Earnings Call Transcript - NSIT Q2 2025

Operator, Operator

Hello, everyone, and thank you for joining the Insight Enterprises Second Quarter 2025 Operating Results Call. My name is Sammy, and I'll be coordinating your call today. I'll now hand over to your host, Ryan Miyasato, Director of Investor Relations, to begin. Please go ahead, Ryan.

Ryan Miyasato, Director of Investor Relations

Welcome, everyone, and thank you for joining the Insight Enterprises earnings conference call. Today, we will be discussing the company's operating results for the quarter ended June 30, 2025. I'm Ryan Miyasato, Investor Relations Director of Insight. And joining me is Joyce Mullen, President and Chief Executive Officer; and James Morgado, Chief Financial Officer. If you do not have a copy of the earnings release or the accompanying slide presentation that was posted this morning and filed with the Securities and Exchange Commission on Form 8-K, you will find it on our website at insight.com under the Investor Relations section. Today's call, including the question-and-answer period, is being webcast live and can also be accessed via the Investor Relations page of our website at insight.com. An archived copy of the conference call will be available approximately 2 hours after completion 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, July 31, 2025. This call is the property of Insight Enterprises. Any redistribution, retransmission, or rebroadcast of this call in any form without the expressed 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 second quarter 2025 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 as constant currency, 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 Joyce. And if you're following along with the slide presentation, we will begin on Slide 4.

