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

Greetings, and welcome to the Ingram Micro Second Quarter 2026 Earnings Results. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Willa McManmon. Please go ahead.

I'm here today with Paul Bay, Ingram Micro's CEO; and Mike Zilis, our CFO. Before I turn the call over to Paul, let me remind you that today's discussion contains forward-looking statements within the meaning of the federal securities laws. All of these statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For further details concerning these risks and uncertainties, please refer to today's earnings release and our SEC filings. Our forward-looking statements are based on information currently available to us, and we do not intend to update these statements except as required by law. During this call, we will also reference certain non-GAAP financial information. Reconciliations of non-GAAP results to GAAP results are included in our earnings press release furnished to the SEC and available on our investor relations website. With that, I'll turn the call over to Paul.

Thank you, Willa. Good afternoon, everyone. I am extremely pleased with our second quarter performance, which combined with our first quarter results produced a very strong first half of 2026. In the second quarter, we delivered net revenue of approximately $14.5 billion, gross profit dollars of $959 million, and adjusted EPS of $0.82, results that came in significantly higher and above our guidance ranges. These results are the best second quarter we have ever delivered and reflect a disciplined execution across our global business, continued momentum with Xvantage, and the strength of our diversified portfolio, partner base, and global ecosystem. They also demonstrate the power of our operating model. Mike will walk through the financial performance. I will begin by highlighting several themes that stood out in the quarter. First, we continue to demonstrate the compounding effect of our operating model. Gross profit dollars grew faster than revenue, adjusted operating income grew nearly 40% year-over-year, while adjusted EBITDA and earnings again outpaced revenue growth. We are increasingly evolving from a reactive selling to a more proactive go-to-market strategy, leveraging data, automation, and platform intelligence to identify opportunities earlier, engage partners more effectively, and improve productivity across the business. Second, demand remains healthy. We saw double-digit revenue growth across our 3 primary lines of business. We also delivered revenue growth across all 4 regions and customer categories. Our net revenue by region remains balanced and well-diversified, with North America contributing 36% of net revenue, Asia Pacific, 30%; EMEA, 26%; and Latin America, 8%. Asia Pacific is now our second highest operating margin region, while Latin America remains our most profitable region by operating margin. During the first half of the year, I traveled to a dozen countries across these regions to meet with partners and team members saw consistent themes across the markets. Customers said that while some Advanced Solutions deals are taking longer, pipelines remain healthy, they are very optimistic. AI is top of mind, their end customers are moving from asking, "What is AI?" to "How do we actually deploy it?" This is where Xvantage and Enable AI are beginning to pay dividends, which I will discuss shortly. The shift in the market is also driving an even greater push towards outcome-based selling to solve specific business problems with complex solutions driven by AI, automation, and security. We are helping our customers provide these solutions through every stage of their sales and deployment cycles, from helping them build use cases to providing access to our certified engineers. The market is evolving. We have invested ahead of the curve to evolve with it, our role in the channel has never been more important. That leads me to my third theme, the continued evolution of our Xvantage digital platform into an intelligent operating system. As AI accelerates changes across the industry, our customers and our vendors need a platform that simplifies complexity, connects data, and orchestrates workflows at scale. Our Xvantage strategy centers around embedded AI, automation, and data intelligence driving clear sources of value. This is demonstrated by reduced operating costs, accelerated growth, and expanded profitability. In Q2, the impact was visible in the data. Time spent on Xvantage increased approximately 40% year-over-year. Average order value increased 12%, and average revenue per customer grew 23%, reinforcing that Xvantage is scaling as a global platform. The 10 countries with the most mature Xvantage implementation showed double-digit year-over-year increases in gross profit and gross margin per go-to-market head delivered lower operating expenses, demonstrating the platform's leverage. We