NSIT - Earnings call transcript Q2 2020 | Insight Enterprises, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Insight Enterprises Second Quarter 2020 Operating Results Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ms. Glynis Bryan, Chief Financial Officer. ma'am. ahead, go Please

Glynis Bryan

June everyone me conference you will call operating Chief of quarter the Welcome Bryan, Officer. am Insight Financial Executive Ken Chief be joining Lamneck, Enterprises Company's Officer ended the for earnings today. and results XXXX. and you. I for Glynis joining thank Insight, the discussing XX, is Thank Today, and we President

insight.com. the second share refer invested operations, today's financial from the we to in this August today's XXXX. retransmission return to the earnings without morning be and conference accessed measures call information website Securities accurate and the it the do Exchange earnings webcast that XXXX can website copy An refer release we question-and-answer certain and associated will being In not quarter approximately filed Relations consent section. posted available is Any is will Enterprises. of was diluted on This the under call of per via earnings copy period be you limited call, of page Form with our on discuss call X, in If of and property written When on hours Insight the financial for any or Relations of prohibited. This the this adjusted and express adjusted call conference call of find Investor as rebroadcast a Commission of webcast call, the redistribution, contain X-K, time. at after website have that will remain completion capital. will non-GAAP will Enterprises including on referring live the strictly non-GAAP archived results. Today's only two time-sensitive at today, of is form Insight our we call, is measures Investor a conference you insight.com and to our as

today. measures non-GAAP are highlighted included constant US to release dollar that in these accompanying the of press the reconciliation a please rates find and currency and in earlier results unless actual will growth discussed You Also, issued note, GAAP amounts presentation all terms. as slide

most turn me that, let periodic differ this and made filed today's will recently to are call materially. forward-looking in XX-K begin slide risks X. and the Report are we risks now statements on and made All call. statements will today's forward-looking are following subsequently be filed you that that on These along our Finally, over actual conference I could our reports will to that release call press greater presentation, With on and about Ken? on SEC. Slide the to in Form you're Ken, detail Annual results remind during discussed in with if subject cause uncertainties

Kenneth Lamneck

Hello, joining today to second everyone, acquisition, team, and that through in our us report for to resilient I'm quarter. growth second year-over-year XXXX pleased dedicated PCM adjusted model the and quarter discuss business you earnings delivered double-digit we the thank operating results. our

the for environment demand second the challenging quarter, priorities were operating quarter the Given in clear. our

our mobilized support to tightened to we client's teammates and from standards pressing most First, our work and most our us continue which the in IT to health allowed home, safety warehouse needs. of

cost $XX million our with reducing demand by on environment sequentially. current focused we reducing expenses Second, operating to align the

the on delivering tough focused climate. finally, very strong focused quarter. operations we optimizing flow in we Third, on generation in our this earnings results And cash from cash flow

business share focused net the and Consolidated our company Now was was on year-over-year services $X.XX. quarter, $X.XX, GAAP a earnings margins XX% per results Slide on per new up on points the of the in in helped quarter adjusted XX.X% basis solutions gross for turning due year-over-year $X.XX our to year-over-year earnings the sales billion, Second drive were acquisition X% up quarter record which We basis to up second X. to second diluted a mix, XXX growing diluted PCM. and

Within our gross meaningful past now the generated component over of increased of our consolidated gross cloud XX months, these XX% profit solutions profit results, profitability. a from

strong our are of Year. execution their Microsoft well Worldwide Experience cloud that Given the U.S. made to proud digital announce clients, bringing as Insight their to Customer solutions the of as XXXX Partner we Partner Year,

Moving to X. Slide

that During we integrating onboarding all to quarter, Insight the our completed and the pleased to the on maintained our PCM focus of PCM have we second clients business I'm effectively systems. report

XX to PCM's our Over our go-to-market systems one the at the consolidated May Early teams North aligned of structure. year, migrated PCM and nine websites ERP past year, of this in we clients American Insight. off different go-to-market PCM, their into nine have subset we brands

Now in into brand single with believe our new structure we place, to marketplace. accounts organization the compete common in platforms positioned well we're as a and

in In to addition, our of ahead of million expectations on year first two previously X. total we cost continue disclosed Slide rate $XX exit to million annualized $XX commitment run million over On expect years. the to to with the savings $XX year approximately

five marketing invested and the we platforms have past capabilities. Over years, in digital our

