Ingram Micro Holding Corporation 2026 Q3 Earnings Call

Please go ahead. Good afternoon.

Before we begin, I would like to remind you that today's presentation may include forward-looking statements within the meaning of applicable securities laws. These statements reflect our current views and expectations regarding future events, including, but not limited to, financial performance, strategic initiatives, market conditions, and regulatory developments. Forward-looking statements are inherently subject to risks and uncertainties, many of which are beyond our control. Actual results may differ materially from those expressed or implied in these statements due to a variety of factors, including changes in economic conditions, interest rates, competitive pressures, and other risks detailed in our most recent filings and public disclosures. We undertake no obligation to update or revise any forward-looking statements to reflect new information or future events, except as required by law. In addition, today's discussion may include certain non-GAAP financial measures.

Reconciliations to the most directly comparable GAAP measures can be found in our earnings materials, which are available on our investor relations website. With that, I will now turn the call over to Paul.

Thank you, Willa, and good afternoon, everyone. I am extremely pleased with our performance in the third quarter. Last quarter, we delivered the best second quarter in Ingram Micro's history. This quarter, we built on that momentum and delivered a record third quarter, exceeding our guidance on all financial metrics. We are also raising the fourth quarter and full year 2026 guidance that we provided at our Capital Markets Day in September. This quarter's execution and the increased guidance reinforces the confidence we shared in September. Ingram Micro is increasingly becoming a different company, combining unmatched global reach, deep technology expertise, and trusted relationships with an intelligent operating system that is changing how we go to market, how our customers grow, and how value is created across the technology ecosystem. Mike will cover the financials in detail, but I would like to underscore the factors that drove the strength in the quarter.

First, demand remains healthy and our growth was broad-based. Net sales grew more than 20% year-over-year with double-digit FX neutral growth in three of our four regions and double-digit growth across all lines of business. Advanced Solutions was our strongest contributor, growing 40% year-over-year with another quarter of strong sales of AI infrastructure and GPUs. Lifecycle Services, which includes our renewed supply chain services and our ITAD and reverse logistics and repairs business, grew 35%. Cloud grew 30% and continued to contribute a gross profit share well into the teens. Client and Endpoint Solutions grew 10%. Growth was also healthy across customer segments. Second, we continue to demonstrate that we are delivering both growth and operating leverage.

The platform investments we have made with Xvantage are helping us improve productivity and scale the business with OpEx as a percentage of net revenue improving even as we continue to invest in future opportunities. Third, we are seeing growing evidence that our strategy is working as we expand our role beyond traditional distribution to become the intelligent operating system at the center of the global technology ecosystem. That positioning is a result of years of building an AI-native platform with eight patents approved and more than 30 pending, a real-time data mesh capturing roughly 250 million events a day, and more than 400 AI and machine learning models that turn those signals into intelligence and ultimately business outcomes. At Capital Markets Day, we described this evolution simply. Scale is our advantage. Intelligence is the multiplier.

We are moving from traditional distribution to becoming the industry's first intelligent operating system for B2B. Our reach spans more than 165,000 customers and over 1,500 vendor partners across six continents, with the ability to serve 90% of the world's population. Our intelligence allows us to provide solutions to our customers at the speed of change. Speed matters because the industry keeps evolving. Distribution began with hardware, vendors to distributors, to resellers, to end customers with a model built around buying, holding, and selling inventory. Next came cloud, subscriptions, and consumption, which required new ways of doing business and higher services element. AI is adding another layer of intricacy. Vendors are becoming customers are becoming vendors, and businesses need solutions that combine infrastructure, software, cloud services, and financing.

Complexity is rising faster than the industry can absorb, and we're building an intelligent operating system to solve for this ever-growing complexity for our customers. For decades, distribution connected supply to demand. Today, Xvantage, powered by the data and signals flowing through it, connects demand to supply, turning these activities across the ecosystem into actionable opportunities. This has been a deliberate multi-year journey, and we are executing it in two phases. The first phase is Xvantage, the platform that connects our vendors, our partners, and their customers, and digitizes and automates how they do business with us on global scale. The second phase is our intelligent operating system, built on that platform foundation. Every transaction on Xvantage creates context, and our intelligence layer connects that context to real-time signals such as renewals, buying patterns, and recommendations. It turns those signals into proactive demand generation, action, and ultimately outcomes.

We are no longer just processing transactions. We are capturing intelligence that makes every interaction smarter for our vendors, our customers, and Ingram Micro. In Q3, we continue to see strength in the platform foundation. Across our 22 platform countries, average revenue per customer on Xvantage increased 39% year-over-year. Self-service represented nearly 70% of orders, up more than 10 percentage points. Email-to-Order volume increased 33%, processing approximately $1.6 billion of revenue, and time spent per visit increased 40%. Additionally, our Intelligent Digital Assistant, IDA, continues to scale as an important part of our model, with IDA-driven revenue hitting our goal of 10% of global revenue in the quarter. These results demonstrate deeper customer engagement and show that Xvantage is becoming increasingly embedded in how our customers operate. The significant is straightforward. Greater self-service lowers transactional costs, deeper engagement expands selling opportunities, and more intelligence improves the quality and speed of commercial decisions.

We are now applying this intelligence to improve pricing, prioritization, and demand generation. During the quarter, we launched ordering via Model Context Protocol, or MCP, across 12 countries, so customers can interact and transact with Ingram Micro through AI assistants such as ChatGPT, Claude, Gemini, Copilot, or through their own agents with the controls and auditability built into Xvantage. Anyone can use MCP, but what makes ours different is it connects securely into Xvantage, giving customers' agents access to the global data and intelligence we have built.

As one of our customers, Cloud Managed Networks, put it, "The real differentiator is the intelligence it provides." Customers actively using MCP are growing their business with us at nearly four times the rate of those that are not integrated with our platform. That's the shift from digital commerce to agentic commerce, where intelligence moves from insight to action. Turning to AI, we continue to see strong demand for GPUs and AI infrastructure. Our customers are moving into high-performance computing while focusing on governance, compliance, and security to implement real-world AI use cases. Through Enable AI, Xvantage, and our relationships with hyperscalers and technology vendors, we're helping customers move from exploration to deployment through our own services and certifications. We are focused on three areas of opportunity. One, reselling and managing AI consumption. Two, attaching professional services around deployment, governance, adoption, and operations.

And three, developing new agentic services, including the custom agents we are already building for our SMB customers. This quarter, AWS validated Ingram Micro's competencies within AI, machine learning, and data services, among others, demonstrating that we have the skills and the track record to deliver AI solutions at scale. What matters most to our customers is this. They don't need to build an AI practice before they can sell an AI project. They own the end customer relationships, and we deliver the solution. We also have an attractive opportunity as we expand our Lifecycle Services business. We are returning to supply chain services by optimizing capacity within our existing infrastructure rather than investing in additional warehouse space. We are also expanding our ITAD and repair capabilities to help customers recover value from existing technologies while meeting strict data security and sustainability requirements.

What excites me most is that all of the transformations I just discussed are happening while the core business continues to perform, and we enable our customers to transform with us. We are growing in some of the most important technology markets in the world, investing in Xvantage, cloud, AI, and Lifecycle Services, creating new routes to market and maintaining the financial discipline necessary to generate attractive returns. As we look ahead, I remain highly confident in our strategy and the opportunity in front of us. The scale, portfolio, and capabilities we have spent years building are producing tangible outcomes for Ingram Micro and our customers. Our customers sit at the center of everything we do, and we serve as an extension of their businesses.