Luke Morrison

Luke Morrison followed up by asking for a finer point on the potential impact of memory cost increases and supply chain disruptions on Insight Enterprises' customers and business.

Answer

Joyce Mullen, CEO, Insight Enterprises, detailed that memory price expectations could lead to 10%-25% increases in PC prices, with historical elasticity suggesting a low single-digit decline in unit volumes if prices rise above 15%. She noted that Insight passes on these price increases and helps customers navigate supply chain impacts. For infrastructure, prices will also rise significantly due to memory constraints, but elasticity is expected to be less, as on-prem infrastructure costs remain favorable compared to public cloud.

Luke Morrison asked for further details on the potential impact of memory cost increases and supply chain disruptions on Insight Enterprises' customers and business.

Answer

Joyce Mullen, CEO, detailed expected PC price increases of 10-25% due to memory, anticipating elasticity and unit volume declines. She emphasized Insight's role in helping customers navigate supply chain challenges and find alternatives. For infrastructure, prices will also rise, but with less elasticity expected due to favorable comparisons with public cloud costs. She noted that cost increases are generally passed along, but elasticity remains a key variable.

Luke Morrison followed up on the ramping of Concentrix's IX suite, asking about pipeline, win rates, demand for Hello versus Hero products, and whether deployments are priced discretely or bundled.

Answer

President and CEO Chris Caldwell stated that 40% of new wins include Concentrix's IX technology, a combination of discrete and bundled billing, with bundling currently being the majority. He anticipates a quick inflection point towards more discrete billing. He highlighted stronger traction with the Hero product (AI-assisted human advisors) due to immediate benefits and a SaaS model, compared to the Hello product (fully autonomous), which has an evolving gain-share commercial model. He expects the IX suite to be modestly accretive by the end of Q4.

Luke Morrison inquired about the drivers behind the margin guide down, specifically asking for more detail on excess capacity from tariff-impacted clients and the acceleration of transformation programs. He also asked about the expected normalization timeline for excess capacity and whether transformation programs would become revenue-accretive. Additionally, Morrison asked for an update on the IX suite's ramp-up, pipeline, win rates, demand for Hello versus Hero products, and pricing strategies (discrete vs. bundled).

Answer

President and CEO Chris Caldwell explained that excess capacity stemmed from client expectations for faster normalization of tariff impacts and slower-than-anticipated volume consolidation, which is now a multi-quarter normalization process. He clarified that transformation programs involved accelerating AI technology deployment, leading to temporary overcapacity but not expected to impact future margins. Caldwell also noted that 40% of new wins include IX technology, with Hero seeing stronger traction due to immediate benefits and a SaaS model, while Hello's commercial model is evolving towards gain share. He expects the IX suite to be modestly accretive by the end of Q4.

Luke Morrison asked about the drivers behind the strong growth of CINT's largest client and requested its constant currency growth rate. He also inquired if similar momentum exists across the other top 10 clients and asked about spending patterns, AI adoption maturity, and any macro instability in the US versus Brazil.

Answer

CEO Cesar Gon credited the strong client growth, particularly in the top financial services account, to the demonstrated productivity of CINT Flow and its ability to drive AI adoption. CFO Stanley Rodriguez specified that the top client grew 92% YoY at constant currency, while the current top 10 cohort grew 23% YoY reported. President Bruno Guicaggi noted that while AI efficiency gains are universal, consumer-driven AI demand is emerging faster in LATAM and that the company has little exposure to tariff instability.