© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, and good evening. Welcome to Lenovo's quarter 2 earnings webcast. Thanks to everyone for joining us. This is Jenny Lai, Vice President of Investor Relations.
Before we start, let me introduce our management team joining the call today. We have Lenovo's Chairman and CEO, Mr. Yang Yuanqing; Corporate President and COO, Mr. Gianfranco Lanci; Group CFO, Mr. Wong Wai Ming; President of Motorola, Mr. Sergio Buniac; and Senior Vice President at Data Center Group, Mr. Doug Fisher. We will begin with a presentation shortly, and after that, we will open the call for questions.
Without further ado, let me turn the call over to Yuanqing. Yuanqing, please.
Hello, everyone. Thank you for joining us today. Last quarter, we delivered another quarter of solid performance despite the ongoing geopolitical uncertainties. We significantly improved the profit with a pretax income up 45% year-on-year to USD 310 million and a net income up 20% year-on-year to USD 202 million while maintaining a stable revenue of USD 13.5 billion.
Our Intelligent Device Group achieved 5% profit margin for the first time, thanks to solid profit contribution from both PC and smart devices and mobile business. PC and Smart Devices, in particular, delivered a strong profit margin of 5.7% with more than 4% revenue growth in spite of the supply shortages under the macroeconomic situation. Software & Services revenue grew 31% year-on-year. In PCs, we maintained our clear #1 position by delivering record high shipments with over 7% growth year-on-year. We outperformed our growing market by 4 points. Volume in high-growth and premium categories such as Workstation, Thin and Light, Visuals and Gaming PCs continues to outgrow the market by double digits. Looking forward. While the macro challenges may continue, we are confident that we will continue to drive premium-to-market growth and industry-leading profitability. We will achieve this through innovation, operational excellence and strong execution in high-growth and the premium categories. We will also continue to transform our business model and grow in Software & Services. Our Mobile Business delivered its fourth consecutive profitable quarter. Pretax income grew USD 57 million year-on-year, reaching the highest since the Motorola acquisition. In our stronghold, Latin America, activation grow almost 7% year-on-year. Revenue, profit and market share all grow year-on-year. In North America, activation was up nearly 5% year-on-year. Revenue, again, outgrew the market and profit margin improved almost 7 points year-on-year. Going forward, our Mobile Business will continue to strengthen profitability and seek opportunities to drive growth in new markets. We will continue to invest in innovation and technology leadership. Our Data Center Group profit continued to improve for the ninth quarter while overall revenue declined due to lower prices for key components, and the softness in demand from a couple of large Hyperscale customers. Meanwhile, the revenue for all other parts of the business was up 13%, and particularly, revenue excluding Hyperscale in China was up nearly 47% year-on-year. This double-digit growth is driven by high double-digit growth in High Performance Computing, software defined infrastructure and even stronger momentum in storage. Looking forward, we will drive revenue growth while improving profitability. We will continue our growth in non-Hyperscale, particularly in fast-growing segments like Software Defined Infrastructure and Storage while expanding our Hyperscale customer base to return Hyperscale to growth in the second half of this fiscal year. At the same time, we will continue to invest in Edge, telco and AI infrastructure to capture new opportunities. Our Intelligent Transformation showed strong momentum. Smart IoT revenue grew 4x year-on-year, driven by strong growth in consumer Smart IoT and AR/VR. Smart Vertical revenue tripled, thanks to 76% growth in Data Intelligence Business Group revenue and breakthrough in smart education. Commercial IoT business unit was established to develop new commercial IoTs, Edge and solutions to drive transformation.
Our Software & Services revenue grew 35% year-on-year, reaching almost USD 900 million, particularly Device as a Service more than tripled. Premier support service and managed service both grew high double-digit year-on-year. We expect this business to generate $1 billion per quarter soon. Over 30 out of 105 Lenovo Capital and Incubator Group portfolio companies are now collaborating with Lenovo to support various areas of our 3S strategy. Also, in our flagship event, Lenovo Tech, over the next week, we look forward to sharing our latest innovation and progresses in Intelligent Transformation. As I mentioned before, Lenovo is like a mountaineer. We are committed to driving transformation to reach new heights and bring smarter technology for all. Thank you. Now let me turn it over to our CFO, Wai Ming. Wai Ming, please.
