Good morning, good afternoon and good evening. Welcome to Lenovo's investor earnings 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. Ken Wong, President of Solutions & Services Group; Mr. Kirk Skaugen, President of Infrastructure Solutions Group; Mr. Luca Rossi, President of Intelligent Devices Group; Mr. Sergio Buniac, President of Mobile Business Group and President of Motorola. We will begin with earnings presentations. And shortly after that, we'll open the call for questions. Now let me turn it over to Yuanqing. Yuanqing, please.

Hello, everyone, and thank you for joining us. Last year, the world faced multiple challenges including supply shortages, pandemic disruption, geopolitical uncertainty and higher inflation yet we successfully overcome these challenges and delivered a record year with historical revenue and profitability improvements. All our main businesses are profitable, and our new growth engines are positioned for even stronger success. The digital and intelligence transformation trend continues to accelerate. IDC reports that more than 50% of enterprises now have digitalization as a part of their corporate strategy. The hybrid work model is here to stay creating strong demand not only for smart devices and the data center infrastructure, but also scenario-driven solutions such as smart collaboration, smart home and the smart office. Guided by our clear strategy, we captured these opportunities to deliver all-time record fiscal year profit and revenue for the group. For the first time, net income reached $2 billion, up 72% year-on-year. Revenue also improved by $10 billion for the second year in a row, reaching $71 billion, crossing the $70 billion milestone. Our main businesses are now profitable for the first time since the Motorola mobile and the IBM exit since acquisitions, with particularly strong growth momentum in our Mobile, infrastructure and Solutions & Services businesses. At the same time, we continued to strengthen our competitiveness to drive sustainable profitable growth. We made strong progress towards doubling R&D investments within three years from fiscal year 2021, 2022 up 43% year-on-year last year. And we continued to realize our ESG goals and commitments. Now I will talk about each of our businesses. Let's start with SSG, Solutions & Services Group. The $1 trillion IT services market continues to expand with a hybrid work model. The demand for digital workplace services is expected to reach $93 billion by 2025. Also I will [indiscernible] more than 90% of CIOs are willing to consider adopting as-a-Service offerings. In the last year, SSG captured these opportunities and delivered high growth and high profitability. Revenue reached an all-time record of 30% year-on-year. Operating margin was 22%. We saw strong double-digit growth across all segments, especially Managed Service revenue grew more than 60% with a strong growth from our true scale as-a-Service business. Now revenue from Managed Service and Project & Solution Services accounted for almost half of our SSG business. SSG continued to invest in software tools, platforms and repeatable vertical solutions with our own IP. We are driving deeper in our vertical solution capabilities in key industries focusing on manufacturing, retail, health care, education and smart city. We continue to expand our TruScale as-a-Service to the broader digital workplace solutions and developed our hybrid cloud solutions. In the meantime, we are further exploring metaverse based on our current foundation. Our Infrastructure Solutions Group, or ISG, continues to benefit from ICT infrastructure upgrade. The data center market is expected to reach $183 billion by 2025. Under the Edge infrastructure market alone is expected to exceed $41 billion. The hybrid cloud market will exceed $120 billion with data creation expected to nearly double by 2025 from 2022. The opportunities for data processing and storage will continue to expand rapidly. Lastly, ISG reached an important milestone, becoming profitable over the full year, with revenue up more than 13% year-on-year to a new record. All the high-value businesses, such as Storage, software, services and the high-performance computers set revenue records. We continue to grow at a premium to the market by enhancing our full stack of capabilities that cover both CSP, Cloud Service Provider, and enterprise SMB segments. We continue to invest in in-house design and manufacturing capabilities, while also expanding into faster-growing areas, including Edge and cloud services. We further differentiated with green technology such as our Neptune Liquid Cooling System. For our Intelligent Device Group, or IDG, smart devices continue to benefit from the hybrid work model while consumer PC demand may slow in the short term. Commercial demand remains strong. Smart collaboration market is expected to surpass $80 billion by 2025. Meanwhile, the challenges we have faced in the recent past won’t disappear right away. By overcoming challenges, while capturing opportunities, IDG delivered a fantastic fiscal year with revenue exceeding $60 billion for the first