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 today. Last quarter, as we all know, the global economy, pandemic, and the geopolitical tensions continue to create the uncertainties. But for Lenovo, our strategic foresight, operational resilience, and a consistent investment in diversifying the growth engines have prepared us well for these challenges times. Whether our traditional markets are booming or contracting, Lenovo consistently delivers on its commitments. Last quarter, was no different. We delivered a solid performance and successfully improved the profitability as our non-PC businesses made greater progress to become new growth engines. Today, despite the macro environmental challenges, the overall trend of digitalization and the hybrid work model, continue to accelerate with global spending on digital transformation expected to sustain strong growth through 2025. Last quarter, thanks to strong execution of our 3S strategy, to drive digital and intelligent transformation, we stood up to the challenges and delivered positive net income growth and the net income margin improvement for the 10th consecutive quarter. All our main businesses contributed a positive operating profit. And we are making progress towards our commitment to doubling profitability in mid-term. Our revenue was up almost the 3% in constant currency year-on-year. And our new diversified the growth engines continued to deliver strong performance. Both solutions and the services business and the infrastructure business saw high double digit growth year-on-year. With a healthy cash balance, we remain committed to doubling R&D investments in midterm. Last quarter, our R&D spending grew by 15% and the headcount increased by 26% year-on-year. Meanwhile, we accelerated our ESG efforts, and it drove One Lenovo sales platform to support the future sustainable growth. Now, I will talk about each of our businesses. Let's start with SSG, Solutions & Services Group. The trillion-dollar IT service market continues to grow steadily, with faster growth to be expected in DaaS as well as Managed Services for data center, cloud and edge environment through 2025. Vertical solutions and the services spending is expected to remain strong, including in smart education, smart retail, smart city and smart manufacturing. Last quarter, SSG’s revenue grew by 26% year-on-year with further improved operating margin. All segments, again deliver the high profitability and a strong growth. For the first time, revenue from non-hardware-tied solutions and services account for more than half of SSG business. At the same time, SSG continued to build comprehensive horizontal solutions for vertical industries. For example, our Digital Store solution embedded with the Lenovo AI Edge Server is now powering one of the world's largest grocery retailers to reduce over 75% self-checkout errors without employee intervention. We also further expanded our sustainability offerings. The newly formed Lenovo PCCW Solutions has been running since August of this year, achieving initial success on business synergy. Our ISG Infrastructure Solution Group continues to capture significant growth opportunity in the market. By 2025, the server market will reach US$134 billion, the edge infrastructure US$47 billion, the storage US$36 billion. Last quarter ISG achieved a record revenue of US$2.6 billion, up 33% year-on-year. We delivered the fourth consecutive quarter of profitability with a record high operating profit of US$36 million. Cloud Service Provider and Enterprise/SMB segments both outgrow over the market a forecast. Edge revenue almost quadrupled, and the Storage more than doubled year-on-year, both set new records. Meanwhile, we continue to do enhance our comprehensive infrastructure portfolio and to invest in innovation, particularly in edge and services. Our operational resilience was further strengthened as we ramped up our new factories in Shenzhen, Guangdong, China and in Hungary, as well as expanded our manufacturing facilities in Mexico. We remain focused on being one of the fastest growing and ultimately the largest end-to-end infrastructure solution provider in the world, while maintaining a sustainable, profitable business model. For our IDG, Intelligent Devices Group, while the market size of PC and the tablets declined in the short term, it is still expected to stably remain at a higher than pre-pandemic level in the long term. Meanwhile, as we move from smart devices to smart spaces, the scenario-based solution market will continue to grow. Driven by our operational excellence and consistent investment in innovations, particularly in the high value-added premier segments, our IDG maintained a industry leading profitability. Despite the PC market softness, we were able to navigate that much better and strengthen our #1 position enlarging the gap with key competitors. We are the clear #1 in four geographies out of five, and the undisputed #1 brand in commercial segment, which represents around the 65% of Lenovo PC revenue mix. At the same time, our smartphone business achieved the 10th consecutive quarters of profitability. We remained as a strong #2 and #3 player in Latin America and the North America respectively and achieved the hyper-growth in the expansion markets. We launched a series of innovative products and they enrich our product the portfolio. Our scenario-based solution continued to demonstrate the growth potential. Smart Collaboration continued to grow at the high double-digital year-on-year and the revenue from gaming scenario business set a new record. Lenovo workstation solutions with artificial intelligence, data science, and immersive computing are enabling our customers in automobile, energy and the entertainment industries to improve their computer-aided design processes. We continue to focus on innovation to drive the extension from smart devices to smart spaces. We are confident that our success in PC can be replicated to grow our business beyond the PC