Core Insights - The article emphasizes the importance of the Zacks Rank in identifying strong stocks through earnings estimates and revisions, while also acknowledging the diverse strategies investors may adopt [1] - Value investing is highlighted as a popular method for identifying undervalued stocks, which can lead to potential profits [2] Company Analysis: Insight Enterprises (NSIT) - Insight Enterprises currently holds a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential for value investors [4] - The stock has a P/E ratio of 13.48, which is lower than the industry average of 15.13, suggesting it may be undervalued [4] - Over the past 52 weeks, NSIT's Forward P/E has fluctuated between a high of 19.54 and a low of 12.59, with a median of 15.22 [4] - The P/B ratio for NSIT is 2.8, which is favorable compared to the industry average of 3.57, indicating solid valuation metrics [5] - NSIT's P/B has ranged from a high of 4.04 to a low of 2.57 over the past year, with a median of 2.88 [5] - The P/CF ratio for NSIT stands at 16.23, significantly lower than the industry average of 23.44, further supporting the notion of undervaluation [6] - NSIT's P/CF has seen a range from 22.27 to 14.38 in the past year, with a median of 16.42 [6] - Overall, the metrics suggest that Insight Enterprises is likely undervalued, making it a strong candidate for value investors [7]

Group 1 - Momentum investing contrasts with the traditional "buy low and sell high" strategy, focusing instead on "buying high and selling higher" to capitalize on fast-moving stocks [1] - Identifying the right entry point for trending stocks can be challenging, as they may lose momentum if future growth does not justify their high valuations [1] - Investing in bargain stocks that have recently shown price momentum can be a safer strategy, with tools like the Zacks Momentum Style Score aiding in identifying such opportunities [2] Group 2 - Insight Enterprises (NSIT) is highlighted as a strong candidate for investment, showing a four-week price change of 4.9% and reflecting growing investor interest [3] - NSIT has gained 0.7% over the past 12 weeks, indicating its ability to deliver positive returns over a longer timeframe, with a beta of 1.2 suggesting it moves 20% more than the market [4] - NSIT's Momentum Score of B indicates a favorable time to invest, supported by an upward trend in earnings estimate revisions, earning it a Zacks Rank 2 (Buy) [5][6] Group 3 - NSIT is trading at a Price-to-Sales ratio of 0.53, suggesting it is undervalued, as investors pay only 53 cents for each dollar of sales [6] - The stock has significant potential for growth, with the current momentum characteristics indicating a fast-paced upward trajectory [7] - There are additional stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, providing further investment opportunities [7]

Summary of Insight Enterprises Conference Call (June 11, 2025) Company Overview - **Company**: Insight Enterprises (NSIT) - **Role**: Leading solutions integrator focusing on hardware, software, and services to drive customer outcomes [6][7] Core Strategy and Market Focus - **Solutions Integrator**: Defined a new category as a solutions integrator, leveraging strengths in hardware, software, and services [7] - **Market Focus**: Concentrating on high-growth areas such as cloud, data, AI, cyber, and edge computing [7] - **Customer Base**: Over 30,000 customers, including a significant presence in the Fortune 5000 [13] Financial Performance - **Gross Margin Improvement**: Expanded gross margins from approximately 15.7% in 2022 to over 20% on a trailing twelve-month (TTM) basis [24] - **EBITDA Margin Growth**: Increased EBITDA margins from 4.7% in 2022 to over 6% on a TTM basis [26] - **Cash Flow Generation**: Consistently generated cash flow exceeding 100% of net income, with a long-term target of over 90% [10][26] Challenges and Market Dynamics - **Hardware Market**: Experienced a depressed hardware market impacting revenue, with a projected decline of $1 billion from 2023 to 2024 [42] - **Partner Program Changes**: Adjustments from hyperscaler partners (Google and Microsoft) resulted in a $70 million gross impact for fiscal year 2025 [22][23] - **Cloud Business**: Despite a strong historical growth rate of 16-20%, the cloud segment is expected to be flat to slightly down for the year due to partner program changes [38][39] M&A Strategy - **Importance of M&A**: M&A is critical to the company's strategy, with a focus on enhancing digital capabilities and services [12][28] - **Recent Acquisitions**: Notable acquisitions include SADA (2023) and InfoCenter, aimed at expanding cloud and ServiceNow capabilities [30][31][32] - **Future Outlook**: Anticipates being active in the M&A space, particularly in digital capabilities, with no imminent announcements but a likelihood of acquisitions this year [56] Cultural and Operational Insights - **Technical Expertise**: Employs over 6,000 technical resources, providing a competitive edge in the market [14] - **Company Culture**: Emphasized as a key differentiator, aiding in recruitment and operational effectiveness [14] Market Outlook - **Hardware Recovery**: Expected mid-single-digit growth in hardware, driven by a refresh cycle and increasing data center demands [49][50] - **Services Impact**: Services business has been affected by global macroeconomic conditions, but the company maintains a competitive position [51][52] Shareholder Relations - **ValueAct Relationship**: Constructive relationship with ValueAct, which recently exited the board but remains supportive of the company's strategy [58][59] This summary encapsulates the key points discussed during the conference call, highlighting the company's strategic direction, financial performance, challenges, and future outlook.

