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What changed in INSIGHT ENTERPRISES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of INSIGHT ENTERPRISES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+288 added−305 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-16)

Top changes in INSIGHT ENTERPRISES INC's 2023 10-K

288 paragraphs added · 305 removed · 224 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

74 edited+19 added−17 removed16 unchanged
Biggest changeVarious ways that we attract, develop and retain qualified and motivated teammates include: • Insight has continued to receive recognition as an employer of choice including as Forbes World’s Best Employers list (2022) - Insight ranked #95 overall, #12 for IT companies worldwide, #59 for Diversity (2022) and #62 for Veterans (2020); #22 for Europe Best Workplaces (2022); #3 for UK Best Workplaces (2021); #15 for Australia’s Best Places to Work (2021); #2 on Phoenix Best Places to Work – Phoenix Business Journal (2022); the Company achieved a perfect score on the Human Rights Campaign Foundation’s Corporate Equality Index; “Elite 8” on Achiever’s 50 Most Engaged Workplaces (2021); and #7 in the information technology services industry on the list of the Fortune World’s Most Admired Companies list (2021). • Insight offers robust leadership training for teammate managers and aspiring leaders.
Biggest changeInsight continues to receive recognitions that we believe demonstrate the success of our strategy to attract, develop, and retain qualified and motivated teammates. • Fortune #20 best places to work (2023); • Insight was recognized as an employer of choice in Forbes Best Workplaces and World’s Best Employers lists (2023); • We maintained our achievement of earning a perfect score on the Human Rights Campaign Foundation’s Corporate Equality Index; and • Fortune World’s Most Admired Companies list (2021).
Intelligent edge is where all of our capabilities come together. It is the combination of industry-based business outcomes, our intellectual property, our technology provider legacy, the ability to deploy tens of thousands of devices and build secure platforms. Our capabilities and portfolio allow for large-scale intelligent edge solutions.
Our Intelligent edge solutions expertise is where all our capabilities come together. It is the combination of industry-based business outcomes, our intellectual property, our technology provider legacy, and the ability to deploy tens of thousands of devices and build secure platforms. Our capabilities and portfolio allow for large-scale intelligent edge solutions.
We believe that we are well positioned in this highly fragmented global market with sales locations in 18 countries and our deep experience delivering IT solutions across the globe. Our Strategy Our ambition is clear — we aspire to be the leading solutions integrator, setting the pace and defining a new category in our industry.
We believe that we are well positioned in this highly fragmented global market with sales locations in 19 countries and our deep experience delivering IT solutions across the globe. Our Strategy Our ambition is clear — we aspire to be the leading solutions integrator, setting the pace and defining a new category in our industry.
(“PCM”), a provider of multi-vendor technology offerings, including hardware, software and services which complemented our supply chain expertise, adding scale and clients in the commercial space primarily in North America; • 2020 – Acquired vNext SAS (“vNext”), a French digital consulting services and managed services provider, increasing our capacity to deliver consulting and implementation services to support clients’ digital transformation initiatives to our clients in EMEA; and 3 INSIGHT ENTERPRISES, INC. • 2022 - Acquired Hanu Software Solutions, Inc. and Hanu Software Solutions (India) Private Ltd.
(“PCM”), a provider of multi-vendor technology offerings, including hardware, software and services which complemented our supply chain expertise, adding scale and clients in the commercial space primarily in North America; • 2020 – vNext SAS (“vNext”), a French digital consulting services and managed services provider, increasing our capacity to deliver consulting and implementation services to support clients’ digital transformation initiatives to our clients in EMEA; • 2022 - Hanu Software Solutions, Inc. and Hanu Software Solutions (India) Private Ltd.
We live by our core values of hunger, heart and harmony, which guide how we act as an organization and as a team, capturing who we are as a culture and reminding us of what we’ve promised to live up to every day. Our core values are: Hunger – We are change agents, driven to improve every day.
We live by our core values of hunger, heart and harmony, which guide how we act as an organization and as a team, capturing the essence of our culture, and reminding us of what we’ve promised to live up to every day. Our core values are: Hunger – We are change agents, driven to improve every day.
We refer to our customers as “clients,” our suppliers as “partners” and our employees as “teammates”. Our Market The worldwide total addressable market for enterprise IT spend is forecasted to be $4 trillion by 2026 according to Gartner, a leading IT research and advisory company.
We refer to our customers as “clients,” our suppliers as “partners” and our employees as “teammates”. Our Market The worldwide total addressable market for enterprise IT spend is forecasted to be $4.7 trillion by 2027 according to Gartner, a leading IT research and advisory company.
The information contained on our web site is not included as a part of, or incorporated by reference into, this Annual Report on Form 10-K. The SEC also maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov .
The information contained on our web site is not included as a part of, or incorporated by reference into, this Annual Report on Form 10-K. The SEC also maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. 12 INSIGHT ENTERPRISES, INC.
The Company is organized in the following three operating segments, which are primarily defined by their related geographies: Operating Segment* Geography Percent of 2022 Consolidated Net Sales North America United States and Canada 81% EMEA Europe, Middle East and Africa 17% APAC Asia-Pacific 2% * Additional detailed segment and geographic information can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and in Note 19 to the Consolidated Financial Statements in Part II, Item 8 of this report.
The Company is organized in the following three operating segments, which are primarily defined by their related geographies: Operating Segment* Geography Percent of 2023 Consolidated Net Sales North America United States and Canada 80% EMEA Europe, Middle East and Africa 17% APAC Asia-Pacific 3% * Additional detailed segment and geographic information can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and in Note 19 to the Consolidated Financial Statements in Part II, Item 8 of this report.
Sales of product from our top five manufacturers/publishers as a group (Microsoft, Dell, Lenovo, Cisco Systems, and HP Inc.) accounted for approximately 50% of our consolidated net sales during 2022. We obtain incentives from certain product manufacturers, software publishers and distribution partners based typically upon our volume of sales or purchases of their products and services.
Sales of product from our top five manufacturers/publishers as a group (Microsoft, Cisco Systems, Dell, Lenovo, and HP Inc.) accounted for approximately 51% of our consolidated net sales during 2023. We obtain incentives from certain product manufacturers, software publishers and distribution partners based typically upon our volume of sales or purchases of their products and services.
For a discussion of risks associated with our IT systems, see “Risk Factors – Risks related to Our Technology, Data and Intellectual Property – Disruptions in our IT systems and voice and data networks could affect our ability to service our clients and cause us to incur additional expenses,” in Part I, Item 1A of this report. 8 INSIGHT ENTERPRISES, INC.
For a discussion of risks associated with our IT systems, see “Risk Factors – Risks related to Our Technology, Data and Intellectual Property – Disruptions in our IT systems and voice and data networks could affect our ability to service our clients and cause us to incur additional expenses,” in Part I, Item 1A of this report.
Insight supports seven teammate resource groups, which represent various diverse groups of teammates and boast 1,450+ active members. • Our leaders carefully review and monitor our Teammate Pulse Survey results year over year and create action plans to increase teammate engagement. • To support teammates and their families, a charitable foundation funded by the Company, its teammates and its partners provides financial support in crisis situations. • Insight offers all teammates paid days off to either volunteer their time to charitable organizations in the communities where they live and work or to use for mental health days. 10 INSIGHT ENTERPRISES, INC.
Insight supports eleven teammate resource groups, which represent various diverse groups of teammates and boast 1,900+ active members. • Our leaders carefully review and monitor our Teammate Pulse Survey results year over year and create action plans to increase teammate engagement. • A charitable foundation funded by the Company, its teammates and its partners provides financial support in crisis situations to support teammates and their families. • Insight offers teammates paid days off to either volunteer their time to charitable organizations in the communities where they live and work or to use for mental health. 8 INSIGHT ENTERPRISES, INC.
Item 1. Business Our Company Today, every business needs to be a technology business. We help our clients accelerate their digital journey to modernize their business and maximize the value of technology. We serve these clients in North America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”).
Item 1. Business Our Company Today, every business is a technology business. We help our clients accelerate their digital journey to modernize their businesses and maximize the value of technology. We serve these clients in North America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific (“APAC”).
We believe that these incentives (or partner funding) and other marketing 9 INSIGHT ENTERPRISES, INC. assistance allow us to increase our marketing reach and strengthen our relationships with leading manufacturers and publishers. We are focused on understanding our partners’ objectives and developing plans and programs to grow our mutual businesses.
We believe that these incentives (or partner funding) and other marketing assistance allow us to increase our marketing reach and strengthen our relationships with leading manufacturers and publishers. We are focused on understanding our partners’ objectives and developing plans and programs to grow our mutual businesses.
For example: • software sales are typically higher in our second and fourth quarters, particularly the second quarter; • business clients, particularly larger enterprise businesses in the United States, tend to spend more in our fourth quarter and less in the first quarter; • sales to the federal government in the United States are often stronger in our third quarter, while sales in the state and local government and education markets are stronger in our second quarter; and • sales to public sector clients in the United Kingdom are often stronger in our first quarter.
For example: • software and certain cloud sales are typically higher in our second and fourth quarters; • business clients, particularly larger enterprise businesses in the United States, tend to spend more in our fourth quarter and less in the first quarter; • sales to the federal government in the United States are often stronger in our third quarter, while sales in the state and local government and education markets are stronger in our second quarter; and • sales to public sector clients in the United Kingdom are often stronger in our first quarter. 9 INSIGHT ENTERPRISES, INC.
Our Partners We partner with market leaders offering the top technology brands as well as emerging entrants in the marketplace. During 2022, we purchased and resold products and software from over 6,000 partners. Approximately 55% (based on dollar volume) of these purchases were directly from manufacturers or software publishers, with the balance purchased through distributors.
Our Partners We partner with market leaders offering the top technology brands as well as emerging entrants in the marketplace. During 2023, we purchased and resold products and software from over 8,000 partners. Approximately 69% (based on dollar volume) of these purchases were directly from manufacturers or software publishers, with the remaining balance purchased through distributors.
Through a combination of acquisitions and organic growth, we continued to increase our geographic coverage and expand our technical capabilities. Our acquisitions were as follows: Prior to 2017 we acquired Software Spectrum, Inc. (2006), Calence, LLC (2008), MINX Limited (2008), Ensynch, Inc. (2011), Inmac GmbH (2012) and Micro Warehouse BV (2012), BlueMetal Architects, Inc. (2015) and Ignia, Pty Ltd (2016).
Through a combination of acquisitions and organic growth, we continued to increase our geographic coverage and expand our technical capabilities. Our acquisitions were as follows: Prior to 2018, we acquired Software Spectrum, Inc. (2006), Calence, LLC (2008), MINX Limited (2008), Ensynch, Inc. (2011), Inmac GmbH (2012), Micro Warehouse BV (2012), BlueMetal Architects, Inc.
As a Fortune 500-ranked solutions integrator, we enable secure, end-to-end digital transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 34 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 at every opportunity.
As a Fortune 500-ranked solutions integrator, we enable secure, end-to-end digital transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 35 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 training is centered around our Leadership Commitments where we enhance our leaders' skills: (1) Creating clarity; (2) Inspiring people; (3) Demonstrating thought leadership; and (4) Delivering results. • An important part of the Company’s culture is its commitment to diversity and inclusion, which we’ve been recognized for.
Our training is centered around our Leadership Commitments where we enhance our leaders' skills in the following areas: (1) Creating clarity; (2) Inspiring people; (3) Demonstrating thought leadership; and (4) Delivering results. • An important part of the Company’s culture is its commitment to diversity and inclusion.
We believe our addressable market represents approximately $750 billion in annual sales and for the year ended December 31, 2022, our net sales of $10.4 billion represented approximately 1% of that highly diverse market. Based on our peer analysis of market data, we believe the top 10 most comparable global solution providers represent less than 20% of the market.
We believe our addressable market represents approximately $730 billion in annual sales and for the year ended December 31, 2023, our net sales of $9.2 billion represented approximately 1% of that highly diverse market. Based on our peer analysis of market data, we believe the top ten most comparable global solution providers represent less than 20% of the market.
On a consolidated basis, product (hardware and software) and services represented approximately 51% and 49%, respectively, of our gross profit in 2022. This compares to 51% and 49%, respectively, of our gross profit in 2021 and 52% and 48%, respectively, of our gross profit, in 2020.
On a consolidated basis, product (hardware and software) and services represented approximately 46% and 54%, respectively, of our gross profit in 2023. This compares to 51% and 49%, respectively, of our gross profit in 2022 and 2021.
For the previous four years, he served as the Vice President of Finance for Synopsys, Inc., an enterprise software engineering company focused on electronic design automation, where he was responsible for Corporate Planning, FP&A, Treasury, Procurement and Supply Chain Finance. Prior to Synopsys, Mr. Morgado worked for Juniper Networks, Inc. in positions of escalating responsibility within Finance. Joyce A.
For the previous four years, he served as the Vice President of Finance for Synopsys, Inc., an enterprise software engineering company focused on electronic design automation, where he was responsible for Corporate Planning, FP&A, Treasury, Procurement and Supply Chain Finance. Prior to Synopsys, Mr.
Our teammates by job function were as follows: Job Function Number of Teammates Sales 3,765 Skilled, certified consulting and service delivery professionals 5,774 Total sales and client facing teammates 9,539 Management, support services and administration 3,473 Distribution 436 For a discussion of risks associated with our dependence on certain personnel, including sales personnel, see “Risk Factors – General Risk Factors – We depend on certain key personnel,” in Part I, Item 1A of this report.
Our teammates by job function were as follows: Job Function Number of Teammates Sales 3,839 Skilled, certified consulting and service delivery professionals 6,487 Total sales and client facing teammates 10,326 Management, support services and administration 3,689 Distribution 422 For a discussion of risks associated with our dependence on certain personnel, including sales personnel, see “Risk Factors – General Risk Factors – We depend on certain key personnel,” in Part I, Item 1A of this report.
Additional detailed sales mix information by operating segment can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and in Note 19 to the Consolidated Financial Statements in Part II, Item 8 of this report.
Additional detailed sales mix information by operating segment can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and in Note 19 to the Consolidated Financial Statements in Part II, Item 8 of this report. Our Competition The IT industry is very fragmented and highly competitive.
Modern Apps – Create new product experiences and transform legacy applications to drive increased business value . The number of applications in use is growing exponentially — and using them to differentiate business identities, unlock new revenue streams and create great user experiences is critical. Clients need an experienced partner to help them migrate and modernize strategically.
Modern Apps – Create new product experiences and transform legacy applications to drive increased business value. Our modern apps solutions expertise is about helping clients migrate and modernize strategically. The number of applications in use is growing exponentially — and using them to differentiate business identities, unlock new revenue streams and create great user experiences is critical.
For a discussion of risks associated with our intellectual property, see “Risk Factors – We may not be able to protect our intellectual property adequately, and we may be subject to intellectual property infringement claims,” in Part I, Item 1A of this report. Information about our Executive Officers The following are our current executive officers: Glynis A.
For a discussion of risks associated with our intellectual property, see “Risk Factors – We may not be able to protect our intellectual property adequately, and we may be subject to intellectual property infringement claims,” in Part I, Item 1A of this report.
Our top five partners as a group for 2022 were Microsoft, Techdata (a distributor), Ingram Micro (a distributor), Dell, and Cisco Systems, and approximately 55% of our total purchases during 2022 came from this group of partners.
