Lenovo Q3 2020: Working from home prompts record-breaking results

Lenovo says the profit surge is due to the emerging “work-, learn- and play-from-home culture.”
Written by Charlie Osborne, Contributing Writer

Lenovo has recorded "record" Q3 2020 financial results with group revenue climbing 22% year-on-year.

On Wednesday, the Hong Kong-based PC maker published its third-quarter earnings, including revenue of $17.2 billion -- up 22% year-on-year -- and basic earnings per share (EPS) of $3.31 (25.66 HK cents). 

In Q2 2020, Lenovo reported revenues of $14.5 billion -- up 7% year-on-year -- and $2.59 EPS. 

The tech giant says that Q3 2020 marks a "second consecutive record-breaking quarter, with revenue, pre-tax income, and net income all reporting record highs."

"Lenovo's sustained growth has been boosted by the company's innovative product portfolio adapting quickly to meet the work-, learn- and play-from-home culture of a rapidly changing world, while transformation investments continue to drive new long-term growth opportunities," the company added. 

In the third quarter, pre-tax income was reported as $591 million, an increase of 52% year-over-year and an increase from the second quarter's $470 million. Net income for Q3 is $395 million, in comparison to $310 million in Q2 2020.

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 $14 billion, up 27% year-on-year, a payment-to-income (PTI) ratio of $925 million, and a profit margin of 6.6%.

Lenovo says that the company now claims 25.3% of the global PC market. 

IDG's second business unit, the Mobile Business Group (MBG), has returned to growth according to Lenovo, "delivering double-digit revenue growth year-on-year, and recovering from the impact of COVID-19 by not only resuming profitability, but also achieving its highest profitability since the Motorola business was acquired."

Lenovo's Data Center Group (DCG) recorded revenues of $1.63 billion. The enterprise and SMB segment was responsible for $1 billion in revenue. 

Lenovo's Intelligent Transformation businesses, including total software and services, recorded revenues of $1.4 billion, together with a growth rate of close to 36%. Attached services, Managed Services, and the Solutions group achieved year-on-year growth of approximately 26%, 73%, and 49% respectively.

Lenovo's business outlook is expected to stay positive as the market continues to demand home PCs and accessories, with current work from home and hybrid employment models believed to continue well into 2021 -- and, perhaps, beyond. 

In addition, the tech giant has announced shifts in its organizational structure. From April 1, services and solutions arms will merge into a new Solutions & Services Group (SSG). This will simplify Lenovo into three main business groups -- SSG, IDG, and ISG. 

"Clearly, 2020 was a challenging year that brought remarkable changes to our world, yet Lenovo quickly responded to the changing market driven by new work and lifestyle trends and delivered strong results," commented Yuanqing Yang, Lenovo Chairman and CEO. "Now, as we begin to see the results of our transformation investments, we will further invest in technology and innovation, drive intelligent transformation across industries, and create sustainable growth."


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