Q1 2025 Ingram Micro Holding Corp Earnings Call

Operator: Thank you, Operator. I'm here today with Paul Bay, Ingram Micro's CEO, and Mike Zilis, our CFO.

Thank you operator, I'm here today with all day, Ingram micro CEO and Mike <unk>, 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, including predicts.

Operator: 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, including predictions, estimates, projections, or other statements about future events, statements about our strategy, demand plans, and positioning, growth, cash flow, capital allocation, and stockholder return, as well as our expectations for future fiscal.

<unk> estimates projections or other statements about future events statements about our strategy demand plans and positioning right cash flow capital allocation and stockholder return as well as our expectations for future fiscal periods.

Operator: Actual results may differ materially from those mentioned in these forward-looking statements because of risks and uncertainties discussed in today's earnings release and in our filings of the We do not intend to update any forward.

<unk> results may differ materially from those mentioned in these forward looking statements because of risks and uncertainties discussed in today's earnings release and in our filings with the SEC.

Operator: During this call, we will reference certain non-GAAP financial Reconciliations of non-GAAP results to GAAP results are included in our earnings press release and the related Form 8K available on the SEC website or on our Investor Relations website.

Related Form 8K, available on the SEC website or on our Investor Relations website. With that, I'll turn the call over to Paul.

Paul Bay: With that, I'll turn the call over to Thank you, Willa. Good afternoon, and thank you for joining the call today. We are very pleased with our first quarter performance. Net revenue of $12.3 billion was up 11% year-over-year on an FX-neutral basis, and 4% above the high end of the guidance we provided on our Q4 call. Gross profit of $829 million came in more than 2% above the midpoint of our guidance, and non-GAAP EPS of $0.61 was at the high end of our guidance. North America and Asia-Pacific both saw double-digit net sales growth, EMEA grew 3%, and Latin America was essentially flat year over year on an FX-neutral basis.

Speaker Change: Thank you Willa. Good afternoon and thank you for joining the call today. We are very pleased with our first quarter performance.

Speaker Change: Net revenue of $12.3 billion was up 11% year-over-year on an FX neutral basis, and 4% above the high end of the guidance we provided on our Q4 call. Gross profit of 829 million came in more than 2% above the midpoint of our guidance.

Speaker Change: And non-GAAP EPS of 61 cents was at the high end of our guidance. North America and Asia Pacific, both sold double-digit net sales growth. A maya grew 3% and Latin America was essentially flat year-over-year on an FX neutral basis.

Paul Bay: As expected, the top line growth was driven by strength in the client and endpoint solutions. But we also saw solid growth in our advanced solutions and cloud business. While the second quarter and back half of 2025 are harder to forecast, given the volatility resulting from the macroeconomic and trade environments, which Mike will discuss, we are optimistic about the future. We believe that Ingram Micro's four-and-a-half decades of experience and global reach in tandem with our investments in our cloud and ExVantage platform capabilities position us to manage this cycle with greater resilience, further competitive differentiation, and positive shareholder return.

Speaker Change: As expected, the top line growth was driven by strength in the client and end point solutions, but we also saw solid growth in our advanced solutions and cloud businesses.

Speaker Change: While the second quarter and back half of 2025 are harder to forecast, given the volatility resulting from the macroeconomic and trade environments which Michael discuss, we are optimistic about the future.

Speaker Change: We believe that Ingram Micro is four and a half decades of experience and global reach in tandem with our investments in our cloud and X-Vantage platform capabilities, position us to manage this cycle with greater resilience.

Speaker Change: Further competitive differentiation and positive shareholder return. Just as importantly, we remain deeply committed to supporting our customers, our vendor partners, as they navigate the same challenges.

Paul Bay: Just as importantly, we remain deeply committed to supporting our customers, our vendor partners, as they navigate the same challenges. Much of our long-term optimism lies in the evolution towards becoming a platform company. During this time, we have invested over $600 million in cloud, the foundation of our XVantage digital platform, which has been implemented in 20 of the 57 countries we operate in. This will allow us to continue to remove silos and friction across thousands of hardware, software, cloud, and service off. ExVantage connects our team members, our vendor partners, and our customers through its real-time data mesh, powered by 4 petabytes of data, 32 million lines of code, and more than 300 AI and machine learning models.

Speaker Change: Much of our long-term optimism lies in the evolution towards becoming a platform company. During this time, we have invested over 600 million in cloud, the foundation of our

Speaker Change: This will allow us to continue to remove silos and friction across thousands of hardware, software, cloud and service offerings.

Speaker Change: X-Fanage Connects our team members, our vendor partners and our customers.

Speaker Change: through its real-time data mesh, powered by four petabytes of data, 32 million lines of code, and more than 300 AI and machine learning models.

Paul Bay: This patent-pending technology framework harmonizes disparate data sources into a unified platform. Unlocking Real-Time Insights, AI Analytics, and Rich Data Visualization. xVantage is a truly global, end-to-end digital platform that connects each player in the ecosystem. removing friction, improving go-to-market efficiencies, and translating data into actionable insights through AI. Importantly, xVantage is not about replacing people. Instead, the platform automates repetitive tasks like billing and order tracking to free up time for our sales teams to move from inbound tactical work to the proactive outbound business-led conversations that bolster customer success. One example of how Ingram Micro is providing go-to-market scale and leverage within our ecosystem is our Intelligent Digital Assistant.

Speaker Change: This patent-tending technology framework harmonizes disparate data sources into a unified platform, unlocking real-time insights, AI analytics, and rich data visualizations.

Speaker Change: XVantage is a truly global, end-to-end digital platform that connects each player and the ecosystem.

Speaker Change: Removing friction, improving go-to-market efficiencies, and translating data into actionable insights through AI.

Speaker Change: Importantly, X-Vantage is not about replacing people. Instead, the platform automates repetitive paths, like building and order tracking.

Speaker Change: To free up time for our sales teams to move from inbound, tactical work.

to the proactive outbound business-led conversations.

Got bolster customer success.

Speaker Change: One example of how Ingram Micro is providing go-to-market scale and leverage within our ecosystem is our intelligent digital assistant. We call this Ida.

Paul Bay: We call this IDA. IDA uses machine learning and AI models to proactively prioritize engagement with our customers and are consistently improving and automating our quote to order conversion. In Q1, IDA enabled tens of thousands of proactive customer engagements per month on behalf of our top vendor partners, driving hundreds of millions in year-over-year incremental revenue. Ida is another example of how our real-time data mesh and AI models are helping to evolve our sales approach from high-touch order-taking to insightful, consultative order generation, thus transforming the end-to-end buying experience for our customers. Let me share some data to illustrate what this transformation looks like.

Speaker Change: Ida uses machine learning and AI models to proactively prioritize engagement with our customers and are consistently improving and automating our quote to order conversions.

Speaker Change: In Q1, I'd enabled tens of thousands of proactive customer engagements per month on behalf of our top vendor partners, driving hundreds of millions in year-over-year incremental revenue.

Speaker Change: IIT is another example of how our real-time data mesh and AI models are helping to evolve our sales approach from high-touch order-taking to insightful, consultative order generation thus transforming the end-to-end buying experience for our customers.

Speaker Change: Let me share some data to illustrate what this transformation looks like.

Paul Bay: In the first quarter alone, our customers used XVantage Advanced Search over 12 million times to find hardware, software, cloud, and services they needed to build end-customer solutions. xVantage also enabled more than triple the self-service orders versus the prior year, allowing customers to quickly and seamlessly place orders directly into the platform. In the first quarter through Xvantage, we also reactivated thousands of dormant customers with average net sales above their prior levels of engagement. Xvantage's AI capabilities, including IDA, contributed in a meaningful way to our revenue. And one standout internal measure of Xvantage's ROI is the improved productivity we're seeing across our go-to-market.

Speaker Change: In the first quarter alone, our customers use X-Vantage advanced search over 12 million times to find hardware, software, cloud, and services they needed to build in customer solutions.

Speaker Change: X-Fanage also enabled more than triple the self-service orders, versus the prior year, allowing customers to quickly and seamlessly place orders directly into the platform.

Speaker Change: In the first quarter through ex-manage, we also reactivated thousands of dormant customers with average net sales above their prior levels of engagement.

Speaker Change: Exfantages AI capabilities, including Ida, contributed in a meaningful way to our revenue. And one standout internal measure of exfantages ROI is the improved productivity we're seeing across our go-to-market teams.

Paul Bay: In the U.S., where Xvantage is most mature and fully embedded into our go-to-market playbook, we are seeing meaningful gains in both revenue generation and cost leverage, both of which were up double digits per head. Another example of how we help our partners scale is our X-Vantage Integrations Hub, or what we call XI. It simplifies software integrations by enabling instant access to pre-built applications and more secure modern workflows. excise customers and vendors quickly deploy integrations with key cloud-based software applications, including large-scale CRM platforms like Salesforce. It also integrates remote monitoring and management and configuration price and quote platform.

Speaker Change: In the US, where X Manage is most mature and fully embedded into our go-to-market playbook, we are seeing meaningful gains in both revenue generation and cost leverage, both of which were up double digits per head.

Speaker Change: Another example of how we help our partner scale is our X-Vantage integrations hub, or what we call XI. It simplifies software integrations by enabling instant access to pre-built applications and more secure modern workflows.

Speaker Change: Excised customers and vendors quickly deploy integrations with key cloud-based software applications including large-scale CRM platforms like Salesforce.

Speaker Change: It also integrates remote monitoring and management and configuration price and

Paul Bay: During Q1, in the U.S. alone, more than 1,500 customers had 51 million interactions through the XVantage integration hub. One key customer said, and I quote, XI is modern, intuitive, and incredibly easy to navigate. We were amazed at how quickly we installed an app. What normally takes months, we completed in minutes. The seamless experience and effortless setup makes this a game-changer for integrations." Industry analysts are also taking note of the platform advantage. A research VP at IDC noted, and I quote, Ingram Micro's xVantage platform and new xVantage integrations hub demonstrate the balance required between integrations and interactions to build a digitally enabled organization that prioritizes the customer experience, end quote.

Speaker Change: During Q1 in the U.S. alone, more than 1,500 customers had 51 million interactions through the at-fantage integration hub.

Speaker Change: One key customer said, and I quote, XI is modern, intuitive and incredibly easy to navigate. We were amazed at how quickly we installed an app. What normally takes months, we complete it in minutes.

Speaker Change: The seamless experience and effortless setup makes this a game-changer for integrations, end-quote. Industry analysts are also taking note of the platform advantages.

Speaker Change: A research VP at IDC noted, and I quote, Ingram Micro's X-Fanage Platform, and new X-Fanage integrations hub demonstrate the balance required between integrations and interactions.

Speaker Change: To build a digitally-enabled organization that prioritizes the customer experience and

Paul Bay: All of the technology I have discussed was created to enhance our customers' experience. So I'm glad to report that the platform is also being validated for its innovative architecture and design. In April, Ingram Micro was recognized with three IF Design Awards 2025 in the User Experience category for our Mobile, Email-to-Order, and Insights and Recommendations solutions within XFANTASY. This is among the most prestigious global design competitions for user experience, recognizing excellence in UX, UI, product design, and innovation. Past winners include the best of breed tech innovators like Google and Meta. We were honored to have such a strong showing there against approximately 11,000 submissions from 66 countries.

Speaker Change: All of the technology I have discussed was created to enhance our customer's experience. So I'm glad to report that the platform is also being validated for its innovative architecture and design.

