Revenue Growth and Performance - Revenue increased by 9% quarter-on-quarter to 15.7billion,markingthefirstyear−on−yeargrowthinthepastyearandahalf[4][6]−IntelligentDevicesGrouprevenuegrewby72 billion, with a strong operating margin of 20.4%[4] - Infrastructure Solutions Group revenue increased by 24% quarter-on-quarter, with losses narrowing to 38million[4]−Non−PCbusinessaccountedfor421 billion for the first time[11] - The Solutions and Services Group achieved record revenue of 2billionandoperatingprofitof412 million, with a strong operating margin of 20.4%[12] - EMEA market revenue grew 20% YoY, driven by a rebound in PC demand and strong smartphone performance in certain countries[13] - APAC (excluding China) revenue increased 7% YoY, supported by a strong recovery in commercial PC sales, particularly in Japan[13] - Americas revenue grew slightly by 1% YoY, with strong performance in gaming laptops and premium smartphones offset by a decline in the Infrastructure Solutions Group[13] - China revenue declined 10% YoY, but the decline narrowed significantly compared to the previous quarter, with a double-digit growth in the Solutions and Services Group[14] - Revenue for the nine months ended December 31, 2023, was 43.031billion,a1343.03 billion, a decrease from 49.31billioninthesameperiodlastyear[24]−TotalsalesforthethreemonthsendedDecember31,2023,wereapproximately15.72 billion, a 3% increase from 15.27billioninthesameperiodlastyear[25]−RevenuefortheninemonthsendedDecember31,2023,was49.312 billion, with a gross profit of 8.358billion[45]−RevenuefromtheIntelligentDevicesBusinessGroupwas34.14 billion, down from 39.58billioninthepreviousyear[58]−RevenuefromtheInfrastructureSolutionsBusinessGroupwas6.39 billion, compared to 7.56billionin2022[58]−RevenuefromtheSolutionsandServicesBusinessGroupincreasedto5.65 billion from 5.01billionin2022[58]−RevenuefromChinadecreasedto9.91 billion from 12.42billionin2022[58]−RevenuefromtheAmericaswas14.84 billion, down from 16.80billionin2022[58]−Revenuerecognizedatapointintimewas40.82 billion, compared to 47.45billionin2022[59]ProfitabilityandMargins−Netincomeattributabletoequityholdersgrewby35337 million, down 23% YoY but up 35% QoQ, with the Intelligent Devices Group's profit margin increasing by 5 basis points to 7.4%[8] - Gross profit margin increased by 0.2 percentage points to 17.1% for the nine months ended December 31, 2023[18] - Net profit attributable to equity holders decreased by 731millionto763 million for the nine months ended December 31, 2023[18] - Basic and diluted earnings per share were 6.38 cents and 6.09 cents, respectively, a decrease of 6.19 cents and 5.59 cents year-over-year[18] - Net profit attributable to equity holders for the three months ended December 31, 2023, was 337million,downfrom437 million year-over-year[25] - Gross margin for the three months ended December 31, 2023, decreased to 16.5%, down 0.6 percentage points from 17.1% in the same period last year[25] - Basic and diluted earnings per share for the three months ended December 31, 2023, were 0.0281and0.0264, respectively, down from 0.0365and0.0344 in the same period last year[25] - Net profit for the three months ending December 31, 2023, was 376.813million,adecreasefrom481.943 million in the same period last year[46] - Net profit attributable to equity holders for the nine months ended December 31, 2023, was 1.494billion[45]−BasicearningspersharefortheninemonthsendedDecember31,2023,was12.57cents[45]−OperatingprofitfortheninemonthsendedDecember31,2023,was2.378 billion[45] - The company's pre-tax profit for the nine months ended December 31, 2023, was 1,056,789thousand,adecreasefrom2,005,566 thousand for the same period in 2022[95] Financial Expenses and Debt Management - Financial expenses were reduced by 16millionquarter−on−quarterand10 million year-on-year through prudent debt management[7] - Financial expenses increased by 22% year-over-year, primarily due to a 144millionincreaseinfactoringcosts,partiallyoffsetbya23 million decrease in bank loan and overdraft interest and a 7milliondecreaseinconvertiblebondinterest[21]−Financialexpensesdecreasedby66 million reduction in convertible bond interest and a 9millionreductioninnoteinterest,partiallyoffsetbya9 million increase in factoring costs[27] - The company has a revolving loan facility of 2billionissuedonJuly4,2022,witha5−yearterm[39]−TradecreditfacilitiesavailableasofDecember31,2023,amountedto3.872 billion, with 2.026billionutilized[40]−Thecompany′soutstandingnotesandconvertiblebondsasofDecember31,2023,include965 million in 2025 notes with a 5.875% interest rate[41] - Net