and like and to lead to the giving resources clients. thought Insight at In consolidation clients Year Intelligent the right partners, published With of quarterly As Cisco, capabilities over we attract virtual quarter. including to more questions effectively past with as measuring XXX% experience marketing XXXX leadership how impact year, Marquee has our the continue and our and buying BXB serving clients The Insight Global readiness a it about grew grew perspectives technology supplier positioned and fresh strong Awards Awards on our and us both research normal to with live past Best resource, gold on us managing National last Demonstrated Insight's earned as five more an of thought enterprise choices in a of well status clients' we they quarter. through COVID-XX last move the post our agents meet ever tech business third well clients. of research. insight.com heading at our as than they're XXXX Technology hybrid notable to powerful Association things Customer leadership, our journal, digital Pulse ROI Award earned a new Microsoft is from our the with where years is workforces to into recognition and journeys. grown including and Insight.com organizations content Oracle traffic engagement, the their our we're creatively grow crucial Report, forward. to like X, when XXX%, relationships COVID, Service. important for Overall, a the On Experience point in for internal Slide starting In building site for coupled In the time ultimately re-imagining a reach into win of year-over-year investments our timely category online on Advertisers have also marketing through web digital presence modernization chats Our now to digital strategy have new Partner year,

work-from-home in in markets open while businesses Asia many business their teammates. Some America in cities and still of Europe are and are for North most mode the for most partially are open major

to more this use uncertain of continue extend assets hardware down a trends business bookings As XX% in for to in QX. as in demand life their were than expect the down environment. America In be year-over-year result, we in North July, clients

however, currently the provide additional sales our have reported in cloud assist category software-as-a-service resilient the we perform the sales, to of hardware expect of of We better delivered and gross Software mostly are margin On in net year. with not over demand the quarter coming and expect in has third the more your month as and the or expected addition and the of XX.X sales. visibility going response the cloud sales to to in and the economy global services quarter. third be service a the we to last to proven basis, between PCM uncertainty, half the higher than in addition do an IT year modeling, year-over-year for this and With PCM in for business to overall mix XX.X, second consolidated up how To third EPS of due of quarter. specific compared guidance high degree due currently to we're not quarter quarters.

challenges back continue year. in potential of the reported demand their want compared half we rise cost first currently for by of pleased commitment with as align our to demand results There single-digit the SG&A environment would Finally, approximate the the expect cases quarter. will COVID-XX half what topline focus to we and to expect and to the low in significant our we of thank levels Insight now, across know to XXXX. ongoing each fourth to to sales I our second trends segments the follow in on of uncertainty COVID-XX impact controlling our globe resurgence growth of the economy the operating teammates on of third a Based to right the will quarter. and the remain clients. We're and percent historical of see around the quarter presented on

provide foreseeable back have now And call over capital sufficient meet we needs revamps. expertise this area back a challenging in sheet levels are and the detail during on operating more solution to into head As eventually team, to of access that environment to of economy our resilient half we allow clients' and the XXXX, our support to to a both times. our our balance the us performance. will financial we Glynis to strong when I requirements confident these hand

Glynis Bryan

like I'm XX. going their key we global profitability you, several help I last also Thank these resilience identified and would for economic initiatives on teammates to these uncertain to during protect times. during our our months. Last Ken. quarter, start thank to dedication Slide

was for split our compensation our half decreased fewer the half certain attainments balance quarter of first actions and trends. to The other functions the majority million variable from Ken integration decreased fairly As lower XXXX. and current QX and the for we expenses in demand between came rightsizing evenly the by year. travel second to the compared discretionary of of due the on About noted, expenses which budget planned $XX lower of lower of headcount support operating in salaries,

flow $XXX on end by revolving procedures, of in As generated enhanced with had debt strong $XXX hiring we quarter, the XX, in addition reduction of credit we we ending our debt you convertible under initiatives debt cash cost cash note. quarter At million the to ABL and facility made approximately with fees and of cash. $XXX Slide reduced available review second the million the move to the hand. million and In outstanding on quarter, the savings

maximum quarter, the position we access Exiting ABL ended are with receivable availability also facility. with on of quarter our current to the support accounts ABL our our covenant is eligible ratio, comfortable the leverage We Under to than $X.X X.Xx trailing includes which billion our primary interest and EBITDA agreement, debt cash EBITDA less charge to taxes, coverage over flows or XX-month expense. a fixed second compliance expenditures, capital

June of support minimum were Xx confident against of the requirement our liquidity. we Xx XX, can and and capital requirements we at are that As very

more second cash quarter, we to benefited the million quarter, between meaning we saw $XXX flow quarter. flow this shorter our cash on timing and allows differences in we generation in helped As related which sales this inverted, cash we in dynamic drive which to items pay is highlighted flow the record the working than our clients, In capital from our quarter. drive cash We more dynamic, million partners from last cycle the of receive also terms us $X than decline.

