Insight Enterprises Inc.
11/05/2026 | Press release | Distributed by Public on 11/05/2026 12:30
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the condensed consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q. We refer to our customers as "clients," our suppliers as "partners" and our employees as "teammates."
Quarterly Overview
Today, every business is a technology business. At Insight, we accelerate transformation by unlocking the power of people and technology. We turn complexity into clarity, helping our clients achieve meaningful business outcomes and drive real results at scale. 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 deliver secure, end-to-end digital transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 38 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.
On a consolidated basis, for the three months ended September 30, 2026:
•Net sales of $2.4 billion increased 22% compared to the three months ended September 30, 2025. The increase was primarily due to increases in hardware and services net sales, partially offset by a decrease in software net sales. Excluding the effects of fluctuating foreign currency exchange rates, net sales also increased 22% compared to the third quarter of 2025.
•Gross profit of $523.2 million increased 20% compared to the three months ended September 30, 2025, primarily driven by increases in hardware and services gross profit, partially offset by a decrease in software gross profit. Excluding the effects of fluctuating foreign currency exchange rates, gross profit also increased 20% compared to the third quarter of 2025.
•Compared to the three months ended September 30, 2025, gross margin contracted approximately 30 basis points to 21.4% of net sales in the three months ended September 30, 2026. The contraction was primarily driven by a higher mix of hardware net sales, which carry lower gross margins, compared to the same period in the prior year.
•Earnings from operations decreased 26%, year to year, to $68.7 million in the third quarter of 2026 compared to $93.1 million in the third quarter of 2025. The net change reflects increases in selling and administrative expenses, including higher acquisition-related earnout revaluation adjustments, and severance and restructuring expenses, net, including costs associated with the Company's Voluntary Separation Program ("VSP"), an initiative to simplify operations and align resources with strategic priorities, partially offset by an increase in gross profit. Excluding the effects of fluctuating foreign currency exchange rates, earnings from operations also decreased 26% year to year.
•Net earnings and diluted earnings per share were $22.2 million and $0.74, respectively, for the third quarter of 2026. This compares to net earnings of $50.9 million and diluted earnings per share of $1.62 for the third quarter of 2025. In the third quarter of 2026, the decrease in net earnings was primarily driven by higher acquisition-related earnout revaluation adjustments, as well as higher severance and restructuring costs associated with the VSP noted above, partially offset by an increase in gross profit. Diluted earnings per share decreased 54% year to year, primarily as a result of a decrease in net earnings, partially offset by a lower number of dilutive shares outstanding in the third quarter of 2026. Excluding the effects of fluctuating foreign currency exchange rates, diluted earnings per share decreased 53% year to year.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
In discussing financial results for the three and nine months ended September 30, 2026 and 2025, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with United States generally accepted accounting principles ("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.
Throughout the "Quarterly 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, diluted earnings per share and earnings from operations on a consolidated basis and in EMEA and APAC, as applicable, excluding the effects of fluctuating foreign currency exchange rates, which are financial measures that are adjusted from our financial results prepared in accordance with GAAP. In addition, we refer to changes in Adjusted earnings from operations in EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. These 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.
Details about segment results of operations can be found in Note 9 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report.
Our discussion and analysis of financial condition and results of operations is intended to assist in the understanding of our condensed consolidated financial statements, including the changes in certain key items in those condensed consolidated financial statements from period to period and the primary factors that contributed to those changes, as well as how certain critical accounting estimates affect our condensed consolidated financial statements.
Supply Chain, Demand and Inflation Update
We believe inflation contributed to sustained high interest rates on all of our variable rate borrowing facilities through the third quarter of 2026 consistent with the prior year. Interest rates are expected to hold steady and continue to remain higher than historical rates through the remainder of 2026. We are actively monitoring changes to the global macroeconomic environment, including those impacting our supply chain, demand for our products whether due to tariffs or otherwise and interest rates, and assessing the potential impacts these challenges may have on our current results, financial condition and liquidity. Currently, our supply chain is impacted by the global memory chip shortage, which has resulted in lower overall supply and increased pricing and may result in further constrained overall supply and upward pressure on pricing. Additionally, international conflicts, including the war in Iran, may impact supply chain and increase inflation. We are mindful of the potential effects these conditions could have on our clients, partners and prospects for the remainder of 2026 and beyond.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Critical Accounting Estimates
Our condensed consolidated financial statements have been prepared in accordance with GAAP. For a summary of significant accounting policies, see Note 1 to the Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results, however, may differ from estimates we have made. Members of our senior management have discussed the critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.
There have been no changes to the items disclosed as critical accounting estimates in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.
Results of Operations
The following table sets forth certain financial data as a percentage of net sales for the three and nine months ended September 30, 2026 and 2025:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Costs of goods sold | 78.6 | 78.3 | 78.4 | 79.3 | |||||||||||||||||||
| Gross profit | 21.4 | 21.7 | 21.6 | 20.7 | |||||||||||||||||||
| Selling and administrative expenses | 17.6 | 16.7 | 17.2 | 16.5 | |||||||||||||||||||
| Severance and restructuring expenses, net and acquisition and integration related expenses | 1.0 | 0.4 | 0.5 | 0.3 | |||||||||||||||||||
| Earnings from operations | 2.8 | 4.6 | 3.9 | 3.9 | |||||||||||||||||||
| Non-operating expense, net | 1.0 | 1.1 | 1.0 | 1.4 | |||||||||||||||||||
| Earnings before income taxes | 1.8 | 3.5 | 2.9 | 2.5 | |||||||||||||||||||
| Income tax expense | 0.9 | 1.0 | 1.0 | 0.8 | |||||||||||||||||||
| Net earnings | 0.9 | % | 2.5 | % | 1.9 | % | 1.7 | % | |||||||||||||||
We generally experience some seasonal trends in our net sales. Software and certain cloud net sales are typically seasonally higher in our second and fourth quarters. Business clients, particularly larger enterprise businesses in the United States, tend to spend more, particularly on product, in our fourth quarter. Sales to the federal government in the United States are often stronger in our third quarter, while sales in the state and local government and education markets are also often stronger in our second quarter. Sales to public sector clients in the United Kingdom are often stronger in our first quarter. These trends create overall variability in our consolidated results.
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
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
available and the requirements year over year," in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.
