Lenovo Q2 2020: Revenue tops $14.5 billion as PC demand climbs

As work from home continues, Lenovo is reaping the benefits.
Written by Charlie Osborne, Contributing Writer

Lenovo has recorded strong Q2 2020 financial results, bolstered by strong PC demand prompted by the work from home movement due to COVID-19. 

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On Tuesday, the Hong Kong-based PC maker published its second-quarter earnings, including revenue of $14.5 billion -- up 7% year-on-year -- and basic earnings per share (EPS) of $2.59 (20.08 HK cents). 

Lenovo's board of directors declared an interim dividend of 6.6 HK cents. 

Pre-tax income of $470 million was reported, up 52% in comparison to Q2 2019, which Lenovo says is a "record" result. Net income in Q2 2020 was reported as $310 million, an increase of 53% year-on-year. 

Analysts estimated net income of $224 million during the quarter.

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Lenovo's Intelligent Devices Group (IDG), including PCs and smart devices, reported strong revenue over the quarter. The PC and Smart Devices Group (PCSD) reported revenues of $11.5 billion, up 8% year-on-year, a payment-to-income (PTI) ratio of $723 million, and overall growth of 18%.

Lenovo says that the company now claims the lion's share of the global PC market with an overall share of 23.6%. 

IDG's second business unit, the Mobile Business Group (MBG), has returned to year-on-year growth with a 39% boost in comparison to a sluggish first quarter. 

Lenovo's Data Center Group (DCG) recorded revenue growth of 11% year-on-year, reaching $1.48 billion. The cloud service provider unit also saw a revenue increase of 34% in comparison to Q2 2019. Enterprise and SMB revenue was recorded as close to flat, however, growth was recorded across Software Defined Infrastructure (22%), Storage (15%), Software (47%) and Services (11%).

The Intelligent Transformation group, including Internet of Things (IoT) devices, infrastructure, and software and services unit also gained pace during the second quarter. The IoT business has grown by over 36% year-on-year, and smart infrastructure and verticals have grown by 21% and 72%, respectively.

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Software and services recorded revenues of $1.2 billion, together with a growth rate of 39%. The linked Service and software, Managed Service, and Solutions group has reported an e-commerce revenue gain of 40% in comparison to Q2 2019. 

Lenovo's business outlook continues to be positive. The company expects that as the coronavirus pandemic continues to keep many of us working from home -- and, therefore, in need of PCs and associated peripherals -- demand for home computers will continue to grow. The company believes that the PC market will go beyond current analyst forecasts to reach 300 million units by the end of 2020, roughly 25 million units more than 2019.

Lenovo's interim results, for six months ending September 30, can be accessed here (.PDF).

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"Our record results this quarter reflect our ongoing commitment to meeting the needs of the rapidly growing work-, learn-and play-from-home economy," commented Yuanqing Yang, Lenovo CEO. "All of our core businesses delivered year-on-year growth, while our Software and Services revenue grew to a new record. As the world continues to adjust to the 'new normal,' we are confident in the long-term growth potential of both devices and cloud infrastructure."

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