In This Article:
IT solutions integrator Insight Enterprises (NASDAQ:NSIT) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 11.6% year on year to $2.1 billion. Its non-GAAP profit of $1.96 per share was 2.7% below analysts’ consensus estimates.
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Insight Enterprises (NSIT) Q1 CY2025 Highlights:
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Revenue: $2.1 billion vs analyst estimates of $2.24 billion (11.6% year-on-year decline, 5.9% miss)
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Adjusted EPS: $1.96 vs analyst expectations of $2.01 (2.7% miss)
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Adjusted EBITDA: $111.3 million vs analyst estimates of $125 million (5.3% margin, 11% miss)
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Management reiterated its full-year Adjusted EPS guidance of $9.90 at the midpoint
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Operating Margin: 2.9%, down from 4.2% in the same quarter last year
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Free Cash Flow Margin: 3.4%, down from 10.1% in the same quarter last year
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Market Capitalization: $4.33 billion
StockStory’s Take
Insight Enterprises reported a year-over-year decline in both revenue and profitability in Q1, as management cited continued challenges with large enterprise client demand, delayed services projects, and ongoing impacts from partner program changes. CEO Joyce Mullen highlighted that while hardware demand showed early signs of recovery, services revenue underperformed due to client caution and project delays, and on-premises software faced difficult comparisons from large deals in the prior year.
Looking forward, management reiterated its full-year adjusted EPS guidance, emphasizing confidence in improving hardware demand, expanding AI-related engagements, and disciplined cost management. Mullen noted that the company expects a stronger second half, with improving services attached to hardware sales and increasing adoption of AI and cloud solutions, but cautioned that macroeconomic volatility and tariff risks could continue to weigh on client budgets and project timing.
Key Insights from Management’s Remarks
Q1 performance at Insight Enterprises reflected uneven demand across segments, with hardware showing early momentum and services lagging expectations. Management pointed to macroeconomic uncertainty, shifting client priorities, and legacy partner program changes as key factors impacting the quarter.
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Hardware demand recovering: Hardware revenue grew modestly, led by server and device sales, as commercial and corporate clients began upgrading aging infrastructure. Management expects this trend to support hardware sales through the year.
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Services project delays: Large enterprise clients postponed services projects due to market uncertainty, leading to a 2% decline in Insight Core services revenue. Management is adopting methodologies from recent acquisitions to improve project scoping and delivery speed.
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Cloud business realignment: Cloud gross profit was flat, as growth in SaaS and Infrastructure as a Service was offset by declines in legacy Microsoft and Google Cloud contracts. The company is shifting its cloud focus from large enterprises to mid-market and corporate clients.
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Tariff and supply chain preparedness: Management is monitoring trade policy changes and has increased the frequency of price adjustments to mitigate supply chain and tariff risks. They noted that moderate tariffs have historically been manageable, but larger increases could dampen demand.
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AI as a long-term driver: While current AI project revenue remains small, Insight is investing in AI capabilities and highlighted early client wins, such as automating creative workflows and unifying customer data, to position for long-term growth.