markets, and the further win in more markets, particularly in smartphone. Looking ahead, the current external challenges will likely persist for a while. We must remain agile and stay focused on both pursuing our strategy and ensuring ongoing profitability. We will rebalance resources towards our diversified growth engines while driving for efficiency and expense reduction throughout the company, especially in areas where we see a softer market outlook. And we will never lose sight of the long term opportunities in this year’s Lenovo Tech World, we draw strong interest from the industry and the public, showcasing our progress in innovation and the vision in digital and intelligent transformation. Lenovo has built capabilities in horizontal solutions across the new IT architecture of client, edge, cloud, network intelligence to be embedded into vertical solutions. Each of these building blocks such as the IoT, Metaverse, edge, hybrid cloud and AI can help us not only address customer needs but also create a scalable, repeatable, sustainable, and profitable solutions that will spark new waves of growth beyond our traditional device business. Our solid performance last quarter and throughout the past three years has proven that we have the right strategy, strong execution, resilient operation to fulfill our commitment and transcend the cycle. We are confident that our high quality and innovative portfolio, unique hybrid manufacturing model driven strong supply chain and the global/local principle and the capability as well as a healthy liquidity will help us capture the opportunities, deliver sustainable growth and improve profitability. 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 for Q2 in the 2023 fiscal year. Next slide, please. The current economic outlook is deteriorating at an unexpectedly fast pace. Despite this, in Q2 we achieved an annual net income growth of 6% to $541 million and net margin growth 0.3 percentage point year-on-year, marking a step forward, our medium term target of doubling the net margin from fiscal year 2021. Group revenue declined 4% year-on-year in nominal terms, but was up 3% on constant currency. Our financial results are a testament to our strength in the non-PC business, which now represent 37% of group sales. ISG and SSG both delivered record breaking revenue and profits. The weakness in the PC market was widespread, but we continue to outperform. Basic earnings per share came in at 4.54 US cents. Today, the Board of Directors declared an interim dividend of 8.0 HK cents, maintaining last fiscal year level. Next slide, please. We continue to make progress in improving our working capital management and cash flow generation remains strong. Our cash and cash equivalent balance reached $5.6 billion at the end of the quarter. And we increased our net cash by $1.1 billion year-on-year to a balance of $1.1 billion in Q2. To optimize our working capital, we further shortened the cash conversion cycle by 13 days year-on-year and 16 days quarter-on-quarter. Both days of inventory and payables were contributors to the improvement. Our inventory decreased 4% year-on-year. Operating cash flow improved by $523 million year-on-year to a record high level of over $2 billion. Free cash flow also improved by $419 million from last year. The group's Green Bond, which was issued in July, officially made its way into Bloomberg’s MSCI Green Bond Index, a key global benchmark for ESG fixed income funds. Next slide, please. The financial result of SSG echoes the size of our transformation journey. Its Q2 revenue grew at a healthy rate of 26% year-on-year to $1.7 billion. Operating profit increased 29% to $368 million. SSG continue to build a franchise to increase deferred revenue with a balance of $2.9 billion. Within our three services segments, revenue of Managed Services increased 69% year-on-year owing to large contract wins in an SS service which delivered the fifth consecutive record breaking quarter in terms of signings. Project & Solution Services won signature deals in smart manufacturing and smart education supported by Lenovo’s IPs. For example, we won two new VR Classroom logos in Q2, leveraging Lenovo ThinkReality platform and VR solution to provide Classroom users with a fully immersive education experience. Support Services revenue rose 16% year-on-year. Its penetration rate rose to a record high, partly due to the highest level of premier booking, of which penetration rate was about average. During the quarter, the combined revenue from Managed Services and Project & Solution Services went beyond 30% for the first time, reaching 52%, four points more than last year. Next slide, please. Q2 marked an exceptional quarter for ISG as revenue and operating profit both reached a record-high. Sales grew 33% year-on-year to $2.6 billion, outperforming the market and delivering record sales levels across Asia Pacific, EMEA and the Americas. Our Mexico plant has been operating at full capacity while our Hungary plant is expanding to meet the growing demand from contract wins. Q2 operating profit, increased by $42 million to $36 million. Cloud Service Provider revenue reached an all-time high supported by the segment's strategy of growing its client base, product portfolio and designing projects. The Enterprise and Small Medium Business segment’s revenue reached a record high for Q2 as enterprise customers continue to pursue digital transformation. By product, Edge, Server, and Storage all set new sales records. ISG launched its largest portfolio ever, consisting over 50 new products, solutions and services to support its future growth and profitability trajectory. Next slide, please. Our IDG business was hit by the far reaching demand headwinds in the sector. Although revenue declined by 11% to $14 billion, the gross operational resilience enables its operating profit margin to stabilize at 7.4%, a sector high level for profitability. IDG is the undisputed #1 in the commercial PC segment as our ThinkPad X1 