INSIGHT ENTERPRISES INC
For the period ended Dec 31, 2024. Filed Feb 14, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 14, 2025
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-K
Period ended 2023-12-31; filed 2024-02-22.
0001628280-24-006391
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-14.
0001628280-25-005817
ITEM 7. 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 177 previous paragraphs and 191 current paragraphs.
86 unchanged; 75 reworded; 27 added; 16 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 10 previous and 14 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 (27)
Current report
•In May 2024, we acquired Infocenter to strengthen our digital transformation capabilities leveraging their deep expertise in ServiceNow’s comprehensive suite of capabilities.
Current report
•Net sales of $8.7 billion decreased 5% compared to 2023.
Current report
•Gross profit of $1.8 billion increased 6% compared to 2023.
Current report
•Earnings from operations decreased to $388.6 million in 2024, a decrease of 7% compared to the prior year, which represented 4.5% of net sales.
Current report
•severance and restructuring expenses, net of $25.0 million, $18.6 million net of tax;
Current report
•acquisition and integration related expenses of $2.7 million, $2.5 million net of tax; and
Current report
In discussing financial results for 2024 and 2023, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with GAAP. When referring to non-GAAP measures, the Company refers to them as “Adjusted.” See the "Use of Non-GAAP Financial Measures" section below for additional information and a reconciliation of such non-GAAP measures to the most directly comparable GAAP financial measures.
Current report
•The increase in services net sales was primarily due to higher sales of cloud solution offerings including from SADA and an increase in sales of Insight Delivered services from SADA and Infocenter, partially offset by declines in sales of Insight Delivered services from our organic business and in software maintenance. Our North America organic business excludes SADA, which we acquired on December 1, 2023 and excludes Infocenter, which we acquired on May 1, 2024.
Current report
•The increase in software net sales was primarily due to a significant multiyear transaction in the first quarter, partially offset by changes in certain vendor relationships (shifting from a principal to agent role), as well as the continued migration of on-premise software to cloud solutions, in each case, reported net in services net sales.
Current report
•The decrease in software net sales was primarily due to lower volume of sales to large enterprise and public sector clients and also reflects changes in certain vendor relationships.
Current report
•The increase in services net sales was due to higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category and increased sales of Insight Delivered services.
Current report
North America’s earnings from operations decreased 12%, or $43.0 million, year to year, in 2024 compared to 2023. As a percentage of net sales, earnings from operations decreased by approximately 40 basis points to 4.5%. The decrease in earnings from operations was primarily driven by increases in selling and administrative expenses and severance and restructuring expenses, partially offset by an increase in gross profit and a decrease in acquisition and integration related expenses.
Current report
EMEA’s earnings from operations increased 21% (increasing 20% excluding the effects of fluctuating foreign currency exchange rates), or $8.1 million, year over year, in 2024 compared to 2023. As a percentage of net sales, earnings from operations increased by approximately 90 basis points to 3.3%. The increase in earnings from operations was primarily driven by increases in gross profit and a decrease in acquisition and integration related expenses, partially offset by increases in selling and administrative expenses and severance and restructuring expenses.
Current report
North America’s Adjusted earnings from operations decreased 1%, or $2.4 million, year to year, in 2024 compared to 2023. As a percentage of net sales, Adjusted earnings from operations increased by approximately 30 basis points to 6.0%. The decrease in Adjusted earnings from operations was primarily driven by increases in selling and administrative expenses, partially offset by an increase in gross profit.
Current report
EMEA’s Adjusted earnings from operations increased 18% (increasing 16% excluding the effects of fluctuating foreign currency exchange rates), or $8.4 million, year over year, in 2024 compared to 2023. As a percentage of net sales, Adjusted earnings from operations increased by approximately 100 basis points to 4.0%. The increase in Adjusted earnings from operations was primarily driven by increases in gross profit, partially offset by an increase in selling and administrative expenses.
Current report
Non-Operating Expense (Income).