the For previously $XXX million range the we million of flow $XXX cash $XXX comfortably to range end will to of annual top million be exceeding our the announced generation million. guidance of in $XXX expect full-year,

review increased sales Insight was software up Year-over-year XX%. we'll Net mostly the sales operating system. were the North growth were with increased starting the results, down second of X%, our integrated business PCM driven sales XX, XX% book billion by Since Slide X% from PCM prior to sales on hardware into and the year sales acquisition. $X.X quarter, America, the segment the acquisition, net Moving closing in of services quarter. been has

XXXX results on expense to the business in in expenses, quarter. of America between PCM from for in to target administrative report on funding increased longer run $XXX suggested, synergies higher and increased $XX and acquisition. no earnings Adjusted margins year-over-year to acquired to a our realize cost to million $XX and of savings we standalone XXX basis million $XX million. $XX sales quarter. for PCM selling result, to we the year business. realized and in America due XX.X%, The addition amortization XX% improved gross And profit are cost basis. increased XX% still up against million the of PCM million operations and Gross the PCM cloud annualized a services of As the expect points year-over-year of the year-over-year was $XX with primarily excluding we to $XX vendor XX% mix North primarily as two-year million commitment between to due Ken the million exit rate North

on sales The from by up XX% higher constant level In year, the EMEA in increase on $XX sales higher Slide sales was second currency also of EMEA of delivered EMEA, A say Gross million earnings constant the profit business was Moving in increase this of net in in in second hardware currency. last sector sales to $XX XX% increase cloud of in sales XX. public X% adjusted record solutions software. Insight provide due increase increased from to our software disruptive these in sales X% to very solutions, currency fees services chose to to cloud quarter operations in software sales million. the net and sales up economic primarily same hardware sales higher volume partially results. X% were referral year-over-year we're clients. grew X% pleased increase quarter in and EMEA clients constant net over as In deliver environment, due services. was on-prem volume The and million, to financial the in period was $XXX services offset in

year-over-year operations constant second APAC, was quarter in sector increased on year-over-year. public profit from currency sales on clients. gross to while the lower quarter in X% XX% and net the in Slide mix cloud of an and from currency, decreased the Moving Gross earnings in expanded margin XX. prior currency services million year quarter. In reflecting declined constant of in due constant to sales $XX to Adjusted volume APAC enterprise flat

was quarter Our Slide XX, with was effective through of million more from the year. cash second rate XX.X%. million tax to XX.X%, line for which little bit of we $XXX year. $XX on quarter A invested second XXXX, million capital In of of last the XXXX first year million generated XXXX, our on performance up in operations quarter $XXX last compared detail prior half our approximately year-to-date $XX of flow cash the in expenditures,

focus the defer year environment. next of our unusual We execution new headquarters on in corporate early our optimizing have decided this to out build until as we

As to $XX a we now for result, CapEx the to full-year expect be between million $XX million.

million June six in to market As our as an of February We're received XX. of actively times, sale buildings update, We've but of held $XX in we proceeds also our one a France, $X have of acquire sale uncertain. timing facilities, remains to sale the invested net million and these these continuing of we've in buildings. from for the in Phoenix

common Lastly, we quarter. repurchase stock $XX first our in to million used the

was of And which $XXX the earlier, noted was at foreign and to of of end subsidiary. the the debt residential outstanding outstanding million credit All convertible second as a under balance quarter, $XXX This of approximately compared million I $XX $XXX of revolving second cash million of of cash to the facility at to million XXXX. notes. led this million debt of end activity and $XXX quarter of our

the during business competitive opportunities our and several actions As conditions we've taken market and are help more healthy downturn, profitability additional preserve to remain to our positioning improve. a reviewing reminder, while as

demand. assessing accelerated to the conditions We're our we side, our in integration operational down existing debt to we the and as flow and different our as spending natural trends, across revised delivery plan context the finally, be this about efficiency improve. allowing and market our office expected our judicious solution sales of will strategic use replacement for pay At and cash hiring plan and we volume PCM make around on and synergy and priority. through we investments platform goals right-sized have investment to our using participation technical of discretionary back capital to we've services allow year. time, Specifically, cost across resources optimize current that We've employee discretionary reduced And to we're available in business. meet same sales to areas our cash, the will us ensure

is back sheet for to comments. in to healthy, closing as access emerge have times. will to and recovers. believe economic the these we We balance all will operate compete these Our help call turn us capital to uncertain the economy steps now Ken strong I

Kenneth Lamneck

committed continuing remain long-term business cloud Through IT our intelligent in to business solutions and areas, We in order XX. as our high-growth client on expanding on XXXX, for in optimize drive and Slide clients Developing crisis, delivery scale execution Glynis. in the better be through our COVID include clients, the the outcomes and will lastly, edge. overall to we Day experience which our of end priorities market you, innovate such its Analyst fall, capture discussed impact relentless last to to Thank the global markets, share at challenging continue to and focus strategic given the believe and the adverse excellence. economy. operational our remainder

across their fall. with now look That up the the our lines you for later for clients. the open support all questions. talking safe in my to thank and concludes forward we'll Be company, and partners We reduce short-term our we of teammates for capital and Thank we globe have we are and and us the economic And support confident on for our environment steps discretionary you again the will access tough weather have operating to plans, appropriate other joining taken side. this emerge our spending today. and healthy to our comments to our again you ensure

Operator

Raymond first [Operator Adam from question Tindle Instructions] James. your with comes And

Glynis Bryan

Hi, Adam.

can one just make Before correction? I you your question, ask

Adam Tindle

Yes.

