Lenovo posts record Q1 results with APAC revenue at USD $3.7b
Lenovo has reported record financial results for the first quarter of its 2025/26 fiscal year, citing robust growth across all business segments and significant expansion in Asia Pacific markets, excluding China.
The group achieved a 22% increase in revenue compared to the same period last year, rising to USD $18.8 billion. Net income more than doubled with a 108% year-on-year increase, reaching USD $505 million. On a non-Hong Kong Financial Reporting Standards basis, which the company suggests better reflects core operational performance, net income stood at USD $389 million, a 22% increase over the previous year.
Asia Pacific and India growth
The Asia Pacific region, which excludes China, contributed strongly to Lenovo's performance. Regional revenue rose to USD $3.7 billion with 39% year-on-year growth. India was a significant contributor, delivering nearly USD $960 million in revenue, marking a 34% increase year-on-year.
Sector performance
All primary business groups reported double-digit revenue growth. The PC and Smart Devices segment delivered its fastest annual revenue growth rate in 15 quarters and achieved an all-time high market share of 24.6%. Non-PC revenue increased, now making up 47% of group revenue. Every sales geography demonstrated appreciable revenue growth compared to the previous year.
Three key strategic factors were highlighted as drivers of these results: the execution of the group's hybrid AI strategy, increased investment in research and development with spending up over 10%, and operational excellence. Lenovo's manufacturing approach, a mix between original design manufacturer partnerships and direct manufacturing, is also cited as providing flexibility during changing market conditions.
Comments from leadership
By leveraging the resilience and flexibility of our supply chain and operational excellence, we overcame challenges brought by tariff volatility and the geopolitical landscape and achieved significant growth in both top and bottom lines. These record Q1 results underscore our ability to deliver on our promise to preserve competitiveness and continuously grow our business. Looking ahead, we will continue to firmly execute our hybrid AI strategy towards the vision of Smarter AI for all, relentlessly drive innovation in personal AI and enterprise AI products and solutions and consistently strengthen our operational competitiveness so that we can realize sustainable growth and profitability improvement.
All sales geographies saw positive growth. The PC business in particular yielded 19% year-on-year growth, with the overall Intelligent Devices Group generating nearly USD $13.5 billion in revenue. Lenovo's personal computer unit sustained its industry-leading profitability with an operating profit above 8% and expanded its leadership in global market share. AI PC penetration also accelerated, with over 30% of total shipments qualifying as AI-enabled, giving the company a 31% share in the Windows AI PC segment. The company's smartphone business posted 14% growth, driven significantly by Motorola's Razr, which reached over 50% market share in foldable devices outside China.
The Infrastructure Solutions Group experienced 36% year-on-year revenue growth, totalling USD $4.3 billion. The company emphasised its strategy targeting both cloud service providers and the enterprise and SMB segment, and reported its AI infrastructure revenue more than doubled, with liquid cooling solutions up 30%. Investment continued in new infrastructure and R&D, with a view towards developing differentiated global competitiveness.
In services, the Solutions and Services Group reported 20% revenue growth to USD $2.3 billion, its seventeenth consecutive quarter of such growth. Operating margins rose to over 22%, with managed services, projects, and "as-a-service" solutions representing 58% of group revenue.
Sustainability and governance
Lenovo's recent Environmental, Social and Governance Report outlined progress towards its 2030 emissions reduction targets, and reaffirmed net-zero ambitions for 2050. Recognition of the group's sustainability measures included an EcoVadis Platinum Medal, MSCI ESG Ratings of AAA, and inclusion on CDP's A list for climate, water security, and supplier engagement. Lenovo also received a Gold Award from the Hong Kong Institute of Certified Public Accountants for best corporate governance and ESG reporting.
In supply chain assessment, Gartner ranked Lenovo eighth worldwide, with an ESG score of nine out of ten. The company also moved up 52 places in the Fortune Global 500 list, achieving its highest ranking yet in the global technology sector, placing thirteenth.
Lenovo management has encouraged analysts and the public to focus on its non-HKFRS financial results to provide a clearer view of core operational performance, noting that non-cash impacts related to warrants and convertible bonds are expected to persist through fiscal year 2027/2028.
