Executive Summary / Key Takeaways

• Insight Enterprises is strategically transforming into an "AI-first solutions integrator," leveraging its comprehensive IT solutions portfolio and recent acquisitions to capitalize on the burgeoning artificial intelligence market.
• Despite macroeconomic headwinds and significant partner program changes that impacted revenue, the company demonstrated resilience with record gross margins and disciplined expense management, contributing to an 11% increase in adjusted diluted EPS in Q3 2025.
• Strategic acquisitions, including Inspire11 (data and AI services) and Sekuro (cybersecurity), are bolstering Insight's technical capabilities and cross-sell opportunities, with both expected to be EBITDA accretive from day one and EPS accretive within four quarters.
• The company anticipates a stronger second half of 2025 and is positioned for growth in 2026, driven by the normalization of hyperscaler program impacts, a continuing PC refresh cycle, and the scaling of AI projects.
• Key risks include ongoing delays in large enterprise spending and the dynamic nature of partner programs, which Insight is actively mitigating through operational efficiencies, strategic pivots, and a focus on outcome-driven solutions.

The AI-First Imperative: Reshaping the Solutions Integrator Landscape

Insight Enterprises, Inc., a Fortune 500-ranked solutions integrator with a 37-year history, is at the forefront of helping clients accelerate their digital journey and maximize technology value. Operating across North America, EMEA, and APAC, Insight provides a comprehensive portfolio spanning IT hardware, software, and services, including robust cloud solutions. The company's overarching strategy is to evolve into the "leading AI-first solutions integrator," a vision that underpins its operational focus and investment decisions. This strategic pivot is critical in an industry characterized by rapid digital transformation, the pervasive adoption of cloud technologies, and the emergent, transformative power of artificial intelligence and enhanced cybersecurity needs.

The competitive landscape for IT solutions is vast and fragmented, with players ranging from broad distributors like CDW Corporation , TD SYNNEX Corporation , Arrow Electronics, Inc. , and Avnet, Inc. , to hyperscale cloud providers offering in-house capabilities. Insight differentiates itself by offering targeted solutions to specific business problems, delivering rapid results, and earning the right to expand client engagements. This approach resonates with clients seeking tangible outcomes rather than complex, protracted contracts.

Insight's core technological differentiation lies in its comprehensive, full-lifecycle AI services. This includes consulting, implementation, training, governance, and managed services support, all designed to guide clients from AI experimentation to enterprise-scale deployment. The company emphasizes pragmatic AI deployment, focusing on delivering measurable and meaningful business value quickly, thereby transforming traditional time-and-materials models into agile, outcome-driven approaches. This shift is crucial for improving profitability and scalability by decoupling revenue growth from linear headcount increases. Insight is also aggressively adopting AI internally across all disciplines and regions, aiming to become its "best reference case" for clients. The company plans to introduce its "Insight AI offerings" in the coming weeks, highlighting specific AI capabilities, governance, training, and intellectual property to help clients determine ROI and prioritize initiatives. This technological roadmap is foundational to building a competitive moat, securing market leadership, and driving future growth.

Strategic Evolution Through Acquisitions and Partnerships

Insight's journey has been marked by strategic acquisitions that have significantly bolstered its capabilities. In December 2023, the acquisition of SADA enhanced its Google (GOOGL) Cloud Platform (GCP) expertise. This was followed by Infocenter.io in May 2024, a pure-play ServiceNow (NOW) Elite Partner, which strengthened Insight's ability to scale multi-cloud environments. More recently, in October 2025, Insight acquired Inspire11 LLC for approximately $212 million upfront, with potential earnouts up to $66 million. Inspire11, a North America data and AI services consultancy, brings "proven AI delivery accelerators, deep data and analytics expertise, and a results-driven methodology" to deliver measurable ROI from AI technologies. Later that month, Insight signed an agreement to acquire Sekuro Limited for an estimated AUD 130 million at closing, plus up to AUD 122.5 million in earnouts, to significantly expand its cybersecurity capabilities in the APAC region.

These acquisitions are central to Insight's ambition to become an AI-first solutions integrator, increasing its pool of technical resources in security, data, and AI, and driving cross-sell opportunities across its global client base. The company reports that all recent acquisitions are performing "extraordinarily well," and the cross-sell thesis is "working very, very well."

