(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.
Yesx
Noo
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).
Yesx
Noo
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).
Yeso
Nox
The number of shares outstanding of the issuer’s common stock as of May 1, 2026 was 30,203,917.
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 expectations regarding supply constraints, including the current global memory chip shortage; our expectations regarding certain trends for our business, including that gross margin expansion could continue into future periods as we focus on selling solutions and increasing our services net sales; our expectation that transformation costs are not expected to recur in the longer term; the expected effects of seasonality on our business, including as a result of recent acquisitions; 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 and changes to partner incentive programs; our expectations about future benefits of our acquisitions and our plans related thereto, including the expected timing of pending acquisitions and the 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 and our expectation that we will incur additional acquisition and integration related expenses in executing such strategy; our expectations regarding the impact of inflation, including our expectation that interest rates will hold steady and continue to remain higher than historical rates throughout most of 2026, and our ability to offset the effects of inflation and manage any increase in interest rates; the effects of tariffs and trade policies; 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; plans relating to share repurchases; our liquidity and the sufficiency of our capital resources, the availability of financing and our needs or plans relating thereto; 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 and the impact of domestic and global tax legislation, including our expectation that our effective tax rate will return to more typical levels in the foreseeable future; our belief that we have 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 intention to use cash generated in excess of working capital needs to pay down our senior secured revolving credit facility (the “ABL facility") and inventory financing facilities and to repurchase shares of our common stock and for strategic 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, 2025 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 and do change significantly in the amounts made available and in the requirements year over year;
•our ability to keep pace with rapidly evolving technological advances, including generative and agentic artificial intelligence ("AI") and the evolving competitive marketplace;
•general economic conditions, economic uncertainties and changes in geopolitical conditions, including the possibility of a recession or a decline in market activity related to tariffs and trade policies, international conflicts including the war in Iran, or otherwise;
•changes in the IT industry and/or rapid changes in technology;
•our ability to provide high quality services to our clients;
•our reliance on independent shipping companies;
•the risks associated with our international operations, including our expansion into the Middle East;
•supply constraints for products;
•natural disasters or other adverse occurrences, including public health issues such as pandemics or epidemics;
•disruptions in our IT systems and voice and data networks;
•cyberattacks, outages, or third-party breaches of data privacy as well as related breaches of government regulations;
•intellectual property infringement claims and challenges to our copyrights, patents, trademarks and trade names;
•potential liability and competitive risk based on the development, adoption, and use of generative AI ("Gen AI") and agentic AI;
•legal proceedings, client audits and failure to comply with laws and regulations;
•risks of termination, delays in payment, audits and investigations related to our 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;
•increased debt and interest expense and the possibility of decreased availability of funds under our financing facilities;
•possible significant fluctuations in our future operating results as well as seasonality and variability in client demands;
•potential contractual disputes or collection matters with our clients and third-party suppliers;
•our dependence on certain key personnel, our ability to attract, train and retain skilled teammates and our ability to manage the business during the transition of our new Chief Executive Officer;
•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.
Accounts receivable, net of allowance for doubtful accounts of $40,529 and $48,064, respectively
6,421,861
5,516,984
Inventories
251,564
160,648
Contract assets, net
59,564
65,745
Other current assets
279,121
260,990
Total current assets
7,452,736
6,362,387
Long-term contract assets, net
46,560
53,176
Property and equipment, net of accumulated depreciation and amortization of $189,085 and $184,730, respectively
187,210
188,449
Goodwill
1,168,255
1,169,734
Intangible assets, net of accumulated amortization of $341,004 and $320,553, respectively
404,845
426,237
Long-term accounts receivable, net
673,897
763,923
Other assets
121,774
123,466
$
10,055,277
$
9,087,372
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable—trade
$
4,820,923
$
4,263,796
Accounts payable—inventory financing facilities
259,611
225,035
Accrued expenses and other current liabilities
1,053,424
615,464
Current portion of long-term debt
13
8
Total current liabilities
6,133,971
5,104,303
Long-term debt
1,469,032
1,361,327
Deferred income taxes
69,543
70,715
Long-term accounts payable
613,736
715,494
Other liabilities
166,399
186,659
8,452,681
7,438,498
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; 30,191 shares at March 31, 2026 and 30,996 shares at December 31, 2025 issued and outstanding
302
310
Additional paid-in capital
164,747
164,560
Retained earnings
1,480,197
1,520,404
Accumulated other comprehensive loss – foreign currency translation adjustments
(42,650)
(36,400)
Total stockholders’ equity
1,602,596
1,648,874
$
10,055,277
$
9,087,372
See accompanying notes to consolidated financial statements.
1. Basis of Presentation and Recently Issued Accounting Standards
At Insight, we accelerate transformation by unlocking the power of people and technology. We turn complexity into clarity, helping our clients achieve meaningful business outcomes and drive real results at scale. We serve these clients in North America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”). As a Fortune 500-ranked Solutions Integrator, we deliver secure, end-to-end digital transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 38 years of broad IT expertise. We amplify our solutions and services with global scale, local expertise and our e-commerce experience, enabling our clients to realize their digital ambitions in multiple ways. Our company is organized in the following three operating segments, which are primarily defined by their related geographies:
Operating Segment
Geography
North America
United States and Canada
EMEA
Europe, Middle East and Africa
APAC
Asia-Pacific
Our offerings in North America and certain countries in EMEA and APAC include hardware, software and services, including cloud solutions. Our offerings in the remainder of our EMEA and APAC segments consist largely of software and certain software-related services and cloud solutions.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly our financial position as of March 31, 2026 and our results of operations for the three months ended March 31, 2026 and 2025 and cash flows for the three months ended March 31, 2026 and 2025. The consolidated balance sheet as of December 31, 2025 was derived from the audited consolidated balance sheet at such date. The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with the rules and regulations promulgated by the SEC and consequently do not include all of the disclosures normally required by United States generally accepted accounting principles (“GAAP”).
The results of operations for interim periods are not necessarily indicative of results for the full year, due in part to the seasonal nature of our business. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the related notes thereto, in our Annual Report on Form 10-K for the year ended December 31, 2025.
The consolidated financial statements include the accounts of Insight Enterprises, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Additionally, these estimates and assumptions affect the reported amounts of net sales and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, we evaluate our estimates, including those related to sales recognition, anticipated achievement levels under partner funding programs, assumptions related to stock-based compensation valuation, allowances for doubtful accounts and contract assets, valuation of inventories, valuation of acquired intangible assets, litigation-related obligations, valuation allowances for deferred tax assets and impairment of long-lived assets, including purchased intangibles and goodwill, if indicators of potential impairment exist.
Recently Issued Accounting Standards
In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)". The standard requires public business entities to disclose
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
detailed information about specific types of expenses that are relevant to certain line items on the income statement. The guidance is effective for annual periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements can be applied prospectively with the option for retrospective application, and early adoption is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025‑06, Intangibles—Goodwill and Other—Internal‑Use Software (Subtopic 350‑40): Targeted Improvements to the Accounting for Internal‑Use Software. The standard modernizes the accounting guidance for internal‑use software costs by eliminating references to software development project stages and introducing a principles‑based capitalization model. Under the updated guidance, entities begin capitalizing internal‑use software costs when management has authorized and committed funding for the project and it is probable that the software will be completed and placed into service for its intended use. The guidance is effective for fiscal years beginning after December 15, 2027 and interim reporting periods within those fiscal years. Early adoption is permitted, and the guidance may be applied prospectively, retrospectively, or using a modified retrospective approach. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.
2. Receivables, Contract Assets, Contract Liabilities and Performance Obligations
Contract Balances
The following table provides information about receivables, contract assets and contract liabilities as of March 31, 2026 and December 31, 2025 (in thousands):
March 31, 2026
December 31, 2025
Current receivables, which are included in “Accounts receivable, net”
$
6,421,861
$
5,516,984
Contract assets, net
59,564
65,745
Long-term accounts receivable, net
673,897
763,923
Long-term contract assets, net
46,560
53,176
Contract liabilities, which are included in “Accrued expenses and other current liabilities” and “Other liabilities”
155,332
152,910
Significant changes in the gross contract assets balances during the three months ended March 31, 2026 are as follows (in thousands):
Contract Assets
Balances at December 31, 2025
$
126,228
Reclassification of beginning contract assets to receivables, as a result of rights to consideration becoming unconditional
(18,615)
Contract assets recognized, net of reclassification to receivables
6,650
Balances at March 31, 2026
$
114,263
Contract assets consist of amounts the Company is entitled to for the resale of third-party consumption-based services, prior to payment becoming unconditional. In these transactions, the Company invoices clients for the gross amount of consideration it is responsible to collect, including amounts ultimately passed on to the third-party service providers. As of March 31, 2026, contract assets, net of allowances, were $106,124,000.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
Gross contract assets by our internal risk ratings as of March 31, 2026 are summarized as follows (in thousands):
Contract Assets
Low risk
$
29,479
Moderate risk
60,751
High risk
24,033
Total contract assets
$
114,263
Changes in the contract liabilities balances during the three months ended March 31, 2026 are as follows (in thousands):
Contract Liabilities
Balances at December 31, 2025
$
152,910
Reclassification of the beginning contract liabilities to revenue, as the result of performance obligations satisfied
(61,332)
Cash received in advance and not recognized as revenue
63,754
Balances at March 31, 2026
$
155,332
During the three months ended March 31, 2025, the Company recognized revenue of $32,528,000 related to its contract liabilities.