Thank you, Yuanqing. I will take you through Lenovo financial and operational performance in Q2 fiscal year 2020. Next chart, please. Let me first share with you the financial highlights. The group reported yet another strong quarter of year-on-year profit expansion across all businesses. Our Q2 results demonstrated our ability to deliver strong margins and robust growth in earnings per share despite the component supply constraint and ongoing geopolitical uncertainties. The inevitable impact from the supply constraint and economy volatility has impacted different parts of our business and our operation, and our group revenue was up 1% year-on-year to $13.5 billion in the quarter. Our efforts in driving continued sales mix improvement such as expanding our market share in high-growth and premium PC segments have paid off. In addition, our transformation actions continue to accelerate. One key element in the Intelligent Transformation actions is that our Software & Service revenue grew at a strong double-digit rate year-on-year and now makes up over 6% of group revenue at a higher margin. Gross profit in Q2 increased by 22% year-on-year and gross profit margin expanded 2.7 percentage points to 16.1%, thanks to the sales mix improvement. Operating expenses rose 16% to $1.7 billion and the E/R ratio was 12.9%, up 1.7 percentage points year-on-year due to spending on sales, marketing and promotion as well as employee bonuses tied to rewarding performance improvements.
Our Q2 PTI increased 45% year-on-year and was the highest PTI in fiscal Q2 since acquisition of x86 and Motorola businesses. The PTI improvement was consistent across all business groups and the most notable improvement came from PCSD and MBG reporting their highest PTI margin in history. Net profit attributable to equity holders was $202 million, up from $168 million in the same quarter of last year.
Basic earnings per share came in at USD 0.0169, up from USD 0.0141 last year.
The Board of Directors in today's meeting declared an interim dividend of HKD 0.063, representing a 5% increase to the interim dividend paid last fiscal year. Next chart, please. In Q2, our cash used in operation improved both quarter-to-quarter and year-on-year to an inflow of $1.4 billion. The net debt position improved by $722 million year-on-year mainly due to better profit improvement and working capital management. Our inventory days improved 4 days year-on-year, thanks to disciplined inventory management. Next chart, please. Our Intelligent Device Business group, which includes PC and Smart Device business group and Mobile Business Group had another strong quarter with PTI margin up significantly by 1.2 percentage points year-on-year to 5.1%, a new record for IDG. PTI was $620 million, up 33% year-on-year, and also a new record for IDG. Next chart, please. In Q2, the component supply constraint capped the revenue growth of PCSD business group to a 4% year-on-year growth to $10.7 billion. Despite the external challenges, we are able to continue our growth and deliver record quarterly shipments. We continue to hold strong market share in PC. In addition, our PC business is becoming more balanced, maintaining our stronghold in the commercial segment while also gaining share in the consumer segment where we set a new market share record. Our strength in the high-growth and the premium segments also led to a favorable shift in sales mix. The revenue from premium products across Workstations, Thin and Light, Visual and Gaming PC grew by double digits year-on-year and contributed more than 50% of total PCSD revenue. Together, the increasing contribution from high-margin Software and Services business, the PCSD business group set a record PTI margin of 5.7% in Q2. Next chart, please. For the fourth consecutive quarter, the Mobile Business Group achieved positive PTI and expansion in its PTI margin and both set a new height since our acquisition of the Motorola business. MBG revenue was $1.5 billion, down 5% year-on-year due to our continued prioritization of core markets. This strategy focused on profitable or core markets, together with an improved portfolio, contributed to a year-on-year improvement of $57 million on MBG pretax profit.
