INSIGHT ENTERPRISES INC
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
NSIT$158.25+3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001628280-24-020070
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001628280-24-034041
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 128 previous paragraphs and 166 current paragraphs.
38 unchanged; 74 reworded; 43 added; 15 removed; 1 previous and 11 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (43)
Current report
Net Sales. Net sales of $2.2 billion for the three months ended June 30, 2024 decreased 8%, year to year, compared to the three months ended June 30, 2023, reflecting decreases in our North America and EMEA operating segments. Net sales of $4.5 billion for the six months ended June 30, 2024 decreased 3%, year to year, compared to the six months ended June 30, 2023, also reflecting decreases in each of our operating segments.
Current report
•The decrease in software net sales was primarily due to the continued migration of on-premise software to cloud solutions, reported net in services net sales.
Current report
Net sales in North America decreased 3%, or $94.0 million, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, driven by a decrease in hardware net sales. Hardware net sales decreased by 13%, year to year. This decrease was partially offset by software and services net sales increases of 18% and 8%, respectively, year over year. The net changes for the six months ended June 30, 2024 were the result of the following:
Current report
•The decrease in hardware net sales was primarily due to lower volume of sales to large enterprise and corporate clients due to lower demand. This decline was driven by infrastructure sales.
Current report
•The decrease in software net sales was primarily due to lower sales to large enterprise clients and continued migration of on-premise software to cloud solutions, reported net in services net sales.
Current report
•The decrease in hardware net sales was primarily due to lower volume of sales to public sector and commercial clients.
Current report
Net sales in EMEA decreased 5%, or $37.0 million, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA decreased 6%, year to year. Net sales of software and hardware decreased by 10% and 11%, respectively, year to year, partially offset by an increase in services net sales of 33%, year over year. The net changes for the six months ended June 30, 2024 were the result of the following:
Current report
•The decrease in software net sales was primarily due to lower sales to large enterprise clients and the continued migration of on-premise software to cloud solutions, reported net in services net sales.
Current report
•The decrease in hardware net sales was primarily due to lower volume of sales to public sector and corporate clients.
Current report
•The decrease in hardware net sales was primarily the result of lower volume of sales to corporate and large enterprise clients.
Current report
•The decrease in software net sales was due to the continued migration of on-premise software to cloud solutions, reported net in services net sales.
Current report
Net sales in APAC decreased 1%, or $1.4 million, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC increased 1%, year over year. Net sales of hardware decreased 25%, year to year. This decrease was partially offset by increases in software and services net sales of 1% and 7%, respectively, year over year. The net changes for the six months ended June 30, 2024 were the result of the following:
Current report
•The expansion in product margin reflects an increase in margin contribution from software and hardware net sales due to selling product at higher margins.
Current report
North America's gross profit for the six months ended June 30, 2024 increased 7%, or $45.7 million, compared to the six months ended June 30, 2023. As a percentage of net sales, gross margin expanded approximately 180 basis points to 19.4% for the six months ended June 30, 2024. The year over year net expansion in gross margin was primarily attributable to the following:
Current report
EMEA's gross profit for the six months ended June 30, 2024 increased 16%, or $21.2 million, year over year (increasing 14% when excluding the effects of fluctuating foreign currency exchange rates), compared to the six months ended June 30, 2023. As a percentage of net sales, gross margin expanded approximately 350 basis points, year over year. The year over year net expansion in gross margin was attributable to the following:
Current report
APAC's gross profit for the three months ended June 30, 2024 increased 12%, or $2.1 million, year over year (increasing 13% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended June 30, 2023. As a percentage of net sales, gross margin expanded approximately 360 basis points, year over year. The year over year net expansion in gross margin was primarily attributable to the following:
Current report
•The contraction in product margin was driven by lower contribution of margin from hardware due to lower volume of sales of hardware in the current year period.
Current report
APAC's gross profit for the six months ended June 30, 2024 increased 9%, or $2.9 million, year over year (increasing 11% when excluding the effects of fluctuating foreign currency exchange rates), compared to the six months ended June 30, 2023. As a percentage of net sales, gross margin expanded approximately 270 basis points, year over year. The year over year net expansion in gross margin was primarily attributable to the following:
Current report
•An expansion in services margin of 234 basis points and an expansion in product margin of 34 basis points.
