Insight Enterprises (NSIT) 1 Aug 242024 Q2 Earnings call transcript

Hello, and welcome to Insight Enterprises Second Quarter 2024 Operating Results. My name is Kiki, and I will be your call operator today. [Operator Instructions] I will now hand you over to your host, James Morgado, Senior Vice President, Finance and CFO of Insight North America to begin. James, please go ahead.

Welcome, everyone, and thank you for joining the Insight Enterprises earnings conference call. discussing XX, operating XXXX. be quarter for will June ended we the results company's the Today, I'm Finance Insight and Morgado, CFO James Senior of North Vice America. President of

Glynis and Joining Executive me Mullen, Financial President is Officer; Joyce and Bryan, Chief Officer. Chief

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

presentation in actual measures we earlier amounts and reconciliation of comparisons issued the both slide to today. Please a dollar accompanying results unless included call in are as growth the all find adjusted U.S. today to that relate noted. Also, rates note growth of press release terms. the and all highlighted the unless You'll constant our year, period otherwise these discussed currency, on corresponding make last GAAP

required new As risks as These no With along date made greater presentation, of made any Slide could forward-looking Joyce, you're the information, this today's and SEC. All are are over of that recently we'll are a results call, materially. to will except the and press Joyce? with to this filed subsequent undertake differ discussed now this and reports most events if and subject that a to are release obligation the as cause in detail in statements reminder, all conference our result or to forward-looking X. future risks whether call call begin on as made following turn filings by call, with update actual we statements uncertainties forward-looking of during our and periodic I the otherwise. statements law, slide on that, in

margin us gross James. very you despite Thank and core expanded EBITDA a and margin profit morning, joining double-digit much, gross delivered growth and demand and cloud thank In for today. QX, you services adjusted choppy environment. everyone, we Good

clients, shareholders. our solutions economics improved delivered and Our including of focus the market, has areas for on our strategy fastest-growing to to cloud, the services

over resilience of the the improved business. have addition, and expense profitability and have foundation we operating strengthened initiatives In actions several the taken our past our quarters

our to All strategy integrator. become the to leading solutions of these elements are critical

improves. sales new to as such invest resources continued critical as well which growth in demand GenAI technical solutions, also and will be areas have as We as

Core to gross $XX profit million. million. profit highlights increased $XXX from grew Here to X% XX%. Insight a Services margin Gross million. to few basis QX. Gross points to profit $XXX expanded increased XXX XX% gross are by XX% Cloud

$XXX to record. especially QX XX business. margin lower-than-expected uncertain expanded increased EBITDA these our and million. in despite We results basis And demand, achieved points to a adjusted X.X%, adjusted product by macro X% Additionally, an EBITDA environment

to interest acquisitions, a and and had we selling business quarter. is on expense in towards solutions seasonality decline higher the industry cloud-centric also the resulting of We changing as of adjusted in our Overall, as variability related the shifts X% more consumption-based focus models. diluted in services and EPS

expanded gross first by Our million. XX% gross integrator compared XX.X%. increased $XXX gross making up basis more million. diluted X%. half XX $XXX are to and points gross year and XXX XX%. XX% EBITDA EBITDA period, million, basis the $XXX Insight margin through by indicative our points Cloud increased of we profit to QX to execution X% adjusted our Services progress EPS Adjusted to $XXX to profit towards Adjusted to increased to solutions Year-to-date prior was results are margin million, expanded Core the grew profit ambitions. XX%

can and our technologies, a integrator to a leading services and trust workplace clients. these navigate software and outcomes As requirements them drive our reminder, integrating ambition hardware, become they digitally the to to They need the new is to solutions by for help infrastructure partner business transform.