sales grew by 19% year-on-year. The business through premium mix remained healthy with sales rising 4% and gaming sales up by 34%. IDG also widened its market share gaps against player #2 and #3 in the sector. Non-PC products continue to contribute to IDG’s revenue, accounting for nearly 18% in Q2. The Smartphone business remained profitable for 10 consecutive quarters despite the challenging market. We defend our #2 and #3 market position in Latin America and North America respectively, while achieving hyper-growth in the expansion markets. Smart Collaboration revenue maintained its double digit growth year-on-year supported by the popularity of scenario-based solutions. Next slide, please. Now let's talk about research and development. Despite the total operating expense decreased by 7%, we increased R&D spending by 15% to fuel various growth engines, business transformation, and ESG initiatives. Excluding R&D spend, other operating expenses went down 14%, due to efficient cost control measures, highlighting the group's commitment in innovation investment even in challenging market conditions. The group's innovative efforts along with the discipline cost control contributed to a record operating margin level of 5% while operating profit also increased 4% year-on-year to $851 million. Next slide, please. We are accelerating our ESG investment. We just publish our 16th Annual ESG Report for the 2021/22 fiscal year on our Investor Relations website. We welcome you to have a read through it. We are currently awaiting validation from the Science Based Targets Initiative for our net-zero by 2050 target. In the meantime, we continue to strive for progress on our near term emissions reductions targets for the 2029/30 fiscal year, which have already been validated by SBTI. In 2021, Lenovo began utilizing recycled metals for both the commercial and consumer product lines. We are also utilizing plastic-free packaging by combining bamboo fiber technology with other innovative materials for our most popular ThinkPad X1 & Z series. The group continues to evaluate the application of plastic-free packaging to additional product lines. We're also committed to making the community a better place through both monetary donation and employee volunteer services. Lenovo was included in the Hang Seng Corporate Sustainability Index with a AA+ rating for the second year in a row. We also had the best score in the IT industry. Our ESG performance was evaluated on seven areas, from corporate governance to human rights and consumer issues against over 575 Hong Kong listed companies. We receive our highest scores in the labor practices and community involvement categories. Next slide, please. While the external business environment continues to be volatile, the strategic opportunities in digital and service led transformations will support long-term growth for Lenovo end-to-end user friendly product and services solution and dependable devices. These external catalysts, coupled with the group investment in innovation, and its global footprint, are key to mitigating external challenges, and achieving the medium-term goal of doubling its net margin. We are building plants to have a meaningful reduction in expense to achieve an expense to revenue ratio, consistent with the pre-COVID levels to maximize profitability even as some of our traditional markets contract. We will continue to rebalance investment and build momentum in businesses where we see substantial opportunity for aggressive profitable premium-to-market growth. Looking forward, SSG will continue to serve as the new growth engine. Cost of capital is going up and global interest rate hikes leading to more cautious spending by enterprise customers and cash outlay by switching technology assets. These trends would supercharge demand for support services to ensure the usefulness of assets during their extended life. Our Managed Service is well positioned to capture TruScale as-a-Service and sustainability demand as enterprise users will also have greater incentives to explore Asset Recovery Services to monetize and recoup the value of their end of life assets. The constrained headcount situation in most enterprise IT departments will translate into additional demand for outsourced services, presenting an opportunity for this segment to provide professional consulting and deployment further accelerating service led transformation. ISG has built industry-leading end-to-end infrastructure solutions, and expanded from server to full stack offerings that includes storage, SDI, software, and services, all with higher profitability. ISG will expand its ESMB portfolio for high profitability and capitalize on growth opportunity in an AI powered edge, hybrid cloud, high performance computing, and solutions for the Telco communication sectors. For the CSP segment, the group has a unique ODM+ business model to address growing customer demand, diversifying our customer base and procuring new accounts through design wins. IDG will lead the global race in device innovation by enhancing features that support hybrid working, gaming, entertainment, green materials, and ESG designs. Meanwhile, the total available market of the global PC sector should remain at a level structurally higher than the pre-pandemic period, thanks to the hybrid work model. The commercial upgrade cycle, and the trend of premiumization will help IDG drive premium-to-market growth. Its smartphone business will focus on portfolio expansion and differentiation to take advantage of the accelerated 5G adoption. IDG will further invest to score wins in non-PC areas, including fast growing accessories and work collaboration solutions which have been become increasingly important for growth. Our strong financial position provides a solid foundation for us proactively pursue growth opportunities ahead. Finally, as always, we remain committed to driving sustainable growth and profitability for our shareholders. Thank you. We will now take your questions.