time, up 18% year-on-year. Operating profit improved by almost $1 billion. We maintained the number 1 position in PCs as the premier segments delivered high double-digit growth. Our Mobile business revenue outgrew the market by 30 points with double operating profit to more than $360 million, a record since the Motorola acquisition. We are expanding beyond the PCs. And now over 18% of IDG revenue comes from other smart devices, embedded computing, IoT and the scenario-based solutions. Meanwhile, we continue to focus on innovation, particularly in premier segments to extend our leading position in PC while maintaining industry-leading profitability. We further expanded to beyond PC devices, IoTs and the scenario-based solutions to provide new growth engines as we move from computers to computing. Let me also cover our fourth quarter performance. Despite the disruption to supply under production due to COVID-19 outbreak in China, we still managed to close the year with strong results. Our net income achieved more than 50% year-on-year improvement for the seventh consecutive quarter. Our revenue grew nearly 7%. All three business growth contributed to our profitable growth. SSG revenue grew 28% and improved the operating margin by over one point. ISG sustained profitability for the second quarter. And IDG improved the operating margin for the 18th consecutive quarter. Lastly, there's one particular message I want to share with you. Years of our persistent investment and efforts in infrastructure and Mobile businesses have paid off. They have not only turned profitable, but also become our new growth engines, along with SSG. We will capture these windows of opportunity and drive the entire company to new heights. At the same time, we will continue to decisively invest in innovation, service-led transformation and the ESG for continued success. While the world continues to face uncertainty, we will stay flexible and resilient. We will execute our clear strategy, compete with a unique advantage of global local model and the balance between innovation and efficiency. We are confident to overcome challenges while capturing opportunities to deliver sustainable profitable growth in the future. 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 fiscal year 2022 and Q4. For the 2022 fiscal year, our group delivered another historic year with new milestone in profit and revenue. The group revenue exceeded $70 billion for the first time in company history and grew 18%, adding $10 billion for the second consecutive year. Profit attributable to equity holders increased 72% to $2 billion, and basic earnings per share came in at $0.1745. This represents an 83% year-on-year growth, a strong accomplishment in a year impacted by severe supply chain and logistical disruptions. Group net income margin improved 89 basis points year-on-year, on track to achieving our target of doubling net margin in 3 years. Our growth trajectory remains strong and well supported by structural trends, such as digital transformation, increasing complexity in cloud infrastructure and customer preference for value-added solutions. Our balanced growth profile underscores the group business strength. It is worth noting our growth beyond PC, including our successful turnaround of infrastructure business and strong expansion in smartphone and services. We achieved consistent growth across all three business groups and geographical markets, except Asia Pacific due to a slowdown in education sales relative to the high base last year. ISG turned profitable for the first time since our acquisition of IBM 886 business. Both SSG and IDG contributed to another successful year with double-digit revenue increase and profit expansion. Today, the Board declared a final dividend of HKD 0.30 per share, taking into consideration of the interim dividend of HKD 0.08 per share, the total dividend will be HKD 0.38 per share for fiscal year 2022. Now let me shift gears to talk about our R&D investments. We made a commitment to double our R&D investment in 3 years. And in fiscal year '22, the group R&D spending grew 43% year-on-year. Digital transformation has never been more important to our growth as we invest in new IT architecture spanning across client, edge, cloud network intelligence. Our investments will push the development of high value-added products and key components including edge, storage and cloud in response to significant growth in data creation and data consumption. We will also drive innovation to propel our smartphone portfolio scenario-based solution, ESG initiative and expand our services scope. Every aspect of our R&D investment has helped contribute to the 71 basis point increase in our record operating margin and long-term competitiveness. In fiscal year '22, our operating cash flow further increased to $4.1 billion, improving over 4 consecutive years to a record level. Free cash flow reached $2.8 billion. These results were achieved through strong profit expansion and prudent working capital management while balancing between generating cash and maintaining competitiveness in response to the industry-wide