progress are initiatives. against We our making our and strategy on executing good

during As to swiftly impacted clients with team X plans global a and minimize engaged downtime implemented to and this, outage operations efficiently. our of the IT Insight, timely example restore recovery unrelated weeks ago,

through response minimal quick operations. in with instrumental to Our team's guiding business outage disruption clients expertise the and their were our

on our to deliver domains. relies clients diverse proficiency our technology across ability solutions Our impactful to

while services the and acquired by companies. business new our our cross-selling in acquiring between Insight areas market enhanced the opportunities fastest-growing have terrific companies with our organic We simultaneously expertise of creating capabilities proven

examples our needed infrastructure IT parent payment Here some recently its an our company and Infocenter are from separated build years. entirely solutions to not months, new major to Amdares bolster in deliver processing how of capabilities clients. A to

acquiring their for areas set engaged to a Insights now by across deploying high-margin workshops. already instance newly expertise provide As using enterprise needed transition automation a comprehensive with ServiceNow, critical deliver our own first complex for planning to client to X engagement. In client management. are specialized support we our Infocenter, through independent proprietary company, months to we're service to and rollout ServiceNow the Insight managed platform, a customers market. service to platform This transformations Infocenter team of ServiceNow the the of solutions in a a phased of after AI-powered traditional IT the all led

an EMEA example with Amdares provides payments Strike Amdares payments for of region. Through how trillion Here's solutions become in in Stripe. partner our processed $X businesses capabilities over fully XXXX. Insight our suite elite integrated of sizes products implementation in of the has and acquisition, financial owned enhances an global all a

we're get complex back-end integrations strategy including models. of of subscription M&A examples our systems. implementation businesses demonstrate to with Stripe-certified suite, the Our the most building commitment year marketplaces row continued experts This proud positioned and Forbes as we These handle of the custom as push billing complex a an full in leading team, America's example solutions how we're product for one help by Stripe's a out effectiveness Diversity. been integrator. Best In inclusive announce and diverse to become of is Employers a for that the fourth Insight to our to recognized has

operation front, on XX/X platform. monitoring security security our a Microsoft the has On services, Insight and to proud XXX,proactive with tight recognized was robust for partner all response security hunting, including be by our built Insight security capabilities, with center demonstrated solutions. integrations by the Microsoft

of assess and some have devices has part our mixed. We QX progress refresh the the half. improved, but we and are their technologies, AIPTs new not the second through initiatives, clients remain the same, environment strong half current the anticipated and year to of track as making drivers are paused for entering though executing manage we results, the they a achieved future levels for the the Demand purchases. through perspective [ strategy year. While against operating our on ] environment good particularly The economic the as on we for remains market first and our of

clients expect half We to deployed devices first the was we half for stronger in half in the the expect demand will first July, the Infrastructure XXXX. In of as improve saw in year. and products some second than in acquired down the be second demand improvement half. that demand our

And initiatives. I'll over services prudently Glynis share will and increased performance and We margin our as turn QX in have manage with we call as recent enhanced profitability key for XXXX. now our gross expenses on to financial to our continue outlook operating our well and to operating global our we're seeing cross-sell and details through acquisitions, the pricing opportunities. capabilities Glynis?

a driven QX, you, billion, modestly In and net $X.X partially also Insight decrease services. devices infrastructure in Thank and were X% devices Sequentially, in cloud software, U.S. core digits hardware increased by declined in revenue was down dollars and of Infrastructure infrastructure decrease on-prem In was year-to-year. slightly. flat and Joyce. double QX, was an currency. The particularly by offset increase constant and

shoots margin and continued declines. the increase services core and Insight demand increased modest cloud devices, and cloud a strong Gross We X%, higher and started in July Insight we to profit green points half services. second basis improvement continue was improvement see hardware growth, XX%, anticipate expect in offset core an throughout of of reflects year. Gross reflecting partially to mix a and infrastructure and XXX by

constant the down increase primarily decline our initiatives our acquisitions. debt of actions was million, to Infrastructure-as-a-Service basis and adjusted down to in per the $XXX year-to-year in acquisitions. in Organic This the gross in due higher operating reflecting SaaS. Adjusted X.X% as continue earnings gross related margin. an X%, X% acquisitions. in last and Cloud benefit of from resulted SG&A $XX profit to were we margin to services took the contributed million, addition, expanding increase dollars $X.XX, XX%, was expense prudently In EBITDA The points to manage is share an grew recent SG&A on current profit an currency. we primarily was growth and higher reflects adjusted in diluted based pricing and adjusted profitability also year environment. and also gross increase spending XX% XX U.S. Insight higher and interest Services hardware of Core