Current report
•The expansion in services margin was driven by higher margins from Insight Core services and a higher percentage of cloud solutions recognized on a net basis.
Current report
•The expansion in product margin was driven by higher volume of sales of software at higher margins than in the prior year period.
Current report
Selling and administrative expenses increased approximately 120 basis points as a percentage of net sales in the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The overall net decrease in selling and administrative expenses primarily reflects a net decrease in other expenses due to gains of $25.1 million recognized on the revaluation of the SADA and Amdaris acquisition earnout liabilities and the resulting decreases in the fair values of the potential earnout payments. We also realized net recoveries of $3.4 million associated with costs previously incurred related to a third-party data center service outage. These net decreases were offset by increases in depreciation and amortization expenses, personnel costs, including teammate benefits, and legal and professional expenses of $9.7 million, $3.5 million and $2.9 million, respectively, year over year. The increase in depreciation and amortization expenses reflects higher amortization of intangible assets associated with the SADA, Infocenter and Amdaris acquisitions. The increase in personnel costs reflects an increase in overall teammate headcount from our acquisitions and the impact of merit increases. The increase in legal and professional expenses reflects an increase in consulting fees incurred in the current year period. We also incurred transformation costs in the current and prior year periods of $5.6 million and $6.2 million, respectively, however, these costs are unique in nature and are not expected to recur in the longer term.
Current report
During the six months ended June 30, 2024, we recorded severance and restructuring expenses, net of adjustments, of approximately $7.1 million. Comparatively, during the six months ended June 30, 2023, we recorded a gain on sale of property due to restructuring of $7.6 million. This gain was offset by severance and restructuring expense, net of adjustments, of approximately $7.6 million. The charges in both periods primarily related to a realignment of certain roles and responsibilities.
Current report
During the six months ended June 30, 2024, we recorded acquisition and integration related expenses of approximately $1.5 million. During the six months ended June 30, 2023, we recorded acquisition and integration related expenses of approximately $0.2 million. The expenses in the current year period related primarily to the acquisitions of SADA in December 2023 and Infocenter in May 2024.
Current report
North America's earnings from operations for the six months ended June 30, 2024 increased $27.2 million, or 17%, compared to the six months ended June 30, 2023. As a percentage of net sales, earnings from operations increased by approximately 80 basis points to 5.1%. The increase in earnings from operations was primarily driven by the increase in gross profit, partially offset by an increase in selling and administrative expenses and a net increase in severance and restructuring expenses, when compared to the six months ended June 30, 2023.
Current report
EMEA's earnings from operations for the three months ended June 30, 2024 increased $4.7 million, or 29% (increasing 30% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended June 30, 2023. As a percentage of net sales, earnings from operations increased by approximately 150 basis points to 5.7%. The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, when compared to the three months ended June 30, 2023.
Current report
EMEA's earnings from operations for the six months ended June 30, 2024 increased $5.6 million, or 21% (increasing 20% when excluding the effects of fluctuating foreign currency exchange rates), compared to the six months ended June 30, 2023. As a percentage of net sales, earnings from operations increased by approximately 90 basis points to 4.1%. The increase in earnings from operations was driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, when compared to the six months ended June 30, 2023.
Current report
APAC's earnings from operations for the three months ended June 30, 2024 increased $1.3 million, or 19% (increasing 21% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended June 30, 2023. As a percentage of net sales, earnings from operations increased by approximately 230 basis points to 13.7%. The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, when compared to the three months ended June 30, 2023.
Current report
APAC's earnings from operations for the six months ended June 30, 2024 increased $2.1 million, or 19% (increasing 21% when excluding the effects of fluctuating foreign currency exchange rates), compared to the six months ended June 30, 2023. As a percentage of net sales, earnings from operations increased by approximately 190 basis points to 10.7%. The increase in earnings from operations was driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, when compared to the six months ended June 30, 2023.
Current report
Non-Operating Expense (Income).
Current report
June 30, 2024 increased 35%, or $7.0 million, compared to the six months ended June 30, 2023. The increase in the six months ended June 30, 2024 was due to higher interest rates and loan balance under our ABL facility and the issuance of the Senior Notes, partially offset by higher interest income and decreased imputed interest under our inventory financing facilities.
