INSIGHT ENTERPRISES INC

The worldwide total addressable market for business IT spend is forecasted to exceed $6 trillion by 2029 according to Gartner, a leading IT research and advisory company. Insight believes its addressable market represents approximately $1.3 trillion in 2026. The IT industry is very fragmented and highly competitive, with competition based on price, product availability, speed of delivery, credit availability, quality and breadth of product lines, and increasingly on the ability to provide services and tailor specific solutions to meet client needs. The competitive landscape is continually changing as various companies expand their product and services offerings, and the shift to digital business such as data analytics, edge computing, hybrid infrastructure, modern workplace, cybersecurity, and other similar service offerings has led to the emergence of new competitive players and opportunities through emerging models like AI and X as-a-service. Insight believes the industry will see further consolidation as product resellers and direct marketers combine operations or acquire or merge with other resellers, service providers and direct marketers to increase efficiency, service capabilities and market share.

Primary competitors named include systems integrators and digital consultants such as Accenture, Capgemini, Atos, HCL Technologies, Tata Consultancy Services and Infosys, as well as technology providers, value-added resellers and direct marketers such as CDW, Presidio, World Wide Technology, SHI and Computacenter. Insight sometimes competes directly with publisher and manufacturer partners including Microsoft, Cisco Systems, Dell, HP Inc. and Adobe Systems. Insight's 2025 net sales of $8.2 billion represented less than 1% of the highly diverse global market. Insight believes it is well positioned in this highly fragmented global market with sales locations in 21 countries and deep experience delivering IT solutions across the globe. Insight's competitive advantages include its Fortune 500-ranked Solutions Integrator status, a comprehensive portfolio of solutions, far-reaching partnerships, 37 years of broad IT expertise, global scale, local expertise, and e-commerce experience.

Insight generates revenue by selling hardware, software, and services, including cloud solutions, to clients in North America; Europe, the Middle East and Africa (EMEA); and Asia-Pacific (APAC). On a consolidated basis, product (hardware and software) and services (including cloud solutions) represented approximately 79% and 21%, respectively, of consolidated net sales in 2025, compared to 81% and 19% in 2024 and 83% and 17% in 2023. On a consolidated basis, product and services represented approximately 41% and 59%, respectively, of gross profit in 2025, compared to 43% and 57% in 2024 and 46% and 54% in 2023. The company serves three primary customer segments: Large Enterprise/Corporate, Commercial, and Public Sector. Insight acts as both a principal and an agent in transactions; in 2025, gross revenue recognition (as principal) was $7,477,150,000 ¹ and net revenue recognition (as agent) was $770,030,000 ².

Insight's solutions expertise is organized into five key areas: Hybrid Multicloud, Cybersecurity, Data & AI, Digital Workplace & Devices, and Intelligent Applications. Hybrid Multicloud solutions involve architecting and modernizing multicloud and networking solutions from edge to data center to cloud. Cybersecurity solutions focus on enhancing resilience, mitigating risk, and safeguarding critical assets, including threat protection, incident response, and compliance. Data & AI solutions focus on turning AI potential into tangible business results by building a solid data foundation and architecting for speed and reusability. Digital Workplace & Devices solutions focus on creating a productive, flexible and secure workplace, tightly integrated with Device-as-a-Service (DaaS) offerings to drive recurring services revenue and gross margin expansion. Intelligent Applications solutions address clients' unique business challenges by transforming and modernizing applications, enhancing developer productivity, and infusing AI to drive innovation.

In North America, net sales by offering category for 2025 were hardware $4,135,116,000 ³, software $1,256,691,000 ⁴, and services $1,262,730,000 ⁵. In EMEA, net sales were hardware $458,802,000 ⁶, software $552,421,000 ⁷, and services $343,925,000 ⁸. In APAC, net sales were hardware $36,199,000 ⁹, software $91,779,000 ¹⁰, and services $109,517,000 ¹¹. Services net sales include cloud solutions, software maintenance, vendor direct support services, cloud/SaaS offerings, Insight Delivered Services (time and materials, fixed fee, OneCall support services), and third-party services. The company's gross profit from services was $1,046,742,000 ¹² in 2025, compared to $1,010,191,000 ¹³ in 2024, and gross profit from products was $714,685,000 ¹⁴ in 2025, compared to $755,825,000 ¹⁵ in 2024.

