Yahoo Finance

Michael Zilis

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 of the year and our progress with advantage.
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-gap 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.
The 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 expandage 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 benefit from efficiencies from exvantage, restructuring initiatives we've taken in the past year plus, continued focus on operational improvements in business processes and operations.
Any mixed shift towards cloud and advanced solutions products.
During fiscal year 2024, we also recorded restructuring costs equaling 8 basis points of net sales versus 4 basis points impact of restructuring charges in fiscal 2023.
The 2024 actions reflect our efforts to enhance organizational efficiency and strengthen customer service capabilities.
And they include organizational changes and headcount reductions recorded during our 1st and 4th quarters of 2024.
Collectively, the 2024 restructuring initiatives are expected to deliver annualized cost reductions in the range of $85 to $95 million although the impact of actions taken in the first quarter of fiscal 2024, which represent approximately half of the range of annual run rate savings I just noted, have largely already been achieved beginning in the third quarter of fiscal year 2024.
Our fiscal year 2024 results also include $34.1 million of expense or seven basis points of net sales representing the value of restricted stock units that immediately vested in connection with our IPO in October.
Non-gap net income for the year was $627.9 million and non-gap diluted EPS was $2.79.
Adjusted IBEA in 2024 was $1.32 billion compared to $1.35 billion in 2023.
Moving to the fourth quarter, net sales were $13.34 billion up 2.5% year over year in US dollars, and up 3.3% on an FX neutral basis, driven primarily by strength across geography's incline and endpoint solutions which saw sequential growth for the past three quarters.
This was offset by weakness in advanced solutions where we had solid momentum in server and storage but another soft quarter in networking.
On a more positive note, networking is gradually improving from a low in the first quarter of 2024.
As a reminder, CEF has a lower profit margin than advanced solutions, which contributed in part to lower overall gross margins in the fourth quarter of 7.01%, down 51 basis points versus prior year.
Also contributing to this year over year margin trend are a higher mix of sales, particularly in the US, towards enterprise customers where we don't provide as much attached value added services as we do, for instance, in SMB where demand remains more muted.
A final contributing factor is a higher growth rate in our lower margin, lower cost to serve Asia Pacific region.
While I expect our long term product mix will skew more towards higher margin advanced solutions and cloud products, the anticipated growth from the PC refresh driving CES sales may impact margins in the short term, depending on the solutions and geographical mix within a given quarter and region.
We remain committed to above market growth and higher margin advanced solutions and cloud while we also hold our associates accountable for quality of revenues and a creative return to shareholders across the whole of the business.
From a regional perspective in the fourth quarter, North American net sales were $4.67 billion up 3.0% in US dollars, and up 3.3% on an FX neutral basis versus the prior year fourth quarter, driven by strength across all lines of business but particular strength as I noted earlier in sales to enterprise customers.
The media net sales of $4.07 billion were down 1.5% year over year and down 1.3% on an FX neutral basis, primarily due to weakness in advanced solutions versus prior year.
Demand levels in general have remained more muted, particularly in Western European markets.
Net sales in Asia Pacific were $3.60 billion up 7.8% over the same quarter in 2023 in US dollars and up 7.7% on an FX neutral basis, driven by strength in CES sales offset partially by weakness and advanced solutions.
Certain countries within AIPAC were strong, but we are seeing a very competitive market in India, impacting both sales and margin as we are remaining appropriately selective on the business we pursue there.
This is a trend that continues into the early part of 2025 as well.
Finally, net sales in Latin America were $1.01 billion down 0.9% in US dollars, but up 7.5% in constant currency, as most local currencies weakened notably since 2023.
The stronger FX neutral sales in latam reflected solid growth trends across all product categories.
Fourth quarter gross profit came in at $936.1 million or 7.01% of net sales, down 51 basis points from the same period last year.
The year over year decrease in gross margin was driven primarily by the mixed factors I've already noted, but also reflective of a heightened competitive environment across most markets and particularly in India as I just mentioned.
Q4 operating expenses were $630.8 million or 4.73% of net sales compared compared to 4.65% in the same period last year.
In Q4 we had discrete charges that related to our previously disclosed fraud matter in our India operation.
These charges impacted gross profit and operating expenses as well as related margins.
The first charge impacting gross profit related to inventory write-offs associated with the professional services business totaling $9.1 million or 7 basis points of net sales.
The second charge impacted operating expenses and related to goods and Services Tax or GST and professional fees associated with the completion of our investigation into this matter.
Specifically, the GST charges connected to true ups related to adjustments we recorded earlier in 2024 on this matter as we filed GST returns at the end of the calendar year.
