Greetings. Welcome to Ingram Micro Holding Corporation Fourth Quarter and Fiscal 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to introduce Willa McManmon, Vice President, Investor Relations. Thank you. You may begin.

Thank you, operator. I'm here today with Paul Bay, Ingram Micro Holding Corporation's CEO, and Michael 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, including predictions, estimates, projections, or other statements about future events, statements about our strategy, demand, plans and positioning, growth, cash flow, capital allocation, and stockholder return, as well as our expectations for future fiscal periods. Actual results may differ materially from those mentioned in these forward-looking statements because of risks and uncertainties discussed in today's earnings release and in our filings with the SEC. We do not intend to update any forward-looking statements. During this call, we will reference certain non-GAAP financial information. Reconciliations of non-GAAP results to GAAP results are included in our earnings press release and the related Form 8-Ks available on the SEC's website or on our Investor Relations website. With that, I'll turn the call over to Paul.

Good afternoon, and thank you for joining today's call. Despite the macroeconomic challenges we saw throughout 2024, we exited Q4 with a return to year-over-year top-line growth of nearly 3.5% on an FX-neutral basis, within our guidance range. We saw particular strength in Asia Pacific and Latin America, both up over 7% on an FX-neutral basis, and I'm excited that North America returned to year-over-year growth. From a mix perspective, we continue to see robust performance in cloud, and in client and endpoint solutions, which both grew over year-over-year and quarter-over-quarter. Advanced Solutions was impacted by slowness in networking, but server and storage were each up double digits versus the prior year and sequentially. In terms of the customer category, we saw strength in sales to large and enterprise customers, while small to medium-sized businesses along with the public sector remained softer. Considering these dynamics, we believe the return to top-line growth we saw in Q4 will sustain in 2025. Client and endpoint solution sales improved consistent with the growth we are now seeing in desktop and notebook categories. We also expect to see networking continue to rebound from the challenging year-over-year comparisons that continued throughout 2024. Lastly, we see more end users and vendors sharpening their focus on evolving automation use cases, including the use of AI, where we are helping our customers and partners navigate a rapidly changing IT landscape. We will continue to forge the path with AI and automation, and we look forward to sharing the data with you in the coming quarters that demonstrate our progress as we become increasingly digital. 2024 was a pivotal year for Ingram Micro Holding Corporation. We celebrated our return to the public markets in October, but more importantly, we also do so as a different company than we were…

Thank you, Paul, and thanks to everyone on the call. I'd like to reiterate how pleased we are at our return to growth to close the year and our progress with Xvantage. Now let me touch on a few fiscal 2024 highlights, with a bit deeper dive on the fourth quarter, and then I will provide our guidance for the first quarter of 2025. Note that I will be focusing primarily on our non-GAAP numbers in this overview. Fiscal year 2024 net sales were $48.0 billion, roughly flat versus 2023, and up 0.3% on an FX-neutral basis. As discussed, 2024 was impacted by macro headwinds, which we believe are beginning to shift as we look to 2025. Full-year 2024 gross profit came in at $3.44 billion or 7.18% of net sales, down 20 basis points from the same period last year, due primarily to line of business, product, and geographic mix, along with a stronger competitive environment in general. Full-year operating expenses were $2.45 billion or 5.10% of net sales, essentially flat from 2023. However, these OpEx levels continue to contain an elevated level of OpEx associated primarily with our investments in digital that Paul just discussed. These heightened expenses totaled $114.9 million or 24 basis points of net sales in 2024 compared to $69.8 million or 15 basis points of net sales in 2023. While we expect in 2025 to incur a relatively consistent level of investment in 2024, these costs will reduce over time as we complete our wider deployment of Xvantage and move to a steady state. Thus, on a longer-term basis, we expect our annual run rate of OpEx as a percent of net sales will land below 5% as we not only move to a more steady state as I just noted, but also increasingly…

Thank you. And we queue for additional questions. Our next question is from Michael Ng with Goldman Sachs. Please proceed.

