Lenovo Group (992) Q1 2026 earnings summary

Executive summary

• Achieved record Q1 revenue of $18.8 billion, up 22% year-on-year, with all business groups delivering double-digit growth and non-PC revenue mix reaching 47%.

• Net income on a non-HKFRS basis rose 22% year-on-year to $389 million; HKFRS net income more than doubled to $505 million, driven by non-cash fair value gains on warrants.

• R&D investment grew 10% year-on-year to $524 million, supporting advancements in Hybrid AI and innovation; technical workforce at 28% of total headcount.

• All geographies delivered strong year-over-year growth, validating the global/local and ODM+ models.

• Maintained industry-leading profitability in PCs, with global market share at 24.6% and AI PC penetration exceeding 30% of shipments.

Financial highlights

• Group revenue hit an all-time Q1 high of $18.8 billion, up 22% year-on-year; gross profit rose 8% to $2.77 billion.

• Operating profit increased 59% to $785 million; net margin improved to 2.7%.

• Free cash flow rebounded to $751 million; cash and equivalents at $4.5 billion, up 15% year-on-year.

• Basic EPS more than doubled to 4.12 US cents; diluted EPS reached 3.65 US cents.

• Net finance costs on a non-HKFRS basis dropped 23% year-on-year; non-HKFRS profit attributable to equity holders rose 22% to $389 million.

Outlook and guidance

• Optimistic outlook for the fiscal year, with sustained PC demand, ongoing Windows 10 to 11 transition, and continued AI PC leadership.

• AI era expected to drive significant opportunities in devices, infrastructure, and services; focus on Hybrid AI strategy.

• Expect mid to high single-digit PC shipment growth for the remainder of the year.

• ISG business expected to sustain mid-to-long-term growth and deliver stronger profitability as AI infrastructure investments mature.

• SSG's hybrid AI framework and TruScale offerings to drive future growth across verticals.