Insight's partner ecosystem is fundamental to its success, with strong relationships with industry leaders like Microsoft , Google, NVIDIA (NVDA), Apple (AAPL), Cisco (CSCO), Dell (DELL), HP (HPQ), Intel (INTC), Lenovo (LNVGY), Broadcom (AVGO), NetApp (NTAP), Pure Storage (PSTG), Databricks, and ESET. These collaborations enhance Insight's capabilities across technology platforms and services, ensuring agility in responding to market demands. The company has received numerous accolades, including Gartner's "Emerging Visionary" in its inaugural Innovation Guide for Generative AI Consulting and Implementation Services. Client success stories, such as developing an AI-powered legal document review platform for a major retail client, optimizing a rental fleet with predictive AI for Thompson Machinery, and implementing an AI-powered architecture for GTT Communications (GTT), underscore Insight's ability to deliver quantifiable business outcomes.

Financial Performance: Resilience Amidst Headwinds

Insight's financial performance in the first nine months of 2025 reflects a challenging macroeconomic environment and significant industry shifts, yet demonstrates underlying resilience and strategic execution. For the three months ended September 30, 2025, consolidated net sales decreased 4% year-over-year to $2.00 billion. This decline was primarily attributed to the netting impact of on-premise software migrating to cloud solutions and changes in certain vendor relationships shifting Insight from a principal to an agent role. Despite this, gross profit remained flat year-over-year at $434.20 million, with gross margin expanding 100 basis points to a record 21.7% of net sales, reflecting a higher margin contribution from services. Net earnings decreased 12% to $50.90 million, primarily due to an increase in interest expense. However, diluted earnings per share increased 7% to $1.62, largely due to a decrease in dilutive shares outstanding.

For the nine months ended September 30, 2025, consolidated net sales decreased 6% to $6.20 billion, and net earnings declined 50% to $105.39 million. Gross profit for the nine-month period decreased 3% to $1.28 billion, while gross margin expanded 70 basis points to 20.7%. Adjusted earnings from operations grew in every geography in Q3 2025, and adjusted SG&A declined 1% due to prudent expense management, including $25 million in annualized reductions from Q4 2024 actions.

Segment-wise, North America net sales decreased 5% in Q3 2025, driven by a 26% decline in software and a 3% decline in services, partially offset by a 2% increase in hardware. EMEA net sales increased 2% (but decreased 3% in constant currency), with services growing 30% and software 2%, while hardware declined 11%. APAC net sales remained flat (up 2% in constant currency), with hardware up 5% and services up 4%, offset by a 7% decline in software.

Cloud gross profit increased 7% in Q3 2025, exceeding expectations, driven by double-digit growth in SaaS and Infrastructure as a Service, despite partner program changes. Excluding these program changes, underlying cloud growth has been in the "higher teens level." Insight Core Services gross profit decreased 3% in Q3 2025, impacted by subdued demand from large enterprise clients. Hardware revenue grew 1% in Q3 2025, marking its third consecutive quarter of growth, with contributions from both infrastructure and devices.

From a liquidity perspective, operating activities provided $150.1 million in cash for the nine months ended September 30, 2025, a decrease from $417.7 million in the prior year, primarily due to lower net earnings and higher hardware net sales. Total debt stood at approximately $1.4 billion as of September 30, 2025, up from $1.1 billion a year ago, mainly due to a drawdown on the ABL facility for acquisitions.

The company has ample liquidity, with $900 million available under its $1.8 billion ABL facility. Capital allocation priorities for the nine months included repaying $333.1 million in Convertible Notes, settling $222 million in Warrants, and repurchasing $151.1 million of common stock. These actions, combined with warrant settlements, reduced the adjusted diluted share count by approximately 2.7 million shares year-to-date, representing about a 10% reduction. Adjusted return on invested capital (ROIC) for the trailing 12 months was 14.8% at the end of Q3 2025, down from 16.3% a year ago, reflecting lower adjusted net income and increased invested capital.

Competitive Landscape: Differentiating in a Fragmented Market

Insight operates in a highly competitive and fragmented IT solutions market, where its "low share position" presents significant growth opportunities. The company's strategy to become an "AI-first solutions integrator" is a key differentiator against both direct and indirect competitors.

Direct competitors like CDW Corporation (CDW), TD SYNNEX Corporation (SNX), Arrow Electronics, Inc. (ARW), and Avnet, Inc. (AVT) offer similar portfolios of IT hardware, software, and services. However, Insight's emphasis on "targeted solutions to specific business problems" and delivering "results fast" sets it apart from more product-focused or logistics-driven models. Insight's integrated solutions, particularly its cloud and AI expertise, provide "significantly greater integration capabilities for cloud and edge computing" compared to some competitors. Its focus on end-to-end IT management and industry-specific solutions can lead to stronger customer loyalty and "superior performance in solution deployment." Insight's "faster innovation cycles" in AI and IoT solutions also position it to capture emerging market opportunities more effectively.

