Insight Enterprises Q4 2025 Insight Enterprises Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Insight Enterprises Inc Earnings Call
Speaker #1: Please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to Ryan Miyasato, Director of Investor Relations.
Speaker #1: Ryan, please go
Speaker #1: ahead. Welcome,
Ryan Miyasato: 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 and full year ended December 31, 2025. I'm Ryan Miyasato, Investor Relations Director of Insight, and joining me is Joyce Mullen, President and Chief Executive Officer, and James Margotto, 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.
Ryan Miyasato: 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 and full year ended December 31, 2025. I'm Ryan Miyasato, Investor Relations Director of Insight, and joining me is Joyce Mullen, President and Chief Executive Officer, and James Margotto, 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.
Speaker #2: 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 and full year ended December 31, 2025.
Speaker #2: I'm Ryan Miyasato, Investor Relations Director of INSIGHT, and joining me is Joyce Mullen, President and Chief Executive Officer at James Morgado, Chief Financial Officer.
Speaker #2: If you do not have a copy of slide presentation, that was posted this morning and filed with the Securities and the earnings release or the accompanying Exchange Commission on Form 8K, you will find it on our website at insight.com under the Investor Relations section.
Speaker #2: 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.
Speaker #2: 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.
Ryan Miyasato: An archived copy of the conference call will be available approximately 2 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, 5 February 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 Q4 and full year 2025 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.
Ryan Miyasato: An archived copy of the conference call will be available approximately 2 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, 5 February 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 Q4 and full year 2025 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.
Speaker #2: This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, February 5, 2026. This call is a property of INSIGHT ENTERPRISES.
Speaker #2: 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 fourth quarter and full year 2025 financial results.
Speaker #2: When discussing non-GAAP measures, we will refer to them as adjusted. You'll 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.
Speaker #2: 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 in growth rates discussed are in US dollar terms.
Ryan Miyasato: 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 US 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 Joyce. Joyce?
Ryan Miyasato: 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 US 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 Joyce. Joyce?
Speaker #2: 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.
Speaker #2: 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.
Speaker #2: 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.
Speaker #2: With that, I will now turn the call over to Joyce. Joyce.
Speaker #3: Thank you very much, Ryan. Good morning, everyone, and thank you for joining us today. We are pleased with our fourth quarter results and the momentum in our business after a challenging year.
Joyce Mullen: Thank you very much, Ryan. Good morning, everyone, and thank you for joining us today. We are pleased with our Q4 results and the momentum in our business after a challenging year. Strong execution in our cloud business and strong growth in our core services business, driven by our acquisitions, enabled us to deliver record gross profit, record gross margin, and record adjusted earnings from operations margin. We delivered strong growth in adjusted earnings from operations across every geography and achieved double-digit growth in adjusted diluted earnings per share. Specifically, in the quarter, overall revenue was down 1% due to the netting impact of on-prem software migrating to cloud. We are pleased that our influence with partners and clients continues to expand, which you can see on our balance sheet... Total gross profit grew 9%.
Joyce Mullen: Thank you very much, Ryan. Good morning, everyone, and thank you for joining us today. We are pleased with our Q4 results and the momentum in our business after a challenging year. Strong execution in our cloud business and strong growth in our core services business, driven by our acquisitions, enabled us to deliver record gross profit, record gross margin, and record adjusted earnings from operations margin. We delivered strong growth in adjusted earnings from operations across every geography and achieved double-digit growth in adjusted diluted earnings per share. Specifically, in the quarter, overall revenue was down 1% due to the netting impact of on-prem software migrating to cloud. We are pleased that our influence with partners and clients continues to expand, which you can see on our balance sheet... Total gross profit grew 9%.
Speaker #3: Strong execution in our cloud business and strong growth in our core services business, driven by our acquisitions, enable us to deliver record gross profit, record gross margin, and record adjusted earnings from operations margin.
Speaker #3: We delivered strong growth in adjusted earnings from operations across every geography, and achieved double-digit growth in adjusted diluted earnings per share. Specifically, in the quarter, overall revenue was down 1% due to the netting impact of on-prem software migrating to cloud.
Speaker #3: We are pleased that our influence expands, which you could see with our partners and clients and continues to our balance sheet. Total gross profit grew 9%, and MIA had strong growth, driven in part by demand.
Joyce Mullen: EMEA had strong growth, driven in part by UAE and Saudi Arabia demand. Cloud gross profit increased 11%, ahead of our expectations, led by double-digit growth in SaaS and infrastructure as a service. This performance was partially offset by the impact of the partner program changes we've previously discussed, which are now largely behind us as we begin 2026. Core services gross profit grew 16%, driven by acquisitions as well as organic growth. These factors, along with incremental netting, contributed to expanded gross margin again this quarter to 23.4%. By prudently managing our adjusted expenses, we delivered adjusted earnings from operations growth of 13% and adjusted earnings per share growth of 11%. We are encouraged by the progress in our services business. We've streamlined our services offerings, implemented disciplined processes, and augmented our leadership team.
Joyce Mullen: EMEA had strong growth, driven in part by UAE and Saudi Arabia demand. Cloud gross profit increased 11%, ahead of our expectations, led by double-digit growth in SaaS and infrastructure as a service. This performance was partially offset by the impact of the partner program changes we've previously discussed, which are now largely behind us as we begin 2026. Core services gross profit grew 16%, driven by acquisitions as well as organic growth. These factors, along with incremental netting, contributed to expanded gross margin again this quarter to 23.4%. By prudently managing our adjusted expenses, we delivered adjusted earnings from operations growth of 13% and adjusted earnings per share growth of 11%. We are encouraged by the progress in our services business. We've streamlined our services offerings, implemented disciplined processes, and augmented our leadership team.
Speaker #3: Cloud gross profit increased 11%, ahead of our UAE and Saudi Arabia expectations, led by double-digit growth in SaaS and infrastructure as a service. This performance was partially offset by the impact of the partner program changes we've previously discussed.
Speaker #3: We are now largely behind us as we begin 2026. Core services gross profit grew 16%, driven by acquisitions as well as organic growth. These factors, along with incremental netting, contributed to expanded gross margin again this quarter to 23.4%.
Speaker #3: And by prudently managing our adjusted expenses, we delivered adjusted earnings from operations growth of 13% and adjusted earnings per share growth of 11%. We are encouraged by the progress in our services business.
Speaker #3: We've streamlined our services processes and augmented our leadership team. Best practices from acquisitions have been adopted across the business, resulting in improved pipeline. We are also pleased with the cross-selling momentum.
Joyce Mullen: Best practices from acquisitions have been adopted across the business, resulting in improved pipeline. We are also pleased with the cross-selling momentum. Core services results were strong and delivered a second consecutive quarter of organic bookings growth. Growth of core services is central to our strategy. Clients expect a comprehensive approach to realizing value of their technology investments. To support those requirements, we have expanded our technology consulting capabilities, which is improving our overall performance, especially in EMEA. The Inspire11 acquisition expands our advisory capabilities in North America and supplements our strength in infrastructure, cloud, edge, data, and security services. We expect these advisory capabilities will also increase demand for our core solutions. I'd like to share an example of how an initial advisory engagement pulled through solutions in EMEA. Our client, a European green IT provider, is building sustainable data centers engineered and optimized for AI workloads.
Joyce Mullen: Best practices from acquisitions have been adopted across the business, resulting in improved pipeline. We are also pleased with the cross-selling momentum. Core services results were strong and delivered a second consecutive quarter of organic bookings growth. Growth of core services is central to our strategy. Clients expect a comprehensive approach to realizing value of their technology investments. To support those requirements, we have expanded our technology consulting capabilities, which is improving our overall performance, especially in EMEA. The Inspire11 acquisition expands our advisory capabilities in North America and supplements our strength in infrastructure, cloud, edge, data, and security services. We expect these advisory capabilities will also increase demand for our core solutions.
Speaker #3: Core services results were strong, and delivered a second consecutive quarter of organic bookings growth. Growth of core services is central to our strategy. Clients expect a comprehensive approach to realizing value of their technology investments.
Speaker #3: To support those requirements, we have expanded our technology consulting capabilities, which is improving our overall performance, especially in MIA. The Inspire 11 acquisition expands our advisory capabilities in North America and supplements our strengths in infrastructure, cloud, edge, data, and security services.
Speaker #3: We expect these advisory capabilities will also increase demand for our core engagement pulled through solutions in of how an initial advisory Mia. Our client, a sustainable data centers engineered and optimized for AI European green IT provider, is building workloads.
Joyce Mullen: I'd like to share an example of how an initial advisory engagement pulled through solutions in EMEA. Our client, a European green IT provider, is building sustainable data centers engineered and optimized for AI workloads. They engaged us to support both the build-out of these data centers and the development of a SaaS GenAI platform, enabling them to design, develop, and visualize AI models and their interactions. Our senior technical advisors drove the conceptual discussions and are now delivering end-to-end program leadership for this large-scale program, which includes network and data center, security, and software development work streams.
Speaker #3: They engaged us to support both the build-out of these data centers and the development of a SaaS Gen AI platform. Enabling them to design, develop, and visualize AI models and their interactions.
Joyce Mullen: They engaged us to support both the build-out of these data centers and the development of a SaaS GenAI platform, enabling them to design, develop, and visualize AI models and their interactions. Our senior technical advisors drove the conceptual discussions and are now delivering end-to-end program leadership for this large-scale program, which includes network and data center, security, and software development work streams. The team implemented a structured governance framework, strengthened delivery performance, and ensured the client's business outcomes were met. Since project inception, the client has signed an additional multimillion EUR agreement to extend both the scope and duration of the program. This is an example of how our teams can drive value, beginning with advisory discussions and expanding to include modern platform investment. Our deep expertise in platforms is also demonstrated through our engagement with Sedgwick, a global leader in claims management and risk solutions.
Speaker #3: Our senior technical advisors drove the conceptual discussions and are now delivering end-to-end program leadership for this large-scale program, which includes network and data center, security, and software development workstreams.
Speaker #3: The team implemented a structured governance framework, strengthened delivery performance, and ensured the client's business outcomes were met. Since project inception, the client has signed an additional multi-million euro agreement to extend both the scope and duration of the program.
Joyce Mullen: The team implemented a structured governance framework, strengthened delivery performance, and ensured the client's business outcomes were met. Since project inception, the client has signed an additional multimillion EUR agreement to extend both the scope and duration of the program. This is an example of how our teams can drive value, beginning with advisory discussions and expanding to include modern platform investment. Our deep expertise in platforms is also demonstrated through our engagement with Sedgwick, a global leader in claims management and risk solutions. The Inspire11 team designed and implemented a modern, unified claims management platform that streamlined operations, enhanced employee productivity, and elevated customer experience.
Speaker #3: This is an example of how our teams can drive value, beginning with advisory discussions and expanding to include modern platform investment. Our deep expertise in platforms is also demonstrated through our engagement with Sedgwick.
Speaker #3: A global leader in claims management and risk solutions. The Inspire 11 team designed and implemented a modern, unified claims management platform that streamlined operations and enhanced employee productivity, and elevated customer experience.
Joyce Mullen: The Inspire11 team designed and implemented a modern, unified claims management platform that streamlined operations, enhanced employee productivity, and elevated customer experience. This transformation has since become a model for success within Sedgwick, sparking new innovation across other areas of the business. Recognized as one of the most successful projects the organization has delivered, it demonstrates how the value we create extends beyond a single program and continues to scale as organizations identify new opportunities for impact. As our clients look to modernize, many are hitting the same wall: legacy systems that have become so customized so heavily over the years that they've become too rigid to move at the speed of business. To stay competitive, these organizations have to get back to basics, stripping away that complexity so they can innovate again. Our teams are effective in assisting clients with this challenge.
