Hello, everyone. Thank you for joining us, and welcome to the Insight Enterprises Q4 2025 Earnings Conference Call. [Operator Instructions]. I will now hand the call over to Ryan Miyasato, Director of Investor Relations. Ryan, please go ahead.

Welcome, everyone, and thank you for joining the Insight Enterprises earnings conference call. Today, we will be discussing the company's operating results for the quarter and full year ended December 31, 2025. I'm Ryan Miyasato, Investor Relations Director of Insight, and joining me is Joyce Mullen, President and Chief Executive Officer; and James Morgado, Chief Financial Officer. If you do not have a copy of the earnings release or the accompanying slide presentation that was posted this morning and filed with the Securities and Exchange Commission on Form 8-K, you will find it on our website at insight.com under the Investor Relations section. Today's call, including the question-and-answer period, is being webcast live and can also be accessed via the Investor Relations page of our website at insight.com. An archived copy of the conference call will be available approximately 2 hours after completion of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, February 5, 2026. This call is the property of Insight Enterprises. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Insight Enterprises is strictly prohibited. In today's conference call, we will be referring to non-GAAP financial measures as we discuss the fourth quarter and full year 2025 financial results. When discussing non-GAAP measures, we will refer to them as adjusted. You will find a reconciliation of these adjusted measures to our actual GAAP results included in both the press release and the accompanying slide presentation issued earlier today. Please note that all growth comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. Also, unless highlighted as constant currency, all amounts and growth rates discussed are in U.S. dollar terms. As a reminder, all forward-looking statements that are made during this conference call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in today's press release and in greater detail in our most recently filed periodic reports and subsequent filings with the SEC. All forward-looking statements are made as of the date of this call, and except as required by law, we undertake no obligation to update any forward-looking statements made on this call, whether as a result of new information, future events or otherwise. With that, I will now turn the call over to Joyce. Joyce?

Thank you very much, Ryan. Good morning, everyone, and thank you for joining us today. We are pleased with our fourth quarter results and the momentum in our business after a challenging year. Strong execution in our Cloud business and strong growth in our Core services business, driven by our acquisitions enabled us to deliver record gross profit, record gross margin and record adjusted earnings from operations margin. We delivered strong growth in adjusted earnings from operations across every geography and achieved double-digit growth in adjusted diluted earnings per share. Specifically in the quarter, overall revenue was down 1% due to the netting impact of on-prem software migrating to cloud. We are pleased that our influence of partners and clients continues to expand, which you can see on our balance sheet. Total gross profit grew 9%. EMEA had strong growth, driven in part by UAE and Saudi Arabia demand. Cloud gross profit increased 11%, ahead of our expectations, led by double-digit growth in SaaS and Infrastructure as a Service. This performance was partially offset by the impact of the partner program changes we've previously discussed, which are now largely behind us as we begin 2026. Core services gross profit grew 16%, driven by acquisitions as well as organic growth. These factors, along with incremental netting, contributed to expanded gross margin again this quarter to 23.4%. And by prudently managing our adjusted expenses, we delivered adjusted earnings from operations growth of 13% and adjusted earnings per share growth of 11%. We are encouraged by the progress in our services business. We've streamlined our services offerings, implemented disciplined processes and augmented our leadership team. Best practices from acquisitions have been adopted across the business, resulting in improved pipeline. We are also pleased with the cross-selling momentum. Core Services results were strong and…

Thank you, Joyce, and good morning, everyone. Our Q4 results met our expectations for the quarter. Net revenue was $2 billion, a decrease of 1%. The decrease was driven by a 4% decline in product, primarily due to on-prem software, which declined 18% and was a result of netting as clients shift to cloud-delivered software. Hardware revenue increased 2%, the fourth consecutive quarter of growth with growth in both devices and infrastructure. Core services revenue was up 7%, primarily driven by the acquisitions completed in the quarter. Gross profit increased 9%. EMEA gross profit increased 30%, driven by ongoing transactions in UAE and Saudi Arabia, where we act as the agent. Growth in core services across EMEA also contributed to this increase. Cloud gross profit was $138 million, an increase of 11% with growth in both SaaS and Infrastructure as a Service, partially offset by the partner program changes we previously discussed. Insight Core Services gross profit was $90 million, an increase of 16% due to contribution from acquisitions as well as growth in our organic business. Hardware gross profit was up 1%. Hardware gross margin improved sequentially and was down year-over-year due to mix. As a result, total gross margin was 23.4%, an increase of 220 basis points. Adjusted SG&A increased 7%, driven by acquisitions and variable costs primarily in EMEA. This resulted in adjusted EBITDA of $156 million, up 11%, while margin expanded 80 basis points to 7.6%. And adjusted diluted earnings per share were $2.96, up 11%. Overall, 2025 was a challenging year that fell short of our gross profit growth expectations entering the year. Spending from our corporate and large enterprise clients remain subdued, weighing on growth in both core services and hardware. However, there were bright spots that are consistent with many of our long-term…