Transaction price allocated to the remaining performance obligations
The following table includes estimated net sales related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2026 that are expected to be recognized in the future (in thousands):
Services
Remainder of 2026
$
141,268
2027
91,451
2028
42,770
2029 and thereafter
22,850
Total remaining performance obligations
$
298,339
With the exception of remaining performance obligations associated with our OneCall Support Services contracts which are included in the table above regardless of original duration, the remaining performance obligations that have original expected durations of one year or less are not included in the table above. Certain contracts are cancellable for convenience and are effectively month-to-month. These contracts are excluded from the total remaining performance obligation disclosure under the practical expedient for contracts with an original expected duration of one year or less. Additionally, for our time and material services contracts, including disposal service arrangements, whereby we have the right to consideration from a client in an amount that corresponds directly with the value to the client of our performance completed to date, we recognized revenue in the amount to which we have a right to invoice as of March 31, 2026 and do not disclose information about related remaining performance obligations in the table above.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
3. Assets Held for Sale
Beginning in the second quarter of 2025, our property in Santa Monica, California had been classified as held for sale within other current assets, and the carrying value of the property was determined to be greater than its estimated fair value less costs to sell. Accordingly, we previously recorded a loss on impairment of a long lived real estate asset of $12,588,000 within selling and administrative expenses. During the three months ended March 31, 2026, we recorded an additional impairment charge of $1,368,700, resulting in total impairment charges of $13,956,700 on the property. Subsequent to March 31, 2026, the property was sold for $7,990,000. During the three months ended March 31, 2025, we did not have any assets held for sale.
4. Net Earnings Per Share
Basic earnings per share ("EPS") is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during each period. Diluted EPS is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding restricted stock units (“RSUs”) and certain shares underlying our previously outstanding 0.75% Convertible Senior Notes due 2025 (the "Convertible Notes") and the warrants (the "Warrants") relating to the Call Spread Transactions (as defined in Note 5), as applicable. A reconciliation of the denominators of the basic and diluted EPS calculations follows (in thousands, except per share data):
Three Months Ended March 31,
2026
2025
Numerator:
Net earnings
$
30,009
$
7,514
Denominator:
Weighted average shares used to compute basic EPS
30,788
31,839
Dilutive potential common shares due to dilutive RSUs, net of tax effect
68
176
Dilutive potential common shares due to the Convertible Notes
—
1,731
Dilutive potential common shares due to the Warrants
—
937
Weighted average shares used to compute diluted EPS
30,856
34,683
Net earnings per share:
Basic
$
0.97
$
0.24
Diluted
$
0.97
$
0.22
For the three months ended March 31, 2026 and 2025, approximately 286,000 and 57,000, respectively, of our RSUs were excluded from the diluted EPS calculations because their inclusion would have been anti-dilutive. These share-based awards could be dilutive in future periods.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
5. Debt, Inventory Financing Facilities, Finance Leases and Other Financing Obligations
Debt
Our long-term debt consists of the following (in thousands):
March 31, 2026
December 31, 2025
ABL revolving credit facility
$
975,670
$
868,209
Senior unsecured notes due 2032
493,356
493,085
Other financing obligations
19
41
Total
1,469,045
1,361,335
Less: current portion of long-term debt
(13)
(8)
Long-term debt
$
1,469,032
$
1,361,327
On December 19, 2025, we entered into the Sixth Amendment to the Credit Agreement (as amended, the "credit agreement") to modify our ABL facility. The amendment, among other things, increased the maximum borrowing amount under the ABL facility from $1,800,000,000 to $2,000,000,000, including a maximum borrowing capacity that could be used for borrowing by certain foreign subsidiaries of $350,000,000. The amendment also extended the maturity date of the ABL facility from July 22, 2027 to December 19, 2030 and increased our flexibility with respect to the sale of receivables. From time to time and at our option, we may request to increase the aggregate amount available for borrowing under the ABL facility by up to an aggregate of the U.S. dollar equivalent of $750,000,000, subject to customary conditions, including receipt of commitments from lenders. The ABL facility is guaranteed by certain of our material subsidiaries and is secured by a lien on certain of our assets and certain of each other borrower’s and each guarantor’s assets. The ABL facility provides for an uncommitted first-in, last-out revolving facility in an aggregate amount of up to $100,000,000. As of March 31, 2026, eligible accounts receivable and inventory permitted availability to $1,955,867,000 of the full $2,000,000,000 facility amount, of which $975,670,000 was outstanding.
The ABL facility contains customary affirmative and negative covenants and events of default. If a default occurs (subject to customary grace periods and materiality thresholds) under the credit agreement, certain actions may be taken, including, but not limited to, possible termination of commitments and required payment of all outstanding principal amounts plus accrued interest and fees payable under the credit agreement. As of March 31, 2026, no such events have occurred.
Senior Unsecured Notes due 2032
On May 20, 2024, we issued $500,000,000 aggregate principal amount of 6.625% Senior Notes due 2032 (the "Senior Notes") that mature on May 15, 2032. The Senior Notes are senior unsecured obligations of the Company and guaranteed by each of the Company's existing and future direct and indirect U.S. subsidiaries that is or becomes a guarantor or borrower under the ABL facility, subject to certain exceptions. The net proceeds from the offering were used to repay a portion of the outstanding borrowings under the ABL facility. The Senior Notes were issued pursuant to an indenture (the "Senior Notes Indenture") containing certain covenants that limit the Company's ability to, subject to certain exceptions, create, incur, or assume liens to secure debt, among other things. The Senior Notes bear interest at an annual rate of 6.625% payable semiannually, in arrears, on May 15th and November 15th of each year beginning on November 15, 2024.
The Company may redeem the Senior Notes prior to May 15, 2027, with an amount equal to the net cash proceeds received by the Company from certain equity offerings at a redemption price equal to 106.625% of the principal amount of such notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, in an aggregate principal amount for all such redemptions not to exceed 40% of the aggregate principal amount of the Senior Notes. The Senior Notes are subject to redemption at specified prices on or after May 15, 2027 plus accrued and unpaid interest, if any, on such notes redeemed, to, but excluding, the applicable
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
redemption date. In addition, at any time prior to May 15, 2027, the Company may, on one or more occasions, redeem the Senior Notes in whole or in part, at its option, upon notice, at a redemption price equal to 100% of the principal amount of such notes plus a “make-whole” premium as specified in the Senior Notes Indenture and accrued and unpaid interest, if any, to, but excluding, the redemption date.
If the Company experiences certain change of control events, together with a ratings decline, as described in the Senior Notes Indenture, the Company will be required to make an offer to repurchase some or all of the Senior Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.
The Senior Notes are subject to certain customary events of default and acceleration clauses. As of March 31, 2026, no such events have occurred.
The Senior Notes consist of the following balances reported within the consolidated balance sheets (in thousands):
March 31, 2026
December 31, 2025
Liability:
Principal
$
500,000
$
500,000
Less: debt issuance costs, net of accumulated accretion
(6,644)
(6,915)
Net carrying amount
$
493,356
$
493,085
Convertible Senior Notes due 2025
In August 2019, we issued $350,000,000 aggregate principal amount of the Convertible Notes that matured on February 15, 2025. The Convertible Notes bore interest at an annual rate of 0.75% payable semiannually, in arrears, on February 15th and August 15th of each year. The Convertible Notes were general unsecured obligations of Insight and were guaranteed on a senior unsecured basis by Insight Direct USA, Inc., a wholly owned subsidiary of Insight.
Upon maturity, the significant majority of Convertible Note holders elected to convert their notes. As a result, the aggregate principal amount of $333,091,000 was settled in cash with the additional amounts due as a result of conversion being settled in shares of our common stock. The conversion rate was 14.6376 shares of common stock per $1,000 principal amount of the Convertible Notes (equivalent to the initial conversion price of approximately $68.32 per share of common stock). We issued 2,832,627 shares upon conversion.
The Convertible Notes were reflected in the consolidated balance sheets prior to their maturity.
The effective interest rate on the principal of the Convertible Notes was 0.75%.Interest expense recognized for the three months ended March 31, 2025 consisted of contractual coupon interest and amortization of debt issuance costs and was included in the consolidated statement of operations.
Convertible Note Hedge and Warrant Transaction
In connection and concurrent with the issuance of the Convertible Notes, we entered into certain convertible note hedge and warrant transactions (the "Call Spread Transactions") with respect to the Company’s common stock.
The convertible note hedge consisted of an option to purchase up to 5,123,160 common stock shares at a price of $68.32 per share. On February 15, 2025, we executed the convertible note hedge upon the conversion of the Convertible Notes discussed above. Upon execution, we received 2,833,276 shares of common stock, which we used to meet our obligation under the Convertible Notes to issue shares of common stock upon conversion.
Additionally, we sold Warrants to purchase 5,123,160 shares of common stock at a price of $103.12 per share as part of the Call Spread Transactions. The Warrants expired on May 15, 2025 and could not be
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
exercised prior to maturity. The Company received aggregate proceeds of approximately $34,440,000 in 2019 for the sale of the Warrants.
On January 6, 2025, we entered into an agreement to settle 2,049,264 of the total 5,123,160 Warrants. These Warrants were settled entirely in cash for $138,892,000 on February 27, 2025. We recorded a liability of approximately $112,590,000 to accrued expenses and other current liabilities upon execution of the agreement. The change in the fair value of the settlement liability through the settlement date of $26,301,000 was recognized in net income.