Speaker Change: In April , Ingram Micro was recognized with three IF Design Awards 2025 in the user experience category for our mobile, email-to-order and insights and recommendation solutions within

Speaker Change: This is among the most prestigious global design competitions for user experience, recognizing excellence in UX, UI, product design, and innovation. Pass winners include the best of brief tech innovators like Google and Metta.

Speaker Change: We were honored to have such a strong showing there against approximately 11,000 submissions from 66 countries.

Paul Bay: As we look forward to the remainder of 2025, despite the macro uncertainty... Our strategic path remains unchanged with our customers at its core. We are focused on innovation and execution, and we believe we are in a stronger position than ever to realize our strategic vision of becoming a platform company. Our goal of delivering speed, scale, and services paying off in demonstrated efficiencies, top-line lift, and the reason for it all, a differentiated customer experience. Together with our customers, our vendor partners, and Ingram Micro team members, we are well positioned to navigate the volatility in the short term while continuing to focus on our long-term roadmap, as we have many times in more than our 45 years as a market leader.

Speaker Change: As we look forward to the remainder of 2025, despite the macro uncertainties, our strategic path remains unchanged with our customers at its core.

Speaker Change: We are focused on innovation and execution and we believe we are in a stronger position than ever to realize our strategic vision of becoming a platform company.

Speaker Change: Our goal of delivering speed, scale, and services paying off in demonstrated efficiencies, top line lift, and the reason for it all, a differentiated customer experience.

Speaker Change: Together with our customers, our vendor partners, and Ingram Micro Team members, we are well positioned to navigate the volatility in the short term, while continuing to focus on our long-term roadmap as we have many times and more than our 45 years as a market leader.

Paul Bay: Our ability to remain nimble and responsive to the needs of our ecosystem has allowed us to perform better than the overall market. We are confident that through the strength of our dedicated Ingram Micro team members, our symbiotic relationships in the channel, and the depth of our innovation, we will continue to provide a differentiated customer experience.

Speaker Change: Our ability to remain nimble and responsive to the needs of our ecosystem has allowed us to perform better than the overall market.

Speaker Change: We are confident that through the strength of our dedicated in-your-micro team members, our symbiotic relationships in the channel, and the depth of our innovation, we will continue to provide a differentiated customer experience.

Paul Bay: And with that, I'll turn the call over to Mike. Mike?

Speaker Change: And with that, I'll turn the call over to Mike. Mike, thank you, Paul, and good afternoon everyone. I want to start by reiterating Paul's comments that we are very pleased with our performance in the first quarter, driving notable growth in both top line and profitability. As I will cover shortly for the second quarter, we also expect a similar trend in this as we saw in Q1. But with continued overall growth as we navigate the uncertainties of the macro and trade environment. Before I further this.

Michael Zilis: Thank you, Paul, and good afternoon, everyone. I want to start by reiterating Paul's comment that we are very pleased with our performance in the first quarter, driving notable growth in both top line and profitability. As I will cover shortly for the second quarter, we also expect a similar trend in the mix as we saw in Q1, but with continued overall growth as we navigate the uncertainties of the macro and trade environments.

Michael Zilis: Before I turn to the specifics of our results and guidance, let me touch on some detail as to how we see the tariff environment and its impacts. As most of you know, we passed through crisis pieces related to tariffs, but in the rest of our systems, we expect that overall demand may be impacted as uncertainty around policies and tariffs must impact this challenge. This is worth pointing out that we have successfully operated in an elevated environment, at least to some degree, for the most part of the last five years. In the US, we are not the important record on the majority of products we purchase, and therefore we do not issue tariffs.

Speaker Change: I'm going to talk a little bit about the specifics of our results and guidance. Let me touch on some detail as to how we see the tariff environment and its impacts. As most of you know, we passed through financial increases related to tariffs, but, in the rest of our ecosystem, we expect that overall demand may be impacted by uncertainty around policies and tariffs. Most of the impact is channeled, so this is reporting out that we have successfully operated in an elevated tariff environment, at least to some degree, for the first part of the last year.

Michael Zilis: We continue to monitor and assess pricing behaviors among vendors while we drive our own dynamic pricing model around them. A pass-through nature of our business still exists, even where tariffs are in fact embedded in the pricing of the products we purchase.

Michael Zilis: Outside of the US, the impact of tariffs depends on whether or not we choose to raise the level of tariffs, as well as the impact of potential inflation brought on by this crisis. We are collaborating with our vendors to maintain a tariff impact at a skewed level for more efficient decision-making. We believe our increased automation and AI capabilities enable us to be more nimble in responding to changes.

Speaker Change: outside of the U.S. on the impact of tariffs and on whether or not countries choose to raise their own tariffs, as well as the impact of potential inflation brought on by these tariffs. We are collaborating with our vendors to understand tariff impact at a skewed level for more precise decision-making. We believe our increased automation and AI-enclosed capabilities enable us to be more nimble in responding to changes.

Sorry for the confusion at this time. We are going to go live to our presenters.

Operator: Sorry for the confusion at this time we are going to go live to our presenters. We think they're spot on, yeah.

Let's think there's body out, body out.

Operator: Presenters, you are live now.

Presenters, you are live now.

Michael Zilis: Hey, sorry, we understand there was some audio difficulties once I picked up from Paul, so I'm just going to pick back up from the start on our prepared remarks, and we'll go from there. Okay, so I'm going to start by reiterating Paul's comment that we are very pleased with our performance in the first quarter, driving notable growth in both top line and profitability. As I will cover shortly, for the second quarter, we also expect a similar trend and mix as we saw in Q1, but with continued overall growth as we navigate the uncertainties of the macro and trade environment.

Speaker Change: Hey, I'm sorry. I understand there was some audio difficulties at once. I picked up from Paul. So I'm just going to pick back up from the start on our prepared remarks and we'll go from there. Okay, so

Speaker Change: I'm going to start by reiterating Paul's comment that we are very pleased with our performance in the first quarter, a driving notable growth in both top line and profitability.

Speaker Change: As I will cover shortly, for the second quarter we also expect a similar trend in mix as we saw in Q1 but within continued overall growth as we navigate beyond certainty for the macro and trade environment.

Michael Zilis: Before I turn to the specifics of our results and guidance, let me touch on some detail as to how we see the tariff environment and its impact. As most of you know, we pass through price increases related to tariffs, but like the rest of our ecosystem, we expect that overall demand may be impacted as uncertainty around these policies persists. Modeling this impact is challenging, but it's worth pointing out that we have successfully operated in an elevated tariff environment, at least to some degree, for the better part of the last nine years. In the U.S., we are not the importer of record on the vast majority of our products that we purchase, and therefore we bear very few tariffs to record.

Speaker Change: Before I turn to the specifics of our results and guidance, let me touch on some detail as to how we see the terror environment and the impacts.

Speaker Change: As most of you know, we passed through price increases related to tariffs, but like the rest of our ecosystem, we expect that overall the man may be impacted as uncertainty around these policies persists.

Speaker Change: Modeling this impact is challenging, but it's work pointing out that we have successfully operated in an elevated tariff environment, at least to some degree, for the better part of the last nine years.

Speaker Change: In the U.S., we are not the importer of record on the vast majority of our products that we purchase. And therefore, we go very few tariffs directly.

Michael Zilis: We continue to monitor closely and discuss the pricing behaviors of our vendors while we drive our own dynamic pricing models around. But the pass-through nature of our business still exists, even where tariffs are indirectly embedded into the pricing of products we purchase. Outside of the U.S., the impact of tariffs will depend on whether other countries choose to raise their own tariffs, as well as the impact of potential inflation brought on by this environment. We are collaborating closely with our vendors to understand tariff impacts at a skew level for more precise decision making. We believe our increased automation and AI capabilities enable us to be even more nimble in response to changes in the pricing and demand environments than we have in the past.

Speaker Change: We continue to monitor closely that and discuss the pricing behaviors of our vendors while we drive our own dynamic pricing models around us.

Speaker Change: For the past three years of our business still exists, even where tariffs are indirectly embedded into the pricing of products we purchase.

Speaker Change: Outside of the U.S., the impact of terrorists will depend on whether other countries choose to raise their own terrorists, as well as the impact of potential inflation brought on by this environment.

Speaker Change: We are collaborating closely with our vendors to understand tariff impact at a skew level for more precise decision-making.

Speaker Change: We believe our increased automation and AI capabilities enable us to be even more nimble in response to changes in the pricing and demand environments than we have in the past.

Michael Zilis: That said, our Q2 guidance reflects the potential impact of tariffs and the macro environment as a prudent reflection of what we see today.

Speaker Change: That says our Q2 guidance reflects the potential impact of terrorists and the macro environment as a prudent reflection of what we see today.

Michael Zilis: Now, turning to the first quarter results. Net sales of $12.28 billion were up 8.3% year-over-year in U.S. dollars and up nearly 11% on an FX-neutral basis. Net revenue mix was similar to the fourth quarter from a line of business, geographical, and customer category perspective. We saw sales of client and endpoint solutions growing most robustly at nearly 15% on an FX-neutral basis. However, we also saw year-over-year growth in Q1 in each of our four lines of business, including our advanced solutions and cloud categories, driven by servers and cybersecurity, but also, notably, networking, which returned a low single-digit growth after multiple quarters of year-over-year top-line pressure, as we've discussed in prior quarters.

Now, turning to the first quarter results.

Speaker Change: Maxil with $12.28 billion were up 8.3% year over year in US dollars and up nearly 11% on an up 8.3% year over year in US dollars and up 8.3% year over year in US dollars and up 8.3% year

Speaker Change: That revenue mixed with similar to the fourth quarter, from a line of business, geographical and customer category perspective.

Speaker Change: We saw sales and cried and employed solutions growing most robustly at nearly 15% on an

Speaker Change: However, we also saw a year over your growth in Q1 in each of our four lines of business including our advanced solutions and cloud categories.

Speaker Change: driven by servers and cybersecurity, but also notably networking, which returned to low single-digit growth after multiple quarters of year-over-year top-line pressure as we discussed in prior quarters.

Michael Zilis: Geographically, we saw continued strength in lower cost to serve and lower margin geographies, particularly in Asia Pacific. However, North America amplified its return to a growth trajectory from the fourth quarter, driving double-digit growth in the first quarter. From the perspective of our customer categories, large corporate and enterprise sales again outpaced higher margin SMB sales, which remain more muted as near to midterm macro uncertainty continues.

Speaker Change: Geographically, we saw continued strength in the lower cost to serve at lower margin geographies, particularly in Asia Pacific.

Speaker Change: I want to let America amplify its return to a growth trajectory from the fourth quarter, driving double visit growth in the first quarter.

Speaker Change: From the perspective of our customer categories, large corporate and enterprise sales again outpaced higher margin SMB sales, which remain more muted as new to midterm macro uncertainty continues.

Michael Zilis: As a result of these mixed factors, and as expected, overall gross margins were down 62 basis points versus prior year. Longer term, we expect that higher margin net sales from advanced solutions and cloud products will become a greater percentage of the overall top line, driving gross margin improvement. As an example, our cloud business, wirely about 1% of our net sales, contributed nearly 15% of total gross profit in the first quarter of this year, up from 13% a year ago. Turning to our regional segments, North America net sales were $4.43 billion, up 10.4% year-over-year on an FX-neutral basis, driven by double-digit growth in client and endpoint solutions, but also by more than 7% growth in advanced solutions.

Speaker Change: As a result of these mixed actors, and as expected, overall worse margins were down 62 basis points versus prior year.

Speaker Change: Long return, we expect that higher margin net sales from advanced solutions and cloud products will become a greater percentage of the overall top line, driving gross margin improvement.

Speaker Change: As an example, our cloud business, widely about 1% of our net sales, contributed nearly 15% of total gross profit in the first quarter of this year, up from 13% a year ago.

