Insight Enterprises (NSIT) investor relations material

Business model evolution and differentiation

• Transitioned from traditional IT reselling to a solutions integrator model, combining hardware, software, and robust services to deliver client outcomes.

• Built out services organically and through acquisitions, expanding into cloud, data, AI, and workflow solutions.

• Differentiates by integrating advisory, deployment, and optimization services, not just product sales.

• Competes with both traditional resellers and pure services firms by offering end-to-end solutions.

• Services and cloud mix are key drivers of margin expansion and client stickiness.

Margin strategy and financial performance

• Services margins benchmarked against top-tier firms, targeting mid-to-high 30% range.

• Margin expansion driven by product mix, pricing programs, and hiring experienced services leaders.

• Cloud revenue changes from Microsoft and Google led to a $70M gross profit reset, impacting 2024 results.

• Cloud and services mix expected to continue growing, supporting long-term margin improvement.

• Hardware margins vary by segment, with infrastructure solutions yielding higher margins than devices.

Market trends and client demand

• IT budgets generally track a few hundred basis points above GDP, but 2024 is subdued due to macro uncertainty and AI experimentation.

• Clients are reserving budget for AI pilots and proof-of-concept projects, with gradual movement toward production deployments.

• PC refresh cycle is about 60-70% complete; networking and infrastructure refreshes are just beginning, with AI expected to drive further demand.

• AI PCs are not yet a major driver in commercial refresh cycles due to immature applications and higher price points.

• Shadow IT and business unit-driven tech spend are increasing, requiring governance and security focus.