Ingram Micro Holding Corporation (INGM) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Day 2 of the Morgan Stanley TMT Conference. My name is Erik Woodring. I lead the U.S. IT hardware practice here at Morgan Stanley. I'm delighted to be joined by Ingram Micro, the team, Paul Bay, CEO; Mike Zilis, CFO. Before we do quick introductions, for important disclosures please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. So I'd love everyone to please in welcoming Paul Bay, CEO of Ingram Micro, Mike Zilis, EVP and CFO. Both mainstays of the company, have been around for a long time. know the company extremely well, obviously. So it going to be a great conversation. Thank you for joining us.

Thanks for having us. Glad to be here.

So the easiest and most natural place to kind of start the conversation is recapping 4Q earnings from last night amid a very red day in the market. There are spots of green and Ingram Micro is one of those spots. So congratulations on the execution. Can you just touch maybe highlights from the December quarter, highlights for the year of 2025 and maybe what the message is as we're entering a very dynamic 2026.

Yes. So I'll start and then Michael will obviously jump in. So we had great growth for Q4, 11.5% revenue growth. We exceeded the high end of our EPS guide, and we had a $1.6 billion of free cash flow. So we're excited about that, too. We continue to operate and deliver very good cost leverage in our environment. That's really being driven around the investments we've made over the last couple of years, which we call our Xvantage platform. So we had some great stats coming out of Q4 and for the year in terms of usage and how we're really freeing up time for our customers, our solution providers, I'll use that generically to go spend more time with their end users. And one of the key stats we talked about in Q4 was that for where the Xvantage platform is delivered, which is the majority of the big countries, it's global. So what you get in one country, you get the same experience in another country. Our heads were actually down in those countries, but our gross profit and our revenues actually grew. And so we're doing a lot about kind of three phases, taking the friction and OpEx out of the business, helping our partners do the same. The second one is around demand generation and really helping our customers drive demand generation to their end users. And the third is really about profitable growth and margin enhancement as we kind of get into that third phase. Mike, I don't know if you have any.

No. I mean I think the top line growth, I think just the only flavor I would add is we're still seeing quite robust growth in desktop notebook. PC refresh cycle is still alive and continued through the end of the year, and we see it going into '26 with some runway, too. And on top of that, we saw strong advanced solutions growth, especially in server storage. We're playing heavy in the AI space around GPU and AI infrastructure. And then cloud anything as a service, continuing to grow double digits if you normalize for a divestiture we did back in Q3.

Okay. So we'll get into all of those maybe more specifically. But I want to quickly touch on kind of 4Q outperformance, and we touched a little bit on it there in the outlook. But above normal seasonality, above the high end of your guidance range. Importantly, you noted you didn't see any pull forward. So this was just a very strong quarter of execution for you guys. Relative to how you expected the quarter to play out, where did you guys basically do better than you thought? And what does that tell you about where your customers want to spend, what they want to spend on how sustainable that spend is?

There's probably the areas that exceeded a little bit our growth expectation that went into our guide. Would have been in the server storage and the GPU and AI infrastructure. And the AI infrastructure, just remember, these deals individually can be hundreds of millions. They're very project-based. But by virtue of that, they can be a little bit spotty. It's -- they're large enterprise deals, and we aren't necessarily forecasting those with a tremendous amount of advanced notice. Same in our guide for Q1. We're not assuming any outsized growth there, but that's going to be opportunity if some of those come across the plate.

The only other thing I would add, Erik, is if you peel back the AI infrastructure and kind of that GPU business within server storage networking, we still had solid growth there, too. So people ask, how is your campus refresh networking going in some of the core products that you traditionally participate and we still saw strong growth there. So you add on top of what Mike said, it comes out with a really good double-digit quarter.

Okay. And Mike, you alluded to this a little bit, but you're guiding to a very modestly subseasonal 1Q. But when we talked last night, you did talk about conservatism embedded into the guide. I always love when you want to be prudent. Again, in this dynamic world, it's the right thing to do, obviously, look at what's going on this week. But unpack where you believe you're being kind of conservative and the relative up and downside risks as you see them, whether they are macro related or company specific.