On February 25, 2025, we entered into an agreement to settle an additional 1,536,948 of the remaining Warrants. These Warrants were settled entirely in cash for $83,072,000 on April 2, 2025. We recorded a liability of approximately $84,304,000 to accrued expenses and other current liabilities upon execution of the agreement. The change in the fair value of the settlement liability through the settlement date of $1,233,000 was recognized in net income.
During 2025, the remaining 1,536,948 Warrants were either settled or expired with no value. We issued an aggregate of 215,324 shares of our common stock to settle the remaining Warrants. As a result, there were no outstanding Warrants as of December 31, 2025 or March 31, 2026.
The Call Spread Transactions had no effect on the terms of the Convertible Notes and reduced potential dilution by effectively increasing the initial conversion price of the Convertible Notes to $103.12 per share of the Company’s common stock.
Inventory Financing Facilities
We have maximum availability under our unsecured inventory financing facility with MUFG Bank Ltd (“MUFG”) of $280,000,000. As of March 31, 2026, we have maximum availability under our unsecured inventory financing facility with PNC Bank, N.A. (“PNC”) of $375,000,000, including a $25,000,000 facility in Canada (the "Canada facility"). We also have maximum availability under our unsecured inventory financing facility with Wells Fargo in EMEA (the "EMEA facility") of $50,000,000. As of March 31, 2026, our combined inventory financing facilities had a total maximum capacity of $705,000,000, of which $259,611,000 was outstanding.
The inventory financing facilities will remain in effect until they are terminated by any of the parties. If balances are not paid within stated vendor terms (typically 60 days), they will accrue interest at prime plus 2.00% on the MUFG facility, Canadian Overnight Repo Rate Average plus 4.50% on the Canada facility and Term SOFR, EURIBOR, or SONIA, as applicable, plus 4.50% and 0.25% on the PNC (other than the Canada facility) and EMEA facilities, respectively. Amounts outstanding under these facilities are classified separately as accounts payable – inventory financing facilities in the accompanying consolidated balance sheets and within cash flows from financing activities in the accompanying consolidated statements of cash flows. We impute interest on the average daily balance outstanding during these stated vendor terms based on our incremental borrowing rate during the period.
6. Income Taxes
Our effective tax rates were 39.4% and 60.5% for the three months ended March 31, 2026 and 2025, respectively. For both periods, the effective tax rate was unfavorably impacted by state income taxes, higher taxes on earnings in foreign jurisdictions, and the non-deductibility of losses from the revaluation of earnout liabilities. The effective tax rate for the three months ended March 31, 2026 was further increased by tax shortfalls on share-based compensation. The effective tax rate for the three months ended March 31, 2025 was further increased by the non-deductibility of net losses associated with warrant settlement liabilities, partially offset by a non-recurring release of a valuation allowance on foreign tax credit carryforwards.
As of March 31, 2026 and December 31, 2025, we had approximately $14,327,000 and $13,272,000, respectively, of unrecognized tax benefits. Of these amounts, approximately $2,085,000 and $1,667,000, respectively, related to accrued interest. In the future, if recognized, the remaining liability associated with uncertain tax positions could affect our effective tax rate.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
7. Share Repurchase Program
On December 19, 2025, we announced that our Board of Directors authorized the repurchase of up to $299,000,000 of our common stock, including amounts that remained from prior authorizations. As of March 31, 2026, approximately $224,000,000 remained available for repurchases under our share repurchase program. Our share repurchases may be made on the open market, subject to Rule 10b-18 or in privately negotiated transactions, through block trades, through 10b5-1 plans or otherwise, at management’s discretion. The number of shares purchased and the timing of the purchases will be based on market conditions, working capital requirements, general business conditions and other factors. We intend to retire the repurchased shares.
During the three months ended March 31, 2026, we repurchased 899,561 shares of our common stock on the open market at a total cost of approximately $75,000,000 (an average price of $83.37 per share). During the three months ended March 31, 2025, we did not repurchase any shares of our common stock. All shares repurchased during the three months ended March 31, 2026 were retired.
8. Commitments and Contingencies
Contractual
In the ordinary course of business, we issue performance bonds to secure our performance under certain contracts or state tax requirements. As of March 31, 2026, we had approximately $38,381,000 of performance bonds outstanding. These bonds are issued on our behalf by a surety company on an unsecured basis; however, if the surety company is ever required to pay out under the bonds, we have contractually agreed to reimburse the surety company.
Management believes that payments, if any, related to these performance bonds are not probable at March 31, 2026. Accordingly, we have not accrued any liabilities related to such performance bonds in our consolidated financial statements.
The Company has a minimum required purchase commitment of approximately $100,467,000 pursuant to an agreement primarily related to cloud services. The total purchase commitment is required to be met or exceeded during a 5-year period, starting October 1, 2023 through September 30, 2028. At March 31, 2026, we had a remaining purchase commitment of $51,235,000. If total purchases do not meet the required commitment by September 30, 2028, the shortfall must be prepaid by the Company and can be used for further purchases through September 30, 2029.
The Company has a minimum required purchase commitment of approximately $40,000,000 pursuant to an agreement primarily related to software as a service. The total purchase commitment was required to be met during a 4-year period, starting November 30, 2022 through November 29, 2026. If total purchases did not meet the required commitment by November 29, 2026, the Company could extend the term of the commitment through November 29, 2027. During this extended period, any credit balance would remain available for payment against the usage of the subscribed products. As of March 31, 2026, the Company has satisfied the minimum purchase commitment under this agreement and has no remaining purchase commitment outstanding.
As of March 31, 2026, the Company has recorded a contingent liability of approximately $27,793,000, payable to a partner to settle various contractual commitments to resell a minimum amount of cloud services to clients.
Employment Contracts and Severance Plans
We have employment contracts with, and severance plans covering, certain officers and management teammates under which severance payments would become payable in the event of specified terminations without cause or terminations under certain circumstances after a change in control. In addition, vesting of outstanding nonvested RSUs would accelerate following a change in control. If severance payments under the current employment agreements or plan payments were to become payable, the severance payments would generally range from three to twenty-four months of salary.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
Indemnifications
From time to time, in the ordinary course of business, we enter into contractual arrangements under which we agree to indemnify either our clients or third-party service providers from certain losses incurred relating to services performed on our behalf or for losses arising from defined events, which may include litigation or claims relating to past performance. These arrangements include, but are not limited to, the indemnification of our clients for certain claims arising out of our performance under our sales contracts, the indemnification of our landlords for certain claims arising from our use of leased facilities and the indemnification of the lenders that provide our credit facilities for certain claims arising from their extension of credit to us. Such indemnification obligations may not be subject to maximum loss clauses.
Management believes that payments, if any, related to these indemnifications are not probable at March 31, 2026. Accordingly, we have not accrued any liabilities related to such indemnifications in our consolidated financial statements.
We have entered into separate indemnification agreements with certain of our executive officers and with each of our directors. These agreements require us, among other requirements, to indemnify such officers and directors against expenses (including attorneys’ fees), judgments and settlements incurred by such individual in connection with any action arising out of such individual’s status or service as our executive officer or director (subject to exceptions such as where the individual failed to act in good faith or in a manner the individual reasonably believed to be in, or not opposed to, the best interests of the Company) and to advance expenses incurred by such individual with respect to which such individual may be entitled to indemnification by us. There are no pending legal proceedings that involve the indemnification of any of the Company’s directors or officers.
Contingencies Related to Third-Party Review
From time to time, we are subject to potential claims and assessments from third parties. We are also subject to various governmental, client and partner audits. We continually assess whether or not such claims have merit and warrant accrual. Where appropriate, we accrue estimates of anticipated liabilities in our consolidated financial statements. Such estimates are subject to change and may affect our results of operations and our cash flows.
Legal Proceedings
From time to time, we are party to various legal proceedings incidental to the business, including preference payment claims asserted in client bankruptcy proceedings, indemnification claims, claims of alleged infringement of patents, trademarks, copyrights and other intellectual property rights, employment claims, claims related to services provided, interruptions, or outages, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations. We regularly evaluate the status of the legal proceedings in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are required. If accruals are not required, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made. Although litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that our consolidated financial position, results of operations or liquidity could be materially and adversely affected in any particular period by the work required pursuant to any legal proceedings or the resolution of any legal proceedings during such period. Legal expenses related to defense of any legal proceeding or the negotiations, settlements, rulings and advice of outside legal counsel in connection with any legal proceedings are expensed as incurred.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
9. Segment Information
We operate in three reportable geographic operating segments: North America; EMEA; and APAC. Our offerings in North America and certain countries in EMEA and APAC include IT hardware, software and services, including cloud solutions. Our offerings in the remainder of our EMEA and APAC segments consist largely of software and certain software-related services and cloud solutions.