Current report
Use of Non-GAAP Financial Measures
Current report
Adjusted non-GAAP earnings from operations exclude (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, and (vii) certain third-party data center service outage related expenses and recoveries, as applicable. Adjusted non-GAAP earnings from operations is used by the Company and its management to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare the Company’s results to those of the Company’s competitors. We believe that this non-GAAP financial measure is useful to investors because it allows for greater transparency, facilitates comparisons to prior periods and to the Company’s competitors’ results, and assists in forecasting performance for future periods. The non-GAAP financial measure is not prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Current report
•Our primary uses of cash during 2024 were to fund the acquisition of Infocenter, repay debt, including principal upon conversion of a portion of the Convertible Notes, fund repurchases of our common stock and to pay earnouts and other acquisition related payments.
Current report
•We issued $500.0 million in principal amount of Senior Notes, which we used to pay down a portion of our borrowings under our ABL facility.
Current report
•The impact to DPOs of netting on certain revenue streams (agent net revenue) that flow through accounts payable on a gross basis while flowing through our income statement on a net basis including a significant agency transaction that based on its terms had not cleared by quarter end as well as changes in vendor mix;
Current report
•the impact to DSOs of netting on certain revenue streams (agent net revenue) that flow through accounts receivable on a gross basis while flowing through our income statement on a net basis including a significant agency transaction that based on its terms had not cleared by quarter end.
Current report
•We paid $265.0 million to acquire Infocenter on May 1, 2024, net of cash and cash equivalents acquired of $5.1 million. Additionally, we paid $5.2 million, net of cash and cash equivalents acquired, for an entity in our EMEA segment, on July 1, 2024.
Current report
•In May 2024, we issued $500.0 million in principal amount of Senior Notes, which we used to pay down a portion of our borrowings under our ABL facility.
Current report
•We expect to partially settle the warrants associated with the Convertible Notes in cash in the first half of 2025.
Current report
•contingent consideration (earnout payments) associated with our acquisition of Infocenter, up to a maximum of $106.3 million, payable upon certain defined contingencies being met for the years ended April 30, 2025 and April 30, 2026 that would be paid in 2025 and 2026, respectively;
Current report
•$500.0 million outstanding under our Senior Notes maturing in 2032; and
Removed paragraphs (16)
Previous report
•In December 2023, we acquired SADA to strengthen our digital transformation capabilities and accelerate the growth of our cloud services and solutions.
Previous report
•In August 2023, we acquired Amdaris to support our EMEA services and solution offerings.
Previous report
•Net sales of $9.2 billion decreased 12% compared to 2022.
Previous report
•Gross profit of $1.7 billion increased 2% compared to 2022.
Previous report
•Earnings from operations increased to $419.8 million in 2023, an increase of 1% compared to the prior year, which represented 4.6% of net sales.
Previous report
•severance and restructuring expenses of $4.2 million, $3.2 million net of tax; and
Previous report
•The increase in software net sales was primarily due to higher volume of software licensing. This increase was partially offset by the continued trend toward higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category.
Previous report
•The increase in services net sales was primarily due to the continued trend toward higher sales of cloud solution offerings, including net sales attributable to SADA, which we acquired in December 2023, partially offset by decreases in Insight Delivered services net sales.
Previous report
•The decrease in software net sales was due to the continued trend toward higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category.
Previous report
•The increase in services net sales was due to higher volume of Insight Delivered services and higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category.
Previous report
EMEA’s earnings from operations decreased 14% (also decreasing 14% excluding the effects of fluctuating foreign currency exchange rates), or $6.1 million, year to year, in 2023 compared to 2022. As a percentage of net sales, earnings from operations decreased by approximately 20 basis points to 2.4%. The decrease in earnings from operations was primarily driven by increases in selling and administrative expenses and acquisition and integration related expenses, partially offset by an increase in gross profit.
Previous report
Non-Operating (Income) Expense.
Previous report
•Our primary uses of cash during 2023 were to fund the strategic acquisitions of SADA and Amdaris, to repurchase shares of our common stock, to repay our inventory financing facilities and to purchase property and equipment.
Previous report
•the impact to DPOs of the SADA and Amdaris acquisitions combined with changes in vendor mix away from discount vendors;
Previous report
•the impact to DSOs of the SADA and Amdaris acquisitions combined with an increase in other receivables including multi-year transactions.
Previous report
•We expect to repurchase shares of our common stock in 2024 under our share repurchase plan to cover the dilutive impact of stock-based awards vesting.
