a that no will sector we matter to continue be the overall other to premium in in confident will position we the

the So coming and really continue gaming strong, new gaming segment, next a XX and portfolio to gain share in lot given have that Thank also in in innovation of we products you. months. our the is the

you. coming And question from next Hung is Thank JPMorgan. Albert from the

channel result lockdown, the quarter. backlog to affecting channel the order did lockdown in June Regarding

expect market. half China we So second for a strong rebound the

impacted So the April, the last June lockdown, have and in definitely, quarter by the the China positive particularly so seen signal. was and but we May, since

China performance the first just But to? expected, [ph] So should the believe better second June segment still market. see particularly for well. half segment dotcom the resulting the half we definitely also better the be in as not want sales. is than commercial than we XX Luca I better consumer you

think, I you. aligned I'm with no, No,

half the the believe is showing first June be better from half. from also recovery. promotion The second showing – science of the consumer should six the is We than

think I if of backlog. overall have was end I or backlog also referred overall this, the business, every business but know significant China to business question referred the continue it on we to to was there don't at quarter. was the the if this the

obviously still reducing what it that levels. if is can significantly backlog the case. general, gradually backlog pre-COVID to than one the you you quarter But more higher average Now, is tell and compare is ago, the year I the was backlog to of normal in still

Yes.

impact check congratulations would last coming business. the the on the Thank the foreign extent I results. the you. of like exchange question and [indiscernible] to of And to from is

Let me, Yuanqing. it’s

policy. is think company think state very and in it I we I a the hedging of if I margin, up prudent report think will currency, think – adopted X% foreign about terms I the we're

right our I insurance. you. by margin of I is sort financial Thank think think the having protected exactly

Yes.

maybe should market performance. dollars, dollars dollars have actually more I Yuanqing, stronger – challenge U.S. market. Because might other but So is supplies speaking, U.S. think will but XX% and point. general U.S. of of our impact add XX% I one our [Indiscernible] in our not So

business four geographies. company, the Lenovo think, being I spread think around I our a actually global

we, maybe think I the think impacted global U.S. therefore, while account more been decline down dollar a for U.S. above very little a U.S. other geography, any business. by and hand, depending XX% strong be but one have well-balanced any I in on I bit for also because as the challenge, think Lenovo less may

profitability. and be So we the able one that that that the to maintain is also to growth see things local continue while

Ming Wai Yuanqing. and you, Thank

[indiscernible]. question the coming So is next from

in to down Your industry that did well. been IDG seem up data. Lenovo Despite help to business and third has calendar Thanks. expected to hold on be based non-PC the as quarter party year shipments – the seem XX% year have do quarter position How well? up holding second shipments has to very

Yes.

let me start end. with So the

to expect and do certainly we So even hold That's it up our better. plan.

as did our extended grew to We position one solidified well. And in have that. and calendar we number noted market So our certainly gaining We you the we to premium plan QX, share. PC. lead our continue at

that noticed, to business last we of situation now non-PC this business years Latin strong of was visual growing are while in where navigate strategy to, innovation, continued proud the XX%, share. accessory America, full smartphone technology, was in gaining as business continue be we many conditions to attack Then in work short product grow to competitiveness. like the deliver profitability strong have in industry we so to rightfully America. And situation our a we we digit. at EMEA, And continue will you protect aware strong maybe rain XX%. our a at leading certainly we quarter as little strong double Asia double are weather digit, to that happy a our proactive And want we Sergio to same growing time, now in And and are mentioning have within foundational after invest growth we long-term is prudently, profitable the fronts to obviously obviously bit taking several Pacific. business north There the not and are actions Now, in able sun. we are a of then term,

our also penetration then in fast. very extending Collaboration Business growing the rate We commercial service Smart And is are business. our expanding,

to maintain not we only the the want we what So PC deliver accelerate to you. also committed we the market. we Thank grow to engines other have grow, to but want

– so growth. mobile just non-PC said Luca business Yes. Not growth in so business are IDG, driving as including we our

So confident. I'm very

the SSG grow will the and So the to double digit double our continue engine least at at digit other growth level. ISG two

software So that PC the can offset needs.

more much has confidence. Luca definitely but – So

So will and drive unit shipment. premier market PC we to the PC, to offset will drive so the the the we premier

or Merrill PC shown pushback His from corporate has from now. weakness and order sales on showing consumer showing next PC first is Cheng market question any company the you. And Thank Robert from see question that demand corporate is weakness which the Lynch. And coming market of is is what growth weakness the which server market breakdown question server and regional any number Lenovo's market corporate is market two, strongest from weakness?

PC the answer. will think I So question I

the any mention the has while PC market So shown as on weakness consumer market PC we or corporate certainly pushback. yes, weakness,

of year we I corporate say. you, can demand reasonably for see a think good with visibility have we I the enterprise Kirk. and customer rest the pipeline the robust Thank that a and still

Sure.

around was question breakdown the think market. server our I regional the corporate of

America the market. though a we growth ESMB even and significant as forward. saw, it some as had America, fastest just accounts which to service globally, is and our growing the our records look and storage, growth. cloud had. we com to in because probably number growing accounts the North we year-on-year out So we our provider service We which Pacific corporate at taken Asia geography, records believe you and business. in conflict double-digit had growing the down, largest and of still covered is record the a had market we be that that think we record Latin analysts America, we're you the premium a would again we global are we're server, in we take is Europe softest double-digit premium also at Americas, Edge, all in we if Latin America North largest But geography the was of in providers had had have growth had

[indiscernible]

Euro don't dropped have I corporate? impact. think question impacted currency the actually actually we percent. by year-to-year any also was XX% We're regarding because Well, currency the

customers course. China? the But server cloud Yes, without grow in in just the corporate even in of China, did business we

Yes.