at QX, sellers include targets, included This Gains results. were lower structured indicate any earnout recognized the operations. excluded These Amdaris. lower higher-than-expected the each in fair related target value than earnouts performance. gain reflects and recognized from share time projected and at from are to lower the after earnings a was the of In recognized Our of most performance or value the loss the million, $XX and earnouts. The value which date recent face the in we the gain acquisition, SADA earn-out gain performance. measured our losses acquisition earnouts additional exceptional recorded of are case the with as for projected performance quarter of is to were earnouts and a value against compared while adjusted to for targets remeasured to amounts much fair the at acquisitions changes

strong outlay capital for determined we exceptional deals. will expect are earn-outs have deals a Multi-cloud solutions that as comfortable a years. SADA is cash we deliver and to that component We the and a the X our still award-winning for these Google typically achieved, capability integrator these continues from accretive While also Cloud be X recognized important flow. be partner. not our contracted ranges contract be to GCP very total that performance multiyear key strategy, to will as will with performance to

and recognized difficult for GAAP, the On revenue the and to upfront lumpy therefore can term U.S. full contract is forecast. of be the

On life. as cash utilization is flows This consumed and be of to through $XXX from these value by on as XX, occurs or To to flows, X SADA based flows can operating the strong clients asset a flow. service predictable, years. cloud much this with of will used the our consumption of consumption other million X highlight typically the proxy has service be operating dynamics. the how the over cash for monthly hand, cash demonstrate value range June GCP continues and that contract the contract contracts average more is

will the of U.S. based Our slower due consumption cash was look our expectations original contracts half the a cycle sales on partnership. forward sales services SADA's mid-market new we in to priorities. motion, the as expanding We're start model. SADA's performance economics be with we first aligned to below business valuation in to of updated to our a focusing SADA on targeted growing and attention the net more our Google's GAAP and

to Moving the flow. In $XX QX compared operations XXXX. of on quarter, of million to generated million we $XX cash in cash flow from

compared client half that in a first flow half partner XXXX, cash of As versus million Through QX million in of operations first of to QX. included generated from $XXX in reminder, have XXXX. timing we favorable payments operations normalized $XXX the cash from flow receipts the

share And $XX We repurchase million be approximately program. on range. expect that XXXX, for typical from XXXX to XXX,XXX cash total end flow $XXX to a of million. first higher at shares for $XXX cost half million will of you operations have In update our of our the repurchased we the

remaining current plan to stock We $XXX under the X we next which months. approximately execute million repurchase have our program, over

raised was trailing on our Our was quarter, long-term a June invested ended progress towards ago. $XXX long-term This ABL. return access year have proceeds notes and adjusted XX% ABL capital aggregate compared our billion XXXX. $XXX the to operating we million ABL. to of in full notes debt improved XXXX, XX, end the senior At offset $XXX We to billion $XXX of increase facility, from XX under performance. from sale QX, goal. exited million, including primary of debt under the the of of the good in was for Acquisitions QX new the This portion We've $X.X we the $X.X the net In drivers outstanding the used cash our the by senior million XX.X% principal flow available. QX million which of capacity with repay months XXXX. a are demonstrates of for due of

have to ample We meet liquidity needs.

net performance XXXX October strong cloud hit in to in XXXX gross the margin as cash of of experience quarters, adjusted on QX that of across XXXX. We relative X of complex this and believe of from Investor free through the first very our year. services profit adjusted gross shows we by Core we're XX%, profit demonstrated on our trailing Day as XXX%. Based adjusted and presentation to XX% a a growth of percentage by ROIC described adjusted X.X%, growth Our metrics track targets flow these starts EBITDA our is XX% XX-month income

been about seen us segment have decisions, While for many our first and the is uptick that segment in downturn. demand we clients have spending recover our after cautious commercial their to of a typically in an

and remain about cycles. SADA very we adjusted will half, We anticipate EPS diluted continued they second services guidance. had elongated a we impact the of improve half negative in despite business the anticipate first as considered accretive remains cloud the strong. remainder be we that As the following year, will think our back-end in on the loaded. the in will have factors sales Core