Reworded paragraphs (75)
Previous wording
Today, every business is a technology business. We help our clients accelerate their digital journey to modernize their businesses and maximize the value of technology. We serve these clients in North America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”). As a Fortune 500-ranked solutions integrator, we enable secure, end-to-end transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 35 years of broad IT expertise. We amplify our solutions and services with global scale, local expertise and our e-commerce experience, enabling our clients to realize their digital ambitions in multiple ways. Our offerings in North America and certain countries in EMEA and APAC include hardware, software and services, including cloud solutions. Our offerings in the remainder of our EMEA and APAC segments consist largely of software and certain software-related services and cloud solutions.
Current wording
Today, every business is a technology business. We help our clients accelerate their digital journey to modernize their businesses and maximize the value of technology. We serve these clients in North America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”). As a Fortune 500-ranked solutions integrator, we enable secure, end-to-end transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 36 years of broad IT expertise. We amplify our solutions and services with global scale, local expertise and our e-commerce experience, enabling our clients to realize their digital ambitions in multiple ways. Our offerings in North America and certain countries in EMEA and APAC include hardware, software and services, including cloud solutions. Our offerings in the remainder of our EMEA and APAC segments consist largely of software and certain software-related services and cloud solutions.
Previous wording
•We reported record gross profit of $1.7 billion and record gross margin of 18.2%, primarily driven by expansion in North America.
Current wording
•We reported gross profit of $1.8 billion and record gross margin of 20.3%, primarily driven by margin expansion in North America.
Previous wording
•We generated cash flows from operations of $619.5 million.
Current wording
•We generated cash flows from operations of $632.8 million.
Previous wording
•Consolidated gross margin expanded approximately 250 basis points to a record 18.2% of net sales in 2023. This increase reflects expansion in margin from services net sales, primarily from growth in cloud solution offerings, and an expansion in product margin.
Current wording
•Consolidated gross margin expanded approximately 210 basis points to a record 20.3% of net sales in 2024. This increase reflects expansion in margin from services net sales, primarily from growth in Insight Delivered services and cloud solution offerings.
Previous wording
•Our effective tax rate in 2023 was 25.6%, which compares to our effective tax rate of 25.1% in 2022.
Current wording
•Our effective tax rate in 2024 was 25.0%, which compares to our effective tax rate of 25.6% in 2023.
Previous wording
•Net earnings and diluted net earnings per share were $281.3 million and $7.55, respectively, in 2023. In 2022, we reported net earnings of $280.6 million and diluted net earnings per share of $7.66.
Current wording
•Net earnings and diluted net earnings per share were $249.7 million and $6.55, respectively, in 2024. In 2023, we reported net earnings of $281.3 million and diluted net earnings per share of $7.55.
Previous wording
•the repurchase of approximately 1.1 million shares of the Company’s common stock for an aggregate cost of $107.9 million.
Current wording
•the repurchase of approximately 1.0 million shares of the Company’s common stock for an aggregate cost of $200.0 million.
Previous wording
Throughout the “Overview” and “Results of Operations” sections of “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 these 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 “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 also considered to be non-GAAP measures. We believe providing this information excluding the effects of fluctuating foreign currency exchange rates provides valuable supplemental information to investors regarding our underlying business and results of operations, consistent with how we, including our management, 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.
Previous wording
During 2023, we generated $619.5 million of cash from operating activities and primarily utilized cash for strategic acquisitions and to repurchase shares of our common stock. We had net borrowings of $299.6 million under our senior secured revolving credit facility (the “ABL facility”). We ended the year with $268.7 million of cash and cash equivalents and $940.5 million of debt outstanding under our long-term debt facilities, including $348.0 million related to the Notes that are classified as a current liability at December 31, 2023.
Current wording
During 2024, we generated $632.8 million of cash from operating activities and primarily utilized cash for strategic acquisitions, to repurchase shares of our common stock, to repay debt and for payment of earnouts and other acquisition related payments. We had net repayments of $554.1 million under our ABL facility and issued $500.0 million in principal amount of Senior Notes. We ended the year with $259.2 million of cash and cash equivalents and $864.1 million of debt outstanding under our long-term debt facilities, including $332.9 million related to the Convertible Notes that are classified as a current liability at December 31, 2024.