Summary of Conference Call for Insight Enterprises Company Overview - **Company**: Insight Enterprises - **CFO**: James Mercado Macro Environment - **Recession Concerns**: Initial recession predictions for the second half of the year ranged from 25% to 50%, but recent news has moderated these concerns [4][5] - **Customer Sentiment**: Customers are navigating uncertainty, with spending patterns aligning with expectations, particularly in hardware [6][10] Financial Performance - **Q1 Performance**: Gross profit was slightly below expectations, but SG&A expenses met forecasts [5][6] - **Q2 Outlook**: Customer spending patterns in Q2 are consistent with expectations, with a cautious but positive outlook for the quarter [6][7] Customer Spending Trends - **Commercial Segment**: Experienced four consecutive quarters of growth, recovering faster than corporate and enterprise segments [33][34] - **Enterprise Segment**: Spending remains constrained, with delays in large deals being more widespread than initially thought [38][39] Tariff Impact - **Tariff Navigation**: Insight has strong partner relationships to help customers manage tariff impacts, with historical data suggesting a 10% tariff does not significantly affect demand [12][14] - **Inventory Positioning**: Some inventory positioning was done in anticipation of tariffs, particularly in the commercial space [18][19] Competitive Landscape - **Differentiation**: Insight's full solutions portfolio, strong cloud offerings, and technical capabilities differentiate it from competitors [27][28] - **Market Position**: Insight is focused on building relationships with new partners, especially in the AI space, to drive future growth [30] Infrastructure and Hardware Trends - **Infrastructure Spending**: Sluggish infrastructure spending attributed to a longer digestion period than expected, but increased customer dialogue suggests potential recovery [56][57] - **Networking Lag**: Networking is lagging behind storage and compute, but expected to improve in the second half of the year [58] AI and Technology Trends - **AI Spending**: Enterprises are beginning to shift budgets towards AI, but significant spending is not yet materializing [64][65] - **PC Refresh Cycle**: The impending end of Windows 10 is driving a refresh cycle, with commercial customers in the middle innings of this cycle [45][46] Financial Guidance - **Gross Profit Expectations**: Q1 gross profit was down 8%, but guidance for the rest of the year suggests a return to low single-digit growth [67][69] - **Cloud Growth**: Cloud services are expected to grow in the double digits, despite headwinds from partner program changes [75] SADA Update - **SADA Performance**: The SADA team is pivoting effectively to focus on services, which is seen as a key differentiator for future growth [78][79] Conclusion - **Outlook**: Insight Enterprises is cautiously optimistic about the second half of the year, with a focus on managing macro uncertainties, enhancing customer relationships, and leveraging its diverse portfolio to navigate competitive pressures [7][8][9]

Financial Performance - Total net sales for the three months ended March 31, 2025, were $2,103,556, a decrease of 11.6% compared to $2,379,485 in the same period of 2024[20] - Gross profit for the three months ended March 31, 2025, was $406,477, down 7.7% from $440,928 in the prior year[20] - Net earnings for the three months ended March 31, 2025, were $7,514, a significant decline of 88.8% compared to $67,027 in the same period of 2024[20] - Basic net earnings per share decreased to $0.24 for the three months ended March 31, 2025, from $2.06 in the same period of 2024[20] - Adjusted earnings from operations for Q1 2025 were $102,352,000, down from $121,750,000 in Q1 2024, reflecting a decline of 15.9%[86] - Earnings from operations decreased 40% year-over-year to $60.1 million, primarily due to a decrease in gross profit and increased selling and administrative expenses[98] - Net earnings for the first quarter of 2025 were $7.5 million, a significant decrease from $67.0 million in the first quarter of 2024, resulting in diluted earnings per share of $0.22, down 87% year-over-year[98] Assets and Liabilities - Total current assets increased to $5,390,136 as of March 31, 2025, compared to $4,844,622 as of December 31, 2024, reflecting a growth of 11.3%[18] - Total liabilities increased to $6,331,629 as of March 31, 2025, from $5,677,967 as of December 31, 2024, representing a rise of 11.5%[18] - Long-term