We expect in the half, improved modestly spending. hardware infrastructure to second refreshes by device driven and primarily improve

million count average year be to the range Considering tax repurchase is than for as expense and follows: between $XX $XX capital and full we that or XX% utilize our outlook. I margin [ includes approximately no these expect and million to in an rate ], expense interest acquisition-related expenditures meaningful severance outlook deliver and We the profit. grow will gross continue guidance Joyce. acquisition-related a of to profit XX.X This share slower adjusted million growth will expect $XX to will in of continue our million. the for the an million change macroeconomic and to plan amortization the shares. rate will $XXX diligently And share to at low year call million and no assumes manage factors approximately expenses between the This transformation we per earnings back $XX our $XX SG&A of and restructuring we to our full intangible or and effective $XX.X. gross XX% now million be debt of the believe diluted our of assumes XX% instruments for turn stock full guidance excludes $XX.XX program SG&A remaining double-digit in range. And gross to year,

Gross in the favorable benefits Core reflecting services in Glynis. initiatives. digits. Insight grew delivered mix gross Insight the half and Cloud margin expanded, device year, EBITDA business. from demand. pricing cloud with many double saw positive a first we And we of profit slight services strong our the of resulted areas remain improvements We Thanks, results disciplined In of and performance. in which profitability of core SG&A and all adjusted margin management, and

acquisitions recent our geos increase synergies revenue our relevance capabilities and clients. are and expertise on with integrating our various expand We across driving they focused our and to as

growth on markets their profitable and help are demand clients, partners to structural capturing for teammates delivering for transformational each While our remains their thank have clients. This our and your collaboration [indiscernible] I clients them concludes commitment our open improvements made and continued to to my innovative demand and support partners focused to our in as with end trusting insight comments, for will for now journey we and choppy, our their our other, line solutions and questions. we want the

first question Joseph from from Cardoso The JPMorgan. [Operator Instructions] is

So this first what of tougher But now you reiterating ramp what's the year I kind Like of you're you a just have here? your much be drivers what then dive half hoping to and operating quite particularly into half a seeing that is driving are And guide despite the can as guide reiterating point, implies one the for that the just year? was of back full at key here impressive me appears earnings follow-up. the environment. on steeper a I kind back in conviction

Sure.

Joe. Okay. Good question. Thanks,

in so that in of we work across less that seasonality what second here's profit -- going SADA margin anticipated going more acquisition out Infocenter of and QX. in say. overall have of the gross year. had help So trying the had year, I second -- we have half the services gross Two, us have a gross we're QX In the of margin quarters we to benefit from the to SADA as the this an to we a not that's smooth talked perspective. half did about We things. business would have One, couple

we year, second the half SADA year, accretive reflected and loaded. we it the very back-end in that guidance the first will remains have. of is that of it the in dilutive be the accretive and be to half So expect was in It

that We will a been also tenant be for core has to strong. expect cloud us. That continue

services terms to starting well to on infrastructure. organic our single digits believe growth some a see to some in the to in up sequential year-over-year and And that as going continue we're some business. of shoots we basis. see by sure, as We starting year-over-year green is strong see for in green improvement, our acquisitions And devices starting year-to-date also to shoots helped be are

we where date, to As results taken months be to already can million in help benefit place for we SG&A we QX, here significantly benefit infrastructure through with the the ultimately. we the going the consolidations us in the control, looking acquisitions associated And results we and think we think second comp at do our to that we've And the some And they to to that have half continued looking had several will XXXX. We're in also of buying stock continue benefit easier us are with go made some have actions the Insight. and our in back becomes second our past from the SG&A over year. will starting we've in that that the we've functions of infrastructure in at of that year. worth of the half $XXX

growth Maybe SADA planning can -- Got of underperforming by a cloud it. And touch that it that take return more. just days last the underperformance like sounded you bit it clear. you profit X your in we take beginning vectors. you of the maybe sounds total dive just the like the what you're on terms to those ago. to seeing on in some year. the being you Like are of you into bit. to growth, trying earlier the And driven is into from than this That's in of Maybe there even from a what referenced performance actions outlined gross very both quarters XX can back is on dive a or so just of some row different can just Yes, like the moderated maybe or kind year trajectory. to expectations touch

Sure.

