Insight Enterprises Inc.
05/07/2026 | Press release | Distributed by Public on 05/07/2026 12:28
Quarterly Report for Quarter Ending March 31, 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 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 March 31, 2026:
•Net sales of $2.1 billion increased 1% compared to the three months ended March 31, 2025. The increase was primarily due to increases in services and hardware net sales as well as continued net revenue recognition in instances where Insight is the agent, partially offset by a decrease in software net sales. Excluding the effects of fluctuating foreign currency exchange rates, net sales decreased 1% compared to the first quarter of 2025.
•Gross profit of $462.2 million increased 14% compared to the three months ended March 31, 2025, primarily driven by increases in cloud solution offerings and Insight Core Services. Excluding the effects of fluctuating foreign currency exchange rates, gross profit increased 11% compared to the first quarter of 2025.
•Compared to the three months ended March 31, 2025, gross margin expanded approximately 240 basis points to 21.7% of net sales in the three months ended March 31, 2026. This expansion reflects higher margin contributed by services net sales, including both cloud solution offerings and Insight Core Services, compared to the same period in the prior year.
•Earnings from operations increased 19%, year over year, to $71.7 million in the first quarter of 2026 compared to $60.1 million in the first quarter of 2025. The net change reflects an increase in gross profit, partially offset by an increase in selling and administrative expenses. Excluding the effects of fluctuating foreign currency exchange rates, earnings from operations increased 17% year over year.
•Net earnings and diluted earnings per share were $30.0 million and $0.97, respectively, for the first quarter of 2026. This compares to net earnings of $7.5 million and diluted earnings per share of $0.22 for the first quarter of 2025. The increase in net earnings was primarily due to an increase in earnings from operations in the first quarter of 2026 and the revaluation of warrant settlement liabilities recorded in the first quarter of 2025. Diluted earnings per share increased more than 100% year over year, primarily as a result of an increase in net earnings and a decrease in dilutive shares outstanding in the first quarter of 2026. Excluding the effects of fluctuating foreign currency exchange rates, diluted earnings per share also increased more than 100% year over year.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
In discussing financial results for the three months ended March 31, 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 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 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 in the first quarter of 2026 consistent with the prior year. Interest rates are expected to hold steady and continue to remain higher than historical rates throughout most 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 in 2026 and beyond.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Critical Accounting Estimates
Our 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 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 months ended March 31, 2026 and 2025:
|
Three Months Ended March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| Net sales | 100.0 | % | 100.0 | % | |||||||
| Costs of goods sold | 78.3 | 80.7 | |||||||||
| Gross profit | 21.7 | 19.3 | |||||||||
| Selling and administrative expenses | 18.0 | 16.1 | |||||||||
| Severance and restructuring expenses, net and acquisition and integration related expenses | 0.3 | 0.3 | |||||||||
| Earnings from operations | 3.4 | 2.9 | |||||||||
| Non-operating expense, net | 1.1 | 2.0 | |||||||||
| Earnings before income taxes | 2.3 | 0.9 | |||||||||
| Income tax expense | 0.9 | 0.5 | |||||||||
| Net earnings | 1.4 | % | 0.4 | % | |||||||
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 $2.1 billion for the three months ended March 31, 2026 increased 1%, year over year, compared to the three months ended March 31, 2025, primarily reflecting increases in our EMEA and APAC operating segments, partially offset by a decrease in our North America operating segment.
Our net sales by operating segment were as follows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
|
Three Months Ended March 31, |
% Change |
||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| North America | $ | 1,682,805 | $ | 1,700,643 | (1) | % | |||||||||||
| EMEA | 372,851 | 342,828 | 9 | % | |||||||||||||
| APAC | 72,330 | 60,085 | 20 | % | |||||||||||||
| Consolidated | $ | 2,127,986 | $ | 2,103,556 | 1 | % | |||||||||||
Our net sales by offering category for North America for the three months ended March 31, 2026 and 2025 were as follows (dollars in thousands):
|
Three Months Ended March 31, |
% Change |
|||||||||||||||||||
| Sales Mix | 2026 | 2025 | ||||||||||||||||||
| Hardware | $ | 1,063,670 | $ | 1,006,294 | 6 | % | ||||||||||||||
| Software | 285,347 | 396,733 | (28) | % | ||||||||||||||||
| Services | 333,788 | 297,616 | 12 | % | ||||||||||||||||
| $ | 1,682,805 | $ | 1,700,643 | (1) | % | |||||||||||||||
Net sales in North America decreased 1%, or $17.8 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily driven by decreases in software net sales of 28%. The decrease was partially offset by increases in services and hardware net sales of 12% and 6%, year over year, respectively. The net changes for the three months ended March 31, 2026 were the result of the following:
•The increase in hardware net sales was primarily due to a mix of higher volume of sales and higher selling price to large enterprise clients. This reflects an increase in both devices and infrastructure net sales.