Current report
Our effective tax rate of 24.8% for the six months ended June 30, 2024 was lower than our effective tax rate of 25.7% for the six months ended June 30, 2023. The decrease in the effective tax rate for the six months ended June 30, 2024 was primarily due to tax benefits related to the revaluation of certain acquisition earnout liabilities and higher excess tax benefits on the settlement of employee share-based compensation in the current year period. We expect our effective tax rate to return to more typical levels in the foreseeable future.
Current report
•Capital expenditures were $18.6 million and $13.2 million for the six months ended June 30, 2024 and 2023, respectively.
Current report
•During the six months ended June 30, 2024, we paid approximately $264.4 million, to acquire Infocenter, net of cash and cash equivalents acquired of $5.1 million.
Current report
•We issued $500.0 million in senior unsecured notes, which we used to pay down our ABL facility.
Current report
•We had net repayments under our inventory financing facilities of $13.0 million during the six months ended June 30, 2024 compared to net borrowings of $30.8 million during the six months ended June 30, 2023.
Current report
•the impact to DSOs of the SADA and Amdaris acquisitions combined with a significant agency transaction that based on its terms had not cleared by quarter end.
Current report
•We paid $264.4 million to acquire Infocenter on May 1, 2024, net of cash and cash equivalents acquired of $5.1 million.
Current report
•Capital expenditures were $18.6 million and $13.2 million for the six months ended June 30, 2024 and 2023, respectively.
Current report
•In May 2024, we issued $500.0 million in 6.625% Senior Notes due 2032 (the "Senior Notes"), which we used to pay down a portion of our borrowings under our ABL facility.
Showing the first 40 of 43 passages. Open the source sections for the rest.
Removed paragraphs (15)
Previous report
Net Sales. Net sales of $2.4 billion for the three months ended March 31, 2024 increased 2%, year over year, compared to the three months ended March 31, 2023, reflecting an increase in our North America segment, partially offset by decreases in our EMEA and APAC operating segments.
Previous report
•The decrease in hardware net sales was primarily due to lower volume of sales to large enterprise, corporate and public sector clients.
Previous report
•The decrease in software net sales was primarily due to continued migration of on-premise software to cloud solutions, reported net in services net sales and lower sales to public sector clients, partially offset by higher sales to large enterprise and corporate clients.
Previous report
•The decrease in product margin reflects a decrease in margin contribution from hardware net sales partially offset by an increase in margin from software net sales.
Previous report
APAC's gross profit for the three months ended March 31, 2024 increased 5%, or $0.8 million, year over year (increasing 8% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2023. As a percentage of net sales, gross margin expanded approximately 170 basis points, year over year. The year over year net expansion in gross margin was primarily attributable to the following:
Previous report
•The expansion in product margin was driven by sales of software and hardware to enterprise and corporate clients at higher margins than in the same period in the prior year.
Previous report
EMEA's earnings from operations for the three months ended March 31, 2024 increased $0.9 million, or 9% (increasing 5% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2023. As a percentage of net sales, earnings from operations increased by approximately 30 basis points to 2.7%. The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, when compared to the three months ended March 31, 2023.
Previous report
APAC's earnings from operations for the three months ended March 31, 2024 increased $0.8 million, or 20% (increasing 22% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2023. As a percentage of net sales, earnings from operations increased by approximately 140 basis points to 7.7%. The increase in earnings from operations was primarily driven by an increase gross profit compared to the three months ended March 31, 2023.
Previous report
Non-Operating (Income) Expense.
Previous report
•Capital expenditures were $6.5 million and $9.1 million for the three months ended March 31, 2024 and 2023, respectively.
Previous report
•We had net repayments under our inventory financing facilities of $4.5 million during the three months ended March 31, 2024 compared to net borrowings of $108.3 million during the three months ended March 31, 2023.
Previous report
•the impact to DSOs of the SADA and Amdaris acquisitions combined with an increase in other receivables including multi-year transactions, partially offset by timing of sales within the quarter.
Previous report
•Capital expenditures were $6.5 million and $9.1 million for the three months ended March 31, 2024 and 2023, respectively.
Previous report
•We had net repayments under our inventory financing facilities of $4.5 million during the three months ended March 31, 2024 compared to net borrowings of $108.3 million during the three months ended March 31, 2023.
Previous report
•During the three months ended March 31, 2023, we repurchased $117.1 million of our common stock.