Speaker #3: This transformation has since become a model for success within Sedgwick, sparking new innovation across other areas of the business. Recognized as one of the most successful projects the organization has delivered, it demonstrates how the value we create extends beyond a single program and continues to scale as organizations identify new opportunities for impact.
Joyce Mullen: This transformation has since become a model for success within Sedgwick, sparking new innovation across other areas of the business. Recognized as one of the most successful projects the organization has delivered, it demonstrates how the value we create extends beyond a single program and continues to scale as organizations identify new opportunities for impact. As our clients look to modernize, many are hitting the same wall: legacy systems that have become so customized so heavily over the years that they've become too rigid to move at the speed of business. To stay competitive, these organizations have to get back to basics, stripping away that complexity so they can innovate again. Our teams are effective in assisting clients with this challenge. Never has innovation been more exciting than with the current AI tools and capabilities.
Speaker #3: As our clients look to modernize many are hitting the same wall. Legacy systems that have become so customized, so heavily over the years that they've become too rigid to move at the speed of business.
Speaker #3: To stay competitive, these organizations have to get back to basics, stripping away that complexity so they can innovate again. Our teams, our effective in assisting clients with this challenge.
Speaker #3: Never has innovation been more exciting than with the current AI tools and capabilities. Client interest remains strong and focused on tangible business outcomes. We are very well positioned to help clients move from hype to how.
Joyce Mullen: Never has innovation been more exciting than with the current AI tools and capabilities. Client interest remains strong and focused on tangible business outcomes. We are very well positioned to help clients move from hype to how. We are proving this by advancing our own internal AI transformation, developing and operationalizing use cases within Insight that we showcase and replicate with clients. In the fourth quarter, as part of our Insight AI launch, we introduced Prism, our AI platform for clients, which has received very positive feedback. Prism is a business transformation platform designed to help our clients simplify AI adoption by identifying and prioritizing high-impact use cases through a proprietary data-driven transformation index. The platform evaluates potential AI initiatives across key elements, such as value, feasibility, access to data, and risk, to provide a clear, actionable roadmap.
Joyce Mullen: Client interest remains strong and focused on tangible business outcomes. We are very well positioned to help clients move from hype to how. We are proving this by advancing our own internal AI transformation, developing and operationalizing use cases within Insight that we showcase and replicate with clients. In the fourth quarter, as part of our Insight AI launch, we introduced Prism, our AI platform for clients, which has received very positive feedback. Prism is a business transformation platform designed to help our clients simplify AI adoption by identifying and prioritizing high-impact use cases through a proprietary data-driven transformation index. The platform evaluates potential AI initiatives across key elements, such as value, feasibility, access to data, and risk, to provide a clear, actionable roadmap.
Speaker #3: We are proving this by advancing our own internal AI transformation, developing and operationalizing use cases within Insight that we showcase and replicate with clients.
Speaker #3: And the fourth quarter, as part of our Insight AI launch, we introduced Prism, our AI platform for clients, which has received very positive feedback.
Speaker #3: Prism is our clients' simplify AI adoption by identifying and prioritizing business transformation, platform designed to help high-impact use cases through a proprietary data-driven transformation index.
Speaker #3: The platform evaluates potential AI initiatives across key elements such as data, and risk to provide a clear, actionable roadmap. the entire lifecycle of an AI project, Prism enables our clients to manage from initial assessment to measurable outcomes.
Joyce Mullen: Prism enables our clients to manage the entire life cycle of an AI project, from initial assessment to measurable outcomes. Our partner ecosystem is central to our success and a critical accelerator of our strategy. These partnerships strengthen our capabilities across technologies, platforms, and services, helping us stay agile and responsive to the rapidly evolving technology landscape. In 2025, we received numerous awards and recognitions from our partners. There are too many to list here, but notable Partner of the Year awards include those from Google, Cisco, HP, HP Enterprise, Intel, Databricks, and others. We were also the first partner to build out, demonstrate, and launch the Cisco Secure AI Factory with NVIDIA. You can find more details in the earnings presentation. Additionally, our portfolio of offerings and technical expertise have been recognized by leading industry analysts, including Gartner, IDC, and Forrester.
Joyce Mullen: Prism enables our clients to manage the entire life cycle of an AI project, from initial assessment to measurable outcomes. Our partner ecosystem is central to our success and a critical accelerator of our strategy. These partnerships strengthen our capabilities across technologies, platforms, and services, helping us stay agile and responsive to the rapidly evolving technology landscape. In 2025, we received numerous awards and recognitions from our partners. There are too many to list here, but notable Partner of the Year awards include those from Google, Cisco, HP, HP Enterprise, Intel, Databricks, and others. We were also the first partner to build out, demonstrate, and launch the Cisco Secure AI Factory with NVIDIA. You can find more details in the earnings presentation.
Speaker #3: Our partner ecosystem is central to our success and a critical accelerator of our strategy. These partnerships strengthen our capabilities across technologies, platforms, and services, helping us to stay agile and responsive to the rapidly evolving technology landscape.
Speaker #3: In 2025, we received numerous awards and recognitions from our partners. There are too many to list here, but notable partner of the year awards include those from Google, Cisco, HP, HP Enterprise, Intel, Databricks, and others.
Speaker #3: We were also the first partner to build out, demonstrate, and launch the Cisco Secure AI Factory with NVIDIA. You can find more details in the earnings presentation.
Speaker #3: Additionally, our portfolio of offerings and technical expertise have been recognized by leading industry analysts, including Gartner, IDC, and Forrester. These recognitions span software, AI and cloud capabilities, and workspace solutions, reflecting the breadth of our end-to-end solutions integrator capabilities.
Joyce Mullen: Additionally, our portfolio of offerings and technical expertise have been recognized by leading industry analysts, including Gartner, IDC, and Forrester. These recognitions span software, AI, and cloud capabilities, and workspace solutions, reflecting the breadth of our end-to-end solutions integrator capabilities. Insight's more than 6,600 technical professionals bring deep, specialized expertise across the major platforms that are most critical to our clients' success. To safeguard and formalize our proprietary IP developed by our technical talent, Insight has filed more than 200 patent applications globally, resulting in more than 70 patents issued to date, covering innovations in AI, machine learning, among other things. Our teammates are the source of the value we deliver to clients.
Joyce Mullen: These recognitions span software, AI, and cloud capabilities, and workspace solutions, reflecting the breadth of our end-to-end solutions integrator capabilities. Insight's more than 6,600 technical professionals bring deep, specialized expertise across the major platforms that are most critical to our clients' success. To safeguard and formalize our proprietary IP developed by our technical talent, Insight has filed more than 200 patent applications globally, resulting in more than 70 patents issued to date, covering innovations in AI, machine learning, among other things. Our teammates are the source of the value we deliver to clients. We cultivate a culture of collaboration, knowledge sharing, and continuous improvement, and Insight is consistently recognized as an employer of choice by Forbes, Fortune, and a Great Place to Work. Despite the challenging backdrop in 2025, we made meaningful progress in transforming Insight into the leading AI-first solutions integrator.
Speaker #3: Insight's more than deep, specialized expertise across the major 6,600 technical professionals bring platforms that are most critical to our client's success. To safeguard and formalize our proprietary IT developed by our technical talent, Insight has filed more than 200 patent applications globally, resulting in more than 70 patents issued to date, covering innovations in AI, things.
Speaker #3: the source of the value we deliver to clients. We cultivate a culture of collaboration, knowledge sharing, and continuous improvement. And Insight is consistently recognized as an employer of choice by Forbes, Fortune, and Great Place to Work.
Joyce Mullen: We cultivate a culture of collaboration, knowledge sharing, and continuous improvement, and Insight is consistently recognized as an employer of choice by Forbes, Fortune, and a Great Place to Work. Despite the challenging backdrop in 2025, we made meaningful progress in transforming Insight into the leading AI-first solutions integrator. We pivoted our Google and Microsoft resale business towards the corporate and mid-market space. We used this transition to sharpen our focus on efficiency and improve our operating leverage, leading to record cloud gross profit of $495 million. We improved profitability in core services and increased bookings performance with our aligned structure in North America and advisory pull-through in EMEA, leading to record core services gross profit of $320 million and margin of over 32%.
Speaker #3: Despite the challenging backdrop in 2025, we made meaningful progress in transforming Insight into the leading AI-first solutions integrator. We pivoted our Google and Microsoft resale business towards the corporate and mid-market space.
Joyce Mullen: We pivoted our Google and Microsoft resale business towards the corporate and mid-market space. We used this transition to sharpen our focus on efficiency and improve our operating leverage, leading to record cloud gross profit of $495 million. We improved profitability in core services and increased bookings performance with our aligned structure in North America and advisory pull-through in EMEA, leading to record core services gross profit of $320 million and margin of over 32%. The increase in mix of services resulted in record total gross margin of 21.4%. We successfully integrated acquisitions and drove cross-sell and best practices across all businesses. We added Inspire Eleven and Sekuro, strengthening our technical expertise in data, AI, and cybersecurity, and expanded cross-sell and pull-through opportunities across our global client base.
Speaker #3: We use this transition to sharpen our focus on efficiency and improve our operating leverage. Leading to record cloud growth profit of $495 million. We improved profitability and core services and increased bookings performance with our aligned structure in North America and advisory pull-through in EMEA.
Speaker #3: Leading to record core services growth profit of $320 million and margin of over 32%. The increase in mix of services resulted in record total growth margin of 21.4%.
Joyce Mullen: The increase in mix of services resulted in record total gross margin of 21.4%. We successfully integrated acquisitions and drove cross-sell and best practices across all businesses. We added Inspire Eleven and Sekuro, strengthening our technical expertise in data, AI, and cybersecurity, and expanded cross-sell and pull-through opportunities across our global client base. We applied our own Client Zero approach, deploying AI agents internally to improve our own productivity and building compelling reference cases for our clients. To help clients move from AI experimentation to production, we've completed hundreds of AI assessments, developed roadmap recommendations, and begun implementations. All this resulted in record adjusted earnings from operations of $504 million and margin of 6.1%, in addition to adjusted diluted EPS of $9.87.
Speaker #3: We successfully integrated acquisitions and drove cross-sell and best practices across all businesses. We added Inspire 11 and Securo, strengthening our technical expertise in data AI and cybersecurity and expanded cross-sell and pull-through opportunities across our global client base.
Speaker #3: We applied our own client zero approach, deploying AI productivity and building compelling reference cases for our clients. From experimentation to production, we've helped clients move from AI, completed hundreds of AI assessments, and used agents internally to improve our own begun implementations.
Joyce Mullen: We applied our own Client Zero approach, deploying AI agents internally to improve our own productivity and building compelling reference cases for our clients. To help clients move from AI experimentation to production, we've completed hundreds of AI assessments, developed roadmap recommendations, and begun implementations. All this resulted in record adjusted earnings from operations of $504 million and margin of 6.1%, in addition to adjusted diluted EPS of $9.87. As we look towards 2026, our outlook reflects cautious optimism as we anticipate subdued spending across the industry. The macro environment has largely remained unchanged, and our corporate and large enterprise clients remain cautious. PC and infrastructure investments will continue at a moderate level in the near term, and we're closely monitoring industry supply chain dynamics and memory pricing.
Speaker #3: All this resulted in record-adjusted $504 million and margin of 6.1% in addition to adjusted diluted EPS of earnings from operations of $9.87. As we look towards 2026, our outlook reflects cautious optimism as we anticipate subdued spending across the industry.