Speaker Change: Turning to our regional segments, North American net sales were $4.4 trillion, up 10.4% year-over-year on an FX neutral basis, driven by double-digit growth in client and endpoint solutions, and also by Maryland's 7% growth in advanced solutions.

Michael Zilis: Consistent with my earlier global comment, our sales in North America were more concentrated in large corporate and enterprise customers. AMIA net sales of $3.42 billion were up 0.6% year-over-year on a U.S. dollar basis and up 3.0% on an FX-neutral basis, also driven by client and endpoint solutions, as well as by very strong double-digit growth in cloud. This was partially offset by soft or advanced solutions demand environment, particularly in Western Europe markets, as we expected. Asia Pacific had our strongest growth in Q1, with net sales of $3.62 billion, up 20.1% year-over-year in U.S. dollars, and up 23.2% on an FX-neutral basis.

Speaker Change: Consistent with my earlier global comment, our sales in North America were more concentrated in large corporate and enterprise customers.

Speaker Change: Amea net sales of $3.42 billion were up 0.6% year-over-year on a U.S. dollar basis, but up 3.0% on an FX neutral basis, also driven by climate and point solutions, as well as by very strong double-digit growth in cloud.

Speaker Change: This was partially offset by software advanced solutions demand environment, particularly in Western Europe markets as we expected.

Speaker Change: Basic decision had our strongest growth in Q1, with net sales of $3.62 billion of 20.1% year-over-year in US dollars, and up 23.2% on an FX neutral basis.

Michael Zilis: India, which we discussed in depth last quarter, is trending as expected as we rebuild the go-to-market team and refocus the organization with the expectation of improvements in margin and continued top-line growth in the back half. As we sit here now in early May, we are seeing the hyper-competitive market in India that we discussed in early March starting to stabilize a bit. Even in this more challenging market, we drove mid-single-digit FX neutral growth in our India business in Q1. From a line of business perspective, Asia-Pacific saw double-digit growth across client and employee solutions, advanced solutions, and cloud, leading to the strong overall top-line growth I just noted.

Speaker Change: India, which we discussed in depth last quarter, is trending as expected as we re-build the Go-to-market team and refocus the organization with the expectation of improvements in margin and continue top-line growth in the back-task.

Speaker Change: As we sit here now in early May, we are seeing the hyper competitive market in India that we discussed in early March starting to stabilize a bit.

Speaker Change: Even in this more challenging market, we drove mid-single visit affects mutual growth in our India business in Q1.

Speaker Change: From a line of business perspectives, Asia-Pacific saw double-digit growth across client and endpoint solutions, advanced solutions, and cloud. We can do the strong level of top line growth, I just note it.

Michael Zilis: The client and endpoint solutions growth is particularly accentuated by very strong double-digit growth in lower-margin mobility device sales in a few markets within the region.

Speaker Change: The crime and end point solutions growth is particularly accentuated by very strong double-digit growth in lower margin mobility device sales in a few markets within the region.

Bye.

Michael Zilis: Latin American net sales were down 8.5% in U.S. dollars at $803 million, but down only 0.3% in constant currency. Somewhat consistent with what we saw in the fourth quarter, and reflective particularly of strength in cloud, offset by a more neutral performance in client and endpoint solutions, and a slight decline in advanced solutions.

Speaker Change: Land American net sales were about 8.5% in U.S. dollars at $803 million, but down only 0.3% in cost and currency.

Speaker Change: So mental distancing with what we saw on the fourth quarter and reflected particularly of strength and cloud offset by a more neutral performance in client and employee solutions and a slight decline in advanced solutions.

Michael Zilis: First quarter gross profit came in at $829 million or 6.75% of net sales. While this is down year-over-year on the mix and India market factors that I've already discussed, we are generally seeing margin rate hold fairly steady to slightly down on like-for-like categories of products and customers in a generally heightened competitive environment.

Speaker Change: There's clear to gross profit came in at $829 million or 6.75% of net sales.

Speaker Change: While this is down year-over-year on the mix and India market factors that I've already discussed, we are generally seeing margin rate holds fairly steady to slightly down on light-for-light categories of products and customers in a generally heightened competitive environment.

Michael Zilis: U.N. operating expenses were $628 million, or 5.11% of net sales, compared to 5.87% in the same period last year. This year-over-year improvement in OpEx leverage is driven largely by the significant cost actions we have taken over the last two years, including actions we announced in December 2024. However, this leverage is also a result of a higher concentration of sales and client and endpoint solutions, where our cost to serve has historically been lower, and where the automation we have brought to the table with xVantage is creating even better leverage today. For the full fiscal year 2025, we expect OpEx as a percentage of net revenue to remain above 5% as we continue to invest in our ExVantage platform, but also in personnel around our strategic priorities, including technical go-to-market skills to address our higher-margin advanced solutions and cloud businesses.

Speaker Change: Do you want operating expenses for $628 million or 5.11% of net sales compared to 5.87% in the same period last year?

Speaker Change: This year, when you're improving in optics, leverage has driven largely by the significant cost actions we have taken over the last two years, including actions we announced in December of 2024.

Speaker Change: However, this leverage is also a result of a higher concentration of sales and client and employee solutions where our cost to serve has historically been lower and where the automation we have brought to the table with X-manage is creating even better leverage today.

Speaker Change: For the full fiscal year 2025, we expect the OPEX as a percentage of net revenue to remain about five percent as we continue to invest in our X-Vantage platform.

Speaker Change: But also in personnel around our strategic priorities, including technical growth and market skills to address our higher margin, advanced solutions, and cloud businesses.

Michael Zilis: As discussed in our March earnings call, on a longer-term basis, we expect our annual run rate of OPEX as a percentage of net sales will fall below 5% as we realize efficiencies and hit more steady state with expanded. Adjusted income from operations was $229 million, and adjusted income from operations margin was 1.87% compared to 1.96% in the first quarter of 2024, as our strong op-ex leverage offset a majority of the mixed-driven decline in gross margins year over year. Non-GAAP net income in the quarter was $144 million compared to $135 million in Q1 of 2024, an increase of nearly 7% in U.S.

Speaker Change: As discussed in our most earnings call on a longer term basis, we expect our annual run rate of op-EX as a percentage of net sales will fall below 5%. As we realize efficiencies and look more steady state with X-Vanage.

Adjust the income from operations was $229 million.

Speaker Change: and adjusted income from operations margin was 1.87% compared to 1.96% in the first quarter of 2024, as our strong offense leverage offset a majority of the mixed driven decline in gross margins year-over-year.

Speaker Change: non-GAAP net income in the corner with $144 million.

Compared to 135 million dollars in Q1 of 2024.

Speaker Change: An increase of nearly 7% in U.S. dollars, and more than 11% in cost and currency. As we also benefited year-over-year from a $13 million decrease in that interest expense on debt repayments, which I will cover in more detail shortly.

Michael Zilis: dollars and more than 11% in constant currency, as we also benefited year-over-year from a $13 million decrease in net interest expense on debt repayments, which I will cover in more detail shortly. Our non-GAF diluted EPS was $0.61 per share at the high end of our guidance for Q1. We continue to drive strong working capital management with Q1 working capital days at 29 compared to 33 days in the same period of 2024. The improvement reflects our focus on cash conversion, driven by disciplined management of our terms with and payments to vendors, as well as strong receivable collection efforts, more than offsetting some targeted investment in inventory to capture market opportunities, all while navigating tariff uncertainties and keeping working capital optimization front and center.

Speaker Change: Armand FDWD-DPS with 61 cents per share at the high end of our guidance for Q1.

Speaker Change: We continue to drive strong working capital management with Q on working capital days at 29 compared to 33 days in the same period of 2024.

Speaker Change: The improvement reflects our focus on casting version driven by discipline management of our terms with end payments to vendors, as well as strong receivable collection efforts.

Speaker Change: More than offsetting some targeted investment in inventory to capture market opportunities, all are navigating tariff uncertainties and keeping working capital optimization from

Michael Zilis: Adjusted free cash flow with an outflow of $159 million in the first quarter, which is in line with our seasonal expectations and indicative of some pre-buying that we did in anticipation of tariffs, as well as the overall growth in the business. The counter-cyclicality of our business may drive some continued working capital investment as we grow. However, this is always with return on investment in mind, and we remain committed over time to get to a mark of 30% or more of our adjusted EBITDA, dropping down to free cash flow on an annual basis. Subseasonality of investment in working capital will make this metric more volatile on a quarter-to-quarter basis.

Speaker Change: A gestive pre-tash blow with an outflow of $159 million in the first quarter, which is in line with our seasonal expectations, and a thicketed of some pre-bying that we did in anticipation of tariffs, as well as the overall growth in the business.

Speaker Change: The cancer sickle towerly of our business may drive some continued working capital investment as we grow. However, this is always with return on investment in mind and we remain committed over time to get to a mark of 30% or more of our executive at the dropping down to free cash flow on an annual basis.

Speaker Change: The seasonality of investment in working capital will make this metric more volatile on a quarter to quarter basis.

Ananda Baruah, Willa McManmon, Erik Woodring, Paul Bay, Ingram

Michael Zilis: As we think about our use of the balance sheet to support the market, I'd like to take a few moments to highlight our strategy around channel financing. In addition to our traditional trade credit, we also offer a number of dedicated channel financing solutions to help our partners manage through rising technology costs, multi-year subscription arrangements, and a higher focus on cash flow optimization. What sets our channel financing model apart is that it is not burdening our balance sheet. We leverage a global network of specialized funding partners to deliver flexible financing solutions tailored to our customers and partners' cash flow needs.

Speaker Change: As we think about our use of the balance sheet to support the market, I'd like to take a few moments to highlight our strategy around Channel Finance.

Speaker Change: In addition to our traditional trade credit, we also offer a number of dedicated channel financing solutions to help our partners manage through rising technology costs, but the year subscription arrangements and a higher focus on cash flow optimization.

Speaker Change: With Cephar Charter Foundation Model Apart, is that it is not burdened in our balance sheet.

Speaker Change: We leverage a global network of specialized funding partners to deliver flexible piloting solutions tailored to our customers and partners' cash flow needs.

Michael Zilis: This allows customers to invest in IT without large upfront outlays and helps vendors secure longer-term commitments. Revenue volume supported by our channel financing model has more than doubled over the past four years, now driving hundreds of millions in annual revenue and a creative margin, while preserving working capital discipline and a seamless channel experience.

Speaker Change: There's a lot of customers to invest in IT without large upfront outweighs and how these vendors secure raw return to

Speaker Change: Revenue Ryland supported by our channel, by nothing model, has more than doubled over the past four years, now driving hundreds of millions in an annual revenue and a creed of margin while preserving working capital discipline and a seamless channel experience.

Michael Zilis: Back to cash flows and balance sheet, in late March, we paid down an incremental $125 million of our term loan balance, bringing our total repayment on term loans to $1.69 billion since 2022, and bringing our net debt to adjusted EBITDA ratio to 2.0 times to close Q1, improved notably from 2.3 times in the first quarter of last year. We also paid our first quarterly dividend in Q1, returning $17.4 million to stockholders during the quarter and we are proud to have announced today a 2.7% increase to that quarterly dividend to be paid in Q2.

Speaker Change: Graphic cashflowers in Baruah Sheet. In late March, we paid down an incremental $125 million of our term loan balance, bringing our total repayment on term loans.

Speaker Change: to $1.69 billion since 2022 and bringing our net debt to adjusted EBITDA ratio to 2.0 times to close Q1, improved notably from 2.3 times in the first quarter of last year.