Joyce A. Mullen, President and CEO

Thank you very much, Ryan. Good morning, everyone, and thank you for joining us today. In Q2, we executed well and met our expectations as we navigated a challenging environment, primarily driven by partner program changes. Our hardware business delivered growth for the second consecutive quarter, and we achieved strong profitability milestones. Total gross margin of 21.1% and adjusted earnings from operations margin of 6.2%, both Q2 records. In the quarter, hardware revenue grew 2% with growth in both devices and infrastructure. Hardware revenue in North America grew 4%. Revenue from our commercial clients grew 8%, which is the fifth consecutive quarter of growth. The underlying SaaS and Infrastructure as a Service business grew double digits and in line with expectations, offset by the partner program changes we've discussed previously. We made internal adjustments to address the program changes, and we will continue to focus on capturing growth in the cloud business. Overall, cloud gross profit declined 5%. Insight Core Services revenue was down 2% as we continue to see delays in initiating new services projects, particularly in our large enterprise clients. We also prudently managed adjusted SG&A expenses, which were down 3%. As a result, adjusted diluted earnings per share were in line with our expectations. While macroeconomic factors, including tariffs, legislative policies affecting supply chains, and interest rates continue to impact our clients' investment decisions, we are well positioned in terms of expertise, particularly AI, to grow as the environment improves. As the technologies we offer to our clients continue to develop, we are adapting our ambition to becoming not only the leading solutions integrator but the leading AI-first solutions integrator. Here's what we mean by that. We are aggressively adopting AI internally across all disciplines and all regions. We've enhanced our services portfolio by integrating an AI-first approach. We are adapting our offers to support our clients' focus on delivering measurable and meaningful business value through pragmatic deployment of AI solutions, delivering results fast and earning the right to do more. We offer our clients full life cycle AI services, including consulting, implementation, training, governance, and managed services support. And while it's still early in terms of project deployment and the initial deployments are small, we've made good progress on multiple fronts. For example, we have deployed hundreds of agents internally and for client projects. We've completed over 200 AI assessments with our clients, more than quadrupling the number compared to the last quarter. In software development, we've delivered significant improvements in productivity. Infrastructure hardware bookings are increasing as clients prepare their on-prem and cloud environments for AI workloads. In addition, we continue to drive the adoption of AI internally to improve our SG&A leverage. We are excited by the momentum in this space. And as an interesting aside, this wave of technology adoption is primarily being driven by business units and business leaders, with support from IT. This is different from cloud, which was driven by IT with support from the business. As an example of our efforts with AI, I am very pleased to share that Gartner has named Insight an emerging visionary in its inaugural innovation guide for generative AI consulting and implementation services. This recognition underscores our innovation-first mindset and our emerging strength as an AI-first integrator. At Insight, we deliver measurable outcomes and help clients navigate the complex challenges of Gen AI adoption from data readiness and governance to security, scalability, and achieving ROI. Clients across all industries are beginning to leverage AI in virtually every aspect of their businesses, including new product development, go-to-market models, and back-office functions. I'd like to share a few examples. We worked with a major retail client, the largest authorized retailer for a leading telecommunications provider operating nearly 1,700 locations across all 50 states. They needed to address inefficiencies in their legal document review process, so they partnered with Insight to develop an AI-powered platform. Insight developed a custom AI solution using the Microsoft Azure OpenAI service to automate legal document review. The platform analyzes millions of documents, identifies key data points, and provides contextual summaries for legal cases. Our AI solution automated the process of reading, understanding, and analyzing vast legal data sets, while ensuring data privacy and confidentiality through secure Azure cloud integration. This project eliminated over 100,000 hours annually from manual document review, improved accuracy, and reduced human error, leading to projected annual savings of $7.5 million. Understanding the essential foundational elements necessary for effectively implementing AI is crucial. This includes assessing the quality and accessibility of data as well as implementing robust security protocols. And as AI adoption grows, so too does the threat surface. Mining operations are capital and technology-intensive, and security is critical. We partnered with one of the top gold producers in the world. They needed to consolidate disparate security tools across multiple acquisitions to improve effectiveness and reduce overlap. We established ourselves as a trusted adviser and implemented a Palo Alto Network solution delivering single-source security services across multiple countries. Our solution addresses security posture concerns through technology consolidation and consistent security policies. We provided professional services to retire duplicate technologies and optimize their security infrastructure. This led to a multiyear managed service agreement with Insight and meaningful cost savings for our clients. Our partner ecosystem is critical to our success. Given our leading partner relationships with companies like NVIDIA, Google, Microsoft, and others who are changing the world right now, we are in a strong position to help clients simplify this complex space and optimize their business outcomes. You can see recent awards in the accompanying slide presentation. As I mentioned previously, we have been included in Gartner's Innovation guide for generative AI consulting and implementation services. Furthermore, we have been named a finalist for CRN's 2025 Best AI Solution Provider. Our teammates are integral to delivering the value we create for our clients. We foster a collaborative environment, and Insight continues to be recognized as a Great Place to Work by various organizations, most recently by Newsweek and Forbes. Now I'd like to share my thoughts on the remainder of 2025. Exiting the first half of the year, adjusted earnings from operations were in line with our expectations. As I mentioned, we are committed to our ambition to become the leading solutions integrator. However, in response to significant technology trends and the overwhelming impact of AI, we are adapting this ambition to become the leading AI-first solutions integrator. Our strategy remains focused on simplifying the complex for clients and delivering outcomes with our full portfolio of hardware, software, and services. And as AI adoption grows, we believe we are well positioned. We have long-standing relationships with a broad base of clients across the globe. We have strong partnerships with the companies and platforms that are changing the world. We have a deep understanding of the cloud platforms and the hardware required to run the environments that will be critical to our clients' success. And we have a dedicated team of experts who are eagerly embracing new tools and processes to deliver results fast. As we have discussed for the past few quarters, we are weathering partner program challenges. In the near term, we are cautiously optimistic for the second half of the year as we navigate the macro factors that weigh on our client spending decisions. In the midterm, we are very well positioned to lead our clients through this rapidly changing technology environment. Our commercial client revenue has grown for five consecutive quarters, and we expect our corporate and large enterprise clients purchasing to increase in the second half. Demand drivers for device refresh remain, mainly the age of the installed base and Windows 10 end of life. And infrastructure spending is improving after a prolonged period of digestion. As a result, we believe hardware demand will continue to build throughout the year. We are pleased with the services performance of the companies we recently acquired. Our investments in our advisory capabilities have also been successful, allowing us to pull through other elements of the portfolio. This was our thesis that we could leverage those capabilities to sell more to our existing client base. The services growth, however, is offset by pauses in deploying infrastructure projects and some continued hesitancy regarding discretionary spending, especially in our largest enterprise clients. Although we expect services to improve modestly in the second half, demand will remain muted. M&A remains key to our ambition to become the leading AI-first solutions integrator, and we are focused on the fastest-growing areas of the market: cloud, data, AI, edge, and security. Our team is executing well as we have pivoted from legacy partner programs to focus on the services and solutions most critical to partners and clients alike. As we exit Q4, we expect partner program changes to be largely normalized. And we will continue to prudently manage SG&A while balancing investments in our solution and AI capabilities.

