Earnings Call Transcript - NSIT Q4 2025

Operator, Operator

Hello, everyone. Thank you for joining us, and welcome to the Insight Enterprises Q4 2025 Earnings Conference Call. I will now hand the call over to Ryan Miyasato, Director of Investor Relations. Ryan, please go ahead.

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 and full year ended December 31, 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, February 5, 2026. 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 fourth quarter and full year 2025 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 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 statements 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. Joyce?

Joyce Mullen, President and CEO

Thank you very much, Ryan. Good morning, everyone, and thank you for joining us today. We are pleased with our fourth quarter results and the momentum in our business after a challenging year. Strong execution in our Cloud business and robust growth in our Core services business, driven by our acquisitions, enabled us to deliver record gross profit, record gross margin, and record adjusted earnings from operations margin. We delivered strong growth in adjusted earnings from operations across every geography and achieved double-digit growth in adjusted diluted earnings per share. Specifically in the quarter, overall revenue was down 1% due to the netting impact of on-prem software migrating to cloud. We are pleased that our influence of partners and clients continues to expand, which you can see on our balance sheet. Total gross profit grew 9%. EMEA had strong growth, driven in part by UAE and Saudi Arabia demand. Cloud gross profit increased 11%, ahead of our expectations, led by double-digit growth in SaaS and Infrastructure as a Service. This performance was partially offset by the impact of the partner program changes we've previously discussed, which are now largely behind us as we begin 2026. Core services gross profit grew 16%, driven by acquisitions as well as organic growth. These factors, along with incremental netting, contributed to expanded gross margin again this quarter to 23.4%. And by prudently managing our adjusted expenses, we delivered adjusted earnings from operations growth of 13% and adjusted earnings per share growth of 11%. We are encouraged by the progress in our services business. We've streamlined our services offerings, implemented disciplined processes, and augmented our leadership team. Best practices from acquisitions have been adopted across the business, resulting in improved pipeline. We are also pleased with the cross-selling momentum. Core Services results were strong and delivered a second consecutive quarter of organic bookings growth. Growth of core services is central to our strategy. Clients expect a comprehensive approach to realizing value from their technology investments. To support those requirements, we have expanded our technology consulting capabilities, which is improving our overall performance, especially in EMEA. The Inspire11 acquisition expands our advisory capabilities in North America and supplements our strength in infrastructure, cloud, edge, data, and security services. We expect these advisory capabilities will also increase demand for our core solutions. I'd like to share an example of how an initial advisory engagement pulled through solutions in EMEA. Our client, a European green IT provider, is building sustainable data centers engineered and optimized for AI workloads. They engaged us to support both the build-out of these data centers and the development of a SaaS Gen AI platform, enabling them to design, develop, and visualize AI models and their interactions. Our senior technical advisers drove the conceptual discussions and are now delivering end-to-end program leadership for this large-scale program, which includes network and data center, security, and software development work streams. The team implemented a structured governance framework, strengthened delivery performance, and ensured the client's business outcomes were met. Since the project's inception, the client has signed an additional multimillion-euro agreement to extend both the scope and duration of the program. This is an example of how our teams can drive value, beginning with advisory discussions and expanding to include modern platform investments. Our deep expertise in platforms is also demonstrated through our engagement with Sedgwick, a global leader in claims management and risk solutions. The Inspire11 team designed and implemented a modern unified claims management platform that streamlined operations, enhanced employee productivity, and elevated customer experience. This transformation has since become a model for success within Sedgwick, sparking new innovation across other areas of the business. Recognized as one of the most successful projects, the organization has delivered, it demonstrates how the value we create extends beyond a single program and continues to scale as organizations identify new opportunities for impact. As our clients look to modernize, many are hitting the same wall, legacy systems that have become so customized over the years that they've become too rigid to move at the speed