•The increase in services net sales was due to an increase in cloud solution offerings combined with an increase in Insight Delivered services from the Inspire11 acquisition.
•The decrease in software net sales was primarily due to changes in certain vendor relationships (shifting us from a principal to an agent role), as well as the continued migration of on-premise software to cloud solutions, in each case, reported net in services net sales.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Our net sales by offering category for EMEA for the three months ended March 31, 2026 and 2025 were as follows (dollars in thousands):
|
Three Months Ended March 31, |
% Change |
|||||||||||||||||||
| Sales Mix | 2026 | 2025 | ||||||||||||||||||
| Hardware | $ | 143,478 | $ | 128,864 | 11 | % | ||||||||||||||
| Software | 138,477 | 138,296 | - | % | ||||||||||||||||
| Services | 90,896 | 75,668 | 20 | % | ||||||||||||||||
| $ | 372,851 | $ | 342,828 | 9 | % | |||||||||||||||
Net sales in EMEA increased 9%, or $30.0 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA remained relatively flat, year to year. Net sales of services and hardware increased by 20% and 11%, respectively, year over year, with software net sales remaining flat, year over year. The net changes for the three months ended March 31, 2026 were the result of the following:
•The increase in hardware net sales was primarily due to higher volume of sales to large enterprise clients, partially offset by lower volume of sales to commercial and public sector clients.
•The increase in services net sales was primarily due to increases in Insight Delivered services and other agency net sales.
Our net sales by offering category for APAC for the three months ended March 31, 2026 and 2025 were as follows (dollars in thousands):
|
Three Months Ended March 31, |
% Change |
|||||||||||||||||||
| Sales Mix | 2026 | 2025 | ||||||||||||||||||
| Hardware | $ | 13,069 | $ | 6,358 | 106 | % | ||||||||||||||
| Software | 22,505 | 31,255 | (28) | % | ||||||||||||||||
| Services | 36,756 | 22,472 | 64 | % | ||||||||||||||||
| $ | 72,330 | $ | 60,085 | 20 | % | |||||||||||||||
Net sales in APAC increased 20%, or $12.2 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC increased 11%, year over year. Net sales of hardware and services increased by 106% and 64%, respectively, year over year. These increases were partially offset by a decrease in software net sales of 28%, year to year. The net changes for the three months ended March 31, 2026 were the result of the following:
•The increase in hardware net sales was due to higher volume of sales to enterprise and commercial clients.
•The increase in services net sales was primarily due to the acquisition of Sekuro in November 2025.
•The decrease in software net sales was primarily driven by a continued migration of on-premise software to cloud solutions, reported net in services net sales.
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 months ended March 31, 2026 and 2025:
| North America | EMEA | APAC | ||||||||||||||||||||||||||||||||||||
|
Three Months Ended March 31, |
Three Months Ended March 31, |
Three Months Ended March 31, |
||||||||||||||||||||||||||||||||||||
| Sales Mix | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Hardware | 63 | % | 59 | % | 39 | % | 38 | % | 18 | % | 11 | % | ||||||||||||||||||||||||||
| Software | 17 | % | 23 | % | 37 | % | 40 | % | 31 | % | 52 | % | ||||||||||||||||||||||||||
| Services | 20 | % | 18 | % | 24 | % | 22 | % | 51 | % | 37 | % | ||||||||||||||||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||||
Gross Profit. Gross profit increased 14%, or $55.7 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, with gross margin expanding approximately 240 basis points to 21.7% for the three months ended March 31, 2026 compared to 19.3% for the three months ended March 31, 2025.
Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | % of Net Sales | 2025 | % of Net Sales | ||||||||||||||||||||
| North America | $ | 353,326 | 21.0 | % | $ | 319,452 | 18.8 | % | |||||||||||||||
| EMEA | 86,803 | 23.3 | % | 71,927 | 21.0 | % | |||||||||||||||||
| APAC | 22,022 | 30.4 | % | 15,098 | 25.1 | % | |||||||||||||||||
| Consolidated | $ | 462,151 | 21.7 | % | $ | 406,477 | 19.3 | % | |||||||||||||||
North America's gross profit for the three months ended March 31, 2026 increased 11%, or $33.9 million, compared to the three months ended March 31, 2025. As a percentage of net sales, gross margin expanded approximately 220 basis points to 21.0%, year over year. The year over year net expansion in gross margin was primarily attributable to the following:
•An expansion in services margin of 188 basis points combined with expansion in product margin of 23 basis points.
•The increase in services margin primarily reflects an increase in margin contribution from cloud solution offerings combined with an increase in margin contribution from Insight Core Services.
•The expansion in product margin primarily reflects improved performance in partner programs, partially offset by a mix of hardware sales with lower margins compared to the prior year period.
EMEA's gross profit for the three months ended March 31, 2026 increased 21%, or $14.9 million, year over year (increasing 11% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, gross margin expanded 230 basis points to 23.3%, year over year. The year over year net expansion in gross margin was attributable to the following:
•An increase in services margin of 250 basis points partially offset by a contraction in product margin of 20 basis points.
•The increase in services margin is primarily the result of increased margin contribution from cloud solution offerings.
•The contraction in product margin is primarily the result of sales at lower margins than in the prior year period for both hardware and software.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
APAC's gross profit for the three months ended March 31, 2026 increased 46%, or $6.9 million, year over year (increasing 35% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, gross margin expanded 530 basis points to 30.4%, year over year. The year over year net expansion in gross margin was attributable to a net expansion in services margin of 735 basis points due to the acquisition of Sekuro, partially offset by a contraction in product margin of 203 basis points.
Operating Expenses.
Selling and Administrative Expenses. Selling and administrative expenses for the three months ended March 31, 2026 increased 13%, or $44.8 million, compared to the three months ended March 31, 2025 (an increase of 11% when excluding the effects of fluctuating foreign currency exchange rates).
Selling and administrative expenses increased approximately 190 basis points as a percentage of net sales in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The overall net increase in selling and administrative expenses primarily reflects an increase in personnel costs of $24.0 million and other expenses of approximately $16.5 million. The increase in personnel costs was driven by variable compensation costs and expenses from acquisitions in Q4 2025. The increase in other expenses primarily reflects a net loss on revaluation of earnout liabilities of approximately $25.3 million for the first quarter of 2026 compared to a net loss of $15.2 million for the first quarter of 2025 primarily due to the acquisitions of Inspire 11 and Sekuro. We also incurred transformation costs in the current and prior year periods of $6.5 million and $1.3 million, respectively. We have been undergoing a transformation of our business in phases across the global organization to help us achieve our strategic objectives, including becoming a leading solutions integrator. These costs are unique in nature to the individual transformation phases and are generally not expected to recur in the longer term.
Severance and Restructuring Expenses, net. During the three months ended March 31, 2026, we recorded severance and restructuring expenses, net of adjustments, of approximately $6.5 million. Comparatively, during the three months ended March 31, 2025, we recorded severance and restructuring expenses, net of adjustments, of approximately $7.0 million. 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 March 31, 2025, we recorded acquisition and integration related expenses of approximately $0.2 million with no significant comparable activity during the three months ended March 31,2026.