Joyce Mullen: As we look towards 2026, our outlook reflects cautious optimism as we anticipate subdued spending across the industry. The macro environment has largely remained unchanged, and our corporate and large enterprise clients remain cautious. PC and infrastructure investments will continue at a moderate level in the near term, and we're closely monitoring industry supply chain dynamics and memory pricing. Clients are making infrastructure investments as they prepare for AI implementation. At the same time, we see opportunity in cloud modernization, security, and AI adoption, and we will continue to invest in these areas to position Insight as the leading AI-first solutions integrator. Our strategy remains clear: simplify complexity for clients, deliver measurable outcomes, and accelerate time to value through integrated solutions. With that, I'll turn the call over to James. James?
Speaker #3: The macro environment has largely remained unchanged, and our corporate and large enterprise clients remain cautious. PC and infrastructure investments will continue at a moderate level in the near term, and we're closely monitoring industry supply chain dynamics and memory pricing.
Speaker #3: Clients are making infrastructure investments as they prepare for AI implementation. At the same time, we see opportunity in adoption, and we will continue to invest in these areas: cloud modernization, security, and AI, to position Insight as the leading integrator.
Joyce Mullen: Clients are making infrastructure investments as they prepare for AI implementation. At the same time, we see opportunity in cloud modernization, security, and AI adoption, and we will continue to invest in these areas to position Insight as the leading AI-first solutions integrator. Our strategy remains clear: simplify complexity for clients, deliver measurable outcomes, and accelerate time to value through integrated solutions. With that, I'll turn the call over to James. James?
Speaker #3: Our strategy remains clear: simplify complexity for clients, deliver measurable outcomes, and accelerate time-to-value through integrated solutions. With that, I'll turn the call over to James.
Speaker #3: James.
Speaker #2: Thank you, Joyce, and good morning, everyone. Our Q4 results met our expectations for the quarter. Net revenue was $2 billion, a decrease of 1%.
James Morgado: Thank you, Joyce, and good morning, everyone. Our Q4 results met our expectations for the quarter. Net revenue was $2 billion, a decrease of 1%. The decrease was driven by a 4% decline in product, primarily due to on-prem software, which declined 18% and was a result of netting as clients shift to cloud-delivered software. Hardware revenue increased 2%, the fourth consecutive quarter of growth, with growth in both devices and infrastructure. Core services revenue was up 7%, primarily driven by the acquisitions completed in the quarter. Gross profit increased 9%. EMEA gross profit increased 30%, driven by ongoing transactions in UAE and Saudi Arabia, where we act as the agent. Growth in core services across EMEA also contributed to this increase.
James Morgado: Thank you, Joyce, and good morning, everyone. Our Q4 results met our expectations for the quarter. Net revenue was $2 billion, a decrease of 1%. The decrease was driven by a 4% decline in product, primarily due to on-prem software, which declined 18% and was a result of netting as clients shift to cloud-delivered software. Hardware revenue increased 2%, the fourth consecutive quarter of growth, with growth in both devices and infrastructure. Core services revenue was up 7%, primarily driven by the acquisitions completed in the quarter. Gross profit increased 9%. EMEA gross profit increased 30%, driven by ongoing transactions in UAE and Saudi Arabia, where we act as the agent. Growth in core services across EMEA also contributed to this increase.
Speaker #2: The decrease was driven by a 4% decline in product, primarily due to on-prem software which declined 18% and was a result of netting as clients shift to cloud-delivered software.
Speaker #2: Hardware revenue increased growth, with growth in both devices and infrastructure. Core services revenue was up 7%, primarily driven by the acquisitions completed in the quarter.
Speaker #2: Gross profit 2%, the fourth consecutive quarter of profit increased 30%, driven by increased 9%. ongoing transactions in EMEA gross the agent. Growth in core UAE and Saudi Arabia where we act as services across EMEA also contributed to this increase.
James Morgado: Cloud gross profit was $138 million, an increase of 11%, with growth in both SaaS and Infrastructure as a Service, partially offset by the partner program changes we previously discussed. Insight Core services gross profit was $90 million, an increase of 16% due to contribution from acquisitions, as well as growth in our organic business. Hardware gross profit was up 1%. Hardware gross margin improved sequentially and was down year-over-year due to mix. As a result, total gross margin was 23.4%, an increase of 220 basis points. Adjusted SG&A increased 7%, driven by acquisitions and variable costs, primarily in EMEA. This resulted in Adjusted EBITDA of $156 million, up 11%, while margin expanded 80 basis points to 7.6%.
James Morgado: Cloud gross profit was $138 million, an increase of 11%, with growth in both SaaS and Infrastructure as a Service, partially offset by the partner program changes we previously discussed. Insight Core services gross profit was $90 million, an increase of 16% due to contribution from acquisitions, as well as growth in our organic business. Hardware gross profit was up 1%. Hardware gross margin improved sequentially and was down year-over-year due to mix. As a result, total gross margin was 23.4%, an increase of 220 basis points. Adjusted SG&A increased 7%, driven by acquisitions and variable costs, primarily in EMEA. This resulted in Adjusted EBITDA of $156 million, up 11%, while margin expanded 80 basis points to 7.6%.
Speaker #2: gross profit was $138 Cloud million, an increase of 11%, with growth in both SaaS and infrastructure as a service, partially offset by the partner program changes we've previously core services gross profit was $90 million, an increase of acquisitions, as well as growth in our organic discussed.
Speaker #2: business. was up 1%. Hardware Hardware gross profit gross margin improved sequentially, and was down year-over-year due to mix. As a result, total gross margin was Insight basis points.
Speaker #2: Adjusted SG&A increased 7%, driven by acquisitions and variable costs primarily in EMEA. 16% due to contribution from This resulted in adjusted EBITDA of $156 million, up 11%, while margin expanded 80 basis points to $7.6%.
Speaker #2: An adjusted diluted earnings per share were $2.96, up 11%. Overall, 2025 was a challenging year that fell short of our gross profit growth expectations entering the year.
James Morgado: Adjusted diluted earnings per share were $2.96, up 11%. Overall, 2025 was a challenging year that fell short of our gross profit growth expectations entering the year. Spending from our corporate and large enterprise clients remained subdued, weighing on growth in both core services and hardware. However, there were bright spots that are consistent with many of our long-term goals. Gross margin expanded for the fourth consecutive year. Cloud remains a key element of our strategy, and we are successfully navigating the impact from the partner program changes. We further strengthened our technical expertise through the Inspire11 and Sekuro acquisitions, and through disciplined expense management, we met our profit expectations. I'll now get into greater detail for full year 2025 results.
James Morgado: Adjusted diluted earnings per share were $2.96, up 11%. Overall, 2025 was a challenging year that fell short of our gross profit growth expectations entering the year. Spending from our corporate and large enterprise clients remained subdued, weighing on growth in both core services and hardware. However, there were bright spots that are consistent with many of our long-term goals. Gross margin expanded for the fourth consecutive year. Cloud remains a key element of our strategy, and we are successfully navigating the impact from the partner program changes. We further strengthened our technical expertise through the Inspire11 and Sekuro acquisitions, and through disciplined expense management, we met our profit expectations. I'll now get into greater detail for full year 2025 results.
Speaker #2: Spending from our corporate and large enterprise clients remained subdued, weighing on growth in hardware. However, there were bright both core services and spots that are consistent with many of our long-term goals.
Speaker #2: Gross margin expanded for the fourth consecutive year. Cloud remains a key element of our strategy, and we are successfully navigating the impact from the partner program changes.
Speaker #2: We further strengthen our technical expertise through the Inspire 11 and Securo acquisitions, and through disciplined expense management, we met our profit expectations. I'll now get into greater detail for full year 2025 results.
Speaker #2: Net revenue was $8.2 billion, a decrease of 5% as netted transactions continued to mute revenue growth. Despite this decline, gross profit was flat, and we expanded gross margin by $110 basis points to $21.4%.
James Morgado: Net revenue was $8.2 billion, a decrease of 5%, as netted transactions continued to mute revenue growth. Despite this decline, gross profit was flat, and we expanded gross margin by 110 basis points to 21.4%.... Our gross profit and gross margin results were driven by cloud and services, as well as a mix of higher netted agency transactions. Cloud gross profit was $495 million, an increase of 2%. SaaS and infrastructure as a service growth offset partner program changes. Adjusted SG&A expenses were flat due to disciplined expense management, partially offset by recent acquisitions. Adjusted EBITDA margin expanded 40 basis points to 6.6%, and adjusted diluted earnings per share were $9.87, up 2%. For the year, we generated approximately $300 million in cash flow from operations.
James Morgado: Net revenue was $8.2 billion, a decrease of 5%, as netted transactions continued to mute revenue growth. Despite this decline, gross profit was flat, and we expanded gross margin by 110 basis points to 21.4%.... Our gross profit and gross margin results were driven by cloud and services, as well as a mix of higher netted agency transactions. Cloud gross profit was $495 million, an increase of 2%. SaaS and infrastructure as a service growth offset partner program changes. Adjusted SG&A expenses were flat due to disciplined expense management, partially offset by recent acquisitions. Adjusted EBITDA margin expanded 40 basis points to 6.6%, and adjusted diluted earnings per share were $9.87, up 2%. For the year, we generated approximately $300 million in cash flow from operations.
Speaker #2: Our gross profit and gross margin results were driven by cloud and services, as well as a mix of higher netted agency transactions. Cloud gross profit was $495 million, an increase of 2%.
Speaker #2: SaaS and infrastructure as a service growth offset partner program changes. Adjusted SG&A expenses were flat due to disciplined expense management, partially offset by recent acquisitions.
Speaker #2: Adjusted EBITDA margin expanded 40 basis points to 6.6%, and adjusted diluted earnings per share were $9.87, up 2%. For the year, we generated approximately $300 million in cash flow from operations.
Speaker #2: In Q4, we increased our share repurchase authorization by $150 million, bringing the total amount to $299 million at year-end. In 2025, we settled $333 million of warrants.
James Morgado: In Q4, we increased our share repurchase authorization by $150 million, bringing the total amount to $299 million at year-end. In 2025, we settled $333 million of convertible notes and all associated warrants. For the year, the combined effect of share repurchases and settlement of the warrants associated with the convert reduced our adjusted diluted share count by approximately 3 million shares. We exited Q4 with total debt of approximately $1.4 billion, compared to approximately $900 million a year ago. The increase in debt was primarily related to acquisitions, the settlement of warrants, and share repurchases. In Q4, we raised the limit of our ABL facility to $2 billion and extended the term for another 5 years.
James Morgado: In Q4, we increased our share repurchase authorization by $150 million, bringing the total amount to $299 million at year-end. In 2025, we settled $333 million of convertible notes and all associated warrants. For the year, the combined effect of share repurchases and settlement of the warrants associated with the convert reduced our adjusted diluted share count by approximately 3 million shares. We exited Q4 with total debt of approximately $1.4 billion, compared to approximately $900 million a year ago. The increase in debt was primarily related to acquisitions, the settlement of warrants, and share repurchases. In Q4, we raised the limit of our ABL facility to $2 billion and extended the term for another 5 years.
Speaker #2: convertible notes and all associated For the year, the combined effect of share repurchases and settlement of the warrants associated with the convert reduced our adjusted diluted share count by approximately 3 million shares.
Speaker #2: We exited Q4 with total debt of approximately $1.4 billion, compared to approximately $900 million a year ago. The increase in debt was primarily related to acquisitions, the settlement of warrants, and share repurchases.