Glynis Bryan

about I quarter, I the was $XXX been should the about timing that in talking that cash differences said have was I flow activity When $X million, talked million. and

Just be to clear.

Adam Tindle

I think that. was that's to into able But perfect. I back just

Glynis Bryan

ahead everybody Thank Just your listening to go question But now. you. for clarify with in.

Adam Tindle

going that, release, in I margin was but Glynis flow just would I'm the you compared budgets. So Ken. hear to cash flow, in usually, In I And year-over-year was pronounced internal see cash operating covered to press up on start impact strong. QX expect disruption operations talked and very about with a to a when and

why maybe variance the guess we show that I metric biggest areas issues see quarter. budget operating color and would this question be and didn't on So the internal up in of

Glynis Bryan

expectation had business. the in the of combination really PCM we a growth in Insight higher driver internally, around of… and biggest So our That's terms

Kenneth Lamneck

Aggressive targets.

Glynis Bryan

Yes, on we as targets environment, and we much we have as the acquisition had this but budgets given our we didn't aggressive internal predicated. grew, grow

Adam Tindle

Okay. able like to able some to operational yes, negative… and were seems But costs – you you achieve aspect volume were – the you could to it but manage

Glynis Bryan

Yes, sided margin very the across with we've the managing then aggressive also quarter, PCM operational the we of the all but help the in decline that's the had from been gross improvement cloud cost, about mix increase and driving margin services it's services the on our relative hardware in some in and business gross lines, to jurisdiction.

Adam Tindle

indicators, that, give does secondly, Okay, thanks. And in does that you compare July was at a North trend your talked what how down improve just America September? declines about start your year-over-year and backlog, cadence been you you, of give for just the that like And July you've either to you or to XX% of Could August when in ask compare to when June the XX%. Ken, that experiencing. sense forward to hardware May us at look to to down context I some it maybe wanted us line helpful

Kenneth Lamneck

we going call, sort may XX% that talked actually, is earnings projected actually the you – of we last what As wise decline received into about, bookings in quarter. a recall our

we're we but is just an So down across we certainly, which the seeing saw XX%. down, certainly what for in board an improvement announced. – play certainly, the that out Still improvement, quarter the from did

other September in what for that, extract in saw say But improving us it's of from to but regards the that, August, experienced. And just what that negativity the be you think your you look like. to trends. could that's I of – July, we what hard the trend to to certainly in the from to question, was yes, line regards to could booking going trends predict we course, So seems

Adam Tindle

guess, and from have of year get you suppressed budgets And have we're sense what the in normalizing of or think freeze budgets do to do returning sales go Okay. projects you that's seems to back a a to obviously a a on a customers, picture, do customers know are question, longer have as and as just guess, a think I line? basis? we're bigger in of a talked period color go-forward team to kind customers, you're there Is happens I you're about that your trend X% is IT kind and It reevaluating. through going right force now of case remainder you going a IT of talking your like any spending? what to spending hard talking to pause the you IT sales surge pressure you to and I getting a customers.

Kenneth Lamneck

would COVID-XX back Yes, certainly it a is and come say lot of offices. the start is obviously to people dependent I when to upon that

and the it. certainly have an I actual side on the will impact of infrastructure spending, think that certainly

see becomes is Chromebooks think, robust I realize this forward. the side, when see And to certainly, as pretty start back as strong. than offices, Certainly, to device normally The start education. it we'll in much they clients improve. I the that think they that up sweating probably will I start are will As longer to would. assets think to second starts continue open start a to norm to those certainly more and pretty going half, coming But increase certainly

a market. there K-XX increase into products in So certainly think Chrome sold is being huge I the

the bolster infrastructure the pretty point – certainly to that's category of that for going the much going course, think from software second of device the half And the our more that's what spending probably hardware. is think we in side, be the which in sort seeing half I of XX% I cloud, view. to we're certainly, more indicated of GP, for much the resilient year. certainly of And second again much resilient. as then But then same

Adam Tindle

Okay. helpful. much. very you That's Thank

Operator

And line question Matt of comes your next Stifel. from Sheerin the with

Matthew Sheerin

wanted to roughly I morning. Good products. it basis gross guide thanks. sequentially. hardware down for you ask imagine and strong But your be weakness about that's Yes, infrastructure to also the issue. just in XXX quarter in margin points Canada the the I talk continued other hardware and mix

mix you. you would think So would continue to that favor

So talk you could about that dynamic?

