Ingram Micro Holding 2026 Q2 Earnings Call

Please go ahead. I'm here today with Paul Bay, Ingram Micro's CEO, and Michael Zilis, our CFO.

Before I turn the call over to Paul, let me remind you that today's discussion contains forward-looking statements within the meaning of the federal securities laws. All of these statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For further details concerning these risks and uncertainties, please refer to today's earnings release and our SEC filings. Our forward-looking statements are based on information currently available to us, and we do not intend to update these statements except as required by law. During this call, we will also reference certain non-GAAP financial information. Reconciliations of non-GAAP results to GAAP results are included in our earnings press release furnished to the SEC and available on our investor relations website.

With that, I'll turn the call over to Paul.

Thank you, Willa. Good afternoon, everyone. I am extremely pleased with our second quarter performance, which combined with our first quarter results produced a very strong first half of 2026. In the second quarter, we delivered net revenue of approximately $14.5 billion, gross profit dollars of $959 million, and adjusted EPS of $0.82, results that came in significantly higher and above our guidance ranges. These results are the best second quarter we have ever delivered and reflect a disciplined execution across our global business, continued momentum with Xvantage, and the strength of our diversified portfolio, partner base, and global ecosystem. They also demonstrate the power of our operating model. Mike will walk through the financial performance. I will begin by highlighting several themes that stood out in the quarter. First, we continue to demonstrate the compounding effect of our operating model.

Gross profit dollars grew faster than revenue, adjusted operating income grew nearly 40% year-over-year, while adjusted EBITDA and earnings again outpaced revenue growth. We are increasingly evolving from a reactive selling to a more proactive go-to-market strategy, leveraging data, automation, and platform intelligence to identify opportunities earlier, engage partners more effectively, and improve productivity across the business. Second, demand remains healthy. We saw double-digit revenue growth across our three primary lines of business. We also delivered revenue growth across all four regions and customer categories. Our net revenue by region remains balanced and well-diversified, with North America contributing 36% of net revenue, Asia Pacific 30%, EMEA 26%, and Latin America 8%. Asia Pacific is now our second highest operating margin region, while Latin America remains our most profitable region by operating margin.

During the first half of the year, I traveled to a dozen countries across these regions to meet with partners and team members saw consistent themes across the markets. Customers said that while some Advanced Solutions deals are taking longer, pipelines remain healthy, they are very optimistic. AI is top of mind, their end customers are moving from asking, "What is AI?" to "How do we actually deploy it?" This is where Xvantage and Enable AI are beginning to pay dividends, which I will discuss shortly. The shift in the market is also driving an even greater push towards outcome-based selling to solve specific business problems with complex solutions driven by AI, automation, and security. We are helping our customers provide these solutions through every stage of their sales and deployment cycles, from helping them build use cases to providing access to our certified engineers.

The market is evolving. We have invested ahead of the curve to evolve with it, our role in the channel has never been more important. That leads me to my third theme, the continued evolution of our Xvantage digital platform into an intelligent operating system. As AI accelerates changes across the industry, our customers and our vendors need a platform that simplifies complexity, connects data, and orchestrates workflows at scale. Our Xvantage strategy centers around embedded AI, automation, and data intelligence driving clear sources of value. This is demonstrated by reduced operating costs, accelerated growth, and expanded profitability. In Q2, the impact was visible in the data. Time spent on Xvantage increased approximately 40% year-over-year. Average order value increased 12%, average revenue per customer grew 23%, reinforcing that Xvantage is scaling as a global platform.

The 10 countries with the most mature Xvantage implementation showed double-digit year-over-year increases in gross profit and gross margin per go-to-market head delivered lower operating expenses, demonstrating the platform's leverage. We are seeing the same flywheel effect across our markets, including Asia Pacific, where India provides a strong proof point with nearly 50% year-over-year growth in average order value. Average revenue per customer, which almost doubled, measurable margin impact from strategic pricing and platform-led insights. Customers are using the platform as a valuable and integrated way to drive their business. Every quarter we see more users, greater engagement, and higher sales on the platform. To illustrate this, self-service orders around the globe reached 2.4 million, up 12% year-over-year, increasing efficiency and allowing our team members to focus more on high-value solution selling and customer engagement.

