Good morning and good afternoon and good evening. Welcome to Lenovo's Earnings Investor Webcast. This is Jenny Lai, Vice President of Investor Relations at Lenovo. Thanks everyone for joining us. Before we start, let me introduce our management team joining the call today. Mr. Yang Yuanqing, Lenovo's Chairman and CEO; Mr. Wong Wai Ming, Group CFO; Mr. Luca Rossi, President of Intelligent Devices Group, Mr. Kirk Skaugen, President of Infrastructure Solutions Group; Mr. Ken Wong, President of Solutions and Services Group and Mr. Sergio Buniac, President of Latin America and Mobile Business Group and President of Motorola. We will begin with an earnings presentation and shortly after that we will open the call for questions. Now let me turn it over to Yuanqing. Yuanqing, please.

Hello, everyone, and thank you for joining us. While the pandemic and industry-wide supply shortage continues, thanks to our operational excellence, innovation and strong execution, our momentum grow even stronger across all our key businesses. Again, this quarter we will look at the significant opportunities in the market, our strong performance capturing these opportunities and our plans for sustained profitability increase and the growth over time. Lenovo's new IT technology architecture of client-edge-cloud-network-intelligence is helping us win more opportunities in the market. Based on this architecture and our 3S strategy, we will combine our smart device/IoT, smart infrastructure and smart vertical solutions capabilities to help our customers realize their digital and intelligent transformation. Lenovo is well-positioned to capture this growing opportunity and continue improving profitability. With strong execution of this strategy, last quarter we delivered another phenomenal quarter with both historical higher profit and revenue. Group net income grew 65% year-on-year to US$512 million. And net income margin improved 0.7 points, on track to doubling in three years. Corporate revenue continued a strong growth of over 23% year-on-year to US$17.9 billion. And our operating cash flow doubled year-on-year to US$1.6 billion. At the same time our R&D spending increased nearly 60% year-on-year, as we increased investment in innovation. Going forward we will continue to focus on high-margin businesses and segments. We aim to double our R&D investments over three years and develop more core technology along our new IT structure. We will also further drive our internal digital and intelligent transformation to improve efficiency and consistently improve our profitability. Now I want to discuss the details of each business group. Let's start with the solution and the service group. As the technology architecture becomes more complex, customers demand more sophisticated IT services. IDC estimates this rapidly growing opportunity to be over US$1 trillion through 2025, within which, the device-as-a-service market is estimated to be US$6 billion to US$7 billion by 2025. These service businesses have much higher margin and faster growth than devices alone. So we expect the SSG's growth to continue driving higher profitability for the group. Last quarter SSG continued to deliver high growth with high profitability. Its revenue grew 30% year-on-year with operating margin of almost 21%. Support service improved the penetration rate in both PC and infrastructure. Managed service saw revenue growth of almost 90% year-on-year. We have launched our other service brand TruScale at our flagship event Lenovo Tech World. And we now have even broadened as-a-service portfolio for our customers. Project Services and Solutions achieved almost 22% year-on-year revenue growth as we gained more traction with repeatable solutions based on Lenovo IP. Looking forward SSG will continue to drive both growth and the profitability. We have integrated our internal IT function into SSG to enhance our service, R&D and the delivery capabilities and turn our proven internal digital capabilities into solution offerings. In Management Services, we will continue to build the platforms, tools and go-to-market capabilities to enhance our TruScale as-a-Service offerings. In support services we will continue to improve penetration rates especially as commercial segment rebounds. For our Infrastructure Solutions Group, ISG the opportunity keeps expanding as the ICT infrastructure upgrade continues. IDC expects the ICT infrastructure to become a $250 billion market globally through 2025 which is as big as the PC market. Last quarter ISG delivered a record performance led by all-time high revenue of almost $2 billion up almost 34% year-on-year. Profitability continued to improve by $24 million year-on-year nearly breakeven. We outgrew the market in nearly every segment. Cloud service provider reached a historical high revenue over 50% year-on-year growth. And the enterprise SMB revenue had a strong growth of almost 20% year-on-year. In the higher margin segments, storage revenue also grew over 50% year-on-year to a new record. In high-performance computing, we delivered the fastest university high-performance computer in China today which is also powered by Lenovo Neptune, water-cooling technology. Looking forward we will continue to invest in ISG's competitiveness and increase investments in faster-growing segments such as edge computing, hybrid cloud solutions and the 5G cloud-network convergence. We will further enhance our in-house design and manufacturing capabilities to drive profitability improvements as we drive to breakeven and beyond. Our vision remains to become the largest and most trusted ICT infrastructure solution provider. For the Intelligent Device Group, IPG the demand for PCs and devices remains strong. IDC reports that commercial demand excluding Chromebook grew 18% year-on-year last quarter. In addition, Windows 11 launch is expected to increase PC demand. We agree with the IDC's assessment that annual PC volumes will maintain at 340 million, 355 million unit level for the next few years. Meanwhile, the reshuffling continues in the global smartphone market, giving Lenovo more room to grow. At the same time, the IoT market is expected to surge by 11% CAGR through 2025. Last quarter, our IDG continued to deliver excellent revenue growth of nearly 21% year-on-year and the profitability grew even stronger, up 34% year-on-year on top of its already high bases. In PCs premier segments delivered a high growth. Premier Yoga and the workstation revenue each more than doubled year-on-year. Commercial PC revenue grew 29% year-on-year with SMB growing 48% year-on-year. In the non-PCs smartphones had its best quarter ever. Profit reached a new historic high while revenue grew 27% year-on-year highest in 15 quarters. All geographies delivered a high double-digit profitable growth. Not only our stronghold Latin America and North America even in the expansion markets of EMEA and Asia Pacific our revenue grew by strong double-digits. Tablet revenue continued to grow 20% year-on-year. Our accessory business revenue also grew 31% year-on-year. Going forward IDG will continue to invest in premier segments to increase profitability and the average selling price. We will leverage our PC leadership to cross-sale adjustment to non-PC products like smartphones tablet smart meeting collaboration embedded computing and further increase our non-PC business mix. Through our clear strategy execution and the increased investment in technology, we are confident that we will continue to deliver sustainable growth and our commitment to double profitability in three years. Thank you. Now let me turn it over to our CFO, Wai Ming. Wai Ming, please.

