00:00 Good morning, 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. 00:12 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'll begin with an earnings presentation and shortly after that, we will open the call for questions. 00:51 Now let me turn it over to Yang Yuanqing please.

00:54 Hello, everyone and thank you for joining us. Once again, despite the challenges of the pandemic and supply shortage, Lenovo has delivered another record-breaking quarter. Our clear focus on profitability and the innovation, supported by strong execution has driven historical results across our businesses. We're also pleased that last week, Lenovo has been added to the Hang Seng Index, providing market recognition of our continued strong results. 01:37 The accelerated digital and intelligent transformations in the new normal continues to generate significant opportunities, investments in digital transformation I expected to increase over 16% annually over next three years. Lenovo's new IT technology architecture of client, edge, cloud, network, intelligence, prepares us well to capture these opportunities. Last quarter, Lenovo delivered another quarter outlook record profit under revenue. 02:22 Our net income reached all-time record of $640 million, up 62% year-on-year. This is the sixth consecutive quarters of over 50% year-on-year net income growth. Net margin also increased by almost one point year-on-year. We are on track to doubling within three years. With the 17% year-on-year growth, our quarterly revenue achieved $20 billion for the first-time, thanks to double-digit growth in all key businesses and balanced growth across all geographies. 03:13 Going forward, we will continue to double our R&D investments along the New IT architecture, enhance our digital foundation to support the business growth, compete as one and novel with pocket-to-cloud offerings, global footprint and organizational efficiency and continue to deliver our ESG commitments. 03:44 Now, I will talk about each of our businesses. Let's start with the solution and service group. The trillion dollar global IT services market through 2025 presents big opportunities for growth. Almost the half of the global workers are currently working remotely driving demand for premier support and the customized fulfillment. As service penetration in PC and the data center is only 2%, providing substantial room for growth and the enterprise spending is expected to grow faster in cloud and digital services. 04:36 Last quarter, Lenovo SSG continued to deliver high growth with a higher profitability. Its operating margin exceeded 22%, a nearly three-point increase year-on-year. Revenue continued the strong growth of over 25% year-on-year, support services 21%, managed service 50%, driven by our TruScale as a service offerings, project services and solutions 23% with the breakthrough in some other retail. 05:20 Looking forward, SSG will capture the remote work trend and leverage our global service footprint to provide accessibility and flexibility to our customers. SSG will also invest in TruScale offerings, hybrid cloud solution, and other software and the services with our own IP and expand sustainability offerings. 05:54 Our Infrastructure Solutions Group, ISG, continues to benefit from the ICT infrastructure upgrade, a $250 billion market globally through 2025. By 2025, the Edge infrastructure market alone is expected to grow quickly to $41 billion. Last quarter marked important milestone. Our ISG became profitable for the first time since the IBM x86 acquisition in 2014. Meanwhile, our revenue grew at double-digit premier to market for the fourth consecutive quarter. 06:52 Our cloud service provider and the enterprise SMB revenue grew by 38% and 7% respectively year-over-year. Over the years, ISG has invested in building full stack of data center portfolio as well as the in-house design and manufacturing capabilities. We can now cover customers of all scales from Tier-1 CSP to Tier-2 enterprise and SMB. 07:28 In the long term, this customer coverage will give us unique advantages to balance scale and the profitability as well as the customers demand for security/reliability and agility/flexibility. We will meet all kinds of customer requirements from on-prem, infrastructure as a service all the way to private, public, hybrid cloud. 08:00 For the Intelligent Devices Group, IDG, smart device markets continued to benefit from the new normal of hybrid working model. The PC market is a focus to remain strong and stable shifting to commercial and the premier segments. In smartphone, the market reshuffling will bring more growth opportunity to Lenovo, at the same time, the penetration of 5G and the development of edge cloud network intelligence will provide more growth potential for the emerging smart devices like, embedded computing, IoT; AR/VR driven by Metaverse as well as smart home and smart collaboration solutions. Last quarter, IDG delivered another record quarter in profit and revenue. Its revenue grew 16% year-on-year and the profit grew even faster, up 21%. 09:21 In PCs, premier segments delivered a high growth. In non-PCs, smartphone business has been healthy profit for seven consecutive quarters. Last quarter, its revenue grew strongly at 46% year-on-year and it was the fastest growing major vendor. Meanwhile, we saw some emerging smart devices like Smart Collaboration Solutions, revenue nearly doubled year-on-year. Going forward in PCs, we will continue investing in innovation, premier segments and core components. 10:09 In mobile, we will strengthen our smartphone portfolio and invest in expanding new markets in Europe and Asia-Pacific. We will also continue to invest in IoT, Metaverse driven AR/VR, Smart Home and Smart Collaboration Solutions to capture the emerging opportunities. 10:32 In summary, our market coverage is expanding, potential is a growing, our capabilities are developing and our performance is stronger than ever. We are on track to doubling both R&D investment and the net margin by the end of fiscal year 2023-2024. So, we are confident in delivering strong, sustainable, profitable growth while also meeting our ESG commitments. 11:15 Thank you. Now, let me turn you to -- over to our CFO, Wai Ming. Wai Ming, please?

