Insight Enterprises Inc (NSIT) Q3 2026 Earnings Call

...of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, November 5, 2026. This call is the property of Insight Enterprises. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Insight Enterprises is strictly prohibited.

In today's conference call, we will be referring to non-GAAP financial measures as we discuss

the third quarter financial results. When discussing non-GAAP measures, we will refer to them as

adjusted. You will find a reconciliation of these adjusted measures to our actual GAAP

results included in both the press release and the accompanying slide presentation issued

earlier today. Please note that all growth comparisons we make on the call today relate

to the corresponding period of last year unless otherwise noted. Also, unless highlighted

All amounts and growth rates discussed are in U.S. dollar terms. As a reminder, all forward-looking statements that are made during this conference call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today's press release and in greater detail in our most recently filed periodic reports and subsequent filings with the SEC. All forward-looking statements are made as of the date of this call and, except as required by law,

We undertake no obligation to update any forward-looking statement made on this call.

whether as a result of new information, future events, or otherwise. With that, I will now turn the call over to Jack. Jack.

Thank you, Ryan. Good morning, everyone, and thank you for joining us. I am pleased to report another very strong quarter with broad-based momentum across the business.

Gross profit increased 20%, adjusted earnings from operations grew 23%, and adjusted diluted earnings per share increased 34%. Importantly, we saw strong performance in our growth priority areas where we are concentrating our investment and resources. Infrastructure hardware gross profit increased more than 50%, supported by demand for servers, storage, and networking, as clients modernized their technology environments for AI.

Cloud gross profit increased 26%, with exceptional performance in our Microsoft business, and core services gross profit grew 21%. At the same time, our core business continues to perform well. Devices revenue increased more than 30%, reflecting market share gains and strong execution by our teams.

These results, together with my conversations with more than 130 clients and partners since I joined, have reinforced my conviction in the opportunity ahead and validated our business model based upon long term relationships, the depth of our engineering capabilities, and our ability to solve complex technology challenges and get to ROI at speed by combining hardware, software, cloud and services.

The opportunity is significant, and the team's commitment to focus and execution is yielding results.

We are moving with greater speed and discipline on our One Insight transformation, centered on the three pillars which I shared last quarter. Accelerating growth in AI infrastructure and AI services, including security, building a more integrated One Insight operating model, and investing in the talent and capabilities required to win.

Cyber security is another area where we see significant opportunity for growth.

We recently established a dedicated cyber security solution mine in Hyde-Valeria Bend, who brings significant industry experience, most recently as CEO of FSISAC, an organization focused on sharing cyber and physical threat intelligence within the financial services sector, and previously a senior managing director at Accenture.

Her mandate is to build on our existing cybersecurity expertise

and accelerate the development of an integrated portfolio security solutions. One recent example

is Insight Managed Exposure Defense, or IMED, which I shared on the last earnings call,

and helps clients simplify security operations and maximize their existing technology investments.

A leading specialty healthcare provider selected Insight to replace an incumbent provider and consolidate multiple managed security services,

including extended detection and response, continuous threat exposure management, penetration testing, and patching, all as part of one bundle.

This is the model we are replicating, leveraging our client zero experience, supporting our clients with differentiated technical talent, and building package solutions to get to predictable outcomes at speed.

Our second pillar is building on a one-insight operating model that allows us to bring the full strength of our capabilities to clients with greater speed and consistency.

As part of that work, we are creating a global solution and partner organization that will enable us to create productized solutions and offerings, continue to industrialize our delivery capabilities, and leverage best practices globally.

This group will be led by Adrian Gregory, who will transition from his role as EMEA president to lead this organization beginning January 1st. Our new EMEA leader will be announced prior to January 1st.

Our objective is straightforward, operate more consistently on a global basis, simplify how we bring capabilities and productized offerings to market, and more seamlessly integrate our solutions to solve our clients' challenges.

This model will also help us to continue to reduce our SG&A to gross profit ratio by leveraging our global scale.

Our third pillar is our talent transformation. During Q3, we initiated a voluntary separation program focused primarily on mid and back office functions as one component of our broader transformation.

This is about more than cost reduction. It is about reallocating resources towards our highest growth opportunities, streamlining how we operate, and building a more focused organization that can move faster and execute more consistently.

At the same time, we are investing in the skills we believe will drive Insight's future.