Joe. thanks, So

double organic our confident was grew in GP as business. remain We digits, -- you cloud So cloud know. very

there, network-related So and other Adobe, than cloud we of the also Citrus, offerings to et were Cisco, In Microsoft challenged Google, cetera. a we the in publishers more expected quarter, in in quarter. addition have lot

in anyway, in you a overall thinking improved and significant traditional drag then synergies revenue business So of. of that cloud will cloud, as Glynis a do that help cloud was we the SADA's to bit performance, with were we mentioned, back SADA public sort on the which half. performance expect, contribute expect of overall And improvement

It we pretty bit So quarter. business. our little cloud lighter good the I than right. feel about was But a you're in expected yes,

that, in fees cloud ], cloud. [ maybe [indiscernible] ago, of that we couple to Joe They a just that on is add received. dominated years the

Citrix, Now some partners, it that turns out Cisco... the other of

Adobe.

-- but becoming less underperformed all actually some bigger Microsoft they're Adobe, those players there's QX. cloud, some still still in et still those also in overall of cetera, are of larger combined, and are than

next is question Matt from Stifel. The from Sheerin

Yes.

particularly another of line. going give significantly but half. regarding Just grow for top you're the top And like OpEx, guidance, second line on based don't backing I appreciate into your to question that pretty to looks year, gross it and guidance sort profit have the in that you

As by for QX. driven it's get revenue primarily going easier are not But be the you to and hardware? to be comps the going expecting said, year are you up overall to in

up year, the going to me will not to services digits. grow my probably for driven be be primarily expect will rephrase going do in single -- well, and be will grow. hugely, sorry, the let driven and that about Hardware It's GP not low, year. hardware. revenue GP low think It's Hardware by We by thinking.

as do revenue, services have side. we services the the have and side GP the on as on We of on We the don't focus from cloud. equation will some will we contribution growth the GP more much revenue so in

Okay.

Because America we a week core sales year-over-year. that give you I looking some and commented you I could that? per sales part netted of significantly [ how our were your North of software And just business? the but know And that's pretty software should think more with about on-prem at know down us results, ], Okay. color down? sequentially

could seeing down. deals is QX are QX. trigger saw GP. in it's but given or we for in be there's any software about netted is unique us multiple happen with ultimately, COGS on-prem the and in that in and on-prem So QX, or deals growth not growth recorded quarter And large then software there It quarter, different or what that versus large deals happened that medium-sized that that we're nothing there

would that, add Matt. also I to

at If it the we in pretty the you half, that feel we're look for confident seeing. numbers

quarter, If big remember, a GP half deal line. software that impacted revenue software where had on-prem to But the pretty And expected on for is you us. a the line, we it we much talked on be. that about so the overall, not we exactly

big that I'm was some sorry, related deal. it. Got that to regarding -- of

then growth. are Okay. that the comps My going half to and And because you second tough. to segment do the grow in year-over-year on question's get expect

envision we've growth. particular on some be Revenue would sell only there we is the lumpy each projects. that growth. that because we Just what growth Matt, quarter, would segment with had on there, software it that in year. for depends consistent The half

regarding And international was Okay. your that also sales down. then

you One in I U.K., incremental of commenting decent about exposure weakness and competitors your the know was there. have

seeing that Europe? So are you in of any

but them, our well. We very from I our revenue, EFO and organically, think which a we that U.K. helped business course, well of didn't particular, also dynamic. the did see perspective. same business, in -- had We European did Amderas, that don't -- GP

see for in year. and in that right QX, of the U.K. not we're as future the of rest the didn't in particular -- the I we we're now, guess, not question, weakness for envisioning -- that Your

question next from from Raymond James. Tindle The is Adam

profit $XXX of 'XX? I on to guidance. me teens I getting been mid- unpack about with growth that were double-digit maybe you SADA, to about just think update for the about would the gross a it for part you we're in Could million about Glynis, fiscal when update, you the question, had year. the have really Today was the low wanted told maybe Okay. annualized I'm SADA us Previously, previously year. the that buckets gross believe, wrong, talking dollars adjustment to of your profit it. step for high drove take correct and a gross talking that in profit now back talk growth you -- initially we with the how acquired down. And I if dollars assumption dollars