Reworded paragraphs (74)
Previous wording
•Net sales of $2.4 billion increased 2% compared to the three months ended March 31, 2023. The increase in net sales reflects increases in software and services net sales, partially offset by a decrease in hardware net sales. Excluding the effects of fluctuating foreign currency exchange rates, net sales also increased 2% compared to the first quarter of 2023.
Current wording
•Net sales of $2.2 billion decreased 8% compared to the three months ended June 30, 2023. The decrease in net sales reflects decreases in hardware and software net sales, partially offset by an increase in services net sales. Excluding the effects of fluctuating foreign currency exchange rates, net sales also decreased 8% compared to the second quarter of 2023.
Previous wording
•Gross profit of $440.9 million increased 13% compared to the three months ended March 31, 2023. Excluding the effects of fluctuating foreign currency exchange rates, gross profit increased 12% compared to the first quarter of 2023.
Current wording
•Gross profit of $453.4 million increased 5% compared to the three months ended June 30, 2023. Excluding the effects of fluctuating foreign currency exchange rates, gross profit also increased 5% compared to the second quarter of 2023.
Previous wording
•Compared to the three months ended March 31, 2023, gross margin expanded approximately 170 basis points to 18.5% of net sales in the three months ended March 31, 2024. This expansion primarily reflects an increase in higher margin services net sales compared to the same period in the prior year.
Current wording
•Compared to the three months ended June 30, 2023, gross margin expanded approximately 260 basis points to 21.0% of net sales in the three months ended June 30, 2024. This expansion primarily reflects an increase in higher margin services net sales compared to the same period in the prior year.
Previous wording
•Earnings from operations increased 29%, year over year, to $100.0 million in the first quarter of 2024 compared to $77.5 million in the first quarter of 2023. The increase was primarily due to an increase in gross profit partially offset by an increase in selling and administrative expenses in the current quarter. Excluding the effects of fluctuating foreign currency exchange rates, earnings from operations increased 28% year over year.
Current wording
•Earnings from operations increased 11%, year over year, to $131.1 million in the second quarter of 2024 compared to $118.6 million in the second quarter of 2023. The increase was primarily due to an increase in gross profit in the current quarter. Excluding the effects of fluctuating foreign currency exchange rates, earnings from operations also increased 11% year over year.
Previous wording
•Net earnings and diluted earnings per share were $67.0 million and $1.74, respectively, for the first quarter of 2024. This compares to net earnings of $50.0 million and diluted earnings per share of $1.34 for the first quarter of 2023. Diluted earnings per share increased 30% year over year, and excluding the effects of fluctuating foreign currency exchange rates, increased 29% year over year.
Current wording
•Net earnings and diluted earnings per share were $87.4 million and $2.27, respectively, for the second quarter of 2024. This compares to net earnings of $80.5 million and diluted earnings per share of $2.17 for the second quarter of 2023. Diluted earnings per share increased 5% year over year, and excluding the effects of fluctuating foreign currency exchange rates, also increased 5% year over year.
Previous wording
Throughout the “Quarterly Overview” and “Results of Operations” sections of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we refer to changes in net sales, gross profit, selling and administrative expenses and earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. In computing the changes in amounts and percentages, we compare the current period amount as translated into U.S. dollars under the applicable accounting standards to the prior period amount in local currency translated into U.S. dollars utilizing the weighted average translation rate for the current period.
Current wording
Throughout the “Quarterly Overview” and “Results of Operations” sections of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we refer to changes in net sales, gross profit, selling and administrative expenses and earnings from operations on a consolidated basis and in North America, EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates, which are non-GAAP measures. We believe providing
Previous wording
Supply constraints that have had an industry-wide impact since the beginning of 2020 eased in the second half of 2023. We believe that the remaining supply constraints and extended lead times for certain infrastructure, including networking products, have now normalized back to near historic levels. Despite the easing supply constraints, we continue to see a general slowdown in our clients' decision making, which we believe will continue in the short term.
Current wording
Supply constraints that have had an industry-wide impact since the beginning of 2020 eased in the second half of 2023. We believe that the remaining supply constraints and extended lead times for certain infrastructure, including networking products, have now normalized back to near historic levels. Despite the easing supply constraints, we continue to see a general slowdown in our clients' decision making, which we believe could continue in the short term.