are seeing the same flywheel effect across our markets, including Asia Pacific, where India provides a strong proof point with nearly 50% year-over-year growth in average order value. Average revenue per customer, which almost doubled, measurable margin impact from strategic pricing and platform-led insights. Customers are using the platform as a valuable and integrated way to drive their business. Every quarter we see more users, greater engagement, and higher sales on the platform. To illustrate this, self-service orders around the globe reached 2.4 million, up 12% year-over-year, increasing efficiency and allowing our team members to focus more on high-value solution selling and customer engagement. Email-to-Order, our patented AI capability that ingests unstructured customer emails, turning them into touchless orders, saw volumes increase 43% year-over-year, representing approximately $1.4 billion in revenue processed through our AI-enabled workflows that help partners move faster and operate more efficiently. For the third consecutive quarter, IDA, our Intelligent Digital Assistant, continued to demonstrate measurable business value, generating approximately $1 billion in net revenue in Q2, nearly 7% of the company's net revenue, ahead of pace on our goal of double-digit revenue contribution by the end of the year. Opportunities supported by IDA converted at nearly 4x the rate of traditional quotes and contributed to a higher mix of Advanced Solutions and subscription categories. These are not simply adoption metrics, they are business outcomes. As engagement of Xvantage grows, the platform becomes more intelligent, automation improves, and our partners transact with greater speed, efficiency, and confidence. Last quarter, we discussed 4 patents that were granted for core innovations that bring greater consumer-like simplicity, personalization, notifications, and ease of use to complex B2B technology commerce. Since then, 2 additional patents have been granted, further reinforcing the platform's differentiation. One covers our consumer-like end-user interface, enabling resellers to seamlessly manage and transact with their end customers through Xvantage, advancing our vision of a single pane of glass where you can order hardware, software, cloud, and services, which again is simplifying the B2B experience. The other covers an AI-powered alerts and notifications architecture, enabling Xvantage to interpret real-time signals and proactively deliver personalized insights and recommendation actions, further differentiating us as Xvantage evolves into Ingram Micro's intelligent operating system. We are extending that differentiation by continually meeting our customers where they are in their technology journey. Customers can integrate with Xvantage in multiple ways. Most recently, we introduced Model Context Protocol, or MCP, which represents the next step in making Xvantage even more intelligent and accessible. MCP provides the standardized way for AI agents to securely access Xvantage's data, services, and workflows. That foundation also enables more sophisticated agent-to-agent interactions, where multiple AI agents can collaborate across customers and vendors to automate increasingly complex business processes. By securely connecting AI agents to Xvantage, MCP enables customers and vendors to automate workflows across quoting, inventory, ordering, and the technology lifecycle. The result is a faster, more seamless experience that reduces manual effort and allows our customers to focus on delivering greater value to their own clients while leveraging the full power of the Xvantage platform. In June alone, adoption of MCP increased 50%. Usage grew more than threefold. MCP-enabled customers are already automating multiple areas of their business. In short, MCP is providing another way to connect seamlessly with our platform, and customers are embracing it. Alongside the platform, we are helping customers and vendors move from AI interest to practical deployment through our Enable AI program. We are moving customers through the stages of assessing readiness and supporting repeatable use cases designed to deliver measurable outcomes. Hundreds of customers are in the program, with new customers joining in at a rapid pace. Quarter-over-quarter, we have seen more than 60% growth in customers engaged in the program, with an almost 100% increase in those moving into AI business case deployment. The AI opportunity extends well beyond AI infrastructure. Moving from pilots to scalable outcomes requires modern infrastructure, clean and structured data, strong security, optimized cloud environments, and the ability to integrate multiple technologies into comprehensive solutions. That complexity plays directly into Ingram Micro's strength and is a reason we rolled out Enable AI at the beginning of the year. With the program, we are helping customers identify high-value use cases, build proof