Speaker Change: We accept paid our first quarterly dividend in Q1 returning $17.4 million to stockholders during the quarter and we have probably an amount today, a 2.7% increase to that quarterly dividend to be paid in Q2.

Michael Zilis: Now shifting to our guidance for Q2, let me preface this by saying our guidance is based on how we see the market today. But as we all see, this is changing almost daily in some regards. With this in mind, we are guiding to net sales of $11.77 to $12.17 billion, which represents year-over-year growth of nearly 4% at the midpoint. We expect second quarter gross profit of $800 to $850 million, which would represent gross margins a bit under 7% as some of the similar geographic product and customer category mix factors continue into Q2. We expect non-gap diluted EPS to be in the range of $0.53 to $0.63 per diluted share, which would be an increase of $0.04 per share, or more than 7% growth at the midpoint.

Speaker Change: Now, shifting to our guidance for Q2, let me preface this by saying our guidance is based on how we see the market today.

Speaker Change: But as we all see, this is changing almost daily in some of the guards.

Speaker Change: With this in mind, we are guiding to net sales of $11.77 to $12.17 billion, which represents you over your growth of nearly 4% at the midpoint.

Speaker Change: We expect a second quarter of gross profit of $800 to $850 million, which would represent gross margins of 307% of some of the similar geographic products and customer category mixed factors continue into Q2.

Michael Zilis: This guidance is also reflective of some heightened inventory investment in the interim months of Q2 as a result of buy-in opportunities ahead of potential tariffs, which in turn drive slightly higher interest expenses. Our EPS guidance assumes weighted average shares outstanding of approximately $235.2 million and a non-GAAP tax rate of 29.1%. Our Q2 guidance considers our current views on the macro and tariff environment, including trends in pre-buy and the 90-day respite on tariffs on many countries. We continue to see, we continue today to see healthy activity and remaining and we remain particularly enthusiastic about a continued demand environment and advanced solution.

Speaker Change: This guidance is also reflected of some high-food inventory investment in the interim months of Q2 as a result of buy and opportunities ahead of potential tariffs, which in turn drives slightly higher interest expense.

Speaker Change: Our EPS guidance assumes weighted average shares outstanding of approximately $235.2 million and a non-GAAP tax rate of 29.1%.

Speaker Change: Our YouTube guide us considers our current views on the macro and tariff environment, including trends in pre-bio and the 90-day respite on tariff on many countries.

Speaker Change: We continue to see, we continue today to see helping activity and remaining, and we remain particularly enthusiastic about a continued demand environment and advanced solutions.

Michael Zilis: We are weighing this with the potential for price increases related to tariffs and some extension in the sales cycle where some customers wait to see how the environment evolves as they consider their overall capital spend decision. Such expenses are particularly true in the higher profit SMB space, which is generally more sensitive to potential inflationary factors. This is where we are confident, however, that our investments in innovation are bearing fruit in terms of leverage, efficiency, and top-line acceleration through this market. We will continue to engage with our vendor partners and customers. to quickly navigate changes in the demand and pricing environments as we focus on the success of our partners and our team.

Speaker Change: But we are weighing this with the potential for price increases related to tariffs and some extension in the sales cycle where some customers wait to see how the environment evolves as they consider their overall capital spend decisions.

Speaker Change: Such expenses are particularly true in the higher-profit SMB space, which is generally more sensitive to potential inflationary factors.

Speaker Change: This is where we are confident, however, that our investment and innovation are bearing through in terms of leverage, efficiency, and top-line acceleration through this market.

Speaker Change: We will continue to engage with our vendor partners and customers to quickly navigate changes into demand and pricing environments as we focus on the success of our partners and our team.

Operator: With that we can now open the call to questions. Operator? If you would like to ask a question at this time, please press star, then the number 1 on your telephone keypad now. You will be placed into the queue in the order received. Please be prepared to ask your question when prompted. Once again, if you have a question you'd like to ask at this time, please press star, then the number 1 on your telephone keypad now.

Speaker Change: With that, we can now open the call to questions. Operator?

Speaker Change: If you would like to ask a question at this time, please press star then the number one on your telephone keypad now.

Speaker Change: You will be placed into the queue in the order received. Please be prepared to ask your question when prompted. Once again, if you have a question you'd like to ask at this time, please press star then the number one on your telephone keypad now.

Sameek Chatterjee: Your first question comes from Sameek Chatterjee with J.P. Morgan. Your line is open. Hi, thanks for taking my question. Maybe if I can start off with sort of the macro geared comments that you've had here and I'm interested to hear, I know you mentioned SMB is a bit weaker and for the larger enterprises, if I understood you correctly, you're expecting to see maybe a bit more sort of longer cycles, but still more moderate sort of reaction to the macro. But maybe if you can just flesh that out a bit more and why shouldn't we expect maybe larger enterprises to eventually follow directionally where the SMB weakness is?

Speaker Change: Your first question comes from Simeek Chatterjee with J.P. Morgan. Your line is open.

Sameek Chatterjee: Hi, thanks for taking my question. Maybe if I can start up with some of the macro related comments that you've had here, and I'm interested to hear. I know you mentioned SMBs a bit weaker, and...

Sameek Chatterjee: for the larger enterprises, if I understood you correctly, you're expecting to see maybe a bit more sort of longer cycles but still more moderate.

Sameek Chatterjee: sort of reaction to the macro, but maybe if you can just flesh that out a bit more and why shouldn't we expect maybe larger enterprises to eventually follow directionally where the SMB weakness is, what are you seeing in terms of maybe large projects and intent from large enterprises to continue with the large projects related to IT infrastructure and what's giving you confidence on that front and I will follow up. Thank you.

Sameek Chatterjee: What are you seeing in terms of maybe large projects and intent from large enterprises to continue with the large projects related to IT infrastructure and what's giving you confidence on that front? And I will follow up. Thank you.

Sameek Chatterjee: Yeah, so I can jump in, this is Paul. Thank you for the question. If we look at it, you may have heard us talk as we were actually in 2024 and are loud.

Paul Bay: Yeah, so I can jump in. This is Paul. Thank you for the question.

Paul Bay: If we look at it, you may have heard us talk as we were exiting 2024 and our last call was SMB, had some headwinds, and so there was still, it was down for the quarter, but if you look at it, it was actually improving year over year, so we are seeing some green shoots relative to some pockets where we're seeing improvement on that. In that large enterprise business and conversation with customers and we look at our pipeline, the demand continues to be strong and we think that that's going to continue based off the conversations we've had thus far, both with our customers and with our vendor partners also.

Sameek Chatterjee: Call with F&B, had some headwinds and so there was still it was down for the quarter.

Sameek Chatterjee: But if you look at it, it was actually improving year-over-year, so we are seeing some green shoots relative to some pockets where we've seen improvement on that. And that large enterprise business and conversation with customer and we look at our pipeline that the demand continues to be strong.

Sameek Chatterjee: And we think that that's going to continue based off the conversations we've had thus far both with our customers and with our vendor partners also.

Sameek Chatterjee: Got it, got it.

Sameek Chatterjee: And then maybe for the quarter and

Sameek Chatterjee: And then maybe for the quarter and related to both 1Q and 2Q, if you can start by with maybe helping us with when you think about the mix between client solutions related to advanced solutions, how was the, how did the mix track between those expectations for 1Q and what are you embedding in there, embedding in terms of mix for 2Q in terms of your expectations, and how much of that client solution strength are you treating as a pull forward from the second half? Thank you. Yeah, so this is Paul again.

Sameek Chatterjee: related to both 1Q and 2Q, if you can start by with maybe helping us with when you think about the mix between...

Sameek Chatterjee: Client Solutions, Real Retreat, Juan Solutions. How did the mix track between those ready for your expectations were 1Q? And what are you embedding in there? Embedding on terms of mix for 2Q in terms of your expectations? And how much of that Client Solutions trend are you creating as it pulled forward from the second half? Thank you.

Sameek Chatterjee: This is Paul again, I'll let Mike jump in, relative to kind of the mix of our client and point solutions business for form very well as we talked about.

Paul Bay: I'll let Mike jump in. Relative to kind of the mix, our client endpoint solutions business performed very well as we talked about the refresh happening and the desktop and notebook, so that was very strong. Our smartphones was also strong within that category. Advanced solutions, I'm proud to say, and we were pretty accurate coming out of the last call on networking because we had talked about that we had double digits for fiscal 2020, I think 2024, and the expectation both that we saw in our pipelines and the key indicators we were seeing in our business that we thought that it was going to start making a turn, and I know the likes of IDC that there's going to be growth on the networking business.

Sameek Chatterjee: The Refresh Happening and the Desktop and Notebook, so that was very strong.

Our smartphones were also strong within that category, advanced solutions.

Sameek Chatterjee: I'm proud to say, and we were pretty accurate coming out of the last call on network because we talked about that we had double digits for Fiscal 2020, vaccine 2024 and the expectation both that we saw on our pipelines and the key indicators we were seeing.

Sameek Chatterjee: In our business that we thought it was going to start making a turn and I know the likes of IDC, so there's going to be growth on.

Sameek Chatterjee: On the end, networking business. So we just won't see low single digit growth.

Michael Zilis: So we did see low single digit growth in Q1, and our server business continues to perform well, and cybersecurity remains healthy also. That said, with regard to what we're putting in our guide for Q2, we don't see a dramatic shift in terms of the product mix. We do think from a system standpoint, it may not be as heightened as it was in Q1, but we definitely see strong growth in that category and not a dramatic mix relative to any other topics I just mentioned.

Sameek Chatterjee: in Q1 and our server business to continue to perform well in cyber security remains healthy also. That said, with regard to what we're putting in our guide for Q2, we don't see

Sameek Chatterjee: We do think from a system standpoint, it may not be as heightened as it was in Q1, but we definitely see strong growth in that category and not a dramatic mix.

Sameek Chatterjee: Relative to me as a topic I just mentioned, Michael, if you have any other comment on that? Yes, I think the only thing I would just add, yeah, I think the big factor is we're assuming that slightly lower climate end point. You see, not the solid double digit, we just close with no almost 15% growth.

Michael Zilis: Mike, I don't know if you have any other comments on that. Yes, I think the only thing I would just add, yeah, I think the big factor is we're assuming a slightly lower client end point piece, not the solid double digit we just closed with almost 15% growth in Q1 in our Q2 guide, but we're considering still some growth in advanced solutions, certainly growth in cloud, and then I think as Paul touched on on the client, I'm sorry, on the customer side of the spectrum, it has been the case for the last two quarters. We see the large enterprise customers, and we're continuing to take a conservative view on where SMB goes, because as I said in my prepared remarks, we still see quite a bit of more mutedness there since that is a group of end user customer base that's going to be more susceptible to an inflationary or God forbid, a recessionary environment, and therefore, we take a closer look on that as to how we see the customer end of the spectrum growing, and we believe that we will still be more concentrated in the lower margin, large enterprise customers.

Sameek Chatterjee: in Q1 and RQ2 Guide, but we're considering, you know, still some growth in advanced solutions certainly growth in cloud, and then I think as Paul puts down on the client, I'm sorry on the customer side of the spectrum.

Sameek Chatterjee: It has been the case for a lot of two quarters. We see the large enterprise customers who are just taking up. We're continuing to say a conservative view on where SMB goes, because as I said in my prepare remarks, we still see...

Sameek Chatterjee: Quite a bit of, you know, more mutedness there since that is a group of end user customer base that's going to be more susceptible to an inflationary or...

Sameek Chatterjee: We got a recessionary environment and therefore we take a closer look on that as to how we see the customer end of the spectrum growing and we believe that we will still be more concentrated in the lower margin large enterprise customers.