Thanks, James. 2025 was a year of resilience and transformation. We navigated macro headwinds, evolving client priorities and significant partner program changes. Through it all, we strengthened our capabilities and sharpened our focus on the areas that matter most to our clients, cloud, data, AI, cyber and edge. As we enter 2026, we are confident in our ability to execute and capture emerging opportunities. Our strong portfolio of offerings and expertise, disciplined approach and commitment to innovation position us well to capture future growth opportunities. Finally, regarding the search for my successor, the Board's orderly transition process is well underway. Our public external search is progressing as planned, and I remain committed to ensuring a smooth handoff as we identify the right leader to guide Insight through its next phase of AI-driven transformation. We expect to name a successor in the next few months. I want to thank our teammates for their unwavering commitment to our clients, partners and each other, our clients for trusting Insight to help them with their transformational journeys and our partners for their continued collaboration and support in delivering innovative solutions to our clients. This concludes my comments, and we will now open the line for your questions.

[Operator Instructions]. Our first question comes from Adam Tindle from Raymond James.

James, I wanted to start with 2026 guidance. I just was curious, I saw the low single-digit growth expectation. It seems like you may be a little bit more conservative this year than in prior years. So maybe just talk about your process to annual guidance this year, how it might be similar or different than prior years. And Joyce, if you could add maybe a little bit of color outside of this guidance, just kind of boots on the ground, your conversations with customers as they think about or thought about their budgets in 2026. I'm sure you've been having those conversations with your sales force as well into year-end. What does IT budgets for your customer base look like in 2026? And any early indications on how the year is starting?

I'll start. Thanks for the question, Adam. So here's the approach that we took this year for guidance. First, when we set guidance, we always look at many factors, what we hear from our customers, what we hear from our partners. We obviously take into consideration any disruptive events like what we're experiencing now with the memory costs, the partner program changes from last year, et cetera. This year, what I would say that the difference in the guidance is, I place greater emphasis on 2 particular areas. The first is exactly that last point that we said with the potential disruptions. The environment is still complex and fluid. There's a continuation of many of the factors we saw last year, which creates a degree of a bit of uncertainty that we have to account for in our outlook. The second point, which is different than previous years is I more heavily weighted our past performance in terms of the guidance that we set at the beginning of the year. Look, the last couple of years have had twists and turns, and I think FY '26 has them as well. And so I think we're trying to balance the internal ambitions that we have as a company with a bit of the market realities that we see. And so our approach to guidance is similar in many ways, but what I would say is I place greater emphasis in those 2 particular areas.

And then in terms of IT budgets, Adam, and kind of how we're thinking about the various market segments, I think in general, it's just a bit more of the same. Uncertainty persists, especially with large enterprise and large corporations. So we've been -- I think one thing that's different is we aren't assuming any kind of massive improvement in spend in the large enterprise, that's different. But they continue -- they're really worried very -- I mean, they're very excited about and worried about making sure they preserve some of their IT budgets to support the transition to AI. That means a lot of different things to a lot of different people. That includes things like infrastructure, which is aging and likely to be a more important factor. It includes security, of course, networking to get the data moving around so you can actually leverage AI. They're continuing to spend significant money on existing infrastructure requirements, for example, VMware and Broadcom. So that's continuing. But I think they are thinking carefully about how to preserve some of their IT budgets to make sure that they can invest in making sure their company is ready for AI. That also could mean some data projects and making sure that they have the right kind of connections. So I feel like that is really very much more of the same on the large enterprise space. Commercial has been really robust, and we expect that to moderate just a tad over the next year. They've done -- we've had really good success in the commercial space, 7 quarters of growth in a row. But we do think that those growth rates are likely to moderate just a bit. And then the public sector is very sort of spiky up and down. It has…

Very helpful. Maybe just as a follow-up, James, I hope we don't have to talk about partner program changes anymore going forward. I'm sure you feel similarly about that. But now that we're done with 2025, I think you were helpful in being explicit about quantifying those. If you could just maybe like summarize the partner program change impact in 2025. And I think you were thinking there might be, maybe a little bit left in 2026, kind of how you're thinking about that. And I'm asking just in light of the EPS guidance, you talked about it being more heavy weight to the first half, but I thought there was a little bit more partner program changes still coming through. So if you could just lay that out and then put a little bit finer point on the -- how heavy in the first half and the rationale for that for EPS, that would be helpful.

Yes. Thanks, Adam. Yes, we certainly would love to not have to talk about partner program changes.