In the following table, revenue is disaggregated by our reportable operating segments, which are primarily defined by their related geographies, as well as by major product offering, by major client group and by recognition on either a gross basis as a principal in the arrangement, or on a net basis as an agent, for the three months ended March 31, 2026 and 2025 (in thousands):
Three Months Ended March 31, 2026
North America
EMEA
APAC
Consolidated
Major Offerings
Hardware
$
1,063,670
$
143,478
$
13,069
$
1,220,217
Software
285,347
138,477
22,505
446,329
Services
333,788
90,896
36,756
461,440
$
1,682,805
$
372,851
$
72,330
$
2,127,986
Major Client Groups
Large Enterprise / Corporate
$
1,118,506
$
296,318
$
29,183
$
1,444,007
Commercial
402,550
8,781
24,293
435,624
Public Sector
161,749
67,752
18,854
248,355
$
1,682,805
$
372,851
$
72,330
$
2,127,986
Revenue Recognition based on acting as Principal or Agent in the Transaction
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
Three Months Ended March 31, 2025
North America
EMEA
APAC
Consolidated
Major Offerings
Hardware
$
1,006,294
$
128,864
$
6,358
$
1,141,516
Software
396,733
138,296
31,255
566,284
Services
297,616
75,668
22,472
395,756
$
1,700,643
$
342,828
$
60,085
$
2,103,556
Major Client Groups
Large Enterprise / Corporate
$
1,160,582
$
252,226
$
19,593
$
1,432,401
Commercial
393,213
12,137
18,720
424,070
Public Sector
146,848
78,465
21,772
247,085
$
1,700,643
$
342,828
$
60,085
$
2,103,556
Revenue Recognition based on acting as Principal or Agent in the Transaction
Gross revenue recognition (Principal)
$
1,573,050
$
307,985
$
52,614
$
1,933,649
Net revenue recognition (Agent)
127,593
34,843
7,471
169,907
$
1,700,643
$
342,828
$
60,085
$
2,103,556
The method for determining what information regarding operating segments, products and services, geographic areas of operation and major clients to report is based upon the “management approach,” or the way that management organizes the operating segments within a company, for which separate financial information is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. Our CODM is our Chief Executive Officer, which was Joyce Mullen as of March 31, 2026. Effective as of April 13, 2026, Jack Azagury serves as our Chief Executive Officer.
All significant intercompany transactions are eliminated upon consolidation, and there are no differences between the accounting policies used to measure profit and loss for our segments or on a consolidated basis. Net sales are defined as net sales to external clients. None of our clients exceeded ten percent of consolidated net sales for the three months ended March 31, 2026 or 2025.
A portion of our operating segments’ selling and administrative expenses arise from shared services and infrastructure that we have historically provided to them in order to realize economies of scale and to use resources efficiently. These expenses, collectively identified as corporate charges, include senior management expenses, internal audit, legal, tax, insurance services, treasury and other corporate infrastructure expenses. Charges are allocated to our operating segments, and the allocations have been determined on a basis that we considered to be a reasonable reflection of the utilization of services provided to or benefits received by the operating segments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
Three Months Ended March 31, 2025
North America
EMEA
APAC
Consolidated
Net sales:
Hardware
$
1,006,294
$
128,864
$
6,358
$
1,141,516
Software
396,733
138,296
31,255
566,284
Services
297,616
75,668
22,472
395,756
Total net sales
1,700,643
342,828
60,085
2,103,556
Costs of goods sold:
Hardware
876,883
112,040
5,596
994,519
Software
377,432
130,936
28,939
537,307
Services
126,876
27,925
10,452
165,253
Total costs of goods sold
1,381,191
270,901
44,987
1,697,079
Gross Profit:
Hardware
129,411
16,824
762
146,997
Software
19,301
7,360
2,316
28,977
Services
170,740
47,743
12,020
230,503
Gross profit
319,452
71,927
15,098
406,477
Operating expenses:
Significant selling and administrative expenses
225,592
59,328
10,358
295,278
Adjusted earnings from operations
$
93,860
$
12,599
$
4,740
$
111,199
Our CODM uses Adjusted earnings from operations ("Adjusted EFO") when assessing the performance of and deciding how to allocate resources to the operating segments. For example, Adjusted earnings from operations is a basis for executive variable compensation. Significant selling and administrative expenses primarily reflect personnel costs, including teammate benefits. Effective in the first quarter of 2026, we transitioned to an updated definition of Adjusted EFO that also excludes stock‑based compensation expense in order to improve comparability across companies. Prior period segment information has been recast to conform to the current period presentation. Adjusted earnings from operations excludes amortization of intangible assets, severance and restructuring expenses, acquisition and integration related expenses, stock-based compensation expense and certain other expenses. These other expenses include transformation costs, revaluation of earnout liabilities and other non-significant expenses. Our CODM uses comparisons of actual Adjusted earnings from operations against budgets, forecasts and prior periods as a basis for assessing current period segment performance as well as for determining necessary resources to assign, including for determining necessary investments or reductions in resources.
The following is a summary of our total assets by reportable operating segment (in thousands):
March 31, 2026
December 31, 2025
North America
$
6,980,474
$
7,018,025
EMEA
3,450,113
2,528,292
APAC
472,225
412,016
Corporate assets and intercompany eliminations, net
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
We recorded the following pre-tax amounts, by reportable operating segment, for depreciation and amortization in the accompanying consolidated financial statements (in thousands):
Three Months Ended March 31,
2026
2025
Depreciation and amortization of property and equipment:
North America
$
6,073
$
6,277
EMEA
1,036
857
APAC
310
97
7,419
7,231
Amortization of intangible assets:
North America
18,644
16,804
EMEA
1,813
1,744
APAC
602
—
21,059
18,548
Total
$
28,478
$
25,779
10. Acquisition
Sekuro
Effective October 31, 2025, we acquired 100 percent of the issued and outstanding shares of Sekuro Limited ("Sekuro") for a preliminary cash purchase price of approximately $79,498,000, net of cash, cash equivalents, and restricted cash acquired of $3,822,000, which is comprised of the initial purchase price of $85,347,000 paid in cash upon the acquisition, partially offset by the contractual adjustments to the purchase price of $2,027,000. The total purchase price also includes the estimated fair value of earn out payments of approximately $11,439,000, which provide an incentive opportunity for the sellers to earn up to AUD122,500,000, contingent upon Sekuro achieving certain EBITDA and net revenue performance targets through October 2027. The AUD122,500,000 includes up to AUD42,500,000 available to the sellers for over achievement against EBITDA and net revenue performance targets. Sekuro is a global cybersecurity and digital resilience provider that offers end-to-end security services for enterprises and governments. We believe the acquisition positions us to better meet the growing demand for comprehensive security solutions in an increasingly complex threat landscape.
The preliminary fair value of net assets acquired was approximately $16,183,000, including approximately $21,431,000 of identifiable intangible assets, consisting primarily of customer relationships of $20,379,000 that will be amortized using the straight-line method over the estimated economic life of ten years. As these intangible assets are not tax deductible, we recognized a related deferred tax liability of approximately $6,429,000. The preliminary purchase price was allocated using the information currently available. Further information obtained upon the finalization of the fair value assumptions for identifiable intangible assets acquired and final assessments of various other assets and liabilities could lead to an adjustment of the purchase price allocation. Goodwill acquired approximated $74,754,000, which was recorded in our APAC operating segment. None of the goodwill recognized is expected to be deductible for income tax purposes.
We consolidated the results of operations for Sekuro within our APAC operating segment since its acquisition on October 31, 2025. Our historical results would not have been materially affected by the acquisition of Sekuro and, accordingly, we have not presented pro forma information as if the acquisition had been completed at the beginning of each period presented in our consolidated statement of operations.
We recognized a net loss of $4,007,000 within selling and administrative expenses due to the net changes in the estimated fair value of the earnout payments for the three months ended March 31, 2026.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
Inspire11
Effective October 1, 2025, we acquired 100 percent of the issued and outstanding equity of Inspire11 LLC ("Inspire11") for a cash purchase price of approximately $209,822,000, net of cash and cash equivalents acquired of $1,413,000, which is comprised of the initial purchase price of $205,171,000 paid in cash upon the acquisition, and a seller retention fund of $6,300,000 and other costs of $160,000 payable post-closing, partially offset by the contractual adjustments to the purchase price of $351,000 and settlement of pre-existing relationship of $45,000. The total purchase price also includes the estimated fair value of earn out payments of approximately $37,790,000, which provide an incentive opportunity for the sellers to earn up to $66,000,000, contingent upon Inspire11 achieving certain EBITDA performance targets through September 2027. Inspire11 is an award-winning technology delivery firm with deep advisory, data, and AI expertise. We believe this acquisition strengthens our capabilities as a leading solutions integrator through the integration of proven AI delivery accelerators, deep data and analytics expertise, and a results-driven methodology to convert AI initiatives into tangible business value and transformative growth.
The preliminary fair value of net assets acquired was approximately $59,146,000, including approximately $50,800,000 of identifiable intangible assets, consisting primarily of customer relationships of $28,000,000 and non-compete agreements of $21,300,000. The preliminary purchase price was allocated using the information currently available. Further information obtained upon the finalization of the fair value assumptions for identifiable intangible assets acquired and various accrued expense balance assessments, including tax related liabilities, could lead to an adjustment of the purchase price allocation. Goodwill acquired approximated $188,466,000, which was recorded in our North America operating segment. Approximately 98% of goodwill is expected to be deductible for income tax purposes.
We consolidated the results of operations for Inspire11 within our North America operating segment since its acquisition on October 1, 2025. Our historical results would not have been materially affected by the acquisition of Inspire11 and, accordingly, we have not presented pro forma information as if the acquisition had been completed at the beginning of each period presented in our consolidated statement of operations.
We recognized a net loss of $6,620,000 within selling and administrative expenses due to the net changes in the estimated fair value of the earnout payments for the three months ended March 31, 2026.