of concepts, accelerate deployment, and create specialized practices around AI. This is similar to the way we helped scale the cloud opportunity, which is now a significant driver of gross profit. We believe Enable AI gives us an even larger long-term opportunity to monetize AI. On the enterprise side, earlier this year, we partnered with key OEMs and the world's leading AI and accelerated computing company to launch a program across several of our key markets. We call this Enable AI OEM Accelerate. Our goal is to enable mid-market MSPs to confidently pitch, deliver, and manage AI factories that drive ROI. Since the launch, our team has helped customers create AI factory opportunities that are already translating into active pipeline. To also support larger enterprise customers, Enable AI now includes access to one of the world's leading Neoclouds, creating a direct path into mission-critical AI training and inference workloads. We are still early in AI adoption cycle, particularly with SMB. While GPU and AI infrastructure remains important on the enterprise side, the larger longer-term opportunity is helping our broad customer base deploy AI more effectively for their end customers. As adoption expands from large enterprise into the mid-market and SMB segments, our role becomes even more important. Customers need guidance and enablement, vendors need reach and scale, the ecosystem needs a digital platform capable of connecting it all together. We are working with vendors to do just that. Thomas Kurian, CEO of Google Cloud, validated this when he said, and I quote, "Google Cloud and Ingram Micro are working together to remove the complexity from IT distribution with the Xvantage platform. Through this unified platform, we are giving enterprises the ability to transform the way they service customers across every industry. Together, we look forward to partnering further to bring Gemini models and agentic AI to even more organizations. This type of partnership is why customers rely on us. Further to this, we are partnering with other leading vendors, including hardware providers, software companies, and hyperscalers, the vendors are increasingly moving towards global distribution-led sales motions to reach both the enterprise and even more SMB market. These types of global partnerships play to our strength, including global and local presence, our CoEs or Centers of Excellence, extensive certifications across technologies, and more than 165,000 customers serving millions of end businesses. As an example, in May, HPE announced that Ingram Micro would become one of two global distribution partners as it moves to a unified distribution model designed to deliver greater simplicity and consistency for partners across lines of business and geographies. Vendor strategies like this validates the importance of dedicated enablement resources, strong operational support, and global scale. They also reinforce the value of Ingram Micro's reach and expertise as AI begins to monetize within SMB. Before I close, I want to highlight our continued commitment to responsible growth and corporate citizenship. Through our 10 to 0 goals, which represents our most ambitious sustainability goals, we made meaningful progress in 2025. We reduced operational greenhouse gas emissions by a cumulative 45% over the last 3 years. We achieved our 2030 target to divert more than 90% of waste from landfill, and we reduced safety incidents by more than 70% since 2020. We are proud of this progress and look forward to sharing more in our 2025 Sustainable Impact Report that is coming out in a few weeks. This quarter, we delivered robust growth, exceeded our financial commitments, expanded profitability, and continue to advance the strategic initiatives that will drive long-term value creation. Just as importantly, we continue to see growing evidence that Xvantage is creating meaningful differentiation and positioning us to capitalize on the next generation of AI-enabled opportunities. The investments we have made in our platform, talent, and intellectual property set us up well for the future. With that momentum and confidence in our execution, we are providing our strongest quarterly guidance to date. Mike will expand on this in more detail. None of this would be possible without the dedication of our team members across 57 countries. Throughout my travels this year, I have seen firsthand our team's tenacity, customer focus, and willingness to take on new challenges. We are building a stronger company that is sustainable and resilient, a more scalable operating model, and a platform that will increasingly differentiate us. Looking to the back half of the year, we are confident in both our strategy and our ability to continue executing. The environment remains dynamic, but over nearly 5 decades, Ingram Micro has proven to be adaptable and capable of performing above market. With that, I'll turn the call over to Mike. Mike?