Ever again.

Yes. What I would say is the $70 million gross profit impact that we called out at the beginning of the year, it landed very, very close to that number in terms of the impact. The reason that we overperformed in cloud last year from our beginning of the year expectations was because of a more effective pivot. But the gross impact was still $70 million. So that was an area that we called correctly. In terms of the partner program changes in the pivot, what I would say is that we are done with the pivot internally, in terms of the engine that we have internally focusing on the mid-market space, I think the team has completed that pivot. But as we mentioned last year, there would be a tail of a financial impact into this year. We see that tail a little more in the second half, candidly, and that is because of the dynamics associated with Google and the Google solution line. And really from the acquisition, it dates back to the acquisition of SADA, which they had a very heavy presence in enterprise. And so to build that installed base in the corporate and mid-market space just takes longer than it would in, for example, compared to the Microsoft space, where we had a nice presence already a good growing presence in the mid-market space. And so it's a bit of a tail into building that installed base still on our Google solution line. And the reason that the impact is a little more heavily weighted in the second half is because of the seasonality associated with the SADA business. It is more acute in -- it's greater in the second half and in fact, in Q4. So when I think about cloud to the guidance that I gave, what we're likely to see is a first half that performs a bit better than the cloud guidance that I gave and a little more challenged into the second half. And by the time we exit the second half, I think the Google space, the Google solution line then has a good installed base and these dynamics completely -- we're expecting these dynamics that would go away completely in 2027. But still a bit of a tail impact into 2026, and you'll see it again, a little more in the second half than the first.

Your next question comes from Luke Morison of Canaccord Genuity.

So maybe just to start, you highlighted an AI optimized data center engagement that I thought was pretty interesting in your remarks. I'm curious, as we think about that engagement, how should we be thinking about the repeatability of that opportunity maybe as AI data center investment accelerates across the U.S. and Europe? And how do you see AI data center build-outs becoming a more meaningful recurring growth vector for your business over the next few years? And how does that play into your overall growth algo?

Thanks, Luke. Yes. I mean -- so that is a great example. I think there's a couple of things to take away. One is that it is a more complex data center solution than we've -- than historical data center solutions have been. There's just a lot more choices. There's a lot more complexity. There's a lot more considerations that probably gets exacerbated as you think about memory optimization coming over the next couple of years as well as power optimization, et cetera, et cetera. So we think we're at the very -- and I would say we're not alone in this. I would say a very -- all of sort of basically the industry is believed that we are primed for broader enterprise adoption as enterprises consider their opportunities and consider their cost structures and think about multi-cloud in a broader way because there's definitely cost constraints associated with running everything in a public cloud. So we have definitely seen more interest in on-prem enterprises. I would say that our partners are making that easier with sort of prepackaged, not exactly simplified yet, but prepackaged AI factories. We were the first partner, as I noted, to launch the Cisco Secure AI factory with NVIDIA into our labs. So there -- we believe we are ready to see enterprise adoption of AI infrastructure, specifically in data centers and specifically in a multi-cloud environment. So we've also been working really, really hard to make sure that there's portability between the solutions and the workloads that we are building out, for example, to start with in public cloud. And they can run in public cloud, they can run in a different public cloud and then they can also run on-prem. So all of those things are critical, I think, to giving our customers the right kind of options and the right kind of cost profile solutions that they're looking for. So we're very, very excited about this. We are absolutely at the very beginning stages, as I noted. This is a function of a couple of things. One is GPU availability. I would say also, there's increased knowledge and understanding of when we can use CPUs and GPUs and what the right combinations are, again, to manage the cost structure and also AI skills and understanding kind of what those workloads and use cases look like. So this should be a significant tailwind for the industry as we move beyond just funding the public clouds and the neo clouds in terms of building out data centers.

That's great color. And maybe just a quick follow-up here. Maybe just putting a finer point on sort of the memory cost supply chain disruption that's going on right now. How should we be thinking about the potential for that to impact your customers and your business if trends there continue the way they look -- they're going right now?