So the guide calls at the midpoint for just under 3% growth, a range of roughly 2% to 4% using round figures. But more importantly, from a leverage perspective, the guide calls for EPS growth anywhere from 11% to 23%. So -- what we're seeing is a bit of mix change with margin accretion, but also the leverage that we touched on a few minutes ago that we've built from an OpEx perspective and efficiencies with all of the investment that we've done over the last handful of years. So if I then unpack that kind of revenue growth and get to the crux of your question on the trends, the guide assumes at the midpoint, I'll center around, would assume flat to low single-digit growth in client and endpoint. So client and endpoint, the two biggest subcategories, while we don't break them out individually, are PC and desktop and mobility. PC desktop, we're still expecting to grow. We just do still see the runway that we just mentioned from a PC refresh perspective. But we had a very significant spike in mobility sales Q1 of last year. And therefore, that compare becomes a little bit more challenging. The compare in PCs is also challenging because that was a very significant growth quarter last year as well, but -- or more significant anyway. So that's sort of the client and endpoint, but our guide is built around low to mid-single-digit growth in advanced solutions with server, storage, cybersecurity still being the drivers, conservatism built around the GPU deals that could come in and conservatism even on the PC and desktop side of the equation, if we were to see some pull forward because price increases with memory supply are now starting to kick in. That's a category that is probably seeing a little bit more of the price increases in early days here in Q1. We didn't see any of that price increase in Q4 to close out the year. And then last but not least, cloud growing double digits. That's been a key growth engine where we see Infrastructure as a Service, modern workplace and other areas continuing to grow quite well.

Okay. Perfect. I'd love if you guys can help us when we take a kind of a big step back and we look at spending trends, macro factors, the pipeline that you see from your customers, I'm not asking for guidance beyond 1Q unless you want to provide it. But like what are you learning about demand in the risk environment? Just like customer end markets, regions, products, you touched on it, Mike, but I'd love if you can just maybe expand a little bit on just -- what are customers telling you? And how does that inform you, the year?

Yes, I'll start. So I think with -- as Mike mentioned, kind of the price increase is just starting to take effect. So enterprise is being much more thoughtful around kind of if they have spend for the year, what are they looking at? What are the price increases and really starting to map out when those deployments should be coming. In addition, knowing that the price increases are here, are they looking at potentially opportunities to have maybe a different feature set? Does everybody need an AI PC? Does everybody need a touchscreen? Do I need the same amount of memory for different work groups that are we're going to be going through a refresh. Secondarily is when you start kind of getting in SMB market, kind of mid-market SMB are just now starting to really understand and go talk and we're doing a lot of educating around of here's what it means, go talk to your end businesses to understand what's in their pipeline for the year, so we can bring that back and really have good end-to-end visibility with our vendor partners, our OEMs because I think that's critical, especially with the masses of customers we serve and on a global basis. So some of the advantage we think at Ingram Micro that we have is because of our reach of what we have is the vendors are coming to us to say, "Hey, help us really understand kind of that market." And by the way, when there is going to be demand, we're hearing that there's still going to be allocation available for those kind of mid-market SMB market. So the opportunity for us to say, and here's what the opportunity is all the way out to the end users. So we're just starting to have that conversation. Are there other ways, some of the OEMs that we're talking with and our customers instead of this PC as an example, on the price increase, can we also wrap it with peripherals so we can kind of cost average and try and help alleviate a little bit of the burden of the price increases. So I would say it's a fluid conversation. We're right in the middle of it and having these conversations, both at a local level and on a global level, both with our customers and also with our vendor partners.

Okay. And then just regionally, any major differences that you see across the world you have exposure, again, Americas, LatAm, Europe, Asia, just any major differences or trends in spending or how customers are trying to address the year and priorities?