Thank you, Yuanqing. I will now take you through Lenovo's financial and operational performance in Q2 fiscal year 2022. We achieved the best quarter in our history. Our new financial records included all-time high revenue, pre-tax income and net income. Q2 revenue grew at a healthy rate of 23% year-on-year to $17.9 billion and net income margin expanded 0.7 points to boost a 65% net profit year-on-year growth. All of our three business groups set new milestones in revenue and contributed to improved profitability. Profit attributable to equity holders was $512 million and the basic earnings per share came in at US$ 0.0442, representing 71% growth year-on-year. The Board of Directors declared today an interim dividend of HKD 0.08, representing an approximately 21% increase on the dividend paid in the last fiscal year. We continue to drive innovation and differentiation in supporting our goal to raise long-term profitability and capture the opportunities brought by digital transformation from new IT. Our research and development investment grew 57% year-on-year. This investment includes talent acquisition and development, intellectual properties as well as projects in premium, gaming and workstation PCs, edge servers, storage, high-performance computing and Lenovo Brain AI. We kept the annual increase of our E-to-R ratio at 0.7 points. As we exercised disciplined control of expense in other areas our operating margin is up 0.7 points year-on-year. This accelerating innovation strategy reflects the value created by R&D to support our gross margin expansion of 1.3 points year-on-year to 16.8%. Our cash flow generation has shown marked improvement since nine quarters ago as we continue to improve efficiency and profitability. For fiscal Q2, we boosted operating cash flow by $790 million year-on-year to $1.6 billion, driven mainly by our strong profitability. To optimize our capital structure, we further reduced our net debt by over $1 million year-on-year to $60 million and lower our finance costs correspondingly. In the past 3.5 years, we cut our net debt by more than $2.5 billion including the repurchase of perpetual securities. We are pleased to see the net debt approaching nearly zero. Going forward, we are confident our continued operating trajectory will result in net cash in the near future. Riding on the fast-growing new IT service opportunities and commercial upgrade cycle, SSG delivered a stellar second quarter with strong revenue and profit growth. SSG revenue increased by 30% year-on-year to $1.4 billion, supported by consistent strong double-digit growth across its three segments. Operating profit advanced by 32% year-on-year to $285 million. SSG continue its growth trajectory by focusing on advantages offered by the group's strong platform, leveraging its partnerships and launching new services to tap into new opportunities including ESG-related end-to-end life cycle management. All of these moves will ensure the group's thriving future and sustainable growth. By service segment, Support Services revenue rose 23% year-on-year. Our service traction with commercial customers is encouraging and they are taking full advantage of our advanced services capability to optimize their hybrid working model and give ESG deployment a higher priority. We are not only seeing a rising service penetration rate towards industry best practices but also the accelerating world in our high value-added services. Managed Services and as-a-Service posted a remarkable 88% revenue growth year-on-year, thanks to phenomenal as-a-Service growth and enriched portfolio. SSG integrates all 18 as-a-Service solutions under Lenovo TruScale brand offering customers the best tools with flexibility and simplicity. Our next action in line is to launch these services in more geographies which should further accelerate TruScale's growth momentum. Project & Solutions also reported solid revenue growth of 22% year-on-year as we continue to expand in-house intellectual properties and repeatable deals. These achievements altogether contributing to a 34% year-on-year growth in booking revenue while deferred revenues recorded another quarter of strong growth, up 31% year-on-year to $2.6 billion. ISG continued to take advantage of infrastructure upgrade opportunities expanding market share in nearly every business segment. For the second quarter ISG revenue grew strongly by 34% year-on-year to an all-time high of $2 billion. While its operating loss significantly narrowed by 80% to near $6 million, a combination of customer base expansion in CSP and improved sales mix in the ESMB business drove further improvement in profitability. In Q2, CSP sales reached another record on the back of strong cloud demand and a broader client base. Its unique ODM+ model provides new stack of solutions across motherboard system and rack integration for server and storage. This business model provides greater flexibility, responsiveness and resilience for our customers who need strong support from infrastructure suppliers so they can focus on growing their core businesses. ESMB segment revenue in Q2 was the highest in the last five years and make market share gains in several high-growth and high-margin products with more prominent growth seen in server, storage and high-performance computing. In mainstream storage market, the group increased its storage sales by 52% year-on-year and further solidify its number two position by narrowing the gap in market share to the top player. In high-performance computing, Lenovo recently delivered its largest system to the public sector in North American market and the faster machine powered by our water-cooling technology to a university