Previous wording
Supply constraints that have had an industry-wide impact since the beginning of 2020 continued to ease 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 historic levels. However, we continue to see a general slowdown in our clients' decision making, which we believe will continue in the near term. In addition, inflation resulted in higher interest rates on all of our variable rate facilities when compared to 2022 and we expect these higher rates will continue into 2024. We are actively monitoring changes to the global macroeconomic environment, including those impacting our supply chain and interest rates, and assessing the potential impacts these challenges may have on our current results, financial condition and liquidity. We are also mindful of the potential impact these conditions could have on our clients, partners and prospects for 2024 and beyond.
Current wording
Inflation contributed to higher interest rates on all of our variable rate facilities in 2024 compared to 2023. While these interest rates are expected to eventually decrease, we continue to anticipate higher than historical rates throughout most of 2025. We are actively monitoring changes to the global macroeconomic environment, including those impacting our supply chain and interest rates, and assessing the potential impacts these challenges may have on our current results, financial condition and liquidity. We are also mindful of the potential impact these conditions could have on our clients, partners and prospects in 2025 and beyond.
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 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 this report.
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 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 effectively shift our focus and efficiently 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 and do change significantly in the amounts made available and the requirements year over year,” in Part I, Item 1A of this report.
Previous wording
Our results of operations include the results of Hanu, Amdaris and SADA from their respective acquisition dates.
Current wording
Our results of operations include the results of Amdaris, SADA and Infocenter from their respective acquisition dates.
Previous wording
Net Sales. Net sales decreased 12%, or $1.3 billion, in 2023 compared to 2022. Net sales of products (hardware and software) decreased 15%, year to year, while net sales of services increased 4%, year over year, in 2023 compared to 2022. Our net sales by operating segment for 2023 and 2022 were as follows (dollars in thousands):
Current wording
Net Sales. Net sales decreased 5%, or $0.5 billion, in 2024 compared to 2023. Net sales of products (hardware and software) decreased 8%, year to year, while net sales of services increased 9%, year over year, in 2024 compared to 2023. Our net sales by operating segment for 2024 and 2023 were as follows (dollars in thousands):
Previous wording
Net sales in North America decreased 13%, or $1.1 billion, in 2023 compared to 2022. This net decrease reflects a decrease in hardware net sales, partially offset by increases in software and services net sales. Net sales of hardware decreased 22%, year to year. Net sales of software and services increased 7% and 2%, respectively, year over year. The net decrease year to year was primarily the result of the following:
Current wording
Net sales in North America decreased 4%, or $327.8 million, in 2024 compared to 2023. This net decrease reflects a decrease in hardware net sales, partially offset by increases in software and services net sales. Net sales of hardware decreased 10%, year to year. Net sales of software and services increased 3% and 7%, respectively, year over year. The changes were primarily the result of the following:
Previous wording
•The decrease in hardware net sales was due to lower volume of sales to large enterprise and corporate clients. This decrease reflects lower sales of devices throughout the year and decreases in infrastructure sales in the latter part of 2023. We believe these decreases reflect client decisions around timing of device refreshes and investments in infrastructure in response to challenges in the broader macroeconomic environment. We expect this trend could continue into the second half of 2024.
Current wording
•The decrease in hardware net sales was due to lower volume of sales to large enterprise and corporate clients due to lower demand. This decrease reflects lower sales of devices and infrastructure. We believe these decreases reflect client decisions around timing of device refreshes and investment responses to challenges in the broader macroeconomic environment. We expect this trend could continue into 2025.
Previous wording
Net sales in EMEA decreased 9% (also decreased 9% excluding the effects of fluctuating foreign currency exchange rates), or $148.9 million, in 2023 compared to 2022. This net decrease reflects a decrease in hardware and software net sales, partially offset by an increase in services net sales. Net sales of hardware and software were down 16% and 8%, respectively, year to year, partially offset by an increase in services net sales of 16%, year over year. The changes were primarily the result of the following:
Current wording
Net sales in EMEA decreased 10% (decreased 11% excluding the effects of fluctuating foreign currency exchange rates), or $149.6 million, in 2024 compared to 2023. This net decrease reflects a decrease in software and hardware net sales, partially offset by an increase in services net sales. Net sales of software and hardware were down 20% and 8%, respectively, year to year, partially offset by an increase in services net sales of 23%, year over year. The changes were primarily the result of the following:
Previous wording
•The decrease in hardware net sales was primarily due to lower sales to public sector, large enterprise and corporate clients.