Okay, thank you. Thanks for taking questions.

Sameek Chatterjee: Thank you.

Erik Woodring: Your next question comes from Erik Woodring with Morgan Stanley. Your line is open. Super, thank you for taking my questions guys and congrats on the quarter. I just want to follow up on Tom's question there. Just if you could maybe Mike help us kind of size the pull forward that you saw in one cue, like if we were to think about the upside relative to the midpoint of your one cue guidance, is that how we should gauge the pull forward or what's the right way to think about that and how are you then taking that into account in your two cue guide?

Eric Woodring: Your next question comes from Erik Woodring with Morgan Stanley . Your line is open.

Eric Woodring: Super, thank you for taking my questions guys and congrats on the quarter. I just want to follow up on Tomic's question there.

Eric Woodring: of your One Q Guidance. Is that how we should gauge the poll forward? Or what's the right way to think about that? And how are you then taking that into account in your 2Q guide? If I just look at it, it looks like you're guiding down about 2 percentage points sequentially.

Erik Woodring: If I just look at it, it looks like you're guiding down about two percentage points sequentially. History shows you're kind of flat to up and so just if you could help us understand that dynamic and how it influences your two cue guide, that would be super helpful. And then a quick follow-up.

Eric Woodring: History shows you're kind of flat to up and so, if you get help us understand that dynamic and how it influences your two kids, that would be super helpful. And then a quick follow up, please.

Paul Bay: Yeah, Erik, I'll start. It's Paul. So, the Q1 pull-forwards, with regard, it was, we did see slight, but I would call it not material. And it was really, I want to be clear about this too, it was really around the PC refresh and not the other products. As we talk about growth and some of the other categories, that wasn't a pull-forward. So, if there was a pull-forward, that we'll see, it was in really that PC refresh. If you look at it from a customer's perspective, it was kind of a mixed bag. There were some pull-forwards in Q1, advance of the tariffs, kind of what we saw in our business, and the customers would also say there was, from an RFP, RFQ, kind of inbound, kind of longer term.

Eric Woodring: Yeah, Erik, I'll start, it's fall. So the Q1, it pulled forwards.

Speaker Change: With regard to it, we didn't see each light, but I would call it not material. And it was really, I want to be clear about this too, it was really around the PC refresh.

Speaker Change: and not the other products as we talk about growth in some of the other categories, that wasn't a poll forward, so if there was a poll forward that we'll see.

Speaker Change: It was in really that PC refresh. If you look at it from a customer's perspective, it was kind of a mixed bag. There were some pull forwards in Q1, advance to the tariffs, kind of what we saw in our business.

Speaker Change: And the customers would also say there was from an RFPR of Q kind of inbound, kind of longer term. Those projects were delayed that they weren't.

Michael Zilis: Those projects were delayed, but they weren't canceled, and the expectation is budgets aren't moving. So, all the feedback that we're getting is that it's still, they're still relevant, and with the pricing uncertainty, it's kind of those longer term ones. I would say neither of those were enough in Q1 to constitute what I would define as a trend. And the question on Q2, guys, and I'll let Mike jump in, it assumes a continued PC refresh, Mike touched on it, more in the mid-single digits, in terms of what we're looking at from a growth rate perspective that we built into the Q2 guide.

Speaker Change: and the expectation that budgets aren't moving. So all the feedback that we're getting is that it's still relevant.

Speaker Change: And with the pricing uncertainty, it's kind of those longer term ones.

Speaker Change: I would say neither of those were enough in Q1 to constitute what I would define as a trend. And the question on Q2 guys and all that might jump in is assume to continue PC refresh my touch on it. More on the mid-single digits.

Speaker Change: In terms of what we're looking at from a growth rate perspective that we built into the Q2 guy. Yeah, so Erik, you pointed out about a 2% roughly decline sequentially, that's right, and I think it is.

Michael Zilis: Yeah, so, Eric, you pointed out about a 2% roughly decline sequentially. That's right, and I think it is. I don't want to quantify it, as Paul just said, that that's a pull-forward, because there's a lot of other factors, as Paul just hit on. But part of these factors, just coupled with, you know, potentially a little bit more overhang as we see, especially in that SMB space and Q1, is really leading to that Q1 guide and that growth factor.

Speaker Change: You know, I don't want to quantify it as Paul just said that that's that's pulled forward because there's a lot other factors as Paul just hit on but

Speaker Change: But card in these factors, just coupled with potentially a little bit more.

Speaker Change: Overhang as we see especially in that SMD space and Q1 is really reading that Q1 guide in that growth factor.

Erik Woodring: Okay, that's really helpful. Thank you for all that context. And then maybe the second question is just, you know, can you help us understand what you're seeing from a pricing perspective as we're here and kind of thinking about 2Q more so? But, you know, are you seeing vendors raising prices? If so, you know, what end markets is that most prevalent in? And how have customers responded to those prices? Could there be more to come? Again, all of that, just kind of putting the pricing environment in context, really here as we think about the last maybe five or six weeks, please.

Speaker Change: You know, can you help us understand what you're seeing from a pricing perspective as we're here and kind of thinking about 2Q more so, but, you know, are you seeing vendors raising prices if so, you know, what end markets is that most prevalent in and how have customers responded to those?

Speaker Change: to those prices, could there be more to come? Again, all of that, just kind of putting the pricing environment in context, really here as we think about the last maybe five or six weeks, please. Thanks so much.

Erik Woodring: Thanks so much.

Paul Bay: Yes, Erik, this is Paul. I'll start. So, as it relates to pricing, there's been minimal pricing impact. If there has been some changes, it's been more around the peripherals and accessories, depending on where the impact was. And keep in mind, from an overall working capital standpoint and inventory that we already had in our system working through that. So, not especially in Q1, and even as we sit here today, in Q2, we haven't seen a lot of price raising and or changes thus far. As we kind of work through what the terrace is going to look like, I would also say, you know, today's announcement with the UK here recently is encouraging.

Yes, Erik is full, I'll start.

Speaker Change: So, as it relates to pricing, there's been minimal pricing impact. If there has been some changes it's been more around the peripherals and accessories depending on where the impact will have been keeping mine from an overall working capital standpoint and inventory that we already had in our system working through that. So, not especially in Q1 and even as we sit here today in Q2 we haven't seen a lot of price raising and or changes thus far.

Speaker Change: As we kind of work through what the terrorist is going to look like, I would also say, you know, today's announcement with the UK here recently is encouraging.

Paul Bay: And just overall, from our perspective, as you would expect, certainty and predictability is good for our business. And we've proven to be flexible and able to adapt quickly. So, we haven't seen this summarized that we haven't seen an impact from a pricing perspective and a lack of tolerance from our customers out to the end users.

Speaker Change: and just overall, from our perspective, as you would expect, certainty and predictability is good for our business and we've proven to be flexible and able to adapt quickly. So we haven't seen this summarized, and we haven't seen an impact from a pricing perspective and a lack of tolerance from our customers out to the end users.

Great. Thanks so much guys. Good luck.

Erik Woodring: Great, thanks so much guys. Good luck.

Thanks.

Ananda Baruah: Your next question comes from Ananda Baruah with Loop Capital. Your line is open. Oh yeah, thanks guys. I appreciate you taking the questions. I've got two if I could as well. The first one, I guess, is, you know, Paul and Mike, just on xVantage. And what's a good, look, you gave a lot of great metrics, so appreciate that and acknowledge it.

Speaker Change: Your next question comes from Ananda Baruah with Loop Capital. Your line is open.

Anand Perua: Oh yeah, thanks guys. I appreciate you taking the questions and yet too if I could as well. The first one I guess is you know, Paul Mike just on on on next vantage and what's a good look you gave a lot of great metrics so I appreciate that and acknowledge it and I guess

Ananda Baruah: And I guess, What I'm wondering is sort of big picture, you know, is there a good way to think about what the progress like I think Paul you said you're in like 27 to 50 something countries you know is there a useful way to think for us to think about number one kind of like ongoing progression and propagation throughout throughout sort of your target map and then you know I don't know number two a way to think about you know transaction penetration over time I guess anything useful there for us to see what you're shooting against and like I don't know what the when I say shooting against like maybe what the potential You know, and I have a quick follow up as well, though, I know that's not a quick question that first.

Anand Perua: What I'm wondering is sort of big picture, you know, is there a good way to think about?

What?

Anand Perua: The progress, like I think, Paul, you said you're in like 27 to 50-something countries. You know, is there a useful way for us to think about, number one, kind of like ongoing progression and propagation throughout sort of your target map? And then, you know, I don't know, number two, a way to think about,

Anand Perua: You know transaction penetration over time. I guess anything useful there for us to see what you're shooting against and like I don't know what the when I say shooting against like maybe what the potential is, you know, I have a quick follow up as well. I know that's not a quick question that first one.

Paul Bay: So the way we look at it, and Ananda, thanks for the question. So there's three ways we look at the metric, and there's multiple metrics, and our commitment will continue to give you visibility as we build out. So we're in 20 of our 57 countries, which we continue to deploy Xvantage and on a global basis. And keep in mind, remember, when we do something, it's number one, it's global, and it's the same experience in all 20 countries that it's deployed in. So we look at that as a differentiator, A, from our research and development and how we continue to build out, and the investment we make is we do something to the code base.

Anand Perua: So the way we look at it and on the thanks for the question, so there's three ways we look at them, and that's right.

Anand Perua: And there's multiple metrics in our commitment, as it will continue to give you visibility as we build out. So we're in 20 of our 57 countries, which we continue to deploy X-Panage and Ananda Global Basis, and keep in mind, remember when we do something, it's number one, it's global.

Paul Bay: It goes to all 20 countries right now, and the expectation is we'll continue to roll those to the rest of the world. From a user, so the three metrics that we really talk about are three different ways. One is user engagement. I talked about 12 million searches, advanced searches, so we continue to see that increase. We look at it from a financial and operational perspective, triple the self-service orders versus the prior year. This just continues to demonstrate what we're focused on, which is the customer, ease of use, taking friction and offsets out of the conversation, moving to more outbound versus inbound.

Anand Perua: I talked about 12 million searches and grant searches, so we continue to see that. Increased, we look at it from a financial and operational.

Perspective.

Anand Perua: For cool-to-self service orders versus a prior view here, this just continues to demonstrate what we're focused on, which is the customer, ease of use, taking friction and off-site hours of the conversations, moving to more outbound versus inbound, and then the third one is we look at it from a customer perspective.

Paul Bay: And then the third one is we look at it from a customer perspective. So again, you heard us last time talk about we brought on over a couple of thousand, I think was the number that I mentioned, or it was, I believe, 8,000 from a full year of 2024 is what I probably mentioned, I believe, last time. And our next call now we're seeing a couple of thousand. So this is a great opportunity for us to go reengage with partners that haven't done business with us that are what we call dormant customers. We have thousands of those also.

Anand Perua: So again, you heard this last time. Talk about what we brought on over a couple of thousand I think was the number that I mentioned, or I believe 8,000 from a fully year 2024, when I really mentioned, I believe last time. And I already know we're seeing a couple of thousand. So this is a great opportunity for us.

Anand Perua: to go re-engage with partners that haven't done business with us.

Anand Perua: that are what we call dormant cuts, and we got thousands of that as well. So, those are just a couple of metrics that we look at and then you heard me talk about.

Paul Bay: So those are just a couple of metrics that we look at. And then you heard me talk about intelligent digital assistant and what we've done to drive leverage both from an offset perspective and a revenue standpoint, both of those, which I mentioned in my prepared remarks were a double digit per head.