Infocenter
Effective May 1, 2024, we acquired 100 percent of the issued and outstanding shares of Infocenter.io Corporation ("Infocenter") for a cash purchase price of $265,000,000, net of cash and cash equivalents acquired of $5,103,000, which is comprised of the initial purchase price of $269,477,000 paid in cash upon the acquisition and contractual adjustments to the purchase price of $626,000 paid in July 2024. The total purchase price of $289,200,000 also includes the estimated fair value of earn out payments of approximately $24,200,000, which provide an incentive opportunity for the sellers of up to $106,250,000, based on Infocenter achieving certain EBITDA performance through April 2026. Infocenter is a pure-play ServiceNow Elite Partner dedicated to automating business processes on the Now Platform®. We believe this acquisition enhances our Solutions Integrator offering framework to drive better business outcomes for our clients by enabling them to scale their multicloud environments with modern infrastructure, applications, and unified data and AI platforms.
The fair value of net assets acquired was approximately $98,084,000, including approximately $123,900,000 of identifiable intangible assets, consisting primarily of customer relationships that will be amortized using the straight-line method over the estimated economic life of ten years. As these intangible assets are not tax deductible, we recognized a related deferred tax liability of approximately $31,832,000. We finalized the purchase price allocation in relation to this acquisition in the second quarter of 2025, with no material changes to our preliminary estimates. Goodwill acquired approximated $191,116,000, which was recorded in our North America operating segment. None of the goodwill recognized is expected to be deductible for income tax purposes.
We consolidated the results of operations for Infocenter within our North America operating segment since its acquisition on May 1, 2024. Our historical results would not have been materially affected by
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(unaudited)
the acquisition of Infocenter and, accordingly, we have not presented pro forma information as if the acquisition had been completed at the beginning of each period presented in our consolidated statement of operations.
We recognized net losses of $14,666,000 and $15,200,000 within selling and administrative expenses due to the net changes in the estimated fair value of the earnout payments for the three months ended March 31, 2026 and 2025, respectively. On July 1, 2025, we paid approximately $39,602,000 for Infocenter's first earnout period.
11. Derivative Financial Instruments
We use derivatives to partially offset our exposure to fluctuations in certain foreign currencies. We do not enter into derivative contracts for speculative or trading purposes. Derivatives are recorded at fair value on the balance sheet based on observable market based inputs or unobservable inputs that are corroborated by market data (Level 2) where available. Gains or losses resulting from changes in fair value of our non hedge designated derivatives are recorded currently in income. Gains or losses resulting from changes in fair value of our hedge designated derivatives are recorded in other comprehensive income. Our foreign currency derivative instruments are not subject to any master netting arrangements with our counterparties.
We use foreign exchange forward contracts to mitigate risk associated with our net investment in foreign currency denominated operations. These forward contracts are designated as net investment hedges. In December 2025, we entered into two foreign exchange forward contracts to mitigate risk associated with our foreign operations denominated in Euros. These forward contracts, one for three years and another for five years, each have a notional value of $50,000,000. These foreign currency forward contracts are carried at fair value. Changes in the fair value of these instruments during the three months ended March 31, 2026 were immaterial.
We use foreign exchange forward contracts to mitigate risk associated with certain non-functional currency assets and liabilities from fluctuations in foreign currency exchange rates. Our non-functional currency assets and liabilities are primarily related to foreign currency denominated payables, receivables, and cash balances. The foreign currency forward contracts, carried at fair value, typically have a maturity of one month or less.
12. Subsequent Event
Sale of the Santa Monica Property
Our property in Santa Monica, California, which had been classified as held for sale as of March 31, 2026, was sold on April 3, 2026 for gross proceeds of $7,990,000. The Santa Monica property was acquired as part of an acquisition completed in 2019. Through March 31, 2026, the Company had recorded cumulative impairment charges of $13,956,700 related to the property. The sale occurred subsequent to the reporting period and, accordingly, was not reflected in the accompanying unaudited condensed consolidated financial statements.
New Chief Executive Officer
Effective April 13, 2026, Mr. Azagury was appointed as President and Chief Executive Officer of the Company and as a member of the Company’s board of directors, succeeding Ms. Mullen. The effective date of Mr. Azagury's appointment occurred subsequent to the reporting period and did not impact the accompanying unaudited condensed consolidated financial statements. Ms. Mullen will continue to serve in a consulting and advisory role pursuant to the terms of her executive employment agreement.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q. We refer to our customers as “clients,” our suppliers as “partners” and our employees as “teammates.”
Quarterly Overview
Today, every business is a technology business. At Insight, we accelerate transformation by unlocking the power of people and technology. We turn complexity into clarity, helping our clients achieve meaningful business outcomes and drive real results at scale. We serve these clients in North America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”). As a Fortune 500-ranked Solutions Integrator, we deliver secure, end-to-end digital transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 38 years of broad IT expertise. We amplify our solutions and services with global scale, local expertise and our e-commerce experience, enabling our clients to realize their digital ambitions in multiple ways. Our offerings in North America and certain countries in EMEA and APAC include hardware, software and services, including cloud solutions. Our offerings in the remainder of our EMEA and APAC segments consist largely of software and certain software-related services and cloud solutions.
On a consolidated basis, for the three months ended March 31, 2026:
•Net sales of $2.1 billion increased 1% compared to the three months ended March 31, 2025. The increase was primarily due to increases in services and hardware net sales as well as continued net revenue recognition in instances where Insight is the agent, partially offset by a decrease in software net sales. Excluding the effects of fluctuating foreign currency exchange rates, net sales decreased 1% compared to the first quarter of 2025.
•Gross profit of $462.2 million increased 14% compared to the three months ended March 31, 2025, primarily driven by increases in cloud solution offerings and Insight Core Services. Excluding the effects of fluctuating foreign currency exchange rates, gross profit increased 11% compared to the first quarter of 2025.
•Compared to the three months ended March 31, 2025, gross margin expanded approximately 240 basis points to 21.7% of net sales in the three months ended March 31, 2026. This expansion reflects higher margin contributed by services net sales, including both cloud solution offerings and Insight Core Services, compared to the same period in the prior year.
•Earnings from operations increased 19%, year over year, to $71.7 million in the first quarter of 2026 compared to $60.1 million in the first quarter of 2025. The net change reflects an increase in gross profit, partially offset by an increase in selling and administrative expenses.Excluding the effects of fluctuating foreign currency exchange rates, earnings from operations increased 17%year over year.
•Net earnings and diluted earnings per share were $30.0 million and $0.97, respectively, for the first quarter of 2026. This compares to net earnings of $7.5 million and diluted earnings per share of $0.22 for the first quarter of 2025. The increase in net earnings was primarily due to an increase in earnings from operations in the first quarter of 2026 and the revaluation of warrant settlement liabilities recorded in the first quarter of 2025. Diluted earnings per share increased more than 100% year over year, primarily as a result of an increase in net earnings and a decrease in dilutive shares outstanding in the first quarter of 2026. Excluding the effects of fluctuating foreign currency exchange rates, diluted earnings per share also increased more than 100% year over year.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
In discussing financial results for the three months ended March 31, 2026 and 2025, the Company refers to certain financial measures that are adjusted from the financial results prepared in accordance with United States generally accepted accounting principles (“GAAP”). When referring to non-GAAP measures, the Company refers to them as “Adjusted.” See the "Use of Non-GAAP Financial Measures" section below for additional information and a reconciliation of such non-GAAP measures to the most directly comparable GAAP financial measures.
Throughout the “Quarterly Overview” and “Results of Operations” sections of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we refer to changes in net sales, gross profit, selling and administrative expenses, diluted earnings per share and earnings from operations on a consolidated basis and in EMEA and APAC, as applicable, excluding the effects of fluctuating foreign currency exchange rates, which are financial measures that are adjusted from our financial results prepared in accordance with GAAP. In addition, we refer to changes in Adjusted earnings from operations in EMEA and APAC excluding the effects of fluctuating foreign currency exchange rates. These are also considered to be non-GAAP measures. We believe providing this information excluding the effects of fluctuating foreign currency exchange rates provides valuable supplemental information to investors regarding our underlying business and results of operations, consistent with how we, including our management, evaluate our performance. In computing the changes in amounts and percentages, we compare the current period amount as translated into U.S. dollars under the applicable accounting standards to the prior period amount in local currency translated into U.S. dollars utilizing the weighted average translation rate for the current period. The performance measures excluding the effects of fluctuating foreign currency exchange rates should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
Details about segment results of operations can be found in Note 9 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Our discussion and analysis of financial condition and results of operations is intended to assist in the understanding of our condensed consolidated financial statements, including the changes in certain key items in those consolidated financial statements from period to period and the primary factors that contributed to those changes, as well as how certain critical accounting estimates affect our condensed consolidated financial statements.
Supply Chain, Demand and Inflation Update
We believe inflation contributed to sustained high interest rates on all of our variable rate borrowing facilities in the first quarter of 2026 consistent with the prior year. Interest rates are expected to hold steady and continue to remain higher than historical rates throughout most of 2026. We are actively monitoring changes to the global macroeconomic environment, including those impacting our supply chain, demand for our products whether due to tariffs or otherwise and interest rates, and assessing the potential impacts these challenges may have on our current results, financial condition and liquidity. Currently, our supply chain is impacted by the global memory chip shortage, which has resulted in lower overall supply and increased pricing and may result in further constrained overall supply and upward pressure on pricing. Additionally, international conflicts, including the war in Iran, may impact supply chain and increase inflation. We are mindful of the potential effects these conditions could have on our clients, partners and prospects in 2026 and beyond.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Critical Accounting Estimates
Our consolidated financial statements have been prepared in accordance with GAAP. For a summary of significant accounting policies, see Note 1 to the Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results, however, may differ from estimates we have made. Members of our senior management have discussed the critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.