Our top five partners as a group for 2023 were Microsoft, TD Synnex (a distributor), Cisco Systems, Ingram Micro (a distributor), and Dell, and approximately 60% of our total purchases during 2023 came from this group of partners.
Bryan served as Chief Financial Officer at APL Logistics in Oakland, California and in various finance roles at Ryder System, Inc., including Chief Financial Officer of Ryder’s largest business unit, Ryder Transportation Services. Ms.
Bryan served as Executive Vice President and Chief Financial Officer at Swift Transportation Co., Inc., a provider of truckload transportation and logistics services, as Chief Financial Officer at APL Logistics in Oakland, California and in various finance roles at Ryder System, Inc., including Chief Financial Officer of Ryder’s largest business unit, Ryder Transportation Services. Ms.
Crump has held controller positions with several multinational companies in the software, medical services and semiconductor industries. Prior to joining Insight, Ms. Crump served as the Senior Director Controller, Global Accounting at Amkor Technology, Inc., a semiconductor product packaging and test services provider, from 2006 to 2016. Adrian Gregory, President – Insight EMEA, Age 49 Mr.
Crump has held controller positions with several public multinational companies in the software, medical services and semiconductor industries. Prior to joining Insight, Ms. Crump served as the Senior Director Controller, Global Accounting at Amkor Technology, Inc. a semiconductor product packaging and test services provider, from 2006 to 2016. Rob Green, Chief Digital Officer, Age 56 Mr.
Outcomes for our clients: • Future-proof critical business applications. • Increase innovation and organizational agility. • Accelerate business growth and product sales. • Optimize operations and increase productivity. • Deliver differentiated customer experiences. Intelligent Edge – Gather and utilize data in the most efficient way possible to enable real-time decision-making and affect pivotal outcomes .
Typical outcomes for our clients include future-proofing critical business applications, increasing innovation and organizational agility, accelerating business growth and product sales, and leveraging GenAI to optimize operations, increase productivity and deliver differentiated client experiences. Intelligent Edge – Gather and utilize data in the most efficient way to enable real-time decision-making and affect pivotal outcomes.
We prioritize security in our architecture design and deployment to cloud services and IT transformation. This way, clients can integrate security across platforms, business units and operations. We also help clients manage security initiatives that are required to protect their business.
Our cybersecurity solutions expertise relates to automating and connecting modern platforms securely (network, security and automation). We prioritize security in our architecture design and deployment to cloud services and IT transformation. This way, clients can integrate security across platforms, business units and operations. We also help clients manage security initiatives that are required to protect their business.
Building upon the strong foundation of our traditional technology business, we bring innovative and scalable solutions — a combination of hardware, software and services — that accelerate transformation and produce meaningful results for our clients. To achieve our ambition, teammates are focused on our strategic objectives — to captivate clients, sell solutions, deliver differentiation, and champion our culture.
Building upon the strong foundation of our traditional technology business, we bring innovative and scalable solutions — a combination of services and product — that accelerate transformation and produce meaningful outcomes for our clients. To achieve our ambition, teammates are focused on our strategic objectives — put clients first, deliver differentiation, champion our culture, and drive profitable growth.
We are focused on driving improvements in sales productivity through increased innovation and enhancements to our e-commerce and IT systems with the goals of improved client satisfaction and attracting new clients, while increasing overall business efficiency. In North America, EMEA and APAC we now use a common set of core IT applications to run our business.
We are focused on driving improvements in sales productivity through increased innovation and enhancements to our e-commerce and IT systems with the goals of improved client satisfaction and attracting new clients, while increasing overall business efficiency.
Captivate clients Our primary goal is to captivate our clients, so they are our number-one priority. We aim to become the partner our clients cannot live without, by delivering exceptional value for their digital transformation needs. We help our clients make the complex simple and look beyond the problems they are facing today to drive outcomes that energize future success.
Put Clients first Our primary goal is to put our clients first, becoming the partner they cannot live without, by delivering essential value for their transformation needs. We help our clients make the complex simple and look beyond the problems they are facing today to drive outcomes that energize future success.
The competitive landscape in the industry is continually changing as various competitors expand their product and services offerings. In addition, emerging models such as cloud computing and X as-a-service are creating new competitors and opportunities in the shift to digital business such as: data analytics, edge computing, hybrid infrastructure, modern workplace, cybersecurity, and other service offerings.
The competitive landscape in the industry is continually changing as various companies expand their product and services offerings. In addition, the shift to digital business such as data analytics, edge computing, hybrid infrastructure, modern workplace, cybersecurity, and other similar service offerings, has led to the emergence of new competitive players and opportunities through emerging models like AI and X as-a-service.
Our Teammates Successful execution of our business strategy and strategic initiatives involves attracting, developing and retaining teammates who share our core values of hunger, heart and harmony. The experience, knowledge and dedication of our teammates help drive our operating results.
Our Teammates Successful execution of our business strategy and strategic initiatives involves attracting, developing and retaining teammates who share our core values of hunger, heart and harmony.
Burger joined Insight in May 2022 as President of the North America business. Prior to joining Insight, Mr. Burger worked at Capgemini, a global leader in consulting, technology services and digital transformation, for 29 years in a diverse range of roles. His responsibilities encompassed leading integration of mergers and acquisitions, digital and cloud solutions, business applications, consulting, strategy, and transformation.
Dee Burger , President North America, Age 54 Mr. Burger joined Insight in May 2022 as President of the North America business. Prior to joining Insight, Mr. Burger worked at Capgemini, a global leader in consulting, technology services and digital transformation, for 29 years in a diverse range of roles.
On a consolidated basis, product (hardware and software) and services represented approximately 86% and 14%, respectively, of our consolidated net sales in 2022. This compares to 86% and 14%, respectively, of our consolidated net sales in 2021 and 86% and 14%, respectively, of our consolidated net sales in 2020.
Our Solutions Mix Our solutions generally include hardware, software and services, including cloud solutions. On a consolidated basis, product (hardware and software) and services represented approximately 83% and 17%, respectively, of our consolidated net sales in 2023. This compares to 86% and 14%, respectively, of our consolidated net sales in both 2022 and 2021.
Gregory spent ten years in Executive positions at Atos, including serving as Senior Executive Vice President, Global Head of Financial Services & Insurance, where he led the integration of Atos Syntel in India and served as CEO of Atos UK and Ireland. Prior to Atos, he held roles at HP and Fujitsu. James A.
Gregory spent 10 years in various other executive positions at Atos, including serving as Senior Executive Vice President, Global Head of Financial Services & Insurance, where he led the integration of Atos Syntel in India and served as Chief Executive Officer of Atos UK and Ireland.
As with other areas, we compete with solutions providers, systems integrators, value-added resellers, hyperscale vendors and directly with publishers, and manufacturer partners for many of these offerings. Many of our manufacturer and publisher partners are also our competitors, as many sell directly to business customers, particularly large enterprise and corporate customers.
As with other areas, we compete with solutions providers, systems integrators, value-added resellers, and hyperscale vendors. We sometimes compete directly with publishers and manufacturer partners for many of these offerings, including Microsoft, Cisco Systems, Dell, HP Inc. and Adobe Systems. They sell products and services directly to business customers, particularly large enterprise and corporate customers.
Purchases from Microsoft and Techdata (a distributor)accounted for approximately 22% and 10%, respectively, of our aggregate purchases in 2022. No other partner accounted for more than 10% of purchases in 2022.
Purchases from Microsoft and TD Synnex accounted for approximately 27% and 12%, respectively, of our aggregate purchases in 2023. No other partner accounted for more than 10% of purchases in 2023.
Modern Infrastructure – Architect and modernize multicloud and networking solutions to drive business transformation . We architect and deliver modern infrastructure solutions, management, and support spanning cloud and data center platforms, modern networks, and edge technologies, to enable our clients’ businesses’ digital transformation.
Our modern platforms solutions expertise is about adopting and building modern platforms from cloud (multicloud and hybrid) to data center to edge. We architect and deliver modern infrastructure solutions, provide management and support spanning cloud and data center platforms, modern networks, and edge technologies, to enable our clients' businesses digital transformation.
We do not believe that backlog as of any particular date is predictive of future results. 11 INSIGHT ENTERPRISES, INC. Our Intellectual Property We do not maintain a traditional research and development group, but we recognize the importance of intellectual property and its ability to differentiate us from our competitors.
Our Intellectual Property We do not maintain a traditional research and development group, but we recognize the importance of intellectual property and its ability to differentiate us from our competitors.
Prior to joining Insight, Mr. Cowley served as General Counsel and Vice President, Business Development of Prestige Brands Holdings, Inc., a company that markets and distributes over-the-counter healthcare products, from February 2012 to June 2016. He previously served as Executive Vice President, Business Development and General Counsel of Matrixx Initiatives, Inc. and 12 INSIGHT ENTERPRISES, INC.
Cowley served as General Counsel and Vice President, Business Development of Prestige Brands Holdings, Inc., a company that markets and distributes over-the-counter healthcare products, as Executive Vice President, Business Development and General Counsel of Matrixx Initiatives, Inc. and Executive Vice President and General Counsel of Swift Transportation Co., Inc.
Crump joined Insight in December 2016 as Vice President of Finance, Controller – North America and was appointed Principal Accounting Officer and Global Corporate Controller in September 2018. Ms. Crump is a Certified Public Accountant. She began her career in public accounting in 1997 with Ernst & Young LLP. Ms.
She was appointed Principal Accounting Officer and Global Corporate Controller in September 2018, with her title being consolidated to Chief Accounting Officer in September 2023. Ms. Crump is a Certified Public Accountant. She began her career in public accounting in 1997 with Ernst & Young LLP. Ms.
Outcomes for our clients: • A scalable infrastructure foundation for innovation. • Increase workload agility, resiliency and flexibility. • Improve visibility and control of data assets. • Deliver better user and customer experiences. • Enable purposeful digital transformation. Cybersecurity – Mitigate risks and secure business assets .
Typical outcomes for our clients include scaling their infrastructure foundation for innovation, increasing workload agility, resiliency and flexibility, improving visibility and control of 5 INSIGHT ENTERPRISES, INC. data assets, delivering better user and customer experiences, and enabling purposeful digital transformation. Cybersecurity – Mitigate risks and secure business assets.
Gregory joined Insight in January 2023 as EMEA President. Prior to joining the Company, he served as CEO for North Europe and APAC at Atos, an IT services and consulting company from February 2022. Mr.
Prior to joining the Company, he served as Chief Executive Officer for North Europe and APAC at Atos, an IT services and consulting company. Prior to being named Chief Executive Officer in February of 2022, Mr.
During 2022, sales of Microsoft and Dell products accounted for approximately 14% and 11%, respectively of our consolidated net sales. No other manufacturer’s or publisher’s products accounted for more than 10% of our consolidated net sales in 2022.
During 2023, sales of Microsoft and Cisco Systems products accounted for approximately 17% and 10% of our consolidated net sales, respectively. No other manufacturer’s or publisher’s 7 INSIGHT ENTERPRISES, INC. products represented 10% or more of our consolidated net sales in 2023.
Outcomes for our clients: • Elevate employee and user experiences. • Increase return on workplace technology investments. • Better protect users and business data to reduce risk. • Boost productivity and mobile capabilities. • Simplify IT lifecycle management. • Enable and secure "work anywhere" operations in the hybrid work environment.
Typical outcomes for our clients include elevating employee and user experiences, increasing return on workplace technology investments, enhancing protection for users and business data to reduce risk, boosting productivity and mobile capabilities, simplifying IT lifecycle management and enabling and securing “work anywhere” operations in the hybrid work environment.
Executive Vice President and General Counsel of Swift Transportation Co., Inc. Prior to that, he practiced law in the business and finance groups with the law firms of Snell & Wilmer and Reid & Priest. Rachael A. Crump , Principal Accounting Officer and Global Corporate Controller, Age 47 Ms.
Prior to that, he practiced law in the business and finance groups with the law firms of Snell & Wilmer and Reid & Priest. Rachael A. Crump , Chief Accounting Officer, Age 49 Ms. Crump joined Insight in December 2016 as Vice President of Finance, Controller – North America.
Bryan is a member of the board of directors and the audit committee of Pentair, Ltd., a diversified industrial manufacturing company and of Pinnacle West Capital Corporation, a public utility holding company. In January 2018, she was appointed to the Economic Advisory Council for the Federal Reserve Bank of San Francisco. Dee Burger , President North America, Age 53 Mr.
Bryan is a member of the board of directors and the audit committee of WESCO International, Inc., a leading provider of business-to-business distribution, logistics services and supply chain solutions, and of Pinnacle West Capital Corporation, a public utility holding company. In January 2018, she was appointed to the Economic Advisory Council for the Federal Reserve Bank of San Francisco.
These trends create overall seasonality in our consolidated results such that sales and profitability are expected to be higher in the second and fourth quarters of the year. Our Backlog The majority of our backlog historically has been and continues to be open cancelable purchase orders; however, we have not experienced significant cancellations historically.
These trends create overall seasonality in our consolidated results such that sales and profitability are expected to be higher in the second and fourth quarters of the year. Historically we have experienced higher net sales in our second quarter, however, with the addition of SADA, we now anticipate our fourth quarter will be our highest quarter for net sales.
Outcomes for our clients: • Improve threat detection, containment and neutralization. • Enhance visibility and context with fewer manual inputs. • Minimize large scale security teams through simplified security management. • Implement governance and maintain compliance. • Better manage and mitigate organizational risk. Data and AI – Leverage analytics and AI to transform business operations and user experiences .
Typical outcomes for our clients include improving threat detection, containment and neutralization, minimizing large scale security teams through simplified security management, implementing governance and maintaining compliance, better management and mitigation of organizational risk and effective and thorough responses to security incidents. Data and AI – Leverage analytics and AI to transform business operations and user experiences.
We help them modernize their business by offering them solutions that maximize the value of technology and enable secure, end-to-end transformation solutions and services. 4 INSIGHT ENTERPRISES, INC. Sell solutions We are transforming our sales capabilities and aligning our incentives to focus on our solutions portfolio.
We help them modernize their business by offering solutions that maximize the value of technology and enable secure, end-to-end transformation solutions and services. 4 INSIGHT ENTERPRISES, INC. Deliver differentiation We deliver differentiation through our innovative and scalable solutions, exceptional technical talent and a compelling portfolio built on over 35 years of IT experience.
Modern Workplace – Create a productive, flexible and secure workplace . Workplaces are changing — along with people’s need for seamless work experiences. Great companies know their people are the key factor — improving attraction and retention, providing great collaborative experiences through technology, leading through change and more. 6 INSIGHT ENTERPRISES, INC.
Our modern workplace solutions expertise deals with helping clients navigate workplace changes along with employee needs for seamless work experiences. Great companies know their people are the key factor — improving attraction and retention, providing great collaborative experiences through technology, leading through change.
Our backlog has fluctuated significantly in the past year, primarily due to the mix of products available and our client's responses to supply chain constraints.
Our Backlog The majority of our backlog historically has been and continues to be open cancelable purchase orders; however, we have not experienced significant cancellations historically. Our backlog has fluctuated significantly in the past few years, primarily due to the mix of products available and our client's responses to supply chain constraints.
