Insight Enterprises, Inc.

Hello everyone, and thank you for joining the Insight Enterprises second quarter 2025 operating results call. My name is Sammy and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you want to switch to change your mind, please press star followed by two on your telephone keypad to remove yourself from a question queue. I'll now hand over to your host, Ryan Miyasato, Director of Investor Relations to begin. Please go ahead, Ryan.

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 June 30th, 2025. I'm Ryan Miyasato, Investor Relations Director of Insight. And joining me is Joyce Mullin, President and Chief Executive Officer and James Murgato, 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 will 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, July 31st, 2025. 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 conference call, we will be referring to non-GAP financial measures as we discuss the second quarter 2025 results. When discussing non-GAP measures, we will refer to them as adjusted. You will find a reconciliation of these adjusted measures to our actual GAP 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 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, Ryan. Good morning, everyone. And thank you for joining us today. In Q2, we executed well and met our expectations as we navigated a challenging environment, primarily driven by partner program changes. Our hardware business delivered growth for the second consecutive quarter, and we achieved strong profitability milestones. Total growth margin of .1% and adjusted earnings from operations margin of 6.2%, both Q2 records. In the quarter, hardware revenue grew 2% with growth in both devices and infrastructure. Hardware revenue in North America grew 4%. Revenue from our commercial clients grew 8%, which is the fifth consecutive quarter of growth. The underlying SaaS and infrastructure as a service business grew double digits and in line with expectations, offset by the partner program changes we've discussed previously. We made internal adjustments to address the program changes, and we will continue to focus on capturing growth in the cloud business. Overall, cloud gross profit declined 5%. Insight core services revenue was down 2% as we continue to see delays in initiating new services projects, particularly in our large enterprise clients. We also prudently managed adjusted ST&A expenses, which were down 3%. As a result, adjusted earnings per share were in line with our expectations. While macroeconomic factors, including tariffs, legislative policies, affecting supply chains and interest rates, continue to impact our clients' investment decisions, we are well positioned in terms of expertise, particularly AI, to grow as the environment improves. As the technologies we offer to our clients continue to develop, we are adapting our ambition to becoming not only the leading solutions integrator, but the leading AI-first solutions integrator. Here's what we mean by that. We are aggressively adopting AI internally across all disciplines and all regions. We've enhanced our services portfolio by integrating an AI-first approach. We are adapting our offers to support our clients' focus on delivering measurable and meaningful business value through pragmatic deployment of AI solutions, delivering results fast, and earning the right to do more. We offer our clients full lifecycle AI services, including consulting, implementation, training, governance, and managed services support. And while it's still early in terms of project deployment and the initial deployments are small, we've made good progress on multiple fronts. For example, we have deployed hundreds of agents internally and for client projects. We've completed over 200 AI assessments with our clients, more than quadrupling the number compared to the last quarter. In software development, we've delivered significant improvements in productivity. Infrastructure hardware bookings are increasing as clients prepare their on-prem and cloud environments for AI workloads. In addition, we continue to drive adoption of AI internally to improve our SG&A leverage. We are excited by the momentum in this space. And as an interesting aside, this wave of technology adoption is primarily being driven by business units and business leaders with support from IT. This is different from cloud, which was driven by IT with support from the business. As an example of our efforts with AI, I'm very pleased to share that Gartner has named Insight an emerging visionary in its inaugural innovation guide for generative AI consulting and implementation services. This recognition underscores our innovation first mindset and our emerging strength as an AI first integrator. At Insight, we deliver measurable outcomes and help clients navigate the complex challenges of gen AI adoption from data readiness and governance to security, scalability and achieving ROI. Clients across all industries are beginning to leverage AI in virtually every aspect of their businesses, including new product development, go to market models and back office functions. I'd like to share a few examples. We worked with a major retail client, the largest authorized retailer for a leading telecommunications provider operating nearly 1700 locations across all 50 states. They needed to address inefficiencies in their legal document review process, so they partnered with Insight to develop an AI powered platform. Insight developed a custom AI solution using Microsoft Azure OpenAI service to