Not necessarily at this point. We haven't seen that. Pretty consistent.

APAC was -- through '25 was our most significant growth, but all -- we closed Q4 with all regions growing. So we're seeing demand healthy everywhere.

Okay. Okay. Really helpful. Since it's a focus at this conference, I just want to ask you a question before we can move on about just how you think the memory cycle is influencing customer spend in your views. Again, it's kind of early in pricing. Are you hearing concerns about that? You kind of talked about enterprises being a little bit more intentional. Are they willing to move quickly to make decisions? Just -- again, I think the enterprise is looking to make decisions probably sooner than SMB. SMB is going to have to catch up to that cycle, I think, here in the coming weeks of really what this impact is and to the extent of that impact and really trying to get their arms around kind of that demand from an end user perspective. So more conversations about what that pipeline looks like. Is there going to be a pull forward? As we mentioned, we haven't seen a pull forward in Q4 and/or to date in Q1. And so what does that look like on a go-forward basis? That's what we're seeing. Okay. Cool. PC market. Mike, you mentioned the kind of being conservative on PCs in 1Q, just given that we're starting to see pricing increases. I think last night, you also mentioned that the refresh cycle is somewhere around halfway complete. Just would love your perspective on kind of what informs that? Is that the pipeline that informs your view? Is that customer conversations? Just how we're thinking about the evolution of this refresh opportunity that's clearly kind of moved beyond that end-of-life period now?

Yes, I'll start, and I know, Paul, you'll add. It's all of the above as far as the data points that we take in. And you can look at some of the external research suggesting there is still runway. Your question mark is more on second half of this year and where that lands, especially if price increases become more earnest. But we're pretty bullish as far as what we see with still some growth in Q1. Now so the one thing to remember is usually a PC refresh that will get triggered by, for instance, Windows end of life usually happens five to six quarters in advance. This one got compressed. We really didn't start to see the pop until Q4 of '24, only less than four quarters ahead of that end of life. And it really became robust beginning in Q1 of last year and was robust, double-digit growth throughout the year. But that still implies runway as far as number of units to be refreshed, the data points we hear from our OEM partners as well as what we see in the market, and we see the demand continuing.

And I think amidst maybe broader market concerns about the pace or sustainability of AI spend, what I heard from you guys last night is really encouraging. You're clearly participating in AI infrastructure projects. You are enabling GPU shipments to customers. Based on kind of the ramp that you've seen, let's call it, over the recent past, what inning of the build-out -- and again, when you talk to customers, what inning of the build-out are we hear -- are you hearing about from your customer base specifically in terms of how prolonged of a potential growth tailwind this could be for you guys?

The AI process.

Yes, exactly. AI [indiscernible].

So it's early days. And so we're encouraged, though. So it's early days and you look at -- if you would have asked us Erik a couple of quarters ago, we have enable AI, which is really helping people understand, sell and deploy AI at scale. And the question is how do you monetize kind of the GPU shipments that we've been going through. If you look at those three phases, the amount of customers quarter-over-quarter that are coming in, not just the Phase 1 for the awareness that are actually getting to the outcome, when I gave one use case, which is a great use case of how we help some partners through that process, and they were able to monetize AI with their end partners. And again, we're seeing significant increase as a percentage. It's still early days and the amount of partners that are coming through this is still minimal relative to our broad 165,000 customers that we sell to, but we're encouraged by the fact that we're seeing more going through that process as opposed to just coming in and trying to do the awareness and kind of dropping out of the process. So early days, encouraged by what we're seeing, and we're actually starting to see some of that monetization because we're helping partners able to capture that at the end user.

And what do you guys as Ingram Micro maybe do differently or better than peers, competitors, other parts of the market that kind of enable you to win in this market? -- specifically to AI.