Previous wording
The following table sets forth certain financial data as a percentage of net sales for the three months ended March 31, 2024 and 2023:
Current wording
The following table sets forth certain financial data as a percentage of net sales for the three and six months ended June 30, 2024 and 2023:
Previous wording
We generally experience some seasonal trends in our sales of IT hardware, software and services. Software and certain cloud net sales are typically seasonally higher in our second and fourth quarters. Business clients, particularly larger enterprise businesses in the United States, tend to spend more in our fourth quarter and less in our first quarter. Sales to the federal government in the United States are often stronger in our third quarter, while sales in the state and local government and education markets are also stronger in our second quarter. Sales to public sector clients in the United Kingdom are often stronger in our first quarter. These trends create overall seasonality in our consolidated results such that net sales and profitability are expected to be higher in the second and fourth quarters of the year. Historically we have experienced higher net sales in our second quarter, however, with the addition of SADA, we now believe our second and fourth quarters may be equally strong.
Current wording
We generally experience some seasonal trends in our sales of IT hardware, software and services. Software and certain cloud net sales are typically seasonally higher in our second and fourth quarters. Business clients, particularly larger enterprise businesses in the United States, tend to spend more, particularly on product, in our fourth quarter. Sales to the federal government in the United States are often stronger in our third quarter, while sales in the state and local government and education markets are also often stronger in our second quarter. Sales to public sector clients in the United Kingdom are often stronger in our first quarter. These trends create overall variability in our consolidated results.
Previous wording
Our gross profit across the business and related to product versus services sales are, and will continue to be, impacted by partner incentives, which can and do change significantly in the amounts made available and in the related product or services sales being incentivized by the partner. Incentives from our largest partners are significant and changes in the incentive requirements, which occur regularly, could impact our results of operations to the extent we are unable to shift our focus and respond to them. For a discussion of risks associated with our reliance on partners, see “Risk Factors – Risks related to Our Business, Operations and Industry – We rely on our partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and the requirements year over year,” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
Our gross profit across the business and related to product versus services sales are, and will continue to be, impacted by partner incentives, which can and do change significantly in the amounts made available and in the related product or services sales being incentivized by the partner. Incentives from our largest partners are significant and changes in the amounts and incentive requirements, including those related to cloud transactions, which occur regularly, could impact our results of operations to the extent we are unable to shift our focus and respond to them. For a discussion of risks associated with our reliance on partners, see “Risk Factors – Risks related to Our Business, Operations and Industry – We rely on our partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and the requirements year over year,” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
Our net sales by operating segment were as follows for the three months ended March 31, 2024 and 2023 (dollars in thousands):
Current wording
Our net sales by operating segment were as follows for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):
Previous wording
Our net sales by offering category for North America for the three months ended March 31, 2024 and 2023 were as follows (dollars in thousands):
Current wording
Our net sales by offering category for North America for the three and six months ended June 30, 2024 and 2023 were as follows (dollars in thousands):
Previous wording
Net sales in North America increased 4%, or $70.9 million, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, driven by increases in software and services net sales, partially offset by a decrease in hardware net sales. Software and services net sales increased 51% and 12%, year over year, respectively. These increases were partially offset by a decrease in hardware net sales of 14%, year to year. The net changes for the three months ended March 31, 2024 were the result of the following:
Current wording
Net sales in North America decreased 9%, or $164.8 million, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, driven by decreases in hardware and software net sales, partially offset by an increase in services net sales. Hardware and software net sales decreased 11% and 12%, year to year, respectively. These decreases were partially offset by an increase in services net sales of 5%. The net changes for the three months ended June 30, 2024 were the result of the following:
Previous wording
•The decrease in hardware net sales was due to lower volume of sales primarily to large enterprise and corporate clients driven by declines in sales of infrastructure products.
Current wording
•The decrease in hardware net sales was due to lower volume of sales primarily to large enterprise and corporate clients due to lower demand. This decline was driven by infrastructure sales.
Previous wording
•The increase in software net sales was primarily due to a significant multiyear transaction and higher volume of software licensing, partially offset by the continued migration of on-premise software to cloud solutions, reported net in services net sales.
Current wording
•The increase in software net sales was primarily due to a significant multiyear transaction in the first quarter and higher volume of software licensing, partially offset by the continued migration of on-premise software to cloud solutions, reported net in services net sales.