Speaker #2: In Q4, we raised the limit of our ABL facility to $2 billion and extended the term. As of the end of Q4, we had access to the full $2 billion capacity under our ABL facility, of which approximately $1.1 billion was available.
James Morgado: As of the end of Q4, we had access to the full $2 billion capacity under our ABL facility, of which approximately $1.1 billion was available. We have ample liquidity to meet our needs. Our adjusted return on invested capital for the trailing twelve months at the end of Q4 was 15.2%, compared to 15.3% a year ago. As we look toward 2026, we have considered the following factors in our guidance. Adjusted diluted earnings per share growth will be more heavily weighted toward the first half. For the year, we expect our corporate and large enterprise client spending to remain subdued. Hardware gross profit will be approximately flat as component costs may impact demand. We expect hardware revenue to grow faster than gross profit, primarily due to customer mix.
James Morgado: As of the end of Q4, we had access to the full $2 billion capacity under our ABL facility, of which approximately $1.1 billion was available. We have ample liquidity to meet our needs. Our adjusted return on invested capital for the trailing twelve months at the end of Q4 was 15.2%, compared to 15.3% a year ago. As we look toward 2026, we have considered the following factors in our guidance. Adjusted diluted earnings per share growth will be more heavily weighted toward the first half. For the year, we expect our corporate and large enterprise client spending to remain subdued. Hardware gross profit will be approximately flat as component costs may impact demand. We expect hardware revenue to grow faster than gross profit, primarily due to customer mix.
Speaker #2: We have ample liquidity to meet our invested capital for the trailing 12 months at the end of Q4 was needs. 15.2%, compared to Our adjusted return on 15.3% a year ago.
Speaker #2: considered the following factors in our As guidance. Adjusted diluted earnings per share growth will be more heavily weighted toward the first the term for another five corporate and large enterprise clients spending to remain subdued.
Speaker #2: Hardware gross profit will be approximately flat, as component costs may impact demand. We expect hardware revenue to grow faster than gross profit, primarily due to customer mix.
Speaker #2: We expect core services gross profit will grow in the high single digits, as our organic business returns to growth, coupled with contribution from our recent acquisitions.
James Morgado: We expect core services gross profit will grow in the high single digits as our organic business returns to growth, coupled with contribution from our recent acquisitions. We anticipate cloud gross profit to grow in the low double digits as we move past the majority of the partner program changes we have previously discussed, and we will continue to prudently manage SG&A and expect growth slightly slower than gross profit. Finally, we intend to start repurchasing $75 million in shares beginning in Q1. Considering these factors, for the full year of 2026, our guidance is as follows: We expect to deliver gross profit growth in the low single digits and that our gross margin will be approximately 21%. Including stock-based compensation, adjusted diluted earnings per share is expected to be $10.10 to $10.60.
James Morgado: We expect core services gross profit will grow in the high single digits as our organic business returns to growth, coupled with contribution from our recent acquisitions. We anticipate cloud gross profit to grow in the low double digits as we move past the majority of the partner program changes we have previously discussed, and we will continue to prudently manage SG&A and expect growth slightly slower than gross profit. Finally, we intend to start repurchasing $75 million in shares beginning in Q1. Considering these factors, for the full year of 2026, our guidance is as follows: We expect to deliver gross profit growth in the low single digits and that our gross margin will be approximately 21%. Including stock-based compensation, adjusted diluted earnings per share is expected to be $10.10 to $10.60.
Speaker #2: We anticipate cloud gross profit to grow in the low double digits, as we move past the majority of the partner program changes we have previously discussed.
Speaker #2: And we will continue to prudently manage SG&A and expect growth slightly profit. Finally, we intend to start repurchasing $75 million in Q1. Considering these factors, for the full year of 2026, our guidance is as follows.
Speaker #2: shares beginning in We expect to deliver gross our gross margin will be approximately 21%. Including stock-based compensation, adjusted diluted earnings per share, is expected to be $10.10 to $10.60.
Speaker #2: Beginning in 2026, slower than gross our adjusted guidance excludes stock-based compensation. We therefore anticipate our adjusted diluted earnings per share will be between $11 to $11.50.
James Morgado: Beginning in 2026, our adjusted guidance excludes stock-based compensation. We therefore anticipate our adjusted diluted earnings per share will be between $11 to $11.50. This represents approximately 5% growth at the midpoint compared to 2025, adjusted diluted EPS of $10.75, excluding stock-based compensation. Please refer to the investor presentation for a historical view of our results, excluding stock-based compensation. Finally, we expect cash flow from operations in the $300 to 400 million range. On a go-forward basis, guidance excludes stock-based compensation and includes interest and other expense to be approximately $85 million, an effective tax rate of 25.5% to 26.5% for the full year, and capital expenditures of $20 to 30 million, and an average share count for the full year of approximately 31 million shares.
James Morgado: Beginning in 2026, our adjusted guidance excludes stock-based compensation. We therefore anticipate our adjusted diluted earnings per share will be between $11 to $11.50. This represents approximately 5% growth at the midpoint compared to 2025, adjusted diluted EPS of $10.75, excluding stock-based compensation. Please refer to the investor presentation for a historical view of our results, excluding stock-based compensation. Finally, we expect cash flow from operations in the $300 to 400 million range. On a go-forward basis, guidance excludes stock-based compensation and includes interest and other expense to be approximately $85 million, an effective tax rate of 25.5% to 26.5% for the full year, and capital expenditures of $20 to 30 million, and an average share count for the full year of approximately 31 million shares.
Speaker #2: This represents approximately 5% growth at the midpoint, compared to diluted EPS of $10.75, excluding stock-based compensation. Please refer to the investor presentation for a historical view of our results, excluding stock-based compensation.
Speaker #2: Finally, we expect cash flow from operations in the $300 to $400 million range. On a go-forward basis, guidance excludes stock-based compensation, and includes interest and other expense to be approximately 85 million.
Speaker #2: An effective tax rate of 25.5% to 26.5% for the full year. And capital expenditures of 20 to 30 million dollars, and an average share count for the full year of approximately 31 million shares.
Speaker #2: This outlook excludes stock-based compensation. It excludes acquisition-related intangible amortization expense of approximately $83 million, severance, and restructuring or transformation. It assumes no acquisition-related costs or expenses, and assumes no change in our debt instruments and no meaningful change in the macroeconomic outlook.
James Morgado: This outlook excludes stock-based compensation, excludes acquisition-related intangible amortization expense of approximately $83 million, assumes no acquisition-related costs, severance, and restructuring or transformation expenses, and assumes no change in our debt instruments and no meaningful change in the macroeconomic outlook. I will now turn the call back over to Joyce. Joyce?
James Morgado: This outlook excludes stock-based compensation, excludes acquisition-related intangible amortization expense of approximately $83 million, assumes no acquisition-related costs, severance, and restructuring or transformation expenses, and assumes no change in our debt instruments and no meaningful change in the macroeconomic outlook. I will now turn the call back over to Joyce. Joyce?
Speaker #2: I will now turn the call back over to Joyce. Joyce? Thanks, James. 2025 was a year of resilience and transformation. We navigated macro headwinds, evolving client priorities, and significant partner program changes.
Joyce Mullen: Thanks, James. 2025 was a year of resilience and transformation. We navigated macro headwinds, evolving client priorities, and significant partner program changes. Through it all, we strengthened our capabilities and sharpened our focus on the areas that matter most to our clients: cloud, data, AI, cyber, and edge. As we enter 2026, we are confident in our ability to execute and capture emerging opportunities. Our strong portfolio of offerings and expertise, disciplined approach, and commitment to innovation position us well to capture future growth opportunities. Finally, regarding the search for my successor, the board's orderly transition process is well underway. Our public external search is progressing as planned, and I remain committed to ensuring a smooth handoff as we identify the right leader to guide Insight through its next phase of AI-driven transformation. We expect to name a successor in the next few months.
Joyce Mullen: Thanks, James. 2025 was a year of resilience and transformation. We navigated macro headwinds, evolving client priorities, and significant partner program changes. Through it all, we strengthened our capabilities and sharpened our focus on the areas that matter most to our clients: cloud, data, AI, cyber, and edge. As we enter 2026, we are confident in our ability to execute and capture emerging opportunities. Our strong portfolio of offerings and expertise, disciplined approach, and commitment to innovation position us well to capture future growth opportunities. Finally, regarding the search for my successor, the board's orderly transition process is well underway. Our public external search is progressing as planned, and I remain committed to ensuring a smooth handoff as we identify the right leader to guide Insight through its next phase of AI-driven transformation.
Speaker #2: Through it all, we strengthened our capabilities and sharpened our focus on the areas that matter most to our clients: cloud, data, AI, cyber, and edge.
Speaker #2: As we enter 2026, we are confident in our ability to execute and capture emerging opportunities. Our strong portfolio of offerings and expertise disciplined approach and commitment to innovation position us well to capture future growth opportunities.
Speaker #2: Finally, regarding the search for my successor, the board's orderly transition process is well underway. Our public external search is progressing as planned, and I remain committed to ensuring a smooth handoff as we identify the right leader to guide Insight through its next phase of AI-driven transformation.
Speaker #2: We expect to name a successor in the next few months. I want to thank our teammates for their unwavering commitment to our clients, partners, and each other.
Joyce Mullen: We expect to name a successor in the next few months. I want to thank our teammates for their unwavering commitment to our clients, partners, and each other, our clients, for trusting Insight to help them with their transformational journeys, and our partners for their continued collaboration and support in delivering innovative solutions to our clients. This concludes my comments, and we will now open the line for your questions.
Joyce Mullen: I want to thank our teammates for their unwavering commitment to our clients, partners, and each other, our clients, for trusting Insight to help them with their transformational journeys, and our partners for their continued collaboration and support in delivering innovative solutions to our clients. This concludes my comments, and we will now open the line for your questions.
Speaker #2: Our clients, for transformational journeys. And our partners for their continued collaboration and support in clients. This concludes my delivering innovative solutions to our comments, and we will now open the line for your questions.
Speaker #3: We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star one on withdraw your question, press star your telephone keypad.
James Morgado: We will now begin the question-and-answer session. Please limit yourself to one question. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question. If you're muted locally, please remember to unmute your device.
Operator: We will now begin the question-and-answer session. Please limit yourself to one question. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question. If you're muted locally, please remember to unmute your device. ... Please mute immediately after, and please stand by while we compile the Q&A roster. Our first question comes from Adam Tindle from Raymond James. Adam, your line is now open.
Speaker #3: one again. Please pick up your To handset when asking a question. If you're muted locally, please remember to unmute your device. Please mute immediately after, and please stand by while we compile the Q&A roster.
Operator: ... Please mute immediately after, and please stand by while we compile the Q&A roster. Our first question comes from Adam Tindle from Raymond James. Adam, your line is now open.
Speaker #3: Our first question comes from Adam Tindall from Raymond James. Adam, your line is now open.
Speaker #4: Okay. Thanks. Good morning. James, I wanted to start with 2026 guidance. I just was curious, saw the low single digit growth expectation, and it seemed like you may be a little bit more conservative this year than in prior years.
Adam Tindle: Okay, thanks. Good morning. James, I wanted to start with 2026 guidance. I just was curious, saw the low single-digit growth expectation, and it seemed like you may be a little bit more conservative than this year than in prior years. So maybe just talk about your process to annual guidance this year, how it might be similar or different than prior years. And Joyce, if you could add maybe a little bit of color, you know, outside of just guidance, just, you know, kind of boots on the ground, your conversations with customers, as they think about or thought about their budgets in 2026. I'm sure you've been having those conversations with your sales force as well, into year-end.