of business. To stay competitive, these organizations have to get back to basics, stripping away that complexity so they can innovate again. Our teams are effective in assisting clients with this challenge. Never has innovation been more exciting than with the current AI tools and capabilities. Client interest remains strong and focused on tangible business outcomes. We are very well positioned to help clients move from hype to how. We are proving this by advancing our own internal AI transformation, developing and operationalizing use cases within Insight that we showcase and replicate with clients. In the fourth quarter, as part of our Insight AI launch, we introduced Prism, our AI platform for clients, which has received very positive feedback. Prism is a business transformation platform designed to help our clients simplify AI adoption by identifying and prioritizing high-impact use cases through a proprietary data-driven transformation index. The platform evaluates potential AI initiatives across key elements such as value, feasibility, access to data, and risk to provide a clear, actionable road map. Prism enables our clients to manage the entire life cycle of an AI project from initial assessment to measurable outcomes. Our partner ecosystem is central to our success and a critical accelerator of our strategy. These partnerships strengthen our capabilities across technologies, platforms, and services, helping us to stay agile and responsive to the rapidly evolving technology landscape. In 2025, we received numerous awards and recognitions from our partners. There are too many to list here, but notable Partner of the Year awards include those from Google, Cisco, HP, HP Enterprise, Intel, Databricks, and others. We were also the first partner to build out, demonstrate and launch the Cisco Secure AI factory with NVIDIA. You can find more details in the earnings presentation. Additionally, our portfolio of offerings and technical expertise have been recognized by leading industry analysts, including Gartner, IDC, and Forrester. These recognitions span software, AI, and cloud capabilities and workspace solutions, reflecting the breadth of our end-to-end solutions integrator capabilities. Insight's more than 6,600 technical professionals bring deep specialized expertise across the major platforms that are most critical to our clients' success. To safeguard and formalize our proprietary IP developed by our technical talent, Insight has filed more than 200 patent applications globally, resulting in more than 70 patents issued to date, covering innovations in AI and machine learning, among other things. Our teammates are the source of the value we deliver to clients. We cultivate a culture of collaboration, knowledge sharing, and continuous improvement. And Insight is consistently recognized as an employer of choice by Forbes, Fortune, and Great Place to Work. Despite the challenging backdrop in 2025, we made meaningful progress in transforming Insight into the leading AI-first solutions integrator. We pivoted our Google and Microsoft resale business towards the corporate and mid-market space. We used this transition to sharpen our focus on efficiency and improve our operating leverage, leading to record cloud gross profit of $495 million. We improved profitability in Core services and increased bookings performance with our aligned structure in North America and advisory pull-through in EMEA, leading to record core services gross profit of $320 million and margin of over 32%. The increase in our services mix resulted in record total gross margin of 21.4%. We successfully integrated acquisitions and drove cross-sell and best practices across all businesses. We added Inspire11 and Sekuro, strengthening our technical expertise in data, AI, and cybersecurity, and expanded cross-sell and pull-through opportunities across our global client base. We applied our own client zero approach, deploying AI agents internally to improve our own productivity and building compelling reference cases for our clients. To help clients move from AI experimentation to production, we've completed hundreds of AI assessments, developed roadmap recommendations, and begun implementations. All this resulted in record adjusted earnings from operations of $504 million and margin of 6.1% in addition to adjusted diluted EPS of $9.87. As we look towards 2026, our outlook reflects cautious optimism as we anticipate subdued spending across the industry. The macro environment has largely remained unchanged and our corporate and large enterprise clients remain cautious. PC and infrastructure investments will continue at a moderate level in the near term, and we're closely monitoring industry supply chain dynamics and memory pricing. Clients are making infrastructure investments as they prepare for AI implementation. At the same time, we see opportunity in cloud modernization, security, and AI adoption, and we will continue to invest in these areas to position Insight as the leading AI-first solutions integrator. Our strategy remains clear: Simplify complexity for clients, deliver measurable outcomes, and accelerate time to value through integrated solutions. With that, I'll turn the call over to James. James?