Net Sales. Net sales of $2.4 billion for the three months ended September 30, 2026 increased 22%, year over year, compared to the three months ended September 30, 2025, driven by growth across all operating segments. Net sales of $7.0 billion for the nine months ended September 30, 2026 increased 12%, year over year, compared to the nine months ended September 30, 2025, also reflecting increases across each of our operating segments.
Our net sales by operating segment were as follows for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
|
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| North America | $ | 1,983,461 | $ | 1,625,302 | 22 | % | $ | 5,604,929 | $ | 5,010,249 | 12 | % | |||||||||||||||||||||||
| EMEA | 338,013 | 319,758 | 6 | % | 1,086,058 | 1,011,200 | 7 | % | |||||||||||||||||||||||||||
| APAC | 120,036 | 58,785 | 104 | % | 278,006 | 177,434 | 57 | % | |||||||||||||||||||||||||||
| Consolidated | $ | 2,441,510 | $ | 2,003,845 | 22 | % | $ | 6,968,993 | $ | 6,198,883 | 12 | % | |||||||||||||||||||||||
Our net sales by offering category for North America for the three and nine months ended September 30, 2026 and 2025 were as follows (dollars in thousands):
|
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||||||||||||||||||||||||||||||
| Sales Mix | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Hardware | $ | 1,332,404 | $ | 1,021,930 | 30 | % | $ | 3,688,458 | $ | 3,102,128 | 19 | % | ||||||||||||||||||||||||||
| Software | 286,345 | 286,115 | - | % | 849,759 | 983,556 | (14) | % | ||||||||||||||||||||||||||||||
| Services | 364,712 | 317,257 | 15 | % | 1,066,712 | 924,565 | 15 | % | ||||||||||||||||||||||||||||||
| $ | 1,983,461 | $ | 1,625,302 | 22 | % | $ | 5,604,929 | $ | 5,010,249 | 12 | % | |||||||||||||||||||||||||||
Net sales in North America increased 22%, or $358.2 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, primarily driven by increases in hardware and services net sales of 30% and 15%, respectively. The increase was partially offset by relatively flat software net sales, year over year. The net changes for the three months ended September 30, 2026 were the result of the following:
•The increase in hardware net sales was primarily driven by growth in infrastructure and devices offerings across client segments, led by large enterprise and corporate clients.
•The increase in services net sales was primarily due to growth in Insight Delivered services and cloud solution offerings.
•Software net sales remained relatively flat compared to the prior-year period, as growth in software demand was offset by the continued migration of certain on-premise software solutions to cloud solutions, which are reported within services net sales.
Net sales in North America increased 12%, or $594.7 million, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, driven by increases in hardware and services net sales of 19% and 15%, respectively, year over year. This increase was partially offset by a decrease in software
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
net sales of 14%, year to year. The net changes for the nine months ended September 30, 2026 were the result of the following:
•The increase in hardware net sales was primarily driven by growth in infrastructure and devices offerings across client segments, led by large enterprise and corporate clients.
•The increase in services net sales was primarily due to growth in Insight Delivered services, including contributions from the acquisition of Inspire11 and cloud solution offerings.
•The decrease in software net sales was primarily due to the continued migration of on-premise software to cloud solutions, which are reported within services net sales.
Our net sales by offering category for EMEA for the three and nine months ended September 30, 2026 and 2025 were as follows (dollars in thousands):
|
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||||||||||||||||||||||||||||||
| Sales Mix | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Hardware | $ | 124,616 | $ | 111,239 | 12 | % | $ | 397,823 | $ | 348,553 | 14 | % | ||||||||||||||||||||||||||
| Software | 116,757 | 126,509 | (8) | % | 399,941 | 416,685 | (4) | % | ||||||||||||||||||||||||||||||
| Services | 96,640 | 82,010 | 18 | % | 288,294 | 245,962 | 17 | % | ||||||||||||||||||||||||||||||
| $ | 338,013 | $ | 319,758 | 6 | % | $ | 1,086,058 | $ | 1,011,200 | 7 | % | |||||||||||||||||||||||||||
Net sales in EMEA increased 6%, or $18.3 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA increased by 7%, year over year. Services and hardware net sales increased by 18% and 12%, respectively, year over year, partially offset by a decrease in software net sales of 8%, year to year. The net changes for the three months ended September 30, 2026 were the result of the following:
•The increase in services net sales was primarily due to increases in agency net sales, attributable to the continued contribution from certain large agency transactions, and Insight Delivered services. These agency transactions represent arrangements in which we serve as a paid pass-through agent in "pay-when-paid" transactions for certain clients and their vendors in the United Kingdom and the United Arab Emirates (UAE). For additional information, see "- Liquidity and Capital Resources - Net cash provided by operating activities."
•The increase in hardware net sales was primarily due to higher volume of sales to large enterprise and corporate clients.
•The decrease in software net sales was primarily due to lower volume of sales to large enterprise, corporate and public sector clients, with the continued migration of on-premise software to cloud solutions, which are reported net in services net sales, also contributing to the decrease.
Net sales in EMEA increased 7%, or $74.9 million, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA increased 4%, year over year. Services and hardware net sales increased by 17% and 14%, respectively, year over year, partially offset by a decrease in software net sales of 4%, year to year. The net changes for the nine months ended September 30, 2026 were the result of the following:
•The increase in services net sales was primarily due to increases in agency net sales, attributable to the continued contribution from certain large agency transactions as discussed above, and Insight Delivered services.
•The increase in hardware net sales was primarily due to higher volume of sales to large enterprise and corporate clients.
•The decrease in software net sales was primarily due to lower volume of sales to large enterprise and corporate clients, with the continued migration of on-premise software to cloud solutions, which are reported net in services net sales, also contributing to the decrease.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Our net sales by offering category for APAC for the three and nine months ended September 30, 2026 and 2025 were as follows (dollars in thousands):
|
Three Months Ended September 30, |
% Change |
Nine Months Ended September 30, |
% Change |
|||||||||||||||||||||||||||||||||||
| Sales Mix | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Hardware | $ | 50,140 | $ | 11,056 | 354 | % | $ | 79,381 | $ | 26,091 | 204 | % | ||||||||||||||||||||||||||
| Software | 19,313 | 20,923 | (8) | % | 66,368 | 73,849 | (10) | % | ||||||||||||||||||||||||||||||
| Services | 50,583 | 26,806 | 89 | % | 132,257 | 77,494 | 71 | % | ||||||||||||||||||||||||||||||
| $ | 120,036 | $ | 58,785 | 104 | % | $ | 278,006 | $ | 177,434 | 57 | % | |||||||||||||||||||||||||||
Net sales in APAC increased 104%, or $61.3 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC increased 93%, year over year. Hardware and services net sales increased by 354% and 89%, respectively, year over year, partially offset by a decrease in software net sales of 8%, year to year. The net changes for the three months ended September 30, 2026 were the result of the following:
•The increase in hardware net sales was due to higher volume of sales to large enterprise clients, primarily attributable to Sekuro.