in China. IDG revenue set a new record in fiscal Q2, up 21% year-on-year. Its operating profit surged 34% year-on-year and its operating margin reached an all-time high record of 7.6%. Demand is shifting to high value-added segments as the use of PC has become an essential aspect of more than life. In the meantime, commercial demand continued to benefit from digital transformation growing at a near record rate in our history. These two trends positively impact our ASP and profitability. Our ASP increased 17% year-on-year during the quarter while Q2 marked the 16th consecutive quarter of year-on-year profit margin expansion for IDG. In fiscal Q2, non-PC products contributed to 90% of IDG revenue and our smartphone profit expanded to a record $89 million. We continue to gain global market share in smartphone across geographies. In North America, we achieved the highest activation rate in history and we are closing the market share gap with the number two player. In Europe, our smartphone revenue grew high double-digit year-on-year while we solidify our number two position in our stronghold market in Latin America. Our latest ESG report is now available from our Investor Relations website, marking the 15 years of this publication and highlighting our sustainability efforts. We would like to take this opportunity to reiterate our ESG targets. We recognize our leading role in the industry and we commit to make responsible changes to mitigate environmental impact. In the next few years, we aim to accelerate our adoption of clean energy and strengthen our ESG innovation all the way from product design manufacturing packaging to product end-of-life management. Our SSG provide a wide range of asset service offerings and sustainability services including asset recovery services. They are not only integral to Lenovo's end-to-end lifecycle services but also assist customers in meeting their environmental goals through offering secure and responsible disposal of products while maximizing value recovery. On the social side, Lenovo as a global company is proud to continue its efforts in diversity and inclusion. By FY 2026, we target to increase the executive representation of women within our organization around the world to 27%. Along the way we are proud to dedicate our continuous efforts towards excellence and inclusion for our global workforce. Looking ahead Lenovo will continue to innovate in new IT to lead as a transformative engine to the accelerating global trend of digital transformation. We will target to double down our R&D investments. This investment in innovation will support Lenovo service-led transformation take full advantage of enterprise demand recovery drive sales in high value-added products and ultimately, expand our gross margin to achieve Lenovo medium term financial target of doubling our net margin. SSG is riding on the fast-growing new IT service opportunities. The group extensive exposure to commercial PC and infrastructure growth offers huge solution and service potential. Furthermore, we proactively reach and serve our customers' demand with integrated and complete solutions to improve our penetration rates. Our newly launched fully integrated TruScale brand is developed to capture the vast growth potential as-a-service segment through partnership with global system integrators and channels enhanced capabilities and expand the platform. These factors add momentum to SSG existing strength driving Lenovo profitability to the next level. For ISG, the strong infrastructure upgrade and commercialization of new technologies including edge computing, hybrid cloud solutions, and 5G cloud network conversion will continue to improve the business profitability and premium to market growth in both ESMB and CSP markets. We'll continue to deliver industry-leading end-to-end infrastructure solutions and expansion from server to full stack offerings. In ESMB, we will expand from service into storage software-defined infrastructure software and services where opportunity exists for higher profitability. In CSP, we will fully integrate our unique ODM+ model to expand customer base and drive quarter-to-quarter profit improvements. In IDG, the commercial upgrade cycle remains strong. Moreover, Windows 11 launches super potential upside to market demand and we lead our competition in new model launches. To efficiently manage the industry-wide component shortage and our demand backlog we will enhance our leading operational excellence and global supply management. We will continue our profit expansion while R&D investments to drive higher value-added products, accessories, and smart devices. Our smartphone business will remain an important driver for non-PC growth. We will focus on growing the premium to market in North America and Europe, while maintaining market leadership in Latin America. We will further push product innovation and accelerate 5G smartphone launches to win more market and stay on track for a profitable growth. In other non-PC adjacent areas, we will launch new features such as smart meeting collaboration and embedded computing products. With solid execution on all these strategic actions we believe IDG's ASP and margin expansion will continue. Our strong financial position and cash flow provides a solid foundation on which Lenovo can proactively pursue growth opportunities ahead, particularly in the fast-growing services area. Finally, as always we cannot emphasize enough to our shareholders of Lenovo's commitment to drive sustainable profitability. Thank you and now we can take your questions. A - Jenny Lai: [Operator Instructions] Operator, I will now turn it over to you. Please give us your instructions.