Okay.

number I maybe think full you're that potentially. year SADA's quoting number the XXXX

Okay.

fruition. going but did second of but we what first not with come the and SADA accretive underperformance growth. of half, first that to to that going dilutive seasonality, capability. I they be strategically SADA There some plans valuable is and were expected a valuable be those SADA portion had associated be the We We to terms the a gross impacting that to they of overall has will to our in with in that half in our regard the underperformed the expectations margin still our were would multi-cloud year a year. Here's is in say. half continue of believe trying to been out acquisition smooth strategically acquisition

is loaded very still has SADA remember, forward. you back-end as case remained So going back-end to it's That And very loaded. QX. the

the this We albeit is a date, we and year, envisioned, but slower for down of back-end we to are we gross to had that gross XX% our we're range. also gross bringing XX%, loaded, the margin guidance that provided. with remainder XX% regard envisioned. our Hence, we the which margin still reduced expectations profit with we more significantly our said from growth, to grown that in associated guide rate originally reflected have have while the have SADA increasing To GPs have than increased than we at we had

to we've also changed guide our changed our expectations And because our SG&A we expectations spend. also [indiscernible] have on

going was originally, because more that and with profit expectations. is growing OpEx SG&A profit. a to associated given And rightsized think the is lower the big now thought gross I faster than it we part of So grow gross slowly we've SADA than

that sense. contribution were guess Yes, prescriptive prior makes very on quarter. you this I the SADA to

started think EPS. $X.XX to to you quarter, $X.XX last $X.XX to you I of $X.XX of EPS at updated

I year. for detailed maybe had for it framework, how guess So on thinking an update that data very like from us you EPS you're could contribution sounded year? give thinking about you a the on SADA an under the

about is can't I I it will EPS don't say from that I contribution year. an What talk in for SADA the May. we think updated

what on relates we off Workspace net start the on specifically. we're of acquired But products would it We're think reason The changed time of we was that with it to in we have the to new, services updated, expanding I focusing refocusing capability soda dynamics the clients, as February. mid-market that somewhat. Google the say. last here's I the business GCP were and SADA part and was

reaffirming All the that range end the XX rate [ that year, ] and in we this accretive in at the are first XX half. reflected versus expect at XX to [ half higher the and second perform be XX ] them of do we is guidance a of of

And plans, to want more capability well we customers, to going aligned starts just of as us capability. I for is point the be our whole goal financially impactful. GenAI super focus it of major -- multi-cloud just is whole critical and our it's to very with emphasize of becoming expand Strategically, to add our believe overall a on sort the acquisition the -- that, SADA to

that it. like enough partner, priorities and to be the that. a us for to Google really have adjust We we doing to So has just nimble we're as

it. Got

global like you of you just that. mentioned it Maybe prepared through your completely outage obviously, remarks, sounds and the helping a to did changing job customers good different subject. a in Okay. Joyce,

July, cybersecurity [ that the impacted to now business, just are beyond customers month broadly pushouts closing is to other growth in of with over, you sort more month security seeing on. has wondering cybersecurity the push at July your pause reevaluations cybersecurity. business trajectory of Just speaking, that of where and the beyond impact out business might projects the want going any ] the And how

a But in as definitely really continuity I think we're said, I numbers the resilience in turnaround. our be portfolio. it's is I do. because see don't business July necessarily different fast that about, resilience and having are we conversations across our would us of of conversations have a about which caused to lot very we'd to think customers' happy it environments, something the

financial conversations that is around results, implications up obvious in as and choices clients this possible. the business as and to just set the ramped no and that definitely, but is success sure So our how focus up the make for the have July resilient their it's

Lebiedzinski & from next Company from Anthony The LLC. Sidoti is question

discussion of there. and lot about a SADA performance its certainly, So

Just X%. for the profit gross quarter, wondering, your was up so

Just wanted growth. to your get a better organic handle on

of two quarter? actually you your So acquisitions. just given the specifics far if Did acquisitions? the in profit organic SADA's dollars actually growth as performance business smaller in in other I versus and could organic guys guess, Or a gross you the terms give more see maybe as

Without QX. going had in details we around organic it, into growth

as said, was And SADA Glynis decretive.