Current wording
•The decrease in hardware net sales was primarily due to lower volume of sales to public sector clients due to lower demand.
Previous wording
•The increase in services net sales was due to increased sales of Insight Delivered services, including from Amdaris, which we acquired in August 2023, and higher sales of cloud solution offerings.
Current wording
•The increase in services net sales was due to increased sales of Insight Delivered services from Amdaris, which we acquired in August 2023, partially offset by declines in sales of Insight Delivered services from our EMEA organic business. Our EMEA organic business primarily excludes Amdaris.
Previous wording
Net sales in APAC decreased 2% (increased 1% excluding the effects of fluctuating foreign currency rates), or $4.4 million, in 2023 compared to 2022. Net sales of hardware decreased 24% year to year, partially offset by increases in software and services net sales of 2% and 8%, respectively, year over year. The net changes were primarily the result of the following:
Current wording
Net sales in APAC increased 1% (increased 2% excluding the effects of fluctuating foreign currency rates), or $3.2 million, in 2024 compared to 2023. Net sales of services and software increased 8% and 5%, respectively, year over year, partially offset by a decrease in hardware net sales of 19% year to year. The net changes were primarily the result of the following:
Previous wording
•The increase in software net sales was primarily due to higher volume of sales to corporate and public sector clients, partially offset by the continued trend toward higher sales of cloud solution offerings.
Current wording
•The increase in software net sales was primarily due to higher volume of sales to enterprise and public sector clients, partially offset by the continued migration of on-premise software toward higher sales of cloud solution offerings.
Previous wording
Gross Profit. Gross profit increased 2%, or $33.0 million, in 2023 compared to 2022, with gross margin increasing approximately 250 basis points to 18.2% of net sales. Our gross profit and gross profit as a percent of net sales by operating segment for 2023 and 2022 were as follows (dollars in thousands):
Current wording
Gross Profit. Gross profit increased 6%, or $96.5 million, in 2024 compared to 2023, with gross margin increasing approximately 210 basis points to 20.3% of net sales. Gross profit and gross margin also increased in each of our operating segments in 2024 compared to 2023. Our gross profit and gross profit as a percent of net sales by operating segment for 2024 and 2023 were as follows (dollars in thousands):
Previous wording
North America’s gross profit increased 1%, or $17.6 million, in 2023 compared to 2022. As a percentage of net sales, gross margin expanded by approximately 250 basis points year over year. The year over year net increase in gross margin was primarily attributable to the following:
Current wording
North America’s gross profit increased 4%, or $56.0 million, in 2024 compared to 2023. As a percentage of net sales, gross margin expanded by approximately 170 basis points year over year. The year over year net increase in gross margin was primarily attributable to the following:
Previous wording
•A net increase in product margin of 50 basis points year over year. This increase was primarily due to higher margins on both hardware and software net sales compared to the prior year, partially offset by a decrease in partner funding.
Current wording
•A net increase in product margin of 15 basis points year over year. This increase was primarily due to slightly higher margins on software net sales compared to the prior year.
Previous wording
•An expansion in services margin year over year of 216 basis points was due to higher margins generated from increased cloud solution offerings, including margin contributed by SADA, software maintenance and on Insight Core services, (consisting of Insight Delivered and managed services).
Current wording
•An expansion in services margin year over year of 149 basis points was due to higher margins generated from increased cloud solution offerings, including margin expansion contributed by SADA and from increased sales of Insight Delivered services from SADA and Infocenter.
Previous wording
EMEA’s gross profit increased 5% (increased 4% excluding the effects of fluctuating foreign currency exchange rates), or $12.7 million, in 2023 compared to 2022. As a percentage of net sales, gross margin expanded 220 basis points to 16.6%. The year over year net increase in gross margin was primarily attributable to the following:
Current wording
EMEA’s gross profit increased 13% (increased 11% excluding the effects of fluctuating foreign currency exchange rates), or $33.2 million, in 2024 compared to 2023. As a percentage of net sales, gross margin expanded 410 basis points to 20.7%. The year over year net increase in gross margin was primarily attributable to the following:
Previous wording
•An expansion in services margin year over year of 169 basis points was due to higher margins generated from increased cloud solution offerings and on Insight Core services from Amdaris.