We now have more than 600 teammates certified with Anthropic and OpenAI, and more than 100 with NVIDIA.

We will continue to invest in certifications and technical skills in the areas where we see the greatest opportunities for growth.

We also continue to build our FTE community. For example, we worked with a global logistics leader seeking to simplify access to HR and support services for a workforce of more than 400,000 employees.

Using our rapid AI framework, our FTEs moved from discovery to a functioning prototype running on Claude in just 10 days, demonstrating how AI can streamline service delivery, improve employee experience, and support the client's broader digital transformation.

Best Companies for 2026, Forbes recognizing Insight as one of the world's best employers, and numerous Great Place to Work awards.

Turning to the remainder of the year, our capital allocation priorities remain clear.

We believe the highest return opportunities today are investing in InSight's organic growth priorities and repurchasing our shares.

We intend to complete the remaining $74 million of our current share repurchase authorization this year.

Our performance through the first three quarters reinforces that conviction.

Demand has remained healthy across our key markets, execution has been strong, our focus on organic growth is gaining traction, and backlog remains elevated.

At the same time, we continue to monitor a mixed and evolving macroeconomic environment and remain disciplined in how we manage the business.

But we are encouraged by what we are seeing. As the year has progressed, we have sharpened our focus, our focus strengthened execution, and continued to deliver strong financial results.

Given our year-to-date performance and confidence in our ability to execute, we are raising our 2026 outlook again for gross profit growth and adjusted diluted earnings per share. James will provide additional details on our updated guidance in a moment.

We have more work ahead, and we are still early in our One Insight transformation, but we are making progress against our priorities and building the capabilities, operating discipline, and execution we believe are necessary to capture the opportunity ahead. With that, I'll turn the call over to James. James?

James? Thank you, Jack, and good morning, everyone. Our Q3 results demonstrated broad-based strength across our business and exceeded our expectations for the quarter. Net revenue was $2.4 billion, an increase of 22% in U.S. dollar and constant currency terms. The increase was driven by hardware and services partially offset by a decrease in on-prem software as clients shift to cloud-delivered software. As a reminder, cloud-delivered software is presented net

and agent services revenue. Hardware revenue increased 32 percent with double-digit growth in both infrastructure and devices. Infrastructure was up over 50 percent and devices over 30 percent. Core services revenue increased 17 percent reflecting contributions from both acquisitions and the organic business with stronger growth from acquired businesses. Organic growth has improved modestly for the last four quarters. While we are encouraged by the progress, there is a

There's more work to do, and strengthening organic growth remains an important priority.

Gross profit increased 20%. Cloud gross profit was $164 million, an increase of 26%, driven

by growth in SaaS, as well as security software from our Securo acquisition.

As we anticipated and communicated throughout the year, growth moderated due to the expected

decline in our Google Cloud resale business. Insight Core Services' gross profit was $95 million,

an increase of 21%, driven by contribution from acquisitions, modest and improving organic growth,

as well as gross margin expansion. Hardware gross profit was up 21%, while gross margin declined 100

basis points due to device pricing and overall client mix. Sequentially, gross margin improved 10

basis points. From a geographic perspective, all regions delivered strong gross profit growth.

North America grew 15% with strong performance across all solution lines.

AMIA increased 22% driven by ongoing AI infrastructure buildouts in the UK and UAE where we act as

the agent in the transactions. And APAC grew 121% fueled by our acquisition of Securo as

well as organic business. As a result, total gross margin was 21.4%, a decrease of 30 basis points due to revenue mix and a decline in hardware margin partially offset by cloud growth. Adjusted SG&A increased 19% primarily due to an increase in our variable compensation tied to our strong year-to-date performance as well as expenses related to acquisitions without a comparable expense in 2025.

During the quarter, we initiated a voluntary separation program as part of our ongoing focus on operating efficiency. We expect approximately $30 million in annualized gross savings.

Our commitment is to reduce our SG&A to gross profit ratio over the coming years. We will share additional details at our investor and analyst briefing on December 2nd.

These results drove an adjusted EBITDA of $177 million, up 22%, while margin was flat at 7.3%.

And our adjusted diluted earnings per share were $3.59, up 34% in U.S. dollar terms and 36% in constant currency. For the quarter, we generated $128 million of cash flow from operations, and year-to-date, we generated $149 million, which was in line with our expectations.