Hey, good afternoon. Thank you for the question. I wanted to ask about the large enterprise momentum which seemed like it was largely focused in North America. Could you talk a little bit about, you know, why large enterprise is outperforming? Are you seeing any sophisticated buying ahead of tariffs? Is there a bit of a pull forward and any comments on, you know, where you feel like we are on the PC cycle? Are you seeing green shoots on the refresh? Thank you.

Yeah. Michael, this is Paul. Good afternoon. So I would tell you that the purchasing when we mentioned large enterprise business was actually across the board and across all of the regions. It wasn't just in North America. North America was one of those that experienced that also. One of the things we did see actually in North America was actually growth in all three areas too, client endpoint solutions, advanced solutions, and cloud. But the large customer comment was across the board and across all of the four regions. As it relates to your question around the refresh, we have continued to see momentum around the notebook desktop refresh, primarily around Windows refresh and aged systems. To, you know, a little bit of an extent, some AI PCs, but really just being driven by the refresh coming up. So again, large customer enterprise, bigger customers across the board, globally, and also refresh starting from a notebook, desktop perspective.

Great, thanks, Paul.

Our next question is from Erik Woodring with Morgan Stanley. Please proceed.

Awesome. Thanks so much for taking my questions. Paul, maybe if I just start, you know, your comments on relative spending strength versus weakness aligned with a lot of what we're hearing in the market more broadly. And my question really is the world is uncertain, volatile today. And just what are you hearing from your customers, and what do you see in your pipeline that gives you enough confidence to say you can return to top-line growth in 2025? And then I have a follow-up. Thanks.

So thank you for the question. So we've seen if you look at kind of how we exited the year and talking about the momentum we had, specifically around endpoint client endpoint solutions I just mentioned, we continue to see strength there. If we look at advanced solutions, one of the areas that we focus on that we've had challenges through 2024 was around the networking business. So that was down in Q4 and full year by double digits. And the expectation that that comes back. So as we see slowly getting better throughout 2024, as I mentioned, it was still down for full year 2024. If you look at IDC's 2025 base case, they say that it's gonna be up 8%, coming off of a negative 6% in 2024. I would also tell you that our leading indicators we're seeing from our large vendors right now are showing signs of that improving and then continued strength around cloud and other areas that we saw good strength around server storage and, again, cybersecurity being one of those also. So that's what gives us the confidence that we're gonna continue to see growth. And again, for the first time in many quarters, we finally got to talk about the North America momentum that we saw exiting the year and really continuing at the beginning parts of this year.

Okay. That's helpful. Thank you, Paul. And then maybe my follow-up, Mike, you know, can you help me just or us understand if there are any one-time costs embedded in your 1Q profitability guide because I believe you had it back into EPS and net income, it implies both are declining year over year in 1Q despite revenue growth. And so really just trying to understand what some of the cost headwinds are. I know you mentioned India, and mix shift, but outside of that, what the cost headwinds would be in 1Q and kind of one-time versus sustainable they might be as we think about the remainder of 2025? So much.

Yeah. So the guide there's not anything notable one-offs. It's mainly more of the margin factors. So we talked about India and Paul can elaborate on this for sure if you'd like, but, you know, those competitive factors are driving notable drops in margin. But we're seeing a heightened competitive environment, I guess, really almost everywhere in the world. It's not probably uncommon when you have more of a down cycle. But, again, nothing notable other than margin and really driven by mix. And then heightened a little bit in the India market by some of the factors there. I guess I'm sorry, Erik. What I'm wondering, I should just one thing to add to that. I mean, I think the only thing I would add to that is we're still seeing continued momentum as we continue to optimize cost and we have a wraparound impact of further reductions we announced in early December as well, for instance, that really aren't taking hold entirely even in Q1. So that'll give a little bit more momentum on the cost side as well as we go through the year.

Great. Thanks so much for the color, guys. Goodbye.