James A. Morgado, Chief Financial Officer

Thank you, Joyce, and good morning, everyone. Our Q2 adjusted earnings from operations and diluted earnings per share were in line with our expectations, with gross profit slightly below, offset by strong operating expense management. Net revenue was $2.1 billion, a decrease of 3% in U.S. dollars and 4% in constant currency. The decrease was driven by a 4% decline in product, primarily due to on-prem software, which declined 14% and was a result of partner consolidation last year that shifted gross product revenue to net agency services. Hardware revenue increased 2%, the second consecutive quarter of growth. Gross profit decreased 2%, primarily due to partner program changes. Hardware gross profit was up 2%, reflecting growth in both infrastructure and devices. Insight Core Services gross profit was $78 million, a decrease of 3%, primarily due to a decline of our product attached services as large enterprise clients delayed projects. Cloud gross profit was $123 million, a decrease of 5% due to the partner program changes we've previously discussed. This was in line with our expectations. And as noted last quarter, we anticipated the headwinds to be weighted more in the first half of the year. We continue to anticipate some headwinds in Q3. However, by the time we exit Q4, we expect the impact to be largely normalized. Gross margin was 21.1%, an increase of 10 basis points. Adjusted SG&A declined 3%, driven by prudent expense management. This resulted in adjusted EBITDA of $138 million, a decrease of 2%, while margin expanded 10 basis points to 6.6%. And adjusted diluted earnings per share were $2.45, flat year-over-year in U.S. dollar terms and down 1% in constant currency. For the quarter, we utilized $177 million in cash flow from operations, primarily related to inter-quarter working capital requirements, which have reversed in July. For the year, we continue to anticipate cash flow from operations in the range of $300 million to $400 million. In Q2, we repurchased approximately $76 million of shares. And as of the end of the quarter, we have $224 million remaining for our share repurchase program. We intend to opportunistically repurchase shares, while balancing organic and inorganic investments. While we settled $333 million of convertible notes in Q1, we still have approximately 1.2 million associated warrants outstanding, which will be settled before the end of the year. As a reminder, during the first half of the year, we settled 3.6 million warrants for $222 million and settled another 300,000 warrants in shares. The benefit of settling the warrants in the first half has been reflected in our outstanding diluted share count. We exited Q2 with total debt of approximately $1.3 billion compared to $1 billion a year ago. Over the last year, we spent $463 million on share repurchases and the settlement of warrants, while debt only increased $330 million. As of the end of Q2, we had access to the full $1.8 billion capacity under our ABL facility, of which approximately $1 billion was available. We have ample liquidity to meet our needs. Our adjusted return on invested capital for the trailing 12 months at the end of Q2 was 14.4% compared to 17% a year ago, reflecting an increase in invested capital and lower adjusted net income. As I think about the first half, it has played out largely as we anticipated. Hardware is on track, driven by multiple quarters of commercial growth with signs of recovery moving to larger clients. While partner program changes have impacted our cloud results in the first half, we're on track with our progress on pivoting to the corporate and mid-market space. However, core services has been challenged, primarily due to a lack of large enterprise client spending in the infrastructure space. As we think about the remainder of 2025, we expect macro uncertainty to remain and have considered the following factors in our guidance. We continue to believe that our growth and profitability will be more heavily weighted towards the second half of the year. We believe hardware demand will exhibit a steady increase throughout the year and expect hardware gross profit to grow in the mid-single digits. We expect demand from our large enterprise clients to modestly improve over a subdued first half. We expect core services to grow in the low single digits. We anticipate cloud performance to improve as we continue to pivot to the mid-market space while also having easier comps in the second half. For the year, cloud is expected to be flat to slightly down. We controlled expenses in the first half, which we will continue to prudently manage and expect SG&A to grow slower than gross profit. We have identified incremental opportunities to drive operating expense leverage over the next 12 months. Considering these factors, for the full year, our guidance is as follows: We expect gross profit to be approximately flat from 2024 and that our gross margin will be approximately 20%. Our adjusted diluted earnings per share remains unchanged and will be between $9.70 to $10.10. This guidance includes interest expense between $75 million to $80 million, an effective tax rate of 25% to 26% for the full year, capital expenditures of $30 million to $35 million, and an average share count for the full year of 32.4 million shares, reflecting the settlement of the remaining warrants associated with our convertible note. This outlook excludes acquisition-related intangible amortization expense of approximately $74 million, assumes no acquisition-related costs, severance and restructuring or transformation expenses, and assumes no change in our debt instruments and no meaningful change in the macroeconomic outlook, either as a result of tariffs or otherwise. I will now turn the call back to Joyce.