Yes. So I would say we've been on this journey for three years. And so we've gone through it. And so this isn't just buzzwords of waking up and saying a platform and saying AI, we've actually gone through this process. And so the first thing we did three years ago is we created a data lake, not a data -- or a data mesh, not a data lake. So it gives you enterprise ready, your data on a global basis, pulled it out of all of our ERPs. So it took a year. AI is only as good as the data. And so we've gone through this process. The second thing is we have 400 AI machine learning models that we've been training for a year, which has allowed us now to actually be able to take a process mapping end-to-end, not just one process, but end-to-end processes in the company and use Agentic AI. So the difference is we've gone through this. So now we can go to partners and say, here's the journey we went on. Here's our lessons learned that we went through. Let us help you go do that with your end businesses, too. So I would say we've been in this. We've experienced it, and now we can help our partners get through it also.

The only thing I would add to that is even aside from the technology and the delivery mode, breadth that we've built over time is a big factor here on these AI projects. So remind everybody that we are about 35%, 36% of our revenues are in Asia Pacific and Latin America combined, a much bigger share than most of the players that we compete against. But on top of that, these are global deals with large players, large vendors, large OEMs and to be able to have that discussion of, yes, we can service this large project in Asia and we can service this large project in North America is absolutely a value prop.

Right. Okay. I think that's a good segue into maybe just addressing what has been a theme more broadly in the market, not necessarily specific to Ingram micro, but just AI disruption risk. And I'm just thinking from the perspective of like are there tools that could be created at some point that just like allows customers to source solutions directly. Again, I'm just playing the devil's advocate. I'd just love to know how you think about that risk and how you're protecting yourself to make sure, yes, you might find some new tools, but we do more than that.

Yes. So I don't get asked, are we going to be disintermediated very often. So if you go through -- kind of I've been in the business for 30 years. So if you go back all the way to dot-com, distribution was going to be disintermediated. Then you came to cloud. Everybody is going to go buy cloud directly. Now we got AI. Everybody is going to go do it directly. I don't need anybody. Reality is there's more complexity in technology and how technology is delivered today than ever and how it's consumed because it's not just about one piece plugging it in and servicing it and coming back a year later, three years later, whatever it is, to go ahead and say, I'm going to give you better, faster, quicker at a cheaper cost of service. So complexity, our average deployment, and this is a global stat, is six products and services are delivered to that end user on behalf of our solution provider through Ingram Micro. So if you want just one product, yes, that's always been an opportunity for someone to just go buy it direct. You want to put six products together and deliver a business outcome and how that gets serviced, you're going to have a big trouble when those six products are there and you got to call six different people to say, "Hey, this isn't working. It's your fault." And Erik is going to go, no, it's not. It's Mike's fault. -- go talk to Mike. So that's what the solution provider and the value, and we provide that. And as we build out competencies and skill sets to help augment our customers. So we're right in the middle of it. And we think it will drive productivity. It's done it for our business. You saw from an OpEx standpoint and what we're doing to take that friction out of our business from back end to free up to go have different conversations with our customers to add more value to them. So we're excited about actually where the technology is. We're using it. We're helping to enable it, and we're helping our partners be successful with it, too.

Okay. Great. I think that's a natural segue into maybe one of the areas of most important differentiation, which is Xvantage. So maybe first, before we get into the specifics of exactly what it allows you guys to do that's differentiated. Just where do we stand on the build-out of Xvantage, meaning how many regions are we in, customer adoption, capabilities? And then for us, as we track your success, what are the milestones we want to -- we should be tracking on Xvantage.

