Intelligent Transformation

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1 Intelligent Transformation PC & Smart Devices 18 Mar, 2019 Gianfranco Lanci Corporate President & Chief Operating Officer Internal only. All rights reserved.

2 Performance Update IDG: PC & PCD (PC + Tablet) Record Revenue & Profit PC revenue grew by 16% 17-point premium to market YOY PC PTI margin improved by 1 point YOY (5.5%) Undisputed #1 in PC and PCD (PC + Tablet) PC record market share of 24.6% PCD market share 17% PC Revenue ($M) & PTI ($M) Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Record High Q Q Global PC Top 3 Market Share(%) Growth Premium to Market in PC Revenue Lenovo HP Dell (5.0) Internal only. All rights reserved Lenovo. All rights reserved. Q3 Q4 Q1 Q2 Q3 FY1718 FY1718 FY1819 FY1819 FY Source: Morgan Stanley: The Data Era Becomes Inevitable (Apr 2018) 2. Source: Source: Lenovo Gartner, FY19Q3 Forecast Investor Enterprise Presentation; IT Spend by IDC Vertical PC Historical Worldwide, Feb (Aug ) 3. Source : Gartner Forecast Analysis: IT Spending, Worldwide, 3Q18 Update

3 Profitable Core Business Driving Double Digit Growth in Revenue and Profit PTI TREND ($M) % PCSD REV TREND ($M) 9, % 10,235 10, % pt. 8,382 8,060 8,619 7,005 Q1 FY17/18 Q2 Q3 Q4 Q1 FY18/19 Q2 Q3 Q1 FY17/18 Q2 Q3 Q4 Q1 Q2 FY18/19 Q3 Sustainable Ops Driven 1 Mix Shift to High Profit Categories 2 Product Design Leadership 3 Anchored Profit Levers 4 Prudent E2E Cost Management Internal only. All rights reserved Lenovo. All rights reserved. 3 Source: Lenovo Finance. FY18/19 Q4 estimated by finance. Includes Fujitsu JV

4 Winning in PCSD High Growth Segments Segment Revenue YoY Growth vs. Market 257% 27.2% +34.4pts 8.9% 43.4% 57.8% +34.6pts 23.2% +32.8pts -5.1% 27.7% +18.1pts 7.5% 25.6% pts 35.7% +22.8pts 4.4% Market Lenovo Market Lenovo Market Lenovo Market Lenovo Market Lenovo Market Lenovo Workstation Thin & Light Visuals Gaming Chromebook Services Source: Industry Data & Internal Data

5 MARKET SHARE LEADERSHIP WW PC Market Trend & Lenovo Unit Market Share WW Lenovo Market Share Market Share in PC Market 61M 32.6% 7.1% 17.1% 22.8% 68M 32.3% 7.9% 15.9% 22.5% Others 71M 31.5% 7.2% 15.7% 23.4% Apple 60M 33.2% 6.8% 16.9% 22.7% Dell 62M 29.6% 6.0% 18.2% 24.0% HP Inc 68M 29.1% 7.8% 16.8% 22.5% Lenovo 68M 28.0% 7.3% 16.5% 23.6% Geo Rank China #1 AP #1 EMEA #2 NA #3 LA #2 20.4% Q1 FY17/ % Q2 22.2% Q3 20.4% Q4 22.2% Q1 FY18/ % Q2 24.6% Q3 GEO PERFORMANCE FY18/19 (Q1-Q3) WW #1 FY18/19 (Q1-Q3) Internal only. All rights reserved. Source: IDC PCD Final Tracker, Feb Source: FY19Q3 reported financials and internal analysis

6 Lenovo PCL Milestones (including FCCL) Snapshot Revenue (TTM) Q4FY1718-Q3FY1819 $37.6B Revenue YoY (TTM) +20.2% Company First #1 PC Units In 2018Q4 #1 PC Revenue In 2018Q4 #1 VLB Share 39.5% #1 Premium PC >$ % #1 Commercial PC #2 Consumer PC #1 12 consecutive months, gaming PC market 30% YoY Growth. ThinkPad X1 Family Shift Source : IDC PCSD Final Tracker 2018Q4; Lenovo earning release

7 2019. Internal only. All rights reserved Lenovo. All rights reserved. DRIVEN BY EXPERIENCE Computing Experience Trends Driving Future Trends.

8 A CHANGING WORLD New technologies are rapidly evolving transforming our work and home Cloud to the Edge Immersive Computing-AR/VR Smart Connected Solutions 5G Networks Artificial Intelligence Internal only. All rights reserved. 8

9 Significant Growth Opportunity Outside Core PC Business Commercial AR/VR (HW+SW) Consumer AR/VR (HW only) DaaS (Services Only)** Commercial IoT Smart Office Smart Connected Devices* Digital Solution Services Core $B % *Smart Speaker, Home Monitoring/Security, Lighting Core includes PC, Tablet, Visuals, Workstation, Gaming **IDC DaaS TAM & MI will conduct a study on the TAM & other related market components Note: IoT and Smart Office TAM based on FY18/19 STAMP Plan., New TAM being developed for each BU Core F18/19 F19/20 F20/21 F21/22 F22/ Internal only. All rights reserved.