Thank you, Wai Ming. Now we are opening the line for questions. And this session will be English only. Please be reminded to limit yourself to two questions at a time. All of the questions will be submitted online to the webcast Q&A box. Operator, I'll now turn it over to you. Please give us your instructions.

[Operator Instructions].

We have our first question from UBS, Grace. First question, can the management share the production site of servers? And will the company consider to further diversify server production sites? Question number two, can the management update the status of Lenovo’s channel inventory and also the channel inventory of the PC industry? When does the company expect the channel inventory in PC market can return to normal? Thank you.

Hi, this is Kirk, I can take the first question. Thank you for the question on server production sites. As you know, Lenovo is now operating over 32 different global factories with over 20 million square feet of manufacturing. For server, we've always had a global footprint and have been expanding that. So we have multiple sites in China. We have motherboard and system production in Mexico across our Guadalajara and Monterrey sites, where we've been doubling that production over the last year supporting both our enterprise, small business and cloud customers. We recently opened a new factory in Budapest Hungary for made in the EU capability and are at an all-time high, again for our enterprise and our CSP customers. And we also obviously manufacture in certain countries like Brazil, for the unique needs of those markets. Relative to the server and storage channel inventory, we're essentially back to normal levels. So we, I think we're seeing strong demand out of that businesses, as you can see it from our business results and expect the premium-to-market and improving demand even as we go into this quarter but no issues on inventory either high or low for server. Luca would you like to talk about PC?