Previous wording
Our net sales by offering category for EMEA for the three months ended March 31, 2024 and 2023 were as follows (dollars in thousands):
Current wording
Our net sales by offering category for EMEA for the three and six months ended June 30, 2024 and 2023 were as follows (dollars in thousands):
Previous wording
Net sales in EMEA decreased 3%, or $14.2 million, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA decreased 6%, year to year. Net sales of hardware and software decreased by 16% and 5%, respectively, year to year, partially offset by an increase in services net sales of 48%, year over year. The net changes for the three months ended March 31, 2024 were the result of the following:
Current wording
Net sales in EMEA decreased 6%, or $22.9 million, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA also decreased 6%, year to year. Net sales of software and hardware decreased by 15% and 5%, respectively, year to year, partially offset by an increase in services net sales of 21%, year over year. The net changes for the three months ended June 30, 2024 were the result of the following:
Previous wording
•The increase in services net sales was primarily due to increases in Insight Delivered services net sales, including from Amdaris, which we acquired on August 17, 2023, and in fees for cloud solutions.
Current wording
•The increase in services net sales was primarily due to increases in Insight Delivered services net sales, including from Amdaris, which we acquired on August 17, 2023.
Previous wording
•The increase in services net sales was primarily due to higher sales of cloud solution offerings, including from SADA, and an increase in Insight Delivered services net sales.
Current wording
•The increase in services net sales was primarily due to increases in Insight Delivered services net sales, including from Amdaris.
Previous wording
Our net sales by offering category for APAC for the three months ended March 31, 2024 and 2023 were as follows (dollars in thousands):
Current wording
Our net sales by offering category for APAC for the three and six months ended June 30, 2024 and 2023 were as follows (dollars in thousands):
Previous wording
Net sales in APAC decreased 2%, or $1.2 million, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC increased 1%, year over year. Net sales of hardware decreased by 29%, year to year. This decrease was partially offset by increases in software and services net sales of 4% and 2%, respectively, year over year. The net changes for the three months ended March 31, 2024 were the result of the following:
Current wording
Net sales in APAC were relatively flat for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC increased 1%, year over year. Net sales of hardware and software decreased by 22% and 2%, respectively, year to year. This decrease was partially offset by an increase in services net sales of 12%, year over year. The net changes for the three months ended June 30, 2024 were the result of the following:
Previous wording
•The increase in services net sales was primarily due to higher volume sales of Insight Delivered services and increase in fees for cloud solutions.
Current wording
•The increase in services net sales was primarily due to higher volume sales of Insight Delivered services and an increase in fees for cloud solutions.
Previous wording
•The decrease in hardware net sales was primarily the result of lower volume of sales to clients across all sectors.
Current wording
•The decrease in hardware net sales was primarily the result of lower volume of sales to large enterprise and corporate clients.
Previous wording
•The increase in software net sales was due to higher volume of sales to large enterprise and corporate clients, partially offset by continued migration of on-premise software to cloud solutions, reported net in services net sales.
Current wording
•The increase in software net sales was due to higher volume of sales to large enterprise and public sector clients, partially offset by the continued migration of on-premise software to cloud solutions.
Previous wording
The percentage of net sales by category for North America, EMEA and APAC were as follows for the three months ended March 31, 2024 and 2023:
Current wording
The percentage of net sales by category for North America, EMEA and APAC were as follows for the three and six months ended June 30, 2024 and 2023:
Previous wording
Gross Profit. Gross profit increased 13%, or $49.6 million, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, with gross margin expanding approximately 170 basis points to 18.5% for the three months ended March 31, 2024 compared to 16.8% for the three months ended March 31, 2023.
Current wording
Gross Profit. Gross profit increased 5%, or $20.2 million, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, with gross margin expanding approximately 260 basis points to 21.0% for the three months ended June 30, 2024 compared to 18.4% for the three months ended June 30, 2023. Gross profit increased 8%, or $69.8 million, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, with gross margin expanding approximately 210 basis points to 19.7% for the six months ended June 30, 2024 compared to 17.6% for the six months ended June 30, 2023.