During 2025, Insight completed two strategic acquisitions: Inspire11 LLC on October 1, 2025 for a preliminary cash purchase price of approximately $209,689,000 ¹⁶, net of cash and cash equivalents acquired of $1,413,000 ¹⁷, and Sekuro Limited on October 31, 2025 for a preliminary cash purchase price of approximately $79,522,000 ¹⁸, net of cash, cash equivalents and restricted cash acquired of $3,822,000 ¹⁹. The company also repurchased approximately 1,201,000 ²⁰ shares of its common stock for an aggregate cost of $151,118,000 ²¹ during 2025. On December 19, 2025, the Board of Directors authorized the repurchase of up to $299,000,000 ²² of common stock. Insight repaid approximately $333,091,000 ²³ of the remaining principal balance upon maturity of the Convertible Notes in 2025 and paid $221,978,000 ²⁴ to settle a portion of the Warrants relating to the Call Spread Transactions. The company also recorded severance and restructuring expenses, net of $37,131,000 ²⁵ and acquisition and integration related expenses of $3,567,000 ²⁶ in 2025.

For the fiscal year 2025, total net sales were $8,247,180,000 ²⁷, a decrease of 5% compared to $8,701,698,000 ²⁸ in 2024. Gross profit was $1,761,427,000 ²⁹, relatively flat compared to $1,766,016,000 ³⁰ in 2024, with consolidated gross margin expanding approximately 110 basis points to a record 21.4% ³¹ of net sales. Earnings from operations decreased to $334,923,000 ³² in 2025, a decrease of 14% compared to $388,584,000 ³³ in 2024, representing 4.1% ³⁴ of net sales. Net earnings were $157,347,000 ³⁵ and diluted net earnings per share were $4.86 ³⁶ in 2025, compared to net earnings of $249,691,000 ³⁷ and diluted EPS of $6.55 ³⁸ in 2024. Cash flows from operations were $303,827,000 ³⁹ in 2025, compared to $632,845,000 ⁴⁰ in 2024.

Insight expects that gross margin expansion could continue into future periods as the company focuses on selling solutions and increasing its services net sales. The company anticipates that transformation costs are not expected to recur in the longer term. Insight expects that while interest rates are expected to continue to moderately decrease going forward, higher than historical interest rates will continue in 2026. The company expects its effective tax rate to return to more typical levels in the foreseeable future. Insight expects total capital expenditures in 2026 to be in the range of $20.0 to $30.0 million ⁴¹.

A key growth vector is the expansion of cybersecurity capabilities, particularly through the acquisition of Sekuro, which significantly expands Insight's cybersecurity capabilities in APAC, positioning the company to better meet the growing demand for comprehensive security solutions in an increasingly complex threat landscape. Another major growth vector is the enhancement of AI and data expertise through the acquisition of Inspire11, which enhances Insight's capabilities as a leading solutions integrator through the integration of proven AI delivery accelerators, deep data and analytics expertise, and a results-driven methodology to convert AI initiatives into tangible business value and transformative growth. The company also continues to invest in its cloud business, with the SADA acquisition positioning Insight to further benefit from the growing trend of multicloud adoption and Gen AI, accelerating progress toward the strategic objective of growing cloud services and solutions.

Insight's growth strategy also includes expanding its presence in the Middle East, which presents additional complications and opportunities. The company is focused on its strategic objectives of putting clients first, empowering teammates, delivering impact with excellence, and driving profitable growth. Insight continues to transform its sales capabilities and align incentives to focus on its solutions portfolio, streamlining account coverage to match skills with client needs and propensity to buy services. The company believes the key to its success is focusing on doing a finite number of things and doing them really well, which leads to successful outcomes with clients and drives profitable growth for shareholders.

Insight expects its gross margins to improve as its mix of services and solutions increase. The company's consolidated gross margin expanded approximately 110 basis points to a record 21.4% ⁴² of net sales in 2025, reflecting expansion in margin from services net sales, primarily from growth in other agency transactions and Insight Core services. The company believes this trend could continue into future periods as it focuses on selling solutions and increasing its services net sales. Selling and administrative expenses increased $42,700,000 ⁴³ in 2025 compared to 2024, and increased approximately 140 basis points as a percentage of net sales. The company incurred transformation costs in 2025 of $13,083,000 ⁴⁴ compared to $18,355,000 ⁴⁵ in 2024, which are unique in nature and are not expected to recur in the longer term.

Insight continues to invest in developing and deploying digital platforms and cloud-native systems used to operate its business and improve the customer experience. The company's IT strategy focuses on innovation and scalability to enhance customer-facing e-commerce, cloud and managed services platforms, as well as internal systems, with the goal of improving client satisfaction, attracting new clients, and increasing efficiency. Insight is also leveraging AI and machine learning to drive operational efficiency, improve security, and deliver personalized client experiences, with key initiatives including predictive analytics, automated compliance monitoring and intelligent workflows that reduce manual intervention. The company is modernizing internal platforms with cloud-native architectures, API-driven integrations and modular design to enable faster deployment, better interoperability, and greater agility. As of December 31, 2025, Insight employed 14,505 ⁴⁶ teammates, with 11,017 ⁴⁷ in North America, 2,759 ⁴⁸ in EMEA, and 729 ⁴⁹ in APAC.