•The increase in services net sales was primarily due to higher agency net sales and increased Insight Delivered services, with growth in Insight Delivered services largely attributable to Sekuro.
•The decrease in software net sales was primarily due to lower volume of sales across client sectors, with the continued migration of on-premise software to cloud solutions, which are reported net in services net sales, also contributing to the decrease.
Net sales in APAC increased 57%, or $100.6 million, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC increased by 46%, year over year. Net sales of hardware and services increased by 204% and 71%, respectively, year over year. These increases were partially offset by a decrease in software net sales of 10%, year to year. The net changes for the nine months ended September 30, 2026 were the result of the following:
•The increase in hardware net sales was primarily due to contributions from Sekuro, as well as higher volume of sales to large enterprise and corporate clients.
•The increase in services net sales was primarily due to higher agency net sales and increased Insight Delivered services, with growth in Insight Delivered services largely attributable to Sekuro.
•The decrease in software net sales was due to the continued migration of on-premise software to cloud solutions, which are reported net in services net sales, with the shift led primarily by corporate and public sector clients.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
The percentage of net sales by category for North America, EMEA and APAC were as follows for the three and nine months ended September 30, 2026 and 2025:
| North America | EMEA | APAC | ||||||||||||||||||||||||||||||||||||
|
Three Months Ended September 30, |
Three Months Ended September 30, |
Three Months Ended September 30, |
||||||||||||||||||||||||||||||||||||
| Sales Mix | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Hardware | 67 | % | 63 | % | 37 | % | 35 | % | 42 | % | 19 | % | ||||||||||||||||||||||||||
| Software | 15 | % | 18 | % | 34 | % | 39 | % | 16 | % | 35 | % | ||||||||||||||||||||||||||
| Services | 18 | % | 19 | % | 29 | % | 26 | % | 42 | % | 46 | % | ||||||||||||||||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||||
| North America | EMEA | APAC | ||||||||||||||||||||||||||||||||||||
|
Nine Months Ended September 30, |
Nine Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||||||||||||||||
| Sales Mix | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Hardware | 66 | % | 62 | % | 37 | % | 35 | % | 28 | % | 15 | % | ||||||||||||||||||||||||||
| Software | 15 | % | 20 | % | 37 | % | 41 | % | 24 | % | 41 | % | ||||||||||||||||||||||||||
| Services | 19 | % | 18 | % | 26 | % | 24 | % | 48 | % | 44 | % | ||||||||||||||||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||||
Gross Profit. Gross profit increased 20%, or $89.0 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, with gross margin contracting approximately 30 basis points to 21.4% for the three months ended September 30, 2026 compared to 21.7% for the three months ended September 30, 2025. Gross profit increased 17%, or $224.0 million, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, with gross margin expanding approximately 90 basis points to 21.6% for the nine months ended September 30, 2026 compared to 20.7% for the nine months ended September 30, 2025.
Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | % of Net Sales | 2025 | % of Net Sales | 2026 | % of Net Sales | 2025 | % of Net Sales | ||||||||||||||||||||||||||||||||||||||||
| North America | $ | 393,643 | 19.8 | % | $ | 342,263 | 21.1 | % | $ | 1,144,676 | 20.4 | % | $ | 1,003,407 | 20.0 | % | |||||||||||||||||||||||||||||||
| EMEA | 90,527 | 26.8 | % | 74,234 | 23.2 | % | 270,756 | 24.9 | % | 228,595 | 22.6 | % | |||||||||||||||||||||||||||||||||||
| APAC | 39,033 | 32.5 | % | 17,698 | 30.1 | % | 91,524 | 32.9 | % | 50,997 | 28.7 | % | |||||||||||||||||||||||||||||||||||
| Consolidated | $ | 523,203 | 21.4 | % | $ | 434,195 | 21.7 | % | $ | 1,506,956 | 21.6 | % | $ | 1,282,999 | 20.7 | % | |||||||||||||||||||||||||||||||
North America's gross profit for the three months ended September 30, 2026 increased 15%, or $51.4 million, compared to the three months ended September 30, 2025. As a percentage of net sales, gross margin contracted approximately 130 basis points to 19.8%, year to year. The year to year net contraction in gross margin was primarily attributable to the following:
•Decreases in services margin and product margin of 86 basis points and 35 basis points, respectively.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
•The contraction in product margin primarily reflects a higher concentration of hardware sales, particularly infrastructure and devices offerings, which generally carry lower margins. Despite the margin contraction, hardware gross profit increased due to strong sales growth across these categories.
•The decrease in services margin primarily reflects lower margin contribution from cloud solution offerings and partner delivered services compared to the prior year period.
North America's gross profit for the nine months ended September 30, 2026 increased 14%, or $141.3 million, compared to the nine months ended September 30, 2025. As a percentage of net sales, gross margin expanded approximately 40 basis points to 20.4% for the nine months ended September 30, 2026. The year over year net expansion in gross margin was primarily attributable to the following:
•An increase in services margin of 62 basis points, partially offset by a decrease in product margin of 26 basis points.
•The increase in services margin primarily reflects increases in margin contribution from cloud solution offerings and Insight Delivered services, partially offset by a contraction in warranty and partner delivered services.
•The contraction in product margin primarily reflects a higher concentration of hardware sales, particularly infrastructure products, and lower hardware and software margins compared to the prior-year period.
EMEA's gross profit for the three months ended September 30, 2026 increased 22%, or $16.3 million, year over year (increasing 23% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended September 30, 2025. As a percentage of net sales, gross margin expanded 360 basis points to 26.8%, year over year. The year over year net expansion in gross margin was primarily attributable to the following:
•An increase in services margin of 407 basis points, partially offset by a decrease in product margin of 50 basis points.
•The increase in services margin was primarily driven by an expansion in margin contribution from certain large agency transactions as discussed above, cloud solution offerings, and Insight Delivered Services.
•The contraction in product margin was primarily the result of lower hardware margins and changes in product mix. This was partially offset by growth in software margins.