James Morgado, Chief Financial Officer

Thank you, Joyce, and good morning, everyone. Our Q4 results met our expectations for the quarter. Net revenue was $2 billion, a decrease of 1%. The decrease was driven by a 4% decline in product, primarily due to on-prem software, which declined 18% and was a result of netting as clients shift to cloud-delivered software. Hardware revenue increased 2%, the fourth consecutive quarter of growth with growth in both devices and infrastructure. Core services revenue was up 7%, primarily driven by the acquisitions completed in the quarter. Gross profit increased 9%. EMEA gross profit increased 30%, driven by ongoing transactions in UAE and Saudi Arabia, where we act as the agent. Growth in core services across EMEA also contributed to this increase. Cloud gross profit was $138 million, an increase of 11% with growth in both SaaS and Infrastructure as a Service, partially offset by the partner program changes we previously discussed. Insight Core Services gross profit was $90 million, an increase of 16% due to contributions from acquisitions as well as growth in our organic business. Hardware gross profit was up 1%. Hardware gross margin improved sequentially and was down year-over-year due to mix. As a result, total gross margin was 23.4%, an increase of 220 basis points. Adjusted SG&A increased 7%, driven by acquisitions and variable costs primarily in EMEA. This resulted in adjusted EBITDA of $156 million, up 11%, while margin expanded 80 basis points to 7.6%. And adjusted diluted earnings per share were $2.96, up 11%. Overall, 2025 was a challenging year that fell short of our gross profit growth expectations entering the year. Spending from our corporate and large enterprise clients remain subdued, weighing on growth in both core services and hardware. However, there were bright spots that are consistent with many of our long-term goals. Gross margin expanded for the fourth consecutive year. Cloud remains a key element of our strategy, and we are successfully navigating the impact from the partner program changes. We further strengthened our technical expertise through the Inspire11 and Sekuro acquisitions. And through disciplined expense management, we met our profit expectations. I'll now get into greater detail for full year 2025 results. Net revenue was $8.2 billion, a decrease of 5% as netted transactions continue to mute revenue growth. Despite this decline, gross profit was flat, and we expanded gross margin by 110 basis points to 21.4%. Our gross profit and gross margin results were driven by cloud and services as well as a mix of higher netted agency transactions. Cloud gross profit was $495 million, an increase of 2%. SaaS and Infrastructure as a Service growth offset partner program changes. Adjusted SG&A expenses were flat due to disciplined expense management, partially offset by recent acquisitions. Adjusted EBITDA margin expanded 40 basis points to 6.6%, and adjusted diluted earnings per share were $9.87, up 2%. For the year, we generated approximately $300 million in cash flow from operations. In Q4, we increased our share repurchase authorization by $150 million, bringing the total amount to $299 million at year-end. In 2025, we settled $333 million of convertible notes and all associated warrants. For the year, the combined effect of share repurchases and settlement of the warrants associated with the convertible reduced our adjusted diluted share count by approximately 3 million shares. We exited Q4 with total debt of approximately $1.4 billion compared to approximately $900 million a year ago. The increase in debt was primarily related to acquisitions, the settlement of warrants, and share repurchases. In Q4, we raised the limit of our ABL facility to $2 billion and extended the term for another 5 years. As of the end of Q4, we had access to the full $2 billion capacity under our ABL facility, of which approximately $1.1 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 Q4 was 15.2% compared to 15.3% a year ago. As we look towards 2026, we have considered the following factors in our guidance. Adjusted diluted earnings per share growth will be more heavily weighted towards the first half. For the year, we expect our corporate and large enterprise client spending to remain subdued. Hardware gross profit will be approximately flat as component costs may impact demand. We expect hardware revenue to grow faster than gross profit, primarily due to customer mix. We expect Core services gross profit to grow in the high single digits as our organic business returns to growth, coupled with contributions from our recent acquisitions. We anticipate cloud gross profit to grow in the low double digits as we move past the majority of the partner program changes we have previously discussed. And we will continue to prudently manage SG&A and expect growth slightly slower than gross profit. Finally, we intend to start repurchasing $75 million in shares beginning in Q1. Considering these factors, for the full year of 2026, our guidance is as follows: We expect to deliver gross profit growth in the low single digits and that our gross margin will be approximately 21%. Including stock-based compensation, adjusted diluted earnings per share are expected to be $10.10 to $10.60. Beginning in 2026, our adjusted guidance excludes stock-based compensation. We, therefore, anticipate our adjusted diluted earnings per share will be between $11 to $11.50. This represents approximately 5% growth at the midpoint compared to 2025 adjusted diluted EPS of $10.75, excluding stock-based compensation. Please refer to the investor presentation for a historical view of our results, excluding stock-based compensation. Finally, we expect cash flow from operations in the $300 million to $400 million range. On a go-forward basis, guidance excludes stock-based compensation and includes interest and other expenses to be approximately $85 million, an effective tax rate of 25.5% to 26.5% for the full year, and capital expenditures of $20 million to $30 million and an average share count for the full year of approximately 31 million shares. This outlook excludes stock-based compensation, excludes acquisition-related intangible amortization expense of approximately $83 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. I will now turn the call back over to Joyce. Joyce?