So...

and profit Sorry, improvement line, not line in grew. gross our at profit EFO decretive were at the They the but of our but at the gross line, at line. gross was the business EBITDA that the were organically, at profit contributed they also GP part

have impact with historically had last the profitability over and even that revenue without year, have pricing we've that just margin gross And of we had have associated with acquisitions, shown. We the initiatives taken. the the even expansion declines we

declined, we've we've hardware, that expansion and has gross margin as services gross around had hardware around So expansion margin well. even had

you. Got

opportunities profitability Okay. think I half? initiatives. the out And think of additional you you the Or those back follow-up mostly in a have just you do you're initiatives? do on the and tapped mean here pricing

initiatives and say incremental regard think how more business, sell out little foundational. we a They have our cetera. are is think marketplace, the that we that value of that et I Anthony, we would how those I to initiatives. do made do bit in are I profitability get of salespeople the can we changes But with now importantly, what structural pricing

embedded be structural base around growth, return have. or terms will pricing that of as but profit our strategy return margin that we've we our gross -- on the higher to the growth margins, higher gross see our I that foundational and that that think we gross value that profit we and may margin as changes made dollars GP think Incrementally, -- of will those gross to it dollars be in we higher the base through in from on increase flow sorry. may gross somewhat, So greater the benefit we'll of the business

you. Got

me. Okay. And lastly for

including focusing Or deals outlook are -- deals Clearly, you done as three expect XX you've term? over additional you guys near your -- we years, far that? months the absorbing acquisitions lot the of on As a acquisitions more I these for some so so. mean on are last acquisitions How or about should here? that? thinking

specific or strategy market. fastest-growing capabilities to allowed we very very, said that M&A the add in to we very our capabilities and about areas us committed We're programmatic strategy, that. augment develop of the doing been wanted M&A We've a to

opportunistic acquisitions. we also scale We said be would about that

So that hasn't changed.

question Colicchio The from Vincent from Research. Barrington is next

more generative on AI how I'm does look Yes. services seeing like? side? have Are curious, you been the the work? What your activities pipeline evolving

Thanks, Yes. Vince.

investments discussion tires. GenAI, of -- let of me There's some There's by making still. but all, a is a it. first are lot but governance, was benefit start kicking of lot small POCs. in some there's I a of really are we lot about data we seeing of our conversations saying So of services about of a lot readiness it in business, There's and that

So it's But developing are point of are about financial get a outcomes from not help to faster. that we IP yet. we meaningful excited the clients view

formalizing do it about our -- do and excited be, is managed takes then development one, sort offers we once important and around to you GenAI, time. And want formula case ongoing the specific, assessments going are do because do use is quite we or We quite think, which how you to I of how more.

development cases to offer use these our the that summarization also whatever. demo that. process tools and lab formalizing allows or hopefully building in virtual And or with chatbots are around then adoption accelerate a us we So we're of the

but lots activity, and outcomes discussion, governance preparation lots bit work, terms and policy POCs, data a not of financial certainly lots of of some mostly work, of So meaningful in yet.

to client government. you divergence of could perhaps segments of enterprise, SMB the performance across and And talk

Yes.

commercial strongest segment So -- is our our our overall segment. so

We in as growth encouraging. growth the is QX, growth and corporate. in low which So end then in of see expands that we and been first, segment that include there to think that sort segments other about saw of mid-market business really all in that segment bit that government, some they're We and still oven the local largely see then improvement challenged, right but is we -- and Yes, and state right the that a in direction. direction. moving sector our public Generally, enterprise later. the have trends see is is

for all them the year. grow expect to We

end Joyce session. closing I'd This is And like the hand over Mullen remarks. for to of Q&A to

sort choppy leading today. very us solutions this we're path integrator. environment in, joining for the much journey our demand you Thank of forward the ahead that opportunities ] about all very excited our becoming look of sharing despite [ We're to again I continued to

now close Kiki, the can So Thank you. call. you

you. concludes conference This Thank call. today's

lines. may disconnect your You now