EMEA's gross profit for the nine months ended September 30, 2026 increased 18%, or $42.2 million, year over year (increasing 15% when excluding the effects of fluctuating foreign currency exchange rates), compared to the nine months ended September 30, 2025. As a percentage of net sales, gross margin expanded approximately 230 basis points to 24.9%, year over year. The year over year net expansion in gross margin was primarily attributable to the following:
•An increase in services margin of 300 basis points, partially offset by a decrease in product margin of 67 basis points.
•The increase in services margin was primarily driven by higher margin contribution from certain large agency transactions as discussed above, cloud solution offerings, and Insight Delivered services.
•The contraction in product margin was primarily the result of lower hardware and software margins compared to the prior-year period, reflecting changes in product mix.
APAC's gross profit for the three months ended September 30, 2026 increased 121%, or $21.3 million, year over year (increasing 109% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended September 30, 2025. As a percentage of net sales, gross margin expanded 240 basis points to 32.5%, year over year. The year over year net expansion in gross margin was primarily attributable to the following:
•Increases in services margin and product margin of 211 basis points and 30 basis points, respectively.
•The increase in services margin is primarily driven by an expansion in margin contribution attributable to Sekuro, as well as growth in cloud solution offerings.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
•The increase in product margin was primarily driven by higher margin contribution from hardware sales, largely attributable to Sekuro, partially offset by lower software margins compared to the prior-year period.
APAC's gross profit for the nine months ended September 30, 2026 increased 79%, or $40.5 million, year over year (increasing 68% when excluding the effects of fluctuating foreign currency exchange rates), compared to the nine months ended September 30, 2025. As a percentage of net sales, gross margin expanded approximately 420 basis points, year over year. The year over year net expansion in gross margin was primarily attributable to the following:
•An increase in services margin of 496 basis points, partially offset by a decrease in product margin of 78 basis points.
•The increase in services margin was primarily driven by margin contribution attributable to Sekuro.
•The contraction in product margin was primarily the result of sales of hardware and software at lower margins compared to the prior-year period.
Operating Expenses.
Selling and Administrative Expenses. Selling and administrative expenses for the three months ended September 30, 2026 increased 29%, or $95.7 million, compared to the three months ended September 30, 2025 (also increasing 29% when excluding the effects of fluctuating foreign currency exchange rates). Selling and administrative expenses increased $172.8 million, or 17% (increasing 16% when excluding the effects of fluctuating foreign currency exchange rates), for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Selling and administrative expenses increased approximately 100 basis points as a percentage of net sales in the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The overall net increase in selling and administrative expenses reflects increases in other expenses of $46.1 million, personnel costs of $43.7 million, legal and professional fees of $2.5 million, depreciation and amortization expense of $2.1 million and marketing expenses of $2.1 million. The increase in other expenses primarily relates to higher earnout valuation adjustments associated with the acquisitions of Sekuro and Inspire11. The increase in personnel costs was primarily driven by variable compensation costs and expenses from acquisitions in the fourth quarter of 2025. The increase in depreciation and amortization expenses reflects higher amortization of assets associated with acquisitions in the fourth quarter of 2025.
Selling and administrative expenses increased approximately 70 basis points as a percentage of net sales in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The overall net increase in selling and administrative expenses primarily reflects increases in personnel costs of $91.6 million, other expenses of $62.8 million, depreciation and amortization expenses of $7.5 million, legal and professional fees of $4.3 million, travel and entertainment expenses of $3.5 million, and marketing expenses of $3.2 million. The increase in personnel costs was driven by variable compensation costs and expenses from acquisitions in the fourth quarter of 2025. The increase in other expenses includes a net loss on revaluation of earnout liabilities of approximately $64.2 million from the acquisitions of Infocenter, Inspire11 and Sekuro for the nine months ended September 30, 2026 compared to a net loss on revaluation of earnout liabilities of $19.2 million for the nine months ended September 30, 2025. We also incurred an impairment loss of approximately $1.8 million in the nine months ended September 30, 2026 compared to an impairment loss of approximately $12.6 million in the nine months ended September 30, 2025 relating to the Santa Monica property that was reclassified to held for sale in April 2025 and subsequently sold in April 2026. We also incurred transformation costs, in the current and prior year periods, of $17.3 million and $11.2 million, respectively, relating to the transformation of our business in phases across the global organization to help us achieve our strategic objectives, including becoming a leading solutions integrator. The increase in depreciation and amortization expenses reflects higher amortization of assets associated with acquisitions in the fourth quarter of 2025.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Severance and Restructuring Expenses, net. During the three months ended September 30, 2026, we recorded severance and restructuring expenses, net of adjustments, of approximately $25.7 million. Comparatively, during the three months ended September 30, 2025, we recorded severance and restructuring expenses, net of adjustments, of approximately $5.4 million. The increase was primarily driven by costs associated with the Company's VSP initiated during the third quarter of 2026. The VSP resulted in approximately $17.2 million of severance and related benefit costs. In addition, the severance charges in both periods included costs associated with a realignment of certain roles and responsibilities and reductions in workforce.
During the nine months ended September 30, 2026, we recorded severance and restructuring expense, net of adjustments, of approximately $37.9 million. Comparatively, during the nine months ended September 30, 2025, we recorded severance and restructuring expense, net of adjustments, of approximately $15.8 million. The increase was primarily driven by costs associated with the VSP initiated during the third quarter of 2026, as well as other workforce optimization activities undertaken during the period. The severance charges in both periods primarily related to a realignment of certain roles and responsibilities and reductions in workforce.
Acquisition and Integration Related Expenses. During the three months ended September 30, 2026, we recorded acquisition and integration related expenses of approximately $0.2 million. During the three months ended September 30, 2025, we recorded acquisition and integration related expenses of approximately $2.8 million primarily related to certain acquisitions that closed in the fourth quarter of 2025.
During the nine months ended September 30, 2026, we recorded acquisition and integration related expenses of approximately $0.5 million. During the nine months ended September 30, 2025, we recorded acquisition and integration related expenses of approximately $3.1 million primarily related to certain acquisitions that closed in the fourth quarter of 2025.