Kenneth Lamneck

Yes, well. I think on the gross Glynis as margin side chime – I'll in let

I think certainly it is a mix issue.

our it's is quarter Microsoft's largest year-end. quarter, Second

there is has there big lot has a it's So in bigger of gross impact that and no our acceleration second margin that a carries big question a yes, a for services software the historically occurs for certainly there's certainly in comment gross us of overall And impact that to quarter. around hardware hardware, in higher that and does. comes a so margin on than course, had netted, always and

decent to margin let But projects a pretty carry and a margin so lot registration of the margin, in pretty On a the to you more be gross side, because will of side, The certainly the course level. that as infrastructure devices but course of in certainly same I'll devices ability that Glynis, that doesn't regard, competitive the the gross of gross much forth, which to overall. well. infrastructure tend you be lot do get add tends on good get carry

Glynis Bryan

QX seen services in there our QX. impact that QX, We're to percentage gross that helped gross profit. of relative margin bigger talked we think of about and in specifically and that this in a the margin a in bigger to largest that we've is are our gross QX overall margin XX% anticipating QX, our by was QX margin decline Matt, decline in of higher Yes, going related to margin overall the basis between what versus a in relative points usually fact lower QX [TOD] gross XXX gross XXX% percentage XX% I that be quarter. our the profit drove have about that services beginning component QX. so hardware will was of hardware higher we saw to particular, that the historically, on at a is In

Matthew Sheerin

Okay, the selling, more continuing thank cloud And year? you. of on about Ken, you SaaS at could clients specific helpful. you the the the trends investing be and that you're are just products revenue, through see That's where end those

Kenneth Lamneck

So everybody I the took then crisis us and so in think fashion? looked security. going and certainly very home certainly good the was Yes, clients you remote of VDI solution forth secure from no way became get a do a was cloud very the in at COVID running in their when to and running. simple, our providing easy the It perspective get how and and organization up very easy-to-use they

robust that perspective. a I increase so think So a pretty you saw tremendous impact certainly, there that certainly shown has from

is operational go them to of to trying rather there we're look at much as this so running it a uncertainty. capital portion sort expense stage, cost where it's easier their get a up is cloud to situation expense had for structures to and and public of a Another a an versus well and it's at as

all point Teams increase dramatic we're course think a in I view, such cloud from and of for clients. seeing tools consumption course the of of and which well cloud continuing just and so that's of a forth, as draw So our Cisco as significant all Microsoft Webex

for So I certainly in place continue permanent well. as think sort and a will be certainly of to and that's lot structures out that of clients play going

as towards looking, more quite clients cloud start that some as be that public might look a is expensive. it realize they know temporary that think I we in VDI setting do that

back So study. start more to start come clients an they I that as think will office at relooking into

Matthew Sheerin

business Yes, link premise? issues that basically customers companies reinstated? some with Some being you and of will think relative seeing those data issues you particularly integration you seeing to projects up do you the of and as those that that, are and projects you there have, not are on be some do open again,

Kenneth Lamneck

but more there delay you We there to be as usually happen. of XXXX-XXXX, robust in only is those category. what the do out them can and there exactly I going going around key downturns here increase clients resurgence we know in a and put do projects on, we to have we forever. hold we projects come once projects certain a That's a turn market on which where once those does mean Exactly. believe experienced to back and there will prior put can't much certainly this so that do still significant expect pause we active

Matthew Sheerin

the position some Okay. taken And QX? terms my reduction year to tell strategy to expense debt. was this about the Glynis expect you also Could cash relative what your sheet, for are and up, interest you down debt balance the be estimate in last question of you've us for

Glynis Bryan

through that QX. QX, I about flows. million say would difference that Most that such quarter cash and year timing that $XXX be increase end you a the in I in talked come at usage that will should be of When at the that. QX, relatively through that you the end associated that of back an flat Generally the from should of so cash would help the third in little is expense. what think as in you interest cash where we're we debt think are what hence use the in we back-end we our debt generate you anticipate we look our and and QX

points, – a aXXX% basis XX debt and X.XX our reminder, up has of coupon cash over our Just revolver at LIBOR. is as basis convert a points

points ABL over LIBOR. XXX%, our over basis at XX is debt Sorry;

