Lenovo's 3Q20 Earnings: Growth in All Business Groups, Profit Up 52% YoY
Taking around 25% of the global PC market in the second quarter of 2020 according to Gartner, Lenovo (00992:HK) published an encouraging third-quarter earnings release on November 3, 2020. Similar to the last quarter's performance, the third quarter of 2020 (three months ending on September 30) witnessed a year-on-year revenue growth at 7%, reaching USD 14.50 billion. The profit showed stronger growth with a record pre-tax income of USD 470 million, up 52% compared to the same quarter a year earlier. Basic earnings per share this quarter were USD 2.59 or HKD 20.08, which increased by roughly 44% compared with last quarter.
With the new global norm of work, learn and play from home driving long-term growth trends in device demand and cloud/infrastructure requirements, the company delivered an all-sector business growth during the third quarter of 2020.
The PC and smart devices group continues to lead the revenue among all sectors, with the revenue volume reaching USD 11.50 billion and the year-over-year growth at 8%. The revenue from its mobile phone business sees a slight year-over-year growth at around 0.6% and a quarter-over-quarter growth at 39%. During the third quarter of 2020, the newly released Razr 5G foldable phones and Legion gaming phones were both well received by the market.
The data center business, enterprise service business, and software services all registered continued growth. Notably, the cloud service business which grew at 34% year-on-year, showed growth across all geographies. Meanwhile, the company's partnership with SAP (SAP:NYSE) also contributed and will be an additional revenue contributor, as the TruScale Infrastructure-as-a-Service combined with SAP HANA Enterprise Cloud enables customers to keep their sensitive data on-premises and secure, with the flexibility of a pay-as-you-go consumption model.