Anand Perua: Intelligence Digital Assistant, and what we've done to try to leverage both from an off-ex perspective and a revenue standpoint, both of those, which I mentioned in a micro-parent garage where I double-gigith per head. I didn't get a follow-on question too.

Paul Bay: I think you had a follow-on question too. Yeah, I guess the follow-up is... I'm going to loop cloud into this also. So it sounds like, I mean. These aren't your words, but I think it sounded to me like Xvantage was maybe a couple hundred million of incremental REBGEN this quarter, and sort of correct me if that's super off base. And then, Floud at 15% of gross profit dollars, 1% of net sales. Can you frame for us?

Yeah, I guess the follow up is

Anand Perua: I'm gonna loop cloud into this also, so it sounds like I mean

Anand Perua: These aren't your words, but I think it sounded to me like X-Vantage was like maybe a couple hundred million of incremental rev gen this quarter and you know sort of correct me if that's like super off goes and then cloud.

Anand Perua: at, you know, 15% of gross profit dollars, 1% in that sale. Can you frame for us the opportunity for like, ex-vanaging cloud to really repurpose the business model, right? Like if, if cloud's gonna go...

Paul Bay: the opportunity for like Xvantage and cloud to really repurpose the business model. Right. Like if, if cloud's going to go.

Anand Perua: The 2% of net sales is at some point like that's 15 to 30% of GP dollars.

Anand Perua: Right? And so anyway, that's really the question, like are we are we sitting on the beginnings of a totally repurposed business model and it's just not fully evident yet, but you guys keep doing what you're doing.

Anand Perua: You know, we're going to look in like 8 to 12 quarters and the business model is going to be really amplified. So just any thoughts there would be great. Thanks. Yeah, and I think so. I'll jump in and we're not going to disclose the numbers necessarily. What I would think about it in the future is that our company will be ex-manage.

Paul Bay: I'll jump in and we're not going to disclose the numbers necessarily. What I would think about in the future is that our company will be expanded. So we'll be talking about metrics of how we're driving share differentiation, better margin improvement, lower operating expense, and overall bottom line return to the shareholder. And some of the things, if you look at cloud, we spent $600 million in cloud, both organically and inorganically over the last 12 years. And that's the foundation for Xvantage. So we didn't start from the ground zero. And on top of those 30 patents pending, the 32 million lines of code that we put on top of that investment around cloud that I talked about in my opening comments, that's about a single experience.

So we'll be talking about all that tricks with how we're driving.

Anand Perua: Share differentiation, better margin improvement, lower operating expense and overall bottom line return to the shareholder. And some of the things if you look at cloud, we spent $600 million in cloud both organically and organically over the last 12 years. And that's the foundation for X-Mantage. So we can start from the ground zero.

Anand Perua: And on top of those 30 patents, pending the 32 million lines of code that we put on top of that investment around cloud that I talked about in my opening comments. That's about a single experience.

Paul Bay: So you're able to come to Ingram Micro and get, as I call it, a one-stop shop or a single pane of glass. We've got our hardware, software, services, and cloud all in one system. So this, in my opinion, is broader than just cloud over time. This is about consumption and how technology is going to be delivered to end businesses and how do we enable our solution providers, who's generically our customers, 161,000 customers, to go provide a better experience at a lower operating expense and effectively drive more revenue and a shorter sale cycle. Got it, got it.

Anand Perua: So you're able to come being or might throw and do it if I call a one-stop shop or a single pane of glass, or hardware software services and cloud, all in one system. So this, in my opinion, is broader than just cloud over time, is about consumption.

Anand Perua: and how technology is going to be delivered in businesses and how do we enable our solution providers, use generically our customers, 161,000 customers to go provide a better experience and a lower operating expense and effectively drive more revenue and a shorter sale cycle.

Speaker Change: Got it, got it. Okay, thanks. That's very helpful context. Appreciate it.

Ananda Baruah: Okay, thanks. That's very helpful context.

Ananda Baruah,

Ruplu Bhattacharya: Your next question comes from Ruplu Bhattacharya with Bank of America. Your line is open. Hi, thanks for taking my questions. Mike, if we look at the guide for fiscal 2Q, at midpoint revenues will be up year-on-year, but gross margin will be down. It's an interesting year because you should have this year both growth and client devices as well as advanced solutions. Based on your current forecast and backlog, as you look into the second half, do you think gross margin can grow year-on-year or should we assume that it remains pressured from a year-on-year standpoint?

Speaker Change: Your next question comes from Ruplu Vattacharya with Bank of America. Your line is open.

Speaker Change: Hi, thanks for taking my questions. Like, if we look at the guide for fiscal tool Q, at the midpoint revenues will be up here on year, but gross margin will be down. It's an interesting year because you should have this year go through and client devices as well as advanced solutions based on your current forecast and backlog as you look into the second half.

Speaker Change: Do you think Bruce Margin can grow year on year or should be assumed that it remains pressured from a year-on-year standpoint?

Michael Zilis: And then I'll ask my follow-up now as well. Can you talk about working capital? You said that you might do some pre-buys, so how should we think about inventory and pre-cash flow as we go through the rest of this year? Thanks so much. Okay, thanks, Rupul. Good questions, I guess. So, I think we're, as we said, we're really thinking about margin in the terms of mix, but it's beyond just the client and endpoint mix, which is maybe not assumed to grow as robustly as it did in Q4. We are still expecting in that model growth of advanced solutions and cloud, which is higher profit business.

Speaker Change: And then I'll ask my follow-up now as well. Can you talk about working capital? You said that you might do some pre-bites. So I'll just be thinking about inventory and pre-cash flow as we go through the rest of this year. Thanks so much.

Okay. Thanks for your good questions, I guess.

Speaker Change: So yeah, I think we're, as we said, we're really thinking about margin in the terms of mix, but it's beyond just the client and endpoint mix, which is maybe not assumed to grow as robustly as it did in Q4. We are still expecting in that model growth of advanced solutions and cloud, which is higher profit business.

Michael Zilis: But I think what we do see more consistency with is still some of the concentrations towards the large customers and SMB being, you know, more muted as a whole. And therefore, that tends to be lower margin mix. We're still also seeing more growth geographically towards our Asia-Pacific region, which is lower cost to serve, but also lower margin on the whole. So, there's multiple factors that go into that. Now, clearly, when you think about maybe the high end of our range, if we see growth coming in, but it's more concentrated towards advanced solutions, we see SMB bouncing back, absolutely, there is the potential you could see accretion in gross profit.

Speaker Change: But I think what we do see more consistency with is still some of the concentrations towards the large customers, and SMB being more muted as a whole, and therefore that tends to be where I'm out in next.

Speaker Change: We're still also seeing more growth geographically towards our Asia Pacific region, which is lower cost.

Speaker Change: to serve, but at their little margin on the whole. So there's multiple factors that go into that now. Clearly, when you think about maybe the high end of our range.

If we see growth...

Speaker Change: Coming in, but it's more concentrated towards advanced solutions. We see SMB bouncing back absolutely. There is the potential you could see accretion in growth profit.

Michael Zilis: But we're seeing, you know, more of the gross margin line stay roughly equivalent to where we were in Q1 from a historical perspective.

Speaker Change: but I will see more in the growth margin line stay roughly equivalent to where we were in Q1 from a historical perspective.

Michael Zilis: I'll answer your second question, and then can come back if there's anything I can clarify. But on the working capital front, yes, both in Q1 as well as in Q2, we are doing some pre-buys with a number of different vendors where we see opportunistic, you know, opportunities to get ahead of potential price increases. Now, the way we usually handle this is a lot of it is bought early in the quarter and it's sold during the quarter. And that was largely true, but you can see a bit of a heightened inventory balance to close the quarter.

Speaker Change: I'll answer your second question, and then can come back if there's anything I can clarify. But on the working capital front, yes, both in Q1, as well as in Q2, we are doing some pre-bites with a number of different vendors where we see opportunistic.

Your opportunity is to get ahead of a potential price increases.

Speaker Change: Now, the way we usually handle this is a lot of it is brought early in the quarter and it's served during the quarter. And that was largely true, but you can see a bit of a heightened inventory balance to close the quarter. We're pretty happy with the fact that working capital days and DIO in specifics.

Michael Zilis: We're pretty happy with the fact that working capital days and DIO in specific. would still improve year over year, despite some of those pre-buys still sitting on the balance sheet. And more importantly, we're working well with our vendors for support through the terms and conditions, and you can see that come through in the payables. So what I would think about pre-buys is we're going to continue to try and manage that as best we can and be opportunistic where the opportunities exist. But it could cause, as I said in my prepared remarks, heightened inventory investment during the interim months of our quarters.

Speaker Change: was still improved year-over-year despite some of those pre-wives still sitting on the balance sheet. More importantly, we're working well with our vendors for support through the terms and conditions, and you can see that come through in the payables.

Speaker Change: So, where I would think about pre-visors, we're going to continue to try and manage that as best we can, and the opportunity to exist.

Speaker Change: But it could cause, as I said in my prepare remarks,

Speaker Change: Highton Inventory Investment during the interim months of our quarters. And that's important only because let's say it's...

Paul Bay: And that's important only because, let's say it's a few hundred million dollars, that drives an interest carrying cost. So you just need to think about the interest expense model that that drives, but it's with a very positive return overall. And the only other thing I would say, this is Paul, and Mike mentioned it in his comments, We did do pre-buy as we just mentioned, but we also improved our working capital year over year by four days. So we think we're making the smart, right, strategic buys, and it's the right return.

Speaker Change: You have a few hundred million dollars, that drives an interest cost, an interest carrying cost, so you just need to think about the interest expense model, that that drives, but it's a very positive return overall. The only other thing I would say is this is Paul and Mike mentioned it in his comments.

Speaker Change: We did do pre-bite as you just mentioned, but we also improved our working capital year over year by four days.

Speaker Change: So we think we're making the smart right strategic buys and it's the right return.

Speaker Change: Okay, thank you for all the details, really appreciate it, it's very helpful.

Ruplu Bhattacharya: Okay. Thank you for all the details. Really appreciate it. It's very helpful.

Ananda Baruah,

Adam Tindall: Your next question comes from Adam Tindall with Raymond James. Your line is open. Okay, thanks. Good afternoon. Paul, I just wanted to start, you know, obviously we're all asking about this concept of pull-in and trying to understand some of your customers have been pretty adamant and open about the idea that there was maybe some pull-in in Q1.

Speaker Change: Your next question comes from Adam Tindle with Raymond James. Your line is open here.

Speaker Change: Okay, thanks, good afternoon. Paul, I just wanted to start. Obviously we're all asking about this concept of pulling and trying to understand some of your customers have been pretty adamant and open about the idea that there was maybe some pulling in Q1.

Adam Tindall: I guess the question might be, you know, for you, if you could maybe walk us through the cadence of the quarter and any early observations from closing the month of April, differences in month-to-month growth, you know, kind of lay out what it looks like kind of on a monthly basis so we can understand what you're seeing in the numbers and whether or not there might have been any aspect of pull-in. And then I have a follow-up. Sure. Yeah. Thanks, Adam. So from a geographic perspective, there was no major anomalies in terms of how a normal kind of quarter goes, exiting Q4 and coming into Q1, with the one exception.

Speaker Change: I guess the question might be for you, if you could maybe walk us through the cadence of the quarter.

Speaker Change: and any early observations from closing the month of April , differences in month to month growth, you know, kind of layout what it looks like kind of on a monthly basis so we can understand what you're seeing in the numbers and whether or not there might have been any aspect of pulling and then I have for sure.

Yeah.

Thanks Adam, so from a geographic perspective.