Matthew Sheerin

you. Thank great. Okay,

Operator

of your with Pat question comes next And the Chung JPMorgan. line from

Paul Coster

question. on It why Hi, system. of in an it's anyone worked Well, and thanks with sense, sounds use really of increase Hi, previously makes $XXX through shares? for some the complain the don't that, you're like equity more flow it looks the buy like ahead free here. looking hear Ken, some think about inexpensive it Paul back year, to down start excess focus what free me? forecasting cash for The taking to full the to you're an going were maybe me use flow. because Can having you million stock for going I the cash That's Why excess of that debt? moment. sounds is Coster and let pay not it some the at not I debt you to will

Glynis Bryan

you right We looks agree that cheap with stock now. the

So economic in environment the actually think happening until and certainty is and to going little occur. environment more about what's bit the when feel that we recovery the I a

I if think the marketplace our in to fruition. we're regards came just advantage being prudent of we'd and to to of it that they take are cash. want conservative opportunities There with other use

We do for $XX we that. best-positioned take million think a implement still under to as to the we just share from of now that I as we as sure repurchase. are possible authorization have that. have So want Board of plan our outstanding don't to advantage make But right

Paul Coster

know Okay. think I you Well, my opinion.

very even in that maybe out through The success fascinated the in way thing, me of think by bigger mean fragmented relative you're developing but you're advantage and might certainly in terms you the operating sort there. was a like the [indiscernible] other do what bit about of Ken, talk relative players term? to margins you having your through longer market, going feels to some really to of to smaller I digital little market that Can a over and just internet, is the it the competitive

Kenneth Lamneck

indicated much come that it's for and five as up platform We've the array to Yes. on building SaaS together question an and really the years Thanks, deliver been of there. systems extensive last, that Paul, investing we IT solutions for that experience. pretty

few a only because drive a as have really differentiator, platform. it that of on So economics a to units the kind certainly wherewithal really could space that we it's our the viewed in

players clients those of So now make know clients Internet Smaller source we as to advantage. kind competitive more for information of investments we've view know longer-term, long-term be our to certainly going rep. would information. and to be to look to most We these important more are challenged the that that their sales obtain started for a to be and

part we're as that connection for So conversation, sure in order to that make that to of obtain dialog our to it's clients. prudent it's critical us

that's on buying and to significant really significant understand become nurture our from When our them their ability our pretty journey advantage in that a forward. a clients' along them to and partners So and lead we the with journey that results cater has needs look flow been that's our recognize us we're been and we've one certainly that. and seeing and at really heavily going on

same but outdated So it, have first for to little long-term that much key strong to clients. a that's to being the going or really is sales sort marketing tool a agree to future. the digital I have phone important quantify they've obtain a because exactly capability relevancy to It's all we'd to is companion hard in think the regards part of not in organization an that very of that you're connection got sales bit trying the for

very today, of ago. important As it's communicate, certainly not know, difficult. answer five what none but an we Still us it very, years was to phones XX way our so all or

Paul Coster

how question you with cloud, Got you're of in some that companies And question, on because success some sort the good to of – level. the seen if the is to struggle of doesn't Microsoft? be look great. a sneak question having can part netting impacting doesn't those of the in the if And margins can much The you. It seem but sort aggregate questions. two just so at of cloud out revenue we've I'm is, comment line two transition you with last one first, wondering I part look revenues. other the the past, of that

Glynis Bryan

of how gross many negative would software impacted you're slightly customer-generated that's growth growth in see So it higher of has at revenue, it report us, quarters netted you no kind does it's is actually look I that you and on growth in where in or gross that net QX top reported. margin on-prem XX.X% of helps business in when off-prem. the we that it moving but to is We margin for basis. that the ultimately at growth from line, saw at us terms impacted And times gross It's the us. in software would flat produce margin. overall a say if more its we right, and

we complement business some are that's want that reduction that of software, how is and to that selling – don't can revenue maybe going a and look long to to force our the solutions. But conversions versus much, services, that see productivity I hardware subscription-based decade of we is generating, have end that track at So of we what take the our – but net understand around because growth cloud the the but also, trend because the internally we so most it of to of how course the sales something convert in over unplanned the terms cloud continue client. that software they will of don't we kind to expect will next in

Kenneth Lamneck

for recurring term competitive us of become service to for will providing build globally, going and important longer capability net clients continued in will the the a this managed that out. investing course consumptions drive, becomes when we're key us services ourselves our to has forward how we the there that be stream is focused think that attach and to on real most cloud that's where so which for And would that revenue the is because us I that

Glynis Bryan

that stream we'd like revenue recurring a to capture. And

Kenneth Lamneck

Right.

Paul Coster

Microsoft? And

Glynis Bryan

of would our they ecosystem, not behemoths results in We think about Well, publisher it's well. there I possible It's composition other of so Microsoft, our percentage as what industry well. with Microsoft's cloud Microsoft, as a the the clearly of terms do if in but is are vendors total say portfolio. you in just software behemoth

Paul Coster

you. got Okay, Thanks.