There have been no changes to the items disclosed as critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.
Results of Operations
The following table sets forth certain financial data as a percentage of net sales for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
2026
2025
Net sales
100.0
%
100.0
%
Costs of goods sold
78.3
80.7
Gross profit
21.7
19.3
Selling and administrative expenses
18.0
16.1
Severance and restructuring expenses, net and acquisition and integration related expenses
0.3
0.3
Earnings from operations
3.4
2.9
Non-operating expense, net
1.1
2.0
Earnings before income taxes
2.3
0.9
Income tax expense
0.9
0.5
Net earnings
1.4
%
0.4
%
We generally experience some seasonal trends in our net sales. Software and certain cloud net sales are typically seasonally higher in our second and fourth quarters. Business clients, particularly larger enterprise businesses in the United States, tend to spend more, particularly on product, in our fourth quarter. Sales to the federal government in the United States areoften stronger in our third quarter, while sales in the state and local government and education markets are also often stronger in our second quarter. Sales to public sector clients in the United Kingdom are often stronger in our first quarter. These trends create overall variability in our consolidated results.
Our gross profit across the business and related to product versus services sales are, and will continue to be, impacted by partner incentives, which can and do change significantly in the amounts made available and the related product or services sales being incentivized by the partner. Incentives from our largest partners are significant and changes in the incentive requirements, which occur regularly, could impact our results of operations to the extent we are unable to effectively shift our focus and efficiently respond to them. For a discussion of risks associated with our reliance on partners, see “Risk Factors – Risks related to Our Business, Operations and Industry – We rely on our partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can and do change significantly in the amounts made
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
available and the requirements year over year,” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.
Net Sales. Net sales of $2.1 billion for the three months ended March 31, 2026 increased 1%, year over year, compared to the three months ended March 31, 2025, primarily reflecting increases in our EMEA and APAC operating segments, partially offset by a decrease in our North America operating segment.
Our net sales by operating segment were as follows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
Three Months Ended March 31,
% Change
2026
2025
North America
$
1,682,805
$
1,700,643
(1)
%
EMEA
372,851
342,828
9
%
APAC
72,330
60,085
20
%
Consolidated
$
2,127,986
$
2,103,556
1
%
Our net sales by offering category for North America for the three months ended March 31, 2026 and 2025 were as follows (dollars in thousands):
Three Months Ended March 31,
% Change
Sales Mix
2026
2025
Hardware
$
1,063,670
$
1,006,294
6
%
Software
285,347
396,733
(28)
%
Services
333,788
297,616
12
%
$
1,682,805
$
1,700,643
(1)
%
Net sales in North America decreased 1%, or $17.8 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily driven by decreases in software net sales of 28%. The decrease was partially offset by increases in services and hardware net sales of 12% and 6%, year over year, respectively. The net changes for the three months ended March 31, 2026 were the result of the following:
•The increase in hardware net sales was primarily due to a mix of higher volume of sales and higher selling price to large enterprise clients. This reflects an increase in both devices and infrastructure net sales.
•The increase in services net sales was due to an increase in cloud solution offerings combined with an increase in Insight Delivered services from the Inspire11 acquisition.
•The decrease in software net sales was primarily due to changes in certain vendor relationships (shifting us from a principal to an agent role), as well as the continued migration of on-premise software to cloud solutions, in each case, reported net in services net sales.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Our net sales by offering category for EMEA for the three months ended March 31, 2026 and 2025 were as follows (dollars in thousands):
Three Months Ended March 31,
% Change
Sales Mix
2026
2025
Hardware
$
143,478
$
128,864
11
%
Software
138,477
138,296
—
%
Services
90,896
75,668
20
%
$
372,851
$
342,828
9
%
Net sales in EMEA increased 9%, or $30.0 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Excluding the effects of fluctuating foreign currency exchange rates, net sales in EMEA remained relatively flat, year to year. Net sales of services and hardware increased by 20% and 11%, respectively, year over year, with software net sales remaining flat, year over year. The net changes for the three months ended March 31, 2026 were the result of the following:
•The increase in hardware net sales was primarily due to higher volume of sales to large enterprise clients, partially offset by lower volume of sales to commercial and public sector clients.
•The increase in services net sales was primarily due to increases in Insight Delivered services and other agency net sales.
Our net sales by offering category for APAC for the three months ended March 31, 2026 and 2025 were as follows (dollars in thousands):
Three Months Ended March 31,
% Change
Sales Mix
2026
2025
Hardware
$
13,069
$
6,358
106
%
Software
22,505
31,255
(28)
%
Services
36,756
22,472
64
%
$
72,330
$
60,085
20
%
Net sales in APAC increased 20%, or $12.2 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Excluding the effects of fluctuating foreign currency exchange rates, net sales in APAC increased 11%, year over year. Net sales of hardware and services increased by 106% and 64%, respectively, year over year. These increases were partially offset by a decrease in software net sales of 28%, year to year. The net changes for the three months ended March 31, 2026 were the result of the following:
•The increase in hardware net sales was due to higher volume of sales to enterprise and commercial clients.
•The increase in services net sales was primarily due to the acquisition of Sekuro in November 2025.
•The decrease in software net sales was primarily driven by a continued migration of on-premise software to cloud solutions, reported net in services net sales.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
The percentage of net sales by category for North America, EMEA and APAC were as follows for the three months ended March 31, 2026 and 2025:
North America
EMEA
APAC
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Sales Mix
2026
2025
2026
2025
2026
2025
Hardware
63
%
59
%
39
%
38
%
18
%
11
%
Software
17
%
23
%
37
%
40
%
31
%
52
%
Services
20
%
18
%
24
%
22
%
51
%
37
%
100
%
100
%
100
%
100
%
100
%
100
%
Gross Profit. Gross profitincreased14%, or $55.7 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, with gross margin expanding approximately 240 basis points to 21.7% for the three months ended March 31, 2026 compared to 19.3% for the three months ended March 31, 2025.
Our gross profit and gross profit as a percentage of net sales by operating segment were as follows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
Three Months Ended March 31,
2026
% of Net Sales
2025
% of Net Sales
North America
$
353,326
21.0
%
$
319,452
18.8
%
EMEA
86,803
23.3
%
71,927
21.0
%
APAC
22,022
30.4
%
15,098
25.1
%
Consolidated
$
462,151
21.7
%
$
406,477
19.3
%
North America's gross profit for the three months ended March 31, 2026 increased 11%, or $33.9 million, compared to the three months ended March 31, 2025. As a percentage of net sales, gross margin expanded approximately 220 basis points to 21.0%, year over year. The year over year net expansion in gross margin was primarily attributable to the following:
•An expansion in services margin of 188 basis points combined with expansion in product margin of 23 basis points.
•The increase in services margin primarily reflects an increase in margin contribution from cloud solution offerings combined with an increase in margin contribution from Insight Core Services.
•The expansion in product margin primarily reflects improved performance in partner programs, partially offset by a mix of hardware sales with lower margins compared to the prior year period.
EMEA's gross profit for the three months ended March 31, 2026 increased 21%, or $14.9 million, year over year (increasing 11% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, gross margin expanded 230 basis points to 23.3%, year over year. The year over year net expansion in gross margin was attributable to the following:
•An increase in services margin of 250 basis points partially offset by a contraction in product margin of 20 basis points.
•The increase in services margin is primarily the result of increased margin contribution from cloud solution offerings.
•The contraction in product margin is primarily the result of sales at lower margins than in the prior year period for both hardware and software.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
APAC's gross profit for the three months ended March 31, 2026 increased 46%, or $6.9 million, year over year (increasing 35% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, gross margin expanded 530 basis points to 30.4%, year over year. The year over year net expansion in gross margin was attributable to a net expansion in services margin of 735 basis points due to the acquisition of Sekuro, partially offset by a contraction in product margin of 203 basis points.
Operating Expenses.
Selling and Administrative Expenses. Selling and administrative expenses for the three months ended March 31, 2026 increased 13%, or $44.8 million, compared to the three months ended March 31, 2025 (an increase of 11% when excluding the effects of fluctuating foreign currency exchange rates).
Selling and administrative expenses increased approximately 190 basis points as a percentage of net sales in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The overall net increase in selling and administrative expenses primarily reflects an increase in personnel costs of $24.0 million and other expenses of approximately $16.5 million. The increase in personnel costs was driven by variable compensation costs and expenses from acquisitions in Q4 2025. The increase in other expenses primarily reflects a net loss on revaluation of earnout liabilities of approximately $25.3 million for the first quarter of 2026 compared to a net loss of $15.2 million for the first quarter of 2025 primarily due to the acquisitions of Inspire 11 and Sekuro. We also incurred transformation costs in the current and prior year periods of $6.5 million and $1.3 million, respectively. We have been undergoing a transformation of our business in phases across the global organization to help us achieve our strategic objectives, including becoming a leading solutions integrator. These costs are unique in nature to the individual transformation phases and are generally not expected to recur in the longer term.