Current wording
•An expansion in services margin year over year of 321 basis points primarily due to higher margins from increased sales of Insight Delivered services from Amdaris.
Previous wording
•A net increase in product margin of 41 basis points year over year. This increase was primarily due to higher margins on both hardware and software net sales compared to the prior year. The expanded margins on hardware are due in part to the decline in lower margin devices and also reflect the results of profitability and pricing initiatives started in 2022.
Current wording
•A net increase in product margin of 90 basis points year over year. This increase was primarily due to higher margins on hardware compared to the prior year.
Previous wording
APAC’s gross profit increased 4% (increased 8% excluding the effects of fluctuating foreign currency exchange rates), or $2.6 million, in 2023 compared to 2022. As a percentage of net sales, gross margin increased by approximately 170 basis points year over year. The expanded gross margin for APAC in 2023 compared to 2022 was due primarily to changes in sales mix to services net sales, including Insight Core services at higher margins than product net sales.
Current wording
APAC’s gross profit increased 11% (increased 12% excluding the effects of fluctuating foreign currency exchange rates), or $7.3 million, in 2024 compared to 2023. As a percentage of net sales, gross margin increased by approximately 270 basis points year over year. The expanded gross margin for APAC in 2024 compared to 2023 was due primarily to changes in sales mix to services net sales, including Insight Delivered services that are sold at higher margins than product net sales.
Previous wording
Our overall gross margins expanded in 2023 compared to 2022, as expected. We believe this trend could continue into future periods as we focus on selling solutions and increasing our services net sales, including cloud solution offerings.
Current wording
Our overall gross margins expanded in 2024 compared to 2023, as expected. We believe this trend could continue into future periods as we focus on selling solutions and increasing our services net sales. As a result of certain partner program changes, we believe we may not experience significant growth in cloud gross profit in 2025 compared to 2024.
Previous wording
Selling and Administrative Expenses. Selling and administrative expenses increased $19.6 million in 2023 compared to 2022. Selling and administrative expenses also increased approximately 180 basis points as a percentage of net sales in 2023 compared to 2022. The overall net increase in expenses reflects a $7.3 million increase in personnel costs, including teammate benefits, and a $19.8 million increase in other expenses, year over year. The increase in personnel costs reflects increases in overall teammate headcount from the acquisitions of Amdaris and SADA. The increase in other expenses is partially due to costs incurred related to a third-party data center service outage, net of recoveries of $5.0 million and an increase of $4.2 million in transformation costs incurred and paid to third parties in 2023 compared to 2022. On July 29, 2023, a third-party data center that hosts network environments for certain Insight managed services clients, experienced a security incident that resulted in a service outage at the data center. The incident did not impact any of Insights' information systems, credentials, or data. To support our clients that were impacted, the Company paid for certain equipment and services required to resolve the outage. Transformation costs are costs we incur to transform our business to help us achieve our strategic objectives, including becoming a leading solutions integrator. We expect to continue to incur further transformation costs in 2024; however, these costs are unique in nature and are not expected to recur in the longer term. Depreciation and amortization expense also increased $6.2 million, year over year, primarily as a result of the Amdaris and SADA acquisitions. These increases were partially offset by decreases in legal and professional fees of $8.3 million and marketing costs of $3.1 million.
Current wording
Selling and Administrative Expenses. Selling and administrative expenses increased $106.9 million in 2024 compared to 2023. Selling and administrative expenses also increased approximately 190 basis points as a percentage of net sales in 2024 compared to 2023. The overall net increase in expenses reflects an increase of $43.9 million in personnel costs, including teammate benefits, an increase in depreciation and amortization expense of $35.5 million, and a net increase in other expenses of $15.5 million, year over year. The increase in personnel costs reflects higher teammate headcount for the majority of 2024 from the acquisitions of Amdaris, SADA and Infocenter, partially offset by reductions in the fourth quarter of 2024, combined with the impact of merit increases. The increase in depreciation and amortization expenses were also the result of the Amdaris, SADA and Infocenter acquisitions. The net increase in other expenses reflects increases in service agreement expenses and an increase in transformation costs. We incurred transformation costs in 2024 of $18.4 million compared to $16.6 million in 2023. These costs are unique in nature and are not expected to recur in the longer term. These increases in other expenses were partially offset by recoveries in excess of costs incurred of $2.1 million in 2024 related to a third-party data center service outage compared to costs incurred in excess of recoveries of $5.0 million in the prior year combined with net gains of $7.8 million from the change in the revaluation of earnout liabilities, with no such activity in the prior year. On July 29, 2023, a third-party data center that hosts network environments for certain Insight managed services clients, experienced a security incident that resulted in a service outage at the data center. The incident did not impact any of Insight's information systems, credentials, or data. To support our clients that were impacted, the Company paid for certain equipment and services required to resolve the outage.