And the professional costs relate to our pursuit of settlements and recovery efforts with the parties involved in this matter.
These operating expense impacts total $11.2 million or 8 basis points of net sales.
Our 24 2024 results also include the impact of $34.1 million or 26 basis points of net sales related to the stock-based compensation charge in connection with our IPO in October.
The combined impact of the discrete charges in India and the stock compensation charge is $54.4 million or 41 basis points of net sales in the fourth quarter of 2024.
During the quarter, adjusted income from operations, which included the aforementioned charges, totaled $305.2 million and adjusted income from operations margin came in at 2.29% compared to 2.86% in the same period last year.
Our non-gap net income for the quarter was $213.1 million compared to $220.9 million in the comparable period last year.
Fourth quarter, non-gap diluted EPS was $0.92. Excluding the two discrete items in India that I just noted, our non-gap diluted EPS in the 4th quarter would have been $0.99 above the high end of our guidance range.
Fourth quarter adjusted IBEDA was $418.1 million compared to $435.4 million in the comparable period last year.
Turning to our balance sheet, at the end of Q4, networking capital was $4.1 billion compared to $4.4 billion to close the same period last year.
We maintain a strong focus on working capital management to maximize returns on investment and cash provided by operations to improve our debt levels.
This discipline allowed us to improve our year, our annual net debt to adjusted even the leverage ratio by more than 0.4 times since our third quarter.
Adjusted free cash flow was strong in the quarter at $337.2 million. Our adjusted free cash flow for the full year was $443.3 million.
As I've noted before, our free cash flow is seasonally driven. Our goal over time is to drop 30% or more of EBITDA annually to free cash flow, but this will not necessarily be the case in each quarter due to this seasonality, as well as the timely investments we make in opportunities for profitable growth.
As anticipated, our board of directors has approved a quarterly cash dividend in the first quarter of 2025 of 7.$0.04 per share, or $17.5 million which will be payable on March 20th to shareholders of record on March 11, 2025.
Our board of directors also approved a one-year share repurchase plan through which the company can purchase up to $75 million of the company's common stock in connection with one or more secondary offerings by our controlling stockholder when an independent committee of our board deems repurchases to be an appropriate use of our capital.
During 2024 we paid down $483 million of our term loan balance, bringing our total repayment on term loans to $1.56 billion since the beginning of 2022.
With the cash flow generation I just mentioned, I am also pleased to note that we will repay an incremental $125 million of our term loan later this month.
During 2024, our interest expense was lower by $41.8 million year over year, primarily as a result of our debt pay downs over the past couple of years.
Last quarter we noted our belief that the 4th quarter would demonstrate a gradual improvement in the demand environment, and we are pleased that this is what has happened.
As Paul said, we believe the return to year over year growth is sustainable, though we expect quarterly volatility.
That said, as I now turn to guidance for the first quarter of 2025, we forecast net sales in the range of 11.43 to $11.83 billion representing year over year growth of 2.6.6% at the midpoint.
As I mentioned, as CES improves, it may have a short-term negative impact on gross margin, but we remain focused on quality of revenue and outsized growth and advanced solutions and cloud over time. Thus, we expect gross margins to expand over time as the mix changes.
For the first quarter of 2025, we expect gross profit to be in the range of $785 to $835 million.
This guidance assum as we continue to see competitive and mixed factors on gross margin consistent with what we've discussed today for Q4 of 2024.
But particularly in our India business where we see some irrational competitive pricing pressures, mainly on the bidding process on large contracts.
As we as we see extremely aggressive pricing behaviors from global, sub-regional, and local players in that market, we expect our own gross margin in India will be temporarily impacted.
We have invested in India for more than 2 decades and remain very committed to pursuing profitable growth in the India market.
We expect non-gap diluted EPS to be in the range of $0.51 to $0.61 per diluted share, which is based on weighted average shares outstanding of approximately 234.9 million.
Our non-gap tax rate is expected to be approximately 30%.
As I close out my comments, we are quite proud of our finish to fiscal 2024 as we saw growth in the top line, but also a solid profit result, despite some unique P&L hits we incurred in India.
But we did so with strong management of the balance sheet as well, generating solid cash flow that allowed us to repay debt and bring our net debt to even a leverage south of 2 times to close the quarter.
This gives us nice momentum in Q1 of 2025, where we expect a second quarter of year over year growth despite some of the headwinds we've discussed in parts of AIA and in India.
We see a more solid environment in North America and Latin America while we continue to optimize our business and drive leverage over time in our operating expenses.
And we are balancing the use of cash generated from operations with another repayment of debt in March while also commencing a return to shareholders in the form of a dividend in our first full quarter as a publicly traded company.
Without operator, we are ready for the question and answer session.