Earnings (Loss) from Operations. Earnings from operations decreased 26%, or $24.4 million, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. Earnings from operations increased 13%, or $31.6 million, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. Earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 |
% of Net Sales |
2025 |
% of Net Sales |
2026 |
% of Net Sales |
2025 |
% of Net Sales |
||||||||||||||||||||||||||||||||||||||||
| North America | $ | 84,123 | 4.2 | % | $ | 83,631 | 5.1 | % | $ | 262,904 | 4.7 | % | $ | 203,143 | 4.1 | % | |||||||||||||||||||||||||||||||
| EMEA | 6,870 | 2.0 | % | 4,487 | 1.4 | % | 22,964 | 2.1 | % | 20,654 | 2.0 | % | |||||||||||||||||||||||||||||||||||
| APAC | (22,302) | (18.6) | % | 4,949 | 8.4 | % | (14,528) | (5.2) | % | 15,905 | 9.0 | % | |||||||||||||||||||||||||||||||||||
| Consolidated | $ | 68,691 | 2.8 | % | $ | 93,067 | 4.6 | % | $ | 271,340 | 3.9 | % | $ | 239,702 | 3.9 | % | |||||||||||||||||||||||||||||||
North America's earnings from operations for the three months ended September 30, 2026 increased 1%, or $0.5 million, compared to the three months ended September 30, 2025. As a percentage of net sales, earnings from operations decreased by approximately 90 basis points to 4.2%. The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, including higher variable compensation, and higher severance and restructuring costs associated with the VSP, compared to the three months ended September 30, 2025.
North America's earnings from operations for the nine months ended September 30, 2026 increased 29%, or $59.8 million, compared to the nine months ended September 30, 2025. As a percentage of net sales, earnings from operations increased by approximately 60 basis points to 4.7%. The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, including higher variable compensation and higher acquisition-related earnout revaluation
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
adjustments, as well as higher severance and restructuring costs associated with the VSP, compared to the nine months ended September 30, 2025.
EMEA's earnings from operations for the three months ended September 30, 2026 increased 53%, or $2.4 million (increasing 55% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended September 30, 2025. As a percentage of net sales, earnings from operations increased by approximately 60 basis points to 2.0%. The increase in earnings from operations was primarily driven by an increase in gross profit, largely attributable to the continued contribution from certain large agency transactions discussed above, partially offset by higher severance and restructuring costs associated with the VSP, and higher selling and administrative expenses, compared to the three months ended September 30, 2025.
EMEA's earnings from operations for the nine months ended September 30, 2026 increased 11% or $2.3 million (increasing 13% when excluding the effects of fluctuating foreign currency exchange rates), compared to the nine months ended September 30, 2025. The increase in earnings from operations was primarily driven by an increase in gross profit, largely attributable to the continued contribution from certain large agency transactions discussed above, partially offset by higher severance and restructuring costs associated with the VSP and higher selling and administrative expenses, primarily related to transformation costs, compared to the nine months ended September 30, 2025.
APAC's earnings (loss) from operations for the three months ended September 30, 2026 decreased 551%, or $27.3 million (decreasing 541% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended September 30, 2025. As a percentage of net sales, earnings from operations declined to (18.6)%. The decrease in earnings from operations was primarily driven by the revaluation of earnout liabilities associated with Sekuro, partially offset by higher gross profit, compared to the three months ended September 30, 2025.
APAC's earnings (loss) from operations for the nine months ended September 30, 2026 decreased 191%, or $30.4 million (decreasing 188% when excluding the effects of fluctuating foreign currency exchange rates), compared to the nine months ended September 30, 2025. As a percentage of net sales, earnings from operations declined to (5.2)%. The decrease in earnings from operations was primarily driven by the revaluation of earnout liabilities associated with Sekuro, partially offset by higher gross profit, compared to the nine months ended September 30, 2025.
Adjusted Earnings from Operations. Adjusted earnings from operations increased 23%, or $31.6 million, year over year, in the three months ended September 30, 2026 compared to the three months ended September 30, 2025. Adjusted earnings from operations increased 27%, or $104.2 million, year over year, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. Adjusted earnings from operations as a percentage of net sales by operating segment were as follows for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 |
% of Net Sales |
2025 |
% of Net Sales |
2026 |
% of Net Sales |
2025 |
% of Net Sales |
||||||||||||||||||||||||||||||||||||||||
| North America | $ | 132,009 | 6.7 | % | $ | 116,712 | 7.2 | % | $ | 403,462 | 7.2 | % | $ | 320,529 | 6.4 | % | |||||||||||||||||||||||||||||||
| EMEA | 18,437 | 5.5 | % | 12,153 | 3.8 | % | 53,781 | 5.0 | % | 45,743 | 4.5 | % | |||||||||||||||||||||||||||||||||||
| APAC | 16,495 | 13.7 | % | 6,439 | 11.0 | % | 31,477 | 11.3 | % | 18,256 | 10.3 | % | |||||||||||||||||||||||||||||||||||
| Consolidated | $ | 166,941 | 6.8 | % | $ | 135,304 | 6.8 | % | $ | 488,720 | 7.0 | % | $ | 384,528 | 6.2 | % | |||||||||||||||||||||||||||||||
North America's Adjusted earnings from operations for the three months ended September 30, 2026 increased 13%, or $15.3 million, compared to the three months ended September 30, 2025. As a percentage of net sales, Adjusted earnings from operations decreased by approximately 50 basis points to 6.7%. The increase in Adjusted earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, primarily due to increased variable compensation expense.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
North America's Adjusted earnings from operations for the nine months ended September 30, 2026 increased 26%, or $82.9 million, compared to the nine months ended September 30, 2025. As a percentage of net sales, Adjusted earnings from operations increased by approximately 80 basis points to 7.2%. The increase in Adjusted earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, primarily due to increased variable compensation expense.
EMEA's Adjusted earnings from operations for the three months ended September 30, 2026 increased 52%, or $6.3 million (increasing 53% excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended September 30, 2025. As a percentage of net sales, Adjusted earnings from operations increased by approximately 170 basis points to 5.5%. The increase in Adjusted earnings from operations was primarily driven by an increase in gross profit, primarily from the continued contribution from certain large agency transactions discussed above, partially offset by an increase in selling and administrative expenses.
EMEA's Adjusted earnings from operations for the nine months ended September 30, 2026 increased 18%, or $8.0 million (increasing 16% excluding the effects of fluctuating foreign currency exchange rates), compared to the nine months ended September 30, 2025. As a percentage of net sales, Adjusted earnings from operations increased by approximately 50 basis points to 5.0%. The increase in Adjusted earnings from operations was largely driven by an increase in gross profit, primarily from the continued contribution from certain large agency transactions discussed above, partially offset by an increase in selling and administrative expenses.