debt increased to $961,172,000 as of March 31, 2025, from $531,233,000 at the end of 2024, reflecting a significant rise of approximately 81%[45] - Total current liabilities rose to $4,385,800 as of March 31, 2025, up from $4,122,202 as of December 31, 2024, indicating an increase of 6.4%[18] Cash Flow and Financing - Cash provided by operating activities in Q1 2025 was $78,050 thousand, down from $247,179 thousand in Q1 2024, reflecting a significant decline[27] - Cash, cash equivalents, and restricted cash at the end of Q1 2025 totaled $324,091 thousand, down from $381,141 thousand at the end of Q1 2024[27] - The company reported a net cash used in financing activities of $15,473 thousand in Q1 2025, compared to $125,267 thousand in Q1 2024, showing improved cash management[27] - The company had net borrowings under its ABL facility of $423.8 million in Q1 2025, compared to net repayments of $42.2 million in Q1 2024[144] Revenue Breakdown - Revenue for the three months ended March 31, 2025, totaled $2,103,556,000, with North America contributing $1,700,643,000[81] - Hardware sales accounted for $1,141,516,000 of total revenue, while software and services contributed $566,284,000 and $395,756,000, respectively[81] - Net sales in North America decreased 11% to $1.7 billion, driven by a 33% decrease in software sales and a 7% decrease in services sales, partially offset by a 2% increase in hardware sales[110] - EMEA net sales decreased 17% to $342.8 million, with software sales down 32% and hardware sales down 5%, while services sales increased by 3%[112] - APAC net sales decreased 3% to $60.1 million, with hardware sales down 13% and services sales down 5%, but software sales increased by 2%[113] Operational Expenses - Operating expenses for the three months ended March 31, 2025, were $339,173, slightly up from $337,434 in the same period of 2024[20] - Significant selling and administrative expenses for Q1 2025 were $295,278,000, compared to $311,135,000 in Q1 2024, reflecting a reduction of 5.1%[86] - Total costs of goods sold for Q1 2025 were $1,697,079,000, compared to $1,938,557,000 in Q1 2024, marking a decrease of 12.4%[86] Tax and Compliance - The effective tax rate for the three months ended March 31, 2025, was 60.5%, significantly higher than the federal statutory rate of 21.0%[62] - As of March 31, 2025, the company had approximately $12,029,000 of unrecognized tax benefits, with $1,614,000 related to accrued interest[63] Strategic Initiatives - The company anticipates that gross margin expansion could continue into future periods as it focuses on selling solutions and increasing services net sales[12] - The company expects to incur additional acquisition expenses as part of its acquisition strategy and plans to use excess cash for strategic acquisitions[12] - The acquisition of Infocenter was completed on May 1, 2024, for a total purchase price of $265,000,000, enhancing the company's service offerings[89] Market Conditions - Inflation has contributed to sustained high interest rates, which are expected to remain above historical levels throughout most of 2025[102] - The company is actively monitoring the global macroeconomic environment, including supply chain impacts and demand fluctuations due to tariffs[102]

Core Insights - Insight Enterprises reported $2.1 billion in revenue for the quarter ended March 2025, reflecting a year-over-year decline of 11.6% [1] - The EPS for the same period was $2.06, down from $2.37 a year ago, with an EPS surprise of +1.48% compared to the consensus estimate of $2.03 [1] Revenue and Earnings Performance - The reported revenue was a surprise of -2.52% against the Zacks Consensus Estimate of $2.16 billion [1] - Key metrics indicate that net sales for services were $395.76 million, which is a -4.8% change year-over-year and below the estimated $422.02 million [4] - Net sales for products were $1.71 billion, representing a -13% year-over-year change, slightly above the estimated $1.70 billion [4] Profitability Metrics - Gross profit for products was reported at $175.97 million, exceeding the estimated $174.34 million [4] - Gross profit for services was $230.50 million, which fell short of the estimated $249.54 million [4] Stock Performance - Shares of Insight Enterprises have returned -6.4% over the past month, compared to the Zacks S&P 500 composite's -0.