So I'll start off and then Mike will for sure, jump in. So the good thing about it, that differentiated is it's all global, and it's real time. So it's in every region. And so it's in the top countries. We have 21 countries that are on it now. Every country has access. So let me take a step back. You have your customer in the same platform, you have Ingram Micro associates and you have our vendors. Every team member globally can have it. The question is, is it automated from being able to have the connectivity to the customer. So full deployment in terms of the capabilities with customer vendor Ingram Micro team member is in 21 countries. Most of them are in the top 10 countries. So if you look around North America, Germany, France, U.K., other countries in Europe and then you look at India, Mexico. So you kind of put it together, it's a majority of the big countries we do business in. Everybody is in a little bit of a different journey. So when you have the same code base, you say, here's some capabilities we've built out. A lot of it comes down to process and change management within those countries to be able to deliver on that. So the more mature countries that are further ahead have just been further down the process. It doesn't mean the other countries aren't catching up to getting that same capabilities out of it. When you look at milestone, there's a couple of things that we look at. One is self-service orders. So this is great. We've developed this platform for people to come on. Are you actually on the platform? And how long are you on it? What are you doing from searches trying to understand, but are those actually turning into orders? And so we're seeing a significant increase. We mentioned it last night that we have 100% self-service orders year-over-year, and it continues to grow. So people are coming on. They're getting value out of it, and they're actually ordering. And it's not because we're saying you have to go order because they're seeing the value out of it. We're actually reactivating dormant customers, customers that haven't done business with us over the last 12 months. On average, it's about 2,000 customers per quarter. We normally announced we had 160,000 customers. This quarter, we said we had 165,000 customers. Great opportunity for us to go back and show up with those customers, and they're actually growing at a significant rate faster many times than the company average, let alone the previous time that they were doing business with Ingram Micro. So there's a number of different stats we look at. We don't talk some of them public, but we look at things like how many times recommendations. So you bought this bottle of water and we recommend you buy this thing because like partners like you and this end user that you're calling on should be selling this warranty, should be selling this service. So we look at the conversion rate of that also. So we have a number of different kind of KPIs we use internally. We're starting to use more of them externally, so everybody can see kind of the progress we're making. First and foremost, if I go back to kind of the strategy, the first one being taking out OpEx, driving friction out of the business, both with us and our partners. That's where you've seen it show up in our P&L, and Mike and I have talked about that over the last year. The second one, driving demand. We've grown faster than market rates. because of the capabilities through Xvantage, it wasn't just one quarter because that was a real question, "Hey, did we just shorten the sales cycle and capture it early? Was it a pull forward? Or has it been consistent"? It's been consistent for four quarters now. And then the last one is when we have that data and insights, I like to say intelligence is the next B2B operating system, because that's what business-to-business wants. They want the data and the intelligence to go run their business differently. I don't know if there's any.

That was great. Just milestones maybe as they look.

Yes. Well, so I think on a timing perspective, as Paul said, we're deployed across a number of our largest countries already. We're going to continue to develop and deploy, and we'll always be on some level of journey there. But I think to get to truly steady state, while we don't guide out beyond the quarter, I think we're looking at the balance of this year and probably into the earlier part of next year, where we still see a little bit more of the deployment and development spend before that gets to a little bit more normal course.

Okay. Normal course, remember, we're a technology company now, so you're always innovating. So if people ask, when is the end journey that this is going to happen, we're going to continue to innovate and create value for our partners along the way, but the spend will come down to some extent. Think of Xvantage as kind of the front end, and there's some work that we still got to do from a back-end kind of standpoint to kind of back of the office opportunity that we have also.

And I think, Paul, something you outlined last night is kind of the three phases of Xvantage and you're kind of entering the third phase, so to speak. Can you just help us understand what exactly that means, the kind of financial implications of what Xvantage can do for?

Yes. We think -- I mean, the biggest enhancement should be quality of revenue. So from a margin standpoint, we saw some of the tools that we're delivering that we call IDA Intelligent Digital Assistant and we only have mid-single digits of that business on the -- using IDA today. We expect it to be more than 10%. Those conversion ratios that we've seen were 3x as much for us and our partners, because of the data that we're offering up for them to go have a different conversation. Within those conversion ratios also, we see more advanced solutions, which is higher margin and more cloud revenue, too. And we're actually fine-tuning IDA to be focused as we've gone through. I talked about Phase 1 and Phase 2, Phase 2 being kind of that demand generation and revenue. Now we're tilting that revenue more towards quality of revenue. So how do we offer up to our sales organization on IDA to have the quality revenue versus just revenue. So now it will be more around advanced solutions and cloud, which will be a better margin profile for us, too. So -- that's what we expect to happen throughout '26 as we kind of go through that. And as we continue to roll out more countries, they'll be on those same kind of phases also. And you'll see some of that show up in our guide in terms of margin accretion that we're showing that we expect to continue to happen.