10 HELPING PEOPLE ACHIEVE SUCCESS THROUGH GREAT EXPERIENCES WITH LENOVO TECHNOLOGIES FOCUSED STRATEGY Setting the foundation for transformation & targeting > $40B revenue in FY19/20 and 10 point premium growth. PERFORMANCE ZONE CORE World class Innovation in PC Unparalleled operational efficiency GROWTH Thin / Light Workstations Accessories Expansion in Visuals Gaming Services INCUBATION EMERGING Investment in Smart Home Smart Office Commercial IoT AR/VR Internal only. All rights reserved. Continue PC Leadership and build solutions beyond PC Establish Leadership in high Growth segments of the market Develop & Scale Smart, Connected Solutions focused on select verticals 10

11 Thin/Light $70B 2019 TAM, CAGR +5.2% Displays $14B 2019 TAM, CAGR +1.1% GROWTH PC Business is the revenue & profit engine that fuels growth, and emerging businesses. Workstations $9B 2019 TAM, CAGR +4.0% Gaming $17B 2019 TAM, CAGR +16.2% Accessories Lenovo YoY growth +17.7% Services Lenovo YoY Growth 27.2% Internal only. All rights reserved. Source: IDC PCD/Workstation/Services Forecast, Feb. 2019; I H S market Forecast 6

12 CONSUMER EMERGING Cultivating future growth engines. COMMERCIAL Broaden Smart Home Ecosystem $60B TAM 2022, CAGR 18% Pioneer Innovation in AR / VR $7B TAM 2022, 60% VR Classroom Education focus Healthcare with T Series ThinkReality AR / VR $36B TAM 2022 CAGR 143% Smart Office $30B TAM 2022 CAGR 10% Commercial IoT Internal only. All rights reserved. Scaling based on smart, connected vertical solutions. 12

13 customer feedback leads us to Meaningful Insights Commercial Insights Community Consumer Insights Community Partner Insights Community Customer Advisory Councils Research Forums & Tools Big Data, Analytics (CID) Surveys 595 IT Decision Makers 311 Small-Med Business 3,461 Consumers 122 Partners Across Tiers 200 Customers Across 9 Councils Research Apps Focus Groups Ethnographic Studies ecommerce Sites Blogs & Forums Social Media Closed Loop Consumer Surveys Commercial Surveys 2019 Lenovo. All rights reserved. 13

14 World Class Execution Lenovo has an award-winning supply chain and was recently ranked the #5 best tech supply chain and #26 best of any company in any industry by Gartner. Lenovo s Heifei PCA manufacturing facility is huge and is 4X larger than the University of Michigan Stadium, aka the Big House. Lenovo has six assembly plants in Mexico, Whitsett (NC), China, Brazil, and Hungry. * * Lenovo. All rights reserved. *INDUSTRY DESIGN AWARDS WON IN 2018 **MEDIA & INNOVATION AWARDS WON AT CES, MWC, IFA 2018 ***2018 LENOVO CUSTOMER SURVEY RESULTS ****LENOVO INTERNAL ANALYSIS INNOVATION DESIGN 45 DESIGN AWARDS* 147 MEDIA & INNOVATION AWARDS** GLOBAL SUPPLY CHAIN 3 DEVICES DELIVERED EVERY SECOND, EVERY DAY**** CUSTOMER EXPERIENCE 51.7 NPS SCORE (X1 CARBON)*** +24% YEAR TO YEAR IMPROVEMENT ON NPS*** PRODUCT QUALITY 16% PC IMPROVEMENT OVER PAST TWO YEARS****

15 Helping People Achieve Success Through Great Experiences with Lenovo Technologies Increasing R&D in Workplace Collaboration TRANSFORMATIONAL DEVICES and solutions Internal only. All rights reserved. 15

16 DISCOVERY It s the Joy of in the classroom 2018 Lenovo. All rights reserved. 16

17 COLLABORATION It s the Ease of in the workplace 2018 Lenovo. All rights reserved. 17

18 PERFORMANCE It s the Reliability of in retail & manufacturing 2018 Lenovo. All rights reserved. 18

19 CONNECTIVITY It s the Breadth of in smart verticals 2018 Lenovo. All rights reserved. 19

20 INTERACTIVITY It s the Opportunities of in artificial intelligence 2018 Lenovo. All rights reserved. 20

21 EXPERIENCE It s the Importance of in work, life, and everything in between 2018 Lenovo. All rights reserved. 21

22 LENOVO IDG Intelligent Transformation is Helping People Achieve Success Through Great Experiences with Lenovo Technologies Internal only. All rights reserved Lenovo. All rights reserved.

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