Insight Enterprises Q2 Earnings Call Highlights

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Insight Enterprises (NASDAQ:NSIT) reported second-quarter results that exceeded its expectations, with broad-based growth in hardware, cloud and services helping drive operating leverage. The company raised its full-year outlook for gross profit growth and adjusted diluted earnings per share while outlining a three-year “One Insight Plan” centered on AI infrastructure, AI services, operational efficiency and talent development.

For the quarter ended June 30, net revenue increased 15% year over year to $2.4 billion, or 14% on a constant-currency basis. Gross profit rose 18%, adjusted EBITDA increased 29% to $190 million, and adjusted diluted earnings per share climbed 44% to $3.86.

“Building on the momentum we established in the first quarter, we delivered broad-based growth across our business and generated strong operating leverage,” President and CEO Jack Azagury said. He said the results reflected demand for AI-ready infrastructure, cloud modernization, cybersecurity and services designed to help clients deploy AI applications.

Hardware, Cloud and Services Contribute to Growth

Hardware revenue increased 21% during the quarter, supported by double-digit growth in both devices and infrastructure. Azagury said infrastructure hardware revenue increased by more than 20%, reflecting demand for servers, storage and networking as customers modernize technology environments and prepare for AI workloads.

Chief Financial Officer James Morgado said hardware gross profit grew 10%, though hardware gross margin declined 110 basis points because of pricing and client mix. During the question-and-answer session, management said device units declined by very low single digits, offset by higher average selling prices. Notebook unit volumes increased, while handheld and desktop units declined.

Management said it expects device unit declines to continue for the next several quarters, but anticipates devices will continue growing with support from higher average selling prices, Windows 11 refresh activity and increased adoption of AI PCs.

Infrastructure demand remained strong in both volume and pricing, according to Azagury. He said customers continue to invest in data centers, servers, storage and networking while balancing on-premises technology with cloud platforms. Asked whether enterprises were moving AI workloads back on premises for security, latency and cost reasons, Azagury said Insight was seeing support for that view.

• Cloud gross profit rose 39% to $171 million, driven by SaaS, infrastructure-as-a-service and security software contributions from the Sekuro acquisition.
• Core services gross profit increased 21% to $95 million, helped by acquisitions, modest organic growth and gross-margin expansion.
• North America gross profit rose 16%, EMEA increased 13%, and APAC grew 67%, with APAC supported by cybersecurity-related acquisition contributions.

Total gross margin improved 60 basis points to 21.7%.

One Insight Plan Targets Organic Growth and Efficiency

Azagury said the company is developing a three-year business plan called the One Insight Plan. The initiative is intended to accelerate organic growth, move the company to a more unified operating model and improve operating leverage.

The plan has three pillars: increased investment in AI infrastructure and AI services; operational excellence through a common global operating model; and a talent strategy focused on AI, data, cloud and cybersecurity expertise.

Azagury said Insight has identified areas where parts of its business remain too decentralized, including acquisitions and support functions that have not yet been fully integrated. The company plans to standardize processes, bring acquisitions onto common platforms, reduce organizational layers and expand collaboration across delivery centers in India, the Philippines and Eastern Europe.

During the quarter, Insight paused back- and mid-office hiring, except for sales and technical roles, as it prioritized customer-facing hiring and efficiency efforts. Management said it intends to reinvest a portion of operational savings into priority growth areas while maintaining its focus on expanding operating leverage.

“We are not going to compromise operating leverage to fuel investments,” Azagury said during the call. Morgado added that the company sees room to both reinvest in strategic areas and continue expanding earnings-from-operations margins.

The company also introduced Insight Managed Exposure Defense, or IMED, a managed security offering aimed at helping customers address AI-driven cyber risks. Azagury said the offering includes a 24-hour quoting process and had attracted strong customer interest within weeks of its launch. Insight also plans to productize its top 10 service offerings over the coming months.

Microsoft Partnership and AI Services Opportunity

Insight highlighted its status as a global launch partner for Microsoft 365 E7, Microsoft’s Frontier Suite. Azagury said the company sees opportunities in both resale and associated services, including Copilot deployments, Azure workload migrations, data migrations to Fabric, Agent 365 implementation and related security services.

Management said Insight had a strong quarter with Microsoft, following strength in the first quarter. Azagury said the company has deployed Copilot internally and trained nearly all employees on its use.

The company cited one AI project involving a healthcare consulting provider that conducts hospital surveys. Insight built an OpenAI-powered solution that transforms survey notes into structured findings and recommendations. According to Azagury, the client expects more than $400,000 in annual productivity savings, with report preparation time reduced from several hours to less than one hour.

Raised 2026 Outlook; Buybacks Prioritized Over M

For 2026, Insight raised its gross-profit-growth outlook to 8% to 10% and expects gross margin of approximately 21.5% to 22%. The company now expects adjusted diluted earnings per share, excluding stock-based compensation, of $12.20 to $12.70. At the $12.45 midpoint, that would represent approximately 16% growth from 2025 adjusted diluted EPS of $10.75.

Insight maintained its expectation for operating cash flow of $300 million to $400 million. Morgado said first-half cash flow reflected typical seasonality and the timing of large partner payments, with stronger cash generation expected in the second half.

The company repurchased $75 million of shares during the second quarter and had $149 million remaining under its authorization. Management said it intends to use the remainder before year-end and continue pausing mergers and acquisitions.

Azagury said his first four months as CEO have been focused on strengthening the organic business and building the three-year plan rather than pursuing acquisitions. Any future M activity, he said, would need to align with the company’s strategic priorities.

Management expects corporate and large-enterprise customer spending to improve from last year but said it remains cautious about the fourth quarter because of memory-price increases, supply-chain disruption and macroeconomic uncertainty. The company also expects to lap prior-year acquisitions and work through remaining Google partner-program changes in the fourth quarter, which it expects to be its lowest adjusted EPS growth quarter of the year.

About Insight Enterprises (NASDAQ:NSIT)

Insight Enterprises, Inc is a global technology provider headquartered in Tempe, Arizona. Founded in 1988, the company specializes in helping organizations harness the power of digital transformation by offering a comprehensive portfolio of IT hardware, software, cloud and licensing management solutions. Insight's expertise spans across the full technology lifecycle, from initial strategy and consulting to implementation, integration and ongoing managed services.

At the core of Insight's business are its consulting and professional services, which guide clients through complex technology environments and ensure optimal deployment of solutions.

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