Insight Enterprises, Inc.

Good morning and thank you for attending the Insight Enterprises Incorporated third quarter 2023 earnings conference call. My name is Alyssa and I will be your moderator. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. To ask a question, you may press star 1. I would now like to pass the call to our host, James Morgado, SVP of Finance and CFO of North America. James, you may proceed.

Welcome, everyone, and thank you for joining the Insight Enterprises Earnings Conference Call. Today, we will be discussing the company's operating results for the quarter ended September 30th, 2023. I'm James Morgado, Senior Vice President of Finance and CFO of Insight North America. Joining me is Joyce Mullen, President and Chief Executive Officer and Glennis Bryan, Chief Financial Officer. If you do not have a copy of the earnings release or the accompanying slide presentation that was posted this morning and filed with the Securities and Exchange Commission on Form 8K, you'll find it on our website at insight.com under the Investor Relations section. Today's call, including the question and answer period, is being webcast live and can also be accessed via the Investor Relations page of our website at insight.com. An archived copy of the conference call will be available approximately two hours after completion of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, November 2, 2023. This call is the property of Insight Enterprises. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Insight Enterprises is strictly prohibited. In today's call, we will be referring to non-GAAP financial measures as we discuss the third quarter 2023 financial results. When discussing non-GAAP measures, we will refer to them as adjusted. You will find a reconciliation of these adjusted measures to our actual GAAP results included in both the press release and the accompanying slide presentation issued earlier today. Please note, that all growth comparisons we make on the call today relate to the corresponding period of last year unless otherwise noted. Also, unless highlighted as constant currency, all amounts and growth rates discussed are in U.S. dollar terms. As a reminder, all forward-looking statements that are made during this conference call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today's press release and in greater detail in our most recently filed periodic reports and subsequent filings with the SEC. All forward-looking statements are made as of the date of this call, and except as required by law, we undertake no obligation to update any forward-looking statement made on this call, whether as a result of new information, future events, or otherwise. With that, I will now turn the call over to Joyce, and if you're following along with the slide presentation, we will begin on slide four. Joyce?

Thank you very much, James. Good morning, everyone, and thank you for joining us today. Q3 met our expectations and delivered record adjusted earnings per share for the quarter. Cloud gross profit grew 17%, and Insight Core Services gross profit grew 20%, demonstrating the progress we are making to becoming the leading solutions integrator. We are also confirming our adjusted diluted earnings per share for the full year of 2023. Here are a few highlights. We achieved gross margin of 18% in Q3, reflecting both an improvement in our revenue mix as well as continued progress on our pricing and profitability initiatives. Q3 adjusted EBITDA margin expanded 130 basis points to 5.7%. We generated $414 million of operating cash flow in the first three quarters of the year, an increase of over 600 million from last year. And consistent with our strategy to focus on cloud and services, We acquired Amdaris, an award-winning software development and digital services company based in the UK. I will provide more details on its acquisition later. These highlights demonstrate we are on the right path with our strategy and making progress towards becoming the leading solutions integrator. We remain focused on the fastest growing areas of the market, cloud, data, AI, edge, and cyber. While we have been leveraging AI to support clients' needs for a long time, we are really excited about the acceleration that generative AI is providing to us and, more importantly, to our clients. We've recently filed GenAI-related patents focused on customer support and sales use cases. These patents integrate large language models with third-party data to enhance support applications, recognize and leverage human sentiment specifically for support applications, reduce hallucinations and query time, which reduces GPU usage, emulate personality types, and improve search capabilities for customer support applications. Combined with our expertise, these capabilities allow us to deliver business outcomes to our clients more efficiently. We are also using GenAI internally to improve efficiencies with our development team and our back office support functions. Our clients need a partner they can trust. to navigate new technologies and the infrastructure and workplace requirements to help them digitally transform. This is at the heart of our strategy. As a reminder, there are four key pillars. Captivate clients, sell solutions, deliver differentiation, and champion our culture. To illustrate this strategy in action, I'd like to talk about one of our clients who is a technology leader in the public safety industry. They were experiencing a significant increase in customer demand and needed help to meet their delivery obligations and fulfill their growing backlog. They required a partner that could design, implement, and execute a large-scale deployment of their technology to tens of thousands of vehicles across multiple locations. Leveraging our edge expertise, we implemented a customized solution combining routers, cameras, and cloud software, along with our services, to deploy and test the solution at the edge. At every stage, we made sure their key requirements around testing and quality assurance were satisfied. We quickly ramped up a successful pilot of several thousand vehicles and have since moved to a multi-year contract. The positive outcomes for our client include faster times to market, improved customer satisfaction, and accelerated revenue growth. The success of this project has led to exploring how we can help them seamlessly deploy more of their products at the edge. This is an excellent example of how we focus on business outcomes, earn the right to do more, and ultimately become the partner our clients can't live without. Our expertise in Edge Solutions is part of our heritage and very important to our clients. As a solutions integrator, by combining hardware, software, and services, we bring even more value to our clients. I'd like to also highlight our application development strength with a recent project we delivered for a large insurance provider. They began an initiative to develop a new custom internal claims processing application to replace their existing outdated and high risk system. They needed help establishing a development environment that could accelerate the time to value. We introduced them to our proven agile development practices and deployed our user experience experts to guide their development efforts. The deployment included user story mapping, planning the project sprints, and performing agility health checks along the way. The effort ultimately concluded with the rollout of a scalable, next-gen claims processing application that helped them realize significant cost savings, improve claims accuracy, and enable digital payments. The two projects I highlighted were delivered by our exceptional technical team of over 6,000 dedicated experts. To augment our exceptional talent and wide-ranging capabilities, M&A remains an important element of our strategy. We are always looking to bolster our capabilities through strategic acquisitions in line with our focus on the fastest growing areas of the market, cloud, data, AI, edge, and cyber. In August, we acquired Amdaras, an award-winning cloud and application modernization company based in the UK with service delivery centers located in several Eastern European countries. Amdaras has been a Microsoft Gold certified partner for more than 10 years. and has a proven track record of delivering transformative digital services. MDARS brings more than 850 teammates, 90% of whom are engineers and developers, making it an ideal addition to our existing application and data practices. Through this acquisition, we also strengthen our solutions capabilities in Europe. I'd like to share an example of how MDARS was able to deliver on a project and earn the right to do more. Their client, a global recruiting firm based in the UK, was dealing with increasing costs while developing their own custom-built CRM system. The Amdaras team stepped in to deliver the project faster with a more scalable and reliable application, all while saving costs. The success of this project has led to additional work with this client, including application development, product design, and data migration support. This illustrates why Amdaras is a perfect complement to our strategy. And our strategy is working. To add to our track record of industry recognitions, I'll highlight a few. We've been included in the Gartner Magic Quadrant for Software Asset Management Managed Services and Public Cloud IT Transformation Services. This highlights our strength in helping clients architect, build, and manage cloud solutions. Additionally, Insight has been named EMEA Innovation Partner at this year's Canales Forum, which recognizes outstanding performance in achieving and driving innovation. In part, this was due to our early development of Insight GPT. And since we believe our culture is a competitive advantage, we are thrilled to be recognized by Forbes as a world's best employer for 2023. In summary, we are making great progress towards becoming the leading solutions integrator, focused on the fastest growing areas of the market and where our clients need the most help. With that, I'll turn the call over to Glynis. to share the key details of our financial and operating performance in Q3 and outlook for 2023. Vanessa?