debt position as of December 31, 2023, was 88million,comparedtoanetcashpositionof366 million as of March 31, 2023[42] - The company's forward foreign exchange contracts outstanding as of December 31, 2023, totaled 10.373billion[43]−Thecompany′sfinancialexpensesfortheninemonthsendedDecember31,2023,were562,256 thousand, an increase from 460,046thousandforthesameperiodin2022[95]−Totalfinancingliabilitiesdecreasedfrom4,359.35 million as of March 31, 2023, to 4,002.85millionasofDecember31,2023,reflectingareductionof356.5 million[96] - Short-term loans decreased from 57.03millionto46.39 million, a reduction of 10.64million[96]−Convertiblebonds(current)significantlydecreasedfrom214.58 million to 10.71million,areductionof203.87 million[96] - Lease liabilities (current) decreased from 123.72millionto119.02 million, a reduction of 4.7 million[96] R&D and Innovation - R&D investment as a percentage of revenue is expected to reach its highest level in the 2023/24 fiscal year[4][7] - The company showcased over 40 new AI devices and solutions at CES 2024, advancing its "AI for All" vision[15] - The company is focusing on AI innovation in devices, expanding from hardware to components and software, including AI Core chips and AI Now solutions[15] - The Infrastructure Solutions Group is leveraging hybrid AI trends, with a diversified and balanced participation in public and private clouds[16] - The company is expanding its service business, particularly its TruScale as-a-service portfolio, to address hybrid work, multi-cloud management, and cybersecurity challenges[17] ESG and Sustainability - The company was recognized as an EPEAT Climate+™ Champion for integrating climate considerations into over 400 products[7] - The company is committed to achieving net-zero emissions by 2050 and integrating innovative ESG features like carbon offset services into its service business[17] Awards and Recognition - The company won 105 product awards at CES 2024, including 61 awards for the ThinkBook Plus Gen 5 Hybrid[7] Operational Efficiency and Cost Management - Operating expenses decreased by 2% year-over-year, with reductions in advertising and promotional expenses by 54 million and R&D-related lab testing, services, and supply expenses by 52million[20]−Operatingexpensesincreasedby726 million spent on advertising and promotional activities for new product launches and special events[26] - Strategic investment fair value gains amounted to 25million,comparedto74 million in the previous year, reflecting changes in the value of the investment portfolio[26] - Net trade receivables impairment provision was 12million,comparedtoareversalof13 million in the previous year, indicating a reassessment of bad debts[26] - Net foreign exchange loss was 15million,comparedto1 million in the previous year, due to currency fluctuations[26] Cash Flow and Liquidity - Operating cash flow decreased to 1,467.7millionfrom2,557.0 million in the previous year, a decline of 42.6%[49] - Net cash used in investing activities was 1,033.1million,comparedto1,601.0 million in the prior year, a decrease of 35.5%[49] - Net cash used in financing activities was 1,181.6million,asignificantshiftfromnetcashgeneratedof315.4 million in the previous year[49] - Cash and cash equivalents decreased by 747.0million,comparedtoanincreaseof1,271.4 million in the prior year[49] - Interest paid increased to 548.3millionfrom406.3 million, a rise of 34.9%[49] - Taxes paid increased to 396.5millionfrom262.9 million, a rise of 50.7%[49] - Proceeds from issuance of convertible bonds were 6,728.4million,comparedto9,768.1 million in the previous year[49] - Repayment of borrowings was 6,740.3million,comparedto9,750.9 million in the prior year[49] - Cash and cash equivalents at the end of the period were 3,466.2million,downfrom5,018.9 million in the previous year[49] - Exchange rate impact on cash and cash equivalents was a loss of 36.9million,comparedtoalossof182.7 million in the prior year[49] - The company's operating cash flow for the nine months ended December 31, 2023, was 2,412,502thousand,comparedto3,226,210 thousand for the same period in 2022[95] Acquisitions and Investments - The company completed the acquisition of Lenovo Leasing Co., Ltd. for approximately 124milliononJuly7,2023[98]−ThecompanyacquiredcertainassetsandassumedcertainliabilitiesfromFCNTCorporationforapproximately14 million on September 29, 2023, to accelerate smartphone business growth in Japan[98] - Lenovo Leasing and FCNT businesses contributed 20millionand8 million respectively to the group's revenue for the nine months ended December 31, 