Ingram Micro NYSE: INGM reported record third-quarter results for fiscal 2026, with revenue, profitability and cash flow exceeding the high end of its guidance ranges. The technology distributor also raised its fourth-quarter and full-year outlook, citing broad-based demand across regions and product categories, including continued strength in GPU and AI infrastructure sales.
Net sales rose 20.8% year over year to $15.22 billion, or 21.2% on a foreign-exchange-neutral basis. CEO Paul Bay said growth was double digit on an FX-neutral basis in three of the company’s four regions, while every line of business also posted double-digit growth.
“This quarter, we built on that momentum and delivered a record third quarter, exceeding our guidance on all financial metrics,” Bay said.
AI Infrastructure Drives Advanced Solutions Growth
Advanced Solutions was Ingram Micro’s fastest-growing business, with sales up 40% year over year. The company attributed the growth to GPU and AI infrastructure products as well as server, networking and storage demand. CFO Mike Zilis said GPU and AI infrastructure sales exceeded $1.8 billion during the quarter, up nearly 160% from about $700 million a year earlier.
Bay said the company also saw healthy demand outside of AI infrastructure, including strong networking growth supported by infrastructure refresh activity, higher-bandwidth requirements, Wi-Fi 7, campus modernization and security needs. Server demand was also favorable, he said.
Cloud revenue increased 30% on an FX-neutral basis, or roughly 36% excluding the prior-year divestiture of CloudBlue. The cloud business represented a high-teens percentage of gross profit dollars year to date, and Zilis said the company expects it to approach one-quarter of gross profit over the next several years.
Other business lines also expanded:
- Client and Endpoint Solutions revenue rose 10%, driven by notebooks, desktops and mobility products.
- Lifecycle Services revenue increased 35%.
- Ingram Micro said AI-enabled PCs represented roughly 50% of PC revenue in the third quarter.
While PC unit volumes declined by the low double digits, Bay said higher average selling prices more than offset the unit decline. He described the PC refresh cycle as being in its “later innings,” but said demand should continue into the fourth quarter, albeit at a lesser extent.
Margins Reflect Sales Mix, While Expenses Decline
Third-quarter gross profit increased 14.6% to $997 million, while gross margin declined 35 basis points year over year to 6.55%. Zilis said the decline primarily reflected the growing contribution from lower-margin GPU and AI infrastructure transactions, along with geographic and customer mix.
Excluding GPU and AI infrastructure deals in both periods, gross margin was 7.06%, down four basis points year over year. The company also cited the growing share of revenue from Asia-Pacific, which represented nearly 29% of quarterly sales and had a gross margin of 4.45%, below the 7.39% gross margin across the other three regions combined.
Management emphasized that the GPU and AI infrastructure business has a low cost to serve and efficient working-capital profile despite lower gross margins. Zilis characterized it as a high-return-on-invested-capital opportunity.
Operating expenses totaled $703 million, or 4.62% of sales, compared with 5.13% in the prior-year period. Excluding prior-year divestiture-related costs, operating leverage improved by 46 basis points. The company attributed the improvement to Xvantage automation and optimization efforts, restructuring actions and the lower-cost-to-serve nature of AI infrastructure business.
Adjusted income from operations rose 25% to $322 million, while adjusted EBITDA increased to $390 million from $342 million a year earlier. Non-GAAP net income climbed 25% to $210.6 million, and non-GAAP diluted earnings per share rose 26% to $0.91.
Xvantage Engagement and Cash Flow Improve
Bay said Ingram Micro continues to develop Xvantage from a digital transaction platform into what it calls an intelligent operating system. In its 22 platform countries, average revenue per Xvantage customer increased 39% year over year. Self-service accounted for nearly 70% of orders, up more than 10 percentage points, while Email-to-Order volume increased 33% to process approximately $1.6 billion of revenue.
The company’s Intelligent Digital Assistant-generated revenue reached 10% of global revenue during the quarter. Ingram Micro also launched ordering through Model Context Protocol across 12 countries, enabling customers to transact through AI assistants and their own agents while connected to Xvantage.
Adjusted free cash flow was an inflow of $250 million, compared with an outflow of $110 million in the prior-year quarter. Net working capital was $5 billion, up less than 2% despite nearly 21% sales growth, while net working-capital days improved by five days to 27 days.
The company ended the quarter with $1 billion in cash and cash equivalents, $3.9 billion of debt and a net debt-to-adjusted EBITDA ratio of 1.9 times, improved from 2.2 times a year earlier. Ingram Micro also announced a 2.3% sequential increase in its quarterly dividend, representing a 10% increase from the prior year.
Fourth-Quarter Outlook Raised
For the fourth quarter, which includes an additional week in fiscal 2026, Ingram Micro forecast net sales of $17.5 billion to $17.9 billion, representing approximately 19% year-over-year growth at the midpoint. The outlook assumes a potential 2% to 3% net positive impact from supply-constraint-related factors and continued growth in GPU and AI infrastructure projects.
The company expects fourth-quarter gross profit of $1.08 billion to $1.12 billion and non-GAAP diluted EPS of $1.05 to $1.15. Management said the gross-profit outlook reflects expected seasonal mix effects as well as continued contribution from lower-margin AI infrastructure deals. It also assumed a potential $0.01 to $0.02 EPS impact from the Middle East conflict.
Zilis said the company’s multiyear framework assumes lower-single-digit revenue growth in 2027, partly due to comparisons with the current year’s extra week, moderating PC refresh demand and potentially moderating average selling prices. However, he said Ingram Micro remains focused on growing gross profit faster than revenue and expanding bottom-line profit at more than twice the rate of revenue growth over its planning period.
About Ingram Micro (NYSE:INGM)
Ingram Micro Inc is a global technology distribution and services company that connects technology manufacturers with businesses, resellers, systems integrators and other channel partners. Its portfolio includes hardware, software, cloud solutions, cybersecurity products, networking equipment, data-center technologies and communications solutions.
The company also provides value-added services such as cloud marketplace management, device lifecycle services, logistics, fulfillment, financing support, technical assistance and professional services.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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