Speaker Change: There was no major anomalies in terms of how a normal kind of quarter goes.

Accidine Q4, Inc. with the one exception.

Paul Bay: We were, if you look at the EMEA region, we saw the 3% FX neutral growth, and we were very pleased with our cloud growth that we have there. And they have continued growth in CES, even with the headwinds of Western Europe, but we were pleased with the way they finished the quarter. They had a very strong finish to the quarter that I would say was a little bit, you know, more accelerated versus the other regions, which was pretty consistent month after month after month. And as we sit here today, we're seeing very much, very similar dynamics in the first part of this quarter in Q2 also.

Speaker Change: We were, if you look at the MA region, we saw the 3% FX mutual growth.

Speaker Change: and we are very pleased with our Cloud Growth that we have there. And they have continued growth and CES.

Speaker Change: Even with the headwinds of a lesser Europe , but we were pleased with the way they finished the quarter. Had a very strong finish to the quarter.

Speaker Change: That, I would say, was a little bit, you know, more accelerated versus the other regions, which was pretty consistent month after month after month, that as we sit here today, we're seeing very much very similar dynamics in the first, in the first part of those quarter and Q2 all set up.

Got it.

Michael Zilis: Maybe a follow-up for Mike, Net Debt to EBITDA is I think down to two times after the debt repayment in the quarter.

Speaker Change: Maybe follow up for Mike Netta, the EBITDA, I think, down to two times after the debt repayment in the quarter. Just if you could remind us of how you think about optimal levels of the capital structure and leverage here. And then how you're thinking about capital allocation priorities from here, obviously, you know, solve the dividend move, but maybe lump in share re-burchases, M&A, you know, kind of just revisit that whole concept for us. Thanks.

Michael Zilis: Just if you could remind us of how you think about optimal levels of the capital structure and leverage here, and then how you're thinking about capital allocation priorities from here, obviously, you know, solve the dividend move, but maybe lump in share repurchases, M&A, you know, kind of just revisit that whole concept for us. Yeah, absolutely. I think, yeah, we're pretty happy with where we've continued to drive that leverage down with quite a bit of debt repayment, as I said, almost $1.7 billion in repayments over the last three years. So, you know, we're always going to be balancing that going forward.

Speaker Change: Yeah, absolutely, Alan. I think we're pretty happy with where we continue to drive that leverage down with quite a bit of that repayment as I said, almost 1.7 billion in repayments over the last three years.

Speaker Change: We're always going to be balancing that going forward as far as optimal level of leverage. We're not far off, honestly right now.

Michael Zilis: As far as optimal level of leverage, we're not far off, honestly, right now, from where I would be happy for us to be. I think, you know, certainly we think about investment grade as an opportunity in the future, and that's challenging with the ownership structure right now. But I believe we're already in that ballpark as far as leverage goes.

from where I live.

Be happy for us to be, I think.

Speaker Change: You know, certainly we think about investment grade as an opportunity and in the future and that's challenging with the ownership structure right now.

Speaker Change: But I believe we're already in that ballpark as far as leverage goes so where we're really focused now is where's the best area for us to invest.

Michael Zilis: So, where we're really focused now is where's the best area for us to invest going forward. And if, you know, if we're more tempered in certain investments, including organic investment in Xvantage, as an example, you know, then we'll continue to repay down debt with cash flow. And then, you know, as far as return to shareholders, you know, we paid out our first quarterly dividend in Q1. We did a, you know, 2.7% increase to that dividend just announced for Q2. So, we want to make sure we're also balancing that with some continued return to shareholders. The share buybacks at some point down the road could be another arrow in that quiver, but obviously that's not a viable option right now.

Speaker Change: going forward. And if, you know, it's more of more tempered insertion, that's what's including organic investment in x-dantage.

Speaker Change: As an example, you know, then we'll continue to repay down that with cash flow and then, you know, as far as return to shareholders, you know, we just do we paid out our first quarterly dividend in Q1.

Speaker Change: We did a 2.7% increase to that dividend just announced for Q2, so we want to make sure we're also balancing that with some continued return to shareholders.

Speaker Change: We share a buyback at some point down the road and could be another arrow in that clipper but obviously that's not a viral option right now so it's really about balancing that.

Michael Zilis: So, it's really about balancing that.

Michael Zilis: M&A continues to also be a big factor. And as you know, most of our historical M&A in the last handful of years has been smaller, tuck-in acquisitions that might be tens of millions of dollars of purchase price. So, we're not really breaking the bank, so to speak, on that front. But that doesn't mean we couldn't opportunistically look at something bigger. And then we'd have a different look as to how we would de-lever the business after that if we were to do something larger and opportunistic. Thanks.

Speaker Change: M&A continues to also be a big factor, and as you know, most of our historical M&A in the last ten full of years has been smaller tucking acquisitions that might be tens of millions of dollars of purchase prices, and I'm really breaking the bank so to speak on that front.

Speaker Change: But that doesn't mean we couldn't opportunistically look at something bigger, and then we have a different look as to how we would dewebber that those myths after that if we were to do something larger and opportunistic.

Makes sense. Thanks.

Carl Ackerman: Your next question comes from Carl Ackerman with BNP Paribas. Your line is open. Yes, thank you. Hi.

Carl Ackerman: Your next question comes from Carl Ackerman with BNP Parabagh. Your line is open.

Yes, thank you, Taya.

Carl Ackerman: Hi, I wanted to go back to the outlook for June. I believe you noted that product mix wouldn't change much despite the stronger growth in client and endpoint solutions. However, I'm hoping to hear some commentary with regard to what you're seeing, if you are seeing recovery in server storage and networking applications that are higher margin. Yeah, so I'll touch on that and Paul can elaborate. I think, you know, I think the biggest differential between Q1 and Q2 is really, you know, a bit of a bring down from a client end point, not assuming we're growing at 15%, but as Paul said, growing, you know, mid-up or single digits in our Q2 guide.

Carl Ackerman: Hi, I wanted to go back to the outlet for June . I believe you noted that product mix.

Speaker Change: wouldn't change much just by the stronger growth in climate and point solutions. However, I'm hoping to hear some commentary with regard to what you're seeing if you are seeing recovery in server storage and networking applications that are higher margin for you.

Speaker Change: Yeah, so I'll touch on that and talk and elaborate. I think I think the biggest differential between Q2, running Q2 is really a bit of a bring down from a client at an employee, not assuming we're growing at 15%, but as Paul said growing, you know, need to offer single digits in our Q2 guide.

Michael Zilis: I think the mix on the other factors is somewhat consistent, but actually I will say servers in particular have been quite strong. Cyber security remains strong, cloud remains strong, and as we also said in our prepared remarks, we're now seeing growth in networking for the first time in, I believe, five quarters. You know, modest at 2%, but that's certainly a vast improvement from where we were most of last year where we had the really challenging compare year over year on the backlog fulfillment, and cloud continues to grow very nicely globally. And I would just say, from a customer standpoint, you layer on top of that, if we start to see momentum come back from an F&D perspective, which I mentioned is proving year over year, but it was still down, not to the same extent that it was in the prior quarter, that could actually provide a little bit of uplift also.

Paul: The mix on the other factors is somewhat consistent, but actually I will say servers in particular have been quite strong, cybersecurity remains strong, cloud remains strong, and as we also said in our prepared remarks, we're now seeing growth and networking for the first time and I believe five quarters.

Paul: You know, a lot is that 2% but that's that's certainly a vast improvement from where we were most of last year where we had the really challenging compare year over year on the on the back while fulfillment and crowd continues to grow very nicely globally. [inaudible]

Paul: And I would just say, from a customer of exam point, you layer on top of that if we start to see momentum come back from an F&D perspective, which I mentioned is proving year over year, but it was still down.

Paul: Not to the same extent that it was in the prior order, that could actually provide a little bit of uplift also.

Speaker Change: Got it. Thanks for that, Mike and Paul. If I may just one more, you indicate you are seeing healthy or activity by customers.

Michael Zilis: Got it.

Michael Zilis: Thanks for that, Mike and Paul. If I may, just one more. At UNAK, you are seeing healthy order activity by customers. And so while inventory rose this quarter, I just want to address should we assume working capital or inventory becomes more favorable to cash flow in June and then beyond June any thoughts with regard to working capital dynamics. Thank you. Yeah, the way I would think about working capital, and realizing we don't, you know, specifically guide on that, but I'll just give you sort of a thought process. We're going to continue to manage our business or our working capital base.

Paul: and so while inventory rows this quarter, I just want to...

Paul: Address, should we assume working capital or inventory becomes more capable to cash low in June and then beyond June any cross with regard to working capital dynamics? Thank you.

Paul: Yeah, the way I would think about working capital and realizing we don't specifically guide on that, but I'll just give you sort of a thought process.

Paul: We're going to continue to manage our lists or our working capital days so we're in a more consistent growth mode as we were in Q1.

Michael Zilis: So if we're in a more consistent growth mode, as we were in Q1, you're going to have that investment. But as we said, you know, working capital base came down on a net basis by four days year over year. So you just have to how we invest on a day basis, and we're going to continue to invest for growth where we can capture the market opportunities in this environment. And that can put a little strain on free cash flow while we're in higher growth mode, and that's going to even out over time, coupled with also the normal seasonality where we usually have a higher investment, for instance, in inventory.

Paul: You're going to have that investment, but as we said, you know, working capital days and down on a net basis by four days year over year.

Paul: So you have to think about that growth factor and maintaining some equivalency in how we invest on a day basis, and we're going to continue to invest for growth where we can capture the market opportunities in this environment.

Paul: and that could put a little strain on free cash flow while we're in higher growth mode and that's going to even out over time.

Paul: A couple with also the normal seasonality where we usually have a higher investment, for instance, in inventory when we get into Q3, a lot of that sort through in Q4 where we will close the year with receivables and then we collect that in the new year and the cycle continues. So just think about that seasonality but also the sick locality.

Michael Zilis: When we get into Q3, a lot of that sold through in Q4, where we'll close the year with receivables, and then we collect that in the new year, and the cycle continues. So just think about that seasonality, but also the cyclicality. Thank you.

Paul: Thank you for watching. If you have any questions, please feel free to email me. I'm always happy to answer any of your questions. I appreciate you guys watching. I'll see you next time.

Thank you.

Speaker Change: Your next question comes from Matt Nicknam with Deutsche Bank. Your line is open.

Matt Nicknam: Your next question comes from Matt Nicknam with Deutsche Bank. Your line is open. Hey guys, thanks so much for taking my question. I guess first on Klein and Endpoint, not to beat a dead horse, but I'm curious whether the strength in Klein and Endpoint, you talked about 15-ish percent growth, was that mainly PC refresh related? And I guess what I'm trying to figure out is, is there a similar dynamic around PC strength in April? And is it mainly concentrated around larger enterprise relative to SMBs refreshing PCs?

Speaker Change: Hey guys, thanks so much for taking my question. I guess first on Client and Endpoint, not to be the dead horse, but I'm curious whether the strength in Client and Endpoint, you talked about 15% growth.

Speaker Change: Was that mainly PC, refresh-related, and I guess what I'm trying to figure out is there a similar dynamic around PC strength in April , and is it mainly concentrated around larger enterprise relative to SMBs?

Speaker Change: Refreshing PCs. And then second question, just on India, if you can give us a little bit more color on the competitive dynamic there and how that's evolved year to day. Thank you.

