Total Revenue

–11.6% (from $2.380B to $2.104B)

Total revenue fell sharply due to a combined decline in both product (–13%) and services (–4.8%) revenues. The drop is further compounded by substantial regional weaknesses in North America (–10.8%) and EMEA (–16.9%), reflecting a continuation of softer demand observed in previous periods. " "

Products Revenue

–13% (from $1.964B to $1.708B)

The 13% decline in products revenue is mainly driven by lower hardware sales and reduced demand for product offerings. This decline follows earlier trends of weakening product sales volumes, indicating that market and competitive pressures persist compared to Q1 2024. " "

Services Revenue

–4.8% (from $415.5M to $395.8M)

Services revenue declined modestly, suggesting less impact compared to product lines; however, it shows that even value-added segments are not immune from overall market headwinds. This trend continues the cautious client spending seen in previous periods. " "

North America Revenue

–10.8% (from $1.905B to $1.701B)

North America, the largest market, saw a decline of 10.8% likely due to reduced demand and tighter customer spending amid macroeconomic uncertainty. This drop reinforces earlier regional struggles and underscores persistent market softness in this critical segment. " "

EMEA Revenue

–16.9% (from $412.8M to $342.8M)

EMEA experienced the steepest decline at 16.9%, driven by significant drops in both software and hardware sales. This more pronounced weakness compared to North America suggests region-specific challenges such as altered vendor relationships and market contraction that were also hinted at in prior reviews. " "

APAC Revenue

–2.8% (from $61.8M to $60.1M)

APAC revenue was relatively stable with only a 2.8% decline, indicating that this smaller region maintained near prior period performance. This modest change contrasts with more significant declines in larger markets and hints at regional stability amid global headwinds. " "

Net Earnings

–88% (from $67.027M to $7.514M)

Net earnings collapsed by 88%, reflecting the combined impact of lower revenues and disproportionate expense pressures. Increased operating costs, higher restructuring and interest expenses, and possibly unfavorable one-off adjustments worsened margins compared to Q1 2024. " "

EPS

Declined from $2.06 to $0.24

EPS fell dramatically in line with the net earnings drop, highlighting severe earnings pressure. Adjustments in share count and operational headwinds contributed to this steep decline compared to the previous period. " "

Total Current Assets

+21% (from $4.441B to $5.390B)

A 21% increase in current assets is primarily driven by rising accounts receivable, inventory buildup, and other receivable items. This expansion suggests slower cash conversion and reflects ongoing changes in working capital management that contrast with the lower revenue base from previous periods. " "

Total Current Liabilities

+25% (to $4.386B from $4.122B)

Current liabilities increased by 25% due to higher accounts payable, accrued expenses, and other short-term obligations, indicating pressure on working capital. Such increases further stress the liquidity position especially when compared with Q1 2024 levels, compounding the challenging operating environment. " "

Long-term Debt

+75% (from $550.006M to $961.172M)

A substantial 75% increase in long-term debt is largely attributable to higher borrowings under the ABL facility and the effects of new senior notes issuance. This shift in capital structure contrasts with previous periods where debt levels were lower, signaling increased leverage to support operations amidst revenue declines. " "

Stockholders’ Equity

–9% (declined to $1.591B from $1.770B)

Equity fell nearly 9% due to significant reductions in Additional Paid-in Capital driven by warrant settlements and the impact of lower retained earnings. This decline, coupled with higher debt levels, reflects a shift in the financial structure compared to Q1 2024. " "

Operating Cash Flow

–68% (from $247.18M to $78.05M)

Operating cash flow contracted by 68% as a result of lower net earnings and unfavorable working capital changes—particularly increased receivables and altered payment timings. The move away from the prior period’s cash cycle benefits, possibly linked to hardware sales dynamics, underscores the operational challenges currently faced. " "

Gross Profit Growth

FY 2025

low single digits "

low single digits "

no change

Gross Margin

FY 2025

20% "

20% "

no change

Adjusted Diluted EPS

FY 2025

$9.70 to $10.10 "

$9.70 to $10.10 "

no change

Interest Expense

FY 2025

$70M to $75M "

$70M to $75M "

no change

Effective Tax Rate

FY 2025

25% to 26% "

25% to 26% "

no change

Capital Expenditures

FY 2025

$35M to $40M "

$35M to $40M "

no change

Average Share Count

FY 2025

33 million shares "

32.9 million shares "

lowered

Cloud Performance

Previous calls (Q4, Q3, Q2 2024) highlighted strong double‐digit growth in cloud gross profit driven by SaaS, IaaS, and acquisitions. " " " "

Q1 2025 reported a 3% decline in cloud gross profit, attributed to a reduction in legacy Microsoft enterprise agreements and a pivot to mid-market clients. " "

Downward shift: From robust growth to a decline as the focus moves away from legacy contracts.

Ecosystem Dynamics

Consistently focused on strategic partnerships, partner program changes, and recognitions in previous periods (Q4, Q3, Q2 2024) with initiatives involving Microsoft, Google, AWS, and others. " " " "

Q1 2025 continues to emphasize managing partner program changes and highlights client dynamics (e.g., budget reallocations toward AI) while maintaining integration with key partners. " "

Evolving focus: The narrative shifts slightly with an added emphasis on client reallocation and a pivot toward corporate/mid-market dynamics, while still dealing with partner structure challenges.

