Insight Enterprises, Inc. · NASDAQ:NSIT
Insight Enterprises — Q3 2024 Earnings Presentation
37 slides from Insight Enterprises's earnings presentation, Oct 31, 2024
Slide 1: Insight Enterprises, Inc. Third Quarter 2024 Earnings Conference Call
Insight Enterprises, Inc. Third Quarter 2024 Earnings Conference Call and Webcast Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2024 Insight Direct USA, Inc. All Rights Reserved. 1
Slide 2: Disclosures
Disclosures ◦ Safe harbor statement This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 related to Insight’s plans and expectations. Statements that are not historical facts, including those related to our expectations ab
Slide 3: Table of Contents
Table of Contents ◦ Solutions Integrator Strategy ◦ Solutions at Work ◦ Awards and Recognitions ◦ Third Quarter 2024 Highlights and Performance ◦ 2027 KPIs for Success ◦ 2024 Outlook ◦ Appendix Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2024 2022 Insight Direct USA, Inc. All Ri
Slide 4: Our strategy is to become the leading Solutions Integrator
Our strategy is to become THE leading SOLUTIONS INTEGRATOR The pillars of our strategy are: Put clients first We put our clients first, delivering essential Put Deliver Champion Drive value that contributes to their success and making us the partner they can't live without. Clients First Differentia
Slide 5: Our strategy is to become the leading Solutions Integrator
Our strategy is to become THE leading SOLUTIONS INTEGRATOR Put clients first We put our clients first, delivering essential value that contributes to their success and making us the partner they can't live without. DRIVE PROFITABLE Deliver differentiation Our combination of innovative and scalable G
Slide 6: Modernizing Cruise Liner's IT Infrastructure
Modernizing Cruise Liner’s IT Infrastructure The challenge: The solution: The results: • As part of its ambition for economic • Insight was commissioned to define and design a • Modern, scalable and highly flexible diversification, the Royal Kingdom of state of the art infrastructure, with the purpo
Slide 7: Unlocking Agility & Innovation With Cloud Infrastructure Provisioning
Unlocking Agility & Innovation With Cloud Infrastructure Provisioning The challenge: The solution: The results: • Our client needed to promote greater agility • Our team collaborated with the client to architect • Streamlined compliance with healthcare and innovation within their healthcare and buil
Slide 8: Awards and Recognitions
Awards and Recognitions • Global Customer Experiences Partner of the Year 2024 Acquisition AWS Premier Tier • Americas Enterprise Partner of Partner of the Year Service Partner the Year • US Partner of the Year 2024 Keystone 2024 Gartner Magic Partner of the Year Quadrant for Software Asset • 2024 I
Slide 9: Q3 2024 Performance
Q3 2024 Performance (Changes against prior year period) NET SALES GROSS PROFIT CLOUD GROSS PROFIT INSIGHT CORE SERVICES 57% services gross CLOUD GROSS PROFIT $2.1B $432M $129M $81M profit as a % of total gross profit** decrease of 8% increase of 6% increase of 33% increase of 14% MARGINS EARNINGS GR
Slide 10: YTD Q3 2024 Performance
YTD Q3 2024 Performance (Changes against prior year period) NET SALES GROSS PROFIT CLOUD GROSS PROFIT INSIGHT CORE SERVICES CLOUD GROSS PROFIT $6.6B $1.3B $384M $237M decrease of 4% increase of 8% increase of 29% increase of 16% EARNINGS EARNINGS FROM OPERATIONS ADJUSTED EARNINGS FROM MARGINS EARNIN
Slide 11: Debt
Debt • In May 2024, raised $500 million aggregate principal of senior notes due 2032 • Total debt balance at September 30, 2024 - $1.1 billion • Total debt balance at September 30, 2023 - $673 million • YoY increase in total debt of $414 million US Dollars in millions Description Net payments SADA (
Slide 12: 2027 KPIs for Success
2027 KPIs for Success KPIs TTM Q3 2024 2027 Cloud GP Growth** 32% 16% - 20% 5-year CAGR*** Core services GP Growth** 14% 16% - 20% 5-year CAGR*** Adjusted EBITDA Margin* 6.3% 6.5% - 7.0% Adjusted DEPS* Growth** 8% 19% - 22% 5-year CAGR*** Adjusted ROIC* 16.3% >25% Adjusted free cash flow 166% >90% a
