Ingram Micro outlines Q4 2025 sales guidance of $14B-$14.35B as Xvantage AI platform accelerates global growth

Earnings Call Insights: Ingram Micro Holding Corporation (INGM) Q3 2025

MANAGEMENT VIEW

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CEO Paul Bay highlighted that "the third quarter was strong with revenues of $12.6 billion, up 7.2% year-over-year and above the high end of our guidance. Non-GAAP diluted earnings per share was $0.72, at the high end of our guidance despite a small impact from the ransomware incident in July." He emphasized rapid recovery from the incident and pointed to market share gains and expanding momentum for the Xvantage digital platform, which is being deployed globally.

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Bay stated, "Enterprise sales remained strong and our SMB customer category achieved a third straight quarter of sequential growth, which is encouraging." He noted that client and endpoint solutions delivered another solid quarter, while advanced solutions were down slightly year-over-year, but servers and storage posted strong double-digit gains. Networking growth was modest, driven by increased AI proof-of-concept activity.

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The CEO discussed the company's multiyear plan to build an AI ecosystem, emphasizing investments in the Xvantage platform and the Enable AI program. He said, "In the third quarter, IDA contributed hundreds of millions of dollars of incremental revenue. We also had rapid international adoption of IDA with IDA-driven revenue with non-U.S. operations growing by more than 100% in the quarter."

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Bay announced the launch of their first enterprise-grade AI agent, Sales Briefing Assistant, built with the Xvantage AI Factory and powered by Google's Gemini large language model, describing it as "a new standard for intelligence: scalable sales enablement in the enterprise."

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CFO Michael Zilis stated, "We had a strong third quarter with results that either exceeded or hit the top end of each of our guidance ranges despite the impact of the July ransomware incident." Zilis detailed that the incident's total impact was within a tighter range of 1% to 1.5% of net sales and $0.02 to $0.03 per share.

OUTLOOK

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Zilis provided Q4 2025 guidance: "We are guiding net sales of $14 billion to $14.35 billion, which represents year-over-year growth of more than 6% at the midpoint. We expect fourth quarter gross profit of $935 million to $990 million, which would represent gross margins of roughly 6.8% at the midpoint. We expect non-GAAP diluted EPS to be in the range of $0.85 to $0.95 per diluted share."

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The guidance reflects consistent trends in sales mix across products, customers, and geographies, with expectations of continued SMB strength and robust cloud growth.

FINANCIAL RESULTS

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Q3 net sales were $12.60 billion, up 7.2% year-over-year in U.S. dollars. Client and endpoint solutions grew nearly 13% on an FX-neutral basis. Advanced solutions sales declined by 4.5%, while cloud revenues dropped 4%, but excluding divestitures, cloud net revenues increased low single digits year-over-year.

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Gross profit was $870 million compared to $845 million last year, and gross margins improved sequentially by 34 basis points. Operating expenses were $646 million, or 5.13% of net sales, with $5.5 million in divestiture-related losses and $3.5 million in restructuring costs.

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Adjusted EBITDA for the quarter was $342 million. Non-GAAP net income rose 6% year-over-year to $169 million. Net working capital was $4.9 billion, and adjusted free cash flow was an outflow of $110 million, which Zilis noted was better than typical Q3 seasonal norms.

Q&A

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Ruplu Bhattacharya, BofA Securities: Asked about margin trends and the impact of SMB versus large enterprise mix. Zilis answered, "what's implied in our guidance from a growth perspective is client and endpoint probably more in the mid-single digits... advanced solutions growing in the lower single digits and cloud growing mid- to upper single digits."

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Bhattacharya followed up on inventory and free cash flow. Zilis responded, "we should see a solid cash flow quarter in Q4."

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Maya Neuman, Morgan Stanley: Inquired about the hardware cycle for PCs and servers. Bay said, "we're in the back half or the later innings of the PC refresh. And if you look at server, that was a very good performance for us in the quarter within our advanced solutions."

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Neuman also asked about pull-forward spend amid component cost inflation. Bay replied, "No, we haven't had any of those conversations at this point in time in terms of pull forwards or from a pricing perspective."

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David Paige Papadogonas, RBC Capital Markets: Asked about Xvantage benefits. Bay explained, "Enterprise is using it for different reasons than SMB. SMB Is where they can really manage their whole business."

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Papadogonas questioned AI-powered PCs extending the cycle. Bay said, "probably 25% of our PC shipments today, refresh, is an AI PC. So that's still a low percentage... we'll know more kind of at the beginning of next year."

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Logan Katzman, Raymond James: Queried about a potential budget flush at year-end. Zilis said, "that is part of the reason we typically see a seasonal pop in revenues is budgeting cycles in Q4."

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Alek Valero, Loop Capital: Asked about catalysts over the next 4 to 6 quarters. Bay highlighted, "it's around services that the partners are continuing to build out... it's around AI... and then security kind of wrapped around everything."

SENTIMENT ANALYSIS

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Analysts focused on margin sustainability, hardware cycle timing, Xvantage's impact, and AI-driven opportunities, with a generally positive but probing tone.

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Management maintained a confident tone, frequently reinforcing guidance and the positive impact of strategic initiatives, with Bay stating, "we are set up for a solid Q4."

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Compared to the previous quarter, both management and analysts displayed increased confidence, especially regarding SMB growth and AI initiatives.

QUARTER-OVER-QUARTER COMPARISON

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The current quarter saw a more confident outlook, with guidance for net sales and EPS higher than previous ranges. Management emphasized the AI ecosystem, the global scaling of Xvantage, and accelerating SMB growth as new highlights.

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Analysts shifted focus from recovery post-ransomware in Q2 to structural growth drivers in Q3, particularly AI, Xvantage, and SMB momentum.

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Management tone was more upbeat, referencing successful mitigation of the ransomware impact and the tangible benefits of strategic investments.

RISKS AND CONCERNS

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Management discussed the July ransomware incident, quantifying its impact and highlighting rapid operational recovery.

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Zilis noted that advanced solutions and cloud segments had some softness or mixed results, attributing some to noncore divestitures or project timing.

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Analysts raised questions about margin mix, inventory management, and potential for pull-forward demand, with management offering clear responses and mitigation strategies.

FINAL TAKEAWAY

Ingram Micro's Q3 2025 performance reflected strong revenue growth and robust execution in the face of disruption, supported by continued investment in digital and AI-driven platforms such as Xvantage. The company enters Q4 with upgraded guidance and high confidence, citing expanding SMB momentum, ongoing AI ecosystem development, and effective cost management as key drivers for future growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ingm/earnings/transcripts]

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