Executive Summary

Q3 2025 delivered record gross margin at 21.7% and 11% growth in adjusted EPS ($2.43), but revenue declined 4% YoY to $2.00B as large enterprise demand remained muted .
Against S&P Global consensus, EPS was slightly below ($2.43 vs $2.49*) and revenue missed ($2.00B vs $2.15B*); cloud gross profit grew 7% and exceeded management’s expectations, while core services and hardware were softer .
Full-year guidance was tempered: adjusted EPS cut to $9.60–$9.90 (from $9.70–$10.10), gross profit now expected to be slightly down (from ~flat), while gross margin outlook was raised to ~21% (from ~20%); interest expense outlook increased to ~$85M and capex lowered to ~$25M .
Strategic M&A intensified the AI and security push (Inspire11 closed Oct 1; Securo signed Oct 16), with management positioning for 2026 growth as partner program headwinds abate and AI projects scale .
Potential stock catalysts: the guidance cut and revenue miss vs consensus, balanced by record margins, strong cash from operations ($249.1M), and an AI-first narrative plus CEO transition planning .

What Went Well and What Went Wrong

What Went Well

Record gross margin and disciplined costs: gross margin expanded 100 bps to 21.7%; adjusted S&A declined 1% YoY, driving 5% growth in adjusted EFO and 11% growth in adjusted EPS .
Cloud momentum: cloud gross profit rose 7% to $130M and was “ahead of expectations,” supported by double-digit SaaS and IaaS growth; management expects partner program headwinds to largely normalize exiting Q4 .
Strong cash generation: cash flow from operations was $249.1M in Q3, aided by working capital timing, and management expects $300–$400M for the year .
Quote: “We delivered Adjusted diluted earnings per share growth of 11% and... posted record gross margin” — Joyce Mullen, CEO .
Quote: “Combined with disciplined SGA management, we drove a 5% increase in adjusted earnings from operations and an 11% increase in adjusted earnings per share” — CFO James Morgado .

What Went Wrong

Top-line softness and revenue mix shifts: consolidated net sales fell 4% YoY to $2.00B; on‑prem software revenue fell 19% as activity shifted to net agency services, and hardware gross profit declined 5% .
Large enterprise demand remained weak: management cited macro uncertainty and delayed big-project decisions; Insight Core services gross profit fell 3% to $79M .
Higher financing costs weighed on GAAP earnings: net earnings fell 12% YoY to $50.9M, with higher interest expense from increased ABL borrowings; EMEA GAAP EFO declined 33% YoY .

Financial Results

Performance by Quarter (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($, Billions)	$2.104	$2.091	$2.004
Gross Profit ($, Millions)	$406.5	$442.3	$434.2
Gross Margin (%)	19.3%	21.1%	21.7%
GAAP Diluted EPS ($)	$0.22	$1.46	$1.62
Adjusted Diluted EPS ($)	$2.06	$2.45	$2.43
Adjusted EBITDA ($, Millions)	$111.3	$138.2	$137.0
Cash from Operations ($, Millions)	$78.1	$(177.1) used	$249.1

Actual vs S&P Global Consensus (Primary EPS, Revenue)

Metric	Q1 2025	Q2 2025	Q3 2025
EPS Actual ($)	2.06	2.45	2.43
EPS Consensus ($)	2.009*	2.467*	2.493*
Revenue Actual ($, Billions)	2.104	2.091	2.004
Revenue Consensus ($, Billions)	2.193*	2.154*	2.154*

Values with asterisk are retrieved from S&P Global.
Notes: Q3 2025 EPS was a slight miss (2.43 vs 2.49*), and revenue missed materially ($2.00B vs $2.15B*). Q2 2025 EPS was roughly in line/slight miss and revenue below; Q1 2025 had a small EPS beat and revenue below consensus.*

Q3 2025 Segment/Geography

Segment	Q3 2024	Q3 2025
Products Revenue ($, Millions)	$1,673.8	$1,577.8
Services Revenue ($, Millions)	$414.1	$426.1
Total Revenue ($, Millions)	$2,087.9	$2,003.8
Gross Profit ($, Millions)	$432.1	$434.2
Gross Margin (%)	20.7%	21.7%

Geography	Q3 2024	Q3 2025
North America Revenue ($, Millions)	$1,716.6	$1,625.3
North America Gross Margin (%)	20.3%	21.1%
EMEA Revenue ($, Millions)	$312.6	$319.8
EMEA Gross Margin (%)	21.2%	23.2%
APAC Revenue ($, Millions)	$58.7	$58.8
APAC Gross Margin (%)	30.1%	30.1%

KPIs and Mix (Q3 2025)

Cloud Gross Profit: $130M (+7% YoY) .
Insight Core Services Gross Profit: $79M (−3% YoY) .
Mix of total net sales: Hardware 57%, Software 22%, Services 21% .