Severance and Restructuring Expenses, net. During the three months ended March 31, 2026, we recorded severance and restructuring expenses, net of adjustments, of approximately $6.5 million. Comparatively, during the three months ended March 31, 2025, we recorded severance and restructuring expenses, net of adjustments, of approximately $7.0 million. The severance charges in both periods primarily related to a realignment of certain roles and responsibilities and reductions in workforce.
Acquisition and Integration Related Expenses. During the three months ended March 31, 2025, we recorded acquisition and integration related expenses of approximately $0.2 million with no significant comparable activity during the three months ended March 31,2026.
Earnings from Operations. Earnings from operations increased 19%, or $11.6 million, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
Three Months Ended March 31,
2026
% of Net Sales
2025
% of Net Sales
North America
$
66,198
3.9
%
$
50,790
3.0
%
EMEA
6,605
1.8
%
5,011
1.5
%
APAC
(1,121)
(1.5)
%
4,302
7.2
%
Consolidated
$
71,682
3.4
%
$
60,103
2.9
%
North America's earnings from operations for the three months ended March 31, 2026 increased 30%, or $15.4 million, compared to the three months ended March 31, 2025. As a percentage of net sales, earnings from operations increased by approximately 90 basis points to 3.9%. The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses, including expenses relating to the acquisition of Inspire11, when compared to the three months ended March 31, 2025.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
EMEA's earnings from operations for the three months ended March 31, 2026 increased 32%, or $1.6 million (increasing 22%when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, earnings from operations increased by approximately 30 basis points to 1.8%. The increase in earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in transformation costs within selling and administrative expenses, when compared to the three months ended March 31, 2025.
APAC's earnings from operations for the three months ended March 31, 2026 decreased 126%, or $5.4 million (decreasing 125% when excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, earnings from operations decreased by approximately 870 basis points to (1.5)%. The decrease in earnings from operations was driven by expenses related to the acquisition of Sekuro,partially offset by an increase in gross profit when compared to the three months ended March 31, 2025.
Adjusted Earnings from Operations. Adjusted earnings from operations increased 27%, or $29.9 million, year over year, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Adjusted earnings from operations as a percentage of net sales by operating segment were as follows for the three months ended March 31, 2026 and 2025 (dollars in thousands):
Three Months Ended March 31,
2026
% of Net Sales
2025
% of Net Sales
North America
$
122,399
7.3
%
$
93,860
5.5
%
EMEA
14,762
4.0
%
12,599
3.7
%
APAC
3,987
5.5
%
4,740
7.9
%
Consolidated
$
141,148
6.6
%
$
111,199
5.3
%
North America’s Adjusted earnings from operations for the three months ended March 31, 2026 increased 30%, or $28.5 million, compared to the three months ended March 31, 2025. As a percentage of net sales, Adjusted earnings from operations increased by approximately 180 basis points to 7.3%. The increase in Adjusted earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses.
EMEA’s Adjusted earnings from operations for the three months ended March 31, 2026 increased 17%, or $2.2 million(increasing 9% excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, Adjusted earnings from operations increased by approximately 30 basis points to 4.0%. The increase in Adjusted earnings from operations was primarily driven by an increase in gross profit, partially offset by an increase in selling and administrative expenses.
APAC’s Adjusted earnings from operations for the three months ended March 31, 2026 decreased 16%, or $0.8 million (decreasing 21% excluding the effects of fluctuating foreign currency exchange rates), compared to the three months ended March 31, 2025. As a percentage of net sales, Adjusted earnings from operations decreased by approximately 240 basis points to 5.5%. The decrease in Adjusted earnings from operations was primarily driven by an increase in selling and administrative expenses, partially offset by an increase in gross profit.
Non-Operating Expense (Income).
Interest Expense, Net. Interest expense, net primarily relates to borrowings under our financing facilities and imputed interest under our inventory financing facilities, the Convertible Notes and the Senior Notes, as applicable, partially offset by interest income generated from interest earned on cash and cash equivalent bank balances. Interest expense, net for the three months ended March 31, 2026 increased 51%, or $8.0 million, compared to the three months ended March 31, 2025. This was primarily due to the higher loan
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
balances under our ABL facility and decreased interest income, partially offset by lower interest rates on ABL borrowings in the current year period.
Imputed interest under our inventory financing facilities was $2.7 million for the three months ended March 31, 2026, compared to $2.4 million for the three months ended March 31, 2025. For a description of our various financing facilities, see Note 5 to our Consolidated Financial Statements in Part I, Item 1 of this report.
Other Income (Expense), Net. Other income (expense), net primarily reflects a net loss on the revaluation of warrant settlement liabilities of $25.1 million recorded in the three months ended March 31, 2025 in connection with the cash settlement of a portion of the Warrants, with no comparable activity in the three months ended March 31, 2026 For additional information regarding the Warrants, see Note 5 to our Consolidated Financial Statements in Part I, Item 1 of this report.
Income Tax Expense. Our effective tax rate of 39.4% for the three months ended March 31, 2026 was lower than our effective tax rate of 60.5% for the three months ended March 31, 2025. The decrease primarily reflects the non-deductibility of net losses related to the fair value adjustment associated with warrant settlement liabilities during the three months ended March 31, 2025, which did not recur during the three months ended March 31, 2026, and a year to year decrease in non‑deductible net losses related to the revaluation of earnout liabilities. These items were partially offset by a non-recurring foreign tax credit valuation allowance release recorded in the three months ended March 31, 2025 and current period tax shortfalls relating to share-based compensation.
Use of Non-GAAP Financial Measures
Adjusted non-GAAP earnings from operations (which we also refer to as "Adjusted earnings from operations") excludes (i) severance and restructuring expenses, net, (ii) certain executive recruitment and hiring related expenses, (iii) amortization of intangible assets, (iv) transformation costs, (v) certain acquisition and integration related expenses, (vi) gains and losses from revaluation of acquisition related earnout liabilities, (vii) impairment losses on long lived real estate assets held for sale, and (viii) stock-based compensation expense, as applicable. Adjusted non-GAAP earnings from operations is used by the Company and its management to evaluate financial performance against budgeted amounts, to calculate incentive compensation, to assist in forecasting future performance and to compare the Company’s results to those of the Company’s competitors. We believe that this non-GAAP financial measure is useful to investors because it allows for greater transparency, facilitates comparisons to prior periods and to the Company’s competitors’ results, and assists in forecasting performance for future periods. The non-GAAP financial measure is not prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
22
Three Months Ended March 31, 2026
Adjusted Earnings from Operations (in thousands):
North America
EMEA
APAC
Consolidated
GAAP earnings from operations
$
66,198
$
6,605
$
(1,121)
$
71,682
Amortization of intangible assets
18,644
1,813
602
21,059
Change in fair value of earnout liabilities
21,286
—
4,007
25,293
Transformation costs
3,582
2,922
—
6,504
Impairment loss on a long lived real estate asset held for sale
1,369
—
—
1,369
Severance and restructuring expenses, net
4,641
1,750
94
6,485
Acquisition and integration related expenses
61
(16)
(44)
1
Stock-based compensation expense
6,060
1,688
449
8,197
Other*
558
—
—
558
Adjusted non-GAAP earnings from operations
$
122,399
$
14,762
$
3,987
$
141,148
GAAP EFO as a percentage of net sales
3.9
%
1.8
%
(1.5
%)
3.4%
Adjusted non-GAAP EFO as a percentage of net sales
7.3
%
4.0
%
5.5
%
6.6%
Three Months Ended March 31, 2025
Adjusted Earnings from Operations (in thousands):
North America
EMEA
APAC
Consolidated
GAAP earnings from operations
$
50,790
$
5,011
$
4,302
$
60,103
Amortization of intangible assets
16,804
1,744
—
18,548
Change in fair value of earnout liabilities
15,200
—
—
15,200
Transformation costs
860
410
—
1,270
Severance and restructuring expenses, net
3,111
3,853
62
7,026
Acquisition and integration related expenses
170
—
5
175
Stock-based compensation expense
6,895
1,581
371
8,847
Other*
30
—
—
30
Adjusted non-GAAP earnings from operations
$
93,860
$
12,599
$
4,740
$
111,199
GAAP EFO as a percentage of net sales
3.0
%
1.5
%
7.2
%
2.9%
Adjusted non-GAAP EFO as a percentage of net sales
5.5
%
3.7
%
7.9
%
5.3%
*
Other includes certain executive recruitment and hiring related expenses. Certain executive recruitment and hiring related expenses were $0.6 million for the three months ended March 31, 2026, compared to immaterial amounts for the three months ended March 31, 2025.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources
The following table sets forth certain consolidated cash flow information for the three months ended March 31, 2026 and 2025 (in thousands):
Three Months Ended March 31,
2026
2025
Net cash provided by operating activities
$
32,383
$
78,050
Net cash used in investing activities
(5,995)
(7,130)
Net cash provided by (used in) financing activities
64,285
(15,473)
Foreign currency exchange effect on cash, cash equivalent and restricted cash balances
(7,776)
7,177
Increase in cash, cash equivalents and restricted cash
82,897
62,624
Cash, cash equivalents and restricted cash at beginning of period
360,776
261,467
Cash, cash equivalents and restricted cash at end of period
$
443,673
$
324,091
Cash and Cash Flow
•Our primary use of cash during the three months ended March 31, 2026 was to repurchase shares of our common stock.