Most recently, he led Capgemini's global business lines in the North America market, with prior leadership roles spanning business services and engineering, U.S. strategy and portfolio, consulting, and innovation and digital services. Samuel C. Cowley , Senior Vice President, General Counsel and Secretary, Age 62 Mr. Cowley joined Insight in June 2016 as our Senior Vice President and General Counsel.
His responsibilities encompassed leading integration of mergers and acquisitions, digital and cloud solutions, business applications, consulting, strategy, and transformation. Most recently, he led Capgemini's global business lines in the North America market, with prior leadership roles spanning business services and engineering, U.S. strategy and portfolio, consulting, and innovation and digital services. Samuel C.
We will continue to streamline our account coverage to match skills with client needs and propensity to buy services. We believe the key to our success is focusing on doing a finite number of things and doing them really well.
We believe the key to our success is focusing on doing a finite number of things and doing them really well. This leads to successful outcomes with our clients and will drive profitable growth for our shareholders .
We have invested in our digital marketing capabilities over the past five years. We believe these digital marketing investments increase the effectiveness of our marketing campaigns and client interactions. We consider that we are emerging as a leader in our industry in digital marketing, striving to deliver an outstanding service experience to our clients.
We have invested in our digital marketing capabilities over the past few years and plan to continue investing in such capabilities moving forward. We believe these digital marketing investments increase the effectiveness of our marketing campaigns and client interactions.
We implemented business intelligence tools that enable us to track performance in this area and demonstrate the return on our partners’ investments with us. We measure partner satisfaction regularly and hold quarterly business reviews with our largest partners to review business results, discuss plans for the future and obtain feedback.
We measure partner satisfaction regularly and hold quarterly business reviews with our largest partners to review business results, discuss plans for the future and obtain feedback. Additionally, we host annual partner forums in North America, EMEA and APAC to articulate our plans for the upcoming year.
Mullen spent 21 years at Dell Technologies, a technology company, in a variety of sales, service delivery, and IT solutions roles. Ms. Mullen also serves on the Board of The Toro Company (NYSE: TTC). Sumana Nallapati , Chief Information Officer, Age 48 Ms. Nallapati joined Insight in April 2022 as Chief Information Officer.
Mullen joined Insight in October 2020 as our President of the North America Region. Prior to joining Insight, Ms. Mullen spent 21 years at Dell Technologies, a technology company, in a variety of sales, service delivery, and IT solutions roles. Ms.
Before joining Insight, Ms. Vasin led the HR team at Calence, a professional services 13 INSIGHT ENTERPRISES, INC. consulting firm. She also worked in the airline industry in a variety of roles, including human resources leadership positions.
Prior to Calence, Ms. Vasin worked in the airline industry in a variety of roles, including human resources leadership positions.
Our competition includes: • Systems integrators and digital consultants such as ePlus, Presidio, World Wide Technology, EPAM, Perficient, Accenture, Atos and Capgemini; • Solution providers, value-added resellers and direct marketers such as CDW, Zones, Connection, SHI, Softchoice, Computacenter, Bechtle, SoftwareONE and Crayon; • Product manufacturers, such as Dell, HP Inc., IBM, Lenovo and HPE; • Software and Cloud publishers and specialists, such as Red Hat, VMware, Crayon, Microsoft and Symantec; • National and global service providers, such as IBM Global Services and HPE Services; and • Specialty retailers, aggregators, distributors and e-tailers, such as Amazon Web Services, Best Buy for Business, Newegg and Ebuyer (United Kingdom).
Our competition primarily includes: • Systems integrators and digital consultants such as ePlus, Presidio, World Wide Technology, EPAM, Perficient, Accenture, Atos and Capgemini; and • Solution providers, value-added resellers and direct marketers such as CDW, Cognizant, Zones, Connection, SHI, Softchoice, Computacenter, Bechtle, SoftwareONE and Crayon.
Our simple and strong portfolio of offerings and our robust roster of technical experts and industry leaders help us deliver client value efficiently and with the accountability our clients expect. Champion culture We see our strong culture as a driver for growth. We are purpose-driven and values-led and are focused on delivering an exceptional client experience.
Combined with thoughtful strategic acquisitions, differentiated expertise and deep partner relationships, we deliver a compelling client experience driving faster outcomes. Our simple and strong portfolio of offerings and our robust roster of technical experts and industry leaders help us deliver client value efficiently and with the accountability our clients expect.
Additionally, we host annual partner forums in North America, EMEA and APAC to articulate our plans for the upcoming year. As we move into new service areas, we may become even more reliant on certain partner relationships.
As we move into new service areas, we may become even more reliant on certain partner relationships.
(collectively, "Hanu"), a global leading cloud technology services and solutions provider, which increased our capacity to provide cloud solutions to clients. Hanu also has a recruiting and development academy which expanded our technical expertise in India. Our Purpose and Values Our purpose: We accelerate digital transformation by unlocking the power of people and technology.
(collectively, "Hanu"), a global leading cloud technology services and solutions provider, which increased our capacity to provide cloud solutions to clients.
Additionally, we acquired Caase Group B.V. and strengthened our ability to deliver cloud solutions to our clients in EMEA; • 2018 – Acquired Cardinal Solutions Group, Inc. (“Cardinal”), a digital solutions provider and strengthened our digital innovation capabilities; • 2019 – Acquired PCM, Inc.
(2015), Ignia, Pty Ltd (2016), Datalink Corporation (2017), and Caase Group B.V. (2017). Our acquisitions from 2018 through today included: • 2018 – Cardinal Solutions Group, Inc. (“Cardinal”), a digital solutions provider that strengthened our digital innovation capabilities; • 2019 – PCM, Inc.
We are building on this foundation, developing a culture of high performance, and continuing to push forward our culture of diversity and inclusion. Solutions Expertise We differentiate through comprehensive areas of solutions expertise to meet market demand and deliver meaningful client outcomes at scale.
Champion our culture We see our strong culture as a driver for growth. We are purpose-driven and values-led and are focused on championing our teammates to deliver exceptional client experience. We are building on this foundation, developing a culture of high performance, and continuing to push forward our culture of diversity and inclusion.
Outcomes for our clients: • Improve decision-making and business intelligence. • Increase responsiveness to customer and market demands. • Optimize operational processes and gain predictive capabilities. • Create new revenue streams and drive differentiation. • Scale and expand business operations to new areas.
Typical outcomes for our clients include, improving decision making and business intelligence, increasing responsiveness to customer and market demands, optimizing operational processes and gaining predictive capabilities, creating new revenue streams, driving differentiation, and scaling and expanding business operations to new areas. 6 INSIGHT ENTERPRISES, INC. We deliver our solutions expertise to our clients through consulting, managed and life-cycle services.
Bryan , Chief Financial Officer, Age 64 Ms. Bryan joined Insight in December 2007 as our Chief Financial Officer. Prior to joining Insight, Ms. Bryan served as Executive Vice President and Chief Financial Officer at Swift Transportation Co., Inc. from April 2005 to May 2007. Prior to joining Swift, Ms.
Information about our Executive Officers The following are our current executive officers: Glynis A. Bryan , Chief Financial Officer, Age 65 Ms. Bryan joined Insight in December 2007 as our Chief Financial Officer. Prior to joining Insight, Ms.
Data & Artificial Intelligence ("AI"): Innovating on top of platforms with strategic solutions delivered through reference architectures, and enhanced through our intellectual property Insight drives significant impact across these foundational areas — which are part of our broader set of solutions expertise, that we believe are critical to our clients’ success and to our identity as a solutions integrator.
Our data and AI solutions expertise pertains to innovating on top of modern platforms with strategic and secure solutions delivered through reference architectures, leveraging GenAI, and enhanced through our intellectual property. We modernize data platforms and architectures and build data analytics and AI solutions that transform our clients’ business operations and user experiences.
We tend to quickly adapt to new technology trends in innovation, investing internally as well as through mergers and acquisitions, to advance our technical capabilities. These areas of expertise, when combined and enhanced with our services, are how we drive digital transformation for our clients and are pivotal to our strategy of becoming the leading solutions integrator.
Our Solutions Expertise We are differentiated in our ability to combine the power of our technology expertise with our technical services capabilities to create solutions to deliver meaningful client outcomes at scale. We adapt quickly to new innovative technology trends such as Generative Artificial Intelligence ("GenAI"). We invest internally as well as through acquisitions to advance our technical capabilities.
Morgado , Senior Vice President of Finance, Age 50 Mr. Morgado joined Insight in January 2022 as Senior Vice President of Finance.
Prior to Atos, he held roles at Hewlett-Packard Development Company, L.P., Fujitsu ICL, and Petroleum Shipping Ltd. James A. Morgado, Senior Vice President of Finance, Age 51 Mr. Morgado joined Insight in January 2022 as Senior Vice President of Finance.
Mullen , President and Chief Executive Officer, Age 60 Ms. Mullen was appointed President and Chief Executive Officer and a director of Insight effective January 1, 2022. Ms. Mullen joined Insight in October 2020 as our President of the North America Region. Prior to joining Insight, Ms.
Morgado worked for Juniper Networks, Inc., Cisco Systems, Inc., The Stephenz Group, Inc., Aramark Uniform Services, and Citigate Cunningham, Inc. in various positions within Finance. Joyce A. Mullen, President and Chief Executive Officer, Age 61 Ms. Mullen was appointed President and Chief Executive Officer and a director of Insight effective January 1, 2022. Ms.
As of December 31, 2022, we employed 13,448 teammates. Our teammates by operating segment were as follows: Operating Segment Number of Teammates North America 10,931 EMEA 2,001 APAC 516 Our teammates in the United States are not represented by a labor union.
As of December 31, 2023, we employed 14,437 teammates. Our teammates by operating segment were as follows: Operating Segment Number of Teammates North America 10,957 EMEA 2,946 APAC 534 Certain of our teammates provide services to clients and/or provide back-office support in offshore locations such as Armenia, India, Moldova, the Philippines, and Romania.
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Our acquisitions from 2017 through today included: • 2017 – Acquired Datalink Corporation (“Datalink”) and strengthened our position as a leading IT solutions provider with deep technical expertise delivering data center transformation solutions to clients on premise or in the cloud.
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Hanu also has a recruiting and development academy which expanded our technical expertise in India; 3 INSIGHT ENTERPRISES, INC. • 2023 - Amdaris Group Limited ("Amdaris"), a service provider with core expertise in providing software application and development services for clients, which adds to Insight’s global application and Data & AI practices.
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Deliver differentiation We deliver differentiation through our unique solutions capabilities, exceptional technical talent and a compelling portfolio built on over 34 years of broad IT experience. Combined with thoughtful strategic acquisitions, differentiated expertise and deep partner relationships, we deliver an excellent client experience driving faster outcomes.
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Amdaris also specializes in customized solutions for cloud, mobile, data analytics and web helping clients digitally transform faster; and • 2023 - SADA Systems, LLC ("SADA"), a Google cloud service provider with engineering capabilities across the entire Google Cloud stack specializing in Google Cloud priority workloads.
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Of our six areas of solutions expertise, our clients are currently prioritizing business outcomes that combine one or more of the following areas to drive their transformation: 1. Modern platforms/infrastructure: Adopting & building modern platforms from cloud (multicloud and hybrid) to data center to edge 5 INSIGHT ENTERPRISES, INC. 2.
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The SADA acquisition positions Insight to further benefit from the growing trend of multicloud adoption and GenAI, accelerating Insight’s progress toward its strategic objective of growing cloud services and solutions. Our Purpose and Values Our purpose: We accelerate digital transformation by unlocking the power of people and technology.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeCyberthreats, cyberattacks, data security incidents, data breaches, malware and similar disruptions from unauthorized access or tampering by malicious actors or inadvertent error could disrupt the security of our systems and business applications, impair our ability to provide services to our clients and protect the privacy of their data, resulting in the unauthorized access to, acquisition, misappropriation, disclosure, alteration, or compromise of confidential, proprietary or technical business information or personal information and thereby could harm our reputation, client relationships, business, and competitive position.
Biggest changeAny failure on the part of us, our third-party service providers or our vendors to maintain the security of our network systems and the proprietary, confidential, and personal data in our possession, including via the penetration of our network security and attempted or actual misappropriation, disclosure, alteration, or compromise of proprietary, confidential and personal information, could disrupt the security of our systems and business applications, as well as impair our ability to provide services to our clients and protect the privacy of their data.
Our substantial indebtedness could have important consequences, that could have a material adverse effect on our business, financial condition and results of operations, including the following: • requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our subsidiaries’ debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes; • requiring us to comply with restrictive covenants in our senior secured debt facility, which limits the manner in which we conduct our business; • limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate; • placing us at a competitive disadvantage compared to any of our less-leveraged competitors; • increasing our vulnerability to both general and industry-specific adverse economic conditions; and • limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing. 24 INSIGHT ENTERPRISES, INC.
Our substantial indebtedness could have important consequences, that could have a material adverse effect on our business, financial condition and results of operations, including the following: • requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our subsidiaries’ debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes; • requiring us to comply with restrictive covenants in our senior secured debt facility, which limits the manner in which we conduct our business; • limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate; • placing us at a competitive disadvantage compared to any of our less-leveraged competitors; • increasing our vulnerability to both general and industry-specific adverse economic conditions; and • limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing. 21 INSIGHT ENTERPRISES, INC.
This is especially true in connection with the incentive programs of our largest partners: Microsoft, Dell, Cisco Systems, HP Inc. and Lenovo. There can be no assurance that we will continue to receive such incentives in the future.
This is especially true in connection with the incentive programs of our largest partners: Microsoft, Dell, Cisco Systems, HP Inc., Google and Lenovo. There can be no assurance that we will continue to receive such incentives in the future.
All acquisitions entail various risks such as difficulties in realizing the benefits of the acquired business, exposure to unexpected liabilities, difficulties in retaining key employees and adverse client reactions.
All acquisitions entail various risks such as difficulties in realizing the intended benefits of the acquired business, exposure to unexpected liabilities, difficulties in retaining key employees and adverse client reactions.
Due to the increased risk of these types of attacks and incidents, we expend significant resources on information technology and data security tools, measures, and processes designed to protect our networks systems, services, and the personal, confidential or proprietary information in our possession, and to ensure an effective response to any cyber-attack or data security incident.
Due to the constant risk of these types of attacks and incidents, we expend significant resources on information technology and data security tools, measures, and processes designed to protect our networks systems, services, and the personal, confidential or proprietary information in our possession, and to ensure an effective response to any cyber-attack or data security incident.
Outside of the United States, we have operation centers in Australia, Canada, France, Germany, India, the Netherlands, the Philippines and the United Kingdom, as well as sales offices throughout EMEA and APAC. In the regions in which we do not currently have a physical presence, we serve our clients through strategic relationships.
Outside of the United States, we have operation centers in Armenia, Australia, Canada, France, Germany, India, the Netherlands, the Philippines, Ukraine and the United Kingdom, as well as sales offices throughout EMEA and APAC. In the regions in which we do not currently have a physical presence, we serve our clients through strategic relationships.
International operations also expose us to currency fluctuations as we translate the financial statements of our foreign operations to the U.S. dollar, which has been very strong in recent years in foreign currency exchange rates and which has adversely impacted our results of operations and cash flows from our operations in EMEA.