Adam Tindle: Okay, thanks. Good morning. James, I wanted to start with 2026 guidance. I just was curious, saw the low single-digit growth expectation, and it seemed like you may be a little bit more conservative than this year than in prior years. So maybe just talk about your process to annual guidance this year, how it might be similar or different than prior years. And Joyce, if you could add maybe a little bit of color, you know, outside of just guidance, just, you know, kind of boots on the ground, your conversations with customers, as they think about or thought about their budgets in 2026. I'm sure you've been having those conversations with your sales force as well, into year-end. What does IT budgets for your customer base look like in 2026, and any early indications on how the year is starting? Thanks.
Speaker #4: So maybe just talk about your process to annual guidance this year, how it might be similar or different than prior years. And Joyce, if you could add maybe a little bit of color outside of just guidance, just kind of boots on the ground, your conversations with customers as they think about or thought about their budgets in 2026.
Speaker #4: I'm sure you've been having those conversations with year-end. What your Salesforce, as well, and does IT budgets for your customer base look like in 2026?
Adam Tindle: What does IT budgets for your customer base look like in 2026, and any early indications on how the year is starting? Thanks.
Speaker #4: And any early indications on how the year is starting? Thanks.
James Morgado: I'll start. Thanks for the question, Adam. So, here's the approach that we took this year for guidance. First, when we set guidance, we always look at many factors: what we hear from our customers, what we hear from our partners. We obviously take into consideration any disruptive events like what we're experiencing now with the memory costs, the partner program changes from last year, et cetera. This year, what I would say that the difference in the guidance is I place greater emphasis on two particular areas. The first is exactly that last point that we said with the potential disruptions. The environment is still complex and fluid.
Speaker #5: I'll start. Thanks for the question, Adam. So here's the approach that we took this year for guidance. First, when we set guidance, we always look at many factors.
James Morgado: I'll start. Thanks for the question, Adam. So, here's the approach that we took this year for guidance. First, when we set guidance, we always look at many factors: what we hear from our customers, what we hear from our partners. We obviously take into consideration any disruptive events like what we're experiencing now with the memory costs, the partner program changes from last year, et cetera. This year, what I would say that the difference in the guidance is I place greater emphasis on two particular areas. The first is exactly that last point that we said with the potential disruptions. The environment is still complex and fluid.
Speaker #5: What we hear from our customers, what we hear from our partners—we obviously take into consideration any disruptive events, like what we're experiencing now with the memory costs, the partner program changes from last year, etc.
Speaker #5: This year, what I would say is that the difference in the guidance is I place greater emphasis on two particular areas. The first is exactly that last point that we said with the potential disruptions.
Speaker #5: The environment is still complex and fluid. It's a continuation of many of the factors we saw last year, which creates a degree of a bit of uncertainty that we have to account for in our outlook.
James Morgado: There's continuation of many of the factors we saw last year, which creates a degree of, you know, a bit of uncertainty that we have to account for in our outlook. The second point, which is different than previous years, is I more heavily weighted our past performance in terms of the guidance that we set at the beginning of the year. Look, the last couple of years have had twists and turns, and I think FY 2026 has the, has them as well. And so I think we're trying to balance the internal ambitions that we have as a company with the, with a bit of the market realities that, that we see. And so our approach to guidance is similar in many ways, but what I would say is I place greater emphasis in those two particular areas.
James Morgado: There's continuation of many of the factors we saw last year, which creates a degree of, you know, a bit of uncertainty that we have to account for in our outlook. The second point, which is different than previous years, is I more heavily weighted our past performance in terms of the guidance that we set at the beginning of the year. Look, the last couple of years have had twists and turns, and I think FY 2026 has the, has them as well. And so I think we're trying to balance the internal ambitions that we have as a company with the, with a bit of the market realities that, that we see. And so our approach to guidance is similar in many ways, but what I would say is I place greater emphasis in those two particular areas.
Speaker #5: The second point, which is different, then previous years, is I more heavily weighted our past performance in terms of the guidance that we set at the beginning of the year.
Speaker #5: The last couple of years have had twists and turns, and I think FY26 has them as well. And so I think we're trying to balance the internal ambitions that we have as a company with a bit of the market realities that we see.
Speaker #5: And so our approach to guidance is similar in many ways, but what I would say is I place greater emphasis in those two particular
Speaker #5: areas. And
Joyce Mullen: And then in terms of IT budgets, Adam, and kind of how we're thinking about the various market segments, you know, I think in general, it's just a bit more of the same. Uncertainty persists, especially with large enterprise and large corporations. So we've been... I think one thing that's different is we aren't assuming any kind of massive improvement in, in spend in the large enterprise, so that's different. But they continue, you know, they're really worried, very, I mean, they're very excited about and, and worried about making sure they preserve some of their, IT budgets to support, the transition to AI. That means a lot of different things to a lot of different people. That includes things like infrastructure, which is aging and likely to be, a more important factor.
Joyce Mullen: And then in terms of IT budgets, Adam, and kind of how we're thinking about the various market segments, you know, I think in general, it's just a bit more of the same. Uncertainty persists, especially with large enterprise and large corporations. So we've been... I think one thing that's different is we aren't assuming any kind of massive improvement in, in spend in the large enterprise, so that's different. But they continue, you know, they're really worried, very, I mean, they're very excited about and, and worried about making sure they preserve some of their, IT budgets to support, the transition to AI. That means a lot of different things to a lot of different people. That includes things like infrastructure, which is aging and likely to be, a more important factor.
Speaker #2: then in terms of IT budgets, Adam, and kind of how we're thinking about the various market segments, I think in general, it's just a bit more of the same.
Speaker #2: enterprise and large corporations, so we've been I Uncertainty think one thing that's different is we aren't in spend in the large enterprise. So that's different.
Speaker #2: But they continue. They're really assuming any kind of massive improvement, and they're worried about making sure they preserve some of their IT budgets to support the transition to AI.
Speaker #2: That means a lot of different things to a lot of different people. That includes things like infrastructure, which is aging and likely to be a more important factor.
Speaker #2: It includes security, of course, networking to get the data moving around so you can actually leverage AI. They're continuing to spend a significant money on existing infrastructure requirements for example, VMware and Broadcom.
Joyce Mullen: It includes security, of course, networking to get the data moving around so you can actually leverage AI. They're continuing to spend, you know, significant money on existing infrastructure requirements, for example, VMware and Broadcom. So that's continuing. But, you know, I think they are thinking carefully about how to preserve some of this, their IT budgets to make sure that they can invest in making sure their company is ready for AI. That also could mean some data projects and making sure that they have the right kind of connections. So I feel like that is really very much more of the same on the large enterprise space. Commercial has been really robust, and we expect that to moderate just a tad over the next year.
Joyce Mullen: It includes security, of course, networking to get the data moving around so you can actually leverage AI. They're continuing to spend, you know, significant money on existing infrastructure requirements, for example, VMware and Broadcom. So that's continuing. But, you know, I think they are thinking carefully about how to preserve some of this, their IT budgets to make sure that they can invest in making sure their company is ready for AI. That also could mean some data projects and making sure that they have the right kind of connections. So I feel like that is really very much more of the same on the large enterprise space. Commercial has been really robust, and we expect that to moderate just a tad over the next year.
Speaker #2: So that's continuing. But I think they are thinking carefully about how to preserve some of their IT budgets to make sure that they can invest in making sure their company is ready for AI.
Speaker #2: That also could mean some data projects and making sure that they have the right kind of connections. So I feel like that is really very much more the same.
Speaker #2: enterprise space. Commercial has been really I'm a large robust, and we expect that to moderate just a tad over the next year. They've done we've had really good success in the commercial space, a seven-quarters of growth in a bit.
Joyce Mullen: We've had really good success in the commercial space, seven quarters of growth in a row, but we do think that those growth rates are likely to moderate just a bit. And then the public sector is very sort of spiky, up and down. It has a lot to do with kind of what's going on in government and where funds are coming from, et cetera. And then we also see a whole lot of netting there. So, we spend a lot of time thinking about what's going on with GP there. But, overall, we expect this to be a whole lot like the 2025 in terms of IT spend, with a bit more emphasis on security and preparation for AI. In terms of how the year is starting, we're pleased with the momentum coming out of Q4.
Joyce Mullen: We've had really good success in the commercial space, seven quarters of growth in a row, but we do think that those growth rates are likely to moderate just a bit. And then the public sector is very sort of spiky, up and down. It has a lot to do with kind of what's going on in government and where funds are coming from, et cetera. And then we also see a whole lot of netting there. So, we spend a lot of time thinking about what's going on with GP there. But, overall, we expect this to be a whole lot like the 2025 in terms of IT spend, with a bit more emphasis on security and preparation for AI. In terms of how the year is starting, we're pleased with the momentum coming out of Q4.
Speaker #2: And then the public sector is very sort of likely to moderate just a bit. But we do think that those growth rates are a lot to do with kind of what's going on in the government and where funds are coming from, etc.
Speaker #2: And then we also see a whole lot of netting there. So we spent a lot of time thinking about what's going on with GP there.
Speaker #2: But overall, we expect this to be a whole lot like the 2025 in terms of IT spend. With a bit more emphasis on security and preparation for AI.
Speaker #2: In terms of how the year is starting, we're pleased with the momentum coming out of Q4. We continue to see that momentum into the early parts of Q1 in terms of bookings.
Joyce Mullen: We continue to see that momentum into the early parts of Q1 in terms of bookings. So that's a great sign. And we expect to continue to build a bit of backlog, especially as there's, you know, supply chain constraints start to hit due to memory pricing. I guess that's the other sort of thing that is a bit different this year. Everybody is very much expecting memory prices to increase, supply chains to probably slow down a bit because of availability, and that is a factor that's kind of weighing on our customers' minds, making sure they preserve some of their IT spend to support some of the memory increases. We also expect a level of elasticity, especially around devices, to kick in given those increased prices.
Joyce Mullen: We continue to see that momentum into the early parts of Q1 in terms of bookings. So that's a great sign. And we expect to continue to build a bit of backlog, especially as there's, you know, supply chain constraints start to hit due to memory pricing. I guess that's the other sort of thing that is a bit different this year. Everybody is very much expecting memory prices to increase, supply chains to probably slow down a bit because of availability, and that is a factor that's kind of weighing on our customers' minds, making sure they preserve some of their IT spend to support some of the memory increases. We also expect a level of elasticity, especially around devices, to kick in given those increased prices.
Speaker #2: that's a great sign. And we expect to continue to build a bit of backlog, especially as there's supply chain constraints start to hit due to memory pricing I So guess that's the other sort of thing that is a bit different this year.
Speaker #2: Everybody is very much expecting memory prices to increase supply chains to probably slow down a bit because of availability. And that is a factor that's kind of weighing on our customers' minds, making sure they preserve some of their IT spend to support some of the memory increases.
Speaker #2: We also expect a level of elasticity, especially around devices. To kick in, given those increased prices.
Speaker #4: Very helpful. Thank you. Maybe just as a follow-up, James, I hope we don't have to talk about partner program changes anymore going forward. I'm sure you feel similarly about that.
Adam Tindle: Very helpful. Thank you. Maybe just as a follow-up, James, I hope we don't have to talk about partner program changes anymore going forward. I'm sure you feel similarly about that. But now that we're done with 2025, I think you were helpful in being explicit about quantifying those. If you could just maybe, like, summarize the partner program change impact in 2025, and I think, you know, you were thinking there might be maybe a little bit left in 2026, kind of how you're thinking about that. You know, I'm asking just in light of the EPS guidance. You talked about it being more heavy weight to the first half, but I thought there was a little bit more partner program changes still coming through.