Glynis Bryan

specific percentage point for I don't the you. have

Operator

from And Riley. with Wiesenberger your Marc next B. question comes

Marc Wiesenberger

talk Good morning. P&L? and opportunities the durable the environment, you. on expand your may In which more customers opportunities then to others? you wallet about And relative with share impact the be current to can potential the Thank

Kenneth Lamneck

been I Yes, it's focus an Marc, certainly of always area, us. think for

we our areas solution, want clients' more which is it clientele our buy and supply the believe these our business about optimization, transformation solution workplace to digital we it's course Of what four modern the Connected how we of Workforce, got do because in obtain four now innovation. chain through really experience; and that's us

ability all clients through to rolled sector, all through the way buying sell our in those the areas. SMB of So public

is of becomes we your So client more set. know as having sell the expand critical to the to all fastest levels expertise way current

certainly more focused So that's we continue delivering to very, our that in on an clients. value very to area be

Marc Wiesenberger

Understood. or the duration the Also budgets service with the of as well situation work all and opportunity has or provided organizations across as device home evolving, accelerate offering? in the from current stretched of to continually kind we're being impetus

Kenneth Lamneck

some endgame take there and for lot completely actually think service depends it environment that. towards you, game, we they're but help they're meet in Yes, have to of before to some clients then structure. along clients we take would we actually we hey, for the That's we their find do on say, at, that But migrate and We get has. in years them actually the we workings meet where them and map ultimate their we'll them I end a their that's client then can we and all at end may can you for for out due what internal what towards actually journey. them would What call Workforce. certainly that say we what on game but it that this sort But with Connected large they of where start can couple is aren't buy because that. to where ready of say, to do provide we'll

sort part the other of we accelerated are what question your It's continue key. I technology this is of list know of of think, security. that around The very there was, few received At The is environment? in of very, resilient an areas the certainly course very at cyber-attacks basis. top a as

in matter invest all how their securities. So no to environments we clients are, continuing distressed see

we for networking very, for certainly lots as getting as Webex so SD-WAN, environments, becoming of work-from-home, very Collaborative we're course certainly very, on know robust with devices of and all a one it's together. well. Teams for So the clients. forth, in top for they're their areas of devices that's like space discussed the More lots to and It's to things teammates that we clients. focused key. Things them it's solution effective network very and cost their like attention critical

of cloud the is dramatically. accelerating everything, of we So key about those as talked and areas are course certainly some

of Google Amazon Azure. likes the for XX% and plus rates, growth and the see You

that growth focused very, participating those in. because we're clients areas. certainly our that still some So so be we're are focused highlighted rates certainly very the that's would of certainly areas Those substantial in on

Marc Wiesenberger

talk And can engagements, what Understood. you from platform reception and for And then of the maybe types the looks you're the the more profile market prevention? detection for about in just me, those seeing margin to like. two connected

Kenneth Lamneck

Yes, glass good of IP IoT. all and basically where [indiscernible] Marc a Insights is pane this connected question. basically we And is single platform provide around

amounts then our data the tremendous helps clients course, think COVID all of optical very people we thermal to their well. the edge the temperature turn cameras basically useful devices case do around it this in and these for who takes platform, disconnect at wearing take basically for contact tracing obviously all it the this with are – into which of imaging, masks, So information ability as testing and do distancing the it's can around as to as social actually that

our actively our facilities. in clients that. looking clients few that right We're automate So very a now are and that all few got we a interested. We pieces, those have and at developed we've use using quite quite obviously certainly that very we've major facilities technology

theme are their environments how so they type back forth. the companies Some park public very to bring looking and large at

to and that solution. lot had delivering and environments. platform are happens and be to lot that temperature there COVID And works in information restaurants in So really and of humidity. it's there's one how major do all and how their this refrigeration to they operating rooms measure concerned about measure actually ovens IoT some a precisely interest units just it who all in of in safety provide bacteria and sensing they and is, were We've worried in need the food strong the just they the a their that it's that around deployed about can of success area IoT solutions really certainly case that, key we've good but works robust a

being the the So horizon all cause is helps really that's keep the the that on IoT. actually biggest broad intelligent is platform edge connected platform as we is that in and about a talking, and world IoT

one future promising invested area an we a very very So that's very, that heavily is in. that and think we're certainly

interest good around long that's yes, but winded platform, long, a the answer the intelligent to your certainly lots but in So edge. question, connected of

Marc Wiesenberger

that And morning, quantify helpful, release talked being the final just the this in you Could about quarter? down. the That's in you business one, thanks. then a core