11:23 Thank you, Yuanqing. I will take you through Lenovo's financial and operational performance in Q3 fiscal year 2022. We delivered more than $20 billion in revenue this quarter with multiple financial records. Our net profit grew 62% year-on-year to an all-time high of $640 million with 17% revenue growth year-on-year. We are excited to see balanced growth across different markets. 11:51 Our Group net margin advanced 89 basis points year-on-year to near record level. All three of our business groups contributed to profit expansion. ISG in particular turned profitable for the first-time since its acquisition in 2014. IDG and SSG continue their strong double-digit growth trajectory. The profit expansions, we are on pace to achieve our medium term target of doubling our net margin. The basic earnings per share came in at $5.50 representing 66% growth year-on-year. 12:30 In line with the digital transformation and new IT opportunities, we leverage our Client, Edge, Cloud, Network, Intelligence architecture to create devices, services and infrastructure to enhance our digital foundations to support business growth. As part of our commitment to double our R&D investment. During the quarter, our R&D expenses grew 38% year-on-year. This includes investing in talent acquisition and development, our R&D headcount was up 40%. We also invested in broadening services and intellectual property, driving innovation, with a focus on ESG and designing or premium segment and edge computing. Every aspect of our R&D investments ranging from devices, surfaces, infrastructure to AI and operation efficiency to help contribute to the 56 basis point increase in both our record operating margin as well as our long-term competitiveness. 13:36 For fiscal Q3, our operating cash flow remains strong at $606 million. This is in spite of the higher working capital requirement due to our buy ahead action of strategic component in response to supply challenges. Q3 sales were also unusually back end loaded because of late arrival of components and longer logistic lead time, leading to higher balances in both accounts receivable and payables. 14:09 Our receivable credit conditions remain healthy, although, Q4 we also see similar sales skewed towards the end of the quarter. Nearly 80% of account receivable are within 30 days and the overdue ratio hit a record low. We expect to mitigate the impact from the above factors gradually and continue to accelerate our cash flow. The group financial position continued to be strong. In Q3, finance cost were down by 17% year-on-year, and we finished the quarter with net cash position. This was achieved by reducing our net debt and perpetual securities by $3.2 billion over the past 10 quarters. Going forward, we are confident in our ability to stay in a net cash position. 14:59 SSG recorded another stellar quarter with strong revenue and profit growth. Structural calculus, including opportunities arising from the New IT trend, hybrid work model, commercial recovery, and increasing ESG awareness are powerful drivers to our service expansion. Its revenue increased by 25% year-on-year to $1.5 billion. Booking and deferred revenue grew a strong double-digit, indicating a larger recurring revenue base. SSG boosted operating profit by 44% year-on-year to $332 million and operating margin revised 2.9 points to 22.2%. 15:47 By segment, Support Services revenue rose 21% year-on-year posting the highest profitability in the group. Working alongside with other business groups, SSG is broadening service penetration in PC. We made significant progress in premier and customer fulfillment services, while customer interests continue to grow or sustainability services such as asset recovery. We are actively developing six more sustainability service solutions. 16:19 Managed Services posted a strong 50% revenue growth with improved profitability on the back of the increasing popularity of as a service model branded under TruScale. We won a number of deals, while also expanding its geographic presence and customer base. 16:38 Project Services and Solutions also reported solid revenue growth of 23% year-on-year. Despite the pandemic creating challenges in project delivery, the total contract value more than tripled with important deal signed for smart retail amidst increasing adoption of our in-house IP solutions. 16:59 ISG staged a successful turnaround leveraging its enriched architecture and technology solution as well as successful project wins and industry partnerships. As a result, its operating profit increased $28 million year-on-year. ISG outgrew the market with new projects and acquisition of new next-wave customers looking to build their cloud platform in response to increased emphasis on a streamline fully integrate the supply chain, our unique ODM+ business model provides a holistic solution encompassing a vertically integrated operation. 