Lenovo Group's continued market share gain in its PC and Smart Devices (PCSD) business, as well as momentum from its Intelligent Transformation initiatives has kicked off its 2019-20 financial year to a positive start.
On Thursday, the company reported that the first three months of this financial year, the group's total revenue increased by 5% year on year to $12.5 billion, marking the company's eighth consecutive quarter growth.
Operating profit surged by a whopping 90% to $180 million, while operating expenses also increased 18% to $1.7 billion.
"This fiscal year kicked off to an excellent start. Once again, this quarter's strong results provided solid evidence that Lenovo's Intelligent Transformation is enabling the company to drive sustainable, profitable growth in today's dynamic and changing world. Our persistent execution and operational efficiency allows us to bring our vision to life and deliver smarter technology for all," said Yang Yuanqing, Lenovo chairman and CEO.
During the first quarter, the company's Intelligent Devices Group (IDG), which consists of its PCSD and Mobile Business Group (MBG) businesses, grew 8% year on year to $11 billion. This was mainly underpinned by performance of PCSD that recorded a 12% revenue growth for the quarter to $9.6 billion, and realised a record market share of 24.9%.
"The stellar market share gain was a testament to the well-orchestrated strategy to drive double-digit growth in the commercial, the premium and high-growth segments, across Workstation, Visual, Thin & Light, Gaming PC, and Chromebook categories," the company said.
"The group aimed to grow at a premium to market and in this fiscal quarter, the growth premium has reached its highest level in more than five years."
Read more: Beyond the PC: Lenovo's ambitious plan for the future of computing (TechRepublic)
Meanwhile, Lenovo's MBG business delivered revenue of $1.5 billion, which is a 9% decline year on year, with the company noting it was due to the company's continued effort to shift its strategy in Europe that led to a smaller operating scale.
Lenovo's efforts behind its Intelligent Transformation initiatives -- involving making smarter technology through smart infrastructure, smart verticals, and smart IoT -- led to software and services revenue growth hitting double digits and making up almost 5% of total group's revenue.
As for the group's Data Centre Group (DCG), it was affected by "industry-wide sluggish demand", the company said. As a result, the DCG business reported revenue of $1.3 billion, a 17% year on year decline on last fiscal quarter. It still however, made up 11% of the group's total revenue and storage revenue continue to still climb by more than 80% year on year.
Going forward, the company said it has laid out ambitious plans to secure its "premium-to-market revenue growth" in its PCSD business through smart IoT devices for homes and businesses, launch up to six new models in its mobile business, and act on industry consolidation opportunities.
"Despite a pullback in the industry, the secular trend of data growth has persisted and is expected to accelerate with the debut of more products and applications featuring new technologies including 5G," the company said.
"Lenovo will take this opportunity to drive premium-to-market growth and to build its DCG business as a full stack industry leader through the introduction of solution capabilities and a reliable end-to-end product portfolio.
"Moving forward, Lenovo will continue to drive growth in software defined infrastructure, storage and networking, service sand software. For hyperscale business, to build a profitable business model with strong in-house design and manufacturing capability remains a strategic priority."
The company's ongoing target to build particularly its DCG business aligns with the recent promises the company has made of becoming a key player in the data centre market by becoming the world's largest hyperscale infrastructure provider.