International operations also expose us to currency fluctuations as we translate the financial statements of our foreign operations to the U.S. dollar, which has been very strong in recent years in foreign currency exchange rates and which has, at times, adversely impacted our results of operations and cash flows from our operations in EMEA.
For example, cloud, security, and digital-related solutions are continuously evolving, and there is rapid development and technological evolution in areas such as IoT, edge-computing, computer vision, advanced machine learning and AI, automation, augmented reality, blockchain and as-a-service solutions.
For example, cloud, security, and digital-related solutions are continuously evolving, and there is rapid development and technological evolution in areas such as IoT, edge-computing, computer vision, advanced machine learning and AI (including GenAI), automation, augmented reality, blockchain and as-a-service solutions.
Likewise, many businesses are actively investing in, developing and seeking protection for intellectual property in the areas of search, indexing, e-commerce and other Web-related technologies, as well as a variety of on-line 22 INSIGHT ENTERPRISES, INC. business models and methods, all of which are in addition to traditional research and development efforts for IT products and application software, and non-practicing entities continue to invest in acquiring patent portfolios for the purpose of turning the portfolios into income-generating assets, whether through licensing campaigns or litigation.
Likewise, many businesses are actively investing in, developing and seeking protection for intellectual property in the areas of search, indexing, e-commerce and other Web-related technologies, as well as a variety of on-line business models and methods, all of which are in addition to traditional research and development efforts for IT products and application software, and non-practicing entities continue to invest in acquiring patent portfolios for the purpose of turning the portfolios into income-generating assets, whether through licensing campaigns or litigation.
In addition, a substantial number of shares of our common stock is reserved for issuance upon the exercise of stock options, upon vesting of restricted stock units, upon conversion of the Notes and upon exercise of the warrants that were issued in connection with the Call Spread Transactions.
In addition, a substantial number of shares of our common stock are reserved for issuance upon the exercise of stock options, upon vesting of restricted stock units, upon conversion of the Notes and upon exercise of the warrants that were issued in connection with the Call Spread Transactions.
Furthermore, if we are unable to maintain an environment for teammates that is competitive and appealing, it could have an adverse effect on engagement and retention, and a material adverse effect on our business. 26 INSIGHT ENTERPRISES, INC.
Furthermore, if we are unable to maintain an environment for teammates that is competitive and appealing, it could have an adverse effect on engagement and retention, and a material adverse effect on our business. 23 INSIGHT ENTERPRISES, INC.
Malicious individuals, organizations, and nation-state threat actors may attempt to penetrate or compromise our network systems, the products we sell, or services we provide in order to access, acquire, misappropriate, disclose, alter, or otherwise compromise our teammates’, clients’, and partners’ proprietary, confidential, technical business, and/or personal information in our possession or to which we have access, create system disruptions, cause system or operations shutdowns or perpetrate secondary attacks against our clients, partners, and teammates.
Malicious individuals, organizations, and nation-state threat actors have and may continue to attempt to penetrate or compromise our network systems, the products we sell, or services we and our third-party contractors provide in order to access, acquire, misappropriate, disclose, alter, or otherwise compromise our teammates’, clients’, and partners’ proprietary, confidential, technical business, and/or personal information in our possession or to which we have access, create system disruptions, cause system or operations shutdowns or perpetrate secondary attacks against our clients, partners, and teammates.
Price reductions by our competitors that we either cannot or choose not to match could result in an erosion of our market share and/or reduced sales or, to the extent we match such reductions, could result in 14 INSIGHT ENTERPRISES, INC. reduced operating margins or inventory impairment charges, any of which could have a material adverse effect on our business, financial condition and results of operations.
Price reductions by our competitors that we either cannot or choose not to match could result in an erosion of our market share and/or reduced sales or, to the extent we match such reductions, could result in reduced operating margins or inventory impairment charges, any of which could have a material adverse effect on our business, financial condition and results of operations.
If we do not invest sufficiently in new technologies, successfully adapt to industry developments and evolving client demand at sufficient speed and scale, we may be unable to develop or maintain a competitive advantage in the market 15 INSIGHT ENTERPRISES, INC. and execute on our growth strategy and initiatives, which could have a material adverse effect on our business.
If we do not invest sufficiently in new technologies, successfully adapt to industry developments and evolving client demand at sufficient speed and scale, we may be unable to develop or maintain a competitive advantage in the market and execute on our growth strategy and initiatives, which could have a material adverse effect on our business.
If we are not able to retain such personnel or to train them quickly enough to meet changing market conditions, we could experience a drop in the overall quality and efficiency of our sales and services teammates, and that could have a material adverse effect on our business, financial condition and results of operations.
If we are not able to retain such personnel or to train them quickly enough to meet changing market conditions, we could experience a drop in the overall quality and efficiency of our teammates, which could have a material adverse effect on our business, financial condition and results of operations.
A significant deterioration in our ability to collect on accounts receivable could also impact the cost or availability of financing under our accounts receivable securitization program. Our sales to public sector clients are also impacted by government spending policies, government shutdowns, budget priorities and revenue levels.
A significant deterioration in our ability 14 INSIGHT ENTERPRISES, INC. to collect on accounts receivable could also impact the cost or availability of financing under our accounts receivable securitization program. Our sales to public sector clients are also impacted by government spending policies, government shutdowns, budget priorities and revenue levels.
There can be no assurance that we will be able to adapt to, or compete effectively with, current or future distribution channels or competitors or that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations.
There can be no assurance that we will be able to adapt to, or compete effectively with, current or future distribution channels or competitors or that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. 15 INSIGHT ENTERPRISES, INC.
To fund our acquisition initiatives, we increase our total borrowings from time to time, such as with the PCM acquisition. These additional borrowings have the effect of increasing our future interest expenses and require escalating amortization payments.
To fund our acquisition initiatives, we increase our total borrowings from time to time, such as with the recent acquisition of SADA. These additional borrowings have the effect of increasing our future interest expenses and require escalating amortization payments.
As newer technologies evolve, and the portfolio of the service providers we share confidential information with grows, we could be exposed to increased risks from cyberattacks, data security events, and data breaches, including those from human error, negligence or mismanagement or from illegal or fraudulent acts. 21 INSIGHT ENTERPRISES, INC.
As newer technologies evolve, and the portfolio of the service providers we share confidential information with grows, we could be exposed to increased risks from cyberattacks, data security events, and data breaches, including those from human error, negligence or mismanagement or from illegal or fraudulent acts.
There can be no assurance that we will be able to compete effectively with current or future competitors or that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations.
There can be no assurance that we will be able to compete effectively with current or future competitors or that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations. 13 INSIGHT ENTERPRISES, INC.
We depend on certain key management personnel and our ability to attract, train and retain skilled teammates to satisfy client demand, including highly skilled technical resources with experience in key digital areas. We rely on key management to execute our strategy to grow profitable market share.
We depend on certain key management personnel and our ability to attract, train and retain skilled teammates to satisfy client demand, including highly skilled technical resources with experience in key digital areas. We rely on key management and qualified engineering, marketing, and sales teammates to execute our strategy to grow profitable market share.
If the warehouse and distribution equipment at one of our distribution centers were to be seriously damaged, or negatively impacted, by a natural disaster or other adverse occurrence, we could utilize another distribution center or third-party distributors to ship products to our clients.
If the warehouse and distribution equipment at one of our distribution centers were to be seriously damaged, or negatively impacted, by a natural disaster, act of terrorism, or public health issue or other adverse occurrence, we could utilize another distribution center or third-party distributors to ship products to our clients.
In addition, our expense levels are based, in part, on anticipated net sales and the anticipated amount and timing of partner funding, and a portion of our operating expenses are relatively fixed.
In addition, our expense levels are based, in part, on anticipated net sales and the anticipated amount and timing 22 INSIGHT ENTERPRISES, INC. of partner funding, and a portion of our operating expenses are relatively fixed.
Potential impacts related to the conflict include further market disruptions, including significant volatility in commodity prices, credit and capital markets, supply chain and logistics disruptions, adverse global economic conditions resulting from escalating geopolitical tensions, volatility and fluctuations in foreign currency exchange rates and interest rates, inflationary pressures on raw materials and heightened cybersecurity threats, all of which could adversely impact our business, particularly our European operations.
Potential impacts related to conflicts, such as those ongoing in Ukraine and Gaza, include further market disruptions, including significant volatility in commodity prices, credit and capital markets, supply chain and logistics disruptions, adverse global economic conditions resulting from escalating geopolitical tensions, volatility and fluctuations in foreign currency exchange rates and interest rates, inflationary pressures on raw materials and heightened cybersecurity threats, all of which could adversely impact our business, particularly our European operations.
General economic and political conditions, including unfavorable conditions in a particular region, business or industry sector, may lead our clients to delay or forgo investments in IT hardware, software and services. Weak economic conditions generally or any broad-based reduction in IT spending, including as a result of the COVID-19 pandemic, would adversely affect our business, operating results and financial condition.
General economic and political conditions, including unfavorable conditions in a particular region, business or industry sector, may lead our clients to delay or forgo investments in IT hardware, software and services. Weak economic conditions generally or any broad-based reduction in IT spending would adversely affect our business, operating results and financial condition.
At December 31, 2022, $346.2 million of our outstanding debt relates to the Notes that are convertible at the option of the holders and as a result are classified as a current liability. We also have the ability to borrow an additional $1.5 billion under our senior secured credit facility.
At December 31, 2023, $348.0 million of our outstanding debt relates to the Notes that are convertible at the option of the holders and as a result are classified as a current liability. We also have the ability to borrow an additional $1.1 billion under our senior secured credit facility.
Manufacturing interruption or delays, including as a 18 INSIGHT ENTERPRISES, INC. result of the financial instability or bankruptcy of manufacturer, labor and supply shortages, significant labor disputes such as strikes, natural disasters (which may increase in number or severity as a result of climate change), political or social unrest, pandemics (such as COVID-19) or other public health crises or other adverse occurrences affecting our suppliers' facilities, could disrupt our supply chain.
Manufacturing interruption or delays, including as a result of the financial instability or bankruptcy of manufacturer, labor and supply shortages, significant labor disputes such as strikes, natural disasters (which may increase in number or severity as a result of climate change), political or social unrest, public health issues, such as pandemics or endemics, or other adverse occurrences affecting our suppliers' facilities, could disrupt our supply chain.
As of December 31, 2022, we had $637.9 million of total long-term debt outstanding, as defined by U.S. generally accepted accounting principles (“GAAP”), and an additional $301.3 million of obligations outstanding under our inventory financing agreements.
As of December 31, 2023, we had $940.5 million of total long-term debt outstanding, as defined by U.S. generally accepted accounting principles (“GAAP”), and an additional $231.9 million of obligations outstanding under our inventory financing agreements.
For instance, while cloud-based solutions present an opportunity for us and make up a significant part of our business and future, cloud-based solutions and technologies developed by manufacturer and publisher partners could be sold directly to customers rather than utilizing solutions providers like us, or such partners could otherwise reduce the amount of hardware or software we sell, leading to a reduction in our sales and/or profitability.
For instance, while cloud-based solutions present an opportunity for us and make up a significant part of our business and future, cloud-based solutions and technologies developed by manufacturer and publisher partners are alternatively marketed directly to customers without utilizing solutions providers like us, and our partners could otherwise reduce the volume of hardware, software or services we sell, leading to a reduction in our sales and/or profitability.
The success and profitability of international operations are subject to numerous risks and uncertainties, many of which are outside of our control, such as: • political or economic instability, including the possibility of recession or financial market instability, or acts of war, such as the Russian invasion of Ukraine and its regional and global ramifications discussed above; • changes in governmental regulation or taxation (foreign and domestic); • currency exchange fluctuations; • changes in import/export laws, regulations, customs, duties and tariffs (foreign and domestic); • trade restrictions (foreign and domestic); • difficulties of conducting business, managing operations, and costs of staffing in certain foreign countries; • work stoppages or other changes in labor conditions; • taxes and other restrictions on repatriating foreign profits back to the United States; • extended payment terms; • seasonal reductions in business activity in some parts of the world; and • natural disasters, terrorism, civil unrest, public health concerns (including health epidemics or outbreaks of communicable diseases such as the COVID-19 pandemic) and other geopolitical uncertainties.
The success and profitability of international operations are subject to numerous risks and uncertainties, many of which are outside of our control, such as: • political or economic instability, including the possibility of recession or financial market instability, or acts of war; • changes in governmental regulation or taxation (foreign and domestic); • currency exchange fluctuations; • changes in import/export laws, regulations, customs, duties and tariffs (foreign and domestic); • trade restrictions (foreign and domestic); • difficulties of conducting business, managing operations, and costs of staffing in certain foreign countries; • work stoppages or other changes in labor conditions; • taxes and other restrictions on repatriating foreign profits back to the United States; • extended payment terms; • seasonal reductions in business activity in some parts of the world; and • natural disasters, terrorism, civil unrest, public health issues such as pandemics or endemics and other geopolitical uncertainties. 16 INSIGHT ENTERPRISES, INC.
We have experienced and could continue to experience product constraints due to the failure of suppliers to accurately forecast demand, or to manufacture sufficient quantities of product to meet demand (including as a result of shortages of product components), among other reasons.
We have experienced and could continue to experience product constraints due to the failure of suppliers to accurately forecast demand, or to manufacture sufficient quantities of product to meet demand (including as a result of shortages of product components), among other reasons. A natural disaster or other adverse occurrence at one of our primary facilities could damage our business.
In addition, a substantial interruption in our IT systems or in our voice and data networks, however caused, could occur and could have a material adverse effect on our business, financial condition and results of operations.
Accordingly, some of our IT systems are subject to ongoing IT projects designed to streamline or optimize the information systems. In addition, a substantial interruption in our IT systems or in our voice and data networks, however caused, could occur and could have a material adverse effect on our business, financial condition and results of operations.
Sales to public sector clients are derived from sales to federal, state and local governmental departments and agencies, as well as to educational institutions, through open market sales and various contracts and programs.
Revenue from public sector contracts is derived from sales to federal, state and local governmental entities, as well as to educational institutions, through open market sales and various contractual frameworks and programs.
Additionally, strikes, inclement weather, natural disasters or other service interruptions, including as a result of the COVID-19 pandemic, sustained by such shippers could 17 INSIGHT ENTERPRISES, INC. adversely impact our ability to deliver products on a timely basis. Such events could have a material adverse effect on our business, financial condition and results of operations.
Additionally, strikes, inclement weather, natural disasters, public health issues such as pandemics or endemics, terrorist attacks or other service interruptions sustained by such shippers could adversely impact our ability to deliver products on a timely basis. Such events could have a material adverse effect on our business, financial condition and results of operations.
Like many other businesses, we have been, are, and expect to continue to be, subject to cyberattacks, and data security incidents. Additionally, some of the hardware and software products we resell could have defects, viruses, vulnerabilities, or otherwise be the subject of cyberattacks, data security events, or data breaches.
Some of the hardware and software products we resell could have defects, viruses, vulnerabilities, or otherwise be the subject of cyberattacks, data security events, or data breaches.
Any failure on the part of us or our vendors to maintain the security of our network systems and the proprietary, confidential, and personal data in our possession, including via the penetration of our network security and the misappropriation of proprietary, confidential and personal information, could result in costly investigations and remediation, business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also result in deterioration in our teammates’, partners’ and clients’ confidence in us and other competitive disadvantages, and thus could have a material adverse effect on our business, financial condition and results of operations.
