Ingram Micro (NYSE:INGM) executives said the company closed fiscal 2025 with results above the high end of its guidance, citing broad-based regional growth, continued strength in enterprise demand, and a sharp increase in quarterly free cash flow driven by working capital reductions and operational efficiency initiatives tied to its Xvantage platform.
Fourth-quarter results topped guidance as revenue grew 11.5%
CEO Paul Bay said Ingram Micro grew fourth-quarter revenue 11.5% with growth “across all regions,” while delivering diluted earnings per share of $0.96, “both exceeding the high end of our guidance.” Bay also highlighted adjusted free cash flow of $1.6 billion in the quarter, which he described as the company’s highest quarterly level in more than a decade.
Mix shifts and AI infrastructure weighed on gross margin, but expenses improved
Zilis said fourth-quarter gross profit was $966.4 million, or 6.50% of net sales, down 51 basis points from the prior-year quarter. He attributed the decline primarily to a heavier sales mix toward lower-margin Client and Endpoint Solutions, faster growth in the lower-margin Asia-Pacific region, and strength in large enterprise and project-based GPU and AI infrastructure deals.
Zilis quantified the GPU and AI infrastructure impact, saying those AI-related project sales reduced fourth-quarter gross margin by “more than 15 basis points.” However, he and Bay emphasized these transactions are generally “low cost to serve,” sold largely on a fulfillment basis, and “very working capital efficient,” with inventory not held in advance.
Operating expenses improved meaningfully as a percentage of sales. Zilis said fourth-quarter operating expenses were $656.7 million, or 4.41% of net sales, compared with 5.15% a year earlier. He said the improvement reflected benefits from “optimization and automation from Xvantage,” as well as a “positive recovery via insurance proceeds” related to a previously disclosed matter. He noted the net benefit in the quarter was partially offset by reserves and settlement expenses and impacts from lost business earlier in the year.
Regional and segment performance: APAC led; Advanced Solutions returned to growth
Zilis said the company posted FX-neutral growth across all four regions in the quarter, led by Asia-Pacific, which grew 14.6% year over year. He said North America net sales were $5.1 billion, up 9.3%, with both APAC and North America benefiting from large enterprise GPU and AI infrastructure projects. North America also saw strength in server and storage categories and PC-driven Client and Endpoint Solutions demand.
In EMEA, Zilis reported net sales of $4.63 billion, up 13.9% in U.S. dollars and up 5.9% FX-neutral, with growth across all lines of business including “strong double-digit growth in Cloud.” Latin America net sales were $1.08 billion, up 6.6% in U.S. dollars and up 1.2% in constant currency, driven by Client and Endpoint Solutions and partially offset by softer Advanced Solutions and Cloud results.
By business line, Zilis said Advanced Solutions “returned to growth,” with net sales up 11.3% on an FX-neutral basis, driven by server, storage, and cybersecurity as well as large-scale GPU and AI infrastructure enterprise deals. Client and Endpoint Solutions grew 8.8% on strong notebook and desktop demand as the PC refresh cycle continued “through 2025 and now into 2026.”
Management also noted improving small and mid-sized business trends. Bay said SMB continued to improve for a “fourth straight quarter of sequential growth,” and Zilis reiterated that the company saw a fourth consecutive quarter of sequential SMB improvement.
Full-year 2025: $52.6 billion in net sales and $1.10 billion adjusted free cash flow
Zilis said fiscal 2025 net sales were $52.6 billion, up 9.5% from 2024 (up 9.0% FX-neutral). Non-GAAP net income was $681.9 million, up 8.6%, and non-GAAP diluted EPS was $2.90. Adjusted EBITDA was $1.36 billion, up from $1.32 billion.
On cash generation and leverage, Zilis said adjusted free cash flow was $1.63 billion in the fourth quarter, compared with $337.2 million a year earlier, and full-year adjusted free cash flow was $1.10 billion versus $443.3 million in the prior year. Ending cash was $1.86 billion with debt of $3.2 billion, and net debt to adjusted EBITDA improved sequentially to 1.0x from 2.2x. He attributed the improvement to reductions in working capital investment, expanded use of channel financing solutions, and stronger cash conversion.
Zilis also said the company paid down $125 million of its term loan during 2025 and repaid an additional $200 million in February, bringing total term loan repayments to $1.89 billion since the beginning of 2022. He said interest expense fell $35.8 million year over year primarily due to debt paydowns.
Xvantage and AI initiatives: IDA engagement, self-service growth, and patents
Bay repeatedly pointed to Xvantage as a driver of efficiency, growth, and AI-enabled capabilities. He said Ingram Micro delivered “billions of dollars of revenue through the Xvantage platform” in 2025 and described a three-phase roadmap: operating expense efficiency, top-line growth, and “using data to drive growth and enhance margins and operating leverage.” He said the company made progress in phase two in 2025 and put in place building blocks to begin capturing the third phase in 2026.
Bay said the company has built Xvantage on a proprietary data foundation, including a “real-time global data mesh” and “over 400 embedded AI and machine learning models.” He highlighted the company’s Intelligent Digital Assistant (IDA), saying it enabled more than 500,000 proactive engagements in 2025 and assisted customers in converting over 100,000 opportunities into orders “worth billions of U.S. dollars.” Bay said IDA-enabled transactions converted at nearly three times normal conversion ratios and included Advanced Solutions and Cloud products almost twice as often as non-IDA transactions. He added that IDA revenue remains in the “mid-single digits” as a percentage of overall revenue, but management expects to exit 2026 with IDA representing a double-digit percentage.
Bay also discussed an “agentic assistant” called Sales Briefing Agent, which he said the company plans to expand globally during the first half of the year, and noted a pilot example in Canada where the tool helped identify multi-quarter implementation and cloud migration opportunities.
Additional Xvantage metrics shared on the call included:
- Self-service orders on Xvantage up “over 100%” versus a year ago.
- Average revenue per customer on Xvantage up 14% sequentially from Q3 to Q4 and “over 30%” year over year.
- In the largest country with Xvantage deployed, overall headcount decreased while revenue and gross profit per go-to-market head increased.
Bay also said the company was granted two patents recently and has more than 35 pending. He highlighted an “Email-to-Order” patent that uses generative AI to convert email orders into “touchless order entries,” noting the company receives millions of emails annually that can be processed through the system.
For fiscal first quarter 2026, Zilis guided net sales of $12.45 billion to $12.80 billion and non-GAAP diluted EPS of $0.67 to $0.75. The company expects gross profit of $840 million to $895 million, implying gross margin of about 6.87% at the midpoint, which management said reflects anticipated mix improvement. Zilis noted the outlook assumes flat to low single-digit growth in Client and Endpoint Solutions, low to mid single-digit growth in Advanced Solutions, and double-digit growth in Cloud, while not assuming “any notable” GPU deals in the quarter.
On tariffs, Zilis said they are generally pass-through and that Ingram Micro is importer of record on a minority of U.S. products, but he added the company is monitoring potential demand effects—particularly among SMB customers—if tariff dynamics contribute to a more inflationary environment.
About Ingram Micro (NYSE:INGM)
Ingram Micro, headquartered in Irvine, California, is a global technology distributor and supply chain services provider. Listed on the New York Stock Exchange under the ticker INGM, the company connects leading technology manufacturers, cloud providers and channel partners through an integrated portfolio of products and services. Ingram Micro’s end-to-end solutions span product distribution, cloud enablement, e-commerce, logistics and lifecycle management, enabling customers of all sizes to bring new technology to market efficiently.
The company’s offerings are organized across several core areas.
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