challenges in supply and logistics. Our strength in cash flow management was maintained throughout the fourth fiscal quarter. Operating cash flow more than doubled to nearly $1.5 billion, while free cash flow tripled to $1.1 billion. To optimize our capital structure, the group further reduced net debt by $1.5 billion and finance costs by 18% during the year, including in the repurchase of perpetual securities. We cut net debt by a total of $3.5 billion in the last 4 years and achieved net cash for consecutive quarters. It's worth noting that not only did a major rating agency grant Lenovo A credit rating upgrade during the year. Lenovo was also added to the Hang Seng Index as a consistent stock. SSG closed its first year of business with operating profit up by 40% year-on-year as operating margin widened to 22%. Revenue increased by 30% to $5.4 billion, growing much faster than the industry average. Our recurring revenue base continued to build as our deferred revenue grew by 30% year-on-year. SSG's solid performance was supported by the strength in its three business segments, among which support services revenue rose 23% year-on-year. We continue to improve our service penetration with an enhanced portfolio, including services in areas of hybrid work and sustainability, which are vital to our customers. Revenue of our second service pillar, Managed Services, grew 63% with Lenovo TruScale launch, which cover a wide range of asset service offerings. The third pillar, project and solution services, which provide industrial vertical solutions continue to build repeatable solutions and make breakthroughs in smart city and smart retail for contract wins. In Q4, SSG continued its robust growth trajectory from the previous 3 quarters, reporting nearly $1.4 billion revenue with 28% year-on-year growth and an 8% contribution to the group revenue. SSG operating margin improved 1.1 points year-on-year to a record 22.5%. Let's turn to ISG. The business group delivered a record year. Its revenue reached all-time high of $7.1 billion, up 13% year-on-year despite supply constraints of semiconductor parts. The business also turned profitable for the first time since the IBM 886 acquisition. ISG operating profit increased by $137 million year-on-year. In Q4, the COVID lockdown in Shenzhen added further pressure on our supply chain impacting ISG revenue growth. Despite the unprecedented supply impact, ISG was again profitable in this fiscal quarter and reported a year-on-year profit expansion of $36 million, highlighting its strength in weathering through challenges to drive profitability. ISG expanded its client base through a broadened portfolio of product offerings that particularly appealed to next wave customers in the CSP business that are in need of strong supply support to expand their own cloud services. CSP revenue grew 20% in the year, thanks to design wins in next-gen products. ESMB revenue was up 7% year-on-year as the business expanded high-growth, high-margin solutions across surface, storage, SDI software and services and capture emerging opportunities in AI power, edge and hybrid cloud. IDG delivered another record year in performance. Its revenue and operating profit grew 18% and 27% year-on-year, respectively to all-time highs. IDG added $9.3 billion in revenue in fiscal year '22, a strong achievement considering the scale of this business. These results were achieved despite multiple challenges, including supply constraints, weakness in education segment and the ongoing pandemic. IDG Group continued to be the leader in the global PC sector by both market share and profits. The business is investing in innovations and cultivating a strong commercial demand from the hybrid work model. Premium products continue to enjoy high double-digit sales growth as premium commercial sales grew 30% to 60% year-on-year, while sales among premium consumers were up 30% to 37%. We also extended our innovation in the ESG area including increased use of recycled materials and sustainable packaging. IDG also makes significant progress beyond PC, including other smart devices, embedded computing and scenario-based solutions. This delivered a combined revenue growth of 26% and accounted for 18% of IDG revenue in fiscal year '22. The success of IDG's adjacent products is becoming an increasing important profit contributor as smartphone sales increased 39% year-on-year with double operating profit. Sales of smart collaboration solutions also grew nearly triple digits year-on-year on the back of strong customer demand, although off a low base. In Q4, IDG achieved a solid 14% profit expansion. Its operating margin grew to 7.7%, with profitability increase year-on-year over 18 consecutive quarters. Q4 was a quarter of strong performance with a 58% hybrid growth in net profit. The global supply shortage of semiconductor persisted while COVID lockdowns impacted the operations of our Shenzhen factory. Despite these challenges, our revenue grew by 7% and all business groups reported strong profit improvements. SSG continued to post double-digit growth in both revenue and profitability, a clear