Insight Enterprises Inc 2026 Q2 Earnings Call

Ryan, please go ahead. Welcome, everyone, and thank you for joining the Insight Enterprises earnings conference call.

Today, we will be discussing the company's operating results for the quarter ended June 30th, 2026. I'm Ryan Miyasato, investor relations director of Insight, and joining me is Jack Azagury, President and Chief Executive Officer, and James Morgado, Chief Financial Officer. If you do not have a copy of the earnings release or the accompanying slide presentation that was posted this morning and filed with the Securities and Exchange Commission on Form 8-K, you will find it on our website at insight.com under the investor relations section. Today's call, including the question and answer period, is being webcast live and can also be accessed via the investor relations page of our website at insight.com.

An archived copy of the conference call will be available approximately two hours after completion of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, August sixth, 2026. This call is a property of Insight Enterprises. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Insight Enterprises is strictly prohibited. In today's conference call, we will be referring to non-GAAP financial measures as we discuss the second quarter financial results. When discussing non-GAAP measures, we will refer to them as adjusted. You will find a reconciliation of these adjusted measures to our actual GAAP results included in both the press release and the accompanying slide presentation issued earlier today.

Please note that all growth comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. Also, unless highlighted as constant currency, all amounts and growth rates discussed are in U.S. dollar terms. As a reminder, all forward-looking statements that are made during this conference call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today's press release and in greater detail in our most recently filed periodic reports and subsequent filings with the SEC. All forward-looking statements are made as of the date of this call, and except as required by law, we undertake no obligation to update any forward-looking statement made on this call, whether as a result of new information, future events, or otherwise. With that, I will now turn the call over to Jack.

Jack? Thank you, Ryan. Good morning, everyone, and thanks for joining us.

I'm pleased to report another strong quarter for Insight. Building on the momentum we established in the first quarter, we delivered broad-based growth across our business and generated strong operating leverage. As a result, total gross profit grew 18%, while adjusted earnings from operations increased 31%, and adjusted diluted earnings per share rose 44%. I'm especially proud of the performance in our key priority areas. Infrastructure hardware revenue rose more than 20%, reflecting strong demand across servers, storage, and networking as clients modernize their environments and invest in AI-ready infrastructure. From a gross profit perspective, cloud grew 39% and core services increased 21%. These offerings are closely aligned with our clients' priorities and represent areas where we see significant opportunity to drive sustained growth. These results reinforce two important points.

First, our strategy to be a solution integrator for the age of AI is resonating with our clients. Second, we are making early progress against the priorities I outlined last quarter, in particular, the need for focus and execution discipline in everything we do. As James will detail in his remarks, we are raising our outlook for both gross profit growth and adjusted diluted earnings per share for the year as a result of this strong momentum. Over the past several months, I've continued spending time with our clients, our teammates, and our partners around the world while conducting a comprehensive review of our business and building our three-year business plan. Those conversations, combined with a deeper understanding of our operations and market position, have only strengthened my conviction in the opportunity ahead of us.

Our pivot to become the leading solution integrator for the age of AI is working. While there are opportunities to optimize how we operate and continue to build our capabilities, we have a strong foundation to build upon, and we are in a strong position to unlock the value from the investments we have made over the last 10 years. Let me start with what's working well. Our client relationships remain one of our greatest strengths. Many of these relationships have been built over years, and in some cases decades, creating a foundation of trust that enables us to engage at a more strategic level with our clients. This is especially true with our mid-market clients who are turning to Insight to help them deploy and adopt AI in a practical way with a focus on rapid results.

A measure of the trust we've earned with our clients is our Net Promoter Score, which has consistently exceeded 60 over the past three years. Second, our cloud business continues to perform well. Organizations remain focused on modernizing their environments, optimizing cloud investment and consumption, and driving value from AI. Our strong cloud performance, especially with Microsoft and Google, reflects both the relevance of these priorities and the value our teams bring in helping clients accelerate their digital transformation journeys. Third, we are seeing encouraging strong growth in infrastructure and AI-related hardware. This growth is being driven by stronger sales execution, close alignment with client priorities, and our ability to help clients navigate supply chain constraints while accelerating investment in modernization and AI-ready infrastructure. Fourth, our partner ecosystem remains a significant competitive advantage.

The strength of our relationships with the world's leading technology providers continues to create opportunities for growth and innovation. As an example, we are a global launch partner for Microsoft 365 E7, Microsoft's Frontier Suite. As an early enterprise adopter, we're gaining first-hand experience that helps clients accelerate their own journey to a human-led, agent-operated enterprise. We bring the full Microsoft AI stack from Copilot to Agent 365 with security and governance built in, which is especially valuable for mid-market clients seeking enterprise-grade AI capabilities. The strength of our partner ecosystem is reflected in recognitions we continue to receive across the industry. Recently, we earned Partner of the Year awards from HPE, Everpure, Adobe, CrowdStrike, Proofpoint, and Rubrik, an endorsement of our technical expertise and leadership in cybersecurity and other strategic growth areas.

We were named a major contender in the Everest Google Cloud Services PEAK Matrix Assessment, recognizing our expertise in the Google Cloud platform. Finally, our people and culture continue to be a major differentiator, bringing deep technical expertise across our solutions. I have been consistently impressed not only by the depth of our expertise, commitment, and passion across our organization, but also by the strength of our culture, grounded in collaboration, accountability, and shared commitment to our clients. We refer to it as hunger, heart, and harmony. As an example that illustrates many of these strengths is our partnership with a healthcare consulting provider that conducts hundreds of hospital surveys each year. These consultants were spending significant time manually documenting findings and producing accreditation reports. We built an AI-powered solution using OpenAI that transforms survey notes into structured findings and recommendations that fit seamlessly into existing workflows.

As a result, the client is realizing more than $400,000 in annual productivity savings, reducing report preparation time from several hours to less than an hour. They're also saving more than 20 hours per week in formatting and quality assurance work and improving consistency across hundreds of reports each year. This example demonstrates how we're helping clients move from AI ambition to realized business value. The differentiator is not access to AI technology itself, but the ability to apply it to real-world business challenges, transform processes, and deliver measurable returns. As clients increasingly prioritize outcome-based AI investments, our expertise, delivery capabilities, and talent position us well to capture this growing opportunity. While we have a strong foundation, we have also identified several areas where we need to improve. First, part of our business remains too decentralized.

Some acquisitions and support functions have not yet been fully integrated into a common operating model, creating complexity, sometimes limiting collaboration, and slowing down decision-making. We need a more connected and consistent way of working in order to serve our clients at speed as One Insight all the time, every time. Second, we have not consistently invested in our organic business in several of our most important growth vectors. We believe there is significant opportunity to accelerate investment in AI infrastructure as well as AI services, including engineering, data, cloud, and security. These are areas where client demand is growing and where we believe Insight is well-positioned to win. Furthermore, we need to continue to invest in our frontline sales and equip our account executives with training and AI tools to represent the full capabilities of Insight. Third, we have opportunities to create greater efficiency through AI-enabled processes and automation.