17:39 ESMB revenue reached a five-year high led by high margin storage, surface and software sales. The Group maintained number two in global entry storage market as well as continued as the largest provider of supercomputers globally. IDG achieved another record quarter with revenue and operating profit up 16% and 21% year-on-year respectively. The shift towards commercial and premium segments continue to accelerate. 18:13 Commercial demand benefited from digital transformation and transition to a hybrid work model on a global scale, growing at the third highest rate since 1998. This commercial strength together with the strong growth in premium segments worked well for increasing our average selling price and profitability. Our PC business does show a 19% increase in ASP and improved margins, marking the 17 consecutive quarter of year-on-year profit margin expansion for IDG. 18:47 Non-PC products contributed to 19% of IDG's revenue in the quarter. Smartphone revenue grew 46% year-on-year and its operating profit stayed at record level of $89 million. Our portfolio expansion strategy to increase product differentiation was well executed. IDG smartphone shipments increased 53% year-on-year according to IDC substantially ahead of the market with share gains across key markets. In North America, we posted triple-digit growth in revenue while strengthening our number two position in our stronghold markets in Latin America. 19:29 Speaking of our ESG initiative, in December 2021, Lenovo was rated at the leadership level for the first-time in both the CDP water and climate surveys respectively receiving an A and A-minus in these widely recognized surveys. We broadened our sustainability services and TruScale portfolio, added ESG-related features such as CO2 offset option to our products and increase our adoption of green materials. 20:04 On the group level, we are exploiting the path to net zero emissions by 2050, completing the road test of sign-based target initiative methodology and becoming a founding member of the China Net-Zero Network. On governance, Lenovo has received recognition from Corporate Knights, Bloomberg and the Hong Kong Institute of CPA. Other impactful sustainable initiatives include Lenovo 360 ESG circle and the EcoVadis rating tool. 20:38 Strategic opportunities in digital and service-led transformation continue to accelerate. We are investing to build Lenovo's service-led transformation to get advantage of infrastructure demand proliferation, drive sales in high value at the products and ultimately achieve the growth medium-term financial target of doubling our net margin. Looking forward, SSG is building a broader service portfolio to take full advantage of remote working environment. 21:08 New business model of as-a-Service is growing fast and the resulting rapid penetration into PC and infrastructure sectors will support its future hyper growth. SSG will play a key role in driving recurring revenue and increasing Lenovo's profitability. For ISG, the infrastructure upgrade opportunity remains strong and Lenovo is one of the fastest growing infrastructure providers globally. We are committed to building full stack offerings and to servicing both CSP and ESMB segments. 21:45 We will continue to develop offerings to meet regional demand and capture growth opportunities, including as-a-Service portfolio to address the proliferation in data and AI combination and Edge. In CSP, we are migrating to our ODM+ model for improved profitability and greater supply chain and procurement agility. 22:08 In ESMB, we will continue to expand our product portfolio from service into storage, storage-defined Infrastructure, Software and Services to pursue higher profitability. In doing so, we will create new business opportunities and expand our customer base. IDG will continue to lead and grow a premium to the markets, the global PC sector should remain strong and stable, thanks to the hybrid work model and digital transformation driving demand in commercial and premium segments. 22:44 PC business will further invest in the premium segment to drive profitability through innovations in the area of ESG features and green materials. The smartphone business will focus on portfolio enhancement and differentiation to take advantage of accelerated 5G adoption and the changing competitive landscape. The group will address the expanding Internet of Things opportunities to grow its non-PC business. 23:12 The Hang Seng Index company last week that is effective from March 7, 2022, Lenovo Group will be included as a constituent stock of the Hang Seng Index, which is reflective of our stellar operational performance in recent years. Our strong financial position provides a solid foundation on which Lenovo can proactively pursue growth opportunities ahead. Finally, as always, we remain committed to driving sustainable profitability growth for our shareholders. Thank you. 23:45 And now we can take your questions.