evidence of its ability to increase surface penetration and capitalize on its massive in-store hardware base. ISG was profitable for two consecutive quarters, with an operating profit improvement of $36 million year-on-year. IDG maintained high profitability, thanks to its focused strategy in driving growth in segments where demand is strong including premium and commercial segments as well as opportunities beyond PC. IDG's smartphone business continued its record breaking performance in focused markets and reached a double-digit market share for the first time in North America since the acquisition of Motorola. On the ESG front, Lenovo achieved a CDP score of A for supplier engagement rating in climate change. We are also listed on the supplier engagement rating leaderboard, an honor we have maintained since 2018. Lenovo was included in the 2022 Bloomberg Gender Equality Index. As a global technology leader, gender equality is a top priority of our social impact efforts. We set several ambitious goals to enhance gender diversity, including increasing the female representation of our executive population by 7 percentage points over 5 years to 27% by fiscal year ending March 2026. On governance, Lenovo received its highest-ever rating and the best overall industry score for the IT industry in the 2021 Hang Seng Corporate Sustainability Index, achieving an AA+ rating for the first time. It is also the first time we received the 2022 Asia Pacific top-rated ESG performer rating by Sustanalytics. We are making every effort to improve our supply chain practice by completing the initial ESG risk screening of over 500 suppliers with the Eco Vadis rating tool. Looking ahead, the group will continue to operate with a larger purpose in mind as it anticipates the technology and innovation needs of a smarter future. While the external environment remains challenging, the strategic opportunities in digital and service-led transformations should accelerate, filling commercial demand for Lenovo end-to-end user-friendly product and service solutions. Our clear strategy and execution, coupled with committed R&D investment and solid global local franchise are key to achieving our medium-term goal of doubling net margin. SSG is a new and well-established growth engine for the group with its driving scale and strong profitability. Structural opportunities will emerge from digitalization and post-pandemic changes in the workplace. The shift will increase the demand for premier TruScale-as-a-Service surface, sustainability and vertical solutions. SSG will continue to broaden its service offering in this area while strengthening channel -- and cooperation with business partners. With our goal to sustain double-digit growth trajectory, we will actively seek business opportunities to broaden and deepen the geographical and vertical corporation of our services, especially by managed and project and solution services. With strengthened customer relationship, SSG will further enhance its financial contribution to the group. The outlook remains strong in ISG as the COVID less supply shortfall has resulted in unfulfilled customer orders that customers accelerate infrastructure upgrades. ISG has built industry-leading end-to-end infrastructure solutions and expanded from server to full stack offerings, including storage, SDI, software and services. For the ESMB segment, ISG will expand its portfolio for higher profitability. The group will also capitalize on growth opportunities in AI power edge, hybrid cloud, high-performance computing and solution for the telco communication sectors. For the CSP segment, the group has a unique ODM+ business model to address growing customer demand. The business will continue to diversify its customer base and expand its share of existing accounts through design wins. IDG will lead the global race and device innovation by enhancing features for hybrid working, gaming, entertainment, green materials and ESG designs. Meanwhile, the total available market of global PC sector should remain at a level higher than the pre-pandemic period, thanks to the strong commercial demand from the hybrid work model. The smartphone business will focus on portfolio expansion and differentiation to take advantage of the accelerated 5G adoption and changing competitive landscape. IDG will accelerate investment to score wins in new growth engines, a move which has become more important for growth. This includes fast-growing accessories and scenario-based solution. Our strong financial position provides a solid foundation on which Lenovo can proactively pursue long-term growth opportunities ahead. In the short term, we face headwinds from slowing down economic growth and ongoing pandemic. The entire industry has been impacted by unpredictable developments, which will create impact on supply and demand. Nevertheless, we will continue to leverage our operational excellence and pursue innovations to grow faster than the industry and expand our new business opportunities. Finally, as always, we remain committed to driving sustainable growth and profitability for our shareholders. Thank you.