•Operating activities provided $32.4 million in cash during the three months ended March 31, 2026, compared to cash provided by operating activities of $78.1 million during the three months ended March 31, 2025.
•Capital expenditures were $6.0 million and $7.1 million for the three months ended March 31, 2026 and 2025, respectively.
•During the three months ended March 31, 2026, we repurchased $75.0 million of our common stock compared to no repurchases during the three months ended March 31, 2025.
•We had net borrowings under our ABL facility during the three months ended March 31, 2026 of $112.4 million compared to net borrowings of $423.8 million during the three months ended March 31, 2025.
•We had net borrowings under our inventory financing facilities of $35.0 million during the three months ended March 31, 2026 compared to net borrowings of $42.7 million during the three months ended March 31, 2025.
•We repaid approximately $333.1 million for the remaining principal balance upon maturity of the Convertible Notes in the three months ended March 31, 2025.
•We paid $138.9 million to settle a portion of the Warrants relating to the Call Spread Transactions associated with the Convertible Notes in the three months ended March 31, 2025. All Warrants were fully settled or expired by the end of 2025.
We anticipate that cash flows from operations, together with the funds available under our financing facilities, will be adequate to support our expected cash and working capital requirements for operations, as well as other strategic acquisitions, over the next 12 months and beyond. We expect existing cash and cash flows from operations to continue to be sufficient to fund our operating cash activities and cash commitments for investing and financing activities, such as capital expenditures, strategic acquisitions, repurchases of our common stock, debt repayments and repayment of our inventory financing facilities for the next 12 months. We currently expect to fund known cash commitments beyond the next 12 months through operating cash activities and/or other available financing resources.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Net cash provided by operating activities
•We have an inverted cash cycle resulting from typically paying partners on shorter terms than we provide to our clients. This generally means in periods of growing hardware sales, we typically use cash from operations.
•Cash flow provided by operating activities in the first three months of 2026 was $32.4 million compared to cash provided by operating activities of $78.1 million in the first three months of 2025.
•The decrease in cash provided by operating activities period over period is primarily due to higher working capital requirements, driven mainly by an increase in accounts receivable and inventories, partially offset by an increase in accounts payable. Changes in accounts receivable and accounts payable were influenced by netting on certain agent revenue streams, including a significant ongoing agency transaction in our EMEA segment, as well as changes in vendor mix. In the first three months of 2026, our cash provided by operations was also positively impacted by the timing of receipts compared to partner payments.
•We continue to be impacted by netted costs that we apply to our services net sales to appropriately record net sales that we earn as an agent. These netted costs, while excluded from net sales and cost of goods sold, are processed and applied to accounts receivable and accounts payable in each reporting period. As a result, calculation of our unadjusted cash conversion cycle, including days sales outstanding and days payables outstanding, do not provide an accurate reflection of our cash conversion metric, due to the metric components being inherently inflated. For example, netted costs were $4.5 billion and $2.7 billion in the first quarter of 2026 and 2025, respectively.
•We expect that cash flow from operations will be used, at least partially, to fund working capital as we typically pay our partners on average terms that are shorter than the average terms we grant to our clients in order to take advantage of supplier discounts.
•We intend to use cash generated in the remainder of 2026 in excess of working capital needs to pay down our ABL facility and inventory financing facilities, and to repurchase shares of our common stock.
Net cash used in investing activities
•Capital expenditures were $6.0 million and $7.1 million for the three months ended March 31, 2026 and 2025, respectively.
•We expect capital expenditures for the full year 2026 to be between approximately $20.0 and $30.0 million.
Net cash provided by (used in) financing activities
•During the three months ended March 31, 2026, we had net borrowings under our ABL facility of $112.4 million, which were primarily used to repurchase shares of our common stock.
•During the three months ended March 31, 2025, we had net borrowings under our ABL facility that increased our outstanding long-term debt balance by $423.8 million, which were primarily used to fund the repayment of the remaining principal balance upon maturity of the Convertible Notes.
•We had net borrowingsunder our inventory financing facilities of $35.0 million during the three months ended March 31, 2026 compared to net borrowings of $42.7 million during the three months ended March 31, 2025.
•We repaid approximately $333.1 million for the remaining principal balance upon maturity of the Convertible Notes in the three months ended March 31, 2025.
•We paid $138.9 million to settle a portion of the Warrants relating to the Call Spread Transactions associated with the Convertible Notes in cash in the three months ended March 31, 2025. All Warrants were fully settled or expired by the end of 2025.
•During the three months ended March 31, 2026, we made earnout and acquisition related payments of $5.5 million primarily associated with our acquisition of Amdaris Group Limited.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
•During the three months ended March 31, 2025, we did not make any earnout and acquisition related payments.
•During the three months ended March 31, 2026, we repurchased $75.0 million of our common stock.
•During the three months ended March 31, 2025, we did not repurchase any shares of our common stock.
Financing Facilities
•Our debt balance as of March 31, 2026 was $1.5 billion.
•Our objective is to pay our debt balances down while retaining adequate cash balances to meet overall business objectives.
•The Senior Notes are subject to certain events of defaultand certain acceleration clauses. As of March 31, 2026, no such events have occurred.
•Our ABL facility contains various covenants customary for transactions of this type, including complying with a minimum receivable and inventory requirement and meeting monthly, quarterly and annual reporting requirements.
•The credit agreement contains customary affirmative and negative covenants and events of default.
•At March 31, 2026, we were in compliance with all such covenants.
•While the ABL facility has a stated maximum amount, the actual availability under the ABL facility is limited by a minimum accounts receivable and inventory requirement. As of March 31, 2026, eligible accounts receivable and inventory were sufficient to permit access to $1,955.9 million of the full $2.0 billion under the ABL facility of which $975.7 million was outstanding.
We also have agreements with financial intermediaries to facilitate the purchase of inventory from certain suppliers under certain terms and conditions.
•These amounts are classified separately as accounts payable – inventory financing facilities in our consolidated balance sheets.
•Our inventory financing facilities have an aggregate availability for vendor purchases of $705.0 million, of which $259.6 million was outstanding at March 31, 2026.
Undistributed Foreign Earnings
Cash and cash equivalents held by foreign subsidiaries are generally subject to U.S. income taxation upon repatriation to the United States. As of March 31, 2026, we had approximately $325.2 million in cash and cash equivalents in certain of our foreign subsidiaries, primarily residing inCanada, Australia, and New Zealand. Certain of these cash balances will be remitted to the United States or other countries by paying down intercompany payables generated in the ordinary course of business or through actual dividend distributions.
Off-Balance Sheet Arrangements
We have entered into off-balance sheet arrangements, which include indemnifications. The indemnifications are discussed in Note 8 to the Consolidated Financial Statements in Part I, Item 1 of this report and such discussion is incorporated by reference herein. We believe that none of our off-balance sheet arrangements have, or are reasonably likely to have, a material current or future effect on our financial condition, sales or expenses, results of operations, liquidity, capital expenditures or capital resources.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Recently Issued Accounting Standards
The information contained in Note 1 to the Consolidated Financial Statements in Part I, Item 1 of this report concerning a description of recently issued accounting standards which affect or may affect our financial statements, including our expected dates of adoption and the estimated effects on our results of operations and financial condition, is incorporated by reference herein.
Contractual Obligations
Other than as described in Note 8 to the Consolidated Financial Statements in Part I, Item 1 of this report, there have been no material changes in our reported contractual obligations, as described under “Cash Requirements From Contractual Obligations” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Except as described below, there have been no material changes in our reported market risks, as described in “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025.
Although our Senior Notes are based on fixed rates, changes in interest rates could impact the fair market value of such notes. As of March 31, 2026, the fair market value of our Senior Notes was $483.0 million. For additional information about our Senior Notes, see Note 5 to our Consolidated Financial Statements in Part I, Item 1 of this report.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as such term is defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and determined that as of March 31, 2026 our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) in the three months ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations of Internal Control Over Financial Reporting
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
There are no material pending legal proceedings to which we are a party or of which any of our property is the subject. From time to time, we are party to various routine legal proceedings incidental to the business, see “– Legal Proceedings” in Note 8 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Item 1A. Risk Factors.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no unregistered sales of equity securities during the three months ended March 31, 2026.
We have never paid a cash dividend on our common stock, and we currently do not intend to pay any cash dividends in the foreseeable future. Our ABL facility contains certain covenants that, if not met, restrict the payment of cash dividends.
Issuer Purchases of Equity Securities
Period
(a) Total Number of Shares Purchased
(b) Average Price Paid per Share
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2026 through January 31, 2026
—
$
—
—
$
299,000,000
February1, 2026 through February 28, 2026
229,549
83.46
229,549
279,840,732
March 1, 2026 through March 31, 2026
670,012
83.34
670,012
224,000,082
Total
899,561
899,561
On December 19, 2025, we announced that our Board of Directors authorized the repurchase of up to $299.0 million of our common stock, including approximately $149.0 million that remained from prior authorizations. As of March 31, 2026, approximately $224.0 million remained available for repurchases under our share repurchase program.
In accordance with the share repurchase program, share repurchases may be made on the open market, subject to Rule 10b-18 or in privately negotiated transactions, through block trades, through 10b5-1 plans or otherwise, at management’s discretion. The number of shares purchased, and the timing of the purchases will be based on market conditions, working capital requirements, general business conditions and other factors. We intend to retire the repurchased shares.
During the three months ended March 31, 2026, none of our directors or executive officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K).
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