Insight intends to use cash generated in 2026 in excess of working capital needs to pay down its ABL facility and inventory financing facilities, to repurchase shares of its common stock and for strategic acquisitions. The company expects total capital expenditures in 2026 to be in the range of $20.0 to $30.0 million ⁵⁰. As of December 31, 2025, approximately $299,000,000 ⁵¹ remained available for repurchases under the share repurchase program. The company does not currently intend to pay any cash dividends in the foreseeable future. Insight's ABL facility was amended on December 19, 2025, increasing the maximum borrowing amount from $1,800,000,000 ⁵² to $2,000,000,000 ⁵³ and extending the maturity date from July 22, 2027 to December 19, 2030.

A significant headwind is the impact of partner program changes, particularly from Microsoft and other large partners. Recent changes in incentives for certain cloud-based solutions adversely impacted Insight's results of operations in 2025. The company regularly experiences partner funding program changes that reduce the incentives many partners make available and that change the requirements for earning such incentives. If Insight is unable to react timely to remediate and effectively respond to these changes, the changes could have a material adverse effect on its business. Another headwind is the impact of inflation and sustained high interest rates on variable rate borrowing facilities throughout 2025, consistent with the prior year period. While interest rates are expected to continue to moderately decrease going forward, the company continues to anticipate higher than historical rates in 2026.

Insight faces structural headwinds from the ongoing migration of on-premise software to cloud solutions, which is reported net in services net sales and can reduce reported product net sales. The company also faces risks from supply constraints, including an anticipated global memory (DRAM and NAND) shortage expected in 2026. Additionally, the company is exposed to risks from tariffs and trade policies, general economic conditions and economic uncertainties, and changes in geopolitical conditions, including the possibility of a recession or a decline in market activity related to tariffs and trade policies or otherwise. The company is also in the process of recruiting and hiring a new Chief Executive Officer and will be subject to risks related to the company being able to attract a qualified candidate and management risks in transitioning to a new Chief Executive Officer.

The IT hardware, software and services industry is intensely competitive, and actions of competitors, including manufacturers and publishers of products Insight sells, can negatively affect the business. Insight relies on its partners for product availability, competitive products to sell, and marketing funds and purchasing incentives, which can and do change significantly in the amounts made available and the requirements year over year; purchases from Microsoft and TD Synnex accounted for approximately 32% ⁵⁴ and 12% ⁵⁵, respectively, of aggregate purchases in 2025, and sales of Microsoft products accounted for approximately 17% ⁵⁶ of consolidated net sales in 2025. The company has a substantial amount of indebtedness, with $1,361,300,000 ⁵⁷ of total long-term debt outstanding as of December 31, 2025, and an additional $225,035,000 ⁵⁸ of obligations outstanding under inventory financing agreements, which could require dedicating a substantial portion of cash flow from operations to debt service payments. The acquisition, integration and operation of acquired businesses may disrupt the business and create additional expenses, and Insight may not achieve the anticipated benefits of the acquisitions. General economic and political conditions, including unfavorable conditions in a particular region, business or industry sector, may lead clients to delay or forgo investments in IT hardware, software and services, and the company is exposed to risks from tariffs and trade policies, the possibility of recession, and financial market instability.

Management's message emphasizes that Insight aspires to be an AI-first, leading solutions integrator, setting the pace and defining a new category in the industry. The company reported record gross margin of 21.4% ⁵⁹ in 2025, primarily driven by margin expansion in North America and EMEA. Management highlighted that full year 2025 financial and operational highlights included gross profit of $1.8 billion and record gross margin of 21.4% ⁶⁰, cash flows from operations of $303.8 million ⁶¹, and strengthening capabilities through two strategic acquisitions: Inspire11, enhancing AI and data expertise, and Sekuro, expanding cybersecurity and digital resilience across APAC. The strategic priorities emphasized for the period ahead are: put clients first, empower teammates, deliver impact with excellence, and drive profitable growth. Management believes the key to success is focusing on doing a finite number of things and doing them really well, which leads to successful outcomes with clients and will drive profitable growth for shareholders. The company expects that gross margin expansion could continue into future periods as it focuses on selling solutions and increasing its services net sales, and that transformation costs are not expected to recur in the longer term.