For the year, we continued to anticipate cash flow from operations in the range of $300 to $400 million.

In Q3, we repurchased $75 million in shares and have $74 million in remaining authorization, which we intend to exhaust before the end of the year.

The projected $299 million of share repurchases for the year would represent over 85% at the midpoint of our projected operating cash flow.

We exited Q3 with total debt of approximately $1.5 billion, compared to $1.4 billion a year ago, with a net leverage ratio of 1.6.

We have ample liquidity to meet our needs, and as at the end of Q3, we had access to the $2 billion capacity under our ABL facility, of which $1 billion was available.

Our adjusted return on invested capital for the trailing 12 months at the end of Q3 was 18.1% compared to 15.8% a year ago.

Now turning to guidance. As we have discussed throughout the year, we expect our growth rate to moderate in the fourth quarter as we lap the acquisitions completed last year and work through the impact of the Google Partner Program changes.

We're also taking a prudent approach to our outlook given uncertainty associated with memory pricing, supply chain disruption, and the broader macroeconomic environment. These factors are reflected on our fourth quarter expectations, and we continue to expect solid execution across the portfolio.

As we consider our year-to-date performance and the evolving operating environment, our guidance incorporates the following assumptions and considerations. Hardware gross profit will be up high single digits, with growth in both infrastructure and devices. We expect core services gross profit will grow in the mid-teens. As a reminder, we have lapped the acquisitions we completed in early Q4 2025.

We anticipate cloud gross profit to grow in the mid-20% range as we move past the majority of the partner program changes we have previously discussed. Adjusted SG&A will grow slower than gross profit growth. And finally, we intend to exhaust the remaining $74 million share repurchase authorization in 2026. Considering these factors, for the full year of 2026, our guidance is as follows. We are raising our gross profit growth expectations to 12

and a half to 14%, and our gross margin will be approximately 21 and a half percent. Excluding stock based compensation or adjusted diluted earnings per share will now be between $13.55 to $13.75. This represents approximately 27% growth at the midpoint. Finally, we expect cash flow from operations in the $300 to $400 million range. Our guidance includes interest and other expenses to be approximately

$95 million, an effective tax rate of approximately 25.5% for the full year, capital expenditures of $20 to $30 million, and an average share count for the full year of approximately 30 million shares. This outlook excludes stock-based compensation, excludes acquisition-related intangible amortization expense of approximately $83 million, assumes no acquisition-related costs, and excludes severance, restructuring,

and voluntary separation program expenses, as well as transformation costs, and assumes no change in our debt instruments and no meaningful change in the macro-economic outlook. I will now turn the call back to Jack. Jack? Thank you, James. Before we conclude, I want to thank our teammates, our clients, and our partners. Our performance this quarter reflects the dedication of our people, the trust our clients place in us, and the strength of our partnerships. I'm proud of what we've

accomplished together. More importantly, I'm encouraged by the progress we are making on our One Insight transformation and the opportunity ahead. On December 2, at noon Eastern, we plan to host a virtual investor and analyst briefing, where we'll provide a deeper perspective on the industry landscape, insights position in the market, our strategic priorities, and our three-year financial targets. Thank you for your continued support of Insight. We look forward to speaking with you at our briefing and updating you on our

progress next quarter. This concludes my prepared remarks, and we will now open the

line for your questions. We will now begin the question and answer session. If you

would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster.

Your first question is from Joseph Cardoso with J.P. Morgan. Your line is now open. Please go ahead.

Hey, good morning, guys, and thanks for the question here. Maybe just wanted to first touch on the demand in the quarter as well as kind of what's implied in the guidance, particularly on the hardware side of the business.

You know, maybe first part of the question is just help us think through how you guys or what you guys are seeing from a contribution standpoint between pricing and underlying units in the quarter and maybe how you thought that trended as you kind of progressed through the quarter into 4Q today.

And then obviously the implied outlook there, James, that you gave kind of embeds a little bit of a slowdown here in the fourth quarter.

Maybe just walk us through what you guys are embedding there as it relates to the hardware

business and maybe what's the puts and takes there that we should be contemplating as we're

thinking about that outlook.

And then I do have a follow-up.