Email-to-Order, our patented AI capability that ingests unstructured customer emails, turning them into touchless orders, saw volumes increase 43% year-over-year, representing approximately $1.4 billion in revenue processed through our AI-enabled workflows that help partners move faster and operate more efficiently. For the third consecutive quarter, IDA, our Intelligent Digital Assistant, continued to demonstrate measurable business value, generating approximately $1 billion in net revenue in Q2, nearly 7% of the company's net revenue, ahead of pace on our goal of double-digit revenue contribution by the end of the year. Opportunities supported by IDA converted at nearly four times the rate of traditional quotes and contributed to a higher mix of Advanced Solutions and subscription categories. These are not simply adoption metrics, they are business outcomes. As engagement of Xvantage grows, the platform becomes more intelligent, automation improves, and our partners transact with greater speed, efficiency, and confidence.

Last quarter, we discussed four patents that were granted for core innovations that bring greater consumer-like simplicity, personalization, notifications, and ease of use to complex B2B technology commerce. Since then, two additional patents have been granted, further reinforcing the platform's differentiation. One covers our consumer-like end-user interface, enabling resellers to seamlessly manage and transact with their end customers through Xvantage, advancing our vision of a single pane of glass where you can order hardware, software, cloud, and services, which again is simplifying the B2B experience. The other covers an AI-powered alerts and notifications architecture, enabling Xvantage to interpret real-time signals and proactively deliver personalized insights and recommendation actions, further differentiating us as Xvantage evolves into Ingram Micro's intelligent operating system. We are extending that differentiation by continually meeting our customers where they are in their technology journey.

Customers can integrate with Xvantage in multiple ways. Most recently, we introduced Model Context Protocol, or MCP, which represents the next step in making Xvantage even more intelligent and accessible. MCP provides the standardized way for AI agents to securely access Xvantage's data, services, and workflows. That foundation also enables more sophisticated agent-to-agent interactions, where multiple AI agents can collaborate across customers and vendors to automate increasingly complex business processes. By securely connecting AI agents to Xvantage, MCP enables customers and vendors to automate workflows across quoting, inventory, ordering, and the technology lifecycle. The result is a faster, more seamless experience that reduces manual effort and allows our customers to focus on delivering greater value to their own clients while leveraging the full power of the Xvantage platform. In June alone, adoption of MCP increased 50%.

Usage grew more than threefold. MCP-enabled customers are already automating multiple areas of their business. In short, MCP is providing another way to connect seamlessly with our platform, and customers are embracing it. Alongside the platform, we are helping customers and vendors move from AI interest to practical deployment through our Enable AI program. We are moving customers through the stages of assessing readiness and supporting repeatable use cases designed to deliver measurable outcomes. Hundreds of customers are in the program, with new customers joining in at a rapid pace. Quarter-over-quarter, we have seen more than 60% growth in customers engaged in the program, with an almost 100% increase in those moving into AI business case deployment. The AI opportunity extends well beyond AI infrastructure.

Moving from pilots to scalable outcomes requires modern infrastructure, clean and structured data, strong security, optimized cloud environments, and the ability to integrate multiple technologies into comprehensive solutions. That complexity plays directly into Ingram Micro's strength and is a reason we rolled out Enable AI at the beginning of the year. With the program, we are helping customers identify high-value use cases, build proof of concepts, accelerate deployment, and create specialized practices around AI. This is similar to the way we helped scale the cloud opportunity, which is now a significant driver of gross profit. We believe Enable AI gives us an even larger long-term opportunity to monetize AI. On the enterprise side, earlier this year, we partnered with key OEMs and the world's leading AI and accelerated computing company to launch a program across several of our key markets. We call this Enable AI OEM Accelerate.