Question and Answer Session

Operator

Thank you. Sorry for that technical difficulty. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. We ask that you please ask one question and one follow up question and reque for additional questions.
Our next question is from Michael Ngs with Goldman Sachs. Please proceed.

Michael Ng

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 in North America. Could you talk a little bit about, 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, where you feel like we are on a PC cycle? Are you seeing green shoots on the refresh?
Thank you.

Paul Bay

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. Across all of the regions, so it wasn't just a 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 to 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 age systems to, a little bit of an extent, some AIPCs, 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.

Operator

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

Erik Woodring

Awesome thanks so much for taking my questions. Paul, maybe.
If I just start, your comments on relative areas of 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.
Will follow up thanks.

Paul Bay

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 focused on that we've had challenges through 2024 was around the networking business. So that was down in Q4 and full year by double digit. 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 going to be up 8% coming off of a negative 6% in 2024, and 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 the confidence that we're going to 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.

Erik Woodring

Okay, that's helpful.
Thank you, Paul, and then maybe my follow up, like, can you help me just, understand if there are any one time costs embedded in your one cu profitability guide because I believe if you kind of back into EPS and that income it implies both are declining year over year in one cu. Despite revenue growth and so really just trying to understand what what some of the cost headwinds are. I know you mentioned India and mix shifts, but outside of that, what the cost headwinds would be in one queue and how kind of one time versus sustainable they might be as we think about the remainder of 2025.

Paul Bay

Thanks so much.

Yeah, so the guy, 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 Indian market by some of the factors there.
I guess I'm sorry Eric, but one thing I, sorry, 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 costs and you know 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 that'll be a little bit more momentum on the cost side as well as we go through the year.

Paul Bay

Great, thanks so much for the.

Erik Woodring

Call guys. Goodbye.

Operator

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

Samik Chatterjee

Thank you. Thanks for taking my questions just more directly at the tariff.
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 what, how are you thinking about and how our customers are of relaying. Would probably change in terms of demand if tariffs were to sort of, and I guess tariffs are not implemented, so how are you thinking about sort of changes in demand profile between the product categories and how would 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 on that.

Paul Bay

So the 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 going to depend on, I'll call it the price elasticity and in 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 products, 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 in the middle of last year we're 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 at a customer event last night with our truck desk community.
Which is our powerful global community of some of our top strategic customers, and I actually asked them for real-time feedback kind of how they're looking at tariffs with their businesses that they're serving every day. And one of the comments was that one of our customers is actually seeing deals and believes that may be a good offset is that they're moving deals from maybe cash or shorter term cycles to financing deals through our microfinancial services. So he believes that if the end businesses, if it becomes too much of a price increase, and there's going to be an opportunity they have to look at how they can finance to really solve that business outcome. So again, that's how we're kind of looking at tariffs right now and as you mentioned, it is a fluid situation, a bit of uncertainty on where we're going to land on this. Could there be, to your point, could there be a potential pocket of price? Fit 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 kind of where the water level sets in a little bit longer term over the coming weeks and days.

Samik Chatterjee

Great, got it. Interesting.
Thank you. Thanks for the insights. Maybe for my follow up for Mike, you're guiding the one EPS to be a EUR your decline despite the growth in revenue because of the, comparative market environment that you are perceiving in one queue. As you look through the 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 of lever on the OpEx to pull through the remainder of the year, but how are you thinking about the opportunity 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 to you.