The business group delivered a 3.6 percentage margin expansion versus the same quarter last year, thanks to improved profitability in our LA and NA markets. We are refining this focused market strategy to select markets in Europe in an effort to accelerate the growth trajectory through new carriers' relationship and improved product pipeline and leveraging the strength of our PCSD business. Next chart, please. Our Data Center business in Q2 continued to be impacted by sluggish Hyperscale orders and component price corrections. DCG revenue was $1.3 billion, down 14% year-on-year in Q2.
[ Bright boss ] included our Storage revenue and Software Defined Infrastructure, both up by strong double digits year-on-year, and our expanded Storage portfolio and strong ThinkAgile offerings are gaining recognition in the market. HPC revenue also grew by double digits, thanks to new projects wins. In China, our business also grew at a double-digit rate, thanks to our expansion in sales coverage and product portfolio offerings. DCG further narrowed its PTI loss by $9 million year-on-year, it's ninth consecutive quarter of year-to-year PTI improvements. Next chart, please. Looking forward, the complexity of macro environment and supply constraints remain our primary challenges. We are working to resolve the supply challenges and aim to minimize the revenue impact in the quarter. While there are sector challenges and not unique to our group, we will leverage our extensive experience in managing a multitude of macro environment challenges to drive growth and drive this business. Our goal is to lead in Intelligent Transformation era and drive service and software to become key profit contributor in the long term. On the group level, we aim to deliver a premium-to-market growth on the top line and we remain confident we will deliver profitable growth for the long term. On PCSD. Our growth continues to be delivering industry-leading profitability and increased sales in high-growth and premium segment to sustain premium-to-market revenue growth. This growth of growing in a market premium extends to our Service & Software businesses. For Mobile, we will continue to deliver innovative new products including our recent launch of several new models. We will look for potential growth opportunities and build more profitable core markets to sustain Mobile's continued financial health. For the Data Center business, we will grow Hyperscale customer base by leveraging our differentiated in-house design for large-scale applications with significant results expected in the next year. DCG will accelerate its market share gain in enterprise server, Software Defined Infrastructure, High Performance Computing, Storage and Software & Services businesses. The global trend of data growth will lead to increased data center demand along with the launch of new technology and services including the 5G and Edge computing.
The group will continue to invest across the Smart Infrastructure, Smart IoT and Smart Verticals to accelerate our transformation and to sharpen the growth core competencies. This investment should strength Lenovo capability as a competitive end-to-end solution provider in the era of Intelligent Transformation.
Thank you. Now we can take your questions.
Thank you, Wai Ming. Now we open the line for questions and this section is in English only. [Operator Instructions] Operator, I will now turn it over to you. Please give us your instructions.
[Operator Instructions] The first question comes from the line of Gokul Hariharan from JPMorgan.
Congrats on the good results. First question I had was on DCG and servers. I think YY mentioned we are looking to get back to growth in the second half of this fiscal. Could we talk about when do we get back to -- which quarter do we expect to get back to positive year-on-year growth? And could we give a little bit more quantitative numbers around what kind of growth are we expecting for calendar '20? And especially on Hyperscale, could we talk a little bit about the broadening out of the customer set from the one key customer that we have right now? And I had a follow-up question as well.
Okay. I will invite our -- Doug, our Senior Vice President and COO of DCG, to answer your question.
Thank you, YY. Let me take this in 2 parts. Let's take a look at, first, Hyperscale and what we stated is we'll continue to expand our relationships and engagement with a broader number of Tier 1, we call them, or the large Hyperscale customers, and we are doing that. We have deep engagements with many of these Hyperscale customers and we expect to see that broaden our portfolio and give us a better long-term view of how we're going to grow in Hyperscale.
I'm seeing the second half of this year coming in better than the first half. That's as granular as I'm willing to get. One of the challenges we have in Hyperscale is it's a very lumpy process and so it's very hard to measure it as systematically like you can in a traditional enterprise. But the view and projections going forward are we're optimistic that we're going to see growth in the second half compared to the first half of the year at Hyperscale. And as we continue to expand not only within the Hyperscale customers we're already participating with, but as we pick up new projects with other customers.