Previous wording
Severance and Restructuring Expenses, Net. During 2023, we recorded severance expense, net of adjustments, totaling $12.9 million. These expenses were partially offset by net gains on the sale of properties due to restructuring of $6.8 million. During 2022, we recorded severance expense, net of adjustments, totaling $4.2 million.
Current wording
Severance and Restructuring Expenses, Net. During 2024, we recorded severance and restructuring expenses, net of adjustments, totaling $34.0 million. The increase compared to 2023 was primarily due to actions taken to reduce both our teammate count, particularly non-technical resources, as well as strategic reductions in physical locations within the United States. These expenses were partially offset by net gains on the sale of properties due to restructuring of $2.4 million. During 2023, we recorded severance expense, net of adjustments, totaling $12.9 million. These expenses were partially offset by net gains on the sale of properties due to restructuring of $6.8 million.
Previous wording
Acquisition and Integration-related Expenses. During 2023, we incurred $7.4 million in direct third-party costs primarily related to the acquisitions of SADA and Amdaris. During 2022, we incurred $2.0 million in direct third-party costs primarily related to the acquisition of Hanu. See Note 20 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of our acquisitions.
Current wording
Acquisition and Integration-related Expenses. During 2024, we incurred $2.7 million in direct third-party costs primarily related to the acquisition of Infocenter. During 2023, we incurred $7.4 million in direct third-party costs primarily related to the acquisitions of SADA and Amdaris. See Note 20 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of our acquisitions.
Previous wording
North America’s earnings from operations increased 3%, or $11.6 million, year over year, in 2023 compared to 2022. As a percentage of net sales, earnings from operations increased by approximately 80 basis points to 4.9%. The increase in earnings from operations was primarily driven by an increase in gross profit in excess of increases in selling and administrative expenses, severance and restructuring expenses and acquisition and integration related expenses.
Current wording
APAC’s earnings from operations increased 19% (increasing 20% excluding the effects of fluctuating foreign currency exchange rates), or $3.7 million, year over year, in 2024 compared to 2023. As a percentage of net sales, earnings from operations increased by approximately 150 basis points to 10.0%. The increase in earnings from operations reflects an increase in gross profit, partially offset by increases in selling and administrative expenses, severance and restructuring expenses and acquisition and integration related expenses.
Previous wording
Earnings from Operations. Earnings from operations increased 1%, or $6.1 million, year over year, in 2023 compared to 2022. Our earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for 2023 and 2022 (dollars in thousands):
Current wording
Adjusted Earnings from Operations. Adjusted earnings from operations increased 2%, or $10.2 million, year over year, in 2024 compared to 2023. Our Adjusted earnings from operations and Adjusted earnings from operations as a percentage of net sales by operating segment were as follows for 2024 and 2023 (dollars in thousands):
Previous wording
APAC’s earnings from operations increased 3% (increasing 6% excluding the effects of fluctuating foreign currency exchange rates), or $0.6 million, year over year, in 2023 compared to 2022. As a percentage of net sales, earnings from operations increased by approximately 40 basis points to 8.5%. The increase in earnings from operations reflects an increase in gross profit, partially offset by an increase in selling and administrative expenses in 2023 compared to 2022.
Current wording
APAC’s Adjusted earnings from operations increased 21% (increasing 22% excluding the effects of fluctuating foreign currency exchange rates), or $4.3 million, year over year, in 2024 compared to 2023. As a percentage of net sales, Adjusted earnings from operations increased by approximately 170 basis points to 10.5%. The increase in Adjusted earnings from operations reflects an increase in gross profit, partially offset by an increase in selling and administrative expenses.
