Lenovo reported its second-ever highest revenues for the fourth fiscal 2025 quarter as unexpected tariff rises affected profitability.
Revenues in the quarter, ended March 31, were up 23 percent Y/Y to $17 billion, with GAAP net income of $90 million, down 64 percent from the year-ago $248 million.
Full fy2025 revenues were 21 percent higher at $69.1 billion, its second ever highest amount, with GAAP net income of $1.4 billion, up 36 percent and representing just 2 percent of revenues. Dell earned $95.6 billion in revenues in its fiscal 2025 with 4.8 percent of that as profit; $4.6 billion. Lenovo could be viewed as similar to Dell but without its strong storage hardware and software revenues. The Infrastructure Solutions Group(ISG) in Lenovo experienced hyper-growth with with revenue up 63 percent Y/Y to a record $14.5 billion
Yuanqing Yang, Lenovo’s Chairman and CEO, stated: “This has been one of our best years yet, even in the face of significant macroeconomic uncertainty. We achieved strong top-line growth with all our business groups and sales geographies growing by double digits, and our bottom-line increased even faster. 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.”
He thought it was “particularly remarkable that we achieved such results amid a volatile and challenging geopolitical landscape and the industry environment.”
Yang finished his results presentation with a particularly Chinese sentiment: “No matter what the future may hold, remember, while the tides answer to forces beyond us, how we sail the ship is always our decision.” Very true. If he was playing the Bridge card game he would prefer to make no trumps bids.
Lenovo experienced an unexpected and strong impact from tariffs and that, we understand, contributed to its profits decline in the quarter. Yang said tariff uncertainty was a bigger worry than tariffs themselves, as Lenovo, with its distributed manufacturing base, can adjust production once it knows what tariffs are and has a stable period in which to make changes. But President Trump’s tariff announcements are anything but stable.
Lenovo has three business units, Intelligent Devices Group (IDG) focusing on PCs, Infrastructure Solutions Group (ISG) meaning servers and storage, and SSG, the Solutions and Services Group.
It said IDG, Lenovo’s largest business unit by far, “enlarged its PC market leadership” in the quarter, gaining a percentage point of market share over second-placed Dell. IDG quarterly revenues grew 13 percent. ISG “achieved profitability for the 2nd consecutive quarter, with revenue hypergrowth of more than 60 percent year-on-year.” SSG delivered 18 percent revenue growth year-on year.
Yang said that, with ISG: “We have successfully built our cloud service provider or CSP business into a scale of USD 10 billion and self sustained profitability. Meanwhile, our traditional Enterprise SMB business also gained strong momentum with 20 per cent year-on-year growth, driving the revenue to a record high.”
The Infinidat business, when that acquisition completes, will enable Lenovo to enter the mid-to-upper enterprise storage market. CFO Winston Cheng indirectly referred to this in a comment:”Going forward, ISG will continue to focus on increasing volume and profitability for its E/SMB business through its streamlined portfolio, enhanced channel capabilities and high-value 3S offerings across storage, software and services.”
New ISG head Ashley Gorakhpurwalla answered a question in the earnings call about ISG’s Enterprise/SMB business: “A very new and refreshed set of compute and storage products from Lenovo offer all of our enterprise and small, medium customers a very rapid return on investment during their technology refresh cycles. So we believe firmly that we are on track for continued momentum in this space and improved profitability in the enterprise infrastructure.”
Lenovo said all its main businesses saw double-digit revenue growth in fy2025. It made significant progress in personal and enterprise AI, noting: “The AI server business … achieved hypergrowth thanks to the rising demand for AI infrastructure, with Lenovo’s industry-leading Neptune liquid cooling solutions as a key force behind this rapid growth.”
The company referred to hybrid AI fueling its performance, meaning AI that integrates personal, enterprise and public data.
It is increasing its R&D budget, up 13 percent Y/Y to $2.3 billion, and said it made an AI super agent breakthrough in the quarter, referring to its Tianxi personal agent, which it claims can handle intricate commands across various platforms and operating systems.