[Operator Instructions] We have the first question comes from the line of Albert Hung from JPMorgan. Please go ahead.

Hi management team. Congrats on the great results and thank you for taking my questions. My first question is on PC business. I guess over PC supply/demand remains in balance and there is still some unfulfilled order. Could you provide some color on the older backlog by application and by market? For example how is the recent order momentum in consumer and commercial? And how is it in developed markets and emerging markets? Is there any divergence between each segment? And my second question is could you provide some color on PC inventory in channels? And it will be good if you could include the product in transit because the shipping logistics cycle is getting longer. I was wondering whether the inventory is actually already back to normal in developed market if we include the product in transit? Thank you.

Sure. Luca would you please answer this question? So, Luca is our new Head of IDG.

Yes. Of course, with pleasure Yuanqing and hello to everybody. So, actually I think your question is twofold. One is the demand and backlog and the other one is about the inventory situation. So, regarding the supply/demand, it is correct. It's still imbalance meaning that we are seeing a very still a very strong demand and the supply is not yet sufficient to cover all that demand. So, we entered this quarter with a significant backlog and despite record shipments we will exit the quarter also with a significant backlog. Now, on the mix of the demand, I think there is certainly a very strong outlook and good visibility on the commercial side. I would say this is coming all over the world so no matter in emerging or in mature markets. And we are confident also based on our discussions with channel and with customers that there is a very strong plan for investment in IT for our enterprise and SMB customers going forward also with visibility extend into next year. While on the consumer, I would say is a mixed bag in the sense that we are seeing still a good demand. In some market, it's softening a little bit. But when I say softening is related to last year, but still higher than the pre-COVID levels, meaning higher than 2019. But we still have several markets with strong demand even in consumer, and one of the example that is very I think interesting is exactly the China market where despite there is not any lockdown and all the COVID things has passed. There is a very strong demand in consumer, which makes us happy as our exposure there is very significant. And regarding your question on inventory, I think the inventory is a little bit higher than in the last year, meaning it's getting a little bit close to normal but still there is no any place or no any country or geography where we have an excess of inventory. And if I look at in transit, yeah, it's a little bit longer due to the logistic lag, but I would not say anything to report that that makes us nervous. It's less than what it was pre-COVID and we are calling a very normal situation or even better than normal. It also has proved that we cannot unfortunately fulfill all the demand we have. Thank you.