We're also participating with what we would call the next wave and we're seeing positive results starting to happen. Although they're smaller customers, we're still seeing positive result in the next wave. On the enterprise side, we've done some very good things with our sales force. We've really driven efficiency and focus on our sales force for both customer acquisition as well as our channel. We have a very strong channel-first strategy and it's playing out quite well for us. We're seeing positive results as YY and Wai Ming described, in our traditional enterprise server, I expect to see that continue next quarter.
Yes. So I want to add something here. So actually since we separated operations in China, so actually our China business saw strong growth last quarter. So overall, it grew...
47% year-on-year.
No. That's the Hyperscale growth, 47%. But the overall is still...
18%.
Yes. So double digit. So we believe this trend can continue. So we will invest more in China, so not only to drive the front-end sales coverage but also the China for China product portfolio.
Yes. That's a very good point. As we bring on more sales engineers in China, we've seen dramatic results as you can tell by the results. So we're feeling very positive about that. The results, we're measuring those very carefully and we're seeing very good results, and we are doing very specific products that address the needs and requirements in China and we're seeing very good results from that as well. So thank you for pointing that out.
The next question comes from the line of Chris Yim from BOCOM International.
I also have a question on DCG. I would like to ask on the Storage side, what kind of progress you're having in Storage and how the China JV is going?
Also, given that you're ramping up new customers in Hyperscale and also expanding the business in HPC and SDI, can you talk about how is the near-term profitability going to be for DCG? And can we expect some kind of timing -- some kind of time line for -- to get to break-even point?
Well, I'll start with the last question first. I'm not in any position to tell you exact timing for our profitability. I'll let Wai Ming decide if he wants to tell you that.
On the Hyperscale, we continually see our efforts in Hyperscale pay off very well our growth is double digits this year -- I'm sorry, HPC. We hold 173 of the top 500 world records. We service 19 markets. We continue to really really grow that area and see positive results. We saw the agreement that YY signed with Bob Swan at Intel where we're going to continue to invest together and drive innovation as we focus, really as a corporation, on helping solve humanity's greatest challenges. We really stand for that and we're putting investments in that space and it's coming to fruition very well for us.
I'm sorry. Was your other question was around -- should have written it down. Storage, yes? Storage, yes. Yes, we're very, very positive of our storage effort. We went from addressing around 15% of the market with our Storage portfolio prior to the investment engagement with NetApp and now we're seeing us address well over 90% of the market in storage, and that is actually going very, very well. We saw high double-digit growth in Storage this quarter and so expecting to see that trend continue as we bring on and train our sales force and we have aligned our sales force behind Storage. It's actually showing tremendous growth and we're very positive and optimistic about that. That's one of our shining areas of growth for the Data Center Group.
So I think in terms of financial performance, although we are not giving any specific numbers, but I can actually show you with the strategy that we adopt, I think we'll continue to grow very aggressively on the top line from server, storage and others, but at the same time, maintaining a sustainable improvement in profitability quarter in, quarter out. So I think we actually take the DCG business very strategically important by really getting back to scale as well as improving profitability so that you can actually sort of see that going forward.
So for our DCG business, so our growth is -- I mean, it's different from MBG. So in the past couple quarters, we put profitability first for our MBG business. But for DCG, definitely, we believe from a long-term point of view, it will be -- it should be Lenovo's growth engine. So we're putting it in our transformation, so definitely the major goal is to -- we should drive the growth. So at the start, just to say, we have the opportunity, not just driving the growth in Hyperscale customers, but we now have the scale in traditional enterprise business.
So we want to drive even higher growth in that space, definitely driven by Software Defined Infrastructure driven by Storage, driven by the Service. So that will be our target. And also, we have a specific China strategy to drive the growth in China. But definite meanwhile, we will not ignore the profit improvement.