Our next question is from Samik Chatterjee with JPMorgan Chase. Please proceed.

Yep. Thank you. Thanks for taking my questions. Maybe first one, Paul, just more directly at the tariff question. Wondering what you're hearing from your North America customers on that front in terms of how should we think about and it's obviously, you've been through many cycles here, including previous tariffs. Like, how are you thinking about and how are customers sort of relaying? What probably changed in terms of demand if tariffs were to sort of and, I guess, tariff time. So how are you thinking about sort of changes in demand profile between the product categories and how typically you how comfortable you feel passing through some of those sort of increased costs to your customers and I have a quick follow-up after that.

Yep. Samik, so the current situation to state the obvious, is very fluid. As you pointed out, we're well-versed in operating in a tariff environment. We typically pass through those tariffs, and we don't bear those costs. I think, you know, the one thing will be is what's the impact potentially, on the overall demand side. So really, that's gonna depend on I'll call it the price elasticity and the end consumption, the end businesses having the tolerance to absorb those tariff impacts. Again, it's too early right now to say what the impacts will be. We're less impacted again because we're not manufacturing product, but with that said, a couple of recent comments. So some of our vendors continue to focus on making their supply chain networks more resilient and creating mitigation plans. And some that I was talking with, you know, middle of last year were already working for some time to diversify where their products are being manufactured to minimize the impacts. Specifically, I would say there's some comments around that for the US and how some of our large manufacturers are moving around the world to try and offset that. I would also say, this is a pretty recent comment. I was in a customer event last night with our Trust X community, which is our powerful global community of some of our top strategic customers. And I actually asked them for real-time feedback on how they're looking at tariffs with their end businesses that they're serving every day. And one of the comments was that one of our customers is actually seeing deals and believes it may be a good offset is that they're moving deals from maybe cash or shorter-term cycle to financing deals through our Ingram Micro Holding Corporation finance services. He believed that at the end businesses, if it becomes too much of a price increase and there's gonna be an opportunity to have to look at how they can finance to really solve that business outcome. So again, that's how we're kinda looking at tariffs right now. And as you mentioned, it is a fluid situation, a bit uncertain on where we're gonna land on this. Could there be, to your point, could there be a potential pocket price benefit for the inventory that we carry on a global basis? Yes. There could be. And so we're looking at strategic opportunities that we looked at in Q4 to make sure that we have the right amount of inventory to help service our 161,000 customers on a global basis. But that'll be a point in time. I think we'll have to wait and see kinda where the water level sets in a little bit longer term over the coming weeks and days.

Great. Got it. Interesting. Thank you. Thanks for the insight. Maybe for my follow-up for Mike, Mike, you're guiding the 1Q EPS to be a year-over-year decline despite the growth in revenue because of the competitive market environment that you are perceiving in 1Q, you look through those sort of exiting the year or sort of the opportunity to get EPS back to a growth trajectory as well. Seems like there's some sort of level somewhat over on the OpEx to pull the remainder of the year, but how are you thinking about the option to get EPS back to growth? Or what are the other additional levels you can think of that would be available to the company to get EPS back with you?

Yeah. It's a good question. I had a couple of points I would make and this would just build off of what you just repeated back. I mean, it is really a margin story more than anything and it's a mix factor. You know, if I guess if I look at a couple of different mix factors that really drive rates as we talked about in our prepared remarks, one, you have a mix more towards client and endpoint solutions and specifically seeing some strength not only in just PC and desktop, but also in mobility devices. And those do tend to be lower margin. They're also lower cost to serve and the product moves fast. So it's a nice turning environment from a working capital perspective, but it will dilute margins and if we see that strength, of a PC notebook refresh continue for a handful of quarters, it is going to have a dilutive impact on at least the gross margins. Then you have customer mix and, you know, as we talked about also in our prepared remarks, and some of the follow-up here, we're seeing a predominance more towards the large enterprise or large customers. And if you think about it, that is a lower value-add kind of relationship for us where we make more margin is where we have more value-add in the form of services, value-add pre-engineering and post-engineering support, deployment skills, as well as just the complexity of the products when we're selling more into SMB as an example. And as we talked about, SMB has remained a little bit softer but we're seeing signs where that would start to improve as long as we start to see the market stabilize a little bit in the form of inflation, and in the interest rate…

Great. Thank you. Thanks for taking my questions.