Joyce A. Mullen, President and CEO

Thank you, James. Overall, we navigated the first half of the year well. We are excited about the new technologies and the results our clients can achieve with AI. We also remain committed to the core elements of our business, which serve as a critical foundation for our clients to unlock the full potential of Gen AI. I want to thank our teammates for their unwavering commitment to our clients, partners, and each other, our clients for trusting Insight to help them with their transformational journeys, and our partners for their continued collaboration and support in delivering innovative solutions to our clients. This concludes my comments, and we will now open the line for your questions.

Operator, Operator

Adam, your line is open. Please go ahead.

Adam Tyler Tindle, Analyst

So James, the guidance, obviously approximately flat on gross profit dollars. As we finished up the first half, it was down about mid-single digits. So you're implying that gross profit dollars have to be up around mid-single digits in the back half. And I wonder if you might just detail some of the key drivers as you thought about that improvement. It sounds like some of it's predicated on hardware improvement, but some of your competitors have suggested that there's been pull-in in hardware, in particular, and we're a little bit more cautious on the back half. So if you could maybe comment on that dynamic as well as your key drivers to hit that mid-single digit implied in the gross profit dollar growth.

James A. Morgado, Chief Financial Officer

Thank you, Adam. Joyce, please add to my remarks. Adam, regarding our guidance for the full year and the second half, it's important to reflect on how the first half performed. Focusing on the main areas of our business, our cloud revenue met expectations in the first half. A few quarters ago, I mentioned we would face a $70 million gross headwind related to cloud, primarily affecting the first half. Meeting our expectations positions us well for the second half. Our cloud business, particularly Infrastructure as a Service and Software as a Service, has experienced steady growth. The growth rate in Q2 matched that of Q1, enhancing our outlook for the second half. That's why we maintain our expectation that cloud revenue will be flat to slightly down. Next is our hardware sector. In Q1, hardware grew by 1% in gross profit, and that growth accelerated to 2% in Q2. While we did observe some pull-ins, which others have discussed, they were not significant enough to impact our overall numbers. As we review our bookings for Q2 and the onset of Q3, we believe that hardware will continue to see growth as we enter the second half. Notably, our commercial business has recorded five consecutive quarters of growth, and both corporate and enterprise bookings have improved throughout the first half, with Q3 starting on a positive note, supporting our anticipation of continued growth in the second half. Lastly, we've adjusted our gross profit outlook due to our core services business, which began with underperformance compared to our initial expectations at the start of the year. We have now revised our expectations to low single-digit growth, indicating a slight recovery in the second half. When considering all these factors, we are maintaining our earnings per share outlook due to our operational expenses. In the first half, our operating expenses decreased by 4% year-over-year, exceeding expectations. For the second half and the full year, we expect operating expenses to grow more slowly than gross profit, which underlies our ability to hold our EPS steady.

Adam Tyler Tindle, Analyst

Understood. I have a follow-up question for Joyce. As James mentioned managing operating expenses down, it's clear that this quarter your team did a commendable job with cost controls. However, this trend seems to be widespread across the industry. Notably, your main competitor recently announced possibly their fourth round of layoffs. I'm curious why this cost-cutting trend is occurring even as device demand remains strong and we are experiencing an upswing in the PC market. It surprises me that in this environment, I'd expect resellers and systems integrators to maintain their workforce rather than reduce it. Could you share your thoughts on this trend and whether you think it will persist? Do you believe this indicates a structural shift in the industry that necessitates these companies to adjust their cost structures for various reasons?

Joyce A. Mullen, President and CEO

We are very enthusiastic about the potential to integrate AI technologies into nearly every aspect of our operations. We are pursuing this aggressively and eliminating a lot of monotonous tasks. Additionally, we aim to enhance the speed of all our internal workflows, which will ultimately improve our service to clients. This boost in productivity is significant. We observe it quite clearly in our software development activities, while it is gradually taking effect in various back-end business processes. This enables us to maintain a steady headcount while some sectors of our business grow. We believe this is beneficial, and we are also assisting our clients in achieving similar improvements. The demand for PCs will primarily be influenced by the aging of existing fleets and the transition to Windows 11. We do not anticipate that PC demand will reach the peaks observed three years ago, but there is a genuine need to update these systems. As a result, the normal trends are starting to diverge because we expect to see enhancements in productivity, which presents a significant opportunity for us to assist our clients similarly.