23:52 Thank you, Wai Ming. Now, we will open our lines for questions and this session will be English only. Please be reminded to limit yourself to two questions at a time. Operator, I will now turn it over to you. Please give us your instructions.

24:10 [Operator Instructions] The first question comes from the line of Chris Chen from UBS. Please go ahead.

24:29 Thank you very much for taking my call and congratulations on your strong results. First question is about the guidance. Can you give us the guidance by different segments of the new fiscal year? And the second question is actually, I was surprised to see Lenovo's share price fell in the afternoon session today after reporting such good numbers. I think this actually happened a few times in recent quarters. Could you help us understand what drives this disconnection here? Thank you.

25:05 Thank you, Chris. So, definitely we delivered very good result last quarter, so all our businesses are growing at a double-digit level and also further, our profit increased by more than 50% for seven consecutive quarters, so that's the last quarter. Definitely, we are very confident this growth can continue, so not only ISG will drive the hyper growth, SSG will dry high growth with higher profitability. Even for IDG, we are confident we can continue to drive the growth. So although the PC market [Technical Difficulty] will keep at current shipment level [Technical Difficulty] million units every year. And also, we see the second shift -- shifting from low end to the premier segment, shifting from consumer to the commercial. So all these trends will help improve the average selling price. So that means even though the unit shipment will be flat [Technical Difficulty] will keep growing. We are confident on that. 27:15 Meanwhile, so our IDG, it's not just relying on PC, it will more rely on non-PC business growth for example mobiles. So we see strong 46% year-on-year growth last quarter. So we definitely think this trend will continue because we were expanding into that new market, in Europe and Asia Pacific, we will double down on that market to drive the growth and also with 5G development and with the new IT Client, Edge, Cloud, Network, Intelligence architecture development, we think that there are more emerging devices to impact. So for example, embedded computing, IoT for example, and AR/VR driven by the Metaverse, smart home and smart collaboration. So those are definitely fast-growing areas. So we would have that opportunity to further go, so we are confident. So from overall company point of view, we will continue to drive the growth. So, in short term on this, we will still be able to drive the double-digit growth. 29:06 So, I don't know whether I answered your question? While share of price going down, so probably Wai Ming that, you are better to answer the question, right?

29:24 Okay. All right. So well, thanks for the question, I think great. I believe that probably the market may not fully understand immediately, I think, our very strong result because of the very volatile environment. I think, Chris as you recall, I think, Lenovo is probably the first company, maybe even a few quarters began after the COVID-19 that we actually have the inside of the continuing growth of the IT business and the market, obviously was a little bit suspicious and as you looked at, we had actually been consistently deliver I think what we actually call a few quarters, that's really, number one. The second one that I would probably want to -- I think draw your attention is our share price unfortunately did not immediately reflect a very strong growth, but the experienced investor, I think such as yourself after one or two days when you actually have an opportunity to study, I think the underlying strength of our business, if I recall, most of the analyst reports, in fact, actually have a recommendation of buy as well as uplifting our target price and very slowly this share price will actually return I think to another high-level. 30:56 I think, thirdly, I would say that clearly there was some sort of short-term trading. As you recall, last Friday, Lenovo was I think, it was announced that Lenovo was actually included in the Hang Seng Index. On Monday and Tuesday, there was tremendous amount of buying and the share price actually went up by nearly 5% for the last two days, so maybe there are some short-term, I think, trading mentality especially deal off, I think the latest unfortunate, I think, in Ukraine-Russia event that triggered, I think for the short term investors taking profits. So, I would expect that, I think with the analysts having more time, and more experience, and more expert understanding of the business, I am sort of patiently waiting for your resource report and your recommendation and actually, I'm very confident that I think the institutional investor, in particular, I think they will study very carefully of your analysis and we will see the return of the share price to another high level. Thank you. Next question.