Earnings from Operations. Earnings from operations increased 19%, or $11.6 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 |
% of Net Sales |
2025 |
% of Net Sales |
||||||||||||||||||||
| North America | $ | 66,198 | 3.9 | % | $ | 50,790 | 3.0 | % | |||||||||||||||
| EMEA | 6,605 | 1.8 | % | 5,011 | 1.5 | % | |||||||||||||||||
| APAC | (1,121) | (1.5) | % | 4,302 | 7.2 | % | |||||||||||||||||
| Consolidated | $ | 71,682 | 3.4 | % | $ | 60,103 | 2.9 | % | |||||||||||||||
North America's earnings from operations for the three months ended March 31, 2026 increased 30%, or $15.4 million, compared to the three months ended March 31, 2025. As a percentage of net sales, earnings from operations increased by approximately 90 basis points to 3.9%. 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 expenses relating to the acquisition of Inspire11, when compared to the three months ended March 31, 2025.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
EMEA's earnings from operations for the three months ended March 31, 2026 increased 32%, or $1.6 million (increasing 22% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, earnings from operations increased by approximately 30 basis points to 1.8%. The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in transformation costs within selling and administrative expenses, when compared to the three months ended March 31, 2025.
APAC's earnings from operations for the three months ended March 31, 2026 decreased 126%, or $5.4 million (decreasing 125% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, earnings from operations decreased by approximately 870 basis points to (1.5)%. The decrease in earnings from operations was driven by expenses related to the acquisition of Sekuro, partially offset by an increase in gross profit when compared to the three months ended March 31, 2025.
Adjusted Earnings from Operations. Adjusted earnings from operations increased 27%, or $29.9 million, year over year, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Adjusted earnings from operations as a percentage of net sales by operating segment were as follows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 |
% of Net Sales |
2025 |
% of Net Sales |
||||||||||||||||||||
| North America | $ | 122,399 | 7.3 | % | $ | 93,860 | 5.5 | % | |||||||||||||||
| EMEA | 14,762 | 4.0 | % | 12,599 | 3.7 | % | |||||||||||||||||
| APAC | 3,987 | 5.5 | % | 4,740 | 7.9 | % | |||||||||||||||||
| Consolidated | $ | 141,148 | 6.6 | % | $ | 111,199 | 5.3 | % | |||||||||||||||
North America's Adjusted earnings from operations for the three months ended March 31, 2026 increased 30%, or $28.5 million, compared to the three months ended March 31, 2025. As a percentage of net sales, Adjusted earnings from operations increased by approximately 180 basis points to 7.3%. 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.
EMEA's Adjusted earnings from operations for the three months ended March 31, 2026 increased 17%, or $2.2 million (increasing 9% excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, Adjusted earnings from operations increased by approximately 30 basis points to 4.0%. 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.
APAC's Adjusted earnings from operations for the three months ended March 31, 2026 decreased 16%, or $0.8 million (decreasing 21% excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, Adjusted earnings from operations decreased by approximately 240 basis points to 5.5%. The decrease in Adjusted earnings from operations was primarily driven by an increase in selling and administrative expenses, partially offset by an increase in gross profit.
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 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 March 31, 2026 increased 51%, or $8.0 million, compared to the three months ended March 31, 2025. This was primarily due to the higher loan
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
balances under our ABL facility and decreased interest income, partially offset by lower interest rates on ABL borrowings in the current year period.
Imputed interest under our inventory financing facilities was $2.7 million for the three months ended March 31, 2026, compared to $2.4 million for the three months ended March 31, 2025. For a description of our various financing facilities, see Note 5 to our 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 three months ended March 31, 2025 in connection with the cash settlement of a portion of the Warrants, with no comparable activity in the three months ended March 31, 2026 For additional information regarding the Warrants, see Note 5 to our Consolidated Financial Statements in Part I, Item 1 of this report.
Income Tax Expense. Our effective tax rate of 39.4% for the three months ended March 31, 2026 was lower than our effective tax rate of 60.5% for the three months ended March 31, 2025. The decrease primarily reflects the non-deductibility of net losses related to the fair value adjustment associated with warrant settlement liabilities during the three months ended March 31, 2025, which did not recur during the three months ended March 31, 2026, and a year to year decrease in non-deductible net losses related to the revaluation of earnout liabilities. These items were partially offset by a non-recurring foreign tax credit valuation allowance release recorded in the three months ended March 31, 2025 and current period tax shortfalls relating to share-based compensation.