Okay.

settlement year, of while the of margin Britney Ovata which the for sales the The are Those drivers rest the is we'll goes? last for constraint the What What outlook the with overall coming question expansion, take is are the operating segment this is relative conference last margin Because time from key Lam Capital. right. market, questions. from stronger call. quite mobile question and given weak? All goes

questions. can take the you Ken

operating second the half of for margin the the Yes, year.

the the And the overall weakness when given I our what in through. are key question? drivers think sell so that's the I move think [indiscernible]

Yes.

just which maybe need or attach to question think the is I talk a server then PC mobile. business clarify about general can we then we and because that, Sergio and if this

Okay.

the gives drive is this opportunity. clearly this So will that more think said, as on because is and I the PC, segment we

We efforts our better better with drive than more commercial proportional cetera, will which et attach, to grow cetera. accessory comes attach, business, service et

probably or we the margin I margin help rate, probably expansion, this this can more the SMB are expansion. devices. offer drivers the we do opportunity But to So expand that regular be will visual will not commercial Talking our year, the will offer the that for segment consumer grow namely continue in should to margin premium mention more about accessories, segment have public, while which is enterprise, several business. penetration best that that this opportunities service

for to drive that launches AUR expansion, product in that help to new several PC. the believe have We us the we will rise margin also us of help is the and year course the

margin. center And space to operating relative the Yes. data

it confidence improving do cases, space, we can I And space. we in ODM+ the our space? public we're separately, think margins have cloud our then is margins about improve model, that. ESMB can think the in cloud our the think We're our higher motherboard both way bringing In rate which the with we in-house. we expanding margin. in have, with new expand the AMD we're design arm customers an and into aggressive is storage and in our more deeper of we customers at which market also margin, and share development will expanding more products, in I

I So margins reasons, believe those cloud our improve. will we all for think

again, at overall XX% our side and our we're storage growing ESMB the market well. market ESMB terms mid-double-digit total in of the as is in storage On

going So with fresh time those market suppliers to the doing that, confident. our our an attached that get the also remainder in of I to that our, and products pricing announcements the refresh think lastly, services are for fiscal And will that's And with opportunity have throughout us and then And be largest year. CPU software we're transitions. market. to our launching our ever we portfolios with to

So the is what public a but that's two, can't the business margin necessarily predict ESMB, obviously cloud we the issue mix because there's the something, between now. versus blended will only of, be right

quarters. mobile, the our side stable been across has So of margin the on consistent, many

single one I think the item. growth; I mean we cannot define

the execution. given solid it's think I

digital think in are, Europe. we on we the regions the also like with as average segments growing, solid the but have as market that also Latin XXX% grows. that's We you just franchise significant I saw Asia if are We on and market growing look America, And in new launched. share view you, said, edge, records

significant our and on We that the expect new Also across promoter continuous customers increasing existing gain customers. net significant market family to a segment. bringing are that share delivering we multitude gains seeing retention of that's score,

of across we commercial the our seeing are is product, say side footprint. growth leveraging would and I on BXB the geography, traction some now across even So Lenovo market the sales

across growth, consistent multiple So many very of spaces. areas

improvement, our forget last our is which And of the SSG. profitability yes, don't driver

we cannot… So

in. Yes. about chime to Wong Wai. was Yes, I

happy So I momentum business. think we SSG is the Solution double have that a Group, the built market. this revenue digit – growth that consecutive fifth year-to-year operating think we high I see of in Services the the very into quarter & about third strong very we also Indeed, a relatively terms and are result

right. analysts for is we digital & see in is to right? share The we SSG, what this and strong transformation, As demand and IT very with Solution media drive tasked right the continue driven services a friends Group the today, the need Lenovo mainly group, Service the market, to from by

call Now very service. scale modern strong infrastructure area In a demand a hybrid a solution, in and we it right is in also of true specific, driving the the right. cloud This all see and also the continue of growth to as two terms outlook, right? the One we strong practices. workplace could in devices Lenovo, as from service, is service,

this So to our contribution drive and the target to to profitability, growth group continue is overall.

Thank Yang. you you. to back So

their about to analyst talk heard in whole. of And improve confidence our business you the leaders definitely their business four so as the to Thank so, a number from Ken. respective investors you, profitability have and

down not ratio. income net margin, well hold are margin, we just our, also but to So operation the very GP confident as as

income double So net drive it's still to ratio. our the commitment

we fiscal very year XXXX So base, are from so confident.

So we that. track to are on still drive

the commitment is in So – the for our innovation to investing meanwhile this still R&D.

as doubled were so we midterm So expense well. R&D, in in our

So we believe – commitment. we'll still deliver our

you, And thank you Yang Thank joining we everyone. call. Yuanqing. very for Thank today's you much

of again questions, this further hours of please you The contact Bye-bye IR feel will have our Thank now. free webcast next website. still the me you us. Relations joining the be for Investor on directly. replay If Team in couple to or available

you. Thank Bye-bye.