These disruptions could further result in costly investigations and remediation, business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also result in deterioration in our teammates’, partners’ and clients’ confidence in us and other competitive disadvantages, and thus could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to pass on to our clients current costs and future increases in the cost of commercial delivery services, our profitability could be adversely impacted.
We generally ship hardware products to our clients by FedEx, United Parcel Service and other commercial delivery services and invoice clients for delivery charges. If we are unable to pass on to our clients current costs and future increases in the cost of commercial delivery services, our profitability could be adversely impacted.
If we were unable to maintain compliance or to repay the borrowed amounts, the lenders under our financing facilities could declare an event of default and demand payment within a specified period of time. We may face risk associated with the discontinuation of and transition from London Interbank Offered Rate (LIBOR) as a benchmark interest rate.
If we were unable to maintain compliance or to repay the borrowed amounts, the lenders under our financing facilities could declare an event of default and demand payment within a specified period of time. General Risk Factors Our future operating results may fluctuate significantly.
A natural disaster or other adverse occurrence at any of our major sales offices, including any closures or restrictions on operations as a result of the COVID-19 pandemic, could negatively impact our business, results of operations or cash flows. 20 INSIGHT ENTERPRISES, INC.
A natural disaster, act of terrorism, or public health issue or other adverse occurrence at any of our major sales offices could also negatively impact our business, results of operations or cash flows. 17 INSIGHT ENTERPRISES, INC.
More generally, these geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide in financial markets and in the economy, as well as other adverse impacts. For example, on February 24, 2022, Russian forces launched significant military actions against Ukraine, and sustained conflict and disruption in the region remains ongoing.
More generally, these geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide in financial markets and in the economy, as well as other adverse impacts.
These types of claims and challenges could have a material adverse effect on our business, financial condition and results of operations.
These types of claims and challenges could have a material adverse effect on our business, financial condition and results of operations. 19 INSIGHT ENTERPRISES, INC. The development, adoption and use of GenAI may result in increased liability exposure and competitive risk.
Although we take the security of our network systems and information very seriously, there can be no assurance that the security measures we employ will effectively prevent unauthorized persons from obtaining unauthorized access to our systems and information due to the evolving nature and intensity of cyberattacks and threats to data security, in light of new and sophisticated tools and methods used by criminals and cyberterrorists to penetrate and compromise systems, including computer viruses, malware, ransomware, phishing, misrepresentation, social engineering and forgery, which make it increasingly challenging to anticipate, harder to detect, and more difficult to adequately mitigate these risks.
Although we take the security of our network systems and information very seriously, there can be no assurance that the security measures we employ will effectively prevent unauthorized persons from obtaining unauthorized access to our systems and information due to the evolving nature and intensity of cyberattacks and threats to data security.
We also believe that our future success will be largely dependent on our ability to attract, train and retain highly qualified management, sales, service and technical teammates, and we make significant investments in the development of our leadership team, sales executives, solution architects, services engineers, project managers and other IT resources.
We make significant investments, and incur significant costs, in the recruitment and development of our leadership team, sales executives, solution architects, services engineers, project managers and other IT resources.
A natural disaster or other adverse occurrence at one of our primary facilities could damage our business. We have warehouse and distribution facilities in the United States and Canada and in the United Kingdom and Germany.
We have warehouse and distribution facilities in the United States and Canada and in the United Kingdom and Germany.
The loss of one or more of these leaders, or a failure to attract and retain new executives, could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to continue to attract and retain highly qualified executives, management, sales, service and technical teammates, it could have a material adverse effect on our business, financial condition and results of operations.
Additionally, competition for skilled and non-skilled workers is intense and there are risks of sustained labor shortages in various regions. In some jurisdictions in which we operate, there is increasing demand for qualified resources to fill open positions.
Competition for skilled and non-skilled workers in the IT industry is intense and there are risks of sustained labor shortages in key digital areas across various regions.
We rely on independent shipping companies for delivery of products and are subject to price increases or service interruptions from these carriers. We generally ship hardware products to our clients by FedEx, United Parcel Service and other commercial delivery services and invoice clients for delivery charges.
The occurrence of any of the aforementioned could adversely affect our reputation, brand, business, results of operations or cash flows. We rely on independent shipping companies for delivery of products and are subject to price increases or service interruptions from these carriers.
The frequency, intensity, and sophistication of cyberattacks and data security incidents has significantly increased in recent years and is constant. As with many other businesses, we are continually subject to cyber-attacks and the risk of data security incidents.
As with many other businesses, we, our third-party service providers and a number of our vendors have been and are continually subject to cyberattacks and the risk of data security incidents, the frequency, intensity, and sophistication of which continue to increase year over year.
Potential adverse consequences of Brexit such as global market uncertainty and increased regulatory complexities could have a negative impact on our business, financial condition and results of operations. 16 INSIGHT ENTERPRISES, INC.
Any of the foregoing or any other reduction in revenue from public sector clients could have a material adverse effect on our business, financial condition, and results of operations. 20 INSIGHT ENTERPRISES, INC.
Removed
Political developm ents, economic instability or natural disasters impacting international trade, including continued uncertainty surrounding the Referendum on the United Kingdom’s Membership in the European Union (“EU”) (referred to as “Brexit”) and, political tensions, trade disputes and increased tariffs, particularly between the United States and China, may also negatively impact markets and cause weaker macroeconomic conditions or drive sentiment that weakens demand for our products and services.
Added
New and sophisticated tools and methods are constantly being developed by criminals and cyber terrorists 18 INSIGHT ENTERPRISES, INC. to penetrate and compromise systems, including computer viruses, malware, ransomware, phishing, misrepresentation, social engineering and forgery, which make it increasingly challenging to anticipate, harder to detect, and more difficult to adequately mitigate these risks.
Removed
The occurrence of any of the aforementioned could adversely affect our reputation, brand, business, results of operations or cash flows. We are exposed to accounts receivable risks. We extend credit to our clients for a significant portion of our net sales, typically on 30-day payment terms.
Added
The development, adoption, and use of GenAI technologies are complex and still in their early stages, and there are technical challenges associated with achieving the desired level of accuracy, efficiency, and reliability. For example, GenAI systems that we deploy may be flawed or may be based on datasets that are biased or insufficient.
Removed
We are subject to the risk that our clients may not pay for the products and services they have purchased, or may pay at a slower rate than we have historically experienced, the risk of which is heightened during periods of economic downturn or uncertainty or, in the case of public sector clients, during periods of budget constraints.
Added
In addition, any latency, disruption, or failure in our GenAI systems could result in vulnerabilities, delays or errors in our offerings and compromise the integrity, security, or privacy of the generated content and applicable infrastructure.
Removed
The COVID-19 global pandemic has adversely impacted our business and, if it reemerges in severity in the future, may further adversely impact, our business, results of operations and financial condition. The widespread outbreak of any other illnesses or communicable diseases could also adversely affect our business, results of operations and financial condition.
Added
These limitations or failures could result in reputational damage, legal liabilities, increased regulatory scrutiny, or loss of client confidence which, in turn, could result in lower than anticipated demand and have a material adverse effect on our business, financial condition and results of operations .
Removed
In general, the occurrence of regional epidemics or a global pandemic, such as COVID-19, may adversely affect our operations, financial condition, and results of operations.
Added
Our public sector contracts are subject to unique risks and uncertainties, including termination rights, delays in payment, audits and investigations, any of which could have a material adverse effect on our business.
Removed
The COVID-19 outbreak resulted in government authorities around the world implementing various measures to try to reduce the spread of COVID-19, such as travel bans and restrictions, quarantines, "shelter-in-place," "stay-at-home," total lock-down orders, business limitations or shutdowns and similar orders.
Added
Non-compliance with requisite procurement, billing or ordinance-specific administrative rules, procedures, and processes could subject our contracts to protest or make them voidable regardless of whether we bear any responsibility for non-compliance. This could also subject us to debarment, suspension, or disqualification from doing business with governmental entities, and could also result in civil, criminal, and administrative liability.
Removed
As a result, the COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and workforce participation, and initially created significant volatility and disruption of financial markets. Since the initial outbreak, new variants of COVID-19 that are significantly more contagious than previous strains, have emerged.
Added
Public sector contracts can contain one-sided provisions and certifications in favor of public sector clients, including broad indemnification obligations, uncapped liability or liquidated damages obligations, which can impose financial risks that are beyond those associated with ordinary course commercial contracts with non-public sector clients. In addition, public sector contracts may be subject to audits and investigations by government agencies.
Removed
The spread of these new strains initially caused many government authorities and businesses to reimplement prior restrictions in an effort to lessen the spread of COVID-19 and its variants; however, while many of these restrictions have been lifted, uncertainty remains as to whether additional restrictions may be initiated or again reimplemented in responses to surges in COVID-19 cases.
Added
Public sector contracts are generally terminable at any time for convenience and in some instances contracting agencies are subject to non-appropriation of funding which impairs their ability to pay us for multi-year contract obligations.
Removed
The COVID-19 pandemic has adversely impacted our business and, if it reemerges in severity in the future, may further adversely impact, our business, results of operations and financial condition. We observed a pronounced impact of COVID-19 on our 2020 financial results when compared to internal expectations and minimal negative impact on our 2021 and 2022 financial results.
Added
Contractual disputes with our clients and third-party suppliers could be costly, time-consuming, and harm our business and reputation. Our business is contract intensive and we are party to contracts with our clients and suppliers in all of our regions.
Removed
However, prolonged supply constraints stemming from shortages of chips and displays resulted in sustained elevated bookings coming into and throughout the first half of 2022. While supply constraints for certain products, such as devices, have eased limitations on other products, such as infrastructure products, remain.
Added
Our contracts can contain a variety of terms, including passthrough terms from our suppliers, data security and privacy obligations, indemnification obligations, and regulatory requirements. Contract terms may not always be standardized across our clients and suppliers and can be subject to differing interpretations, which could result in disputes from time to time.
Removed
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – COVID-19 and Supply Chain Constraints Update” for additional information.
Added
Our contracts with clients may also include indemnification provisions under which we agree to indemnify for losses incurred as a result of claims of third-party intellectual property rights infringement or other violations of intellectual property rights, damages caused by us to property or persons, or other liabilities relating to or arising from sale of our solutions or the resale of our suppliers’ hardware, cloud, software, and services.
Removed
Additionally, our business operations, financial performance and results of operations have been and could be further adversely impacted in a number of ways, which may include, but are not limited to, the following: • disruptions to our operations, including closures of our offices and facilities; restrictions on our operations and sales, marketing and distribution efforts; and interruptions to our other important business activities; • reduced demand for our products and services due to disruptions to the businesses and operations of our clients; • interruptions, availability or delays in global shipping to transport our products; • disruptions, slowdowns or stoppages in the supply chain for our products; • limitations on employee resources and availability, including due to sickness, government restrictions, labor supply shortages, the desire of employees to avoid contact with large groups of people or mass transit disruptions; • the ability of our clients to pay for our products, services and solutions; 19 INSIGHT ENTERPRISES, INC. • a continuation or worsening of general economic conditions, including increased inflation; • the willingness of clients in the travel, hospitality, retail and other industries significantly impacted by the pandemic to continue with current and expected projects and initiate new projects; • a fluctuation in foreign currency exchange rates or interest rates, which could result from market uncertainties; • an increase in the cost or the difficulty to obtain debt or equity financing, which could affect our financial condition or our ability to fund operations or future investment opportunities; • changes to the carrying value of our goodwill and intangible assets; and • an increase in regulatory restrictions or continued market volatility, which could hinder our ability to execute strategic business activities, including acquisitions, as well as negatively impact our stock price.
Added
Large contract damages payments could harm our business, reputation, operating results, and financial condition. Any dispute with respect to such obligations could have adverse effects on our relationships with existing or potential clients and suppliers, and harm our business, financial condition, reputation, and operating results.
Removed
The potential effects of the COVID-19 pandemic may also impact other factors discussed in this “Risk Factors” section.
Removed
The ultimate extent of the impact of the COVID-19 pandemic on our business operations, financial performance and results of operations, including our ability to execute our business strategies and initiatives in the expected time frame, is currently unknown and will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted.
Removed
This includes, but is not limited to, the duration and spread of the COVID-19 pandemic and its severity; the emergence and severity of its variants; the availability and efficacy of vaccines (particularly with respect to emerging strains of the virus) and potential hesitancy to utilize them; the reduction in travel and increase in teammates working from remote locations and other protective actions taken to contain the virus or treat its impact; general economic factors, such as increased inflation; supply chain constraints; labor supply issues; and how quickly and to what extent normal economic and operating conditions can resume.
Removed
Accordingly, some of our IT systems are subject to ongoing IT projects designed to streamline or optimize the information systems. In addition, we recently migrated our EMEA operations to the same core IT systems and tools used in North America and APAC.
Removed
There is no guarantee that we will be successful in these efforts at all times or that there will not be implementation or integration difficulties.
Removed
Cyberthreats are constantly evolving, increasing the difficulty of detecting and successfully defending against them.
Removed
The failure to comply with the terms and conditions of our commercial and public sector contracts could result in, among other things, damages, fines or other liabilities. Sales to commercial clients are based on stated contractual terms, the terms and conditions on our website or terms contained in purchase orders on a transaction by transaction basis.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOperating Segment Location Primary Activities Own or Lease North America Chandler, Arizona, USA Executive Office, Sales and Administration, Network Operations Center and Client Support Center Own Addison, Illinois, USA Sales and Administration Lease Eden Prairie, Minnesota, USA Sales, Services and Administration Lease Hanover Park, Illinois, USA Services, Distribution and Administration Lease Lewis Center, Ohio, USA Services, Distribution and Administration Own Worthington, Ohio, USA Distribution Lease Plano, Texas, USA Sales and Administration Lease Liberty Lake, Washington, USA Sales and Administration Lease Tampa, Florida, USA Sales and Administration Lease Conway, Arkansas, USA Sales and Administration Lease Fort Worth, Texas, USA Services, Distribution and Administration Lease Edmonton, Alberta, Canada Sales, Distribution and Administration Lease Winnipeg, Manitoba, Canada Sales and Administration Lease Montreal, Quebec, Canada Sales and Administration Own Montreal, Quebec, Canada Distribution Lease EMEA Sheffield, United Kingdom Sales and Administration Own Sheffield, United Kingdom Distribution Lease Uxbridge, United Kingdom Sales and Administration Lease Frankfurt, Germany Sales and Administration Lease Frankfurt, Germany Distribution Lease Vélizy, France Sales and Administration Lease Apeldoorn, Netherlands Sales and Administration Lease APAC Sydney, Australia Sales and Administration Lease Perth, Australia Sales and Administration Lease Auckland, New Zealand Sales and Administration Lease Hong Kong Sales and Administration Lease Shanghai, China Sales and Administration Lease Manila, Philippines Operations Center Lease In addition to those listed above, we have leased sales offices in various cities across North America, EMEA and APAC.