Joseph Lima Cardoso, Analyst

Maybe just for my first one, you obviously mentioned delays in services projects with large enterprises again. I was just hoping you could provide updated thoughts around the drivers behind this behavior. Do you have any other transparency around what's really being the motivation here around delays outside of maybe the broader macro? And if there's anything else structurally like around AI investments, et cetera, that could be driving it? And then the second part of that is just how are you assessing the potential timing for your customers to kind of reengage on these large projects? Do you have any visibility in terms of when you could potentially see them come back? And then I have a follow-up.

Joyce A. Mullen, President and CEO

Yes, Joe. The macroenvironment is certainly a factor, and there's still a level of uncertainty about many issues we discussed earlier. However, the main driver is how to approach investments thoughtfully, particularly with a focus on leveraging AI technologies. Many of our clients are holding back a bit so they can invest in setting up their infrastructures for AI and managing their data properly. But not everyone has a clear plan yet on how to proceed, leaving some questions about where to start. This presents a significant opportunity for us. The AI MVP projects and assessments we talked about earlier are increasing, although they are not large projects yet. We expect to deliver practical solutions to customers that lead to meaningful business outcomes in the short term, which can then be followed by more projects. Additionally, enterprises are maintaining some of their expenditures in traditional areas to ensure they have the capacity to invest in AI as they develop their strategies.

Joseph Lima Cardoso, Analyst

Got it. Makes sense. I think for my second question, I think last quarter, you talked about cloud growth, excluding the impact of program changes tracked, if I'm remembering correctly, somewhere in the high teens. The guide that you guys put out today with the reiterated guide on cloud gross profit, if we exclude the impact, I think it's closer to mid-teens. So I'm just trying to triangulate. One, can you provide an update in terms of what cloud growth would look like this quarter, excluding the program changes? And then how you're thinking about that momentum trending going into the back half and whether you think that is sustainable just given kind of the strong performance, at least that we know that you guys did in 1Q? And then maybe just as a second part of the question, can you just update us on the initiatives around SADA and how that's been tracking?

James A. Morgado, Chief Financial Officer

Sure, I'll address the first part, and then Joyce can discuss the second part regarding the pivot. In the first quarter, we noted that cloud growth was around 17% year-over-year, which was quite comparable in the second quarter, showing a slight acceleration. We expect this trend to continue for the remainder of the year. Regarding the program changes, I've mentioned that we experienced a $70 million gross headwind, primarily impacting the first half, but there will still be some effects in the third quarter. By the end of the fourth quarter, we anticipate a return to normalization, and overall for the second half, we expect year-over-year growth in our cloud business.

Joyce A. Mullen, President and CEO

From our perspective at SADA, we are very pleased with the work our team has done to focus more on driving consumption and adoption of Google services. They have done a great job expanding our services business and performed better than we anticipated in Q2. This positive trend has continued over several quarters, and we couldn't be happier. In fact, all the companies we acquired in the last 18 months are doing exceptionally well. As I mentioned earlier, our strategy is proving successful. We're very satisfied with the cross-sell opportunities we're experiencing, and our clients are responding positively because nearly everyone operates in a multi-cloud environment and has needs across the platforms we've invested in: Microsoft, Google, ServiceNow, and AWS.

Anthony Chester Lebiedzinski, Analyst

So I know you touched on a little bit as far as your commercial business in the second quarter. Just wondering if you could give us some comments about the other two main segments, how they did? And what is your expectation? And particularly interested actually in your comments about the public sector with all the noise about the DOGE and some of the higher ed institutions being impacted by the current administration, whether you expect to see any impact on your business?