APAC's Adjusted earnings from operations for the three months ended September 30, 2026 increased 156%, or $10.1 million (increasing 148% excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended September 30, 2025. As a percentage of net sales, Adjusted earnings from operations increased by approximately 270 basis points to 13.7%. The increase in Adjusted earnings from operations was primarily driven by an increase in gross profit, largely attributable to Sekuro, partially offset by higher selling and administrative expenses.
APAC's Adjusted earnings from operations for the nine months ended September 30, 2026 increased 72%, or $13.2 million (increasing 65% excluding the effects of fluctuating foreign currency exchange rates), compared to the nine months ended September 30, 2025. As a percentage of net sales, Adjusted earnings from operations increased by approximately 100 basis points to 11.3%. The increase in Adjusted earnings from operations was primarily driven by an increase in gross profit, largely attributable to Sekuro, partially offset by higher selling and administrative expenses.
Non-Operating Expense (Income).
Interest Expense, Net. Interest expense, net primarily relates to borrowings under our financing facilities and imputed interest under our inventory financing facilities, the previously outstanding Convertible Notes and the Senior Notes, as applicable, partially offset by interest income generated from interest earned on cash and cash equivalent bank balances. Interest expense, net for the three months ended September 30, 2026 increased 8%, or $1.8 million, compared to the three months ended September 30, 2025. This was primarily due to higher loan balances under our ABL facility and inventory financing facilities, partially offset by increased interest income and lower interest rates on ABL facility borrowings in the current year period. Interest expense, net for the nine months ended September 30, 2026 increased 19%, or $11.9 million, compared to the nine months ended September 30, 2025. The increase in the nine months ended September 30, 2026 was primarily due to higher loan balances under our ABL facility and inventory financing facilities and the maturity of the Convertible Notes in February 2025, partially offset by lower interest rates and increased interest income.
Imputed interest under our inventory financing facilities was $3.1 million and $9.0 million for the three and nine months ended September 30, 2026, compared to $2.6 million and $7.4 million for the three and nine months ended September 30, 2025. For a description of our various financing facilities, see Note 5 to our Condensed Consolidated Financial Statements in Part I, Item 1 of this report.
Other Income (Expense), Net. Other income (expense), net primarily reflects a net loss on the revaluation of warrant settlement liabilities of $25.1 million recorded in the nine months ended September 30, 2025 in connection with the cash settlement of a portion of the Warrants, with no comparable activity in the nine months
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
ended September 30, 2026. For additional information regarding the Warrants, see Note 5 to our Condensed Consolidated Financial Statements in Part I, Item 1 of this report.
Income Tax Expense. Our effective tax rate of 49.9% for the three months ended September 30, 2026 was higher than our effective tax rate of 27.9% for the same period in 2025. This increase was primarily due to the non-deductibility of losses from the revaluation of earnout liabilities in the current period.
Our effective tax rate was 35.1% for the nine months ended September 30, 2026, compared to 31.5% for the same period in 2025. The effective tax rate increased primarily due to higher non-deductible losses associated with the revaluation of earnout liabilities in the current period.
Use of Non-GAAP Financial Measures
Adjusted non-GAAP earnings from operations (which we also refer to as "Adjusted earnings from operations") excludes (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, (vii) impairment losses, net on long lived real estate assets held for sale, (viii) stock-based compensation expense, and (ix) 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.
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||
| Adjusted Earnings from Operations (in thousands): | North America | EMEA | APAC | Consolidated | |||||||||||||||||||
| GAAP earnings from operations | $ | 84,123 | $ | 6,870 | $ | (22,302) | $ | 68,691 | |||||||||||||||
| Amortization of intangible assets | 18,635 | 1,711 | 585 | 20,931 | |||||||||||||||||||
| Change in fair value of earnout liabilities | 1,720 | - | 36,875 | 38,595 | |||||||||||||||||||
| Transformation costs | (640) | 1,428 | 164 | 952 | |||||||||||||||||||
| Impairment loss, net on a long lived real estate asset held for sale | (280) | - | - | (280) | |||||||||||||||||||
| Severance and restructuring expenses, net | 18,219 | 7,124 | 317 | 25,660 | |||||||||||||||||||
| Acquisition and integration related expenses | 21 | - | 212 | 233 | |||||||||||||||||||
| Stock-based compensation expense | 9,820 | 1,304 | 644 | 11,768 | |||||||||||||||||||
|
Other*
|
391 | - | - | 391 | |||||||||||||||||||
| Adjusted non-GAAP earnings from operations | $ | 132,009 | $ | 18,437 | $ | 16,495 | $ | 166,941 | |||||||||||||||
| GAAP EFO as a percentage of net sales | 4.2 | % | 2.0 | % | (18.6 | %) | 2.8% | ||||||||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 6.7 | % | 5.5 | % | 13.7 | % | 6.8% | ||||||||||||||||
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
| Three Months Ended September 30, 2025 | |||||||||||||||||||||||
| Adjusted Earnings from Operations (in thousands): | North America | EMEA | APAC | Consolidated | |||||||||||||||||||
| GAAP earnings from operations | $ | 83,631 | $ | 4,487 | $ | 4,949 | $ | 93,067 | |||||||||||||||
| Amortization of intangible assets | 16,806 | 1,872 | - | 18,678 | |||||||||||||||||||
| Change in fair value of earnout liabilities | 3,800 | - | - | 3,800 | |||||||||||||||||||
| Transformation costs | 908 | 2,021 | - | 2,929 | |||||||||||||||||||
| Impairment loss on a long lived real estate asset held for sale | - | - | - | - | |||||||||||||||||||
| Severance and restructuring expenses, net | 3,069 | 2,146 | 175 | 5,390 | |||||||||||||||||||
| Acquisition and integration related expenses | 1,898 | - | 933 | 2,831 | |||||||||||||||||||
| Stock-based compensation expense | 6,847 | 1,627 | 382 | 8,856 | |||||||||||||||||||
|
Other*
|
(247) | - | - | (247) | |||||||||||||||||||
| Adjusted non-GAAP earnings from operations | $ | 116,712 | $ | 12,153 | $ | 6,439 | $ | 135,304 | |||||||||||||||
| GAAP EFO as a percentage of net sales | 5.1 | % | 1.4 | % | 8.4 | % | 4.6% | ||||||||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 7.2 | % | 3.8 | % | 11.0 | % | 6.8% | ||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||