Biggest changeOperating Segment Location Primary Activities Own or Lease North America Chandler, Arizona, USA Executive Office, Sales and Administration, Network Operations Center and Client Support Center Own Eden Prairie, Minnesota, USA Sales, Services and Administration Lease Hanover Park, Illinois, USA Services, Distribution and Administration Lease Lewis Center, Ohio, USA Services, Distribution and Administration Own Plano, Texas, USA Sales and Administration Lease Liberty Lake, Washington, USA Sales and Administration Lease Tampa, Florida, USA Sales and Administration Lease Conway, Arkansas, USA Sales and Administration Lease Fort Worth, Texas, USA Services, Distribution and Administration Lease Edmonton, Alberta, Canada Sales, Distribution and Administration Lease Winnipeg, Manitoba, Canada Sales and Administration Lease Montreal, Quebec, Canada Sales and Administration Lease Montreal, Quebec, Canada Distribution Lease Calgary, Alberta, Canada Distribution Lease Mississauga, Ontario, Canada Sales and Administration Lease EMEA Sheffield, United Kingdom Sales and Administration Lease Sheffield, United Kingdom Distribution Lease Uxbridge, United Kingdom Sales and Administration Lease Frankfurt, Germany Sales and Administration Lease Frankfurt, Germany Distribution Lease Vélizy, France Sales and Administration Lease Apeldoorn, Netherlands Sales and Administration Lease Chisinau, Moldova Services Lease Timisoara, Romania Services Lease APAC Sydney, Australia Sales and Administration Lease Perth, Australia Sales and Administration Lease Auckland, New Zealand Sales and Administration Lease Hong Kong Sales and Administration Lease Shanghai, China Sales and Administration Lease Manila, Philippines Operations Center Lease In addition to those listed above, we have leased sales offices in various cities across North America, EMEA and APAC.
Legal Proceedings For a discussion of legal proceedings, see “Legal Proceedings” in Note 16 to the Consolidated Financial Statements in Part II, Item 8 of this report, which is incorporated by reference herein. Item 4. Mine Safety Disclosures Not applicable. 29 INSIGHT ENTERPRISES, INC. PART II
Legal Proceedings For a discussion of legal proceedings, see “Legal Proceedings” in Note 16 to the Consolidated Financial Statements in Part II, Item 8 of this report, which is incorporated by reference herein. Item 4. Mine Safety Disclosures Not applicable. 27 INSIGHT ENTERPRISES, INC. PART II
Information about significant sales, distribution, services and administration facilities in use as of December 31, 2022 is summarized in the following table: 27 INSIGHT ENTERPRISES, INC.
Information about significant sales, distribution, services and administration facilities in use as of December 31, 2023 is summarized in the following table: 25 INSIGHT ENTERPRISES, INC.
For additional information on property and equipment and operating leases, see Notes 4 and 9 to the Consolidated Financial Statements in Part II, Item 8 of this report.
For additional information on property and equipment and operating leases, see Notes 4 and 9 to the Consolidated Financial Statements in Part II, Item 8 of this report. 26 INSIGHT ENTERPRISES, INC. Item 3.
At December 31, 2022, we owned or leased approximately 2.1 million square feet of office and warehouse space, and, while approximately 77% of the square footage is in the United States, we own or lease office and warehouse facilities in Canada and in 10 countries in EMEA and we lease office facilities in 6 countries in APAC.
At December 31, 2023, we owned or leased approximately 1.8 million square feet of office and warehouse space, and, while approximately 75% of the square footage is in the United States, we own or lease office and warehouse facilities in Canada and in 16 countries in EMEA and we lease office facilities in 7 countries in APAC.
Removed
For additional information on the sale of our Tempe, Arizona and Woodbridge, Illinois properties in 2021, see Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this report. 28 INSIGHT ENTERPRISES, INC. Item 3.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. Mine Safety Disclosures 29 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 ITEM 6. [Reserved] 31 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 32 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 47 ITEM 8.
Biggest changeITEM 4. Mine Safety Disclosures 27 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 ITEM 6. [Reserved] 29 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 45 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed4 unchanged
Biggest changeIssuer 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 October 1, 2022 through October 31, 2022 — $ — — $ 300,000,000 November 1, 2022 through November 30, 2022 334,108 99.30 334,108 266,823,076 December 1, 2022 through December 31, 2022 504,423 98.60 504,423 217,086,968 838,531 838,531 On May 6, 2021, we announced that our Board of Directors had authorized the repurchase of up to $125,000,000 of our common stock.
Biggest changeIssuer 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 October 1, 2023 through October 31, 2023 — $ — — $ 200,020,373 November 1, 2023 through November 30, 2023 — — — 200,020,373 December 1, 2023 through December 31, 2023 — — — 200,020,373 — — On September 19, 2022, we announced that our Board of Directors had authorized the repurchase of up to $300.0 million of our common stock, including $50.0 million that remained available from a prior authorization.
The graph assumes that $100 was invested on December 31, 2017 in our common stock and in each of the two Nasdaq indices, and that, as to such indices, dividends were reinvested. We have not, since our inception, paid any cash dividends on our common stock.
The graph assumes that $100 was invested on December 31, 2018 in our common stock and in each of the two Nasdaq indices, and that, as to such indices, dividends were reinvested. We have not, since our inception, paid any cash dividends on our common stock.
See further information on our share repurchase programs in Note 15 to the Consolidated Financial Statements in Part II, Item 8 of this report. 30 INSIGHT ENTERPRISES, INC.
See further information on our share repurchase programs in Note 15 to the Consolidated Financial Statements in Part II, Item 8 of this report. 28 INSIGHT ENTERPRISES, INC.
Historical stock price performance shown on the graph is not necessarily indicative of future price performance. Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2022 Insight Enterprises, Inc.
Historical stock price performance shown on the graph is not necessarily indicative of future price performance. Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2023 Insight Enterprises, Inc.
Our senior secured revolving credit facility contains certain covenants that, if not met, restrict the payment of cash dividends.
Our senior secured revolving credit facility contains certain covenants that restrict the payment of cash dividends.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades under the symbol “NSIT” on The Nasdaq Global Select Market. As of February 10, 2023, we had 33,807,565 shares of common stock outstanding held by 43 stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades under the symbol “NSIT” on The Nasdaq Global Select Market. As of February 16, 2024, we had 32,590,162 shares of common stock outstanding held by 37 stockholders of record.
On September 19, 2022, we announced that our Board of Directors had authorized the repurchase of up to $300,000,000 of our common stock, including the $50,000,000 that remained available from the prior authorization. As of December 31, 2022, approximately $217.1 million remained available for repurchases under this share repurchase plan.
On May 18, 2023, we announced that our Board of Directors authorized the repurchase of up to $300.0 million of our common stock, including $100.0 million that remained available from the prior authorization. As of December 31, 2023, approximately $200.0 million remained available for repurchases under this share repurchase plan.
Common Stock (NSIT) $ 100.00 $ 106.00 $ 184.00 $ 199.00 $ 278.00 $ 262.00 Nasdaq US Benchmark TR Index (Market Index) 100.00 95.00 124.00 150.00 189.00 152.00 Nasdaq US Benchmark Computer Hardware TR Index (Industry Index) 100.00 94.00 172.00 305.00 412.00 303.00
Common Stock (NSIT) $ 100.00 $ 172.00 $ 187.00 $ 262.00 $ 246.00 $ 435.00 Nasdaq US Benchmark TR Index (Market Index) 100.00 131.00 159.00 200.00 161.00 203.00 Nasdaq US Benchmark Computer Hardware TR Index (Industry Index) 100.00 183.00 325.00 440.00 324.00 482.00

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

86 edited+33 added−35 removed40 unchanged
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Cash Requirements From Contractual Obligations At December 31, 2022, our contractual obligations for continuing operations primarily consist of $301.3 million under our inventory financing facilities due in 2023 and payments of $91.4 million under operating leases primarily due in 2023 through 2026.
Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Cash Requirements From Contractual Obligations At December 31, 2023, our contractual obligations for continuing operations primarily consist of: • $231.9 million under our inventory financing facilities due in 2024; • $102.4 million under operating leases, the majority of which are due from 2024 through 2027; • contingent consideration (earnout payments) associated with our acquisition of SADA, up to a maximum of $390.0 million, payable upon certain defined contingencies being met from 2024 through 2027; • contingent consideration (earnout payments) associated with our acquisition of Amdaris, up to a maximum of $54.4 million, payable upon certain defined contingencies being met from 2024 through 2026; • a purchase commitment related to cloud services of $95.8 million that must be met by September 2029; • a purchase commitment related to software as a service of $33.9 million that must be met by November 2026; • $591.5 million outstanding under our ABL facility maturing in 2027; and • $350.0 million principal amount due on the Notes maturing in 2025.
As of December 31, 2022, 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 December 31, 2022, 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 December 31, 2023, 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 December 31, 2023, 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.
These amounts are classified separately as accounts payable - inventory financing facilities in our consolidated balance sheets. Notes 7 and 8 to the Consolidated Financial Statements in Part II, Item 8 of this report also include: a description of our financing facilities; amounts outstanding; amounts available and weighted average borrowings and interest rates during the year. 42 INSIGHT ENTERPRISES, INC.
These amounts are classified separately as accounts payable - inventory financing facilities in our consolidated balance sheets. Notes 7 and 8 to the Consolidated Financial Statements in Part II, Item 8 of this report also include: a description of our financing facilities; amounts outstanding; amounts available and weighted average borrowings and interest rates during the year. 40 INSIGHT ENTERPRISES, INC.
Judgements and Uncertainties We may first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform a quantitative goodwill impairment test. Otherwise, the goodwill impairment test is not required.
Judgments and Uncertainties We may first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform a quantitative goodwill impairment test. Otherwise, the goodwill impairment test is not required.
Our assessments in the past three fiscal years have been qualitative assessments and no quantitative assessments have been deemed necessary. Additionally, during the three years ended December 31, 2022, 2021 and 2020 we analyzed each of our reporting units and determined that no impairment charge was necessary.
Our assessments in the past three fiscal years have been qualitative assessments and no quantitative assessments have been deemed necessary. Additionally, during the three years ended December 31, 2023, 2022 and 2021 we analyzed each of our reporting units and determined that no impairment charge was necessary.
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 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, including conversion of the Notes, and repayment of our inventory financing facilities for the next 12 months.
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 change significantly in the amounts made available and the requirements year over year,” in Part I, Item 1A of this report. 34 INSIGHT ENTERPRISES, INC.
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 change significantly in the amounts made available and the requirements year over year,” in Part I, Item 1A of this report.
The change in net foreign currency exchange gains/losses is due primarily to the underlying changes in the applicable exchange rates, partially mitigated by our use of foreign exchange forward contracts to offset the effects of fluctuations in foreign currencies on certain of our non-functional currency assets and liabilities. Income Tax Expense.
The changes in net foreign currency exchange gains/losses are due primarily to the underlying changes in the applicable exchange rates, partially mitigated by our use of foreign exchange forward contracts to offset the effects of fluctuations in foreign currencies on certain of our non-functional currency assets and liabilities. Income Tax Expense.
As of December 31, 2022, eligible accounts receivables and inventory were sufficient to permit access to the full $1.8 billion under the ABL facility. We also have agreements with financial intermediaries to facilitate the purchase of inventory from certain suppliers under certain terms and conditions.
As of December 31, 2023, eligible accounts receivables and inventory were sufficient to permit access to $1.7 billion of the full $1.8 billion under the ABL facility. We also have agreements with financial intermediaries to facilitate the purchase of inventory from certain suppliers under certain terms and conditions.
RESULTS OF OPERATIONS The following table sets forth certain financial data as a percentage of net sales for the years ended December 31, 2022 and 2021: 2022 2021 Net sales 100.0 % 100.0 % Costs of goods sold 84.3 84.7 Gross profit 15.7 15.3 Operating expenses: Selling and administrative expenses 11.7 11.8 Severance and restructuring expenses and acquisition-related expenses — — Earnings from operations 4.0 3.5 Non-operating expense, net 0.4 0.4 Earnings before income taxes 3.6 3.1 Income tax expense 0.9 0.8 Net earnings 2.7 % 2.3 % 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 change significantly in the amounts made available and the related product or services sales being incentivized by the partner.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) RESULTS OF OPERATIONS The following table sets forth certain financial data as a percentage of net sales for the years ended December 31, 2023 and 2022: 2023 2022 Net sales 100.0 % 100.0 % Costs of goods sold 81.8 84.3 Gross profit 18.2 15.7 Operating expenses: Selling and administrative expenses 13.5 11.7 Severance and restructuring expenses and acquisition-related expenses 0.1 — Earnings from operations 4.6 4.0 Non-operating expense, net 0.5 0.4 Earnings before income taxes 4.1 3.6 Income tax expense 1.0 0.9 Net earnings 3.1 % 2.7 % 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.
We have not made any material adjustments to our financial statements as a result of actual results not being consistent with our estimates in the past three fiscal years.
We have not made any material adjustments to our financial statements as a result of actual results not being consistent with our estimates in the past three fiscal years. 42 INSIGHT ENTERPRISES, INC.
See Note 11 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of income tax expense. 2021 Compared to 2020 For a comparison of our results of operations for the fiscal years ended December 31, 2021 and 2020, see “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 fiscal year ended December 31, 2021 filed with the SEC on February 18, 2022. 39 INSIGHT ENTERPRISES, INC.
See Note 11 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of income tax expense. 2022 Compared to 2021 For a comparison of our results of operations for the fiscal years ended December 31, 2022 and 2021, see “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 fiscal year ended December 31, 2022 filed with the SEC on February 16, 2023.
As of December 31, 2022, the current portion of our long-term debt relates to the Notes, our finance leases and other financing obligations. • Our objective is to pay our debt balances down while retaining adequate cash balances to meet overall business objectives. • Our convertible senior notes are subject to certain events of default and certain acceleration clauses.
As of December 31, 2023, the current portion of our long-term debt relates to the Notes and other financing obligations. • Our objective is to pay our debt balances down while retaining adequate cash balances to meet overall business objectives. • Our Notes are subject to certain events of default and certain acceleration clauses.
Inflation We have historically not been adversely affected by inflation, as technological advances and competition within the IT industry have generally caused the prices of the products we sell to decline and product life cycles tend to be short. This requires our growth in unit sales to exceed the decline in prices in order to increase our net sales.
Inflation We have historically not been adversely affected by inflation, as technological advances and competition within the IT industry have generally caused the prices of the products we sell to decline and product life cycles tend to be short. This requires our growth in unit sales to exceed 41 INSIGHT ENTERPRISES, INC.
Our consolidated cash flow operating metrics for the quarters ended December 31, 2022 and 2021 were as follows: 2022 2021 Days sales outstanding in ending accounts receivable (“DSOs”) (a) 120 105 Days inventory outstanding (“DIOs”) (b) 12 14 Days purchases outstanding in ending accounts payable (“DPOs”) (c) (92) (88) Cash conversion cycle (days) (d) 40 31 (a) Calculated as the balance of accounts receivable, net at the end of the period divided by daily net sales.
Our consolidated cash flow operating metrics for the quarters ended December 31, 2023 and 2022 were as follows: 2023 2022 Days sales outstanding in ending accounts receivable (“DSOs”) (a) 147 120 Days inventory outstanding (“DIOs”) (b) 9 12 Days purchases outstanding in ending accounts payable (“DPOs”) (c) (127) (92) Cash conversion cycle (days) (d) 29 40 (a) Calculated as the balance of accounts receivable, net at the end of the period divided by daily net sales.