automate legal document review. The platform analyzes millions of documents, identifies key data points and provides contextual summaries for legal cases. Our AI solution automated the process of reading, understanding and analyzing fast legal data sets while ensuring data privacy and confidentiality through secure Azure cloud integration. This project eliminated over a hundred thousand hours annually from manual document review, improved accuracy and reduced human error, leading to projected annual savings of seven and a half million dollars. Understanding the essential foundational elements necessary for effectively implementing AI is crucial. This includes assessing the quality and accessibility of data, as well as implementing robust security protocols. And as AI adoption grows, so too does the threat surface. Mining operations are capital and technology intensive and security is critical. We partnered with one of the top gold producers in the world. They needed to consolidate disparate security tools across multiple acquisitions to improve effectiveness and reduce overlap. We established ourselves as a trusted advisor and implemented a Palo Alto network solution, delivering single source security services across multiple countries. Our solution addressed security posture concerns through technology consolidation and consistent security policies. We provided professional services to retire duplicate technologies and optimize their security infrastructure. This led to a multi-year managed service agreement with Insight and meaningful cost savings for our clients. Our partner ecosystem is critical to our success. Given our leading partner relationships with companies like Nvidia, Google, Microsoft and others who are changing the world right now, we are in a strong position to help clients simplify this complex space and optimize their business outcomes. You can see recent awards in the accompanying slide presentation. As I mentioned previously, we have been included in Gartner's innovation guide for generative AI consulting and implementation services. Furthermore, we have been named a finalist for CRM's 2025 best AI solution provider. Our teammates are integral to delivering the value we create for our clients. We foster a collaborative environment and Insight continues to be recognized as a great place to work by various organizations. Most recently by Newsweek and Forbes. Now, I'd like to share my thoughts on the remainder of 2025. Exiting the first half of the year, adjusted earnings from operations were in line with our expectations. As I mentioned, we are committed to our ambition to become the leading solutions integrator. However, in response to significant technology trends and the overwhelming impact of AI, we are adopting this ambition to become the leading AI first solutions integrator. Our strategy remains focused on simplifying the complex for clients and delivering outcomes with our full portfolio of hardware, software and services. And as AI adoption grows, we believe we are well positioned. We have long standing relationships with a broad base of clients across the globe. We have strong partnerships with the companies and platforms that are changing the world. We have a deep understanding of the cloud platforms and the hardware required to run the environments that will be critical to our client success. And we have a dedicated team of experts who are eagerly embracing new tools and processes to deliver results fast. As we have discussed for the past few quarters, we are weathering partner program challenges. In the near term, we are cautiously optimistic for the second half of the year as we navigate the macro factors that weigh on our client spending decisions. In the midterm, we are very well positioned to lead our clients through this rapidly changing technology environment. Our commercial client revenue has grown for five consecutive quarters and we expect our corporate and large enterprise clients purchasing to increase in the second half. Demand drivers for device refresh remain, namely the age of the installed base in Windows 10 end of life and infrastructure spending is improving after a prolonged period of digestion. As a result, we believe hardware demand will continue to build throughout the year. We are pleased with the services performance of the companies we recently acquired. Our investments in our advisory capabilities have also been successful, allowing us to pull through other elements of the portfolio. This was our thesis that we could leverage those capabilities to sell more to our existing client base. The services growth, however, is offset by pauses in deploying infrastructure projects and some continued hesitancy regarding discretionary spending, especially in our largest enterprise clients. Although we expect services to improve modestly in the second half, demand will remain muted. M&A remains key to our ambition to become the leading AI first solutions integrator and we are focused on the fastest growing areas of the market, cloud, data, AI, edge and security. Our team is executing well as we have pivoted from legacy partner programs to focus on the services and solutions most critical to partners and clients alike. As we execute for, we expect partner program changes to be largely normalized and we will continue to prudently manage SG&A while balancing investments in our solution and AI capabilities. With that, I'll turn the call over to James to share key details of our financial and operating performance in Q2 as well as our outlook for 2025.