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Insight Enterprises reported quarterly earnings of $2.06 per share, exceeding the Zacks Consensus Estimate of $2.03 per share, but down from $2.37 per share a year ago, indicating an earnings surprise of 1.48% [1] - The company posted revenues of $2.1 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 2.52%, and down from $2.38 billion year-over-year [2] - Insight Enterprises has underperformed the market, with shares down approximately 9.1% year-to-date compared to the S&P 500's decline of 5.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.54 on revenues of $2.14 billion, and for the current fiscal year, it is $9.84 on revenues of $8.82 billion [7] - The estimate revisions trend for Insight Enterprises is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Industry Context - The Retail - Mail Order industry, to which Insight Enterprises belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, 1-800-Flowers.com, is expected to report a quarterly loss of $0.34 per share, reflecting a year-over-year decline of 21.4%, with revenues projected at $364.65 million, down 3.9% from the previous year [9][10]

Financial Data and Key Metrics Changes - In Q1 2025, net revenue was $2.1 billion, a decrease of 12% compared to the previous year, driven by a 13% decline in product revenue, particularly on-prem software [21][22] - Adjusted diluted earnings per share were $2.6, down 13%, primarily due to lower gross profit, partially offset by lower adjusted SG&A expenses [24] - Gross profit decreased by 8%, with a gross margin of 19.3%, an increase of 80 basis points due to a favorable product mix [22][23] Business Line Data and Key Metrics Changes - Hardware revenue increased by 1%, marking the first growth in ten quarters, with strong performance in servers and storage [21][22] - Cloud gross profit was $103 million, a decrease of 3%, while SaaS and Infrastructure as a Service gross profit grew by 17% [22][24] - Insight Core Services revenue decreased by 2%, with gross profit down 4% due to delays in projects from large enterprise clients [7][22] Market Data and Key Metrics Changes - The macro environment has deteriorated, leading to increased volatility and uncertainty, impacting large enterprise clients' spending [7][18] - Demand for hardware is expected to grow in the mid-single digits, while cloud gross profit is anticipated to be flat to slightly down [20][28] Company Strategy and Development Direction - The company aims to accelerate profitable growth by enhancing consulting engagement models and leveraging GenAI technologies [10][11] - Focus on driving attached services to hardware sales and improving supply chain management in response to market dynamics [10][20] - The strategy includes becoming a leading solutions integrator, emphasizing AI, data, and cloud services [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about hardware spending and AI interest, despite the uncertain macro environment [36][38] - The company anticipates that the second half of 2025 will be stronger than the first half, with improvements in services spending expected [18][19] - Ongoing challenges are expected, particularly with large enterprise clients in North America, but the fundamentals driving the tech industry remain strong [20][28] Other Important Information - The company has been recognized for its diversity and workplace environment, receiving accolades such as Newsweek's America's Greatest Workplaces for Diversity for 2025 [17] - The company has ample liquidity with $1.3 billion available under its ABL facility, allowing it to meet operational needs [27] Q&A Session Summary Question: What drives the confidence in the guidance despite a tougher macro backdrop? - Management noted good momentum in hardware spending and AI interest, alongside effective navigation of partner program changes [34][36] Question: Are there any demand pull-ins from customers? - Minimal pull-ins were observed in Q1, primarily device-related, with a general movement towards leveraging AI technologies [41][43] Question: What are the expectations regarding vendor pricing in light of tariffs? - Some OEMs have raised prices, but generally, pricing has been subdued, with a slight positive impact expected from tariffs [51][53] Question: What is the outlook for the services business? - The services business is expected to improve in the second half of the year, aligning with hardware sales recovery [73]