Slide 13: Full Year 2024 Outlook
Full Year 2024 Outlook Assumptions: As of October 31, 2024 As of August 1, 2024 Gross profit growth mid single-digit low double-digit Gross margin 19% - 20% range 19% - 20% range Adjusted diluted EPS* $9.40 - $9.70 $10.60 - $10.90 Interest expense $58 - $60 million $60 - $62 million Effective tax ra
Slide 14: Net Sales and Gross Profit
NET SALES Trailing twelve months $2.1B decrease of 8% y/y $8.9B* decrease of 6% y/y $9.7B $9.4B $9.2B $9.2B $9.0B $8.9B $2.3B $2.2B $2.4B $2.2B $2.1B Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 GROSS PROFIT Trailing twelve months $432M increase of 6% y/y $1.8B* increase of 7% y/
Slide 15: Services Net Sales and Gross Profit
SERVICES NET SALES Trailing twelve months $414M increase of 10% y/y $1.7B* increase of 10% y/y $1,604M $1,635M $1,673M $1,509M $1,520M $1,544M $408M $416M $435M $414M $376M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 SERVICES GROSS PROFIT Trailing twelve months $245M increase of
Slide 16: Insight Core Services and Cloud Gross Profit
INSIGHT CORE SERVICES GROSS PROFIT Trailing twelve months $81M increase of 14% y/y $307M* increase of 14% y/y 28% 29% 30% 31% 31% 31% 32% 32% 31% 30% 31% $288M $297M $307M Gross Margin $257M $269M $273M $76M $81M $81M $71M $69M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 CLOUD G
Slide 17: Earnings from Operations
EARNINGS FROM OPERATIONS Trailing twelve months $93M increase of 1% y/y $456M* increase of 13% y/y $442M $455M $456M $400M $402M $420M $132M $131M $92M $100M $93M Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 ADJUSTED EARNINGS FROM OPERATIONS** Trailing twelve months $120M flat y/
Slide 18: Diluted Earnings Per Share
DILUTED EARNINGS PER SHARE Trailing twelve months $1.52 decrease of 6% y/y $7.94* increase of 9% y/y $7.95 $8.05 $7.94 $7.22 $7.26 $7.55 $2.42 $2.27 $1.62 $1.74 $1.52 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 ADJUSTED DILUTED EARNINGS PER SHARE** Trailing twelve months $2.19 d
Slide 19: Appendix
Appendix Insight Proprietary & Confidential. Do Not Copy or Distribute. © 2024 Insight Direct USA, Inc. All Rights Reserved. 19
Slide 20: Q3 2024 YTD Financial Performance
Q3 2024 YTD | Financial Performance Nine Months Ended September 30, US Dollars in $000s, except for per share data 2024 2023 Change Consolidated IEI Net sales $6,629,033 $6,939,829 (4)% Net sales, constant currency* (5)% Product net sales $5,364,169 $5,803,408 (8)% Services net sales $1,264,864 $1,1
Slide 21: Consolidated IEI Financial Metrics
Consolidated IEI Financial Metrics Three Months Ended Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Twelve Months Ended Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 Net Sales YoY (11)% (11)% 2% (8)% (8)% Net Sales YoY (7)% (10)% (12)% (9)% (7)% (6)% Gross Margin 18.0% 19.5% 18.5% 21.0% 20.7% Gross Margin 16.9% 17.5% 18.2% 18
Slide 22: Services Financial Metrics
Services Financial Metrics Three Months Ended Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 Twelve Months Ended Q2-23 Q3-23 2023 Q1-24 Q2-24 Q3-24 Services Revenue $376M $408M $416M $435M $414M Services Revenue $1,509M $1,520M $1,544M $1,604M $1,635M $1,673M Services Revenue YoY 3% 6% 17% 8% 10% Services Revenue Yo
Slide 23: GEO Financial Metrics
GEO Financial Metrics Three Months Ended Nine Months Ended September 30, 2024 September 30, 2024 North America EMEA APAC North America EMEA APAC Net Sales $1.7B $312.6M $58.7M $5.4B $1,094.3M $181.0M Net Sales YoY** (8%) (13%) 13% (4%) (8%) 5% Gross Profit $348.1M $66.4M $17.6M $1,052.0M $220.6M $53
Slide 24: Adjusted EBITDA and Debt Covenants
Adjusted EBITDA and Debt Covenants Twelve Months Ended September 30, Fixed Charge Coverage US Dollars in $000s 2024 2023 $546,533 Adjusted Consolidated EBITDA: $550,000 $500,000 Net earnings $ 303,287 $ 268,178 $450,000 Interest expense 63,270 47,889 $400,000 Taxes 99,550 90,673 $350,000 $300,000 De