Joyce Mullen, President and CEO

Thanks, James. 2025 was a year of resilience and transformation. We navigated macro headwinds, evolving client priorities, and significant partner program changes. Through it all, we strengthened our capabilities and sharpened our focus on the areas that matter most to our clients, cloud, data, AI, cyber, and edge. As we enter 2026, we are confident in our ability to execute and capture emerging opportunities. Our strong portfolio of offerings and expertise, disciplined approach, and commitment to innovation position us well to capture future growth opportunities. Finally, regarding the search for my successor, the Board's orderly transition process is well underway. Our public external search is progressing as planned, and I remain committed to ensuring a smooth handoff as we identify the right leader to guide Insight through its next phase of AI-driven transformation. We expect to name a successor in the next few months. 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

Our first question comes from Adam Tindle from Raymond James.

Adam Tindle, Analyst

James, I wanted to start with 2026 guidance. I just was curious, I saw the low single-digit growth expectation. It seems like you may be a little bit more conservative this year than in prior years. So maybe just talk about your process to annual guidance this year, how it might be similar or different than prior years. And Joyce, if you could add maybe a little bit of color outside of this guidance, just kind of boots on the ground, your conversations with customers as they think about or thought about their budgets in 2026. I'm sure you've been having those conversations with your sales force as well into year-end. What does IT budgets for your customer base look like in 2026? And any early indications on how the year is starting?

James Morgado, Chief Financial Officer

I'll start. Thanks for the question, Adam. So here's the approach that we took this year for guidance. First, when we set guidance, we always look at many factors, what we hear from our customers, what we hear from our partners. We obviously take into consideration any disruptive events like what we're experiencing now with the memory costs, the partner program changes from last year, et cetera. This year, what I would say that the difference in the guidance is I place greater emphasis on 2 particular areas. The first is exactly that last point that we said with the potential disruptions. The environment is still complex and fluid. There's a continuation of many of the factors we saw last year, which creates a degree of a bit of uncertainty that we have to account for in our outlook. The second point, which is different than previous years is I more heavily weighted our past performance in terms of the guidance that we set at the beginning of the year. Look, the last couple of years have had twists and turns, and I think FY '26 has them as well. And so I think we're trying to balance the internal ambitions that we have as a company with a bit of the market realities that we see. And so our approach to guidance is similar in many ways, but what I would say is I place greater emphasis in those 2 particular areas.

Joyce Mullen, President and CEO

In terms of IT budgets and our perspective on various market segments, overall, it's largely consistent with what we've seen. There's still a lot of uncertainty, particularly among large enterprises and corporations. One notable difference is that we are not expecting any significant increase in spending from large enterprises. However, these companies are very concerned about allocating some of their IT budgets to transition to AI. This can mean different things to different organizations, including a need for updated infrastructure, enhanced security, and improved networking to facilitate data movement for AI applications. They are continuing to invest significantly in existing infrastructure needs, such as with VMware and Broadcom. However, they are also carefully considering how to allocate their IT budgets to ensure their companies are prepared for AI initiatives. This could also involve some data projects and ensuring they have the right connections. The commercial sector remains strong, although we anticipate a slight moderation in growth over the coming year. We’ve enjoyed seven consecutive quarters of growth in this space, but we do expect those growth rates to slow a bit. The public sector is quite variable, largely influenced by government activities and funding sources. We pay close attention to what’s happening with government purchasing. Overall, we expect IT spending in 2025 to resemble this year's trends, with a heightened focus on security and AI preparation. As the year begins, we are encouraged by the momentum we’ve seen since Q4, and this positive trend has continued into the early part of Q1 with regard to bookings. This bodes well for building backlog, especially as supply chain challenges arise due to memory pricing. This year, there’s a collective expectation of rising memory prices and potential slowdowns in supply chain availability, which is a concern for our customers. They are working to conserve some of their IT budgets in response to these anticipated memory price increases. Furthermore, we expect some elasticity, particularly concerning devices, due to these rising costs.