Joyce A. Mullen, President and CEO

Thanks, Anthony. Yes, as we mentioned, our commercial business has been growing for five consecutive quarters, and we anticipate that this growth will start to manifest in the corporate and enterprise sectors. We're seeing positive progress in corporate, and we're feeling more optimistic about that, although enterprise growth is still lagging. Regarding the public sector, our overall revenue has declined, mainly due to netting. However, our public sector business is performing well in terms of services, and we’re also noticing some positive movement in the hardware sector. Most of our public sector business comes from state and local government as well as higher education, which haven't faced direct impacts, but there certainly are some effects because funding ultimately trickles down. We’ve been cautious about this situation, but I’m proud of our team's efforts to concentrate on areas with potential. There are still opportunities available, especially since some of the larger federal contracts are being adjusted, which means there’s work ahead, but the approach will change, and we believe we are well positioned to pursue some of that work.

Anthony Chester Lebiedzinski, Analyst

Sounds good. And then I may have missed this, but in terms of the partner program changes, I know you talked about $70 million impact for the full year, mostly in the first half. Did you guys give a specific number for the second quarter, what that impact was?

James A. Morgado, Chief Financial Officer

We didn't give a specific number, but what I said earlier, Anthony, was that from a cloud perspective, the underlying Infrastructure as a Service and Software as a Service grew at about the same rate it did in Q1. And in Q1, we called out a 17% year-over-year growth.

Joyce A. Mullen, President and CEO

The partner impact of $70 million is primarily concentrated in the first half of the year.

Anthony Chester Lebiedzinski, Analyst

Got you. All right. And then lastly for me, as far as just thinking about the impact of these partner program changes. As you look forward to 2026, any sort of early read as to what the gross margins could look like as you get past the impact of these changes?

Joyce A. Mullen, President and CEO

So by the way, partners change programs all the time. This just happens to be a very significant change this year, which is why we're talking about it. I hope we never have to talk about them again. But right now, we don't foresee any major partner program changes that would dramatically change kind of our outlook or our margins. And it's our job, of course, to adapt to those. And I think we've been doing that well, especially with Microsoft and Google changes as we talked about earlier. So we're not going to give guidance on gross margins probably until February for 2026.

James A. Morgado, Chief Financial Officer

I would like to add to what Joyce mentioned in her prepared remarks. Q2 set a record for both gross margin and EBITDA margin. This illustrates our capability in managing margins. The $70 million gross headwind I referenced has had a direct impact on our gross margins. The fact that we were able to maintain a record in Q2 despite this challenge is a strong indication of our margin management skills, including in EBITDA margins. Regarding the $70 million for this year, I've mentioned that as we approach Q4, we anticipate this issue will largely normalize by 2026, which means it will pose much less of a challenge in 2026 compared to 2025.

Vincent Alexander Colicchio, Analyst

Joyce, what is your labor strategy for addressing the growing AI opportunity? I assume acquisitions are part of that plan. Since AI is a key focus, I'm curious whether the current valuations for these acquisitions are too high. That's my question.

Joyce A. Mullen, President and CEO

Yes. Thanks, Vince. So you know we are very active on the M&A front, absolutely looking for more skills. But I would say it's a two-pronged approach in terms of building the capabilities and skills. One is go out and hire/acquire capabilities in the areas that are really relevant to AI, data security, cloud, advisory capabilities like we talked about earlier. But also, we have a very intense internal development program that is underway to upskill our existing teammates across the world. And we think we are in a great position because we've got a lot of great talent that are excited and eager to embrace these tools and use them. And so that program is well underway with various certifications internally and development programs, etc. So we're excited about that. And more importantly, our teammates are excited about that. So it's a two-pronged approach: M&A/acquihires and also development. And are your profitability and pricing initiatives still ongoing? Where does that stand? Our profitability and pricing initiatives that James started about two years ago are progressing well. We initially targeted the low-hanging fruit and achieved some impressive results, which are continuing as we expand these initiatives to other regions.

Operator, Operator

We currently have no further questions. So at this time, I'd like to hand back to Joyce for some closing remarks.

Joyce A. Mullen, President and CEO

Thank you very much to all of you for your questions and your interest. Our clients currently require a reliable adviser to navigate this evolving and complex landscape, especially in light of the current macroeconomic uncertainties and the expected long-term changes arising from the integration of Gen AI into their operations. We are very optimistic about the opportunities that lie ahead, and I look forward to updating you on our ongoing journey to becoming a leading solutions integrator focused on AI. Thank you very much. You can close the call now.

Operator, Operator

This concludes today's call. We thank everyone for joining. You may now disconnect your lines.