We ask that you please limit to one question now. As in consideration of time.

Our next question is from Ruplu Bhattacharya with Bank of America. Please proceed.

Hi. Thanks for taking my questions. Paul and Mike, in your opinion, at what rate is the overall IT distribution market growing? And did Ingram Micro Holding Corporation lose or gain share in the December quarter? I know you talked about a tough pricing environment in India. Is that the only region? And what is your strategy to deal with this? Is price the only lever? Or can this impact working capital in terms of you having baked in your credit? So if you can just talk about the market and what your strategy is to deal with this environment.

Yeah. Let's also I'll start, Ruplu. Thank you. So I'll just touch again. North America definitely stabilizing returning to growth. As we mentioned, we saw growth in all three lines of business. Our client endpoint solutions, advanced solutions in cloud in Q4, and we expect to continue to see that momentum. In Europe, I would say performing relatively well based off the expectations, the broader macroeconomic environment, give us a little bit of headwinds there. But we're focused as we talk about quality of earnings and growth of what we're looking at. And we've had a little bit of headwinds specifically as you've heard Mike and I talk about Asia Pacific. Which is still strong, particularly in client endpoint solutions. Business, but definitely a competitive environment that we haven't seen for quite some time in that market, specifically. There are deals that we actually walked away from that did meet our profitability and ROI expectations. That would have been at a profit loss. So you've heard me and Mike again say that we're focused on quality of revenue, and I think you show up see that show up in our earnings. So what are we doing? We're focused on as we came out of some of the challenges for the back half of the year and the fraud that Mike talked about in the prepared remarks. We're rebuilding the right teams, making sure we're operating with the right level of integrity and control. Or hiring the appropriate talent. We're getting back to focusing on the customer. I think some of that challenges that we had starting to Q2 with the fraud in the investigation, we are a bit internally focused, and now we're focused on the customers and vendors. We've also put some controls in, around kind of the marginal and transactional level to minimize negative margin impact. And I'll go back to this as one of our largest countries as you know. And we've been doing business and we're getting the team focused. We've been doing business in India for the past two decades and being a leader there, so we're gonna get back to what we know how to. To grow and continue to be a leader in that business. If you look at Latin America, we continue to execute very well in Latin America. Because of our reach and our depth that we have and the investment we've made throughout the years in that region, and so we expect to continue to see momentum there. That would be kinda the overall environment where we see.

Yeah. Ruplu, just what I the only thing I would add to that is as you've heard pretty clearly, India is probably where we're seeing more irrationality right now as far as pricing. But it is a competitive market everywhere. To your question on balance sheet, yes, we are seeing at times a lengthening of terms being granted although I don't think it's as notable of a factor. We're seeing a bit of that and we need to make sure as we elect what deals we're going to participate in, that it is with an appropriate return on invested capital and return to shareholders. So but I'm not as concerned about the balance sheet side of the equation. It's more just making sure we're taking the deals that make sense. And then overall continuing to grow as we've always said as our strategy growing advanced solutions in cloud above market. And over time, we've demonstrated that we've been doing that. Engraving client and endpoint where you tend to have a little bit more of that turf war from a margin perspective. Can get a little bit more exacerbated you know, growing that with market and being selective as to the nature of business we wanna pursue.

Hey, Ruplu. The only last thing I would say real quick is if you look at Xvantage and the investments we made, and as we've talked about over the last nine quarters, we've taken out upwards of $200 million worth of OpEx. Which we've reinvested some of that back into Xvantage, but it's been enabled internal efficiencies. And the benefit we have is we're showing up to provide our customers a singular experience around hardware, software services, and cloud. One area that they can transact with the needs of doing business. Ultimately for those end businesses, the millions that they're serving each and every day.