Hardware Demand Recovery

Mixed messages in past periods: Q3 2024 noted weak demand and delayed hardware refresh, Q2 2024 showed declines with expectations for a later recovery, and Q4 2024 signaled improved gross profit from devices with optimistic outlooks for a refresh cycle. " " " "

Q1 2025 reported a 1% increase in hardware revenue—the first growth in 10 quarters—with expectations for further improvement in later periods. " " "

Positive turnaround: Although previously lagging, signs of recovery are emerging with renewed client demand and renewed device refresh momentum.

Tariff Management

Q4 2024 discussions indicated that current tariffs had minimal impact on demand, with costs being passed to clients and cautious forecasts. " " Q3 2024 did not address tariffs and Q2 2024 omitted the topic entirely. " "

Q1 2025 noted minimal pull‐in of demand from tariffs in devices and introduced scenario analysis with potential positive impact if tariffs remain near 10% versus muted demand if they jump to 25% or more. " "

Steady but closely monitored: While tariffs continue to have a limited immediate effect, the company remains alert to potential shifts that could impact demand.

Acquisitions and Integration Effectiveness

All previous periods (Q2, Q3, Q4 2024) consistently celebrated the performance and successful integration of acquisitions—driving revenue synergies and structural efficiencies. " " " " " "

In Q1 2025, the focus is on accelerating integration of recent acquisitions to reduce SG&A expenses by 5% and further embedding proven methodologies within the business. " " " "

Strengthening integration: The emphasis remains positive with an added focus on cost-synergy through accelerated integration in response to demand challenges.

Partner Program Changes and Service Attach Challenges

Q3 and Q4 2024 detailed challenges from partner program changes (e.g., revenue shifts from product to services, consolidation effects) and noted impacts on on-prem software revenue. " " " Q2 2024 did not discuss these issues. "

In Q1 2025, the discussion continues with recognition of declines in legacy agreements and challenges with service attach, particularly in the lag between hardware sales and attached services. " " "

Persistent challenge: Recurring issues remain, with the company adapting its strategy amid ongoing hurdles in revenue mix and service attachment.

Cost Management and Operating Leverage

Previous periods (Q2, Q3, Q4 2024) focused on disciplined SG&A management, headcount adjustments, and cost reduction initiatives with annualized savings targets between $20–25 million. " " " " "

Q1 2025 reiterated effective expense management with a 5% decline in adjusted SG&A, the use of automation and AI initiatives, as well as proactive cost adjustments, to maintain operating leverage. " " " "

Consistent focus with innovation: Ongoing emphasis on structural cost management now enhanced by new AI and automation initiatives to bolster operating leverage.

Accelerated AI and Digital Transformation Initiatives

Q2 2024 discussed early-stage investments in Generative AI (POCs, IP development, a virtual lab) and Q4 2024 showcased client success stories (e.g., Cricket Australia) reinforcing digital transformation strategies. " " " " Q3 2024 did not mention this topic explicitly.

Q1 2025 featured AI prominently as a key driver for business transformation—improving consulting methodologies and internal processes, while addressing client needs in AI, cloud, and data accessibility. " " " "

Increasing prominence: The role of AI and digital transformation has grown and is now central to both client engagement and internal efficiency, indicating a major future growth lever.

Enterprise Demand and Capital Allocation Uncertainty

Across Q2, Q3, and Q4 2024, enterprise demand was generally characterized as weak or challenged—particularly among large North American clients—with mixed optimism from commercial segments; capital allocation discussions were more focused on liquidity and share repurchase activities. " " " " "

Q1 2025 continued to highlight subdued enterprise demand with delays and scaling back of projects, while noting uncertainties in capital allocation amid macro volatility and potential tariff impacts. " " " "

Persistent weakness with cautious outlook: Enterprise demand remains fragile, though capital allocation strategies (debt, share repurchases) are being closely managed, suggesting significant impact on future performance.

Execution Risks and Revenue Timing Uncertainty

Q2 2024 highlighted revenue timing challenges due to SADA's multiyear contracts and execution risks related to partner and acquisition earnouts. " " Q3 2024 further underscored execution risks in hardware refresh delays, SADA's pivot, and one-time software revenue reclassifications. " " " "

Q1 2025 acknowledged execution risks stemming from macro uncertainty, partner program changes, hardware demand variability, and delays in revenue recognition, prompting proactive cost adjustments and process improvements. " " " "

Steady concern with proactive measures: Execution risks persist due to external and internal shifts, yet the company is actively mitigating these risks through enhanced cost and process management.

Convertible Debt Restructuring and Increased Interest Expense

Q2 2024 noted increased interest expense due to acquisition-related debt and earnouts, while Q3 2024 mentioned a modest guidance ($58–60M) and Q4 2024 focused on restructuring convertibles with plans to settle notes and warrants through the ABL facility. " " " "

In Q1 2025, the restructuring is emphasized with the settlement of $333 million of convertible notes and ongoing warrant settlements, leading to guidance on increased annual interest expense of $70–75 million. " "

Rising financial cost: The focus on restructuring continues and interest expense is increasing due to debt refinancing, highlighting an area of significant financial impact moving forward.