While competitors like CDW may boast more extensive distribution networks and SNX excels in global supply chain capabilities, Insight's strategic acquisitions, such as Inspire11 for data and AI and Sekuro for cybersecurity, are designed to bolster its service depth and technical talent, exploiting potential weaknesses in competitors' service offerings. For instance, Insight's ability to offer "full life cycle AI services, including consulting, implementation, training, governance and managed services support" provides a more holistic approach than competitors primarily focused on product distribution.

Indirect competitors include hyperscale cloud providers (e.g., Amazon Web Services (AMZN), Microsoft (MSFT) Azure) that offer in-house IT capabilities, potentially reducing demand for third-party services. New technologies like edge computing and open-source software also present alternative solutions. Insight addresses these by forming "strategic collaboration agreements with Microsoft, Google, and Amazon Web Services," strengthening its position as a provider of cloud, data, AI, cyber, and intelligent edge solutions. This strategy allows Insight to integrate offerings from these providers into comprehensive solutions, rather than being solely a reseller.

Insight's competitive advantages stem from its integrated solutions, global distribution channels, and deep vendor partnerships. These advantages foster customer loyalty and recurring revenue, while its AI-first strategy aims to enhance efficiency and profitability. However, vulnerabilities include potential dependencies on key suppliers and a narrower focus on certain hardware segments, which could expose it to supply chain disruptions or make it challenging to compete on cost in high-volume hardware distribution against larger players. The high capital requirements, established relationships, and regulatory complexities in the IT solutions industry serve as significant barriers to entry, helping Insight defend its market position.

Outlook and Risks: Charting the Path Forward

Insight's outlook for the remainder of 2025 and into 2026 reflects a strategic pivot amidst persistent macroeconomic uncertainty. For the full year 2025, the company has updated its guidance, now expecting gross profit to be "slightly down from 2024," with gross margin at "approximately 21%." Adjusted diluted earnings per share is projected to be between $9.60 and $9.90. This guidance includes an anticipated $85 million in interest and other expenses, a 25% to 26% effective tax rate, and capital expenditures of approximately $25 million. The average share count for the year is expected to be around 32 million, reflecting the impact of warrant settlements.

Management anticipates that the "growth and profitability will be more heavily weighted towards the second half of the year." This is partly due to the normalization of the approximately $70 million impact from partner program changes (Google Enterprise resale and Microsoft enterprise agreements), which is expected to be "largely behind us" as the company exits 2025. Hardware gross profit is expected to grow modestly in Q4 2025, resulting in an "approximately flat" performance for the full year. Cloud performance is expected to continue growing, with cloud gross profit projected to be "flat to slightly up" for the year. Core services are anticipated to "return to growth in Q4" and be "approximately flat" for the full year, including contributions from recent acquisitions.

Looking ahead to 2026, Insight is "positioned for growth." The company expects the PC refresh cycle to continue, improvements in its services businesses to "take hold," and AI projects to "begin to scale." The recent acquisitions of Inspire11 and Sekuro are expected to contribute positively to adjusted EBITDA from day one and become accretive to adjusted diluted EPS within four quarters, despite initial dilution due to interest expense.

However, several risks could impact this outlook. Macroeconomic uncertainty and "persistent delays in large enterprise spending" continue to be significant challenges, as corporate and enterprise clients grapple with IT budget reallocations to fund AI investments. The dynamic nature of partner incentive programs also poses an ongoing risk, as changes can significantly impact gross profit. Furthermore, "higher than historical interest rates" are anticipated to continue throughout most of 2025, affecting borrowing costs. Litigation and the ability to keep pace with rapidly evolving technological advances, including generative AI, also represent inherent risks. Insight is actively mitigating these risks through disciplined SG&A management, internal AI transformation for productivity gains, and strategic acquisitions that enhance its capabilities in high-growth areas.

Conclusion

Insight Enterprises stands at a pivotal juncture, strategically transforming into an AI-first solutions integrator to capitalize on the profound shifts in the technology landscape. Despite facing macroeconomic headwinds and significant partner program changes that have impacted near-term revenue, the company has demonstrated financial resilience, achieving record gross margins and disciplined expense management. Its aggressive pursuit of AI-driven solutions, bolstered by strategic acquisitions like Inspire11 and Sekuro, is not merely an opportunistic move but a foundational reorientation aimed at delivering measurable business outcomes and fostering a more scalable, outcome-driven service model.

The company's outlook for 2026 signals a return to growth, driven by the anticipated normalization of partner program impacts, a continuing PC refresh cycle, and the scaling of AI projects across its client base. While challenges such as large enterprise spending delays and interest rate volatility persist, Insight's integrated approach, deep partner ecosystem, and commitment to technological leadership position it strongly. For investors, Insight represents an opportunity to participate in the evolving digital transformation narrative, led by a company strategically aligning its capabilities and capital allocation to become a leading force in the AI-first era.