Previous wording
Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three months ended March 31, 2024 and 2023 (dollars in thousands):
Current wording
Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):
Previous wording
North America's gross profit for the three months ended March 31, 2024 increased $34.7 million, compared to the three months ended March 31, 2023. As a percentage of net sales, gross margin expanded approximately 120 basis points to 18.4% for the first quarter of 2024. The year over year net expansion in gross margin was primarily attributable to the following:
Current wording
North America's gross profit for the three months ended June 30, 2024 increased 3%, or $11.0 million, compared to the three months ended June 30, 2023. As a percentage of net sales, gross margin expanded approximately 230 basis points to 20.4% for the second quarter of 2024. The year over year net expansion in gross margin was primarily attributable to the following:
Previous wording
•An increase in services margin of 166 basis points partially offset by a contraction in product margin of 48 basis points compared to the same period in the prior year.
Current wording
•An increase in services margin of 202 basis points and an expansion in product margin of 33 basis points compared to the same period in the prior year.
Previous wording
•The increase in services margin reflects an increase in fees for cloud solutions, including from SADA, an increase in margin contribution from Insight Core services (consisting of Insight Delivered and managed services) and an increase in product warranty.
Current wording
•The increase in services margin reflects an increase in fees for cloud solutions, including from SADA, and an increase in margin contribution from Insight Core services (consisting of Insight Delivered and managed services), including from Infocenter, which we acquired on May 1, 2024, partially offset by a decrease in product warranty.
Previous wording
EMEA's gross profit for the three months ended March 31, 2024 increased 23%, or $14.1 million, year over year (increasing 20% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2023. As a percentage of net sales, gross margin expanded 390 basis points, year over year. The year over year net expansion in gross margin was attributable to the following:
Current wording
EMEA's gross profit for the three months ended June 30, 2024 increased 10%, or $7.1 million, year over year (also increasing 10% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended June 30, 2023. As a percentage of net sales, gross margin expanded 310 basis points, year over year. The year over year net expansion in gross margin was attributable to the following:
Previous wording
•A net increase in product margin of 16 basis points and an increase from services margin of 375 basis points.
Current wording
•A net increase in product margin of 123 basis points and an increase from services margin of 183 basis points.
Previous wording
•The increase in services margin is primarily the result of increased fees for cloud solutions and increased margin contribution on Insight Core Services, including from Amdaris.
Current wording
•The increase in services margin is primarily the result of increased fees for cloud solutions and increased margin contribution from Insight Core Services, including from Amdaris.
Previous wording
•The increase in product margin is primarily the result of sales of hardware and software at higher margins than in the same period in the prior year.
Current wording
•The increase in product margin is primarily the result of sales of hardware at higher margins than in the same period in the prior year.
Previous wording
•A net increase in product margin of 108 basis points and an increase from services margin of 62 basis points.
Current wording
•A net increase in product margin of 67 basis points and an increase from services margin of 282 basis points.
Previous wording
•The expansion in services margin was driven by higher margins on Insight Core services and increased fees for cloud solutions.
Current wording
•The expansion in services margin was driven by higher margins from Insight Core services and increased fees for cloud solutions.
Previous wording
Selling and Administrative Expenses. Selling and administrative expenses for the three months ended March 31, 2024 increased 9%, or $27.4 million compared to the three months ended March 31, 2023 (also increasing 9% when excluding fluctuating foreign currency exchange rates).
Current wording
Selling and Administrative Expenses. Selling and administrative expenses for the three months ended June 30, 2024 were relatively flat, decreasing $1.0 million compared to the three months ended June 30, 2023 (also flat when excluding fluctuating foreign currency exchange rates). Selling and administrative expenses increased $26.4 million, or 4% (also increasing 4% when excluding fluctuating foreign currency exchange rates), for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Previous wording
Selling and administrative expenses increased approximately 90 basis points as a percentage of net sales in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The overall net increase in selling and administrative expenses primarily reflects increases in personnel costs, including teammate benefits and depreciation and amortization expenses of $14.6 million and $8.0 million, respectively, year over year. The increase in personnel costs reflects an increase in overall teammate headcount from our SADA and Amdaris acquisitions and the impact of merit increases. The increase in depreciation and amortization expenses reflects higher amortization of intangible assets associated with the SADA and Amdaris acquisitions. We incurred transformation costs in the current and prior year periods of $2.3 million and $4.0 million, respectively, however, these costs are unique in nature and are not expected to recur in the longer term.
