Insight Enterprises, Inc.

Hello and welcome to the Insight Enterprises first quarter 2024 operating results. My name is Alex. I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. And I'll hand it over to your host, James Morgado, SVP of Finance and CFO of North America. Please go ahead.

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 March 31st, 2024. I'm James Murgado, Senior Vice President of Finance and CFO of Insight North America. Joining me is Joyce Mullen, President and Chief Executive Officer, and Glenys 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 8-K, 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 this 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, May 2nd, 2024. This call is the property of Insight Enterprises. Any redistribution, retransmission, or rebroadcast of this call in any form without their express written consent of Insight Enterprises is strictly prohibited. In today's conference call, we will be referring to non-GAAP financial measures as we discuss the first quarter 2024 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 US 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 statements 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'll begin on slide four. Joyce?

Thank you very much, James. Good morning, everyone, and thank you for joining us today. We are pleased to announce another record-setting Q1 with very strong performance in our key strategic areas of cloud and insight core services fortified by continued SG&A discipline. Some key highlights. Growth profit grew 13% to $441 million, an all-time record for insight. Adjusted earnings from operations increased double digits in all geos. Adjusted diluted earnings per share increased 33% to $2.37. Additionally, the following metrics represent Q1 record results. Gross margin expanded by 170 basis points to 18.5%. Cloud gross profit grew 33% to $117 million. Insight core services gross profit grew 24% to $76 million. An adjusted EBITDA margin expanded by 130 basis points to 5.6%. These highlights demonstrate that we are executing well against our solutions integrator strategy. In addition, on May 1st, we acquired InfoCenter, an elite ServiceNow partner and 2024 Partner of the Year for Americas Consulting and Implementation. Infocenter, a pure play services company focused on implementing and developing ServiceNow solutions across all major workflows, has earned a reputation for delivering exceptional results. And since ServiceNow is a fundamental pillar of enterprise digital transformation, this capability complements our strength in cloud, data and AI, and expands our ability to support our clients as a solutions integrator. As a reminder, our strategy is to become the leading solutions integrator by integrating hardware, software, and services to drive business outcomes for our clients. They need a partner they can trust to navigate these new technologies and the infrastructure and workplace requirements to help them digitally transform. Our ambition is to be the partner our clients can't live without. I'd like to provide two examples of our solutions integrator strategy in action. First, I'll describe how our expertise in product sales led to services engagement. And in the second example, I'll describe how a services-led selling motion led to product sales. Our longtime client, a multinational conglomerate, has historically purchased a wide range of products from us, from software to devices to infrastructure. The client wanted to conserve capital and was looking to support their business units with improved agility and more disciplined cost management and accountability. specifically around data management. Through our discussions, we architected an effective solution which included public cloud compute with on-prem storage sold as a service. To address their need for flexibility with minimal capex, we designed and implemented an environment that included multi-year storage as a service with surge capacity, fully managed by Insight, including 24 by 7 monitoring of the capacity on hand and consumption usage. Our deep client relationship, supported by strong infrastructure expertise with our broad portfolio of products, enabled us to create and deliver a solution that addressed their technical and financial needs. A driving factor for the client was the need for flexibility to support changing business requirements. They are impressed by the solution and they plan to add over 30 additional locations over the next two years. This is a perfect example of how we deliver results fast and earn the right to do more. The solution selling approach at Insight can also begin with a strong services relationship and expand to include products. Let's talk about one of these examples. Over several years, our longtime client, a leading manufacturer in the luxury appliances industry, engaged Insight to deliver on multiple initiatives from user experience enhancements and front end application development to cloud integration and security. Projects included developing a connected home appliance solution and an app to enable customers to monitor their appliances. Recently, our clients faced a costly upgrade of their antiquated compute and storage environment to meet their business and security requirements. And because we have a strong relationship and a track record of delivering outcomes, they asked us for help. We assessed their platform and existing infrastructure and reviewed their requirements and ultimately migrated them to an optimized, scalable cloud solution that included modern infrastructure at a fraction of the cost. This engagement further deepened our relationship, which in turn has led to additional services projects. We cannot deliver these optimized solutions without strong relationships with our expansive partner network, and we are honored that our innovative partners continue to recognize Insight for our expertise and our results. Insight was named NVIDIA's 2024 America's Software Partner of the Year. for our exceptional work assisting clients across industries with software, systems, and services to integrate AI into their businesses. As an elite partner, Insight engineers have incorporated the best of NVIDIA AI into deep learning solutions to help clients gain a competitive advantage, seamlessly incorporating data analytics, machine learning, and generative AI applications into business operations. Insight's AI proof of concept process, tests, and validates solutions through our in-house research and innovation hubs. Additionally, as part of Broadcom's 2023 Partner Awards, Insight was recognized as VMware's fastest growth partner of the year for North America. We were also awarded six Partner of the Year awards from Broadcom, including North America's Cybersecurity Partner of the Year. You can see additional awards in the accompanying slide presentation. At Insight, we are passionate about using technology for good. We're proud to share the progress we've made toward our continued commitment to the UN Global Compact in our sixth annual corporate citizenship report. And we are proud to be recognized as one of Barron's 100 most sustainable companies for 2024. Overall, we are executing against our strategy and making good progress on our initiatives. We achieved strong Q1 results and are staying focused and disciplined in an uneven market. We have expanded our global services capabilities with the addition of Andaris, SADA, and InfoCenter. Our improved e-commerce and digital engagement platforms deliver better client experiences. Our state-of-the-art integration center in Texas began shipping products last week and will continue to ramp throughout the year. And as the demand environment for devices improve, we remain ready to support our clients' needs with enhanced offerings such as devices as a service and storage as a service. And we will continue to prudently manage operating expenses and gross margin with our pricing and profitability initiatives. As you are aware, we announced this morning that Glynnis will be retiring at the end of this year. This has been part of an organized succession process with our board. We have hired a top tier executive search firm and are undertaking a thoughtful process to evaluate internal and external candidates. Glynnis will work with me and the team to identify the new CFO. and she has committed to continuing to lead the finance team until the right successor is appointed. I'll now turn the call over to Glenys to share key details of our financial and operating performance in Q1, as well as our outlook for 2024. Glenys?