Lenovo Group – the world’s largest maker of personal computers – on Thursday reported a 23% year-over-year increase in revenue for the final quarter of the 2024/2025 financial year, despite a larger-than-expected drop in quarterly net profit.
The China-based company attributed the significant revenue growth to its strategic focus on artificial intelligence. Meanwhile, the 64% decline in quarterly net income to US$90 million – significantly below analyst expectations of about US$225 million – was primarily due to a non-cash, mark-to-market accounting adjustment related to warrants issued in January 2025, the company said.
The fair market valuation of these warrants was impacted by a rise in Lenovo’s share price by March 31, the end of its fiscal fourth quarter. As a result, the company is placing greater emphasis on its non-Hong King Financial Reporting Standards (non-HKFRS) net income, which it says offers a clearer picture of operating performance.
“In Q4, group revenue reached $17 billion, up 23% year-on-year, while non-HKFRS net income grew 25% year-on-year to $278 million,” said CFO Winston Cheng during Lenovo’s earnings webcast. "This growth reflected strong performances across all business groups and geographies, showcasing double-digit year-on-year revenue increases."
Record revenue and AI-driven growth
For the full fiscal year, Lenovo, which is listed on the Hong Kong Stock Exchange, achieved a 21% year-on-year increase in revenue to reach US$69.1 billion – the second-highest annual revenue total in its history. Net income rose by 36% year-on-year to US$1.4 billion on a non-HKFRS basis.
The company’s diversified growth strategy led to non-PC revenue comprising nearly 47% of total revenue, up five percentage points from the previous year.
Lenovo’s investments in AI have been pivotal to its growth. The company launched its first AI-powered PCs in May 2024, with a global rollout in September.
Among the best-performing business segments:
- Intelligent Devices Group (IDG) continued to lead the PC market, expanding its market share lead over competitors. Smartphone revenue outpaced the market by 12 percentage points, elevating Lenovo to the fourth-largest smartphone vendor by revenue outside China.
- Infrastructure Solutions Group (ISG) achieved a 64% year-on-year revenue increase in Q4, driven by strong demand for AI servers.
- Solutions and Services Group (SSG) reported a 22% revenue rise to US$2.2 billion, reflecting robust growth in cloud-based software and services for enterprise clients.
Strategic outlook
Lenovo plants to continue investing in AI and innovation in the 2025-2026 financial year, with research and development expenses increasing by 13% year-on-year to US$2.3 billion. The company is also exploring the expansion of its global manufacturing footprint to mitigate geopolitical risk and tariffs.
“This has been one of your best years yet, even in the face of significant macroeconomic uncertainty,” CEO Yuanqing Yang said. “Our strategy to focus on hybrid AI has driven meaningful progress in both personal and enterprise AI, laying a strong foundation for leadership in this AI era.”
Lenovo’s Hong Kong-listed shares were down by more than 4% as of 4:30 pm AEST on Thursday following the earnings release.