Current wording
Selling and administrative expenses increased approximately 100 basis points as a percentage of net sales in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The overall net increase in selling and administrative expenses primarily reflects increases in personnel costs, including teammate benefits, depreciation and amortization expenses and legal and professional expenses of $19.5 million, $17.7 million and $5.3 million, respectively, year over year. The increase in personnel costs reflects an increase in overall teammate headcount from our acquisitions and the impact of merit increases. The increase in depreciation and amortization expenses reflects higher amortization of intangible assets associated with the SADA, Infocenter and Amdaris acquisitions. The increase in legal and professional expenses reflects an increase in consulting fees incurred in the current year period. We also incurred transformation costs in the current and prior year periods of $7.9 million and $10.3 million, respectively, however, these costs are unique in nature and are not expected to recur in the longer term. These increases were partially offset by a net decrease in other expenses due to net gains of $24.2 million recognized on the revaluation of the SADA and Amdaris acquisition earnout liabilities and the resulting decreases in the fair values of the potential earnout payments.
Previous wording
Severance and Restructuring Expenses. During the three months ended March 31, 2024, we recorded severance and restructuring expenses of approximately $2.2 million. Comparatively, during the three months ended March 31, 2023, we recorded severance and restructuring expenses of approximately $3.8 million. The charges in both periods primarily related to a realignment of certain roles and responsibilities.
Current wording
Severance and Restructuring Expenses. During the three months ended June 30, 2024, we recorded severance and restructuring expenses, net of adjustments, of approximately $4.9 million. Comparatively, during the three months ended June 30, 2023, we recorded severance and restructuring expenses of approximately $3.8 million. The charges in both periods primarily related to a realignment of certain roles and responsibilities. During the three months ended June 30, 2023, we also recorded a gain on sale of property due to restructuring of $7.6 million, with no comparable activity in the current year period.
Previous wording
Acquisition and Integration Related Expenses. During the three months ended March 31, 2024, we recorded acquisition and integration related expenses of approximately $1.3 million. During the three months ended March 31, 2023, we had no significant comparable activity. As the Company executes its acquisition strategy, we expect to incur additional acquisition and integration related expenses.
Current wording
Acquisition and Integration Related Expenses. During the three months ended June 30, 2024, we recorded acquisition and integration related expenses of approximately $0.2 million. During the three months ended June 30, 2023, we recorded acquisition and integration related expenses of approximately $0.1 million. As the Company executes its acquisition strategy, we expect to incur additional acquisition and integration related expenses.
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Current report — wording carried from elsewhere
this information excluding the effects of fluctuating foreign currency exchange rates provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. In computing the changes in amounts and percentages, we compare the current period amount as translated into U.S. dollars under the applicable accounting standards to the prior period amount in local currency translated into U.S. dollars utilizing the weighted average translation rate for the current period. The performance measures excluding the effects of fluctuating foreign currency exchange rates should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
Current report — wording carried from elsewhere
•The increase in services net sales was primarily due to higher sales of cloud solution offerings, including from SADA, which we acquired on December 1, 2023.
Current report — wording carried from elsewhere
•The increase in services net sales was primarily due to higher sales of cloud solution offerings, including from SADA, partially offset by a decline in software maintenance.
Current report — wording carried from elsewhere
•The increase in services net sales was primarily due to higher volume sales of Insight Delivered services and an increase in fees for cloud solutions.
Current report — wording carried from elsewhere
•A net increase in services margin of 180 basis points compared to the same period in the prior year.
Current report — wording carried from elsewhere
•The increase in services margin reflects an increase in fees for cloud solutions and an increase in margin contribution from Insight Core services.
Current report — wording carried from elsewhere
•The increase in services margin is primarily the result of increased fees for cloud solutions and increased margin contribution from Insight Core Services, including from Amdaris.
Current report — wording carried from elsewhere
•The increase in product margin is primarily the result of sales of hardware at higher margins than in the same period in the prior year.
Current report — wording carried from elsewhere
•A net increase in services margin of 407 basis points, partially offset by a contraction in product margin of 44 basis points.
Current report — wording carried from elsewhere
•Our cash conversion cycle is impacted by netted costs that we apply to our services net sales to appropriately record net sales that we earn as an agent. These netted costs, while excluded from both net sales and cost of goods sold, are processed and applied to accounts receivable and accounts payable in each reporting period.
Current report — wording carried from elsewhere
•The Senior Notes are subject to certain events of default and certain acceleration clauses. As of June 30, 2024, no such events have occurred.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•During the three months ended March 31, 2023, we had net repayments under our ABL facility that decreased our outstanding long-term debt balance by $123.8 million.