Thank you, Paul, and thanks everyone for joining us today. As Paul highlighted, we had a record second quarter with financial results that exceeded the high end of each of our guidance ranges. Our growth was widespread across all geographies, customer categories, and our 3 primary lines of business. In terms of operating leverage, our gross profit dollar growth in the double digits, combined with our focus on disciplined execution, operating efficiency, and quality of business, yielded growth in non-GAAP net income at a rate well over 2x that of gross profit. As we look ahead to the third quarter, we see a continued solid demand environment driving further year-over-year top-line growth enabled by strong execution, which I'll cover more in our guidance discussion shortly. Now getting to the details of our second quarter. Net sales of $14.53 billion. We're up 13.6% year-over-year in US dollars and up 12.6% on an FX neutral basis. Cloud was our fastest growing line of business at 44% FX-neutral growth year-over-year, bolstered by strength in Infrastructure-as-a-Service and cybersecurity. This is despite an 11% year-over-year impact related to our previously disclosed divestiture of CloudBlue, which was completed in the third quarter of 2025. Net sales of Advanced Solutions grew 13% on an FX neutral basis, driven by demand for GPU and AI infrastructure product sets, as well as storage and cybersecurity. Finally, we also saw continued momentum in Client and Endpoint Solutions with FX neutral growth of 12%, driven by strong demand for notebooks, desktops, and components. Geographically, we saw growth across each of our 4 regions, once again led by Asia-Pacific, which grew 28% on an FX neutral basis. Latin America also had strong double-digit growth of 19%. Both regions had robust growth in Cloud as well as Client and Endpoint Solutions. North America net sales came in at $5.28 billion, up 6% over the prior year. Both Asia-Pacific and North America benefited from sales of GPU and AI infrastructure product sets. We saw our consolidated sales of these products more than double year-over-year. Finally, net sales in EMEA were $3.75 billion, up 5% on an FX neutral basis, with robust growth in cloud, also growth in Client and Endpoint Solutions and Advanced Solutions. Back in April, we discussed for our guidance for Q2 that we expected a combined benefit to net sales of approximately 2% to 3% from various factors related to supply constraints, including increased average selling prices and pull forward of orders ahead of ASP hikes, offset partially by longer lead times to get product and some demand elasticity brought on by price increases. While it is quite difficult to quantify precisely all of these impacts, we estimate that we landed closer to the high end of this 2% to 3% impact from these combined factors. The year-over-year growth in cloud worldwide and in GPU and AI infrastructure were the other primary factors driving our overachievement to our revenue guidance for Q2. Second quarter gross profit came in at $959 million, compared to $839 million last year. The prior year figure included the impact of a write-down of $10.5 million in connection with held for sale accounting for a group of non-core assets in our North America region. Excluding this write-down, we saw gross profit growth of nearly 13%. Gross margin came in at 6.60% for this year's second quarter, up 4 basis points year-over-year, down slightly if we take into account the 8 basis point negative impact from the prior year write-down I just discussed. However, the growth in GPU and AI infrastructure deals that I touched on earlier is also an important factor in our margin analysis. Excluding the impact of these deals, our Q2 2026 gross margins were 6.90%, which is more than 20 basis points higher than the prior year second quarter, also excluding any such deals. As I've said in the past, while these deals tend to be lower margin fulfillment business, they also remain very low cost to serve and working capital efficient and are one of the more notable contributors to a year-over-year increase in adjusted return on invested capital of roughly 240 basis points. A final factor to touch on quickly related to gross margin is our geographic footprint. I noted earlier, our Asia-Pacific region grew 28% in Q2 and now represents 30% of our total net sales. Our Asia-Pacific gross margins were 4.47% in the current year Q2, which is a solid year-over-year increase of 27 basis points for the region. However, this remains a margin rate that is well below the average of the rest of the world. To this point, the margin for just our combined North America, EMEA, and LatAm business was 7.53% in the current year quarter. We've discussed before, this growth in Asia-Pacific is well-served as we focus on quality of sales across the region. Additionally, our turnaround has been very successful in India from the challenges in that country in late 2024 through the first half of 2025. So I'm pleased to say that this lower cost to serve and very