32:12 Thank you, Wai Ming. Now, yeah, operator, we are now ready for the next question please.

32:19 The next question comes from the line of Howard Kao from Morgan Stanley. Please go ahead.

32:25 Thanks for taking my question and congratulations on good quarter. So, before I ask my question, though, can I just clarify something in terms of your comment on outlook for the PC business. Did you say that you guys are expecting shipments to be flat or down, but revenues will keep growing because of the shift from consumer to commercial?

32:51 So, Lucas will be answering.

32:58 Yes, Yuanqing. Good morning. Yeah. Okay. Thank you for the question. Good morning and good afternoon to everyone. So, I think you're asking whether our view in the market, the PC market, will be stable kind of flat in the next fiscal? The answer is, this is our view and also supported by most of the analyst and those of our industry partners, we all see the market to be stable, but with higher AUR due to improved mix premium, more commercial and also the compare with the previous year, there is a certainly a slowdown of Chrome. So the total volume perhaps the same, but the value increasing significantly as demonstrated by our AUR recently.

33:59 I see. Thank you. So, sorry, two questions from me. One is, can you talk a little bit about your channel inventory situation in the PC market. I think earlier this year you guys had seen channel inventory creeping up a little bit to around four to five weeks, which is still below your healthy level, but just wanted to see how that has changed over the past couple of weeks. And in terms of the server business, I just wanted to ask two-fold question, one is in terms of your third quarter numbers, it seems like revenue were down a little bit on a sequential basis, whereas I think a lot of other companies within the server supply chain reported pretty strong calendar year fourth quarter numbers. So I just wanted to see -- ask, what was the reason for that? It seems that cloud revenues were down on a quarter-to-quarter basis. And can you guys provide outlook and commentary about your ISG business in the next coming quarters? Thank you. [Multiple Speakers]

35:11 Okay. So look, the inventory profile is materially -- still materially below the pre-COVID situation and particularly in the commercial segment for the so-called transactional part of the commercial segment is significantly below the pre-COVID levels and you also need to think that we are now in a market with a bigger total available market. Additionally, just maybe to give you a little bit more color of our business model, not all of our business hold inventory by design. So we have several segment relationship government, global account that in most of the cases had no inventory at all. So this is a kind of an end-to-end direct kind of concept. The consumer inventory on the other side is growing a little bit, still below pre-COVID but I would say that is normalizing to a reasonable level because during the peak of pandemic, it was just too low to the point that we lost -- the industry lost opportunities to sell. So, I would not consider this worrying situation. On the contrary, I would conclude saying that we are not concerned about our inventory levels. Hopefully, I answered your question.

36:51 Yeah. So, probably Luca, I kind of happy to expand this situation. So our inventory or channel inventory level was probably the higher than last year, but is lower than before pandemic and also a reasonable channel inventory [Technical Difficulty] that will help us to drive the sale because in the last year and the past period, we have ten models offerings probably we only have five in -- another five is in shortage. So for those customers, they want to buy that another five, so they cannot buy, so that's the issue. So, that's why we think the reason channel inventory will help the sales. So that's our kind of channel inventory situation. So, our past inventory probably is higher than before the pandemic. So, the other reason you could understand. So that's because of the shortage. We have to buy ahead for some component, so that is why the past inventory is high. Okay. So, Kirk, would you like to talk about the ISGs now?