Yes. Thank you, Kirk. And good morning, good afternoon to everyone. So, for PC, let me start, obviously, I’m going to focus on Lenovo. So in the first place, as I commented already some quarters ago, our business is quite diversified and a significant portion of our business is without channel inventory by design. That includes our relationship, our public sector, and certain global account business. So here there is simply no, any channel inventory. Then for those business models that are require channel inventory, which are the transactional, consumer and SMB, channel inventories are above the pre-COVID inventory level in some of the region, not all. And the other element is that in-transit inventory is still a little bit higher than pre-COVID and that is a function of the transit times that are increased due to the congestion of the global logistics network. I can say that, we feel generally quite comfortable with our inventory position in all channels and all geography. We are increasing sell-out, the demand for Lenovo product is at record high levels as demonstrated by the activation share that we track weekly. And we have a precise plan and expecting a reduction of the channels inventory level. After the holiday cycle, we believe that we will return at or even below pre-COVID level within the end of our fiscal year, so within the March quarter. Thank you.

Thank you, Luca. And the next question is coming from JPMorgan, Albert Hung. Question one, how to reconcile the averaging data points for [chain week], guidance of server CPU [indiscernible] and strong Lenovo BCG and or ISG performance and the market - data center market share, again, fully reflecting the numbers? And number two, does Lenovo see any slowdown in the price of servers for SSG? And that's number three, for SSG, any speed bump in the near-term due to enterprise budget cuts? Kirk? Here you go.

Kirk?

Thank you, operator for the question. This is Kirk, I'll answer that question. So I think from a server and storage perspective, we do believe we're executing at a premium-to-market and are becoming a larger portion of our supplier’s customer base. I would say we have a unique business model, because we've talked to you about this ODM+ model where we're building our own motherboards, designing our own systems and putting them into racks around the world. So consistently, we've had a good mix between our public cloud both the Tier 1 public cloud, where we've supported eight of the Top 10, the next wave hyperscalers, which are doing extremely well for us after we set up a new division to support that. And what we see is continued strong demand for Enterprise/SMB, not just in clearing our backlog, but also in fresh load. I would say that we continue to see even stronger demand in the quarter that we're in right now. So this isn't a slowdown, we think and our field is consistently now placing demand into our customer tracking tools, multiple quarters out, so we have so more confidence to talk about the future. So I think we do have momentum in the market, not just in server but also in storage. This quarter, while the storage market might be single-digit growth, we had well over 100% year-on-year growth. So as supply continues to free up and we think we're executing better than market on supply, and recovery, getting indirect and direct channel inventory back out, and so are seeing strong growth there. And then as you know, edge is continuing to grow very rapidly for us. With our new Think Edge product line, we saw almost 300% growth in our edge business there as well. So I would say we're seeing good demand and strengthening demand even into the quarter for the customers that we service around the world. So no slowdown that we see, although we've been certainly watching the macro trends as well. That's all for me.

So, SSG?

Yeah, good morning, good evening, thank you Albert. This is Ken Wong speaking for SSG. Now, when we look at the IT services market, right, based on the aggregated data point that we have got from various research analysts, the overall IT services market is growing at about 5% on a year-to-year basis. Now that's - that I think, when we look at some of the subsegments, especially for the as-a-Service segment, it’s still growing at high double-digit rate, for example, Device as-a-Service and Infrastructure as-a-Service. This is where our TruScale offerings with [products]. Indeed, if you look at our Q2 performance, we were able to grow for the sixth consecutive quarter at a very high growth rate, right? In Q2, we were able to grow as said, 67% on a year-to-year basis. And also we were able to add about 100 new logos, right, to our TruScale offering, right? So I think, we'll continue to enjoy the growth momentum from the as-a-Service market. Now when we look back at our around the hardware services business, yes, I think inevitably we see some slowdown in the hardware growth, especially around PC. But our execution really upgraded to improve the penetration rate around our hardware business. So overall, if you look at it SSG overall, in Q2, we were still able to grow at a very high growth rate of 26% on a year-to-year basis. And based on the pipeline that we're looking at, and the backlog that we're building up, we're confident that we'll be able to maintain that level of growth, right, for the coming quarters. Thank you.

