Affected by the headwinds of tariffs, Lenovo's net profit in Q4 declined for the first time after five consecutive quarters of growth, plummeting 64%, far below market expectations. The company attributed the decline to non-cash losses in the fair value of warrants.
Despite the significant hit to profits, Lenovo's revenue exceeded expectations, with the smart devices segment, including personal computers, smartphones, and tablets, growing by 13%. However, some analysts pointed out that this is partly due to suppliers and end users placing orders in advance to cope with the impact of U.S. tariffs.
On the 22nd, Lenovo Group announced its full-year and Q4 results for 2024:
<blockquote>
<ul>
<li>Q4 revenue of $17 billion, a year-on-year increase of 23%,</li>
<li>Q4 net profit decreased by 64% to $90 million, lower than the analyst estimate of $230 million. The company attributed the profit decline to non-cash losses in the fair value of warrants.</li>
<li>Q4 adjusted net profit increased by 25% to $278 million.</li>
<li>Lenovo Group's full-year revenue was $69.1 billion, a year-on-year increase of 21%, reaching the second-highest in history;</li>
<li>Full-year net profit was $1.4 billion, a year-on-year increase of 36%.</li>
</ul>
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/59754a1a-2220-4d1f-84d7-9bd89f5d28a3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/59754a1a-2220-4d1f-84d7-9bd89f5d28a3.png"/>
</blockquote>
In terms of core business:
<blockquote>
<ul>
<li>Intelligent Device Group (IDG) revenue was $50.5 billion, a year-on-year increase of 13%, with PC market share continuing to expand and AI PCs performing well;</li>
<li>Infrastructure Solutions Group (ISG) revenue was $14.5 billion, a year-on-year increase of 63%, achieving breakeven in the second half of the year, with AI server business becoming a new engine;</li>
<li>Solutions and Services Group (SSG) revenue was $8.5 billion, a year-on-year increase of 13%, with a gross margin of 21.1%. Operating profit margin reached 21.1%.</li>
</ul>
</blockquote>
After the earnings report was released, Lenovo Group's stock fell over 4% in the afternoon.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/7673a1d6-ec59-4a4f-b693-b6614f7bd88b.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/7673a1d6-ec59-4a4f-b693-b6614f7bd88b.png"/>
<h2>Revenue Growth: Order Front-Loading Effect?</h2>
Despite the significant hit to profits, Lenovo's revenue performance exceeded expectations. Revenue reached $16.98 billion, a year-on-year increase of 23%, thanks to a 13% growth in the smart devices segment, including personal computers, smartphones, and tablets. However, this growth may not be entirely a positive signal.
According to IDC data, Lenovo's PC shipments in the first three months of 2025 increased by 11% year-on-year. Market intelligence firms pointed out that this is partly due to suppliers and end users placing orders in advance to cope with the impact of U.S. tariffs. This phenomenon of &#34;order front-loading&#34; suggests that future demand may face overdraw, and once the impact of tariffs truly manifests, Lenovo's revenue growth may face greater pressure
Analysis indicates that although Lenovo's production base is primarily located in China, its revenue share in the Americas market reaches as high as 34.5%.
<h2>R&amp;D Investment Continues to Increase, Hybrid AI Strategy Accelerates Implementation</h2>
Lenovo's diversification strategy is accelerating, with non-PC business revenue share increasing by nearly 5 percentage points to 47%, marking the company's gradual reduction in reliance on traditional PC business.
Lenovo Group's R&amp;D expenditure increased by 13% year-on-year to USD 2.3 billion, continuously increasing innovation investment. Over the past year, Lenovo has made significant progress in its hybrid AI strategy:
<blockquote>
<ul>
<li>Currently ranks first in the global AI PC market</li>
<li>Launched the first foldable phone equipped with Moto AI</li>
<li>Achieved ultra-fast growth in AI server business</li>
<li>Created Lenovo Hybrid AI Advantage core solutions and service capabilities</li>
<li>Recently launched the first personal and enterprise-level AI super assistant at the Shanghai Technology World Conference</li>
</ul>
</blockquote>
Looking ahead, Lenovo is confident in its focus on innovation and hybrid AI strategy. IDG will continue to build an AI-driven application ecosystem; ISG will continue to execute its CSP and enterprise/SMB strategy, simplifying the product portfolio and enhancing go-to-market capabilities; SSG will continue to build capabilities within the Lenovo Hybrid AI Advantage framework while expanding and deepening the enterprise solutions portfolio

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Lenovo's net profit in Q4 declined for the first time after five consecutive quarters of growth, plummeting by 64%. The revenue of the smart devices division grew by 13%, but analysts believe this is partly due to consumers placing orders in advance to cope with tariffs

- Lenovo's Q4 net profit fell 64% to $90 million, significantly below market expectations, attributed to non-cash warrant valuation losses.  
- Despite this decline, Q4 revenue reached $17 billion, a 23% increase, driven by a 13% growth in the smart devices segment, although some analysts suggest this may be due to preemptive ordering in response to U.S. tariffs.  
- For the full year, Lenovo reported $69.1 billion in revenue, a 21% increase, and a net profit of $1.4 billion, up 36%, while continuing to diversify its business and invest in AI innovations.  

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Lenovo's Q4 net profit fell 64% year-on-year, while revenue increased by 23% year-on-year under the "order front-loading" effect | Financial Report Insights