Yeah. So if I can add some points. So definitely we see the strong commercial demand. So if you exclude the Chromebook last quarter, so we grew by 18% in entire commercial PC. SMB was even stronger with 48% year-on-year growth. Global account was 70% to 80% year-on-year growth. So Windows 11 -- so it's -- so it will be the key driver in the future. It has not been reflected to the last quarter's performance, but we think it will reflect to the future PC demand potential. So now the only weak segment is education. So Chromebook you know about that. But we also see some government is planning the new incentive plan. So to give money to the schools to buy the Chromebook, or PC for their students. So that's what we have seen. So we have talked PC overall demand for a couple of quarters. So now IDC has a similar view as us. So in the next couple of years, PC demand will keep at 340 million 350 million level. So it will not drop to the level before pandemic, but it's mainly driven by the people's new working approach. So definitely the hybrid working approach will be a new normal. So everybody needs a PC to work not just at the office, but also at home. So that will drive the high demand. So that's our view. And also another trend that you can see from our last quarter's performance our average selling price are going up significantly. So it's mainly because now our PC has come back to the center of people's lives. So every day that we use for the video conference so that is better quality of PC. So better video audio screen et cetera, et cetera. So that's -- so even in the consumer space consumer segment you can see the average selling price going up. So that's what I want to add to Luca's comment. Thank you. Next question.

The next question comes from the line of [indiscernible] Securities. Please go ahead.

Thank you for taking my question. And I have two questions. One is about the -- you mentioned about diversity. And I'm wondering for the long-term will you see demand versus value. That means maybe the commercial PC is gaining market share, but the personal individual PC is declining. Will this happen? That is the first question. And the second question is you mentioned in the last conference about the IC shortage. I'm wondering can you update what the situation at the moment? And we also see the gross margin is still very strong. I'm not sure if you can give us more color on the gross margin in the next coming quarters. Thank you.

So Luca please will answer for you that.

Yes. So the line was a little bit blurry, but I think your first question was about the future growth of PC market in commercial and what could happen in consumer in the longer term. So I think we are very optimistic in the commercial outlook as we were saying before. And to be honest we are also optimistic on the consumer side in the sense that the PC now is a game for everybody to enter into the digital life to access to many, many things that you cannot do from another device. So we believe that the commercial will grow the consumer will probably not hyper grow like it happened in the last 12 months because that was probably an exceptional situation but we'll not go back to pre-COVID levels. And then we are aligned to the view of IDC that the market will remain in the range of 340 million, 355 million, 360 million. And probably the commercial will grow a little bit more and the consumer will lower a little bit but still stronger than pre-COVID. Your second question was around IC shortage. I think the situation that we reported last quarter is still similar in this quarter. So the IC parts are still constrained and that is related to strong demand in the IT field, but also in several other industrial areas from the electric vehicles to other areas. And we believe this situation will not necessarily improve in the short-term. However as we have I think demonstrated over the last several quarters we are able to navigate that with our global local manufacturing footprint and also our hybrid manufacturing partially in-house and partially outsourcing we are able to better manage the Tier 2 and Tier 3 suppliers. So we are very confident about that. Regarding the gross margin you are correct it's very strong. I think we are optimistic that we will maintain and hopefully increase this margin by selling more premium devices by having a better penetration of our accessories of our services that is also related to the favorable outlook of commercial. I think overall we are optimistic that we can maintain and improve our gross margin over time and extending our lead in the market share as well.