Thank you, Ken. Thank you. And now, let’s move to the next question. The next question is coming from Morgan Stanley's Howard Kao. Could you provide an update to the PC time for 2023? Could you please provide more colors on the trends of ISG in fiscal quarter two? And can we expect the strength to continue over the next few quarters? So we'll start with the PC 10 discussion?

Yeah. Hey, Jenny, I'll take it. So, thank you Howard for this question. And maybe, let me expand on your question to give a little bit more color. And I think I want to call your attention on some of the particular dynamics of the demand that we are seeing. So, first of all, we confirm we feel positive about the long term trajectory of PC and smart devices. Digital transformation, digital life, these are all secular trends, and we believe PC is certainly at the center of that. And additionally opportunity 400 million plus, all the PC devices to be upgraded and refreshed and still give a lot of opportunity for the medium/longer term. Meanwhile, we also confirm the shift towards more premium devices within higher commercial mix, better features, better attach rate and better service span rate is happening. This is driving higher AUR and obviously helping the margin a little bit. Now to go directly to your question, for this year, we are seeing range of around 290 million units for the PC market. And for next year, we are modeling flat to plus or minus 4% in terms of the total available market. But on the positive side, I want to note and to signal that we are getting much more encouraging data from the real end user demand that we track by the real activation of devices. And there we are seeing only a mid-single digit negative number in terms of the decline with stable or even improving trend and in the meanwhile we are recording very high activation share for Lenovo. So as this is demonstrating, we are gaining share in the real end user. So, that means the real demand is healthier than the shipment decline and I think this is partially a function of the inventory correction that is undergoing in the overall industry. I will not talk about inventory again. But I think this is something we should think, we should consider in making the analysis. So the real demand is better than the shipments. Thank you.

So I think so, analysts, this is very important information for you, so from our data. So, although sell-in number numbers a high double-digit decline, but the actually sell-out or activation data is not as bad as that so actually we may see single digit decline, so in the activation of sales data. So that means so, channel is digesting the [indiscernible]. So once they fit to that process, so definitely they will restart to give the order to us. So that's the current situation. So probably you should you should realize that. So that being said, in the past sale, probably sell-out is less than sell-in but now sell-in less than sell-out. So now that it will - back to the normal, balance the situation. Okay, next question, so Kirk, would you like to answer?

Yeah, I think the question was on, where - giving some color on the strength of the ISG business. I would say very simply, it's very broad-based. We had records in Cloud, all-time records, as well as a Q2 record in Enterprise and Small and Medium Business. It was broad based from a geography perspective with all-time records in Europe, Asia, Pacific, and Americas. And again, we're broadening our portfolio, beyond just servers and to storage, where we saw, over 100% growth year-on-year, and if you even drill into storage, it was records in traditional NAS and SAN markets and hyper converge and in cloud based storage. And then, as I said, in Edge we had almost a 4x growth in that business. And we recently highlighted customers like Kroger, who are rolling our solutions out across over 3000 - about 3000, self-checkout stores. We worked with the City of Barcelona to put up the 3000 street cabinets in for smarter cities. So these are just some of the recent public cases we did. I would say we have confidence looking into the next quarter, for a few reasons. As you know, Intel, AMD and even Ampere are launching new products. And we recently celebrating our 30th anniversary of Think system and being in the x86 server business, we launched a product portfolio that was three and a half times larger than anything we've done before with over 51 products, 21 of those which are AMD. So we're seeing a diversification of our CPU portfolio as well, which is allowing us to cover many, many parts of the market. And then lastly, we have a unique business model with our ODM+. So that’s not just about improving our cloud business by being able to deliver custom products to the largest cloud vendors in the world. But we're also getting economies of scale back to our enterprise and small and medium business boards as well, because we can have common components and common sourcing between our cloud business and our enterprise, SMB business. So I think we have good visibility for the foreseeable future with improving supply chains and strong customer demand. And I'm confident that this next quarter will be even more of a positive than what we're talking about right now. Thank you.