Thank you. Thank you, Wai Ming. Now we will open the line for questions, and this session will be in English only. [Operator Instructions]. Operator, I will now turn it over to you. Please give us your instructions.

[Operator Instructions]

Thank you. Now we have our first question from Desmond Ling [ph] [indiscernible]. What is the impact of lockdown in China on both the production as well as the revenue side? We would invite our Chairman, Yuanqing, to give us a comment. Yuanqing, we couldn’t hear you.

While we are waiting, perhaps another executive would like to share the insight on this question?

Hello? Can you hear me?

Yes.

Thank you, Desmond, for your question. Definitely, the lockdown in China has certain impact on the demand and the supply chain. On the demand side, so we do see some short-term impact, particularly on the commercial PC. But in the consumer PC, the impact is less because when people, as a whole, so they need the PC to work or to study. But for the normal, we have very balanced portfolio across the geographies. So we think the rest of world will offset the China loss. So that's about the demand. Regarding of the supply, indeed, it brings a certain -- uncertain, but we have tried to mitigate the lockdown really, are not new. It's something our industry and others around the world have navigated for the past 2 years. If you recall back to the early days of the global pandemic, it was cities and factories in China that were hardest hit first. We learned from those experience, which will help us mitigate and minimize the impact for the similar situation. Lenovo's supply chain has always been a core strength of our company as demonstrated by our business results. Our unique global manufacturing footprint across the certified market, it's very helpful. Our hybrid manufacturing model of in-house and the ODM are -- is definitely our operational excellence are flexible and resilient, will continue to help us overcome these challenges. Also, the good news is that we are seeing some cities, including China, losing restrictions. While we will still see some short-term impact in the market, we remain confident about the long-term opportunities even in China.

Thank you, Yuanqing. And now we move to question two, a follow-up question Desmond Wing of Eastspring. Given good cash flow generation, what is the intention of the management? Will management be considering increasing dividends, buybacks or are there opportunities for M&A and investments?

So we think we should answer the question, Wai Ming.

Okay. Thank you, YY. Desmond, its Wai Ming from CFO. Obviously, I think, during deleveraging over the last couple of quarters very successfully. And you can see that I think the leverage we have, I think, compared with cash. We actually end up with net cash -- for the last 2 quarters. I think in so far as the cash is concerned, I think we'll continue to deploy the cash to drive the profitable growth, the company. I think that also include, I think, at time when this is appropriate, I think we'll do, I think, the appropriate share buyback if there are some, I think -- if we actually see the share price, which obviously is a significant leeway from the value. There are -- if you recall, we actually have a medium-term target of driving our net margin to double. I think in the first year, I think we already achieved on our promise. And we obviously will continue to use the cash to drive the growth, I think, both organic as well as inorganic as far as more important, I think, is to invest in R&D for innovation so that we will continue to maintain a sustainable growth. Thank you.

Thank you, Wai Ming. Now we will move to question number three Alice Chen from UBS. Her question is can management share Lenovo achieved for the PC industry growth scores for 2022 and 2023? And how does this forecast change versus the company's prior forecast? There has been some recent concerns. This should be a follow-up question. That's on server order cut we learn in the market and have Lenovo seeing -- plan, the Cloud Service Providers. And could you share your view for the supermarket this year? Those are two questions from Alice.

So can Luca answer the first part and Kirk answer the second part?