Thanks for the details. Appreciate it.

Our next question is from Surinder Singh with Jefferies. Please proceed.

About the SMB market and what you're seeing there at this point. Is it fair to characterize that it's a bit weaker at this point in the cycle than you're anticipating? Just some any color around that would be helpful. And maybe your expectations as the year progresses.

Sure. No, this is Paul. So thank you for the question. Yes, SMB was down as I mentioned double digit for most quarters that exiting the year in Q4. Early indications are that we believe that is going to come back and we're seeing early signs of that. Part of that, I believe, too, is tied to the advanced solutions and the opportunity we have is as areas like networking continue to or continue to make progress towards not having, you know, declines in 2024 going into 2025. So wrapping our advanced solutions, our cloud, and the endpoint solutions together, we think that there'll be some strength coming back into SMB. Maybe not as much in Q1, but the conversation we're having with customers as they see a pretty good back half of the year. They're building out their pipelines relative to the end businesses they're serving today.

Thanks.

Our next question is from Matt Niknam with Deutsche Bank. Please proceed.

Matt, are you there?

Hey, guys. Can you hear me?

Yeah. Now we can. Yeah. We can hear you.

Okay. Awesome. Awesome. So two follow-ups. First on public sector, you referenced some softness. I'm just wondering, is that US related? Is that related to the election and hence more transitory in nature? Or is this expected to continue? And then just on working cap and OCF, Mike, maybe if we can how you're thinking about working cap and operating cash flow in 1Q with the implied seasonal sales dip and maybe more of a mix shift towards client and endpoints?

So this is Paul. I'll answer the public sector. Yes. The significant piece was from a North America perspective, but I would also say the other regions also were down too, so it's kind of a global public sector environment and, you know, the expectation was prior to some of the decisions that were made here recently over the last 24 hours was that we would see some return to growth. In public sector depending on which season it is. You know, whether it's Fed, SLED, or education, but there may actually be some opportunity now too. I would in the European markets as there's potentially some more preparing to they're going to move forward. So there may be some public sector opportunities there too. But the expectation is that, yes, it would start to come back this year. Because it was down by double digits on a global basis for us, in Q4.

Then just to tack on on the working capital question, yeah, I'll just remind everybody, we have a decent amount of seasonality to our business where we invest in the second half of the year for the peak of sales going into Q4. Those sales were higher as we talked about. We saw nice growth in Q4, and therefore, we're more in collection mode on the receivables that came out of Q4 as we get into Q1. But I would also point out, we did have a very strong free cash flow fourth quarter, and some of that was not only sell through very successfully of inventory levels, and translating that into sales, but also some strategic work with our vendors and payables to extend that. And obviously, you can only do that so much on an ongoing basis. So we're more in collection mode as we go into Q1 on the receivables, but we also see a typically a little bit more of a seasonal wall in Q1 and Q2 as you would see in our normal sales cycle. So what I would just say is over time and I made this remark in my prepared remarks, yeah, we expect to generate consistent free cash flow over the annual periods. As long as we pair through those seasonality factors and see some of that bear out throughout the year. And, you know, it's our goal that on a consistent basis, we're driving 30% or more of our EBITDA through the free cash flow. But if we start to see as we usually do with the countercyclicality of the business, quite a bit of growth opportunity that requires investment and working capital. And then employing solutions requires less than advanced solutions does. So if we start to see networking rebound and advanced solutions return to more significant growth given the project-based nature of that business, that might require some investment in working capital, but rest assured where we look at that is with an eye absolutely towards shareholder return and making sure we're balancing that with the profitability of the deals we're pursuing.

Thank you.

Our next question is from Adam Tindle with Raymond James. Please proceed with your question.