The next question comes from the line of Howard Kao from Morgan Stanley.
Congratulations on the quarter. So my question is maybe for Doug, continuing on the server side. So can you talk about the kind of momentum you're seeing for Hyperscale for the December quarter? Because I remember 3 months ago, you guys talked about seeing significant improvement in terms of demand for Hyperscale from your key existing Hyperscale customer. Can you just kind of talk about how that momentum has changed over the past 3 months? And yes, so how do we expect December quarter to look like? So that's my first question.
My second question is maybe for Gianfranco on the PC side. So if I'm looking at the numbers correctly, your PTI margin for PCSD is the highest it's ever been at 5.7% PTI margin. Obviously, this is a combination of several factors, but what do you think is driving this higher elevated margin? Is it mostly product mix? Or is it mostly a reflection of lower component pricing? I mean how sustainable do you think this new elevated PTI margin will be going forward?
So on the Hyperscale question, we don't see any change with -- from what we've stated. We believe we'll see better results in the second half in Hyperscale. We've seen some pushout, as we talked about last time, whereas they consume the capacity they have and bring on more. We're not seeing a change in what they're demanding, it's just the timing. So we're very engaged and very positive about the long-term results with the Hyperscale partners we have.
And so we see the growth continuing in that space and that's why, as YY said, it's our scale engine and we're going to continue to invest there. It really provides tremendous advantage for us as we have one of the world's best supply chain organizations. We're utilizing that capability in our in-house design to be a major, major player in Hyperscale and we'll continue to do that. And so yes, I see the second half being an obviously improvement over first.
Gianfranco?
Yes. I think when you look at our results, for sure, the major components is coming from product mix in the event that when you look at our growth on the Workstation, Gaming, Thin and Light, we are talking about, let's say, worst case, around 30%; in some cases, even better than 30%. So we are strictly focused on the growth area and also where the margin usually is better.
It is also true that we get some benefit from component costs going down, but frankly speaking, if I look at last quarter, component costs have started to stabilize. They are still slowly going down, but it's much more stable than 6 or 9 months ago. And we expect that this is going to be the same probably in the next couple of quarters moving forward.
So I would say, for sure, the mix. And if you look at commercial, I think it's already 70% of our mix. But, we are still #1 on both commercial and consumer. And even consumer, we reached historical high market share. The other good thing here is that when we look at our geo, we have today all the geo without any exception running more or less with the similar performance in terms of profitability, and I think it's probably the first quarter or the second quarter in our history where we have all the geo running the same or similar performance in terms of profitability.
So I would say product mix, good balance between the geo, some help from component costs.
Yes, so we were not impacted by supply. We have even better performance.
Yes, Yuanqing. I think in terms of revenue, it could be much better without any supply limitation. And probably also profitability, it could be better. It's just additional margin flowing down to the bottom line. But I think we have been mentioned managing the activity well considering the overall situation in the market.
Yes. Also, so we are very competent so we can keep profitability level over time.
Yes.
The next question is the follow-up question from the line of Gokul Hariharan from JPMorgan.
I had a couple of follow-up questions. One on MBG, we've done a very strong improvement in profitability. We held breakeven or above breakeven for the last 3, 4 quarters. Now we're coming into the era of 5G. Could you talk a little bit about what are the plans for 5G as well as, I think, Yuanqing mentioned that we are also entering Europe selectively into some markets. So could you talk about what are the next plans for MBG and what does it mean for MBG profitability?
And one small follow-up question is for Wai Ming. Wai Ming, could you talk a little bit about the increase in the factoring expenses? Is it a temporary thing? Do we expect the factoring costs to come down closer to the previous levels that we've seen last year once we enter into a new factoring agreement?
So I think Gianfranco...
Can you hear me?
Yes, Gianfranco. Could you please answer the question? Yes.
Yes. So first, I think our commitment was like 5 to 6 quarters of profitability, so we keep delivering on that. Moving forward, there are a few things that are going to help boost profitable growth. We are making good progress lapping synergies we see in the enterprise side. We have -- just starting but it is getting very promising.