So I want to add a little more color here. So actually, over the past the couple of years, we are bringing back design and the manufacture to in-house. So not just for the system but also for the motherboard, so that's what Kirk said, ODM+ model. So we think that will give us a very unique advantage because of many of our competitors just using the ODM model are outsourcing the manufacturer or even design to the third party. So that will give us cost competitiveness. The second one is also Lenovo unique. So we are addressing both enterprise, SMB customers and cloud service providers. So definitely a cloud service provider so is more demanding. So probably it is not easy to make a lot of money from that kind of customers, but they will give us a scale. That scale will help us to drive the competitiveness even in the Enterprise and SMB side. So that's very unique for Lenovo. And so for our competitors, actually, we could group them into two categories. The first is just focusing on ESMB, so like the edge, another group is ODM. So they are just addressing cloud service providers. So but because our first advantage, we have been across design and manufacturing so that we can address both. So we don't want to compete with our ODM. We don't want to share the profit with that. So that's why we think we will be more competitive than our competition. And also we are very familiar with these kind of model. So even in the PC, so when we bought the IBM PC, so actually, that business can only address commercial side, they didn't have the consumer business. But we added the consumer business to our PC portfolio. So even though that consumer business make less money, but it helps us to become #1 in product mix and also, help us to make more profit in commercial side. So I think we can replicate our success in PC through our ISG business. Thank you.

Thank you, Wong Wai. The last question is coming from [indiscernible] [Desmond Ling]. So there are two set of questions. First one is what service operating margin and percentage contribution to group profit? And second question is cash, given strong cash balance and still positive cash flow generation, what is the company intending to do with the cash? Will Lenovo hold a higher cash buffer given economic uncertainty? Will you invest in building a server revenue or maybe reduce some of the debt to lower the impact of higher interest rates? Those are the two questions from Desmond.

Okay. So Kirk, first question is yours.

Sure. So I think if you saw the operating profit, while we're thinking of, we're executing at a significant premium-to-market, we're also significantly improving the operating profit this year. So we were up $44 million. And I think this will increase over time for several reasons we talked about earlier. The first is the ODM+ model that Wong Wai just talked about. So building our own boards in house, getting paid for the design. We get paid for the manufacturing, we get paid, if someone wants to second source that board, we get paid for the system integration, and we get paid for the rack integration, so each of those is a unique opportunity, that's number one. Number two, we are diversifying our CPU portfolio to include AMD and Arm, which is making us more profitable. Number three, we're adding what we call the 3S, software, solutions and services. So our bookings, for TruScale as-a-Service for infrastructure as-a-Service is almost up almost four digits, meaning almost up to close to 1000% growth off the small base. But that just shows you that the as-a-Service model is working and we recently closed one of the largest insurance companies in Europe, one of the largest banks in Southeast Asia country, etc. So definitely TruScale is growing not just for Device as-a-Service, but also Infrastructure as-a-Service for us. And then as we do more Edge, again, there's more service opportunities around that to provide software services and solutions. So I think, you know, our goal is to continue to grow profit while we grow at a premium-to-market in the future. And I think if you if you look at what IDC and others are predicting for this year, it's still a double digit growth in the server market for this year.

Wai Ming will answer the cash one.