Thank you. Hey, good morning. Thanks for the question. So a few points. Let me talk about hardware. First of all, in Q3, both devices and infrastructure were very strong. We actually saw device units up, low single digit, in addition to price increase, a very strong quarter in devices and obviously a very strong quarter in infrastructure with a very strong demand across servers.

storage and networking. When we look at Q4, a few things. First of all, we're pleased with the start of the quarter. The second, when we look at our guidance for Q4, you know, firstly, I want to keep a prudent stance in my guidance, so that's first. The second thing is, this will be the first quarter in a long time that is primarily an organic quarter.

We're also hitting, you know, harder compares compared to Q4 of last year. We had signaled the impact of the Google partner program changes in Q4. As you know, we singled that. I think even in my first earnings call in Q2, we started to single that maybe even earlier. So we knew this was coming. This is not a surprise, but that obviously dampens things.

And so those are primarily the primary drivers for our guidance. James, anything you want to add?

Yeah, I think that's spot on in terms of the dynamics that we've been calling out all year as we enter in Q4.

I would just, you know, from a hardware standpoint, the, you know, backlog is still very healthy as we enter the quarter, and as Jack mentioned, bookings have progressed well.

Seeing that both, by the way, across devices and infrastructure, we had very strong performance in both of those in Q3.

As Jack mentioned, on the device side, units were up, and, you know, based on all the measures we see, market was actually down from a unit perspective.

Around the cloud, you know, cloud remains healthy. You saw, and I call this out in the prepared remarks, but you saw a little bit of a slowdown in cloud signaling around the Google Partner Program changes. That becomes more acute in Q4, but the underlying cloud business, particularly around the Microsoft side, has remained really healthy and really strong. You know, I would argue that all year we've taken share in the Microsoft space as well.

That demand also continues into Q4. We just have these other items that we have to contend with specifically in Q4, but all the signals that I see entering the quarter, the demand profile remains strong, but it is important for us to keep that prudent stance.

No, got it, guys, fair, and thanks for the color there. And then maybe as my follow-up, Jack, you know, you spent a fair bit of time in the prepared remarks talking about a focus on continuing to drive operating leverage, and obviously this year you guys made great progress. I think the guidance implies something like exiting the year and kind of the high 60% as a percentage of total GP there.

So maybe just wanted to touch on there in terms of your conviction around maybe medium, longer term outlook in terms of being able to drive that on an annual cadence or consistently through the forecast or looking outward longer term. Just given that you're also benefiting from a very strong top line this year, maybe just walk us through how you guys are thinking about that longer term and the conviction to kind of continue to drive this improving operation.

improving operating leverage in the business and then maybe a second part to as you guys think about that and putting that out there, you know, are you guys also contemplating M&A and being able to consistently do that even in and maybe if that were to engage there in terms of the M&A pipeline. Thank you.

Yeah, so let me start with operating leverage and when we get together in December for the investor day, we'll provide a three-year view on operating leverage. But I have strong conviction that we can continue to drive operating leverage. We've implemented a voluntary separation program. We've also mostly frozen all mid and back office hiring, you know, for some time now.

You know, we're looking at a number of levers that I outlined on, you know, maybe my first or second earnings call around. We've got a strategic sourcing program, which is well underway. We kicked that off within a few months of me joining.

We have tremendous opportunities with AI and modernization of technology and automation. Our one inside operating model provides opportunities to get better scale from our global presence.

We're looking at the spans and layers in the organization to accelerate and simplify decision-making. So we have a very strong plan. We know what to do and we'll be executing. We'll provide a three-year view of how we plan to execute on that in December.

On M&A, you know, we will, you know, as I said, this was not a focus this year. Our focus this year is on the organic business. And whatever we do in M&A, you know, our priority is making sure we have a healthy, strong, and high-performing organic business. But we will be looking at M&A as part of our strategy going forward. We've already started to work on our integration playbook to make sure if and when it happens, we execute with discipline.

And, you know, so it'll be part of, you know, I'm sure in some way, shape, or form of how we execute over the next three years.

Joe, I would add things to this. One is I certainly am with Jack in terms of we have a big opportunity around our operating expense leverage. I think we are in a unique position to both drive leverage as well as continue to invest in the core areas that will drive the growth priorities for us. And that's investments that will take the shape in terms of sales and technical talent.