Guidance Changes

Metric	Period	Previous Guidance (Q2’25)	Current Guidance (Q3’25)	Change
Adjusted Diluted EPS	FY 2025	$9.70–$10.10	$9.60–$9.90	Lowered
Gross Profit	FY 2025	~Flat vs 2024	Slightly down vs 2024	Lowered
Gross Margin	FY 2025	~20%	~21%	Raised
Interest & Other Expense	FY 2025	$75–$80M	~$85M	Raised
Effective Tax Rate	FY 2025	~25%–26%	25%–26%	Maintained
Capital Expenditures	FY 2025	$30–$35M	~$25M	Lowered
Average Share Count	FY 2025	~32.4M	~32.0M	Lowered

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Q3 2025 Commentary	Trend
AI initiatives & “AI-first” strategy	Q1: Early gross margin focus; cloud GP −3%; services under pressure . Q2: Partner program headwinds; positioning cloud pivot .	Launching “Insight AI”; acquisitions (Inspire11, Securo) to bolster data/AI and security; clients moving from pilots to value; aim to shorten time-to-value with repeatable frameworks .	Intensifying AI focus, building capabilities
Partner program changes	A headwind to cloud; noted in Q1–Q2 .	~$70M FY headwind; largely normalizes exiting Q4; underlying cloud GP growth high teens ex-changes .	Headwind fading
Macro/large enterprise demand	Q1–Q2: Macro uncertainty; enterprise delays .	Large enterprises reprioritizing budgets (cloud bills, software price increases, AI); delays in large projects persisted, bookings improving .	Still cautious but bookings improving
Hardware	Q1–Q2: YoY growth in hardware net sales (Q2 +2%) .	+1% hardware revenue, but below expectations; EMEA hardware challenged .	Mixed; weaker vs plan
Services execution	Q1–Q2: Core services GP −3% in Q2 .	Core services GP −3%; adding leaders, standardized methodology (RADIUS), shifting to outcomes-based delivery to scale .	Re-tooling to improve scalability
Capital allocation	Q2: Buybacks ongoing; warrants settlement .	~$75M buybacks in Q3; ~600k warrants to settle by year-end; balanced M&A and buybacks; near-term focus on debt prudence .	Balanced, near-term deleveraging
Leadership	–	CEO announced retirement planning; external search underway; will advise successor .	Transition planning underway

Management Commentary

Strategic positioning: “Our strategy is to become the leading AI-first solutions integrator” .
On Q3 performance: “We delivered Adjusted diluted EPS growth of 11%… achieved adjusted earnings from operations growth and posted record gross margin” .
Cloud momentum: “Cloud gross profit was above our expectations, driven by double-digit growth in SaaS and IaaS” .
Enterprise demand: “Enterprises are… taking a bit longer to engage in big services projects… hardware is a little slower than we were expecting” .
AI scaling and methodology: adopting repeatable frameworks (RADIUS) to accelerate POCs/MVPs and outcomes-based delivery for scalability .
Capital allocation: ~$150M YTD repurchases; share count down ~10% YoY; M&A remains primary long-term use of capital; near-term focus on debt .

Q&A Highlights

Guide down drivers: Large enterprise delays in core services and slower hardware vs plan; cloud outperformed expectations but partner program changes continue to weigh near-term .
Cloud trajectory ex-partner changes: Underlying cloud growth running in “higher teens”; ~$70M FY headwind largely normalizes by Q4 exit, setting up 2026 .
M&A vs buybacks: Management prioritized capabilities (AI, security) via Inspire11 and Securo; balanced with ~$150M repurchases; near-term bias to pay down debt but optionality preserved .
Services scalability: Shift from T&M to outcomes-based offers using standardized methodology (RADIUS) to improve time-to-value and profitability; KPIs to be updated at a 2026-focused investor day .
Acquisition accretion: Expect EBITDA accretion day one; EPS accretion within four quarters for Inspire11/Securo .

Estimates Context

Q3 2025 vs S&P Global consensus: Primary EPS $2.43 vs $2.49*; Revenue $2.00B vs $2.15B* — modest EPS miss and larger revenue shortfall .
Trailing quarters:
- Q2 2025: EPS $2.45 vs $2.47* (slight miss); Revenue $2.09B vs $2.15B* .
- Q1 2025: EPS $2.06 vs $2.01* (slight beat); Revenue $2.10B vs $2.19B* .
Implications: With FY adjusted EPS guidance reduced and gross profit now expected “slightly down,” Street models may need to modestly trim FY EPS and revenue assumptions; mix shift and higher interest expense also factor into GAAP results .
Values with asterisk are retrieved from S&P Global.*

Key Takeaways for Investors

Revenue softness and a lowered FY EPS outlook are near-term overhangs, but margin structure is improving (record 21.7% in Q3; FY gross margin guided to ~21%) .
The cloud business shows underlying high-teens growth ex-partner changes; normalization exiting Q4 positions the category as a 2026 growth leader .
Large enterprise caution persists; watch conversion of strong services bookings and whether enterprise demand firming in Q4 materializes .
M&A (Inspire11, Securo) deepens AI and security capabilities; management targets EBITDA accretion day one and EPS accretion within four quarters, while balancing deleveraging .
Strong cash generation ($249.1M CFFO in Q3) provides flexibility for buybacks, M&A, and debt reduction; ~$149M buyback capacity remained at Q3 end .
Watch EMEA execution: despite higher gross margins, GAAP EFO declined 33% YoY in Q3; sustained improvement is needed to lift consolidated profitability .
Near-term trading: sentiment likely hinges on evidence of large enterprise re-acceleration and confirmation that cloud headwinds fully normalize by year-end, offset by the AI-first narrative and record margins .

INSIGHT ENTERPRISES INC (NSIT)·Q3 2025 Earnings Summary