Thank you, Luca. So I completely agree with Luca. So I also want to tell you so the commercial PC margin is higher than consumer, so particularly in SMB so we actually have the highest margin in that segment. So, the strong growth in that segment will help us to improve margin. Also -- so in the consumer we see the trend to go to the premier segment. So this will help to maintain or increase margins as well. So, regarding oversupply so definitely. So, another point I want to add to Luca's comment is, Lenovo. So we pursue the Lenovo supply chain so that we have the scale, the size to better negotiate with the upstream vendor suppliers. So that will give us another kind of advantage. So that's why -- so we are confident that we can ship premier volume to our -- to the market to our key competitors. So that's another point. And also to secure the supply, so we have pursued some strategic buying ahead. So that's why you see our material inventory are going up in the past couple of quarters. So that's what we have done to ensure we can supply enough goods for our customers. So that's about it next question.

[Operator Instructions] The next question comes from the line of Howard Kao from Morgan Stanley. Please proceed.

Hi, thank you for taking my question. So my first question is on CDR. I just wanted to ask, why do we decide to withdraw the CDR? And what does that mean for the future? Does that mean we will look for another time to apply for it, or is this plan just totally gone? So that was my first question. And my second question is on PC as well. So, when we look at IDC numbers Lenovo's PC shipments have been declining two quarters in a row on a sequential basis, but at the same time your finished goods inventory has been climbing over the past several quarters. Is there anything we need to worry about when we look at these two numbers? Thank you.

Yes. So, I will answer your CDR question first and then Luca will follow on the second question. So, we have given the announcement. So, there is no additional comment on that. So, our decision was made based on variety of reasons associated with market conditions complexity of our businesses and definitely the overall CDR listing process. But I want to emphasize since we have been listed in Hong Kong already, so the CDR was just nice to have. So even withdraw CDR we are not changing Lenovo's fundamentals and will not impact our business as well. So, as you can see our performance is still very strong. And we are -- we have no problem to further grow in the next couple of quarters. Okay. So Luca, could you please...

Yes. Yes, Yang Yuanqing. Yes. Yes for sure. So look, despite the fact that in the last quarter we didn't grew a premium to market and that's only limited by our -- by the supply, because when I look at our backlog, we could grow exponentially. We still managed not only to maintain the number one position but also to extend the lead that is the number two2. If you observe the latest IDC report we gained in absolute almost probably a little bit less than two points of absolute market share. So I think we are not worried about the fact that we are not growing a premium just, because we know the limitation is now supplied. And as a reaction, we are managing this supply very carefully with allocating to the right segment and to the geographies. That is one. And when you refer to our inventory, I think there are two kinds of inventory. I don't know which one you refer to, but the one is FGI finished goods inventory. I don't think that represent any meaningful piece of our overall inventory and that's quite low I would say. It's just business as usual level of inventory for certain customers that need immediate supply. And the inventory that grew a little bit more is the parts inventory, which is related to a strategic decision just like Yuanqing mentioned to buy high certain parts to secure the supply. And we believe this is the right thing to do in a world where supply is very constrained. Hopefully I answered what you were asking.

Thank you.

So, next question.

You have the last question comes from the line of Shiwen Li from CICC. Please go ahead.

Thank you for taking my question. I want to know as we see that the net margin in the latest quarter has further increased, so do we have any new guidance on the future improvement of the net margin? And how can we achieve that? And where our R&D expense rate increase? Thank you.

So, Wai Ming, you want to answer the question first?

Yes. Well, thank you for the question. We actually plan to increase our net margins, double our net margin over a period of three years. I think that primarily will be driven from the expansion of gross margin as well as, I think obviously through our operating efficiency I think that actually are the -- from a pure financial perspective the net result has increased net margin by 2%, which was 2% last year, last fiscal year, going forward will be 4% in two-three years time. And that will be achieved by expansion of gross margin and continue our operating efficiency resulting to the result of the target of 2%. And in fact if you look at Q1 as well as Q2, I think we only just passed through the first half of the three-year period. I think we already approached about 3% net margin. So we are very confident that we can continue to follow that trajectory, especially with the transformation with the services the SSG, which is obviously a key driver of improvement of our operating margin in addition to the continuing expansion of the profitability of our ISG business. Thank you.