Know, operating income dollars are kind of a good proxy that neutralizes for all the mix impacts and trying to figure out, you know, what's going on PCs versus infrastructure. And if I look at that metric, it was down almost 20% year over year in the quarter. Understand, you know, tough macro in India and some of those other factors going on. But your main competitor, I think, on that metric was down about 1% and your main customers, whether it's the CDW, etcetera, were kinda flat on that metric. So I guess, you know, relative to the competitors and your customers, it's just a big delta on the operating income dollar line. I'm trying to figure out how to reconcile what's going on there. And then for Mike, if you could just, you know, expand on your Q1 guidance. It's on gross profit dollars and EPS, but we don't have the OI dollars. Hard to model the below the line items, but I think I'm getting to around $210 million on EBITDA dollars. If you could maybe just us a little bit on what's implied for Q1 on operating income dollar line that'd be helpful. Thank you, guys.

Yeah. So let me hit on the trend in Q4 first. Yeah. I'll just remind you, not only do we have the India charges, which were about $20.3 million, but we also have the stock-based comp charge that goes through OpEx and operating income. We have that back when you get down into adjusted EBITDA. And non-GAAP net income. But it is not added back into adjusted operating income. So that's $54.4 million. It's 41 basis points of sales, and I think that probably explains the bulk of what you're talking about relative to what you would see perhaps in some other markets on the operating income line item. And then on top of that, as I've said a couple of times here, I think we continue to find ways where we can optimize sales. And also as we see Xvantage driving some of the benefits we've talked about in previous discussions as well as today. You know, as we return to growth, we have the opportunity to grow without having to add back as much operating expense to serve that because we're now more automated than we were a year ago, two years ago, etcetera. So those are really the more optimal benefits there. Could you I'm sorry. Could you just repeat your second part of your question though you were asking more on EBITDA, I think.

Yeah. I was mainly trying to get into Q1 to make sure we don't miss model this in Q1 again, because it was such a big deviation in Q4 on the operating income dollar line. And I think you're implying just over $200 million of EBIT on the Q1 line, but any color you can give us in terms of modeling, and we could take it offline if need to, but.

Yeah. I can definitely get back to you with more specifics when we have some follow-ons. But I think generally speaking, I think you're about right as far as what we would see as far as trending. We're seeing a little bit of on the operating income non-GAAP line again because we have some of that heightened investment in on a year-over-year basis in Xvantage and so forth. You're seeing a little bit more muted number on a year-over-year basis. But directionally, you're not too far off on the EBIT, I believe.

Okay. That clarification is helpful. Thanks, Mike.

Our next question is from David Page with RBC Capital Markets. Please proceed.

Hi. Thank you for taking my question. Wondering if you could just give some qualitative thoughts around how you're leveraging the Xvantage platform in 2025 in particular with respect to hyperscalers. I think on the 3Q call, you had mentioned some momentum with AWS. So I was wondering how that was going. And then, you know, hyperscale demand in general. Thank you.

Yeah. So thank you, David. So let me give a couple of thoughts of how we're looking at maybe some of the platform metrics. So as it relates to the hyperscalers, yes, we have actually created some integrations and ease of use on how technology wants to be deployed. Specifically with AWS. They mentioned that they're reinventing conference, and you probably saw a press release on us about what we're doing. To integrate seamlessly with our marketplace. And we will continue to integrate and move forward with all the hyperscalers from a customer really an ease of use standpoint. But let me give you a couple of thoughts that we had. These are year-end, full-year, kind of metrics that we look at. There's really three different ways that we look at the metrics with regard to the business. So the first one is we would talk about end-user engagement. And how we're moving forward with end-user engagement. That would be things like searches and active users. That was up over 50% year-over-year for the full year of 2024. The second one is we call it is customer. And as we look at the customer, one of the metrics that we use is dormant customers and a dormant customer is us. For us, as somebody that hasn't transacted with us in 12 months or more, we have reactivated over 8,000 and those 8,000 new dormant customers that we've been working with actually started to deliver meaningful revenue. For those net new customers, I'll call. The last one is financial and operational. One of the metrics that we use there is self-service orders, and those have more than doubled which helps demonstrate if you're doing self-service orders that much less and it demonstrates ease of use and much more less touch and friction in the business. So are a couple of different ways we're looking at user engagement, financial and operational, and customer. And I just gave you one metric that we use of a amongst many that we have. So we're seeing good progress. On our Xvantage adoption. And ease of doing business is what we've expected. We feel good about where we're at right now.