Previous wording
Interest Expense, net. Interest expense, net primarily relates to borrowings under our financing facilities and imputed interest under our inventory financing facilities and the Notes, partially offset by interest income generated from interest earned on cash and cash equivalent bank balances. Interest expense increased 4%, or $1.6 million, in 2023 compared to 2022 primarily due to higher interest rates under our ABL facility. This was partially offset by lower average daily balances under our ABL facility, higher interest income earned in 2023 and decreased imputed interest under our inventory financing facilities. Imputed interest under our inventory financing facilities decreased $2.2 million due to lower average daily balances in 2023 compared to 2022. For a description of our various financing facilities, see Notes 7 and 8 to our Consolidated Financial Statements in Part II, Item 8 of this report.
Current wording
Interest Expense, net. Interest expense, net primarily relates to borrowings under our financing facilities and imputed interest under our inventory financing facilities, the Convertible Notes and the Senior Notes, partially offset by interest income generated from interest earned on cash and cash equivalent bank balances. Interest expense increased 41%, or $19.7 million, in 2024 compared to 2023. This was primarily due to the issuance of the Senior Notes and higher loan balances under our ABL facility. This was partially offset by higher interest income earned in 2024 and decreased imputed interest under our inventory financing facilities. Imputed interest under our inventory financing facilities decreased $3.6 million due to lower average daily balances in 2024 compared to 2023. For a description of our various financing facilities, see Notes 7 and 8 to our Consolidated Financial Statements in Part II, Item 8 of this report.
Previous wording
Other Expense (Income), Net. Other expense (income), net, consists primarily of foreign currency exchange gains and losses. Foreign currency exchange gains and losses result from foreign currency transactions, including foreign currency derivative contracts and intercompany balances that are not considered long-term in nature. The changes in net foreign currency exchange gains/losses are due primarily to the underlying changes in the applicable exchange rates, partially mitigated by our use of foreign exchange forward contracts to offset the effects of fluctuations in foreign currencies on certain of our non-functional currency assets and liabilities.
Current wording
Other (Income) Expense, Net. Other (income) expense, net, consists primarily of foreign currency exchange gains and losses. Foreign currency exchange gains and losses result from foreign currency transactions, including foreign currency derivative contracts and intercompany balances that are not considered long-term in nature. The changes in net foreign currency exchange gains/losses are due primarily to the underlying changes in the applicable exchange rates, partially mitigated by our use of foreign exchange forward contracts to offset the effects of fluctuations in foreign currencies on certain of our non-functional currency assets and liabilities.
Previous wording
Income Tax Expense. Our effective tax rate for 2023 was 25.6% compared to 25.1% in 2022. The increase in the tax rate was primarily due to reduced foreign and research tax credit benefits available in 2023 as compared to 2022 and the effect of valuation allowances on certain foreign loss carryforwards. These increases were partially offset by the release of reserves related to tax years whose statute expired during the current year.
Current wording
Income Tax Expense. Our effective tax rate for 2024 was 25.0% compared to 25.6% in 2023. The decrease in the tax rate was primarily due to additional research and transferable energy tax credit benefits available in 2024 as compared to 2023.
Previous wording
The effective tax rate in 2023 was higher than the federal statutory rate of 21.0% primarily due to state income taxes and higher taxes on earnings in foreign jurisdictions. These increases were offset partially by research tax credits. See Note 11 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of income tax expense.
Current wording
The effective tax rate in 2024 was higher than the federal statutory rate of 21.0% primarily due to state income taxes and higher taxes on earnings in foreign jurisdictions. These increases were offset partially by research and transferable energy tax credits. See Note 11 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of income tax expense.
Previous wording
•Operating activities generated $619.5 million in cash in 2023, compared to $98.1 million in 2022.
Current wording
•Operating activities generated $632.8 million in cash in 2024, compared to $619.5 million in 2023.
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Supply constraints that have had an industry-wide impact since the beginning of 2020 eased in the second half of 2023. We believe that any 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 report — wording carried from elsewhere
Earnings from Operations. Earnings from operations decreased 7%, or $31.2 million, year to year, in 2024 compared to 2023. Our earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for 2024 and 2023 (dollars in thousands):
Current report — wording carried from elsewhere
•The Senior Notes are subject to certain events of default and certain acceleration clauses. As of December 31, 2024, no such events have occurred.