Adam Tindle, Analyst

Very helpful. As a follow-up, James, I hope we don't have to discuss changes to the partner program anymore. I'm sure you feel the same way. Now that we’ve wrapped up 2025, I found your insights on quantifying those changes quite useful. Could you summarize the impact of the partner program changes for 2025? You mentioned there might still be some residual effects in 2026, so I'd like to hear your thoughts on that as well. This is particularly relevant in the context of the EPS guidance you provided, which indicated a stronger focus on the first half of the year. However, I was under the impression that there were still some ongoing changes from the partner program. Can you clarify that and provide more details on how significant the first half would be for EPS, along with the reasoning behind it?

James Morgado, Chief Financial Officer

Yes, thank you, Adam. We definitely wish we didn't have to discuss changes to the partner program. What I can say is that the $70 million gross profit impact we mentioned at the start of the year was very close to the actual outcome. Our stronger performance in the cloud last year compared to our initial expectations was due to a more effective pivot, but the gross impact remained at $70 million, which we anticipated correctly. Regarding the partner program changes and the pivot, I believe we have completed the internal adjustments needed to focus on the mid-market sector. However, as we indicated last year, there will still be some financial repercussions into this year. We anticipate those repercussions will be more pronounced in the second half, primarily due to the dynamics tied to Google and the Google solution line, which stemmed from the acquisition of SADA, a company with a significant focus on enterprise. Establishing our presence in the corporate and mid-market sectors takes longer compared to, say, our experience with Microsoft, where we had a solid and growing foothold in the mid-market. Therefore, we are still in the process of building that base for our Google solution line. The impact will be more noticeable in the second half due to the seasonal trends associated with the SADA business, particularly pronounced in the fourth quarter. Looking ahead, I expect the first half to exceed our cloud guidance, while the second half may present more challenges. By the end of the second half, we anticipate having a solid installed base in the Google area, with expectations that these dynamics will fully resolve by 2027. However, we will still experience a lingering impact into 2026, particularly more in the second half than in the first.

Operator, Operator

Your next question comes from Luke Morison of Canaccord Genuity.

Lucas Morison, Analyst

So maybe just to start, you highlighted an AI optimized data center engagement that I thought was pretty interesting in your remarks. I'm curious, as we think about that engagement, how should we be thinking about the repeatability of that opportunity maybe as AI data center investment accelerates across the U.S. and Europe? And how do you see AI data center build-outs becoming a more meaningful recurring growth vector for your business over the next few years? And how does that play into your overall growth algorithm?

Joyce Mullen, President and CEO

Thanks, Luke. That's a great example. There are several key points to consider. First, our data center solution is more complex than traditional ones, involving many choices and considerations. This complexity will likely increase as memory and power optimization become more prominent in the coming years. The entire industry believes we are poised for greater enterprise adoption as companies reassess their opportunities, cost structures, and viewpoints on multi-cloud, especially given the cost challenges of relying solely on public cloud services. We've noticed a growing interest among on-premise enterprises, aided by our partners who are providing prepackaged AI solutions. Notably, we were the first to launch the Cisco Secure AI factory with NVIDIA in our labs. We are prepared to support enterprise adoption of AI infrastructure within data centers, particularly in multi-cloud settings. Additionally, we've been focused on ensuring that solutions and workloads are portable, allowing them to operate in various cloud environments or on-premises. These elements are crucial for delivering the options and cost-effective solutions that our customers need. We're genuinely excited about this development and recognize we're just at the beginning. Some factors contributing to this include the availability of GPUs and the growing understanding of when to use CPUs and GPUs to optimize costs, along with AI skills and awareness of potential workloads. This trend presents a significant opportunity for the industry as we transition from merely funding public clouds and newer models to developing data centers.

Lucas Morison, Analyst

That's great insight. I have a quick follow-up regarding the current memory cost supply chain disruption. How should we consider the potential impact on your customers and your business if these trends continue as they are?