Great. Thank you.

Our next question is from Amit Daryanani with Evercore ISI. Please proceed.

Yep. Thanks a lot. You know, I guess, hoping you could talk a little bit about your, you know, in December and March, were you folks looking at about 2%, 2.5% top-line growth. As you go through calendar 2025, just qualitatively, do you folks expect that growth to accelerate as the year progresses, especially given some of the comments you made on networking recovery for the endpoint here. I'm trying to understand think this growth accelerates? So what are the cost constraints we should be thinking about as it comes to 2025 growth? And then if you could just quantify how big is India for you right now, that would be helpful. Thank you.

So we don't give guidance for the year from a revenue standpoint. I think there's a couple of variables as we're seeing the net notebook desktop refresh. I think that's gonna depend it's gonna be dependent on how quickly that happens. Again, we're seeing nice momentum. Exiting the year and really going into the first part of Q1. So we're pleased with the momentum that we're seeing around that. Again, that's coming out of the Windows refresh and just aged systems in general, people looking for new technology, to refresh the business. And, again, if IDC is correct and kind of their thoughts and the business moving on networking from negative 6% last year to some more high single digits they called 8%. That will definitely impact networking is one of our larger pieces of business within our enhanced solutions business. And continue momentum in cloud. So that's kinda how we see the makeup of where we're gonna continue to invest. India, I think your question is you broke up a little bit. India, kind of a size of it is one of our largest businesses that we have. From a company perspective. So within Asia Pacific, it's a very large piece of the overall business.

Thank you.

And our final question will be from Maggie Nolan with William Blair. Please proceed with your question.

Thank you. Is there a change in the expectation for the year of how you're gonna drive operating leverage just given some of the dynamics with pricing and advanced solutions? Are you going to need to be looking at more cost solutions and efficiencies and, you know, anything beyond this year as well you would wanna comment on as welcome to.

Yeah. Maggie, this is Paul. So as we went through the budgeting process and looking at kind of what could be some of the headwinds or challenges. I think we saw maybe some of the potential headwinds in Europe. As a potential and, you know, how do we look at protecting that on a go-forward basis. As we mentioned, exiting the year, which was late in the year, we announced we're taking out 3.5% of OpEx on a global basis. And the expectation was that we'll continue to get the efficiencies that you heard me talk about and expand it. So how do we give a better experience more touchless, stated another way at lower OpEx. And so that's what we're really focused on is making sure we're benefiting out of the investments we've made in those 16 countries where we have the Xvantage platform. And so we continue to build additional competencies and capabilities that we're offering each of the countries and one of the benefits we have as we've mentioned before, which we think is a significant differentiator is that because the way we set up our architecture around Xvantage, that if when we do development and create code around it, it goes to all 16 countries. So the way we like to say it is we create the data once and we get to use it multiple times. Because it allows us to scale at a much lower cost in terms of innovation. So we're gonna continue to focus on after the first half of the year. And, again, we were planning for kinda downside scenarios that we thought exiting the year going into the first half of 2025.

Thank you.

We have reached the end of our question and answer session. I would like to turn the call back over to Paul Bay for closing remarks.

Thank you everyone for today's call. Thank you to our 24,000 team members for their commitment to innovation and to our vendor partners and customers for continuing to evolve alongside us. We hope to see many of you at the Morgan Stanley TMTA Conference tomorrow as well as many of the other conferences in the coming months. Thanks for your interest, and have a great rest of the day.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.