Ingram Micro shares rose +6.5% as it reported Q3 figures and Q4 guidance.
In addition to beating Q3 revenue estimates (while posting in-line earnings per share), the distributor says it expects Q4 yr/yr revenue growth of 8%-12%.
A near-50% Y/Y increase in mobility product sales (boosted by a new Verizon channel deal in the US) to $2B helped drive the Q3 revenue but earnings were squeezed by a 15 bps drop in gross margin to 5.75%, which was caused by the mix shift towards mobility and systems sales.
Alain Monié, Ingram Micro CEO, commented: "We delivered strong third quarter financial results as we continue to take advantage of market opportunities to drive very solid revenue growth, improved returns and robust earnings growth and leverage.
"Revenue grew 11% and strong operating leverage led to a 19% increase in non-GAAP operating income. We are benefiting from new wins and strong market share and we are enhancing earnings power through disciplined cost management and execution on our global organisational effectiveness program.
"We also maintained our focus on optimising the balance sheet, generating cash flow from operations for the quarter while growing the business significantly. I am very pleased with our third quarter performance, which reflects the strength of our diversified geographic reach, solutions portfolio, partnerships and strong execution."
Worldwide sales increased by more than $1bn to $11.2bn from $10.2bn in the third quarter last year. Worldwide gross profit was $646m, compared with $599m in the 2013 third quarter.
Gross profit increased by 8% year-over-year benefiting from strong sales across most regions, it says. Gross margin was down versus last year as revenue growth was led by a greater mix of high volume sales, particularly in mobility and systems.
Europe's revenue of $3.2bn was up 9% year-over-year in dollars and up 8% in local currency. Non-GAAP operating income increased 8%, and non-GAAP operating margin was relatively flat at 64 basis points as revenue growth was driven primarily by sales in high-velocity products.
The region is benefiting from cost savings as a result of the initial implementation of the organisational effectiveness initiative, and it expects to see improvements in Europe's cost structure in 2015. Europe Technology and Other Solutions revenue grew at mid-single digits in local currency.
Solid growth in Germany, Ingram Micro's largest country in the region, was led by strength in retail markets. Spain and Italy experienced robust growth, benefiting from double-digit increases in both SMB and retail. The UK had another solid quarter of growth in SMB, it says.
Europe Mobility delivered solid double-digit local currency revenue growth, led by strong smartphone sales in Germany across all leading vendor lines, primarily into retail markets. Spain and Sweden also contributed well to the region's Mobility growth.