Adam Tindle: Very helpful. Thank you. Maybe just as a follow-up, James, I hope we don't have to talk about partner program changes anymore going forward. I'm sure you feel similarly about that. But now that we're done with 2025, I think you were helpful in being explicit about quantifying those. If you could just maybe, like, summarize the partner program change impact in 2025, and I think, you know, you were thinking there might be maybe a little bit left in 2026, kind of how you're thinking about that. You know, I'm asking just in light of the EPS guidance. You talked about it being more heavy weight to the first half, but I thought there was a little bit more partner program changes still coming through.
Speaker #4: But now that we're done with 2025, I think you were helpful in being explicit about quantifying those. If you could just maybe summarize the partner program change impact in 2025 and I think you were thinking there might be maybe a little bit left in 2026, kind of how you're thinking about that.
Speaker #4: And I'm asking just in light of the EPS guidance. You talked about it being more heavy weight to the first half, but I thought there was a little bit more partner program changes still coming through.
Speaker #4: So if you could just lay that out and then put a little bit of finer point on the how heavy in the first half in the rationale for that for EPS, that'd be helpful.
Adam Tindle: So if you could just lay that out and then put a little bit finer point on the how heavy in the first half in the rationale for that for EPS, that'd be helpful. Thanks.
Adam Tindle: So if you could just lay that out and then put a little bit finer point on the how heavy in the first half in the rationale for that for EPS, that'd be helpful. Thanks.
Speaker #4: Thanks.
James Morgado: Yeah. Thanks, thanks, thanks, Adam. Yeah, we certainly would love to not have to talk about partner program changes.
James Morgado: Yeah. Thanks, thanks, thanks, Adam. Yeah, we certainly would love to not have to talk about partner program changes.
Speaker #3: to not have to talk about partner program changes.
Speaker #2: Ever again. Yeah.
Joyce Mullen: Ever again.
Joyce Mullen: Ever again.
Speaker #3: Yeah. What I would say Thanks. is the $70 million gross Thanks. Thanks, profit impact that we called out at the beginning of the year landed very, Adam.
James Morgado: Yeah. What I would say is, the $70 million dollar gross profit impact that we called out at the beginning of the year, it landed very, very close to that number in terms of the impact. The reason that we overperformed in cloud last year from our beginning of the year expectations was because of a more effective pivot, but the gross impact was still $70 million. So that was an area that we called correctly. In terms of the partner program changes in the pivot, what I would say is that we are done with the pivot internally. In terms of the engine that we have internally focusing on the mid-market space, I think the team has completed that pivot.
James Morgado: Yeah. What I would say is, the $70 million dollar gross profit impact that we called out at the beginning of the year, it landed very, very close to that number in terms of the impact. The reason that we overperformed in cloud last year from our beginning of the year expectations was because of a more effective pivot, but the gross impact was still $70 million. So that was an area that we called correctly. In terms of the partner program changes in the pivot, what I would say is that we are done with the pivot internally. In terms of the engine that we have internally focusing on the mid-market space, I think the team has completed that pivot.
Speaker #3: impact. The reason that we Yeah, we certainly would love very close to that number in terms of the overperformed in cloud last year from our beginning of the year expectations was because of a still $70 million.
Speaker #3: was an area that we called So that more effective pivot. correctly. In terms of the partner program changes in the But the gross impact was pivot, what I would say is that we we have internally focusing think the team is completed that pivot.
Speaker #3: On the mid-market space, I—but as we mentioned last year, there would be a tail of financial impact into this year as we are done with the pivot.
James Morgado: But as we mentioned last year, there would be a tail of a financial impact into this year. We see that tail a little more in the second half, candidly, and that is because of the dynamics associated with Google and the Google solution line, and really from the acquisition. It dates back to the acquisition of SADA, which they had a very heavy presence in enterprise. And so to build that install base in the corporate and mid-market space just takes longer than it would in, for example, compared to the Microsoft space, where we had, you know, a nice presence already, a good growing presence in the mid-market space. And so it's a bit of a tail into building that install base still in on our Google solution line.
James Morgado: But as we mentioned last year, there would be a tail of a financial impact into this year. We see that tail a little more in the second half, candidly, and that is because of the dynamics associated with Google and the Google solution line, and really from the acquisition. It dates back to the acquisition of SADA, which they had a very heavy presence in enterprise. And so to build that install base in the corporate and mid-market space just takes longer than it would in, for example, compared to the Microsoft space, where we had, you know, a nice presence already, a good growing presence in the mid-market space. And so it's a bit of a tail into building that install base still in on our Google solution line.
Speaker #3: We see that tail a little more in because of the dynamics associated with Google. And the the second half, candidly, and that is the acquisition, it dates back to the acquisition Google solution line and really from of SADA, which they had a very heavy presence in enterprise.
Speaker #3: And so to build that install base in the corporate and mid-market space just takes longer than it would in, for example, compared to the Microsoft space where we had a nice presence already, a good growing presence in the mid-market space.
Speaker #3: And so, it's a bit of a tail into building that install base still on our Google solution line. And the reason that the impact is a little more heavily weighted in the second half is because of the seasonality associated with the SADA business.
James Morgado: And the reason that it, the impact is a little more heavily weighted in the second half is because of the seasonality associated with the SADA business. It is more acute in the second half, it's greater in the second half, and in fact, in Q4. So when I think about cloud to the guidance that I gave, what we're likely to see is a first half that performs a bit better than the cloud guidance that I gave, and a little more challenged into the second half. And by the time we exit the second half, I think the Google space, the Google solution line then has, you know, a good install base, and these dynamics completely, we're expecting these dynamics would go away completely in 2027.
James Morgado: And the reason that it, the impact is a little more heavily weighted in the second half is because of the seasonality associated with the SADA business. It is more acute in the second half, it's greater in the second half, and in fact, in Q4. So when I think about cloud to the guidance that I gave, what we're likely to see is a first half that performs a bit better than the cloud guidance that I gave, and a little more challenged into the second half. And by the time we exit the second half, I think the Google space, the Google solution line then has, you know, a good install base, and these dynamics completely, we're expecting these dynamics would go away completely in 2027.
Speaker #3: It is more acute, and it's greater in the second half. And in fact, in Q4. So when I think about cloud, to the guidance that I gave, what we're likely to see is a first half that performs a bit better than the cloud guidance that I gave.
Speaker #3: And a little more challenged into the second half. And by the time we exit the second half, I think the Google space, the Google solution line then has a good install base and these dynamics completely we're expecting these dynamics that would go away completely in 2027.
James Morgado: But still a bit of a tail impact into 2026, and you'll see it again a little more in the second half than the first.
James Morgado: But still a bit of a tail impact into 2026, and you'll see it again a little more in the second half than the first.
Speaker #3: you'll see it again a little more in the into 2026, and second half than the first.
Speaker #4: it. Thank
Adam Tindle: Got it. Thank you.
Adam Tindle: Got it. Thank you.
Speaker #5: Your next question comes from
Operator: Your next question comes from Luke Morrison of Canaccord Genuity. Luke, you are now live.
Operator: Your next question comes from Luke Morrison of Canaccord Genuity. Luke, you are now live.
Speaker #5: Luke Morrison of Canaccord Genuity. you. But still a bit of a tail impact now Luke, you are
Speaker #5: live. Hey, guys.
Luke Morrison: Hey, guys, thanks for taking the question here. So maybe just to start, you highlighted an AI-optimized data center engagement that I thought was pretty interesting in your remarks. I'm curious, as we think about that engagement, how should we be thinking about the repeatability of that opportunity as AI data center investment accelerates across the US and Europe? And how do you see AI data center build-outs becoming a more meaningful recurring growth vector for your business over the next few years? And how does that play to your overall growth algo?
Luke Morison: Hey, guys, thanks for taking the question here. So maybe just to start, you highlighted an AI-optimized data center engagement that I thought was pretty interesting in your remarks. I'm curious, as we think about that engagement, how should we be thinking about the repeatability of that opportunity as AI data center investment accelerates across the US and Europe? And how do you see AI data center build-outs becoming a more meaningful recurring growth vector for your business over the next few years? And how does that play to your overall growth algo?
Speaker #6: Thanks for taking the question here. So, you highlighted an AI-optimized data center engagement that I thought was pretty interesting in your remarks. I'm curious, as we think about that engagement, how should we be thinking about the repeatability of that opportunity as AI data center investments accelerate across the US and Europe?
Speaker #6: And how do becoming a more meaningful you see AI data center buildouts business over the next few into your overall growth
Speaker #6: algo? Thanks, Luke.
Joyce Mullen: Thanks, Luke. Yeah, I mean, so that, that is a great example. I think there's a couple of things to take away. One is that, it is a more complex data center solution than historical data center solutions have been. There's just a lot more choices. There's a lot more complexity. There's a lot more considerations that probably gets exacerbated as you think about memory optimization, coming, you know, over the next couple of years, as, as well as power optimization, et cetera, et cetera.
Joyce Mullen: Thanks, Luke. Yeah, I mean, so that, that is a great example. I think there's a couple of things to take away. One is that, it is a more complex data center solution than historical data center solutions have been. There's just a lot more choices. There's a lot more complexity. There's a lot more considerations that probably gets exacerbated as you think about memory optimization, coming, you know, over the next couple of years, as, as well as power optimization, et cetera, et cetera.
Speaker #2: Yeah. I mean, so that is a great example. I think there's a couple of things to take away. One is that it is a more complex data center solution data center solutions have been.
Speaker #2: There's just a lot more choices. There's a lot more complexity. There's a lot more considerations that probably get exacerbated as you think about memory couple of years, as well as power optimization, etc., etc.
Joyce Mullen: So, we think we're at the very, and I would say we're not alone in this. I would say all of sort of basically the industry believes that we are primed for broader enterprise adoption, as enterprises consider their opportunities and consider their cost structures and think about multi-cloud in a broader way, because there's definitely cost constraints associated with running everything in a public cloud. So we have definitely seen more interest in on-prem enterprises. I would say that our partners are making that easier with sort of prepackaged, not exactly simplified yet, but prepackaged AI factories. We were the first partner, as I noted, to launch the Cisco Secure AI Factory with NVIDIA into our labs.
Joyce Mullen: So, we think we're at the very, and I would say we're not alone in this. I would say all of sort of basically the industry believes that we are primed for broader enterprise adoption, as enterprises consider their opportunities and consider their cost structures and think about multi-cloud in a broader way, because there's definitely cost constraints associated with running everything in a public cloud. So we have definitely seen more interest in on-prem enterprises. I would say that our partners are making that easier with sort of prepackaged, not exactly simplified yet, but prepackaged AI factories. We were the first partner, as I noted, to launch the Cisco Secure AI Factory with NVIDIA into our labs.
Speaker #2: at the very and I would say we're not alone in this. I would So we think we're sort of basically the industry is believes that we are primed for broader enterprise adoption.
Speaker #2: As enterprises consider their opportunities and consider their cost structures, and think about multi-cloud in a broader way—because there's definitely cost constraints associated with running everything in a public cloud.
Speaker #2: So we have definitely seen more interest in on-prem enterprises. I would say that our partners are making that easier with sort of prepackaged, not exactly simplified yet, but prepackaged AI factories.
Speaker #2: We were the first partner, as I noted, to launch NVIDIA. Into our labs. So we believe we are ready to see enterprise adoption of AI infrastructure specifically in data centers and specifically in a multi-cloud environment.