Yes. Thank you, Yuanqing. Hopefully, you can all hear me okay. So thanks, Alice, for this great question. I think it helps to clarify our view on this matter. So we are certainly confident in the long-term outlook of our device business being largely positive. Digital life for consumer and digital transformation, hybrid work for commercial will be key drivers for the total available market increase. And as a data point, we also think there is a potential of between 300 million and 400 million agent devices more than 4 years in the commercial space, which are due for replacement. Meanwhile, the AUI with more premium devices, which are being demanded by the customer to improve their digital life experience is also helping for the revenue path. Now in consumer, despite some weakness in the low end, particularly Chrome but maybe not only Chrome at this moment. But we believe that the premium and the gaming segment will continue to do reasonably well. And for both consumer and commercial, we are also increasing the penetration rate of our services so that it can contribute to better profitability and better customer experience and the spectrum. Now in short term, we certainly recognize some of the macro headwind, IC shortages, the manufacturing shutdown in China in the short term, certain demand slowdown and then the geopolitical tension. So all these factors are weighting on the demand in the short term, but that is more on consumer. When I look at the commercial demand, as of now, we still see strong demand and with good visibility for the full year. Our order portfolio is growing, and we also expect to end the quarter with a significant backlog in commercial. So end of the day, we remain positive in the long term, particularly given our focus on innovation, our best-in-class portfolio and then our historical strong execution we are confident we will continue to grow at premium to market. We are also focusing on adjacencies, accessories, visual, security, software, several areas we get high growth potential and also good or higher-than-average margin. So -- and then to conclude here, let me add that already we have expanded beyond the over 80% of IDG revenue. And particularly, we are very proud of our mobile phone performance, as you have seen from the data with 30 points of premium to market and triple-digit growth of the profit since acquisition. So we are very confident about that. And we are also working to expand the revenue on the smart collaboration area, where we recorded triple-digit growth. So I think despite maybe some short-term weaknesses of the PC, we are confident we will navigate it very well better than our competitors. Thank you, Alice.

This is Kirk, President of Infrastructure Solutions Group. I will answer the question on server. As you heard from YY and Wai Ming, the last fiscal year, we hit records in nearly every piece of our business. We do not see a slowdown in our cancellations from our Cloud Service Providers. We believe our ODM+ model with integrated board and system manufacturing is a superior model. And we believe that the revenue growth is -- and backlog is at an all-time high. Our orders and new orders are at an all-time high. And we're expanding from supporting 8 of the top 10 global clouds to also now covering -- having sales coverage on 500 of the next wave hyperscalers that we believe will become the next multibillion-dollar companies in the world. As you heard, YY, Lenovo is unique in that we have edge-to-cloud. So our new think-edge, offering is offering ability for retailers and manufacturing and health care and others to deliver an edge-to-cloud infrastructure. So this is also helping pull through demand, our edge products as well as the cloud. Relative to demand, we agree with the industry analysts, there'll be high single-digit growth as a compound annual growth rate. And we are confident Lenovo will execute a premium to market for that. And then beyond that, our profitability should improve as I've said in previous calls. We're expanding beyond Intel into AMD and arm, we're expanding into storage in addition to server. So all of these kind of infrastructure pieces are helping our profitability as well.

Thank you, Kirk. Thank you, Luca. And our next question is coming from Howard Kao from Morgan Stanley. Given the current nickel backdrop, a lot of companies are slowing down but they are hiring particularly tech companies. When you talk to your clients in the U.S., do you get a sense that they are still thinking about reducing their CapEx budget? And for your Chinese clients, there is an additional factor, which is the lockdown from COVID. And any colors on how they are thinking regarding to their CapEx budget now versus a few months ago?

Yes. As I talked to in the past year, so while we continue to focus on efficiency, we also invest more on innovation and R&D. We actually added more headcount in the technology side, in R&D side. So we added 5,000 people to focus on the innovation, our new IT structure, client edge, cloud network and intelligence. I think from a long-term point of view, it will pay back to our sustainable growth and the profitability improvements. But definitely -- so we will adjust our set based on the market situation and our sales performance. So we do see the market situation is challenging. So in both China and the rest of world. So we will make the details based on that.