In 5G, of course, we were first to market with the 5G launch with Verizon a few months ago. We are going to see a few products coming in the near future. We're not announcing the future date. But we see that helping us grow our average selling price in markets like North America and Europe. And also, we are seeing very good reception on our future portfolio among European carriers. So that will also help foster growth in the near future.
In terms of profitability, I mean we're not giving commitment, but our commitment is like on profitable growth. So we're not taking any routes that will affect profitability. We're being very cautious. We have also an important announcement coming next week, we cannot comment today, that also will deliver stronger in the premium space.
So as we move forward, we are coming back to the premium space, the experience we have with 5G launch in terms of [ like campaign in areas of ] performance, I believe is going to help us grow in that space also.
By the way, so actually we made a pretty decent profit in North America and Latin America. So if you only consider these 2 geos separately, so [indiscernible] right. So actually, both -- in both markets, we made more than 5% PTI. So definitely, if we want to expand into more markets, so probably we need some investment. We feel we are still committed. So we will put profitability first. So we will make sure this will be a profitable growth.
One thing, in my opinion, is we start to see the payback on what we did during the last 18 months because we did a lot of things and we also tell that we were doing a lot of things. But at the end, when I look, we really rationalized the product road map -- the lineup. We shortened the product design -- product development by almost 30%. We cut the costs in terms of we look at our cost base and then we cut any kind of cost that was not bringing in any return. And this is why probably you see now that for more than 4 quarters, we are profitable. But I think we build a very good, solid foundation.
Now I think we are also looking at area where we can grow, but as Sergio said, being very careful that we don't get into any risk in terms of profitability.
But area, so we are making some [ fast turn ] in some countries in Europe, for example. We will do similar things in Asia because we see growth opportunity both in Europe and Asia. But still managing profitability very, very carefully. There is no reason to jeopardize what we did during the last 18 months.
So to go on factoring costs. I think, in fact, you should actually look at it both 2 ways. One obviously is the rate of the interest rate, the other is really the usage. I think this is a full quarter in which we, I think, moved the [ IGF ] financing, I think, to sort of in-house during the quarter. I think we are actually making progress. We will continue to see improvement of the interest rates. But at the same time, because taking it in-house, we'll actually be able to utilize that in more efficient way, meaning that we probably will be able to do generally a little bit more cash from the receivables that we have.
So I don't see -- while we're definitely, from a trend perspective, seeing improving interest rate, but at the same time we'll see the absolute dollar probably will come down a little bit but not significant because we really would want to take the in-house to drive more cash from the operation.
The next question comes from the line of Arthur Liao from Fubon Securities.
I also have a question to like ask Gianfranco, that you mentioned I saw you said gross margin's pretty good for the PC that is because the component is more stable. Just want to ask you -- consult with you for 2020, you think that, for PC, the market still can keep the component price stable? Is my first question.
Second question, I was very excited for your [indiscernible] the app, but as I know that some of PC deploying earlier before December, especially in June and December less the American trade war with China. So I guess this is natural demand. I'm not sure what your view for 2020, especially the commercial replacement probably slowed down. So this is my second question for PC. So this is my PC question.
On component costs, I think, frankly speaking, if I look at the current environment and the current situation, I would expect not to see any major increase on component costs at least for the next 6 months, for the next couple of quarters. Then it depends on a lot of things, demand on Hyperscale, demand on PC and so on. But when I look at the overall picture, capacity is still bigger than demand and memory, frankly speaking, when we look at -- in the open markets, both flash and DRAM, they are still going down.
So it's a -- I would not expect to see any major change over the next 6 months. If I was so good to predict also the following 6 months, I would have a good crystal ball and probably we are going to do something different. But no, I do follow -- so we are quite confident that for a certain period of time, we will see a certain stability in terms of component.