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 on long lived real estate assets held for sale, and (viii) stock-based compensation expense, 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 March 31, 2026 | |||||||||||||||||||||||
| Adjusted Earnings from Operations (in thousands): | North America | EMEA | APAC | Consolidated | |||||||||||||||||||
| GAAP earnings from operations | $ | 66,198 | $ | 6,605 | $ | (1,121) | $ | 71,682 | |||||||||||||||
| Amortization of intangible assets | 18,644 | 1,813 | 602 | 21,059 | |||||||||||||||||||
| Change in fair value of earnout liabilities | 21,286 | - | 4,007 | 25,293 | |||||||||||||||||||
| Transformation costs | 3,582 | 2,922 | - | 6,504 | |||||||||||||||||||
| Impairment loss on a long lived real estate asset held for sale | 1,369 | - | - | 1,369 | |||||||||||||||||||
| Severance and restructuring expenses, net | 4,641 | 1,750 | 94 | 6,485 | |||||||||||||||||||
| Acquisition and integration related expenses | 61 | (16) | (44) | 1 | |||||||||||||||||||
| Stock-based compensation expense | 6,060 | 1,688 | 449 | 8,197 | |||||||||||||||||||
|
Other*
|
558 | - | - | 558 | |||||||||||||||||||
| Adjusted non-GAAP earnings from operations | $ | 122,399 | $ | 14,762 | $ | 3,987 | $ | 141,148 | |||||||||||||||
| GAAP EFO as a percentage of net sales | 3.9 | % | 1.8 | % | (1.5 | %) | 3.4% | ||||||||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 7.3 | % | 4.0 | % | 5.5 | % | 6.6% | ||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| Adjusted Earnings from Operations (in thousands): | North America | EMEA | APAC | Consolidated | |||||||||||||||||||
| GAAP earnings from operations | $ | 50,790 | $ | 5,011 | $ | 4,302 | $ | 60,103 | |||||||||||||||
| Amortization of intangible assets | 16,804 | 1,744 | - | 18,548 | |||||||||||||||||||
| Change in fair value of earnout liabilities | 15,200 | - | - | 15,200 | |||||||||||||||||||
| Transformation costs | 860 | 410 | - | 1,270 | |||||||||||||||||||
| Severance and restructuring expenses, net | 3,111 | 3,853 | 62 | 7,026 | |||||||||||||||||||
| Acquisition and integration related expenses | 170 | - | 5 | 175 | |||||||||||||||||||
| Stock-based compensation expense | 6,895 | 1,581 | 371 | 8,847 | |||||||||||||||||||
|
Other*
|
30 | - | - | 30 | |||||||||||||||||||
| Adjusted non-GAAP earnings from operations | $ | 93,860 | $ | 12,599 | $ | 4,740 | $ | 111,199 | |||||||||||||||
| GAAP EFO as a percentage of net sales | 3.0 | % | 1.5 | % | 7.2 | % | 2.9% | ||||||||||||||||
| Adjusted non-GAAP EFO as a percentage of net sales | 5.5 | % | 3.7 | % | 7.9 | % | 5.3% | ||||||||||||||||
|
*
|
Other includes certain executive recruitment and hiring related expenses. Certain executive recruitment and hiring related expenses were $0.6 million for the three months ended March 31, 2026, compared to immaterial amounts for the three months ended March 31, 2025.
|
||||
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 three months ended March 31, 2026 and 2025 (in thousands):
|
Three Months Ended March 31, |
|||||||||||
| 2026 | 2025 | ||||||||||
| Net cash provided by operating activities | $ | 32,383 | $ | 78,050 | |||||||
| Net cash used in investing activities | (5,995) | (7,130) | |||||||||
| Net cash provided by (used in) financing activities | 64,285 | (15,473) | |||||||||
| Foreign currency exchange effect on cash, cash equivalent and restricted cash balances | (7,776) | 7,177 | |||||||||
| Increase in cash, cash equivalents and restricted cash | 82,897 | 62,624 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 360,776 | 261,467 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 443,673 | $ | 324,091 | |||||||
Cash and Cash Flow
•Our primary use of cash during the three months ended March 31, 2026 was to repurchase shares of our common stock.