Joyce Mullen: So we believe we are ready to see enterprise adoption of AI infrastructure, specifically in data centers and specifically in a multi-cloud environment. So we've also been working really, really hard to make sure that there's portability between the solutions and the workloads that we are building out, for example, to start with in public cloud. And they can run in public cloud, they can run in a different public cloud, and then they can also run on-prem. So all of those things are critical, I think, to giving our customers the right kind of options and the right kind of cost profile solutions that they're looking for. So we're very, very excited about this. We are absolutely at the very beginning stages, as I noted. This is a function of a couple of things. One is GPU availability.
Joyce Mullen: So we believe we are ready to see enterprise adoption of AI infrastructure, specifically in data centers and specifically in a multi-cloud environment. So we've also been working really, really hard to make sure that there's portability between the solutions and the workloads that we are building out, for example, to start with in public cloud. And they can run in public cloud, they can run in a different public cloud, and then they can also run on-prem. So all of those things are critical, I think, to giving our customers the right kind of options and the right kind of cost profile solutions that they're looking for. So we're very, very excited about this. We are absolutely at the very beginning stages, as I noted. This is a function of a couple of things. One is GPU availability.
Speaker #2: So make sure that there's portability between the solutions and the workloads that we are building out. For example, to start with in public cloud.
Speaker #2: And they can run in public cloud, and then they can also run in public cloud. They can run in a different way on-prem. So all of those things are critical, I think, to giving our customers the right kind of options and the right kind of cost profile solutions that they're looking for.
Speaker #2: So we're very, very excited about this. We are absolutely at the very beginning stages, as I noted. This is a function of a couple of things.
Speaker #2: One is GPU availability. I would say also there's increased knowledge and understanding of when we can use CPUs and GPUs and what the right combinations are.
Joyce Mullen: I would say also there's increased knowledge and understanding of when we can use CPUs and GPUs and what the right combinations are, again, to manage the cost structure, and also, AI skills, and understanding kind of what those workloads and use cases look like. So, this, this should be a significant tailwind for the industry, as we move beyond just funding the public clouds and the neo clouds in terms of building out data centers.
Joyce Mullen: I would say also there's increased knowledge and understanding of when we can use CPUs and GPUs and what the right combinations are, again, to manage the cost structure, and also, AI skills, and understanding kind of what those workloads and use cases look like. So, this, this should be a significant tailwind for the industry, as we move beyond just funding the public clouds and the neo clouds in terms of building out data centers.
Speaker #2: Manage the cost again, to structure. And also AI skills and understanding kind of what those workloads and use cases look like. So this should be a significant tailwind beyond just funding the public clouds and the Neo clouds in industry.
Speaker #2: terms of building out data centers.
Speaker #4: That's great color. Thank you very much. And maybe just a quick follow-up here—maybe just putting a finer point on the memory costs, supply chain disruption that's going on right now.
Luke Morrison: That's great color. Thank you very much. Maybe just a quick follow-up here. Maybe just putting a finer point on sort of the memory cost, supply chain disruption that's going on right now, how should we be thinking about the potential for that to impact your customers and your business, if trends there continue the way they look, they're going right now?
Luke Morison: That's great color. Thank you very much. Maybe just a quick follow-up here. Maybe just putting a finer point on sort of the memory cost, supply chain disruption that's going on right now, how should we be thinking about the potential for that to impact your customers and your business, if trends there continue the way they look, they're going right now?
Speaker #4: How should we be thinking about the potential for that to impact your customers and your the way they look
Speaker #2: Yeah. Well, so it's been moving days. And it probably has changed again in the last 30 days. So the memory price expectations will result in something somewhere between they're going right now?
Joyce Mullen: Yeah, well, so it's been moving pretty fast, and it's changed a lot, I would say, in the last 90 days. And it's probably changed again in the last 30 days. So the memory price expectations will result in something somewhere between 10 and probably 20, 25 percent increases in PCs this year. We've seen those price increases documented from most of the OEMs. A few have decided not to do that, but anyway, but generally, I would say that's the right kind of range. And historically, and I hesitate to say this because every time I've said historically before, it doesn't actually continue now, but historically, as prices go above kind of 15 percent, elasticity kicks in and the volume is impacted.
Joyce Mullen: Yeah, well, so it's been moving pretty fast, and it's changed a lot, I would say, in the last 90 days. And it's probably changed again in the last 30 days. So the memory price expectations will result in something somewhere between 10 and probably 20, 25 percent increases in PCs this year. We've seen those price increases documented from most of the OEMs. A few have decided not to do that, but anyway, but generally, I would say that's the right kind of range. And historically, and I hesitate to say this because every time I've said historically before, it doesn't actually continue now, but historically, as prices go above kind of 15 percent, elasticity kicks in and the volume is impacted.
Speaker #2: pretty fast, and it's changed a lot, I would say, in the last 90
Speaker #2: 10 and probably 20, PCs this year. We've seen those price increases documented from most 25 percent increases in of the OEMs. A few have decided not to do that, but anyway.
Speaker #2: That's the right kind of—but generally, I would say range. And historically, and I hesitate to say this because every time I've said 'historically' before, it doesn't actually continue.
Speaker #2: But historically, as prices go above, kind of, 15%, elasticity kicks in and the volume is impacted. So generally, I would say, as an industry, we're expecting prices to increase 15% or so on average.
Joyce Mullen: So generally, I would say, as an industry, we're expecting prices to increase 15% or so on average, and volume units to decline kind of just barely low single digits. And what happens to our business from a device point of view is that we pass along those price increases, but of course, we're always managing the elasticity as well. So, that's kind of how. That's what we saw during COVID. I think there's also an incredible, and there's an opportunity for us to help our customers navigate the supply chain impacts, which is what we did pretty well during COVID, and help them understand alternatives. So this is, I think, a place where partners can add a whole lot of value, and Insight will add a whole lot of value to our customers as they navigate that.
Joyce Mullen: So generally, I would say, as an industry, we're expecting prices to increase 15% or so on average, and volume units to decline kind of just barely low single digits. And what happens to our business from a device point of view is that we pass along those price increases, but of course, we're always managing the elasticity as well. So, that's kind of how. That's what we saw during COVID. I think there's also an incredible, and there's an opportunity for us to help our customers navigate the supply chain impacts, which is what we did pretty well during COVID, and help them understand alternatives. So this is, I think, a place where partners can add a whole lot of value, and Insight will add a whole lot of value to our customers as they navigate that.
Speaker #2: to decline kind of just barely, low single digits. And what happens to our business from a device point of view is that we pass along those price increases, but of course, we're always managing the elasticity as well.
Speaker #2: saw during COVID. I think there's also So And volume to units an opportunity for us to help our that's kind of how that's what we customers navigate the supply chain impacts, which is what we did pretty well during COVID and helped them understand alternatives.
Speaker #2: So this is, I think, a place where partners can add a whole lot of value, and Insight will add a whole lot of value to our customers as they navigate that.
Speaker #2: On the infrastructure side of this, we're basically rounding a refresh cycle on infrastructure. And those prices will also go up—constraints and the memory price hikes.
Joyce Mullen: On the infrastructure side of this, we're basically rounding a refresh cycle on infrastructure, and those prices will also go up significantly given the memory constraints and the memory price hikes. We think there's a little bit less elasticity there, and you know, because, again, the compares for on-prem infrastructure are really the public cloud compares in terms of cost for customers, and we still think that's gonna be relatively favorable, but it will cause a bit more, I would say, caution as customers decide which investments to make in terms of infrastructure and how it'll play out. As a general rule, we pass along those cost increases. As a general rule, those are helpful to us, but again, the wild card there is the elasticity.
Joyce Mullen: On the infrastructure side of this, we're basically rounding a refresh cycle on infrastructure, and those prices will also go up significantly given the memory constraints and the memory price hikes. We think there's a little bit less elasticity there, and you know, because, again, the compares for on-prem infrastructure are really the public cloud compares in terms of cost for customers, and we still think that's gonna be relatively favorable, but it will cause a bit more, I would say, caution as customers decide which investments to make in terms of infrastructure and how it'll play out. As a general rule, we pass along those cost increases. As a general rule, those are helpful to us, but again, the wild card there is the elasticity.
Speaker #2: We think there's a little bit less elasticity there, and in terms of cost for customers, we still think that's going to be relatively favorable.
Speaker #2: But it will cause a bit more, I would say, caution as customers decide which investments to make in terms of infrastructure and how it'll play cost out.
Speaker #2: Increases as a general rule. Those are helpful to us. But again, the wildcard there is the— As a general rule, we pass along those.
Speaker #4: Great. Thank
Luke Morrison: Great. Thank you.
Luke Morison: Great. Thank you.
Speaker #4: You. Elasticity. Thank you for your question.
Operator: Thank you for your question. Your next question comes from Joseph Cardoso from J.P. Morgan. Joseph, please go ahead.
Operator: Thank you for your question. Your next question comes from Joseph Cardoso from J.P. Morgan. Joseph, please go ahead.
Speaker #1: Your next question comes from Joseph Cardoso. From JP Morgan. Joseph, ahead.
Joseph Cardoso: Hi, good morning. Thank you for the questions. Maybe just for the first one regarding the full year guidance, you know, James, I appreciate the color on the weighting towards the first half of the year. But any additional color you can give relative to the magnitude that you're thinking of in terms of the full year guide, first half versus second half? Just trying to understand the balance for the year, given the commentary. And then if I take that question and then I add to it, you know, how are you thinking about the concentration of the drivers of that dynamic relative to the underlying portfolio? Is it primarily hardware and PCs, or is there- or is it a broader dynamic that we should be considering in terms of the first half, second half weighting?
Joseph Cardoso: Hi, good morning. Thank you for the questions. Maybe just for the first one regarding the full year guidance, you know, James, I appreciate the color on the weighting towards the first half of the year. But any additional color you can give relative to the magnitude that you're thinking of in terms of the full year guide, first half versus second half? Just trying to understand the balance for the year, given the commentary. And then if I take that question and then I add to it, you know, how are you thinking about the concentration of the drivers of that dynamic relative to the underlying portfolio? Is it primarily hardware and PCs, or is there- or is it a broader dynamic that we should be considering in terms of the first half, second half weighting?
Speaker #5: questions. Maybe just for the first one regarding the full year Hi, good morning. Thank you for the towards the first half of the guidance.
Speaker #5: Year. But any additional color you can give relative to the magnitude that you're thinking of in terms of the full-year guide? First half versus second half?
Speaker #5: Just trying to understand the balance for the year given the commentary, and then if I take James—I appreciate the color on the weighting of that question—and I add to it, how are you thinking about the concentration of the drivers of that dynamic relative to the underlying portfolio?
Speaker #5: Is it primarily hardware and PCs, or is there or is it a broader dynamic that we should be considering in terms of the first half, second half
James Morgado: Thanks. Thanks, Joe. Great, great question. I'll jump in, and then Joyce, if there's anything you'd like to add, please jump in. So, Joe, in terms of how to think about the year, first half, second half, so in my prepared remarks, I talked about the first half growth rate being a little bit stronger from an EPS standpoint in the first half than the second half. What I would say is, the best way to think about that is, the first half growth rates are likely to be closer to the upper end of our range, and the second half, you know, a little bit below the midpoint to the lower end of that, at least based on what we currently see today.
James Morgado: Thanks. Thanks, Joe. Great, great question. I'll jump in, and then Joyce, if there's anything you'd like to add, please jump in. So, Joe, in terms of how to think about the year, first half, second half, so in my prepared remarks, I talked about the first half growth rate being a little bit stronger from an EPS standpoint in the first half than the second half. What I would say is, the best way to think about that is, the first half growth rates are likely to be closer to the upper end of our range, and the second half, you know, a little bit below the midpoint to the lower end of that, at least based on what we currently see today.