efficient region landed in Q2 as our second largest region in terms of both net sales and operating margin. Asia-Pacific was actually our largest region worldwide in terms of operating income. As I shift to our operating expenses, we landed Q2 2026 at $722 million, or 4.97% of net sales, compared to 5.44% in the same period last year. The year-over-year improvement in operating leverage of 47 basis points included a 26 basis point impact related to held for sale accounting on 2 divestitures that closed in the third quarter of 2025. The remaining 19 basis point improvement demonstrates our operating leverage and the continued benefits of optimization and automation from Xvantage, as well as the mix factors associated with a higher concentration of lower cost to serve sales in the APAC region as well as GPU and AI infrastructure sales in APAC and North America. Adjusted income from operations was $280 million, up 40% year-over-year, including the held for sale accounting charge in the prior year, as growth in gross profit dollars and operating efficiencies are driving significant leverage in the business. Our non-GAAP diluted EPS was $0.82, up 34% from the prior year and well above the high end of our guidance for Q2. You'll recall, in our Q2 guidance, we discussed a potential $0.01 to $0.03 impact related to the conflict in the Middle East, and we believe that impact landed closer to the lower end of that range as our team there has continued to execute through this prolonged conflict. Turning to our balance sheet, we entered the quarter with net working capital of $4.9 billion, compared to $4.6 billion to close the same period last year. The higher investment in working capital this year is driven by the increase in net sales and investment needed to capture these opportunities. In particular, we have done some strategic procurement of certain product categories to get out ahead of continued ASP increases and potential memory-related supply shortages. ASP increases themselves also inflate the value of all elements of working capital. As we continue to push for efficiency in how we deploy working capital in this environment, on a days basis, our net working capital of 26 days in Q2 2026 was 3 days better than the same period of 2025. And as I noted earlier, our adjusted ROIC improved by 240 basis points year-over-year. From the standpoint of adjusted free cash flow, these factors drove an outflow of $527 million in the second quarter. I will touch a bit more on free cash flow in the context of our guidance shortly. Before I turn to that, we also completed another secondary offering in early May for 14.5 million shares, which included a repurchase of 1.2 million shares. Taking into account the 2 secondary offerings we have completed so far this year, as well as the smaller Rule 144 unregistered sale of shares by our majority shareholder in June, the ownership interest of Platinum Equity has been reduced by 13% since the beginning of March. We also returned $19 million to stockholders through dividends paid during the quarter and today announced a 2.4% sequential increase to our quarterly dividend to be paid in Q3. We entered the quarter with $809 million in cash and cash equivalents and debt of $3.8 billion. Our net debt-to-EBITDA leverage ratio was 2.0x, which has improved approximately 0.2x of a turn from the year-ago quarter as we balance the need to invest for growth with higher profit generation we saw in this year's Q2. Shifting now to guidance for Q3. We are guiding net sales of $13.55 billion to $13.95 billion, which represents year-over-year growth of more than 9% at the midpoint and nearly 11% at the high point. We expect third quarter gross profit of $910 million to $955 million, which would represent gross margins in roughly the 6.8% range. This revenue and gross profit guidance is reflective of many of the same trends in sales mix across products, customers, and geographies that we saw in Q2. We expect non-GAAP diluted EPS to be in the range of $0.72 to $0.82 per diluted share. Our EPS guidance assumes approximately 231.9 million weighted average shares outstanding and a non-GAAP tax rate of 27%. This guidance also assumes, again, a roughly 2% to 3% net revenue benefit from supply constraint puts and takes along the same lines as we saw in Q2. Our EPS guidance assumes roughly $0.01 to $0.02 impact related to the continuing conflict in the Middle East. Lastly, while we don't guide on free cash flow, I want to point out that we need to invest to support the continuing growth we are forecasting. However, as our Q3 guide indicates, we are driving accretion and income generation. Furthermore, we expect our heightened inventory investment exiting Q2 to sell through in full as the year progresses. In closing, I'm extremely pleased with our record Q2 performance and where we stand today looking into Q3. We expect continued year-over-year growth in our top and bottom lines as we execute and scale our Xvantage platform. With that, we can now open the line up for questions.

