Ingram Micro Q1 Earnings Call Highlights

Key Points

• Ingram Micro beat or matched the high end of Q1 guidance with net sales of $13.96 billion (up 13.7% YoY) and non-GAAP EPS of $0.75, driven by strong Cloud and Advanced Solutions growth and large GPU/AI infrastructure deals that boosted revenue but reduced gross margin by roughly 35 basis points (Q1 gross margin 6.63%).
• The company's Xvantage platform and AI automation are central to its strategy — with over 400 ML models deployed, the "email-to-order" capability processed ~230,000 emails into orders (enabling > $1 billion in sales) and the Intelligent Digital Assistant helped convert > $800 million in AI-led net sales.
• Adjusted free cash flow was an outflow of -$962 million due to seasonal working capital and growth funding, though net debt/adjusted EBITDA improved to 1.7x; management guided Q2 net sales of $13.6–$14.0 billion and non-GAAP EPS of $0.68–$0.78.

Ingram Micro NYSE: INGM reported first-quarter fiscal 2026 results that management said came in at or above the high end of guidance, fueled by continued strength in Cloud and Advanced Solutions and increased contribution from large GPU and AI infrastructure deals.

Quarterly results exceed guidance

CEO Paul Bay said the company “delivered another strong first quarter,” with net revenue rising nearly 14% year over year and non-GAAP diluted earnings per share of $0.75. Bay also pointed to nearly 12% growth in gross profit and “over 20% growth in non-GAAP net income,” citing operating leverage and momentum across the business.

CFO Mike Zilis provided additional detail, reporting net sales of $13.96 billion, up 13.7% year over year in U.S. dollars and up 10% on an FX-neutral basis. Zilis said performance was “widespread geographically,” with all four regions posting double-digit year-over-year growth in U.S. dollars.

Cloud and Advanced Solutions lead; AI infrastructure deals weigh on margin rate

Management highlighted strong growth in Cloud and Advanced Solutions, including large enterprise GPU and AI infrastructure projects that were captured late in the quarter in North America and Asia Pacific.

• Cloud: Zilis said Cloud grew 25% year over year on an FX-neutral basis, and 34% when adjusting for the CloudBlue divestiture that closed in the third quarter of last year. Bay said Cloud again grew double digits with “particular strength in Infrastructure as a Service.”
• Advanced Solutions: Zilis said Advanced Solutions grew 14% year over year on an FX-neutral basis, driven by “strength in server and networking” and supported by continued large-scale GPU and AI infrastructure deals. He characterized these projects as “low margin but…low-cost to serve,” adding that the company typically does not stock inventory for these transactions, supporting “a strong return on working capital.”
• Client and Endpoint Solutions (CES): Zilis said CES grew nearly 8% year over year on an FX-neutral basis, citing demand for notebooks and desktops as the refresh cycle continues and AI PC penetration grows.

Gross profit was $926 million, up 12% year over year, while gross margin was 6.63%, down 12 basis points year over year. Zilis attributed the decline to sales mix, noting that lower-margin GPU and AI infrastructure projects reduced gross margin by roughly 35 basis points in the quarter, compared with about five basis points in the year-ago period. Excluding those deals, he said first-quarter gross margin would have been “roughly 7%.”

Operating expenses were $703 million, or 5.04% of net sales, compared with 5.11% a year earlier. Zilis said SG&A leverage improved by 12 basis points due to cost reductions, productivity gains tied to the Xvantage platform, and mix factors associated with lower-cost-to-serve categories. Adjusted income from operations was $262 million, up 14% year over year, with an adjusted operating margin of 1.88%, essentially flat with last year’s 1.87%.

Regional performance and market conditions

On the regional mix, Bay said Asia Pacific grew at double digits and was the company’s second-largest region by net revenue. Zilis reported North America net sales of $5.0 billion and APAC net sales of $4.1 billion, with both regions benefiting from Cloud strength and large enterprise GPU and AI infrastructure projects. EMEA net sales were $3.9 billion, up 3.8% FX-neutral, and Latin America net sales rose 10.1% FX-neutral.

Zilis said EMEA delivered its strongest growth in Cloud-based solutions “while navigating around the challenges of the Middle Eastern conflict that started in the final month of the quarter.” He later noted that the company has a “relatively small but nicely profitable business” in the region and incorporated potential impacts into guidance.

Management also discussed memory-related supply constraints across the IT industry. Zilis said the company is seeing product ASP increases ranging from “single-digit percentage points well into double-digit percentage points,” along with some instances of demand pull-forward. At the same time, he said constraints are leading to longer lead times and, in limited cases, projects being deferred or resized due to availability or price sensitivity.