And I want to touch on that a natural segue what I thought was the most important kind of most enlightening part of the 4Q results and 1Q guide was just the OpEx control that we're seeing. OpEx as a percentage of gross profit was effectively a 2-year low in 4Q. The guidance you kind of implied, so to speak, I know you don't necessarily guide to it, but it remains well below the kind of trailing 2-year run rate there of OpEx intensity. So I know you mentioned a small kind of insurance benefit. But even if you back that away, like it feels like we're seeing Xvantage at work here. And I would just love to maybe understand how sustainable this level of kind of OpEx efficiency is, I think it was like 63%, 64% of GP dollars. I mean, that's fantastic compared to where you've been. So just talk about how you -- where that goes from here. Again, I know you won't guide but.

Yes. No, I can start on that. No, that's fair, very fair. I think that has been the journey we've been focused on. We've seen a mix of our business more towards lower margin but lower cost to serve. So that drives a little bit of cost efficiency, but it's really the baseline of what we've done with Xvantage, and we've talked publicly about taking out around $200 million of annualized costs over the last handful of years. But as you start to see that growth and 2025 is a perfect example where for the year, we grew 9%, and we did not add back all of those costs to serve that growth. So we're a far more efficient machine. No reason that, that efficiency doesn't still exist. Where we are going to invest is going to be more around the technical competencies and services around cloud and around some of the advanced solutions categories where that drives also a higher profit margin even despite a little bit more cost to serve. But we can serve that cost in such a more efficient way by having removed a lot of those back office and admin functions that are now automated in a more material way. So we -- you alluded to OpEx as a percentage of GP. It's the same as we do, but also OpEx as a percentage of net revenue. Same thing.

5%.

We finished at 5% for the year. We finished well below 5% in Q4, and our target is to stay below 5%.

Okay. Okay. Perfect. I want to touch on free cash flow. Obviously, extremely impressive. You just had your best cash conversion cycle as far back as we have the data. So again, congratulations, just like, again, you can see why the stock is up the way it is today amidst a blood bath, so to speak. Just what are the implications for free cash in 2026? Where did you excel in 2025? I don't think you're necessarily changing your outlook about how you can convert EBITDA to free cash, but learnings of what you were able to accomplish and how that informs the future.

Yes. So what we said in our guide for Q1, and we really don't even guide on free cash flow, but we felt it important to make this point now coming off of such a huge cash flow generation to close out the year. So it was north of $1.6 billion was about $1.1 billion for the full year of free cash flow generation. Some of that was benefited by timing of our year-end and then -- but a pretty relentless focus on working capital as a whole and continuing to drive efficiency there. And even the areas where we're seeing the growth are more efficient working capital areas. So for instance, these large GPU and AI infrastructure deals that we talk about, while it is a lower margin, it's extreme -- it's very low cost to serve. It's more of a fulfillment kind of mode, but it's also very working capital efficient. We aren't stocking this product. These are kind of project-based where the product moves in through our possession very quickly. So we've become far more working capital efficient tools like Xvantage, IDA, the ability to key sales towards areas where there's opportunity because either we have the stock or there's opportunity to procure the stock favorably and move it fast. Those are really key differentiators that are driving this efficiency. But what we said in our guide, well, adjacent to our guide, even though it's not a formal guide, is that we do expect a more than normal seasonal outflow in Q1 only because of how low we closed Q4, but also we may opportunistically use our balance sheet with price increases to do buy-ins. That can also be a favorable use of capital for us, and we are constantly talking with the vendors around those opportunities. So that could create a little bit more of a headwind. But what stands pat here is that we expect in most years to generate more than 30% -- to generate free cash flow equivalent to 30% or more percent of our adjusted EBITDA. We did way more than that in 2025, and we expect '25 and '26 to still be well over that, which implies a positive free cash flow for 2026 as well.