[Operator Instructions] And our first question will come from Katherine Murphy with Goldman Sachs.

I wanted to ask more about the 13% FX-neutral growth in the Advanced Solutions segment in the quarter. Prior, you had guided to that segment growing high single digits excluding any GPU fulfillment deals, and made clear that you had some of those both in APAC and the U.S. region this year. Can you talk about the characteristics of some of those GPU deals in the quarter, and then also how we should think about the performance of the ex-GPU demand, specifically CPU demand, and how you're participating in the broader refresh outside of the storage and security opportunities you talked to? Thank you very much.

Yes, this is Paul. I'll start off. Thanks for the question. As we noted, part of the upside that we talked about in our overachievement came both in cloud but really around GPU AI infrastructure, and we had very good growth in that. Came across the 3 categories: storage, server, really networking to some extent. Networking, we had a very large Q1. Some of that was timing. We're absolutely participating in what we define as the AI infrastructure data center build-outs that are happening. A lot of that came in Asia-Pacific, which was part of the results. If you peel back the general outside of the GPU AI infrastructure, we saw good growth across the board. As we mentioned, we had growth across all lines of business, across all geographies, and then also across all customer segments too. A healthy business with a little bit of an uplift from what we would define as AI infrastructure and GPU deals. Mike, I don't know if you have any other....

Yes, Kat, the only other thing I would add, because you asked about sort of the characteristic, which maybe you meant this, maybe you didn't, but it's more timing. I think as we've said in the past, a lot of those deals, one, they happen when the supply becomes available, which is part of the constraint, but they tend to end up being back-end loaded. We didn't guide to a significant outsized amount there, and we ended up seeing that happen with a lot of deals closing in the second half of the quarter. We similarly, in our guide for Q3, are not guiding to outsized growth, but there continues to be pipeline in that category of spend happening for sure.

[Operator Instructions] Our next caller will come from Erik Woodring with Morgan Stanley.

This is Maya on for Erik. Maybe just one question for me. There's been a lot of debate around whether enterprises are kind of reallocating IT budgets away from software towards infrastructure hardware, in particular, given the higher prices. Based on what you're seeing across partners and end customers, are you observing any meaningful software-to-hardware budget reprioritization today? If so, which customer segments or product categories are seeing the biggest benefit there?

I'll start. This is Paul. As we look at the pipeline and where the delivery came from, we are seeing a little bit of an effect of some customers, and I would say it's more mid-market and SMB, that are breaking their large project deals into smaller phases. We're actually seeing on the flip side, some partners that are actually now seeing areas that were previously delayed projects coming to fruition now. As it relates to hardware and software, we still had good growth, high single-digit growth in software, and similarly in hardware from a category standpoint. We're still seeing good strength, and part of that goes back to, again, as I mentioned on the prior question, the customer segments and seeing healthy growth across all the customer segments. I think it varies if you get into enterprise mid-market versus really the SMB market. Nothing I would say material that we've seen shifting one way or the other.

We'll go next to Joseph Cardoso with JPMorgan.

I just wanted to touch on the HP disclosure or discussion point around them essentially rationalizing maybe their partner ecosystem in terms of distribution. If we take a step back and we look at some of the other OEM partners, just from a big picture standpoint, how prevalent is that behavior that you're seeing in terms of rationalizing the partner ecosystem here? Just curious in terms of how broadly we're seeing that and if that's a recurring trend maybe across your OEM partners.

Yes. Thanks for the question. This is Paul. I actually called it out in my prepared remarks. We're actually seeing quite a bit of activity. I think there's a couple of reasons. One is we're seeing partners really want to do vendor partners, the OEMs that you mentioned and the one I touched on, HP, that announced that, they want to do more with less. You're able to really look at the resources. The way we look at it is we go global, regional, local and one of our differentiators is we have Centers of Excellence in each of the 4 regions, thousands of certificates. You've heard Mike and I talk about previously our product sets are made up of six different products and services. We're able to wrap in really what's the business outcome or solution that people are looking for. You have the access to 165,000 of our customers. Again, part of the reason is a co-invest. You get a little bit longer-term view on a multi-year. The one we announced from HPE is what are we going to do over the next couple of years, where are we going to co-invest, and how we're going to resource against that. It allows us really to be more strategic as opposed to quarter by quarter or month by month as they look at that. Again, I think because of the capabilities and competencies we've built out, along with our great geo presence of really good diversity all the way from North America, Asia Pacific, Latin America, and EMEA. It allows us to really have that reach and similar skill sets and competencies, and you wrap that around what we're doing with Xvantage from a global perspective. As we said, it's really one code base, and we are actually, what you get in North America, you can get the other 22 countries we have Xvantage launched into. You get consistency and predictability, and we're able to really focus on long-term strategies.