Thank you, Yuanqing. We have our next question from Isaac Wong of eFusion Capital [ph]. His question is, your smartphone revenue and profit outgrown -- significantly. May I know what are the possible reasons of outperformance? And do you foresee the outperformance to continue?

So yes, I think Buniac is online, right? So would you like to answer the question?

Yes, yes. Can you hear me? Yes. So I think it's a combination of market expansion and better mix. So if you look at our volumes, we grew around 5%. Our revenues grew 27%, and our profitability triple in fiscal Q4. When you look by market, we see growth coming from all markets. So Latin America grew by almost 10%, North America by 56%, Europe by 20% and Asia markets by triple digits. We are also seeing a much better mix. You see the revenue growing faster than the units. We expect both to continue to grow. Our AURs were higher. Our mix of 5G, higher. In terms of mix, our Moto Edge, the third premium franchise grew by 600% from a smaller base. Our -- Moto G mid-tier by 50 and our Moto E by 30. So we are seeing growth in the more premium side of the market. And we are also now leveraging the One Lenovo footprint to grow in new segments like commercial. So -- and we expect that to continue in Q1 and to the year. We expect to continue to grow in all geographies, -- market and in all segments of the market.

Thank you, Sergio. And the next question is coming from Mr. Hano Omara [ph] from Jefferies. His question is SSG this quarter is already roughly 22% of profit and 8% sales. As part of your transformation plan, do you have any target for SSG as a percentage of sales and profit? And how about ISG?

So Ken, could you please answer the first question?

Yes, Yuanqing. So thank you, Mr. Hano Omara, I think this is a good question. So we have seen our customers becoming more increasingly dependent on new IT technology to support their digital transformation and improve their business performance, right? And in our experience, I think the IT services demand a bit of resilience , regardless of economic cycle, right? And even I would debate, in a challenging economic cycle, I think the demand for IT services is even higher because this is about out of leverage technology to build a competitive edge to be more customer-centric. That's why I think our view is still optimistic about the IT services growth. Now if you look at our last fiscal year performances for SSG, I think it was a great year. I think Wai Ming and YY shared early on. The SSG revenue on a year-to-year basis, we were able to grow at 30% year-to-year and maintaining a relatively high margin, right? Both the revenue growth and the profitability is above the Lenovo group average, right? So with that, I think for the New Year, we continue to see good demand in the market. Our customer project is still planning for spending more in terms of IT services, right? So hopefully, we can be able to maintain 20% and above growth of revenue and maintain a relatively high profitability. With that, I think we'll continue to support the Lenovo overall service-led transformation strategy.

Thank you, Ken. So Kirk, I see it again.

Sure. So I think from a profitability perspective, as you can see this quarter, the focus on high-margin products, even in a supply-constrained environment enabled us to significantly improve profitability and retain profit for the full year and the second quarter in a row. This is really driven by our 3S strategy around attaching storage, storage in floor areas, traditional storage, cloud storage, software-defined storage and hyper-converged storage and in HPC. We're still number one in supercomputing. So the second is in services, as Ken talked about in the third is in attaching more and more software, both developed internally at Lenovo as well as our core partners, whether that's VMware, Microsoft, Nutanix, Red Hat and others. So the 3S strategy, I think, means that we'll continue year-on-year profit growth and quarter-on-quarter growth for the future. Relative to revenue, I think we are confident we can have a strong premium to market with a market that is growing, as I said, close to 10% in the foreseeable future. And then lastly, we have the ability to balance revenue growth and profit because as we've shown for multiple quarters, our business is unique and that it's almost perfectly split between public cloud enterprise on-prem. So in a hybrid multi-cloud world, that means we benefit both on the on-prem side as well as the public cloud grows. And I think that's quite unique among. So we don't have an exact percent of the business. You should expect us to grow revenue quarter-on-quarter, year-on-year and do the same with profit and at a premium to market.

