Insight Enterprises(US:NSIT)2021-08-07 16:24Financial Data and Key Metrics Changes - The company reported net sales of $2.2 billion for Q2 2021, representing a 13% increase in U.S. dollars and a 10% increase in constant currency compared to Q2 2020 [24] - Gross margin was 16.4%, with a slight contraction of 10 basis points year-over-year due to increased hardware net sales [24] - Adjusted earnings from operations increased by 6% year-over-year to $97.7 million, while adjusted diluted earnings per share was $1.91 [26] Business Line Data and Key Metrics Changes - North America net sales were $1.8 billion, up 14% year-over-year, driven by increases in software licensing and hardware sales [27] - EMEA net sales decreased by 4% year-over-year in constant currency to $417 million, with adjusted earnings from operations of $20 million [30] - APAC net sales increased by 24% year-over-year to $52.5 million, with adjusted earnings from operations of $5 million [31] Market Data and Key Metrics Changes - The company experienced strong hardware booking trends, with elevated backlog levels exiting Q2 [10][11] - Cloud sales, including SaaS and infrastructure as a service, grew high double digits, contributing to 22% of gross profit [11][19] - The company improved its position in the Fortune 500 rankings, moving up 49 spots to number 360 [19] Company Strategy and Development Direction - The company is focused on helping clients transition to cloud-based solutions and modernize their infrastructure, emphasizing the importance of AI and data utilization [13][14] - Strategic investments in technology and digital solutions are expected to drive future growth [18] - The company aims to maintain its competitive edge by leveraging its expertise in emerging technologies and digital transformation [17] Management's Comments on Operating Environment and Future Outlook - Management noted that supply constraints remain a challenge but expressed confidence in achieving high-end net sales guidance for the year [9][12] - The company anticipates continued demand for cloud solutions and infrastructure investments, despite potential impacts from COVID-19 variants [42][62] - Management expects gross margins to remain flat to slightly down due to ongoing hardware growth [61] Other Important Information - The effective tax rate for Q2 2021 was 25.4%, a decrease from 26.2% in the prior quarter [32] - The company has over $1 billion available under its ABL facility, indicating strong liquidity to support future growth [37] - The company plans to increase its full-year guidance for net sales growth to the high end of 4% to 8% [39] Q&A Session Summary Question: Can you talk about PC demand, specifically notebooks? - Management noted that supply for Chromebooks has significantly caught up, while Windows platforms remain tighter in supply [46][47] Question: Can you highlight other areas of consumer spending? - Management indicated that cloud solutions continue to accelerate, representing 22% of gross profit, with increased infrastructure spending as companies invest in data centers [48] Question: What areas of the business are experiencing the most wallet share gains? - Management highlighted gains in cloud transformation and security services as key areas of growth [56] Question: What is the outlook for the public sector and education cycle? - Management expects a moderation in Chromebook sales but anticipates operating from a new base level [57] Question: How should we think about gross margins in the back half of the year? - Management expects gross margins to remain flat to slightly down due to continued hardware growth [61] Question: Have you seen changes in customer buying patterns due to COVID variants? - Management has not observed significant changes in buying patterns, indicating resilience among clients [62]