Yeah, it's a good question.
It's 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, I guess if I look at a couple different mixed factors that really drive rates as we talked about in our prepared remarks, one, You have to 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. That 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. A 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 a interest rate environments. And then lastly you have the geographic mix. We've talked about this before where we're at north of 7% in our Asia Pack region to close out the year and that is a lower margin, lower cost to serve business. A couple of our largest markets there have a more predominance of client and endpoint solutions business in their own right and so that too has a diluted margin impact. So as long as we now start to see more traction in North America, we see continued traction in. Inlatham, which has been solid and is one of our most profitable regions, and then we also start to see perhaps some of the economic headwinds that exist today in Europe and particularly Western European markets start to subside. All of those things are going to have the impact of driving an upward trend, generally speaking, on gross margins. In the meantime, OpEx does remain optimized, as I just responded to Eric a minute ago. I think we We are seeing still wraparound impact of some of the cost reduction efforts, but we do still have some of the heightened investment in our OpEx associated with our digital deployment advantage still rolling out in various ways through 2025 and even into the early part of next year that causes some heightened OpEx. So as we said in our prepared remarks, we do see a line of sight where we would be bringing OpEx out of 5%. I think that's probably as we get into next year, that's 5% on net sales, leverage perspective, and I think we're optimizing that quite well. We continue to capitalize on that.

Samik Chatterjee

Great, thank you, thanks for taking my questions.

Operator

We ask that you please limit to one question now as in consideration of time. Our next question is from Ruoplu Bhattacharya with Bank of America. Please proceed.

Paul Bay

Hi, thanks for.

Ruplu Bhattacharya

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

Paul Bay

Yeah, that's, I'll start.
Thank you. So I'll just touch again, North America definitely stabilizing and returning to growth. As we mentioned, we saw growth in all three lines of business our client endpoint solutions, advanced solutions and cloud and 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. Headwind specifically, as you've heard Mike and I talk about Asia Pacific, which is still strong, particular in client and 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 didn't meet our profitability and ROI expectations that would have been in a profit loss. So you've heard me and Mike again say that we're focused on quality of revenue. I think you show up, see that show up, and 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 controls. We're hiring the appropriate talent. We're getting back to focusing on the customer. I think some of that. Challenges that we had starting in 2 with the fraud and the investigation, we are a bit internally focused and now we're focused on the customers and vendors. We've also put some controls around kind of the marginal and transactional level to minimize negative margin impact, and I'll go back to this is 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 going to get back to what we know how to to grow and continue to be a leader in that 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 investments we've made throughout the years in that region. And so we expect to continue to see momentum there. That would be kind of the overall environment where we see.

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. So 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 makes sense and then overall continuing to grow as we've always said is our strategy grow and advanced solutions and cloud above market and over time we've demonstrated that we've been doing that and growing client and endpoint where you tend to have a little bit more of that turf war from a margin perspective. I can get a little bit more exacerbated, growing that with market and being selective as to the nature of business we want to pursue.

Paul Bay

Hey, Rupala, the only last thing I would say real quick is if you look at Xvantage and the investments we've made and as we've talked about over the last 9 quarters, we've taken out upwards of $200 million worth of opE which we've reinvested some of that back into X Vantage, 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 in one area that they can transact with the needs of doing business ultimately for those businesses, the millions that they're serving each and every day.
Thanks for all the details.

Ruplu Bhattacharya

I appreciate it.

Operator

Our next question is from Surrenderend with Jeffreys. Please proceed.

Surinder Thind

About the SMB market and 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 and maybe your expectations as the year progresses.

Paul Bay

This is thank you for the question. Yes, F&B was down, as I mentioned, double digit for most quarters and exiting the year in Q4.
Early indications is that we believe that it 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. As areas like networking continue to continue to make progress towards not having, 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 conversations we're having with customers that they see a pretty good back half of the year as they're building up their pipelines. A relativity in businesses they're they're serving today.

Thanks.

Operator

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

Paul Bay

Battery there.
Hey guys.
Can you hear me?

Yeah we can yeah we can hear you.

Paul Bay

Okay.

Matt McNamara

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 one cu with the implied seasonal sales dip. And maybe more of a makeshift towards client and endpoint.

Paul Bay

So this is 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 the expectation was prior to some of the decisions that were made here recently over the last 24 hours.
That we would see some return to growth in public sector depending on which season it is, whether it's fed, sla or education, but there may actually be some opportunity now too, I would say in the European markets as And there's potentially some more preparing to how 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.