| Adjusted Earnings from Operations (in thousands): | North America | EMEA | APAC | Consolidated | |||||||||||||||||||
| GAAP earnings from operations | $ | 262,904 | $ | 22,964 | $ | (14,528) | $ | 271,340 | |||||||||||||||
| Amortization of intangible assets | 55,933 | 5,327 | 1,775 | 63,035 | |||||||||||||||||||
| Change in fair value of earnout liabilities | 22,800 | - | 41,374 | 64,174 | |||||||||||||||||||
| Transformation costs | 9,028 | 8,062 | 196 | 17,286 | |||||||||||||||||||
| Impairment loss on a long lived real estate asset held for sale | 1,753 | - | - | 1,753 | |||||||||||||||||||
| Severance and restructuring expenses, net | 24,908 | 12,274 | 758 | 37,940 | |||||||||||||||||||
| Acquisition and integration related expenses | 210 | (16) | 305 | 499 | |||||||||||||||||||
| Stock-based compensation expense | 24,312 | 5,170 | 1,597 | 31,079 | |||||||||||||||||||
| Other* | 1,614 | - | - | 1,614 | |||||||||||||||||||
| Adjusted non-GAAP earnings from operations | $ | 403,462 | $ | 53,781 | $ | 31,477 | $ | 488,720 | |||||||||||||||
| GAAP EFO as a percentage of net sales | 4.7 | % | 2.1 | % | (5.2 | %) | 3.9% | ||||||||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 7.2 | % | 5.0 | % | 11.3 | % | 7.0% | ||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| Adjusted Earnings from Operations (in thousands): | North America | EMEA | APAC | Consolidated | |||||||||||||||||||
| GAAP earnings from operations | $ | 203,143 | $ | 20,654 | $ | 15,905 | $ | 239,702 | |||||||||||||||
| Amortization of intangible assets | 50,427 | 5,467 | - | 55,894 | |||||||||||||||||||
| Change in fair value of earnout liabilities | 15,701 | 3,463 | - | 19,164 | |||||||||||||||||||
| Transformation costs | 6,696 | 4,508 | - | 11,204 | |||||||||||||||||||
| Impairment loss on a long lived real estate asset held for sale | 12,588 | - | - | 12,588 | |||||||||||||||||||
| Severance and restructuring expenses, net | 8,734 | 6,802 | 285 | 15,821 | |||||||||||||||||||
| Acquisition and integration related expenses | 2,144 | - | 938 | 3,082 | |||||||||||||||||||
| Stock-based compensation expense | 20,788 | 4,849 | 1,128 | 26,765 | |||||||||||||||||||
| Other* | 308 | - | - | 308 | |||||||||||||||||||
| Adjusted non-GAAP earnings from operations | $ | 320,529 | $ | 45,743 | $ | 18,256 | $ | 384,528 | |||||||||||||||
| GAAP EFO as a percentage of net sales | 4.1 | % | 2.0 | % | 9.0 | % | 3.9% | ||||||||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 6.4 | % | 4.5 | % | 10.3 | % | 6.2% | ||||||||||||||||
|
*
|
Other includes certain executive recruitment and hiring related expenses and certain third-party data center service outage related expenses and recoveries, net. Certain executive recruitment and hiring related expenses were $0.4 million and $1.6 million for the three and nine months ended September 30, 2026, respectively, compared to $0.4 million and $0.5 million for the three and nine months ended September 30, 2025. Certain third-party data center service outage related recoveries were $0.6 million and $0.2 million for the three and nine months ended September 30, 2025 with no comparable activity for either the three or nine months ended September 30, 2026.
|
||||
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources
The following table sets forth certain consolidated cash flow information for the nine months ended September 30, 2026 and 2025 (in thousands):
|
Nine Months Ended September 30, |
|||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 148,549 | $ | 150,057 | |||||||
| Net cash used in investing activities | (12,747) | (17,551) | |||||||||
| Net cash (used in) provided by financing activities | (87,303) | 136,521 | |||||||||
| Foreign currency exchange effect on cash, cash equivalent and restricted cash balances | (8,398) | 18,953 | |||||||||
| Increase in cash, cash equivalents and restricted cash | 40,101 | 287,980 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 360,777 | 261,467 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 400,878 | $ | 549,447 | |||||||
Cash and Cash Flow
•Our primary use of cash during the nine months ended September 30, 2026 was to repurchase shares of our common stock.
•Operating activities provided $148.5 million in cash during the nine months ended September 30, 2026, compared to cash provided by operating activities of $150.1 million during the nine months ended September 30, 2025.
•Capital expenditures were $21.0 million and $17.6 million for the nine months ended September 30, 2026 and 2025, respectively.
•During the nine months ended September 30, 2026, we repurchased $225.0 million of our common stock compared to $151.1 million of repurchases during the nine months ended September 30, 2025.
•We had net borrowings under our ABL facility during the nine months ended September 30, 2026 of $139.1 million compared to net borrowings of $852.2 million during the nine months ended September 30, 2025.
•We had net borrowings under our inventory financing facilities of $18.8 million during the nine months ended September 30, 2026 compared to net borrowings of $21.9 million during the nine months ended September 30, 2025.
•We repaid approximately $333.1 million for the remaining principal balance upon maturity of the Convertible Notes in the nine months ended September 30, 2025.
•We paid $222.0 million to settle a portion of the Warrants relating to the Call Spread Transactions associated with the Convertible Notes in the nine months ended September 30, 2025. All Warrants were fully settled or expired by the end of 2025.
We anticipate that cash flows from operations, together with the funds available under our financing facilities, will be adequate to support our expected cash and working capital requirements for operations, as well as other strategic acquisitions, over the next 12 months and beyond. We expect existing cash and cash flows from operations to continue to be sufficient to fund our operating cash activities and cash commitments for investing and financing activities, such as capital expenditures, strategic acquisitions, repurchases of our common stock, debt repayments and repayment of our inventory financing facilities for the next 12 months. We currently expect to fund known cash commitments beyond the next 12 months through operating cash activities and/or other available financing resources.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Net cash provided by operating activities
•We have an inverted cash cycle resulting from typically paying partners on shorter terms than we provide to our clients. This generally means in periods of growing hardware sales, we typically use cash from operations.
•Cash flow provided by operating activities in the first nine months of 2026 was $148.5 million, compared to $150.1 million in the first nine months of 2025.
