nsit-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 0-25092

INSIGHT ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)


Delaware			86-0766246
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

2701 E. Insight Way, Chandler, Arizona 85286

(Address of principal executive offices) (Zip Code)

(480) 333-3000

(Registrant’s telephone number, including area code)

__________________________________________________________________

Not Applicable

_________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01	NSIT	The NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes x			No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes x			No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes o			No x

The number of shares outstanding of the issuer’s common stock as of April 28, 2023 was 33,262,388.

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INSIGHT ENTERPRISES, INC.

QUARTERLY REPORT ON FORM 10-Q

Three Months Ended March 31, 2023

TABLE OF CONTENTS


		Page
PART I -	Financial Information

Item 1 –	Financial Statements:

	Consolidated Balance Sheets (unaudited) – March 3 1 , 202 3 and December 31, 20 2 2	1

	Consolidated Statements of Operations (unaudited) – Three Months Ended March 3 1 , 202 3 and 20 2 2	2

	Consolidated Statements of Comprehensive Income (unaudited) – Three Months Ended March 3 1 , 202 3 and 20 2 2	3

	Consolidated Statements of Stockholders’ Equity (unaudited) – Three Months Ended March 3 1 , 202 3 and 20 2 2	4

	Consolidated Statements of Cash Flows (unaudited) – T hree Months Ended March 31 , 202 3 and 20 2 2	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2 –	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3 –	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4 –	Controls and Procedures	32

PART II -	Other Information	33

Item 1 –	Legal Proceedings	33

Item 1A –	Risk Factors	33

Item 2 –	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3 –	Defaults Upon Senior Securities	33

Item 4 –	Mine Safety Disclosures	34

Item 5 –	Other Information	34

Item 6 –	Exhibits	35

Signatures		36

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INSIGHT ENTERPRISES, INC.

FORWARD-LOOKING INFORMATION

References to "the Company," “Insight,” “we,” “us,” “our” and other similar words refer to Insight Enterprises, Inc. and its consolidated subsidiaries, unless the context suggests otherwise. Certain statements in this Quarterly Report on Form 10-Q, including statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2 of this report, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include: projections of, and matters that affect, net sales, gross profit, gross margin, operating expenses, earnings from operations, non-operating income and expenses, net earnings or cash flows, cash needs and the payment of accrued expenses and liabilities; our future responses to and the potential impact of coronavirus strain COVID-19 (“COVID-19”) on our Company; our expectations regarding current supply constraints, including that supply constraints and extended lead times for networking and infrastructure products may impact results into the latter part of 2023 and possibly into 2024; the expected effects of seasonality on our business; expectations of further consolidation and trends in the Information Technology (“IT”) industry; our business strategy and our strategic initiatives, including our efforts to grow our core business in the current environment, develop and grow our global cloud business and build scalable solutions; expectations regarding the impact of partner incentives; our expectations about future benefits of our acquisitions and our plans related thereto, including potential expansion into wider regions; the increasing demand for big data solutions; the availability of competitive sources of products for our purchase and resale; our intentions concerning the payment of dividends; our acquisition strategy; our expectations regarding the impact of inflation, including our expectation that higher interest rates and higher interest expense will continue for the remainder of 2023, and our ability to offset the effects of inflation and manage any increase in interest rates; projections of capital expenditures; our plans to continue to evolve our IT systems; our expectation that our gross margins will improve as our mix of services and solutions increase; our liquidity and the sufficiency of our capital resources, the availability of financing and our needs or plans relating thereto; our expectation that holders of our convertible senior notes (the “Notes”) will not convert their Notes in the near term; the effects of new accounting principles and expected dates of adoption; the effect of indemnification obligations; projections about the outcome of ongoing tax audits; our expectations regarding future tax rates; adequate provisions for and our positions and strategies with respect to ongoing and threatened litigation and expected outcomes; our ability to expand our client relationships; our expectations that pricing pressures in the IT industry will continue; our plans to use cash flow from operations for working capital, to pay down debt, repurchase shares of our common stock, to make capital expenditures, and fund acquisitions; our belief that our office facilities are adequate and that we will be able to extend our current leases or locate substitute facilities on satisfactory terms; our belief that we have adequate provisions for losses; our expectation that we will not incur interest payments under our inventory financing facilities; our expectations that future income will be sufficient to fully recover deferred tax assets; our exposure to off-balance sheet arrangements; statements of belief; and statements of assumptions underlying any of the foregoing. Forward-looking statements are identified by such words as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will,” “may” and variations of such words and similar expressions and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There can be no assurances that results described in forward-looking statements will be achieved, and actual results could differ materially from those suggested by the forward-looking statements. Some of the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following, which are discussed in “Risk Factors” in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2022 and in "Risk Factors" in Part II, Item 1A of this report:

•actions of our competitors, including manufacturers and publishers of products we sell;

•our reliance on our partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and in the requirements year over year;

•our ability to keep pace with rapidly evolving technological advances and the evolving competitive marketplace;

•general economic conditions, economic uncertainties and changes in geopolitical conditions, including the possibility of a recession or as a result of the ongoing war between Russia and Ukraine;

•changes in the IT industry and/or rapid changes in technology;

•our ability to provide high quality services to our clients;

•accounts receivable risks, including increased credit loss experience or extended payment terms with our clients;

•our reliance on independent shipping companies;

•the risks associated with our international operations;

•supply constraints for products;

•the duration and severity of the COVID-19 pandemic and its effects on our business, results of operations and financial condition, as well as the widespread outbreak of any other illnesses or communicable diseases;

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INSIGHT ENTERPRISES, INC.

•natural disasters or other adverse occurrences;

•disruptions in our IT systems and voice and data networks;

•cyberattacks or breaches of data privacy and security regulations;

•intellectual property infringement claims and challenges to our registered trademarks and trade names;

•legal proceedings, client audits and failure to comply with laws and regulations;

•failure to comply with the terms and conditions of our commercial and public sector contracts;

•exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations;

•our potential to draw down a substantial amount of indebtedness;

•the conditional conversion feature of the Notes, which has been triggered, may adversely affect the Company’s financial condition and operating results;

•the Company is subject to counterparty risk with respect to certain hedge and warrant transactions entered into in connection with the issuance of the notes (the "Call Spread Transactions");

•increased debt and interest expense and the possibility of decreased availability of funds under our financing facilities;

•risks associated with the discontinuation of LIBOR as a benchmark rate;

•possible significant fluctuations in our future operating results as well as seasonality and variability in client demands;

•our dependence on certain key personnel and our ability to attract, train and retain skilled teammates;

•risks associated with the integration and operation of acquired businesses, including achievement of expected synergies and benefits; and

•future sales of the Company’s common stock or equity-linked securities in the public market could lower the market price for our common stock.

Additionally, there may be other risks described from time to time in the reports that we file with the Securities and Exchange Commission (the “SEC”). Any forward-looking statements in this report are made as of the date of this filing and should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. We assume no obligation to update, and, except as may be required by law, do not intend to update, any forward-looking statements. We do not endorse any projections regarding future performance that may be made by third parties.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

INSIGHT ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)


	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	175,726	$	163,637
Accounts receivable, net of allowance for doubtful accounts of $14,336 and $15,161, respectively	3,087,105		3,272,371
Inventories	265,570		265,154
Other current assets	217,415		199,506
Total current assets	3,745,816		3,900,668
Property and equipment, net of accumulated depreciation and amortization of $215,418 and $214,981, respectively	200,969		204,260
Goodwill	493,724		493,033
Intangible assets, net of accumulated amortization of $146,893 and $142,297, respectively	196,879		204,998
Other assets	323,140		309,622
	$	4,960,528	$	5,112,581
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable—trade	$	1,711,878	$	1,785,076
Accounts payable—inventory financing facilities	410,126		301,314
Accrued expenses and other current liabilities	415,519		433,789
Current portion of long-term debt	346,672		346,228
Total current liabilities	2,884,195		2,866,407
Long-term debt	168,875		291,672
Deferred income taxes	28,728		32,844
Other liabilities	305,132		283,590
	3,386,930		3,474,513
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 3,000 shares authorized; no shares issued	—		—
Common stock, $0.01 par value, 100,000 shares authorized; 33,261 shares at March 31, 2023 and 34,009 shares at December 31, 2022 issued and outstanding	333		340
Additional paid-in capital	317,283		327,872
Retained earnings	1,310,178		1,368,658
Accumulated other comprehensive loss – foreign currency translation adjustments	(54,196)		(58,802)
Total stockholders’ equity	1,573,598		1,638,068
	$	4,960,528	$	5,112,581

See accompanying notes to consolidated financial statements.

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INSIGHT ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Net sales:
Products	$	1,967,645	$	2,310,287
Services	356,302		340,563
Total net sales	2,323,947		2,650,850
Costs of goods sold:
Products	1,772,729		2,107,209
Services	159,903		164,780
Total costs of goods sold	1,932,632		2,271,989
Gross profit:
Products	194,916		203,078
Services