So 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 queue 1 on the receivables, but we also see a typically a little bit more of a seasonal lull in queues 1 and 2 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 bear 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 through to 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 in working capital. A and endpoint 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.

Operator

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

Adam Tindle

Operating income dollars are kind of a good proxy that neutralizes for all the mixed impacts and trying to figure out, what's going on with PCs versus infrastructure. Now if I look at that metric, it was down almost 20% year over year in the quarter. Understand, 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, etc. Were kind of flattish on that metric, so. I guess, relative to the competitor, 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, 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 on EI dollars. If you could maybe just help us a little bit on what's implied for Q1, on the operating income dollar line, that'd be helpful.
Thank you guys.

Yeah, so let me get on the trend in Q4 first.
Yeah, I 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 add that back when you get down into adjusted EIA and non-gap net income. That it is not added back into adjusted operating income, so that's 50.4 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 other markets on the operating income line item. And then on top of that, as I said a couple of times here, I think we continue to to to find ways where we can optimize sales and also as we see advantage driving some of the benefits we've talked about in previous discussions as well as today. 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, 2 years ago, etc. 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 you, I think.

Adam Tindle

Yeah, I was mainly trying to get it into 11 to make sure we don't missmodel 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 ebi on the Q1 line, but any color you can give us in terms of modeling and we can take it offline if we 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-gap line again because we have some of that heightened investment in on a year over year basis in ex vantage 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 ebi I believe.

Adam Tindle

Okay, that clarification is helpful. Thanks, Mike.

Operator

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

David Paige

Hi, thank you for taking my question. I was wondering if you could just give some maybe qualitative thoughts around how you're leveraging the X-vantage platform in 2025, in particular with respect to hyper scales, I think, on the 32 call you had mentioned some momentum with AWS, so I was wondering how that was going and then, just hyperscale demand in general.
Thank you.

Paul Bay

Yeah, so thank you, David. So let me give you a couple of thoughts on how we're looking at maybe some of the platform metrics. So as it relates to the hyper scales, 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 reinvent. A conference and you probably saw a press release on us of what we're doing to integrate seamlessly with our marketplace and we will continue to integrate and move forward with all the hyper scalers from a customer and really an ease of use standpoint. But let me give you a couple of thoughts that we have. These are year end, full year kind of metrics that we look at. There's really 3 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, as 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 have actually started to deliver meaningful revenue. For those, net new customers I'll call them, and the last one is financial and operational and one of the metrics that we use there. It's self-service orders and those have more than doubled, which helps demonstrate if you're doing self-service orders it's touchless and it demonstrates ease of use and much more less touch and friction in the business. So those 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 amongst many that we have. So we're seeing good progress. On our manage adoption and ease of doing business is what we've expected and we feel good about where we're at right now.
Great, thank you.

Operator

Our next question is from David and me Dari and Annie with Evercore ISI. Please proceed.

Amit Daryanani

Yes, thanks a lot, I guess I was just hoping you talk a little bit about your, in December and March, what are you folks are looking at about mid 2%, 2.5% top line growth. As you go through calendar 25 just qualitatively, do you folks expect that growth to accelerate as the year progresses, especially given some of the comments you made on the networking recovery and the endpoint here? I'm trying to understand, do you think this growth accelerates or what are the cross currents we should be thinking about as it comes to 25% growth? And then if you could just quantify how big is India for you folks right now, that would be helpful.
Thank you.

Paul Bay

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

Operator

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

Maggie Nolan

Thank you.
Is there a change in the expectation for the year of how you're going to 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 anything beyond this year as well that you would want to comment on is welcome with too.

Paul Bay

Yeah Maggie, this is Paul so 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, 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 Ochs on a global basis, and the expectation was that we'll continue to get the efficiencies, as you heard me talk about an advantage. So how do we get A better experience, more touchless, stated another way at lowerop effects. 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 X managed 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 mentioned before, which we think is a significant differentiator is that because the way we set up our architecture around Xvantage that when we do development and create code around it goes to ALL16 countries. So you, 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 going to continue to focus on that for the first half of the year and again we were planning for kind of downside scenarios of what we thought exiting the year and going into the first half of 2025.
Thank you.

Operator

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.

Paul Bay

Thank you everyone for today's call and 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 TMT 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.

Operator

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