2023[99] - Lenovo Leasing contributed 0.8millioninpre−taxprofit,whileFCNTbusinessincurredapre−taxlossof4.5 million for the nine months ended December 31, 2023[99] - The goodwill from business combinations was calculated at 18.2million,withLenovoLeasingcontributing9.613 million and FCNT contributing 8.587million[99]−Thetotalidentifiablenetassetsacquiredwerevaluedat119.262 million, with Lenovo Leasing at 113.934millionandFCNTat5.328 million[99] - The group incurred 2millioninacquisition−relatedcosts,recordedinadministrativeexpensesandoperatingcashflows[100]−Thecompanypurchased291,517,600sharesforemployeeincentiveplansduringtheninemonthsendedDecember31,2023[101]CorporateGovernanceandCompliance−TheauditcommitteereviewedtheunauditedfinancialresultsfortheninemonthsendedDecember31,2023,andregularlymeetswithmanagementandauditors[102]−ThecompanycompliedwiththeCorporateGovernanceCodeexceptfortheseparationoftheChairmanandCEOroles,whichwasdeemedappropriateforstrategiccontinuity[103]−TheboardappointedWilliamO.GrabeastheLeadIndependentDirectortooverseegovernancemattersandensurechecksandbalances[103]−Theboardstructureincludesamajorityofindependentnon−executivedirectors,withquarterlymeetingstoreviewoperations[103]FinancialStatementsandReporting−ThefinancialstatementsforthefiscalyearendingMarch31,2023,weresubmittedtotheCompaniesRegistryandreceivedanunqualifiedauditopinion[51]−ThecompanyadoptedHongKongAccountingStandard12(Amendment)relatedtodeferredtaxesonassetsandliabilitiesarisingfromsingletransactions,effectivefromApril1,2023,whichnarrowedthescopeofinitialrecognitionexemptions[52]−Deferredtaxassetsrelatedtoleaseliabilitieswerereclassified,resultinginanimpactof70,336 thousand as of March 31, 2022, and 55,473thousandasofMarch31,2023[54]−Thecompany′sdeferredtaxassetswere2,601,667 thousand as of April 1, 2022, and 2,537,367thousandasofApril1,2023,afterreclassificationadjustments[54]−ExchangeadjustmentsanddeferredtaxassetimpactsfromtheconsolidatedincomestatementfortheyearendedMarch31,2023,includeda287,000 exchange loss and 14,576,000reclassifiedfromdeferredtaxliabilities[54]−Thecompanyisevaluatingtheimpactofnewinterpretationsandrevisedstandards,includingHongKongInterpretation5(2020)andamendmentstoHKAS1,whichwillbeeffectivefromJanuary1,2024[56]−Thecompanyconcludedthattheadoptionofthesenewstandardsandinterpretationswillnothaveamaterialimpactonitsconsolidatedfinancialstatements[56]SegmentPerformance−Thecompany′soperatingsegmentsaredeterminedbasedonthereportingreviewedbytheLenovoExecutiveCommittee(LEC),includingtheIntelligentDevicesGroup,InfrastructureSolutionsGroup,andSolutionsandServicesGroup[57]−TheLECevaluatessegmentperformancebasedonoperatingprofit/loss,excludingnon−cashacquisition−relatedaccountingexpensesandnon−recurringitemssuchasrestructuringcosts[57]−OperatingprofitfortheIntelligentDevicesBusinessGroupwas2.41 billion, down from 2.94billionin2022[58]−TheInfrastructureSolutionsBusinessGroupreportedanoperatinglossof151.59 million, compared to a profit of 90.59millionin2022[58]AssetsandLiabilities−TotalassetsasofDecember31,2023,were39.504 billion, up from 38.920billionasofMarch31,2023[47]−CurrentassetsasofDecember31,2023,were23.228 billion, slightly higher than 22.941billionasofMarch31,2023[47]−TotalequityasofDecember31,2023,was6.113 billion, compared to 6.047billionasofMarch31,2023[48]−Non−currentliabilitiesasofDecember31,2023,were6.691 billion, down from 6.780billionasofMarch31,2023[48]−CurrentliabilitiesasofDecember31,2023,were26.701 billion, up from 26.093billionasofMarch31,2023[48]−TradereceivablesandbillsasofDecember31,2023,were6.219 billion, down from 6.372billionasofMarch31,2023[47]−CashandcashequivalentsasofDecember31,2023,were3.466 billion, down from 4.250billionasofMarch31,2023[47]−TotalliabilitiesasofDecember31,2023,were33.391 billion, up from 32.873billionasofMarch31,2023[48]−InventoryasofDecember31,2023,totaled6,218,910 thousand, a decrease from 6,371,858thousandasofMarch31,2023[74]−TradereceivablesandbillsreceivableasofDecember31,2023,amountedto8,944,694 thousand, up from 7,940,378thousandasofMarch31,2023[75]−OverduetradereceivablesnetofimpairmentallowanceasofDecember31,2023,were908,974 thousand, compared to 888,758thousandasofMarch31,2023[77]−TradepayablesandbillspayableasofDecember31,2023,totaled10,258,486 thousand, an increase from 9,772,934thousandasofMarch31,2023[79]−Otherreceivables,includingdepositsandprepayments,amountedto4,143,353 thousand as of December 31, 2023, up from 3,945,153thousandasofMarch31,2023[81]−OtherpayablesandaccruedexpensesasofDecember31,2023,were13,368,766 thousand, compared to $12,932,781 thousand as of March 31, 2023[82] -