Joseph, one other thing. All those breadth points and certainly the Xvantage platform is a differentiator. I think one other thing that resonates with a lot of vendors, I don't want to necessarily pin this purely on the HPE discussion, but just as a more general statement, is business practices and how we operate around the world with that presence. That is definitely not true when you talk about some of the local and sub-regional players in some markets. That becomes a very key value prop to a lot of the vendors as well.

Our next question will come from Ruplu Bhattacharya with Bank of America.

It relates to AI infrastructure impact on gross margin. Looks like it was at 30 bps headwind this quarter. Going forward, do you think operational benefits from Xvantage can outweigh the mix pressure? Do you think your business can sustainably operate at a higher gross margin level with sustainable higher operating leverage as AI becomes an increasing part of the mix? Mike, if you can throw in, are you seeing any changes in working capital requirements or financing requirements as AI becomes a bigger part of the mix? Thanks for taking the question.

Yes. Well, let me hit on that second part first. I think the AI and GPU, as we have said, is extremely working capital efficient. We're not really stocking that higher-end equipment. It's more when you get it, the projects close. Very low inventory. As I said in my prepared remarks, the AI GPU piece was a significant contributor to the 240 basis points year-over-year improvement we saw in adjusted ROIC as an example, and also a significant driver of our working capital days being 3 days better year-over-year. As to the efficiency part of your question that you led with, Paul may add to this, I think Xvantage and the enablement we're driving around our entire ecosystem is true across every single product line. It does absolutely apply across the AI GPU piece, and we continue to be very efficient. That's why you see not only the leverage in a solid state, but even if you just look on absolute dollar growth of OpEx, we have to invest a little bit in the business. We are investing into cloud and enablement and services and some of those areas, but we certainly aren't matching, in any way, the double-digit growth we've seen year-to-date from a top-line perspective. That's significantly driven by the ability to operate in a far more efficient manner, and that remains extremely scalable. We will invest in some of those specialized skills, but we don't need to invest just simply to handle growth because we've built that much more automation around it.

This is Paul. As I talked about in my prepared remarks around the 10 countries with maturity, we had double-digit gross profit and gross margin per go-to-market head and delivered lower OpEx driving leverage. That wasn't really related to the AI deals that we're participating on. That's really on our core business, and we're going to continue to focus on the opportunities we have there. That's also not just more efficient and more profitable, but it's also a better experience for the customers because we're using our intelligence and our data to actually bring those opportunities forward. That's where I go back to being more proactive versus being reactive.

We'll go next to David Paige with RBC Capital Markets.

I want to ask on Client Endpoint Solutions, solid growth, 13% in the quarter. Would you be able to break out the category growth, whether it be PCs, mobile, and anything in the CES category?

Yes, PCs specifically.

Yes. Well, I think you're just asking sort of the general breakout. We don't give the subcategories, but I think across Client and Endpoint, certainly the PC notebook category remained very healthy, growing double digits. We did see solid single digit, high single digit growth in smartphones components. Some of the consumer electronics categories also growing. It was actually somewhat healthy across a lot of the CES categories, but PC notebooks and the continued growth we see there on the refresh cycle continuing was certainly a big driver there.

Yes. The only thing I would add specifically to the PC comments that Mike made, is we still think as we're seeing the refresh cycle and Windows 11 happen, and as we mentioned, coming off of significant double-digit growth in Q2 of 2025, we think there's still room to run, particularly as AI PCs continue to gain traction, and we talk about that. AI PCs accounted for more than 30% of our revenue in Q2. And we believe this is consistent with what you'd hear from the other OEMs and analysts. We continue to see solid demand, which would suggest that there's an extended cycle still with the PC refresh right now.