INSIGHT ENTERPRISES INC Q4 FY2024 earnings call

• Q4 highlights: Gross profit up 1%, adjusted diluted EPS $2.66, SG&A actions expected to save $25M annually. - Cloud and Insight Core Services gross profit grew double digits. - Structural improvements: Programs to drive cross-sell, back-office integration of acquisitions, go-to-market expansion. - Client examples: Security solution for a $15B consumer health client and AI-driven solution for Cricket Australia. - Awards and partnerships: Recognitions from partners and for workplace culture, new collaborations with Microsoft, Google, AWS.

In Q4 2024, net revenue was $2.1 billion, a decrease of 7%. Gross profit increased 1%, driven by a 12% rise in Insight Core Services and modest growth in hardware and cloud. For full-year 2024, net revenue was $8.7 billion, down 5%, but gross profit grew 6% with cloud and services contributing. Insight Core Services gross profit grew 12% in Q4 and 15% for the year. Cloud gross profit was $125 million in Q4 (up 3%) and $484 million for the year (up 21%). Hardware revenue declined 2% in Q4, while cloud gross profit reflected increased demand for SaaS and infrastructure as a service.

• Hardware gross profit expected to grow mid-single digits in 2025. - Insight Core Services gross profit to grow 16%-20%. - Cloud flat to slightly down (approx $70M impact from enterprise agreements), but mid-teens growth excluding that. - Full-year gross profit growth low single digits, gross margin ~20%. - Adjusted diluted EPS $9.70-$10.10, including ~$0.40 interest from settling convertible notes. - Interest expense $70-75M, tax rate 25%-26%, capex $35-40M.

• Macroeconomic environment impacting client investment priorities and decision-making. - Partner program changes creating headwinds for cloud business. - Tariffs as a dynamic risk with potential impact on ASP if changed, but current tariffs expected to have minimal elasticity impact.

Q: Joseph Cardoso asked about cloud program changes, particularly with Microsoft and Google, and OpEx expansion.

A: Joyce Mullen discussed transitioning enterprise agreements to CSP, James Morgado mentioned OpEx expected to grow slightly slower than gross profit with $25M actions and normalized acquisitions.

Q: Adam Tindle asked about headwinds, tailwinds, and cash flow.

A: James Morgado spoke about pivot headwinds, interest expense from settling convertible notes, and cash flow returning to historical range with hardware growth.

Q: Anthony Labidzinski asked about tariffs and structural improvements.

A: Joyce Mullen said tariffs have minimal impact on demand currently, and there are still opportunities to improve business structure with room for profitability enhancements.