Okay. I just want to maybe ring-fence one risk. It came up last year. I don't think it's an issue anymore. But India, I remember there was obviously an issue in 1Q of last year. I think we've moved beyond that, but just confirm that, that risk is kind of ring-fenced as.

Yes, that's right. So we've talked about it in Q1 and Q2. And it was met expectations in Q3. We feel good about it in Q4. We've got new leadership team. We got process. We're rolling out some additional stuff around Xvantage. So we feel good about where we sit in India today going into Q1 and into 2026.

Perfect. Perfect. Mike, for you, you paid down $200 million of your term loan in February. You authorized $100 million share repurchase. You keep growing your dividend. Just -- when we think about capital allocation, weighting of M&A, organic investment, debt reduction, shareholder returns, just maybe stack rank the priorities for us as you see them today.

Sure. Yes. So I think we're going to continue to invest in the business for sure, from an organic perspective, the Xvantage investment that we mentioned as well as potentially in some of the people and other things around that, and we'll drive that well within bounds of profit and cash flow metrics. We're proud of the fact that we've now repaid close to $2 billion in debt over the last handful of years, inclusive of the $200 million you just referenced that we paid down a couple of weeks ago. So we're bringing our leverage on a net debt to adjusted EBITDA basis, actually closed the year at 1.0x, down from 2.2x a year earlier. Now I wouldn't say 1 is normal, but certainly being in the high 1s to around 2 is a good wheelhouse for where we should be on a leverage perspective. But we want to continue to repay debt, and that brings our interest coverage down and so forth. And in the meantime, we're happy that we do have some of the return to shareholders built in there. So we have a dividend that we started right out of the gate from when we went public. And every quarter, we've raised that by around 2.5% or a little bit more than that on a sequential basis. And we announced an increase again of the same magnitude in the dividend that will be paid out in a couple of weeks. And then you mentioned the share repurchase. That was an authorization also obtained with our Board in February for $100 million. Now the key focus now with us still being majority owned is that, that wouldn't necessarily be a buy out of public float, but rather participating with a potential follow-on by our sponsor when that happens to buy additional shares down from them. But it is a more blanket authorization that could be used as a regular buyback, and we would absolutely look at that as another means of shareholder return when the time is right on a more traditional way. Last, but not least, M&A. I think M&A has been a lifeblood for us for many years. We've done quite a bit over time. But what we've done lately in the realm of M&A has been more smaller tuck-in acquisitions, not very big dollar amounts, but very meaningful as far as capabilities, technology. It doesn't mean we don't have the dry powder to do something bigger if it came along, and we would think about it opportunistically. But those tuck-in acquisitions will continue to be part of our DNA.

Cool. That's great. So we've covered a lot in 35 minutes today. Maybe for each of you, I'd love to just kind of give you the kind of final word here. What's the message you want to leave us and everyone on the webcast with what's underappreciated, what's undervalued as we think about the story from each of your perspective?

Yes. I think for us, it's Xvantage and the investments we're making in our customers. We continue to invest ahead of the curve. We did it with cloud. We spent $600 million on our cloud and cloud platform. dozen years ago through that process. That was the underpinning of what we're doing around Xvantage is providing value to our customers and making sure that we're driving more efficiency. We're helping drive demand and ultimately using the data and insights for them to help run their business. So we're pretty excited about the investments we're seeing that start to show up from a return, and we expect continued success.

And I would just add, I can't resist to put on my CFO hat here, but I'll just touch on very -- building very much off of Paul's comment. It's all about the efficiency we now have in the system. We can operate in a far more automated manner than we could have a couple of years ago, and it's pretty exciting.

That's a perfect place to end. Paul. Mike, thank you guys very much.

Thanks a lot.

Thank you.