In response to an analyst question, Zilis said these deferrals are “more project-based” and “a little bit more in the Advanced Solutions area,” particularly among smaller customers, while “large enterprise continues to…invest.” Bay cited one example in “a smaller country in Europe” where a PC rollout was delayed due to a specific configuration being unavailable, with timing potentially “a quarter or two out.”

Zilis estimated the net positive impact of these dynamics on first-quarter year-over-year net sales at approximately 2% to 3%. He added that discussions with vendors about opportunistic inventory buy-ins have not had a material impact on first-quarter results.

Xvantage platform, patents, and AI-driven automation

Bay emphasized Ingram Micro’s Xvantage digital platform, describing it as “the operating system for B2B” and a core element of the company’s transition “from a traditional IT distributor into a platform company.” He said the company built a real-time data mesh and deployed “more than 400 AI and machine learning models” across the customer journey.

Bay also said four of the company’s “35+ patent-pending applications have been granted,” and outlined what those patents cover, including:

• a vendor-agnostic AI framework to integrate vendor inventory, pricing, and product data at scale;
• dynamic SKU generation to simplify solution configuration and pricing workflows;
• configure-and-quote to order automation to increase quote volume and enable “touchless” conversion; and
• an “email to order” capability that uses generative AI to convert unstructured emails and attachments into structured transactions.

Bay said the email-to-order capability processed approximately 230,000 emails into orders in the quarter, up 78% year over year, enabling “more than $1 billion in sales” with lower manual touch. He added that the company is extending the patent IP to other workflow automation capabilities, including “email to quote.”

Bay also highlighted Xvantage-enabled selling tools such as the Intelligent Digital Assistant (IDA). He said IDA and other AI capabilities delivered more than 153,000 proactive engagements during the quarter and helped customers convert more than $800 million in “AI-led net sales.” Bay said IDA-driven opportunities converted at “nearly 4x our standard baseline,” and the company logged more than two million self-service orders in the quarter.

In Latin America, Bay said the region delivered the highest gross margin across Ingram Micro’s regions, up 69 basis points year over year, which he attributed to shifting SMB demand to self-service and automated quoting while embedding intelligence. He also said India showed “clear evidence” of moving from adoption to performance, noting IDA revenue in India grew more than 200% quarter over quarter.

Bay also noted Ingram Micro achieved a specialization for AI apps with Microsoft, saying the company used Azure AI services to build capabilities that help partners automate work such as statement-of-work generation and improve sales productivity. He quoted Hans Meijs, President of Data41, who said, “Ingram Micro feels like an extension of our AI practice.”

Balance sheet, capital returns, and second-quarter outlook

Ingram Micro ended the quarter with net working capital of $4.4 billion, compared with $4.3 billion a year earlier. Zilis said net working capital days improved to 23 from 29 days last year, citing vendor terms discipline, inventory optimization, and use of Xvantage capabilities. Adjusted free cash flow was an outflow of $962 million, which Zilis attributed to seasonal working capital needs and funding double-digit growth; he said free cash flow trends should be “more in line with seasonal norms” over the next one to two quarters.

Zilis also discussed capital allocation actions, including a secondary offering completed in early March that increased public float and included the company repurchasing $75 million of stock from its majority owner. He said the company is expanding its repurchase program for future use and returned $19 million through dividends in the quarter. The company also announced an increase in the next quarterly dividend of 2.4% sequentially and 10.5% year over year.

Ingram Micro ended the quarter with $916 million in cash and cash equivalents and $3.3 billion of debt. Zilis said net debt to adjusted EBITDA improved to 1.7x, down from 2.0x a year earlier, and noted a $200 million term loan repayment during the quarter.

For the second quarter, management guided net sales of $13.6 billion to $14.0 billion, representing 8% year-over-year growth at the midpoint. The company expects Cloud to lead with double-digit growth and “particular strength in Infrastructure as a Service,” while Advanced Solutions is expected to grow higher single digits with strength in servers, storage, and cybersecurity. CES is expected to grow at a “more moderate lower single-digit pace.”

Zilis guided second-quarter gross profit of $905 million to $950 million, implying gross margin growth sequentially and year over year, and non-GAAP diluted EPS of $0.68 to $0.78. The EPS range includes a potential $0.01 to $0.03 negative impact from the “volatile situation in the Middle East,” according to Zilis.

Bay said the company remains optimistic and expects CES to grow “at market,” with Advanced Solutions and Cloud growing “above market,” while continuing to see opportunities tied to AI use cases and ongoing PC refresh demand, including AI PCs.

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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