•Operating activities provided $32.4 million in cash during the three months ended March 31, 2026, compared to cash provided by operating activities of $78.1 million during the three months ended March 31, 2025.
•Capital expenditures were $6.0 million and $7.1 million for the three months ended March 31, 2026 and 2025, respectively.
•During the three months ended March 31, 2026, we repurchased $75.0 million of our common stock compared to no repurchases during the three months ended March 31, 2025.
•We had net borrowings under our ABL facility during the three months ended March 31, 2026 of $112.4 million compared to net borrowings of $423.8 million during the three months ended March 31, 2025.
•We had net borrowings under our inventory financing facilities of $35.0 million during the three months ended March 31, 2026 compared to net borrowings of $42.7 million during the three months ended March 31, 2025.
•We repaid approximately $333.1 million for the remaining principal balance upon maturity of the Convertible Notes in the three months ended March 31, 2025.
•We paid $138.9 million to settle a portion of the Warrants relating to the Call Spread Transactions associated with the Convertible Notes in the three months ended March 31, 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 three months of 2026 was $32.4 million compared to cash provided by operating activities of $78.1 million in the first three months of 2025.
•The decrease in cash provided by operating activities period over period is primarily due to higher working capital requirements, driven mainly by an increase in accounts receivable and inventories, partially offset by an increase in accounts payable. Changes in accounts receivable and accounts payable were influenced by netting on certain agent revenue streams, including a significant ongoing agency transaction in our EMEA segment, as well as changes in vendor mix. In the first three months of 2026, our cash provided by operations was also positively impacted by the timing of 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. As a result, calculation of our unadjusted cash conversion cycle, including days sales outstanding and days payables outstanding, do not provide an accurate reflection of our cash conversion metric, due to the metric components being inherently inflated. For example, netted costs were $4.5 billion and $2.7 billion in the first 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.
•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 $6.0 million and $7.1 million for the three months ended March 31, 2026 and 2025, respectively.
•We expect capital expenditures for the full year 2026 to be between approximately $20.0 and $30.0 million.
Net cash provided by (used in) financing activities
•During the three months ended March 31, 2026, we had net borrowings under our ABL facility of $112.4 million, which were primarily used to repurchase shares of our common stock.
•During the three months ended March 31, 2025, we had net borrowings under our ABL facility that increased our outstanding long-term debt balance by $423.8 million, which were primarily used to fund the repayment of the remaining principal balance upon maturity of the Convertible Notes.
•We had net borrowings under our inventory financing facilities of $35.0 million during the three months ended March 31, 2026 compared to net borrowings of $42.7 million during the three months ended March 31, 2025.
•We repaid approximately $333.1 million for the remaining principal balance upon maturity of the Convertible Notes in the three months ended March 31, 2025.
•We paid $138.9 million to settle a portion of the Warrants relating to the Call Spread Transactions associated with the Convertible Notes in cash in the three months ended March 31, 2025. All Warrants were fully settled or expired by the end of 2025.
•During the three months ended March 31, 2026, we made earnout and acquisition related payments of $5.5 million primarily associated with our acquisition of Amdaris Group Limited.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
•During the three months ended March 31, 2025, we did not make any earnout and acquisition related payments.
•During the three months ended March 31, 2026, we repurchased $75.0 million of our common stock.
•During the three months ended March 31, 2025, we did not repurchase any shares of our common stock.
Financing Facilities
•Our debt balance as of March 31, 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 March 31, 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 March 31, 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 March 31, 2026, eligible accounts receivable and inventory were sufficient to permit access to $1,955.9 million of the full $2.0 billion under the ABL facility of which $975.7 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 consolidated balance sheets.
•Our inventory financing facilities have an aggregate availability for vendor purchases of $705.0 million, of which $259.6 million was outstanding at March 31, 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 March 31, 2026, we had approximately $325.2 million in cash and cash equivalents in certain of our foreign subsidiaries, primarily residing in Canada, Australia, and New Zealand. 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 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 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.
INSIGHT ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Recently Issued Accounting Standards
The information contained in Note 1 to the 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 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.
Insight Enterprises Inc. published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 07, 2026 at 18:28 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]