See Note 1 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of our accounting policies related to sales recognition and for a detailed description of our product and services offerings.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) See Note 1 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of our accounting policies related to sales recognition and for a detailed description of our product and services offerings.
As of December 31, 2022, we had approximately $138.2 million in cash and cash equivalents in our foreign subsidiaries, the majority of which reside in Canada and the Netherlands. Certain of these cash balances will be remitted to the U.S. by paying down intercompany payables generated in the ordinary course of business or through dividend distributions.
As of December 31, 2023, we had approximately $209.1 million in cash and cash equivalents in our foreign subsidiaries, the majority of which reside in Canada, The Netherlands, New Zealand and Australia. Certain of these cash balances will be remitted to the U.S. by paying down intercompany payables generated in the ordinary course of business or through dividend distributions.
As a percentage of net sales, earnings from operations increased by approximately 50 basis points to 4.1%. The increase in earnings from operations was primarily driven by an increase in gross profit in excess of increases in selling and administrative expenses and severance and restructuring expenses.
As a percentage of net sales, earnings from operations increased by approximately 80 basis points to 4.9%. The increase in earnings from operations was primarily driven by an increase in gross profit in excess of increases in selling and administrative expenses, severance and restructuring expenses and acquisition and integration related expenses.
This compares to $50.0 million repurchased during 2021. We anticipate that cash flows from operations, together with the funds available under our financing facilities, will be adequate to support our cash and working capital requirements for operations as well as other strategic investments over the next 12 months and beyond.
We anticipate that cash flows from operations, together with the funds available under our financing facilities, will be adequate to support our cash and working capital requirements for operations as well as other strategic investments over the next 12 months and beyond.
EMEA’s earnings from operations decreased 6% (increased 4% excluding the effects of fluctuating foreign currency exchange rates), or $2.7 million, year to year, in 2022 compared to 2021. As a percentage of net sales, earnings from operations decreased by approximately 20 basis points to 2.6%.
EMEA’s earnings from operations decreased 14% (also decreasing 14% excluding the effects of fluctuating foreign currency exchange rates), or $6.1 million, year to year, in 2023 compared to 2022. As a percentage of net sales, earnings from operations decreased by approximately 20 basis points to 2.4%.
Financing for future transactions would result in the utilization of cash, incurrence of additional debt, issuance of stock or some combination of the three. See Note 20 to the Consolidated Financial Statements in Part II, Item 8 of this report for a discussion of our acquisition of Hanu on June 1, 2022.
Financing for future transactions would result in the utilization of cash, incurrence of additional debt, issuance of stock or some combination of the three. See Note 20 to the Consolidated Financial Statements in Part II, Item 8 of this report for a discussion of our acquisitions of SADA in December 2023, Amdaris in August 2023 and Hanu in June 2022.
Netted costs were $1.6 billion and $1.4 billion in the fourth quarter of 2022 and 2021, respectively.
Netted costs were $1.8 billion and $1.6 billion in the fourth quarter of 2023 and 2022, respectively.
Financing Facilities As of December 31, 2022, our long-term debt balance includes $291.6 million outstanding under our $1.8 billion ABL facility.
Financing Facilities As of December 31, 2023, our long-term debt balance includes $591.5 million outstanding under our $1.8 billion ABL facility.
For a description of our various financing facilities, see Notes 7 and 8 to our Consolidated Financial Statements in Part II, Item 8 of this report. Other (Income) Expense, Net . Other (income) expense, net, consists primarily of foreign currency exchange gains and losses.
For a description of our various financing facilities, see Notes 7 and 8 to our Consolidated Financial Statements in Part II, Item 8 of this report. 36 INSIGHT ENTERPRISES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Other Expense (Income), Net . Other expense (income), net, consists primarily of foreign currency exchange gains and losses.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) 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 our estimates.
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 our estimates.
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.
Our offerings in the remainder of our EMEA and APAC segments consist largely of software and certain software-related services and cloud solutions.
This increase was partially offset by the continued trend toward higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category. • The increase in services net sales was primarily due to higher volume of sales of Insight Delivered services and the continued trend toward higher sales of cloud solution offerings.
This increase was partially offset by the continued trend toward higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category. • The increase in services net sales was primarily due to the continued trend toward higher sales of cloud solution offerings, including net sales attributable to SADA, which we acquired in December 2023, partially offset by decreases in Insight Delivered services net sales.
Adjusting our cash conversion cycle calculation by adding netted costs to both daily net sales and daily costs of goods sold results in a reduction to our cash conversion cycle from 40 days to 28 days in the fourth quarter of 2022 and no change in the fourth quarter of 2021, which we believe provides a more accurate reflection of our cash flow operating metrics. • 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 2023 in excess of working capital needs, given current market conditions, to pay down our ABL facility and our inventory financing facilities. • We expect that in 2023 our cash flows from operations will continue to normalize as we anticipate sequential growth and given the fact that our business mix has returned to previous levels. 41 INSIGHT ENTERPRISES, INC.
Adjusting our cash conversion cycle calculation by adding netted costs to both daily net sales and daily costs of goods sold results in a reduction to our cash conversion cycle from 29 days to 22 days in the fourth quarter of 2023 and from 40 days to 28 days in the fourth quarter of 2022, which we believe provides a more accurate reflection of our cash flow operating metrics. • 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 2024, in excess of working capital needs, to pay down our ABL facility and our inventory financing facilities as well as to fund strategic acquisitions.
The changes were primarily the result of the following: • The increase in software net sales was due to higher volume of software net sales, partially offset by the continued trend toward higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category. • The decrease in hardware net sales was primarily due to fluctuations in foreign currency exchange rates compared to the prior year. • The decrease in services net sales was primarily due to fluctuations in foreign currency exchange rates compared to the prior year, partially offset by higher volume of sales of Insight Delivered services and higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category.
The net changes were primarily the result of the following: • The decrease in hardware net sales was due to lower volume of sales to large enterprise and corporate clients. • The increase in services net sales was due to higher volume of Insight Delivered services and higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category. • The increase in software net sales was primarily due to higher volume of sales to corporate and public sector clients, partially offset by the continued trend toward higher sales of cloud solution offerings.
During 2022, we incurred $2.0 million in direct third-party costs primarily related to the acquisition of Hanu. See Note 20 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of our Hanu acquisition. During 2021, we did not incur any acquisition-related expenses. Earnings from Operations.
During 2022, we incurred $2.0 million in direct third-party costs primarily related to the acquisition of Hanu. See Note 20 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of our acquisitions. Earnings from Operations. Earnings from operations increased 1%, or $6.1 million, year over year, in 2023 compared to 2022.
Our actual results could differ materially from those contained in forward-looking statements due to a number of factors, including those discussed in “Risk Factors” in Part I, Item 1A and elsewhere in this report. Overview Today, every business needs to be a technology business.
Our actual results could differ materially from those contained in forward-looking statements due to a number of factors, including those discussed in “Risk Factors” in Part I, Item 1A and elsewhere in this report. Overview Today, every business is a technology business. We help our clients accelerate their digital journey to modernize their businesses and maximize the value of technology.
Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. Management evaluates the merits of each significant assumption, both individually and in the aggregate, used to determine the fair value of the reporting units. If the estimated fair value exceeds book value, goodwill is considered not to be impaired.
Management evaluates the merits of each significant assumption, both individually and in the aggregate, used to determine the fair value of the reporting units. If the estimated fair value exceeds book value, goodwill is considered not to be impaired.
Our earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for 2022 and 2021 (dollars in thousands): 2022 % of Net Sales 2021 % of Net Sales North America $ 350,436 4.1 % $ 268,813 3.6 % EMEA 44,264 2.6 % 46,918 2.8 % APAC 19,000 8.1 % 16,330 7.7 % Consolidated $ 413,700 4.0 % $ 332,061 3.5 % North America’s earnings from operations increased 30%, or $81.6 million, year over year, in 2022 compared to 2021.
Our earnings from operations and earnings from operations as a percentage of net sales by operating segment were as follows for 2023 and 2022 (dollars in thousands): 2023 % of Net Sales 2022 % of Net Sales North America $ 362,082 4.9 % $ 350,436 4.1 % EMEA 38,128 2.4 % 44,264 2.6 % APAC 19,585 8.5 % 19,000 8.1 % Consolidated $ 419,795 4.6 % $ 413,700 4.0 % North America’s earnings from operations increased 3%, or $11.6 million, year over year, in 2023 compared to 2022.
We ended the year with $163.6 million of cash and cash equivalents and $637.9 million of debt outstanding under our long-term debt facilities, including $346.2 million related to the Notes that are classified as a current liability at December 31, 2022.
We ended the year with $268.7 million of cash and cash equivalents and $940.5 million of debt outstanding under our long-term debt facilities, including $348.0 million related to the Notes that are classified as a current liability at December 31, 2023.
Any adverse change in these factors, among others, could have a significant effect on the recoverability of goodwill and could have a material effect on our consolidated financial statements.
Any adverse change in these 43 INSIGHT ENTERPRISES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) factors, among others, could have a significant effect on the recoverability of goodwill and could have a material effect on our consolidated financial statements.
Partner funding received pursuant to certain services delivered is recorded as services net sales. Consideration that exceeds the specific, incremental, identifiable costs is classified as a reduction of costs of goods sold. Judgements and Uncertainties We make period-end estimates about the anticipated achievement levels under the various partner programs in order to accrue amounts earned.
Consideration that exceeds the specific, incremental, identifiable costs is classified as a reduction of costs of goods sold. Judgments and Uncertainties We make period-end estimates about the anticipated achievement levels under the various partner programs in order to accrue amounts earned. These estimates and assumptions primarily include whether we have met key net sales targets under the various partner programs.
Partner funding received pursuant to shared marketing expense programs is recorded as it is earned as a reduction of the related selling and administrative expenses in the period the program takes place if the consideration represents a reimbursement of 44 INSIGHT ENTERPRISES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) specific, incremental, identifiable costs.
Partner funding received pursuant to shared marketing expense programs is recorded as it is earned as a reduction of the related selling and administrative expenses in the period the program takes place if the consideration represents a reimbursement of specific, incremental, identifiable costs. Partner funding received pursuant to certain services delivered is recorded as services net sales.
The results of operations for 2022 include the following items: • severance expenses of $4.2 million, $3.2 million net of tax; and • the repurchase of approximately 1,109,000 shares of the Company’s common stock for an aggregate of $107.9 million. 32 INSIGHT ENTERPRISES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) The results of operations for 2022 include the following items: • severance and restructuring expenses of $4.2 million, $3.2 million net of tax; and • the repurchase of approximately 1.1 million shares of the Company’s common stock for an aggregate cost of $107.9 million.
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 43 INSIGHT ENTERPRISES, INC.
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.
APAC’s earnings from operations increased 16% (increased 24% excluding the effects of fluctuating foreign currency exchange rates), or $2.7 million, year over year, in 2022 compared to 2021. As a percentage of net sales, earnings from operations increased by approximately 40 basis points to 8.1%.
APAC’s gross profit increased 4% (increased 8% excluding the effects of fluctuating foreign currency exchange rates), or $2.6 million, in 2023 compared to 2022. As a percentage of net sales, gross margin increased by approximately 170 basis points year over year.
Interest expense, net primarily relates to borrowings under our financing facilities and imputed interest under our inventory financing facilities and the Notes, partially offset by interest income generated from interest earned on cash and cash equivalent bank balances.
Interest expense, net primarily relates to borrowings under our financing facilities and imputed interest under our inventory financing facilities and the Notes, partially offset by interest income generated from interest earned on cash and cash equivalent bank balances. Interest expense increased 4%, or $1.6 million, in 2023 compared to 2022 primarily due to higher interest rates under our ABL facility.
This increase reflects higher services net sales at higher margins than in the prior year and an expansion in product margin for software. • Earnings from operations increased to $413.7 million in 2022, up 25% compared to the prior year, which represented 4.0% of net sales. • Our effective tax rate in 2022 was 25.1%, which compares to our effective tax rate of 25.0% in 2021. • Net earnings and diluted net earnings per share were $280.6 million and $7.66, respectively, in 2022.
This increase reflects expansion in margin from services net sales, primarily from growth in cloud solution offerings, and an expansion in product margin. • Earnings from operations increased to $419.8 million in 2023, an increase of 1% compared to the prior year, which represented 4.6% of net sales. • Our effective tax rate in 2023 was 25.6%, which compares to our effective tax rate of 25.1% in 2022. • Net earnings and diluted net earnings per share were $281.3 million and $7.55, respectively, in 2023.
Net sales of hardware and services increased 17% and 24%, respectively, year over year, partially offset by a decrease in software net sales of 4 %, year to year.
This net decrease reflects a decrease in hardware net sales, partially offset by increases in software and services net sales. Net sales of hardware decreased 22%, year to year. Net sales of software and services increased 7% and 2%, respectively, year over year.
Interest expense decreased 3%, or $1.0 million, in 2022 compared to 2021 primarily due to having no imputed interest in 2022 under the Notes and higher interest income earned in 2022. This was partially offset by the higher interest rates and higher average daily balances under our ABL facility and increased imputed interest under our inventory financing facilities.
This was partially offset by lower average daily balances under our ABL facility, higher interest income earned in 2023 and decreased imputed interest under our inventory financing facilities. Imputed interest under our inventory financing facilities decreased $2.2 million due to lower average daily balances in 2023 compared to 2022.
The expanded margins on hardware are due in part to a shift away from devices towards higher margin infrastructure sales in the latter part of 2022. • An expansion in services margin year over year of 24 basis points was due to higher margins generated from increased cloud solution offerings, software maintenance and on Insight Core services, (consisting of Insight Delivered and managed services), partially offset by a decline in margins from hardware warranty.
The expanded margins on hardware are due in part to the decline in lower margin devices and also reflect the results of profitability and pricing initiatives started in 2022. • An expansion in services margin year over year of 216 basis points was due to higher margins generated from increased cloud solution offerings, including margin contributed by SADA, software maintenance and on Insight Core services, (consisting of Insight Delivered and managed services).
Our net sales by offering category for APAC for 2022 and 2021, were as follows (dollars in thousands): APAC Sales Mix 2022 2021 % Change Hardware $ 57,928 $ 49,470 17 % Software 86,661 89,844 (4 %) Services 89,689 72,425 24 % $ 234,278 $ 211,739 11 % Net sales in APAC increased 11% (increased 18% excluding the effects of fluctuating foreign currency rates), or $22.5 million, in 2022 compared to 2021.
Our net sales by offering category for APAC for 2023 and 2022, were as follows (dollars in thousands): APAC Sales Mix 2023 2022 % Change Hardware $ 43,850 $ 57,928 (24 %) Software 88,688 86,661 2 % Services 97,294 89,689 8 % $ 229,832 $ 234,278 (2 %) Net sales in APAC decreased 2% (increased 1% excluding the effects of fluctuating foreign currency rates), or $4.4 million, in 2023 compared to 2022.
During 2022, we recorded severance expense, net of adjustments, totaling $4.2 million. During 2021, we recorded gains on sale of properties due to restructuring of $8.0 million. These gains were partially offset in 2021, as we recorded severance expense, net of adjustments, totaling $6.4 million. Acquisition-related Expenses .