Thank you, Kirk. Thank you, Ken. Now we move to the next question is from Jerry Ji, a private investor [ph]. Could you talk about the impact from Shenzhen lockdown on ISG business in fiscal quarter 4? Are the orders push out this quarter? And how is the current lockdown in Shanghai area impacting ISG and SSG business, respectively?

Go ahead, Wai Ming.

Yes. Go ahead. Go ahead. You continue, please.

I would just say we have record backlog across almost every part of our business in the Infrastructure Solutions Group. We're not seeing orders canceled, but certainly, the lockdown in the last couple of weeks of the quarter did affect our revenue, as you could see in the fourth quarter. That backlog pushed into Q1, our fiscal Q1, but again, we're seeing record backlog, and we think the scale of Lenovo's growth now with another $10 billion year-on-year kind of growth. That kind of One Lenovo approach to the market, taking advantage of our scale in phone and PC and tablet is helping the data center business, and we think will recover faster than the industry on the supply constraints. So it did affect us, but we now have record backlog of firm orders, and we believe will recover faster than the market on the scale of Lenovo and our industry-leading supply chain.

Yes. So general speaking, the Shanghai lockdown impacted more on our PC business on the supply chain. So less on smartphone and ISG business. Our smartphone and ISG demand -- business demand are still very strong. But definitely, there are -- they are still constrained by the supply -- component supply ICs. But we are confident that we will grow in this two business. SSG actually, as I said, so now, only half of this business is related to the hardware. So another half is Managed Service and project and the solution service. So I think it's less impacted by this lockdown.

Thank you, Yuanqing. And due to limited time, we are now ready to take the last question. And our last question is from Albert Hung of JPMorgan. How do you keep the ISG profit-making in fiscal quarter 4? The revenue declined by $500 million sequentially by PTI only declined by $10 million. How do you explain the substantial trends going forward how do you see ISG’s profit into second half? Should we expect a huge fund in terms of profits and revenue refund? That's question from our last question from JPMorgan.

So Kirk, you want to answer first?

Sure. So I think if you look at some of the constraints in the industry, whether, for example, power supplies or things like this, we definitely were able to prioritize our highest margin products and solutions. So I think that's the main reason. And we are very careful on prioritizing higher margin solutions in the market. So I think that's the core element in addition to adding and attaching more things around the actual hardware, every quarter now, we're getting, as you saw, records in Software & Services. So we still have an opportunity to increase our attach rate of this type of thing even further. And lastly, we did pass through costs to the end user, as many companies have around some of the premiums that we've seen and those changes that are cost takes sometimes take 1 to 2 quarters to flow through the system because we have deals that may last multiple quarters on a contract. So those contracts are new, we're passing through some of those costs and improving our profit. That should continue as we look forward in the market. As I said earlier, in terms of rebounds in profits and revenue rebound, I think we expect our expense revenue ratio to continue to improve as revenue increases. And again, we'll see better profits quarter-on-quarter and year-on-year in addition to premium to market revenue growth. And we have high confidence in that based on the backlog we're seeing out of several quarters.

So I think a point to what the Kirk just said. So you might be surprised by this achievement, but I'm not. So you should remember, when we bought the IBM PC from IBM, that business lost $200 million, $300 million a year. So -- but now Fintech make more than $1 billion profit for us a year. So when we bought the Motorola in 2014, so it lost $1 billion -- Google. So in 1 year -- in 2013. But last year, we made $316 million. So we keep replicating this kind of a successful turnaround story. So that's Lenovo's strong. So we know how to be more efficient, how to make money from this kind of hardware business. So we have this kind of culture and the methodology. So I'm pretty sure. So for our ISG business, it will quickly becoming our -- not just the growth entity, but also the cash comp.

Thank you, Yuanqing, and thank you, Kirk, and thank you, everyone, for joining today's call. If you have any further questions, please feel free to contact me directly. And 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. And this is the end of the call. Thank you very much. Bye-bye now.