Slide 25: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures* Three Months Ended Nine Months Ended September 30, September 30, US Dollars in $000s 2024 2023 2022 2024 2023 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 92,851 $ 91,862 $ 90,279 $ 323,910 $ 287,934 Amortization of in
Slide 26: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended Nine Months Ended September 30, September 30, US Dollars in $000s, except per share data 2024 2023 2022 2024 2023 Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 58,208 $ 60,247 $ 57,316 $ 212,
Slide 27: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended Nine Months Ended September 30, September 30, US Dollars in $000s 2024 2023 2024 2023 Adjusted North America Earnings from Operations: GAAP EFO from North America segment $ 80,836 $ 86,083 $ 266,672 $ 244,705 Amort
Slide 28: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended Nine Months Ended September 30, September 30, US Dollars in $000s 2024 2023 2024 2023 Adjusted Consolidated EBITDA: GAAP consolidated net earnings $ 58,208 $ 60,247 $ 212,679 $ 190,701 Interest expense 19,184 13,874
Slide 29: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Twelve Months Ended September 30, US Dollars in $000s 2024 2023 Adjusted Return on Invested Capital: GAAP consolidated EFO $ 455,771 $ 401,950 Amortization of intangible assets 61,972 33,320 Gain on revaluation of earnout liabilities
Slide 30: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures (continued) Three Months Ended Nine Months Ended September 30, September 30, US Dollars in $000s 2024 2023 2024 2023 Adjusted Consolidated Selling and Administrative Expenses: GAAP selling and administrative expenses $ 329,996 $ 309,793 $ 984,664
Slide 31: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Twelve Months Ended September 30, US Dollars in $000s 2024 Adjusted Free Cash Flow: Net cash provided by operating activities $ 623,520 Less: Purchases of property and equipment 42,553 Adjusted non-GAAP free cash flow $ 580,967 Net c
Slide 32: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) Three Months Ended Three Months Ended Three Months Ended December 31, March 31, June 30, US Dollars in $000s, except per share data 2023 2022 2024 2023 2024 2023 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $
Slide 33: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) US Dollars in $000s TTM Q2-22 TTM Q3-22 2022 TTM Q1-23 TTM Q2-23 TTM Q3-23 2023 TTM Q1-24 TTM Q2-24 TTM Q3-24 Adjusted Consolidated Earnings from Operations: GAAP consolidated EFO $ 385,973 $ 393,101 $ 413,700 $ 411,312 $ 400,367 $ 4
Slide 34: Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Reconciliation of GAAP to Non-GAAP Financial Measures* (continued) US Dollars in $000s, except per share data TTM Q2-22 TTM Q3-22 2022 TTM Q1-23 TTM Q2-23 TTM Q3-23 2023 TTM Q1-24 TTM Q2-24 TTM Q3-24 Adjusted Consolidated Net Earnings: GAAP consolidated net earnings $ 263,431 $ 265,264 $ 280,608 $ 2
Slide 35: Financial Results by Offering Category
Financial Results by Offering Category US Dollars in $000s Q3-22 Q4-22 FY 2022 Q1-23 Q2-23 Q3-23 Q4-23 FY 2023 Q1-24 Q2-24 Q3-24 Consolidated IEI by Offering Category: Hardware $ 1,572,275 $ 1,473,916 $ 6,450,895 $ 1,328,845 $ 1,310,273 $ 1,301,155 $ 1,148,664 $ 5,088,937 $ 1,134,727 $ 1,172,641 $ 1
Slide 36: Cloud Gross Profit Reconciliation
Cloud Gross Profit Reconciliation US Dollars in $000s Q3-22 Q4-22 FY 2022 Q1-23 Q2-23 Q3-23 Q4-23 FY 2023 Q1-24 Q2-24 Q3-24 Cloud Gross Profit Reconciliation: Agency Cloud Gross Profit* $ 75,611 $ 85,651 $ 315,528 $ 84,132 $ 105,210 $ 89,005 $ 121,478 $ 399,825 $ 106,993 $ 129,933 $ 122,310 Cloud Se
Slide 37: Convertible Senior Notes (Illustrative example)
Convertible Senior Notes (Illustrative example) • Insight Convertible Senior Notes - $350 million principal • Required to settle the convertible notes principal/par value in cash • Excess required to be settled in shares resulting in dilution in GAAP reported Diluted Earnings Per Share (“DEPS”) • DE