Yeah. So, not just the SSG will help us drive the high margin and high profit. So actually in all our businesses so we will drive higher margin. So in PC, we just talked about that. So we see the market is shifting to the commercial. It's shifting to the high-end of the consumer PC. So that will help us to drive a higher margin definitely. So in the -- or even in MBG, our mobile business and ISG, the Infrastructure Solutions business, so we will drive high margin as well. So actually, I don't know whether you have realized in the past quarter, so actually although our PC business is still growing fast, still growing premium to the market. So actually our mobile business and our ISG business grow faster than our PC business. So all three businesses grew more than 20% year-on-year, but even more importantly so our mobile business has improved their margin and their profit significantly on past three years with it improved from like minus 9 minus, 10 to today plus 4% to 5% in our mobile business. Even for the ISG infrastructure solution business, so we – now we are very close to the breakeven. So we are very confident. So this quarter current quarter, so probably we will achieve the breakeven. So actually, we improved the margin by or profit by 10 points over the past couple of years, as well in the ISG. So I don't know, whether Kirk and Buniac you want to add something here.

Hello, Wai. This is Kirk speaking on ISG. So yes, I'm quite confident that, we're going to continue to grow profit. I think we're excited that we achieved record revenue of nearly $2 billion significant double-digit premium to market for now seven quarters in a row. And the profit is improving, because we're applying more of our business to the in-house design and manufacturing. So we're one of the only companies in the world that can deliver a true edge-to-cloud experience, and we're seeing that pay off in both revenue growth and margin improvement. So our ODM+ model of in-house design and manufacturing now has delivered more than 50% growth in cloud. And as you're probably aware, because I see it every day, more of the world's data is going to be stored in the public cloud than in enterprise for the first time. And obviously, we're in a world where more data was created in the last two years in the entire history of the world combined. So we're now able to see 50% growth in storage, which has better profit more than 50% growth in the cloud year-on-year. And with our in-house design and manufacturing both of those issues, as well as the services that we're attaching to that are all driving up our profit more and more every quarter. So we expect to continue to be able to deliver records quarter-on-quarter with improving profitability. Thank you.

Sergio?

This is Sergio. On the mobile side, we have a record quarter that in revenue grew Q3 2017/2018 demand is strong in all regions. We grew three points premium to market and we grew in every geography especially North America, our best quarter in a long time and we foresee that, it's not going to be different in this current quarter. So Latin America, we achieved 24% market share our highest ever and Europe, Asia overall market double-digit growth. Our 5G mix also grew by 10 points from 14% to 25%. And we are also starting to leverage our solution to start leveraging the global commercial strength and start growing in the commercial market as well as across geos across segments very strong demand. And our stock channel is 20% lower than last year and even 50% lower than what we see as optimal for the holiday season. So we continue to see the growth in the future quarters.

Thank you. Thank you, Sergio. So, any more questions?

Yes. I think we are actually running out of time. But could I invite you to give the final remarks, especially regarding to our R&D spending that is one of our key objective in terms of running the business forward.

Yes. Definitely Jenny. So investors and analysts so we definitely see because of the pandemic the digitalization and intelligent transformation are accelerating. So not only that drives the higher PC demand, but also the higher infrastructure demand server and storage and even IT service demand as well. So we see the clear new IT architecture, which is client device edge, edge computing cloud, cloud computing, high-speed network and definitely intelligence. So, this kind of architecture have been formed. Lenovo -- so we are fortunate -- so based on this architecture we have formed Lenovo's 3S strategy Smart Device IoT Smart Infrastructure and Smart Vertical. So now we have all necessary components to help our customers realize the digitalization and the intelligent transformation. So we are ready to grasp the growth potential or the opportunity. So definitely so while we are committed to invest more on R&D, so because we want to build the core competence with the 3S strategy with this new IT architecture. So we are definitely -- we'll continue to deliver our commitment to double our R&D in three years, and to hire more R&D people to deliver that, so we are confident on Lenovo's future for sure. Thank you.

Thank you Yuanqing. We still have a couple of options in the pipeline, but because of time we have to close our session today. And we thank you very much for joining today's call. And if you have any further questions, please feel free to contact Lenovo's IR team or myself. And the replay of this webcast will be available in the next couple of hours on our Investor Relations website. Thank you very much for joining us. Bye-bye now.

Bye-bye.

That concludes today's conference call. Thank you for participating. You may now disconnect.