Yes. Well, it's been moving pretty fast, and it's changed a lot, I would say, in the last 90 days, and it probably has changed again in the last 30 days. So the memory price expectations will result in something somewhere between 10% and probably 20%, 25% increases in PCs this year. We've seen those price increases documented from most of the OEMs. A few have decided not to do that. But anyway, but generally, I would say that's the right kind of range. And historically, and I hesitate to say this because every time I've said historically before, it doesn't actually continue now. But historically, as prices go above kind of 15%, elasticity kicks in and the volume is impacted. So generally, I would say, as an industry, we're expecting prices to increase 15% or so on average and volume to units to decline kind of just barely low single digits. And what happens to our business from a device point of view is that we pass along those price increases. But of course, we're always managing the elasticity as well. So that's kind of how -- that's what we saw during COVID. I think there's also an incredible -- there's an opportunity for us to help our customers navigate the supply chain impact, which is what we did pretty well during COVID and help them understand alternatives. So this is, I think, a place where partners can add a whole lot of value and Insight will add a whole lot of value to our customers as they navigate that. On the infrastructure side of this, we're basically rounding a refresh cycle on infrastructure. And those prices will also go up significantly given the memory constraints and the memory price hikes. We think there's a little bit less elasticity there. And -- because, again, the compares for on-prem infrastructure are really the public cloud compares in terms of cost for customers, and we still think that's going to be relatively favorable. But it will cause a bit more, I would say, caution as customers decide which investments to make in terms of infrastructure and how it will play out. As a general rule, we pass along those cost increases. As a general rule, those are helpful to us. But again, the wildcard there is the elasticity.

Your next question comes from Joseph Cardoso from JPMorgan.

Maybe just for the first one regarding the full year guidance. James, I appreciate the color on the weighting towards the first half of the year. But any additional color you can give relative to the magnitude that you're thinking of in terms of the full year guide first half versus second half? Just trying to understand the balance for the year given the commentary. And then if I take that question and then I add to it, how are you thinking about the concentration of the drivers of that dynamic relative to the underlying portfolio? Is it primarily hardware and PCs? Or is there -- or is it a broader dynamic that we should be considering in terms of the first half, second half weighting?

Thanks, Joe. Great question. I'll jump in and then Joyce, if there's anything you'd like to add, please jump in. So Joe, in terms of how to think about the year, first half, second half. So in my prepared remarks, I talked about the first half growth rate being a little bit stronger from an EPS standpoint in the first half and second half. What I would say is the best way to think about that is the first half growth rates are likely to be closer to the upper end of our range and the second half a little bit below the midpoint to the lower end of that, at least based on what we currently see today. And the dynamics in there -- and by the way, I would remind within the first half, I still see Q2 as our seasonally stronger quarter. So if you think of the split between the first half, I would expect to see a slightly stronger Q2 than Q1. In terms of the reason behind the dynamics, one of them is the one that I called out earlier regarding the cloud situation, which I think cloud will grow more strongly in the first half than the second half. The other dynamic is hardware. I think that follows a similar profile with more strength in the first half than the second half. The Core services business is the one that is more of an equalizer through the year. I think that, that performs more steadily through the year. So I think when you add up all of those factors, you get to a slightly stronger first half than second half.

You mentioned cloud stronger than the first half.

Yes.

Great. Appreciate the color there. And then maybe just a quick clarification question on the cloud gross profit growth for the quarter. First part of it is just more wondering if we were to ex out the partner headwinds or the partner headwinds there, what -- where would have growth tracked for the quarter? I believe over the last couple of quarters, you've been mid-teens, high teens in kind of that ballpark. So just curious if momentum exited the year in that range. And then as we think about the guidance for double digits, is that -- does that imply an acceleration from those levels? Or are you kind of embedding something similar for the year?

So what I would say is our performance in Q4 was similar to what it was all year, kind of in that mid-teens range. So the underlying performance was strong. When I think about this in terms of first half versus second half for cloud, I would actually expect the first half cloud number growth to be slightly above my guidance for the year and the second half to be slightly below that guidance. And then the full year ends up close to the double digits as the low double digits as we mentioned. And I think as we exit the year from a financial stand -- like I said, I think from an operating the business standpoint, the pivot is done. And then the financial -- any of the financial tail that was there impact is done as we exit FY '27 -- FY '26, sorry.

Our next question comes from Vincent Colicchio from Barrington Research.

Joyce, how did your share changes play out in your key focus areas in North America?

You mean market share or...

Yes.

So well, we believe -- so we're generally -- we basically put together all of the IDC data and try to figure out this with OEMs. We feel like we are on par with the market in terms of devices. And we feel like we are basically on par with infrastructure and probably a little bit ahead in cloud, I would say.

Okay. And do you think you currently have the resources on the AI side to meet current demand? Or is it hard to access the supply you need?

So we are doing our level best to build the skills and buy the skills as demand increases. And I think that's going to be kind of a constant theme for a very long time. We are -- we've really doubled down on the development effort, and we're seeing some really good success with our internal development and training programs. That's really important to us, but we've also begun specific recruiting programs to find the AI talent that we need. So far, we've been in pretty good shape.

There are no further questions at this time. I will now hand the call over to Joyce Mullen, President and Chief Executive Officer, for closing remarks. Joyce, please go ahead.

Thank you very much to all of you for your questions and interest, and I think we're ready to close the call, operator. Thank you.

That concludes today's call. Thank you very much for attending. You may now disconnect.