38:38 Sure, Yuanqing. So I think we're very excited about the growth in server and storage but since your question was regarding server, I think some of the calendar fourth quarter analyst data is now just coming in preliminary and we're expecting the formal revenue share numbers to be out in across the next several weeks. I think, we're confident given our increasing average unit pricing based on an improved mix that we'll see a premium to market when that happens. We're in a unique position because we are participating both in cloud and in Enterprise SMB. 39:20 In cloud, we had a significant premium to market, double-digit premium to market and we have not only acquired some new $1 billion class customers in the Tier-1 space, but we've grown our next wave account base more than a 100% year-on-year in a supply-constrained environment. So, as that supply continues to free up, we're confident that that growth will just accelerate further and we have the design wins in place to make that happen. 39:53 In Enterprise SMB, this our highest revenue in five years for Q3 and we're seeing strength and records across all of our profit engines. So records, in our Microsoft software, our VMware software, our Nutanix software, in Edge, in communication service providers, all of those hit new records. And I think our product innovation speaks for itself. We were just awarded this quarter the AI Product of the Year by HPCwire, CRN Storage Product of the Year. And now we have new ThinkEdge product that is most GPU rich edge server. So, all of that shows servers are strong and in storage, I think we're confident that in the price bands one through four will grow from previously, not even being on the radar to being the number one increased storage provider in price band one through four which make up about 60% of the units in the storage market. 40:57 So I think, hopefully, that gives you some optimism for the future and the supply point is that I think things will get better from there. We did have an exceptionally strong Q2, which was at 30% year-on-year growth. So in this cloud business, when you've got very, very large customers that can be a little cyclical, but I would [Technical Difficulty] there is no -- from my perspective, there is no concern I have. We see exceptionally strong growth for the future in continued profitability. Thank you.

41:39 So, that [indiscernible] how ISG have been increased -- still constrained by the supply and we can have better supplies. So, definitely even last quarter, we could deliver even stronger performance, but we definitely are optimistic on the current quarter and in the future on the ISG business. And also, as I said at the beginning, so Lenovo is very unique company in the ISG area, so we can cover all kinds of the customers all the way from Tier-1 obviously with the provider to Tier-2 that Enterprise SMB. So, this coverage will give us unique advantage to balance scale and profitability and also, we can meet our customers’ requirements. We have [Technical Difficulty] customer requirement, secrecy, reliability and flexibility and agility. So, we have laid out the strategy solid. So we are confident that we will continue to drive the growth in that business. Next question please.

43:23 Thank you. The next question comes from Albert Hung from JP Morgan Securities. Please go ahead.

43:32 Hi, management team. Thank you for taking my question and congrats on great results. My first question is on the service business, which has gained a lot of good traction. Did you consider any M&A point to assess rate service business development? If yes, what's the consideration when doing M&A for service? My second question is on mobile. You mentioned that you're going to enter Europe and Asia again. I remember a couple of years ago, Lenovo changed their mobile strategy to become more focused in term profits. So I wonder what's the competition level in Europe and Asia versus that in couple of years ago. What's the difference in the strategy this time? And is there any impact on the new strategy on profitability side? Thank you.

44:28 Thank you, Albert. So those are two questions for Ken and Buniac respectively. Ken, please...

44:44 Okay. Thank you, Albert. I think this is a great question regarding Services. First of all, I think we are very happy to see the strong growth in Solutions and Services Group, SSG. I think this is the third consecutive quarter, where we see our revenue growth is faster than the group and also maintaining at a high level of profitability. I think this is once again giving us confidence that our service-led transformation strategy is actually executing well, right? Just like YY said at the opening, I think we definitely see, our customer is asking for more help because of new IT is powerful, at the same time also very complex, right? So a lot of customers actually looking for help, like Lenovo, where we have the full portfolio of hardware from pocket-to-the-cloud software and now Services and Solution, right, to help to unleash the full power of technology and also to help them to bring in the desired services outcome. This is a big trend for overall services market. 45:55 In terms of growth, I think we're looking at all strategy including both organic and inorganic way to grow SSG, and we are very confident in our strategy. And also, I think Wai Ming can cover. I think we are in terms of our balance sheet. We're much healthier ever than before to support any kind of tactics in terms of growing SSG. Thank you.