Speaker #3: question. I'll jump in and then Joyce, if there's anything you'd like to add, please jump in. So Joe, in terms of how to think about the year first half, second half.
Speaker #3: So in my prepared remarks, I talked about the first half growth rate being a little bit stronger from an EPS standpoint in the first half and second half.
Speaker #3: What I would say is, the best way to think about that is the first-half growth rates are likely to be closer to the upper end of our range.
Speaker #3: And the second half a little bit below the midpoint to the lower end of that, at least based on what we currently see today.
James Morgado: And the dynamics in there, and by the way, I would remind, within the first half, I still see Q2 as our seasonally stronger quarter. So if you think of, you know, the split between the first half, I would expect to see a slightly stronger Q2 than Q1. In terms of the reason behind the dynamics, one of them is the one that I called out earlier regarding the cloud situation, which I think cloud will grow more strongly in the first half than the second half. The other dynamic is hardware. I think that follows a similar profile with, you know, more strength in the first half than the second half.
Speaker #3: And the dynamics in there, and by the way, I would remind you, within the first half, I still see Q2 as our seasonally stronger quarter.
James Morgado: And the dynamics in there, and by the way, I would remind, within the first half, I still see Q2 as our seasonally stronger quarter. So if you think of, you know, the split between the first half, I would expect to see a slightly stronger Q2 than Q1. In terms of the reason behind the dynamics, one of them is the one that I called out earlier regarding the cloud situation, which I think cloud will grow more strongly in the first half than the second half. The other dynamic is hardware. I think that follows a similar profile with, you know, more strength in the first half than the second half.
Speaker #3: So if you think of the split between the first half, I would expect to see a slightly stronger Q2 than Q1. In terms of the reason behind the dynamics, one of them is the one that I called out earlier regarding the cloud situation, which I think cloud will grow more strongly in the first half than the second half.
Speaker #3: The other dynamic is hardware. I think that follows a similar profile with more strength in the first core services business is the one that is more of an equalizer through the year.
James Morgado: The core services business is the one that is more of an equalizer through the year. I think that performs more steadily through the year. So I think when you add up all of those factors, you get to a slightly stronger first half than second half.
James Morgado: The core services business is the one that is more of an equalizer through the year. I think that performs more steadily through the year. So I think when you add up all of those factors, you get to a slightly stronger first half than second half.
Speaker #3: I think that that performs more steadily through the year. So I those factors, you get to a than second slightly stronger first half
Speaker #3: half. You mentioned cloud stronger Yes.
Joyce Mullen: You mentioned cloud, stronger than-
Joyce Mullen: You mentioned cloud, stronger than-
James Morgado: Yeah.
James Morgado: Yeah.
Joyce Mullen: Stronger than the first half?
Joyce Mullen: Stronger than the first half?
James Morgado: Yeah.
James Morgado: Yeah.
Joyce Mullen: Yes.
Joyce Mullen: Yes.
Speaker #3: Yeah. Half than the second half.
James Morgado: Yeah.
James Morgado: Yeah.
Joyce Mullen: Okay.
Joyce Mullen: Okay.
Speaker #5: No, no. Great. Okay. Thanks, James. Appreciate the color
Joseph Cardoso: No, no, great. Thanks, James. Appreciate the color there. And then maybe just a quick clarification question on the cloud gross profit growth for the quarter. First part of it is just more wondering if we were to x out the partner headwinds or, yeah, the partner headwinds there, what where would have growth tracked for the quarter? I believe over the last couple of quarters, you've been mid-teens, high teens, or in kind of that ballpark. So just curious if momentum exited the year in that range. And then as we think about the guidance for double digits, does that imply an acceleration from those levels, or are you kind of embedding something similar for the year?
Joseph Cardoso: No, no, great. Thanks, James. Appreciate the color there. And then maybe just a quick clarification question on the cloud gross profit growth for the quarter. First part of it is just more wondering if we were to x out the partner headwinds or, yeah, the partner headwinds there, what where would have growth tracked for the quarter? I believe over the last couple of quarters, you've been mid-teens, high teens, or in kind of that ballpark. So just curious if momentum exited the year in that range. And then as we think about the guidance for double digits, does that imply an acceleration from those levels, or are you kind of embedding something similar for the year?
Speaker #5: if we were to X out the partner headwinds or yeah, the partner headwinds there, where would have growth tracked for the quarter? last couple of quarters, you've been mid-teens, I believe over the high-teens, and kind of that ballpark.
Speaker #5: So just curious if momentum we take think about the guidance imply an acceleration from those levels, or are for double digits, is that does that you kind of embedding something similar for the
James Morgado: ... So what I would say is, our performance in this, in Q4 was similar to what it was all year, kind of in that mid-teens range. So the underlying performance was strong. When I think about this in terms of first half versus second half for cloud, I would actually expect the first half cloud number growth to be slightly above my guidance for the year, and the second half to be slightly below that guidance. And then the full year ends up close to the double digits, as in the low double digits, as we mentioned.
James Morgado: ... So what I would say is, our performance in this, in Q4 was similar to what it was all year, kind of in that mid-teens range. So the underlying performance was strong. When I think about this in terms of first half versus second half for cloud, I would actually expect the first half cloud number growth to be slightly above my guidance for the year, and the second half to be slightly below that guidance. And then the full year ends up close to the double digits, as in the low double digits, as we mentioned.
Speaker #3: So what I would say performance in Q4
Speaker #3: was similar to what it was all year, kind is our range. So the underlying performance was strong. When I think about this in terms of first half year?
Speaker #3: versus second half for cloud, I would actually expect the first half cloud number growth to be slightly above my guidance for the year in the second half to be slightly below that guidance.
Speaker #3: And then the full year ends up close to the double digits as I'm below double digits. As we mentioned, and I think as we exit the year, from a financial stand, like I said, I think from an operating the business standpoint, the pivot is done.
James Morgado: And I think as we exit the year, from a financial standpoint, like I said, I think from an operating the business standpoint, the pivot is done, and then the financial, any of the financial tail that was there, impact is done as we exit, FY 2027. FY 2026, sorry.
James Morgado: And I think as we exit the year, from a financial standpoint, like I said, I think from an operating the business standpoint, the pivot is done, and then the financial, any of the financial tail that was there, impact is done as we exit, FY 2027. FY 2026, sorry.
Speaker #3: And then the financial, any of the financial tail that was there impact is done, as we exit FY26, sorry.
Speaker #2: Yes.
Operator: Great. Thank you. Appreciate the color.
Joseph Cardoso: Great. Thank you. Appreciate the color.
Speaker #5: you. Appreciate the
Speaker #5: color. Thank
Speaker #1: you for your question. Our next question comes from Vincent Colecchio from Barrington Research. Vincent, your line is now
Operator: Thank you for your question. Our next question comes from Vincent Colicchio, from Barrington Research. Vincent, your line is now-
Operator: Thank you for your question. Our next question comes from Vincent Colicchio, from Barrington Research. Vincent, your line is now-
Vincent Colicchio: Yeah, Joyce, Joyce, how did your share changes play out in your key focus areas in North America?
Vincent Colicchio: Yeah, Joyce, Joyce, how did your share changes play out in your key focus areas in North America?
Speaker #4: out in your key focus areas in North
Speaker #4: America? You mean market share, or—? Yes. Yes.
Joyce Mullen: You mean market share or?
Joyce Mullen: You mean market share or?
Vincent Colicchio: Yes, yes.
Vincent Colicchio: Yes, yes.
Speaker #2: So well, we believe so we're
Joyce Mullen: So, well, we believe, so we're generally, you know, we basically put together all of the IDC data and try to figure out this with OEMs. We feel like we are on par with the market on, in terms of devices, and we feel like we are basically on par with infrastructure and probably a little bit ahead in cloud, I would say.
Joyce Mullen: So, well, we believe, so we're generally, you know, we basically put together all of the IDC data and try to figure out this with OEMs. We feel like we are on par with the market on, in terms of devices, and we feel like we are basically on par with infrastructure and probably a little bit ahead in cloud, I would say.
Speaker #2: generally FY27. we basically put together all of the IDC data and try to figure out this with OEMs. We feel like we are on par with the market in terms of devices.
Speaker #2: infrastructure and probably a little bit ahead in cloud, I would Joyce, how did your share changes play And we feel like we say.
Speaker #4: Okay. And do you think you currently AI side to meet current have the resources on the demand, or is it hard to access the supply you
Vincent Colicchio: Okay. And, do you think you currently have the resources on the AI side to meet current demand, or is it hard to, you know, access the supply you need?
Vincent Colicchio: Okay. And, do you think you currently have the resources on the AI side to meet current demand, or is it hard to, you know, access the supply you need?
Speaker #2: So we are
Joyce Mullen: So we are doing our level best to build the skills and buy the skills as demand increases, and I think that's gonna be kind of a constant theme for a very long time. We've really doubled down on the development effort, and we're seeing some really good success with our internal development and training programs. That's really important to us, but we've also begun specific recruiting programs to find the AI talent that we need. So far, we've been in pretty good shape.
Joyce Mullen: So we are doing our level best to build the skills and buy the skills as demand increases, and I think that's gonna be kind of a constant theme for a very long time. We've really doubled down on the development effort, and we're seeing some really good success with our internal development and training programs. That's really important to us, but we've also begun specific recruiting programs to find the AI talent that we need. So far, we've been in pretty good shape.
Speaker #2: doing our level best to build need? the skills and buy the skills as demand increases. And I think that's going to be kind of a constant theme for a very long time.
Speaker #2: We are really doubling down on the development effort, and we're seeing some really good success with our internal development and training programs. That's really important to us, but we've also begun specific recruiting programs to find the AI talent that we need.
Speaker #2: So far, we've been in pretty good
Speaker #2: shape.
Speaker #4: Thank
Speaker #4: you.
Vincent Colicchio: Thank you.
Vincent Colicchio: Thank you.
Operator: There are no further questions at this time. I will now hand the call over to Joyce Mullen, President and Chief Executive Officer, for closing remarks. Joyce, please go ahead.
Operator: There are no further questions at this time. I will now hand the call over to Joyce Mullen, President and Chief Executive Officer, for closing remarks. Joyce, please go ahead.
Speaker #1: questions at this time. I will now hand the call over to Joyce Mullen, President and Chief Executive Officer for closing remarks. Joyce, please go ahead.
Speaker #2: Thank you very
Joyce Mullen: Thank you very much to all of you for your questions and interest, and I think we're ready to close the call, operator. Thank you, Hillary.
Joyce Mullen: Thank you very much to all of you for your questions and interest, and I think we're ready to close the call, operator. Thank you, Hillary.
Speaker #2: much. To all of you for your questions and interest. And I think we're ready to close the call, operators. There are no further Thank you,
Speaker #2: Hillary.
Operator: That concludes today's call. Thank you very much for attending. You may now disconnect.
Operator: That concludes today's call. Thank you very much for attending. You may now disconnect.
Speaker #1: now Thank you very much for attending. You may disconnect. Wonderful.
Joyce Mullen: Wonderful!
Joyce Mullen: Wonderful!
Operator: This event has now concluded. Thank you for joining Insight Enterprises's Q4 2025 operating results. The line will disconnect automatically.
Operator: This event has now concluded. Thank you for joining Insight Enterprises's Q4 2025 operating results. The line will disconnect automatically.