On your question on December shipment, frankly speaking, we have seen some movement in the past. We are not seeing -- and you are mainly talking about U.S. We are talking about U.S., I think. We are not seeing a big movement in terms of shipment for December in order to prevent the tariff or these things, at least not from our side, but frankly speaking, also from competition. We are not seeing the -- we saw it last quarter, last quarter in the sense that between August and September, yes, at least for [indiscernible] for cost [ certainty ]. But this quarter, we really don't see this kind of movement.
One good thing when I look at PC and I look at commercial, I think the transition to Windows 10 is not finished yet in the sense that we are not alone, but together with Microsoft, with other people, we know that there are still probably almost 100 million PCs installed base that are running with Windows 7 or even before Windows 7 and they will move probably in the next 6 to 9 months. So this transition has been done for large customer, large enterprise and in some areas of the world. But there are small customer or medium customer in the area of the world where transition is not finished yet. So also there, I would expect that for the next 6 months to continue to see the upgrade to Windows 10 moving forward then.
Okay. My second question is probably for Mr. Doug Fisher. I think this is for data center and this is for server. I just want to consult with you for outlook for 2020. The reason because we know that Intel's service CPU probably will launch in the third quarter or the first quarter for [indiscernible]. That's why some of supply chain or even industrial were thinking that the first half year of 2020 will be mute. What do you think about it?
And how do you look at the global server demand for 2020? And in the risk of the Intel delay because we know right now their competitor, AMD, is gaining market share, is very aggressive and it is [ passed ] by TSMC. So how much is no doubt from your side, from you Data Center, especially the [ cloud IP ] already contributed 40% of total worldwide server. And did you think AMD will be lose market share in server? So this is total my question for server side.
Yes. If you take a look at the server side, we made an announcement on the AMD front -- we made our announcement in August with AMD. We launched our first AMD platform in an enterprise space. We obviously work with AMD in the cloud space. And so we've been working with AMD for years, and why we have an enterprise platform. We're very proud of that. It really drove a lot of top performance benchmarks, which we're well known for. We're #1 in performance in the industry and we'll continue to do that. The timing for -- my view, the timing for Intel platform is not going to impact what we do. We're going to continue to drive the platform road map that we have today. We're seeing us grow within the market. If you take a look at really the market that -- was declined, we actually did much, much better than the market. That's our commitment: we're going to continue to do better than the market is doing. And so we've done that quarter-to-quarter. We're going to continue to do that. So we pay less attention to what they're doing overall, and our objective is to grow within the market that we have.
When it comes to the new platform, we've had a tradition, which we're going to continue is the fastest transition. So we're already gearing up, and when the platform is available, we'll transition to that as quickly as we have done in the past. We have a very, very good record of transitioning with the newest technology and leading the industry on that, which gives us -- that's why we always have the top performance marks in the industry by far. And these are not ours.
These are independent performance marks that you can find on sites like from Intel will showcase [indiscernible]. So we're going to continue that and I'm very, very excited about [indiscernible]. I'm like Gianfranco, I'd love to have a crystal ball, but I'm going to stick with my day job and shift performance that are -- the top performance and #1 in reliability and customer satisfaction and we're going to go win our own fair share.
All right. Thank you. We are running out of time to take any more questions. Sorry for those questions online. If you have any further questions, feel free to contact us directly. We thank you very much for joining today's call. The replay of this webcast...
Before you finish, I want to say something here. So all the questions are related to our 3 core businesses. So actually, if you ask me, what are we satisfied with the last quarter's performance, so I would say that will be our transformation benchmark. So actually, our Service & Software revenue grew by 36%. So it's not easy. And also our Smart IoT quadrupled. Our Smart Vertical revenue tripled. So those are definitely good signals of how our transformation strategy really works and our execution is very determined. So I just want you to see those results as well. Yes, so Service & Software, so now almost a $1 billion business per quarter so...
Okay. Thank you, Yuanqing, for the additional highlights. And again, 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 today. Bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.