Financial Data and Key Metrics Changes - In Q1 2025, net revenue was $2.1 billion, a decrease of 12% driven by a 13% decline in product revenue, primarily due to on-prem software related to a large deal in Q1 2024 [21] - Gross profit decreased by 8% due to partner program changes and a decline in on-prem software and agent services [22] - Adjusted diluted earnings per share were $2.6, down 13%, primarily due to lower gross profit [25] - Adjusted EBITDA was $111 million, a decrease of 16%, with a margin contraction of 30 basis points to 5.3% [25] - The adjusted return on invested capital for the trailing twelve months was 14.9%, down from 18% a year ago [26] Business Line Data and Key Metrics Changes - Hardware revenue increased by 1%, marking the first increase in ten quarters, with good performance in servers and storage [21][22] - Cloud gross profit was $103 million, a decrease of 3%, attributed to declines in legacy Microsoft enterprise agreements and a pivot to the mid-market [23] - Insight Core Services revenue decreased by 2%, with gross profit down 4% due to delays in services projects from large enterprise clients [22][24] Market Data and Key Metrics Changes - The macro environment outlook has deteriorated, leading to increased volatility and uncertainty, impacting large enterprise clients' spending [7][18] - AI spending remains a priority for firms, with budget reallocations from other segments to invest in AI [19] Company Strategy and Development Direction - The company aims to accelerate profitable growth by enhancing consulting business engagement models and leveraging GenAI technologies [9][10] - Focus on driving attached services to hardware sales and expanding programs with distribution partners to improve supply availability [9] - The strategy is to become a leading solutions integrator, investing in areas like cloud, data, AI, edge, and cyber [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about hardware spending and AI interest, despite the uncertain macro environment [36][38] - The company anticipates that the second half of the year will be stronger than the first, with expectations for improved services spending aligned with hardware sales [18][19] - Management is prepared for potential downturns with plans for cost management and operational efficiency improvements [72] Other Important Information - The company has been recognized for its diversity and workplace environment, receiving accolades such as America's Greatest Workplaces for Diversity for 2025 [17] - The company continues to focus on corporate citizenship and sustainability, as highlighted in its annual corporate citizenship report [18] Q&A Session Summary Question: What is driving the confidence in the guidance despite a tougher macro backdrop? - Management noted good momentum in hardware spend and AI interest, along with effective navigation of partner program changes [36][38] Question: Are there any demand pull-ins from customers in hardware? - Minimal pull-ins were observed in response to tariff threats, primarily related to devices, with a general movement towards leveraging AI technologies [44] Question: What are the expectations regarding vendor OEM pricing in light of tariffs? - Pricing responses vary by OEM, with some increasing prices, but generally, the pricing motion has been subdued [52][54] Question: What is the outlook for services spending through the year? - Services spending is expected to improve in the back half of the year, aligning with improved product sales [73]

Q1 2025 Financial Performance - Net sales decreased by 12% year-over-year to $21 billion[25] - Gross profit decreased by 8% year-over-year to $406 million[25] - Cloud gross profit decreased by 3% year-over-year to $103 million[25] - Insight Core Services gross profit decreased by 4% year-over-year to $73 million[25] - Earnings from operations decreased by 40% year-over-year to $60 million[25] - Adjusted earnings from operations decreased by 16% year-over-year to $102 million[25] - GAAP diluted earnings per share decreased by 87% year-over-year to $022[25] - Adjusted diluted earnings per share decreased by 13% year-over-year to $206[25] Debt and Capital Allocation - Total debt balance at March 31, 2025, was $9612 million, an increase of $796 million year-over-year[28] - The company spent $574 million on acquisitions, share repurchases, and warrant settlements[28] 2025 Outlook - The company expects low single-digit gross profit growth for the full year 2025[31] - The company anticipates a gross margin of approximately 20% for the full year 2025[31] - The company projects adjusted diluted EPS to be in the range of $970 to $1010 for the full year 2025[31]