46:26 Buniac?

46:28 Hi. Hello, can you hear me? So, I think look a few differences, right? I think our scale has improved globally. So, our plan has always been protecting Latin America, North America where we are growing fast in premium to market and rebuilding our capabilities in different regions like Europe and Asia. Our approach is going to be very focused. We are not going broadly in those markets, but starting to get relevant in key markets we have selected carefully. Our time to market in product development has gone down 30% to 40% since three to four years ago what allowed us to play much better in those markets, our software platform and I think also we will leverage a lot the one and novel capabilities in markets like B2B and commercial. So, I mean we're going to keep growing in North America, Latin America. We see growth coming from selected markets in Europe and Asia, that we will represent a strong percentage and our approach is going to be very careful. So, and we are seeing very early positive indications that we can sustain profitable growth both in selected markets in Europe and no different in Asia.

48:00 Yes, regarding our mobile business. So, I think we have success, we realized our first stage objective to magnitude, I mean, is a healthy profitable. So actually, we have been in this position for six or seven consecutive quarters. So, it's now, we will change the strategy to the profitable growth. So, definitely we will make sure there has been -- we have continued to be profitable at current level. So if we can make more money from this, definitely we will reinvest the money into expansion of the market, but we will not expand the market everywhere. We will only choose selective countries or markets and double down on that. Now, we can quickly get [Technical Difficulty] this year, so that will be our strategy for the future. So, we are pretty confident, although last year, we shipped 50 million, 60 million units of the smartphone. Also, this year we will people keep that hyper growth as we delivered in the past two quarters. Next question.

49:44 Thank you. [Operator Instructions] Next, we have the questions from Jack Shu (ph) from President (ph) Securities. Please go ahead.

49:58 Hi. Thank you. Could you hear me? Okay. Thanks. Congratulations for the financial results, and I have two questions. My first question is about still is about the server. And I’m interested how -- what's our strategy for AI server in the future. Can we collaborate with more opportunities with the chip companies such as DDR or other chip supplier in the future? And this is my first question. And my second question is about our, the mobile, our mobile market, because since we have done a great job. And so, I'm still interested what's our strategy in the Chinese market and in India market that is two biggest the markets in the next two years? Thank you.

51:17 Okay. Another IT and mobile combinations. So, Kirk, you go first then I will take over. [Multiple Speakers] Go ahead.

51:33 Yeah, definitely we see AI and AI everywhere as a growth opportunity for us. As I mentioned and I think also Wai Ming mentioned we maintained our position as number one in the global top 500 supercomputers and actually over the last year now installed the largest supercomputers, we've ever done in more countries than any person in the world or any OEM in the world. So that one in three of the world's supercomputers and many, if not all of those are putting in the AI element into their compute engines. But the other large growth area is at the Edge and we've created now an end-to-end portfolio with the new [Technical Difficulty] called ThinkEdge and as I mentioned, we were just awarded by HPCwire who gives out the awards as having one of the best AI products or the best AI product. And we now have a new portfolio with the SE450 product that's the world's most GPU-rich server, so we can actually put four GPUs in an Edge server. 52:50 As a result, we just won one of the largest global retailers in fast food chains in the world using our Edge servers with the GPUs they are to help automate and make their drive-through as more resilient. So, definitely we're seeing AI as a significant growth engine as well, I said earlier, over a $40 billion market coming up and we now have a brand new ThinkEdge product line and internally, we just announced a new ThinkEdge division to do everything from the Edge device to the Edge gateway to the Edge servers and this was a record quarter by the way for our Edge business. So we've put together several record quarters in a row now and we are continuing to grow our portfolio. Thank you for the question.