And then on the M&A front, on December, we'll talk more about our capital allocation priorities

because we do believe that share repurchases will have a strong place in those capital allocation priorities along with the M&A side. But we'll outline that more holistically on December 2nd.

Thank you, guys.

Your next question is from Luke Morrison with Canaccord Genuity. Your line is now open. Please go ahead.

Hey, guys. Thanks for taking the question here, and congrats on the great results. So I wanted to dig on the infrastructure segment a little bit. The number there really stood out. Gross profits up more than 50%. I'd love to just get more color on sort of the underlying drivers of that.

You know, as I think about the inflection here, is it mainly enterprises just getting their own environments ready for AI, or are you also participating directly or indirectly in larger buildouts for cloud and AI-focused providers?

And then as that business grows, how are you thinking about where it makes sense to lead with services versus where you're comfortable with a purely more transactional reseller role?

Thanks. So on infrastructure, our primary focus and the primary driver of our numbers is selling to the enterprise. That is the bulk of our numbers. And what we're seeing with our clients is while we see very, very strong cloud growth, many of our enterprise clients are seeking a balanced posture with data and compute on-prem and, you know, leveraging the cloud for their workload.

for their workloads and for AI. And so a lot of our clients are opting for a balanced posture. And so when I look at the market outlook for the next few years, I see very strong growth in cloud, but also strong growth on infrastructure as clients seek that balanced posture. And I think with token costs and token economics, every client's looking at how do they balance that, what do they do on-prem, what inference on-prem, what data do they need for privacy or other reasons.

And so we see a dual approach at many of our clients between the cloud and their on-prem, and that's what's driving our business and infrastructure.

The second one on services, one of the things that is central to our strategy, and a lot of people ask me, you know, especially, you know, with my services background, is the focus resale or is the focus on services?

And the answer is yes. For us to execute both resale and services are critical. Our strategy is to be the solution integrator. That means bringing the hardware, the software, the cloud, and the services to drive results. And so we're very focused on making sure we have the right motions on resale, the right motion on services, and making sure we complement those to get to faster solution for our clients to get them to ROI. And so when you look at our engineering talent, it's both a

It's both advising our clients on how to structure, you know, what they're going to buy in terms of service, you know, software, you know, hardware, you know, very complex architectural decisions, but then advising on the implementation and how to make it happen and how to build their use cases on top of that infrastructure. And so our strategy is very much rooted on having that resale and services complement each other. It's not either or it's both together.

Got it. Makes a lot of sense. And then maybe just for my follow-up, you know, last quarter you described backlog as clean. You know, no double ordering. Cancelations were mostly rebookings. Hardware sales are up 32% this quarter. You know, maybe just update us on where backlog stands today. Is it still building? Is it starting to convert down? And then if anything, you know, has changed in the mix or lead times, that's worth flagging.

Yeah, thanks. Thanks, Luke. Backlog still remains quite healthy. We don't see any unusual trends around de-bookings or cancellation of orders. So as healthy as it has been in previous quarters. As we entered Q4, backlog was still at an elevated level. Going back to, you know, if you rewind, we said this earlier in the year that Q2 was at

historic levels back all the way from the COVID time. It is still at elevated levels as we enter in Q4. And then the bookings thus far in Q4 would indicate that anything that is shipping is effectively being rebooked. Now, we have to watch to see if that trend continues through the quarter, and we will update you, of course, as we get into the outlook for next year in February. But the trends to start the quarter have continued to be healthy.

Great. Thank you.

Your next question comes from Vincent Caliccio with Barrington Research.

Your line is now open. Please go ahead.

Yeah, Jack, for your strategy, are you seeing customers increasingly purchase bundled solutions that include hardware, software, and implementation?

Yeah, especially in the mid-market, that's where the full integrated solution, integrated proposition resonates the most. We have many clients that come to us for resale, be it of their cloud capabilities, their infrastructure, their service, storage, networking, and then wanting the implementation service, be it help them build the AR use cases, migrate their data to the right platform, secure the enterprise,

that is, we very much see that with our clients. One of the things that I've been very pleased to find out over the last six or seven months is the length and depth of our relationships. We as a company have not treated our clients' relationships as transactional. These are long-term. We have account executives in positions for 10, 15 years, sometimes longer, and the clients consistently tell me we love working with Insight. We love the long-term