Kenneth Lamneck

have basically we has mean did we two to indicated us to say the the July due in of that would course booking in lot more that I QX, indicated down Yes, the we in was what have fact that certainly growth that they're months XX%. numbers. rates We of but of a PCM

overall to will in at down we when booking about top down are quarter, but whereas XX%, like line the a growth the actually we but have was the the number. trending So look last XX% rates quarter, trending information, negative improving, still

Glynis Bryan

we the down. – talked on trends that And with consistent we that down quarter, beginning that quarter the basis, that don't first last do combination beginning pure business is combination that the about a at What know booking the is anything sorry. to a at year-over-year being reported PCM of and to Insight the second it's would of view maybe add down. we like year, XX% is, we to the as Marc, as I the have of core know

Marc Wiesenberger

you. Thank it. Got Very helpful.

Glynis Bryan

you. thank Okay,

Operator

And your next question line Lebiedzinski of Sidoti. comes with the from Anthony

Anthony Lebiedzinski

taking Yes, good for question. morning and the thank you

you how an different end a get to date performance perhaps wanted just are quarter as the bit vertical so to the us those markets, performing? more I little different a So to color markets, third the from about sense trends, give

Kenneth Lamneck

big through thanks becomes market the this of more anybody's is Yes, Chrome that there. XX-market doing already Anthony. market. even statistics, K of very the by is to The question, norms with XX% well. the XX% has Google – for investments Certainly, education

well get spending, federal state robust government. as increases on So very when at dollars you we're those certainly going the of think some level as and through spent, K start the as I devices seeing to there, in XX at the success markets in look for government COVID local federal around lot a

period in the be will for quarter. for spending that this this government So a key

make space certainly, How and be recognize that how I think QX, think in would the at SMB – of challenged accounts expect for – challenged, to in, on overall of in that elective of it see depends sort at starts corporate to as account, on off. When this sort I and improvement environment. certainly they specific depends the when fruition. the has the end talk anxious course, actually I look us lower money the is to most on the to depends care guess, stage. it probably you we're all back bounce sort been comes corporate been hospitals, on of of and very And this that sector most So if you in then that is have – certainly, think sort of about surgeries of we verticals, an that anybody's you're upon the I but it's really health that

hospitals upon back on the but aspect been more scene lines. Anything hospitality has is industry, elective consistent space lots Airline with should not space. example a dependent So a challenged. see of their more that cruise we there's of IT a course, have it's surgeries Obviously, to the basis. that spend we do calling lot associated challenged. what but we once you're challenged, very, that on, industry start happened in expect, – of certainly of a norm very The on in businesses that would bounce expect would

going that there not is we towards into but happen what's as this next business. down a So and year, will and considerably, year. bounce focus but back there their certainly future is for Certainly be calendar look there spend to the

in we when to on verticals the accounts to you looking – I base. have at the about specifically So corporate be have think very talk granular we

bit certainly So, it's a a little mixed more in bit of bag that of – regard. little a

Anthony Lebiedzinski

Got you and SMB so the helpful, touched on it. That's very clientele.

the how for debt the mind, in the of we expense about should that bad rest with think So year?

Glynis Bryan

as we process I part Everybody say for we've have focus it individual to have which our well. with that, our industries expense. some grant on to We've at the and the a for of basis to and industry risk our how seeing had forward, looking is and that around through are believe of business, we've a a we relief. deferred, some tea we very at and able through bankruptcies that put request "as pretty also necessary. forward clients, our have at request, been we're they on seeing with as I we is measured large our which Typically, And customers, team. judicious high a top to a their judicious of we're are sure would their lot risk, our And couple seeing etcetera, short it to through through so history with regard being course the go that – our and regard for much enhanced good large downturn, bad clients to the asking about normal we extend for that a to the What making going and term. with We're go had we with that during a it's them to-date legitimately clients delayed debt credit that being providing make on extended regards segment. very scrutinize But or a the market. payment taking bad are duration performance have debt and much then about this handle think back of an on enterprise us we not we we're support advantage on clients willing we determination well had we've cover how that risks of associated of we've and – we feet." in we reviewed that process SMB bankruptcies payment in is get segment

Anthony Lebiedzinski

and thank very All right. luck. best Well, of much you

Glynis Bryan

you. Thank

Kenneth Lamneck

you. Thank

Glynis Bryan

conference Insight. at call And welcome to your first

Anthony Lebiedzinski

you. Thank

Operator

have time. We in this callers no Instructions] [Operator queue other at

Glynis Bryan

That and the talking in concludes much conference you call for be our future. for your participation you. we you very Thank today. will Thank to

Operator

Ladies may now you participation. the call. for you and from disconnect gentlemen, Thank conference

Insight Enterprises (NSIT) 8 Aug 202020 Q2 Earnings call transcript