Paul Bay: And then second question, just on India, if you can give us a little bit more color on the competitive dynamic there and how that's evolved year to date. Thank you. Yeah, so the client endpoint solutions, Mike, that we've referenced, that's 15%, that's from the client endpoint solutions. So our desktop notebook through the refresh actually grew faster than that complete line of business, the client endpoint solutions business. So that is part of the refresh that we're seeing. And if you look at kind of early into the quarter of Q2, we're seeing similar growth rates on the client endpoint solutions, but more importantly, on the desktop and notebook refresh.

Speaker Change: Yeah, so the client and employee solutions might, that we've referenced.

Speaker Change: That's 15%. That's from the client endpoint solution. So those are dot dot dot notebook through the refresh actually grew faster than

Speaker Change: That is a complete line of business, the client endpoint solutions business, so that is part of...

Speaker Change: to refresh that we're seeing. And if you look at kind of early into the quarter of Q2, we're seeing similar.

Speaker Change: Growth Rate on the clientele end point solutions the more importantly on the desktop and notebook refresh. So we're seeing similar trends earlier as we see here early in the quarter.

Paul Bay: So we're seeing similar trends early here, as we see here early in the quarter. So that's what we're seeing around the refresh. As it relates to the customer, when I refer to customers, I refer to our customers that historically serve those end markets. So a lot of those are going into what we would define as our enterprise and larger customers, as opposed to our customers that historically service the small to medium-sized businesses.

Speaker Change: So that's what we're seeing around the refresh. As it relates to the customer, when I refer to customers, I refer to our customers that historically serve those end markets.

Speaker Change: So a lot of those are going into what we would define as our enterprise and larger customer of a post to our customers that historically serve us the small and medium-sized businesses.

Paul Bay: On your question about India, the market continues to be competitive. I would say the market competitiveness in India, and as we continue to rebuild and hire out our right executives, it's still definitely competitive. But outside of more local large distributors, not as much as multinational that we may have pointed to last quarter, it's more of a local environment from a competitive nature. But it is still competitive, and I like to always remind the team, myself included, which is we're focused on quality of earnings and the right revenue growth that we want to make sure, even in a competitive environment.

on your question about India.

Speaker Change: The market continues to be competitive. I would say the market competitiveness in India as we continue to rebuild and hire out our right executives. It's still definitely competitive, but outside of.

Speaker Change: More local, large distributors, not as much as multi-national that we may have pointed to last quarter, it's more of a local environment from a competitive nature, but it is still competitive and I like to always remind.

Speaker Change: The team, myself included, which were focused on quality of earnings.

Speaker Change: and the right revenue growth that we want to make sure, even in a competitive environment. So, we're only keeping a keen eye on that as we move forward, like I don't know if you have any thoughts on these earlier. Just real quick. We talked in our call back in March about an impact that we were projecting into our guidance that was incense, not person.

Paul Bay: So, we're always keeping a keen eye on that as we move forward.

Michael Zilis: Mike, I don't know if you have any other thoughts on either of those aspects. Just real quick on India, you know, we talked in our call, you know, back in March about, you know, an impact that we were projecting into our guidance that was in cents, not per cent. a high single-digit cent. impact from EPS from India from the competitive factors and uniqueness of that. And then we talked about how Q2 would probably be closer to half of that kind of impact. And that is where we are tracking. We're seeing that's how Q1 landed. And that's how we are seeing Q2 land.

a high single-digit cent.

Speaker Change: Impact from EPS, from India, from the competitive factors, and unique to solve that.

Speaker Change: You know, and then we talked about how Q2 would probably be closer to half of that kind of impact, and that is where we are tracking. We're seeing that's how Q1 landed, and that's how we are seeing Q2 land, as I said in my prepare the remarks we're seeing.

Michael Zilis: As I've said in my prepared remarks, we're seeing things start to improve on some of the competitive factors, but it is still highly competitive. And we're going to go after business that's the right kind of business. And we did a good job of still driving mid-single digit growth in India on an FX neutral basis in Q1. But we're not interested in going after negative margin business. So we're going to make the right decisions there and continue to drive that while we enhance the team, as Paul said. And we're pretty pleased with that progress where we expect things in the second half being a little bit more normal.

Speaker Change: Things start to improve on some of the competitive factors, but it is still highly competitive. And we're going to go after business at the right kind of business. And we did a good job of still driving mid-single-digit growth in India on an affects neutral basis in Q1.

Speaker Change: But we're not interested in going after a negative margin business, so we're going to make the right decisions there and continue to drive that while we enhance the team, as Paul said, and we're pretty pleased with that progress where we expect things in the second half being a little bit more normal.

Thank you.

Maggie Nolan: Thank you. We have time for one last question, and that question comes from Maggie Nolan with William Blair. Your line is open. Hi, thank you. I wanted to ask about your comments on OPEX. I heard you say that OPEX as a percentage of revenue would stay above 5% this year. Can you give us a little more insight, though, into how to think about this quarterly? Should we still be expecting a decrease in OPEX as a percentage of revenue in each coming quarter this year versus, you know, the prior year quarter because of the cost actions that you've recently undertaken?

Speaker Change: We have time for one last question, and that question comes from Maggie Nolan with William Blair. Your line is open.

Maggie Nolan: Hi, thank you. I wanted to ask about your comments on OPEX. I heard you say that OPEX is a percentage of revenue would stay above 5% this year.

Maggie Nolan: Can you give us a little more insight, though, into how to think about this quarterly should we still be expecting a decrease in OpEx as a percentage of revenue in each coming quarter this year versus, you know, the prior year quarter because of the cost actions that you've recently undertaken?

Michael Zilis: You know, we're, you know, most of the costs, if you talk sequential, most of the costs that we announced in our most recent actions in December have already taken place, and we're out largely in the first quarter. There's a little bit of rollover impact into Q2, but not substantially. So, you know, this is what I would think about this quarterly. We're probably floating a bit north of 5% on a fairly consistent basis, where you may see a little bit more leverage, and certainly in Q4, where we usually have the hockey stick of a higher seasonality for sales, and therefore you absorb costs in a more meaningful way.

Maggie Nolan: You know, most of the costs, if you talk sequential, most of the costs that we announced in our most recent actions in December have already taken place and we're out largely in the first quarter. There's a little bit of rollover impacting the Q2 but not substantially.

Maggie Nolan: So, you know, this is what I would think about this quarterly, we're probably floating a bit north of 5%.

Maggie Nolan: On a fairly consistent basis, where you may see a little bit more leverage, it's certainly in Q4, or we usually have the hockey stick of a higher seasonality for sales.

Maggie Nolan: and therefore you absorb crops in a more meaningful way. And obviously that's why our costs, that's a contributor to why our costs were as good as they were from a leverage perspective.

Michael Zilis: And honestly, that's why our costs, that's a contributor to why our costs were as good as they were from a leverage perspective in Q1. We certainly have taken the cost actions to bring leverage to the table, and those are staying out, but you couple that with a client and endpoint solutions business that grows nearly 15%, which is very low cost to serve and more automated than it's ever been, you know, and that becomes even far more efficient from an absorption perspective. So if we saw a more robust higher end of the growth spectrum in Q2 or quarters after that, you may see more of that cost absorbed, of course.

Maggie Nolan: in Cuba. We certainly have taken the cost actions to bring leverage to the table, and those are staying out. But...

Maggie Nolan: You couple that with a client and an endpoint solutions business that grows nearly 15%, which is very low cost to serve and more automated than it's ever been, that becomes even far more efficient from an absorption perspective.

Maggie Nolan: So, if we saw a more robust higher end of the growth spectrum in Q2 or quarters after that, you may see more of that cost absorbed, of course.

Maggie Nolan: Okay, thank you.

Speaker Change: Okay, thank you. And then, once you get past this pull forward in buying, do you have an expectation for how many months it takes for tariffs to potentially suppress fire behavior, just based on how your business may have been impacted historically?

Michael Zilis: And then, once we get past kind of this pull forward and buying, do you have an expectation for how many months it takes for tariffs to potentially suppress buyer behavior, just based on how your business may have been impacted historically? It's a really good one. I'll give some initial thoughts. I'll let Paul add. It's a hard one to answer, as you can imagine, because we don't know where tariffs are going to land. We believe there may be a deal between the UK and the US, but I heard the US administration say 200 more to go or something along those lines.

Speaker Change: It's a really good one. I'll give some initial thoughts. I'll let Paul add, you know, it's a hard one to answer as you can imagine because we don't know where tariffs are going to land. You know, if you...

Speaker Change: We believe there may be a deal between the UK and the US, that I heard the US Administration say 200 more to go or something along those lines so we'll see where that goes and we need to see where that lands if it is not.

Michael Zilis: So we'll see where that goes, and we need to see where that lands. If it is not as pronounced an increase as we suspect, you may not see a real significant down cycle. But we're taking a tempered approach based on what we see today and the fact that come early July, there may be a number of tariffs coming into effect, depending on whether deals happen or not. And again, the fact that that it's not the tariffs as much since they are passed through for us as it is just the simple impact on the demand environment as a whole that we need to watch.

You may as pronounced an increase as we suspect.

Speaker Change: You may not see a real significant down cycle, but we're taking a tempered approach based on what we see today and the fact that come early July or maybe a number of tariffs coming into effect, depending on whether it feels happened or not.

Speaker Change: And again, the fact that it's not the terrorists as much as they all pass through for us, as there's a simple impact on the demand environment as a whole that we need to watch.

Paul Bay: Yeah, so the last time we had this, it was absorbed and there was no impact. We've driven through inflationary situations and we've been fine with that. So I think to Mike's point, it really comes down to, you know, where does the wheel stop and where is the manufacturing actually done and what is the impact and what's the tolerance at that end business to absorb a price increase, whatever that's going to be. For us, one of the benefits are, again, we don't absorb that, we pass it along. And furthermore, we do business with 1500 vendors in, you know, close to 60 countries on a global basis.

Speaker Change: Yeah, and the last time we had this, it was absorbed and there was no impact. We've driven through inflationary.

Situations, and we've been fine with that.

Um...

Speaker Change: So, I think to my point, it really comes down to, you know, where does the wheel stop and where is the manufacturing actually done and what is the impact and what's the tolerance at that end business to absorb a price increase, whatever that's going to be for us.

Speaker Change: One of the benefits are, again, we don't absorb that, we pass it along. And furthermore, we do business with 1,500 vendors.

Speaker Change: In, you know, close to 60 countries on a global basis, so we're pretty diversified. And we have multiple different options for our customers to provide end user solutions. So, if there's winners and losers from a technology perspective, we sit right in the middle of that and get the health participate in that.

Paul Bay: So we're pretty diversified and we have multiple different options for our customers to provide end user solutions. So if there's winners and losers from a technology perspective, we sit right in the middle of that and get to help participate in that.

Paul Bay: Thank you.

Thank you.

Paul Bay: At this time, I'd like to turn the call back to Paul Bay for any further remarks.

Paul Bay: At this time, I'd like to turn the call back to Paul Bay for any further remarks. Thank you, operator, and thank you all for your questions and continued interest in Ingram Micro. And as always, to our team members, our customers, and our vendor partners, as we continue to deliver both short-term and execute against the long-term vision of transforming IT distribution together.

Ananda Baruah,

Paul Bay: Thank you, Operator, and thank you all for your questions and continued interest in Ingram Micro. And as always, to our key members and our customers and our better partners as we continue to deliver both short term and execute against the long-term vision of transforming IT distribution together. We look forward to talking with you in the coming months, so go have a great day and a good evening. Bye for now.

Operator: We look forward to talking with many of you in the coming months, so go have a great day and a good evening. Bye for now.

Paul Bay: This concludes today's call. Thank you for attending and have a wonderful rest of your day.

Operator: This concludes today's call. Thank you for attending and have a wonderful rest of your day.

Ananda Baruah, Willa McManmon