•The decrease in cash provided by operating activities period over period was primarily due to an increased use of cash for working capital, particularly accounts receivable and inventories, partially offset by higher net earnings and an increase in accounts payable. Changes in accounts receivable and accounts payable were primarily influenced by netting on certain agent revenue streams, principally large agency pay when paid transactions in the United Kingdom and UAE (within our EMEA segment), as well as changes in vendor mix and the timing of customer receipts compared to partner payments.
•We continue to be impacted by netted costs that we apply to our services net sales to appropriately record net sales that we earn as an agent. These netted costs, while excluded from net sales and cost of goods sold, are processed and applied to accounts receivable and accounts payable in each reporting period. A large portion of these netted costs relate to our large agency arrangements in the United Kingdom and UAE, under which transactions are structured on a pay when paid basis, meaning that, as a paid pass-through agent, our obligation to remit payment to the vendor is contingent upon our receipt of payment from the client. As a result, the gross receivable from the client and the corresponding gross payable are recorded simultaneously, inflating both accounts receivable and accounts payable by equivalent amounts without a corresponding net cash flow impact until settlement. Fluctuations in these transactions can therefore significantly affect reported accounts receivable and accounts payable balances, and corresponding period-over-period changes in working capital, while generally having a limited impact on operating cash flow because collections from clients and payments to vendors generally offset one another. Further, calculation of our unadjusted cash conversion cycle, including days sales outstanding and days payables outstanding, is not a reflection of our net cash receipts or payments, due to the metric components being inherently inflated by these gross accounts receivable and accounts payable balances. For example, netted costs were $5.4 billion and $3.8 billion in the third quarter of 2026 and 2025, respectively.
•We expect that cash flow from operations will be used, at least partially, to fund working capital as we typically pay our partners on average terms that are shorter than the average terms we grant to our clients in order to take advantage of supplier discounts, excluding certain large agency transactions in our EMEA segment with differing payment terms, as discussed above.
•We intend to use cash generated in the remainder of 2026 in excess of working capital needs to pay down our ABL facility and inventory financing facilities, and to repurchase shares of our common stock.
Net cash used in investing activities
•Capital expenditures were $21.0 million and $17.6 million for the nine months ended September 30, 2026 and 2025, respectively.
•During the nine months ended September 30, 2026, we received proceeds of $8.3 million from the sale of the Santa Monica property.
•We expect capital expenditures for the full year 2026 to be between approximately $20.0 and $30.0 million.
Net cash (used in) provided by financing activities
•During the nine months ended September 30, 2026, we had net borrowings under our ABL facility of $139.1 million, which were primarily used to repurchase shares of our common stock.
•During the nine months ended September 30, 2025, we had net borrowings under our ABL facility that increased our outstanding long-term debt balance by $852.2 million, which were primarily used to fund the repayment of the remaining principal balance upon maturity of the Convertible Notes, to settle a portion of the Warrants and to repurchase shares of our common stock.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
•We had net borrowings under our inventory financing facilities of $18.8 million during the nine months ended September 30, 2026 compared to net borrowings of $21.9 million during the nine months ended September 30, 2025.
•We repaid approximately $333.1 million for the remaining principal balance upon maturity of the Convertible Notes in the nine months ended September 30, 2025.
•We paid $222.0 million to settle a portion of the Warrants relating to the Call Spread Transactions associated with the Convertible Notes in cash in the nine months ended September 30, 2025. All Warrants were fully settled or expired by the end of 2025.
•During the nine months ended September 30, 2026, we made earnout and acquisition related payments of $17.2 million primarily associated with our acquisition of Infocenter and Amdaris Group Limited.
•During the nine months ended September 30, 2025, we made earnout and acquisition related payments of $20.2 million primarily associated with our acquisition of Infocenter.
•During the nine months ended September 30, 2026, we repurchased $225.0 million of our common stock.
•During the nine months ended September 30, 2025, we repurchased $151.1 million of our common stock.
Financing Facilities
•Our debt balance as of September 30, 2026 was $1.5 billion.
•Our objective is to pay our debt balances down while retaining adequate cash balances to meet overall business objectives.
•The Senior Notes are subject to certain events of default and certain acceleration clauses. As of September 30, 2026, no such events have occurred.
•Our ABL facility contains various covenants customary for transactions of this type, including complying with a minimum receivable and inventory requirement and meeting monthly, quarterly and annual reporting requirements.
•The credit agreement contains customary affirmative and negative covenants and events of default.
•At September 30, 2026, we were in compliance with all such covenants.
•While the ABL facility has a stated maximum amount, the actual availability under the ABL facility is limited by a minimum accounts receivable and inventory requirement. As of September 30, 2026, eligible accounts receivable and inventory were sufficient to permit access to the full $2.0 billion under the ABL facility of which $1,004.8 million was outstanding.
We also have agreements with financial intermediaries to facilitate the purchase of inventory from certain suppliers under certain terms and conditions.
•These amounts are classified separately as accounts payable - inventory financing facilities in our condensed consolidated balance sheets.
•Our inventory financing facilities have an aggregate availability for vendor purchases of $755.0 million, of which $243.3 million was outstanding at September 30, 2026.
Undistributed Foreign Earnings
Cash and cash equivalents held by foreign subsidiaries are generally subject to U.S. income taxation upon repatriation to the United States. As of September 30, 2026, we had approximately $326.7 million in cash and cash equivalents in certain of our foreign subsidiaries, primarily residing in Canada and Australia. Certain of these cash balances will be remitted to the United States or other countries by paying down intercompany payables generated in the ordinary course of business or through actual dividend distributions.
Off-Balance Sheet Arrangements
We have entered into off-balance sheet arrangements, which include indemnifications. The indemnifications are discussed in Note 8 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report and such discussion is incorporated by reference herein. We believe that none of our off-balance sheet
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
arrangements have, or are reasonably likely to have, a material current or future effect on our financial condition, sales or expenses, results of operations, liquidity, capital expenditures or capital resources.
Recently Issued Accounting Standards
The information contained in Note 1 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report concerning a description of recently issued accounting standards which affect or may affect our financial statements, including our expected dates of adoption and the estimated effects on our results of operations and financial condition, is incorporated by reference herein.
Contractual Obligations
Other than as described in Note 8 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this report, there have been no material changes in our reported contractual obligations, as described under "Cash Requirements From Contractual Obligations" in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.
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