Ingram Micro Holding Corporation Q2 FY2025 earnings call

• Ransomware incident in early July: Systems were taken offline, an investigation with cybersecurity experts was launched, and law enforcement was notified. The incident had no impact on Q2 results. • Q2 highlights: Exceeded net sales guidance, growth across all lines of business, APAC had the highest net sales growth, North America had mid-teens growth, Latin America returned to growth, and EMEA had single-digit growth. • Divestitures: Completed divestiture of assets related to an underperforming North America operation in late July, and CloudBlue is expected to close in Q3. • Xvantage platform: Three phases of evolution, using AI and automation. The Intelligent Digital Assistant (IDA) drove sales, with self-service orders up nearly 200% year-over-year, quotes created nearly doubled, and 2,000 dormant customers reactivated with 40% higher sales.

Net sales were $12.79 billion, up 10.9% year-over-year in U.S. dollars and 10.2% on an FX-neutral basis. Client and endpoint solutions grew nearly 14% on an FX-neutral basis, driven by desktop, notebook, and smartphone categories. Advanced Solutions had mid-single-digit growth, fueled by servers, storage, cybersecurity, and GPUs in Asia Pacific markets. Cloud continued to grow. Geographically, Asia Pacific had the highest net sales growth, followed by North America (mid-teens growth), Latin America returned to growth, and EMEA had single-digit growth. From a customer perspective, large corporate and enterprise sales outpaced SMB, though SMB showed some growth.

• Q3 net sales guidance: $11.88 billion to $12.38 billion, representing year-over-year growth of more than 3% at the midpoint. • Q3 gross profit guidance: $815 million to $875 million, with gross margins just below 7% at the midpoint. • Non-GAAP diluted EPS guidance: $0.61 to $0.73 per diluted share, assuming a potential $0.02 to $0.04 impact from the ransomware incident. • Guidance reflects conservatism due to the impact of the ransomware incident on business transactions.

• Ransomware attack in early July: Data was exfiltrated from systems, an investigation with a third-party data analysis firm is ongoing, and there's uncertainty regarding potential impact on future results.

Q: Provide color on Q3 expectations for endpoint and advanced solutions?

A: On client and endpoint, mid-single digits at the high end of guidance; advanced solutions expected to be low to mid single digits, with strength in servers and storage. Cloud expected to have higher single-digit growth.

Q: China mobility growth driver?

A: Likely some pull forward from government subsidies and potential tariffs, but hard to gauge exactly.

Q: Q3 revenue guidance below typical seasonality?

A: Cyber incident is a major factor, along with the over-index growth in client and endpoint in prior quarters affecting seasonality.

Q: Xvantage driving SMB growth?

A: Yes, the Intelligent Digital Assistant (IDA) in North America is shortening sales cycles and helping drive growth in the SMB market.

Q: CloudBlue divestiture impact?

A: CloudBlue was the foundation for the cloud platform, and retaining relevant IP allows focus on Xvantage platform strategy; the divestiture is immaterial from a financial perspective.