Joyce Mullen, President and CEO

It's been changing quickly, and a lot has shifted in the past 90 days, with further changes in the last 30 days. Therefore, memory price expectations could lead to increases in PC prices ranging from 10% to around 25% this year. Most OEMs have reported these price hikes, although a few have opted not to increase prices. Generally, this seems to be a reasonable estimate. Historically, when prices rise above 15%, we see elasticity come into play, which affects volume. Overall, we expect an average price increase of about 15%, with unit volume declining slightly in the low single digits. In terms of our business, we will pass on these price increases while also managing elasticity. This is similar to what we experienced during COVID. Additionally, we see a significant opportunity to assist our customers in navigating supply chain impacts, which we managed effectively during COVID, by helping them explore alternatives. This is an area where partners, including Insight, can provide substantial value. On the infrastructure side, we are nearing a refresh cycle, and prices are expected to rise considerably due to memory constraints. There may be less elasticity here since on-prem infrastructure costs are compared to public cloud costs, which remain relatively favorable for customers. However, this may lead to more cautious investment decisions from customers regarding infrastructure. As a general practice, we pass along cost increases, which tend to benefit us, but elasticity remains an important variable to consider.

Operator, Operator

Your next question comes from Joseph Cardoso from JPMorgan.

Joseph Cardoso, Analyst

Could you provide more detail on the full year guidance? James, I appreciate your insights about the focus on the first half of the year. Can you elaborate on how you see the balance between the first and second halves in terms of magnitude? I'm also curious about the concentration of factors driving this dynamic within the underlying portfolio. Is it mainly related to hardware and PCs, or should we consider a broader set of dynamics for the weight distribution between the first and second halves?

James Morgado, Chief Financial Officer

Thank you, Joe, for your question. I'll respond to that and then Joyce can add any insights if she has them. To consider the year, it's important to note that the growth rate for earnings per share in the first half is expected to be somewhat stronger than in the second half. A good way to look at this is that the growth rates in the first half should align more closely with the upper range of our projections, while the second half may be closer to the lower end. As for the first half, I anticipate that Q2 will be our seasonally strongest quarter, so we can expect a bit more strength in Q2 compared to Q1. One reason for this dynamic is the cloud segment, which I expect to grow more robustly in the first half than in the second. The hardware sector will likely follow a similar pattern with greater strength in the first half. Our Core services business is more stable throughout the year, contributing to a balanced performance. Overall, these factors suggest a stronger first half relative to the second half.

Joyce Mullen, President and CEO

You mentioned cloud stronger than the first half.

Joseph Cardoso, Analyst

Thank you for the information. I have a quick clarification regarding the growth of cloud gross profit for the quarter. If we exclude the challenges from partners, where would growth have been tracked for the quarter? I recall that in the past few quarters, it was in the mid to high teens range, so I am interested to know if momentum ended the year within that range. Additionally, as we consider the guidance for double digits, does that suggest an acceleration from those levels, or are you expecting something similar for the year?

James Morgado, Chief Financial Officer

Our performance in Q4 was consistent with what we experienced throughout the year, remaining in the mid-teens range. The foundational performance was solid. In examining the growth for cloud between the first and second halves, I anticipate that the first half's growth will slightly exceed my guidance for the year, while the second half will fall just below that guidance. Consequently, the full year is expected to end up in the low double digits, as previously indicated. As we wrap up the year from a financial perspective, I believe we have successfully completed our operational pivot, and any financial impacts previously affecting us will have ceased as we close out FY '26.

Operator, Operator

Our next question comes from Vincent Colicchio from Barrington Research.

Vincent Colicchio, Analyst

Joyce, how did your share changes play out in your key focus areas in North America?

Joyce Mullen, President and CEO

We have analyzed all of the IDC data and worked with OEMs. We believe we are in line with the market regarding devices and feel we are on par with infrastructure, and likely slightly ahead in cloud.

Vincent Colicchio, Analyst

Okay. And do you think you currently have the resources on the AI side to meet current demand? Or is it hard to access the supply you need?

Joyce Mullen, President and CEO

We are making every effort to build and acquire the skills necessary as demand rises. This will be a consistent focus for the foreseeable future. We have significantly intensified our development efforts and are experiencing success with our internal training programs, which is crucial for us. Additionally, we have initiated specific recruitment efforts to attract the AI talent we require. Overall, we are managing quite well so far.

Operator, Operator

There are no further questions at this time. I will now hand the call over to Joyce Mullen, President and Chief Executive Officer, for closing remarks. Joyce, please go ahead.

Joyce Mullen, President and CEO

Thank you very much to all of you for your questions and interest, and I think we're ready to close the call, operator. Thank you.

Operator, Operator

That concludes today's call. Thank you very much for attending. You may now disconnect.