Yeah. So okay, and I think the cash is definitely, I think for us to build the cash, I think to support the growth of the business. Now let me be a little bit more specific, we actually - knowing the market is actually going to be tight in terms of liquidity as well as interest rate higher. We actually did, I think some bonds offering in the beginning of the year, I think contemplating the interest rate going up. In fact, over the next 15 months, we probably have about 800 or thereabout at total bond for us to get mature. And then we actually get the cash well in our bank account for repayment. And secondly, we are also, I think, continue looking for opportunity to move out debt from a shorter tenure to a longer tenure, like the latest one we've had. I think it’s really doing five years and 10 years as well as seven years. I think one of the latest one, we captured the market opportunity to do refinancing is the convertible bond, where we actually do it, I think, at the time, I think with over 40% premium with a conversion price of nearly $10. So, in short, I think we are I think getting, I think ready, just in case that might get tough. I think it's going to support the growth of our business. Thank you.

Thank you, Wai Ming. And the next question is coming from Merrill Lynch, Katherine. Do you expect any ASP pressure on PC as peers are all making efforts to digest inventory? And what's the potential impact on IDG’s operating margin?

Hey, Jenny, probably I'll take this one. So, look, for sure we are seeing an intensified competition in the market, which I think is normal in a market that has some channel inventory digestion and the macro outlook is not necessarily pushing strong demand. And additionally, you have the other element, which is the strength of the US dollar that in general is not playing in favor in most of the geography. That is posing probably pressure on GP rather than on average selling price, because average selling price is probably with a good trajectory, giving a better premium mix, a better commercial mix, etc., etc. Having said that, we continue to work towards balancing growth and profitability. We are focusing on more premium mix with a certain success, we are increasing our premium devices mix significantly, year-over-year, more commercial mix, better attach rate of accessories, better penetration rates of services, and a number of other actions to mitigate the GP pressure. With - by doing this, we are confident that we will be able to mitigate a large part of that additional pressure. And we are working maybe in new areas in IDG, f example, Smart Collaboration, AR VR, so new revenue streams that can help us to further mitigate the situation with additional revenue and the richer GP. And maybe you didn't ask but last but not least, we are obviously being very disciplined with expenses. So where we have maybe a little bit of shortfall in the GP, we will make sure we maintain a very disciplined [indiscernible] back to pre-COVID, so that we maintain our commitment to industry leading profitability. Thank you.

All right, thank you. And the last question is coming from Jeffries, [Connor O'Meara]. On the last call, Connor said that, Luca has commented we could expect PC market to be flat last year, and AMD Intel and the report from TrendForce yesterday, guided down roughly 5% to 10%. Do you maintain your flat market view? And what growth rate should we expect from Lenovo increasing next year?

Yeah, so I think it's, as I mentioned, probably in the previous answer, right now we are modeling next year to be flat to minus 4% to plus 4%, so in the four, plus minus 4%. So you can you can say is similar, or a little bit worse than our previous guidance that you are correct, on the last call, we were talking about flat. But I think still there are a lot of uncertainties. And the biggest one is the fact that we have seen, as we mentioned before, activation being significantly better than shipments. I’m not that pessimistic, and that we might see a much more stable market, once the channel inventory digestion for the total industry is done. The other comment is that, obviously, it's not only about units, but it's also about revenue, which is coming much better due to the premium and commercial mix. What growth should we expect from Lenovo next year? We are not guiding now in absolute number, but we confirm we will continue to grow at premium-to-market with the objective to expand and extend our leadership. Thank you.

Thank you. And due to time constraint, we will have last question from Athena Capital, [indiscernible]. What is quarter four and next year company performance forecast?

We definitely will not give the forecast on the performance but as I said at my opening, so we will continue to drive the premium-to-market in PC and the smartphone business. So we are confident on that. Meanwhile we will continue to leverage our diversified growth engine to grow. So we are confident both ISG and SSG will continue the hyper-growth. Thank you.

Thank you, Yuanqing. And now we are running out of time and we thank you very much for joining today's call. If you still have any further questions, please feel free to contact us directly. The replay of this webcast will be available in the next couple of hours in our Investor Relations website as well. Thank you for, again for joining us. Bye-bye now.