53:43 Thank you, Kirk. So Buniac, you continue mobile in China…

53:53 Yeah. So our like we reignited our business in India two to three years ago. We are seeing good progress, solid. We are assuming, we are seeing consumer ratings very positive strong/sales. So we will continue to grow in India. We are coming from a small base, but growing very -- in a sustainable way. We believe this is going to hold and probably our expectation is to gain share to grow three, four point of share in the next few months, years. So we see the progress is very healthy and sustainable, profitable in India with a special focus on online. 54:47 In China, we reignited our business a year ago. We have created the channel. We launched our Razr family very successfully. And now the Edge family is still very small. We are going to be very careful with a big market, but we are seeing a small progress in a low way. So, India little faster and going in the good direction both brand and channel, our stock and channels are very well in those markets and our sell-out kits surpassing our selling in the last few months. So careful approach, we see steady growth and you could continue to sustain that over the next months and years.

55:37 Thank you, Buniac. So, let me add something here. So, actually in the mobile world or industry, probably there are three different games. The first is the US and the mature market, so it's driven by the premium of our product, our premium brand, but the meanwhile consumers, our customers that want to pay premium priced as what we are, so you can think there are different players in those kinds of markets, so Apple, Samsung, Motorola, possibly LG. So that's the first game. The second game is like the Latin American market. So, it's mainly driven by the mainstream product, not a premium, but sale price. So, that's another market up. So actually China, India probably are the third market that's the price performance driven market. So, people want to have the latest technology. Meanwhile, they want to pay to be more aggressive on the price. So, those are three different games. So definitely we with Lenovo's strategy, we want to win the first of two, first, but meanwhile, we start to prepare the probability in the third game or in the third market. So that will be Lenovo's strategy. Okay, next question.

58:08 Thank you, Yuanqing, because due to limited time, we are going to attend our last question and this is some online submission by Mr. Kai Strong from Pacific Securities Research. His question is this year the economy and geopolitical issues are resulting a larger market uncertainties. Would this impact your PC market outlook? And could you also elaborate and share more details regarding to your ASP trend for your PC product?

58:46 That's a question for Luca, right?

58:48 Yes.

58:49 Yes, Yuanqing. So thanks for the question. So, I think talking about 2022 and little bit as I said before, the view is that the market will stabilize with better AUR. Now, I think we can make -- I want to make two reflections. One is that when we say the market will stabilize, we also need to recognize that from the pre-COVID to the post-COVID PC market, this market will be adding $100 billion of revenue, which obviously is a very significant number and opens a lot of project opportunities given the larger size. This is one. The other thing, the other reason why we are confident is that the digital transformation, work from home, all these things are majorly driving more demand for the PC technology. And I just want to say the remote collaboration, which is probably the killer application, this is the one which runs the best on PC. 60:02 So, I think there are many, many reasons to feel confident about the stable market with increasing average in unit price and consequently a little bit of improving on the revenue vessels already in high number, which will be the 2021. Obviously, just to add some more color, this '22 market we believe will be stronger in commercial, which is very positive, not only because our exposure in commercial is traditionally higher, approximately 65% of our last quarter revenue was in commercial but also because this mix is more favorable in terms of penetration rate -- our service penetration rate, which obviously comes with good margins. 60:58 And additionally, you had the accessory attached which also comes with a good margin. And if, you think about the work from home, many users want to have now two PC from a work perspective and ones who have a rich portfolio of accessory and even services to use their product and to work with their partner at home. So, I think there are many good reason on to have a good view on the market plus, our traditional ability to drive at premium to market. So, even with the flat market, we will continue to grow and better than the market. Thank you.

61:46 Yes. Thank you, Luca. And thank you everyone online and this will conclude our webcast today. If you have any further questions, please feel free to contact the IR team of Lenovo directly. The replay of this webcast will be available in the next couple of hours on our Investor Relations website. Thank you again for joining us. Thank you. Bye-bye now.

62:11 Thank you.

62:12 Thank you. Bye-bye.

62:15 This concludes today's conference call. Thank you for participating. You may now disconnect.