These expenses were partially offset by net gains on the sale of properties due to restructuring of $6.8 million. During 2022, we recorded severance expense, net of adjustments, totaling $4.2 million. Acquisition and Integration-related Expenses . During 2023, we incurred $7.4 million in direct third-party costs primarily related to the acquisitions of SADA and Amdaris.
The majority of the capital expenditures in 2022 and 2021 were used for our global corporate headquarters and to fund technology related projects. • We expect total capital expenditures in 2023 to be in the range of $55.0 to $60.0 million.
The majority of the capital expenditures in 2023 was used to fund technology related projects. • We expect total capital expenditures in 2024 to be in the range of $50.0 to $55.0 million.
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 2022 and 2021 (in thousands): 2022 2021 Net cash provided by operating activities $ 98,106 $ 163,711 Net cash used in investing activities (137,841) (21,074) Net cash provided by (used in) financing activities 114,007 (161,385) Foreign currency exchange effect on cash, cash equivalent and restricted cash balances (14,531) (5,857) Increase (decrease) in cash, cash equivalents and restricted cash 59,741 (24,605) Cash, cash equivalents and restricted cash at beginning of period 105,977 130,582 Cash, cash equivalents and restricted cash at end of period $ 165,718 $ 105,977 Cash and Cash Flow • Our primary uses of cash during 2022 were to fund working capital requirements, to repurchase shares of our common stock, to acquire Hanu and to purchase property and equipment, including for the final build out of our corporate headquarters. • Operating activities generated $98.1 million in cash in 2022, compared to $163.7 million in 2021. • We received proceeds from the sale of assets, including our properties held for sale, of $1.3 million in 2022, compared to $31.0 million in 2021. • We had net repayments under our inventory financing facilities of $8.3 million in 2022 compared to net repayments of $14.4 million in 2021. • Net borrowings under our ABL facility were $244.7 million in 2022.
Liquidity and Capital Resources The following table sets forth certain consolidated cash flow information for 2023 and 2022 (in thousands): 2023 2022 Net cash provided by operating activities $ 619,531 $ 98,106 Net cash used in investing activities (505,201) (137,841) Net cash (used in) provided by financing activities (16,712) 114,007 Foreign currency exchange effect on cash, cash equivalent and restricted cash balances 7,449 (14,531) Increase in cash, cash equivalents and restricted cash 105,067 59,741 Cash, cash equivalents and restricted cash at beginning of period 165,718 105,977 Cash, cash equivalents and restricted cash at end of period $ 270,785 $ 165,718 Cash and Cash Flow • Our primary uses of cash during 2023 were to fund the strategic acquisitions of SADA and Amdaris, to repurchase shares of our common stock, to repay our inventory financing facilities and to purchase property and equipment. • Operating activities generated $619.5 million in cash in 2023, compared to $98.1 million in 2022. • We received proceeds from the sale of assets, including our properties held for sale, of $15.5 million in 2023, compared to $1.3 million in 2022. • We had net repayments under our inventory financing facilities of $70.4 million in 2023 compared to net repayments of $8.3 million in 2022. 37 INSIGHT ENTERPRISES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Net cash used in investing activities . • We acquired Hanu for approximately $68.2 million, net of cash and cash equivalents acquired and excluding earn outs and hold backs in 2022. • We received proceeds from the sale of assets, including our properties held for sale, of $1.3 million and $31.0 million in 2022 and 2021, respectively. • Capital expenditures were $70.9 million and $52.1 million in 2022 and 2021, respectively.
Net cash used in investing activities . • We acquired SADA and Amdaris for approximately $398.6 million and $82.9 million, respectively, net of cash and cash equivalents acquired and excluding earn outs and hold backs in 2023. • We received proceeds from the sale of assets, including our properties held for sale, of $15.5 million and $1.3 million in 2023 and 2022, respectively. • Capital expenditures were $39.3 million and $70.9 million in 2023 and 2022, respectively.
The changes were primarily the result of the following: • The increase in services net sales was due to higher volume of Insight Delivered services and higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category. • The increase in hardware net sales was due to higher volume of net sales to enterprise and commercial clients. • The decrease in software net sales was primarily due to the impact of fluctuating foreign currency exchange rates compared to the prior year combined with the continued trend toward higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category.
The changes were primarily the result of the following: • The decrease in hardware net sales was primarily due to lower sales to public sector, large enterprise and corporate clients. • The decrease in software net sales was due to the continued trend toward higher sales of cloud solution offerings that are recorded on a net sales recognition basis in the services net sales category. 33 INSIGHT ENTERPRISES, INC.
Our net sales by offering category for EMEA for 2022 and 2021, were as follows (dollars in thousands): EMEA Sales Mix 2022 2021 % Change Hardware $ 654,381 $ 676,815 (3 %) Software 857,516 825,361 4 % Services 200,624 201,875 (1 %) $ 1,712,521 $ 1,704,051 — % Net sales in EMEA was relatively flat (increased 12% excluding the effects of fluctuating foreign currency exchange rates), or $8.5 million, in 2022 compared to 2021.
Our net sales by offering category for EMEA for 2023 and 2022, were as follows (dollars in thousands): EMEA Sales Mix 2023 2022 % Change Hardware $ 546,621 $ 654,381 (16 %) Software 784,717 857,516 (8 %) Services 232,316 200,624 16 % $ 1,563,654 $ 1,712,521 (9 %) Net sales in EMEA decreased 9% (also decreased 9% excluding the effects of fluctuating foreign currency exchange rates), or $148.9 million, in 2023 compared to 2022.
As a percentage of net sales, gross margin increased by approximately 90 basis points year over year. The expanded gross margin for APAC in 2022 compared to 2021 was due primarily to changes in sales mix to services net sales with higher margins than product net sales. Our overall gross margins expanded in 2022 compared to 2021, as expected.
The expanded gross margin for APAC in 2023 compared to 2022 was due primarily to changes in sales mix to services net sales, including Insight Core services at higher margins than product net sales. Our overall gross margins expanded in 2023 compared to 2022, as expected.
These estimates and assumptions primarily include, but are not limited to, an appropriate control premium in excess of the market capitalization of the Company, future market 45 INSIGHT ENTERPRISES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) growth, forecasted sales and costs and appropriate discount rates.
These estimates and assumptions primarily include, but are not limited to, an appropriate control premium in excess of the market capitalization of the Company, future market growth, forecasted sales and costs and appropriate discount rates. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates.
This increase was primarily due to higher margins on both hardware and software net sales compared to prior year.
The year over year net increase in gross margin was primarily attributable to the following: • A net increase in product margin of 41 basis points year over year. This increase was primarily due to higher margins on both hardware and software net sales compared to the prior year.
Our ABL facility matures in 2027 and the $350.0 million principal amount due on the Notes mature in 2025. Undistributed Foreign Earnings Cash and cash equivalents held by foreign subsidiaries may be subject to U.S. income taxation upon repatriation to the United States.
Undistributed Foreign Earnings Cash and cash equivalents held by foreign subsidiaries may be subject to U.S. income taxation upon repatriation to the United States.
Net sales by category for North America, EMEA and APAC were as follows for 2022 and 2021: North America EMEA APAC Sales Mix 2022 2021 2022 2021 2022 2021 Hardware 68 % 69 % 38 % 40 % 25 % 23 % Software 18 % 17 % 50 % 48 % 37 % 43 % Services 14 % 14 % 12 % 12 % 38 % 34 % 100 % 100 % 100 % 100 % 100 % 100 % 36 INSIGHT ENTERPRISES, INC.
Net sales by category for North America, EMEA and APAC were as follows for 2023 and 2022: North America EMEA APAC Sales Mix 2023 2022 2023 2022 2023 2022 Hardware 61 % 68 % 35 % 38 % 19 % 25 % Software 23 % 18 % 50 % 50 % 39 % 37 % Services 16 % 14 % 15 % 12 % 42 % 38 % 100 % 100 % 100 % 100 % 100 % 100 % Gross Profit .
For example, a revised assessment of the achievement level for any individual partner program would not materially affect our reported net sales or gross profit.
Based on our current methodology to recognize partner funding, the amount of reported net sales and gross profit is not highly sensitive to changes in key assumptions around achievement levels. For example, a revised assessment of the achievement level for any individual partner program would not materially affect our reported net sales or gross profit.
Selling and administrative expenses decreased approximately 10 basis points as a percentage of net sales in 2022 compared to 2021. The overall net increase in expenses reflects a $68.4 million increase in personnel costs, including teammate benefits expenses primarily related to increases in overall teammate headcount and increases in variable compensation in the current year.
Selling and administrative expenses also increased approximately 180 basis points as a percentage of net sales in 2023 compared to 2022. The overall net increase in expenses reflects a $7.3 million increase in personnel costs, including teammate benefits, and a $19.8 million increase in other expenses, year over year.
We believe this trend could continue into future periods as we focus on selling solutions and increasing our services net sales. 37 INSIGHT ENTERPRISES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Operating Expenses. Selling and Administrative Expenses. Selling and administrative expenses increased $99.5 million in 2022 compared to 2021.
We believe this trend could continue into future periods as we focus on selling solutions and increasing our services net sales, including cloud solution offerings. Operating Expenses. Selling and Administrative Expenses. Selling and administrative expenses increased $19.6 million in 2023 compared to 2022.
Our gross profit and gross profit as a percent of net sales by operating segment for 2022 and 2021 were as follows (dollars in thousands): 2022 % of Net Sales 2021 % of Net Sales North America $ 1,328,333 15.7 % $ 1,135,450 15.1 % EMEA 247,269 14.4 % 258,862 15.2 % APAC 60,965 26.0 % 53,245 25.1 % Consolidated $ 1,636,567 15.7 % $ 1,447,557 15.3 % North America’s gross profit increased 17% in 2022 compared to 2021.
Our gross profit and gross profit as a percent of net sales by operating segment for 2023 and 2022 were as follows (dollars in thousands): 2023 % of Net Sales 2022 % of Net Sales North America $ 1,345,955 18.2 % $ 1,328,333 15.7 % EMEA 259,987 16.6 % 247,269 14.4 % APAC 63,583 27.7 % 60,965 26.0 % Consolidated $ 1,669,525 18.2 % $ 1,636,567 15.7 % 34 INSIGHT ENTERPRISES, INC.
EMEA’s gross profit decreased 4% (increased 6% excluding the effects of fluctuating foreign currency exchange rates), in 2022 compared to 2021. As a percentage of net sales, gross margin decreased 80 basis points to 14.4%, reflecting a 38 basis point reduction in product margin and a 37 basis point decline in services margin.
EMEA’s gross profit increased 5% (increased 4% excluding the effects of fluctuating foreign currency exchange rates), or $12.7 million, in 2023 compared to 2022. As a percentage of net sales, gross margin expanded 220 basis points to 16.6%.
As a percentage of net sales, gross margin expanded by approximately 60 basis points year over year. The year over year net increase in gross margin was primarily attributable to the following: • A net increase in product margin, which includes partner funding and freight, of 31 basis points year over year.
The year over year net increase in gross margin was primarily attributable to the following: • A net increase in product margin of 50 basis points year over year.
Net repayments under our ABL facility were $87.0 million in 2021. • Capital expenditures were $70.9 million in 2022 compared to $52.1 million in 2021. • During 2022, we repurchased an aggregate of $107.9 million of our common stock, pursuant to a repurchase program approved in May 2021 and subsequently increased in September 2022.
Net borrowings under our ABL facility were $244.7 million in 2022. • Capital expenditures were $39.3 million in 2023 compared to $70.9 million in 2022. • During 2023, we repurchased an aggregate of $217.1 million of our common stock compared to an aggregate of $107.9 million repurchased during 2022.
The increase in earnings from operations reflects an increase in gross profit, partially offset by an increase in selling and administrative expenses in 2022 compared to 2021. 38 INSIGHT ENTERPRISES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Non-Operating (Income) Expense. Interest Expense, net.
As a percentage of net sales, earnings from operations increased by approximately 40 basis points to 8.5%. The increase in earnings from operations reflects an increase in gross profit, partially offset by an increase in selling and administrative expenses in 2023 compared to 2022. Non-Operating (Income) Expense. Interest Expense, net.
In 2021, we reported net earnings of $219.3 million and diluted net earnings per share of $5.95.
In 2022, we reported net earnings of $280.6 million and diluted net earnings per share of $7.66.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Gross Profit . Gross profit increased 13%, or $189.0 million, in 2022 compared to 2021, with gross margin increasing approximately 40 basis points to 15.7% of net sales.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) North America’s gross profit increased 1%, or $17.6 million, in 2023 compared to 2022. As a percentage of net sales, gross margin expanded by approximately 250 basis points year over year.
See Note 1 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of our accounting policies related to goodwill. Income Taxes Description We record a provision for income taxes which reflects a mix of earnings in the jurisdictions in which we operate.
See Notes 1 and 20 to the Consolidated Financial Statements in Part II, Item 8 of this report for further discussion of our accounting policies related to acquisition accounting and recent acquisitions.
These increases were partially offset by the one-time solar tax credit claimed in 2022 on our recently completed headquarters and an increase in the deduction for foreign derived intangible income. The effective tax rate in 2022 was higher than the federal statutory rate of 21.0% primarily due to state income taxes and higher taxes on earnings in foreign jurisdictions.
These increases were partially offset by the release of reserves related to tax years whose statute expired during the current year. The effective tax rate in 2023 was higher than the federal statutory rate of 21.0% primarily due to state income taxes and higher taxes on earnings in foreign jurisdictions. These increases were offset partially by research tax credits.
On a consolidated basis, for the year ended December 31, 2022: • Net sales of $10.4 billion increased 11% compared to 2021. • Gross profit of $1.6 billion increased 13% compared to 2021, also up 16% year over year excluding the effects of fluctuating foreign currency exchange rates. • Consolidated gross margin increased approximately 40 basis points to a record 15.7% of net sales in 2022.
On a consolidated basis, for the year ended December 31, 2023: • Net sales of $9.2 billion decreased 12% compared to 2022. • Gross profit of $1.7 billion increased 2% compared to 2022. • Consolidated gross margin expanded approximately 250 basis points to a record 18.2% of net sales in 2023.
Net cash provided by (used in) financing activities. • During 2022, we had net borrowings on our long-term debt under our ABL facility of $244.7 million and had net repayments under our inventory financing facilities of $8.3 million. • During 2021, we had net repayments on our long-term debt under our ABL facility of $87.0 million and had net repayments under our inventory financing facilities of $14.4 million. • In 2022, we also funded $107.9 million of repurchases of our common stock, compared to $50.0 million purchased during 2021. 2021 Compared to 2020 For a comparison of our cash flows for the fiscal years ended December 31, 2021 and 2020, see “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 fiscal year ended December 31, 2021 filed with the SEC on February 18, 2022.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) 2022 Compared to 2021 For a comparison of our cash flows for the fiscal years ended December 31, 2022 and 2021, see “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 fiscal year ended December 31, 2022 filed with the SEC on February 16, 2023.
During 2022, we generated $98.1 million of cash from operating activities and primarily utilized cash to purchase property and equipment, including the finalization of our corporate headquarters in Chandler, AZ. We had net borrowings of $244.7 million under our senior secured revolving credit facility (the “ABL facility”).
During 2023, we generated $619.5 million of cash from operating activities and primarily utilized cash for strategic acquisitions and to repurchase shares of our common stock. We had net borrowings of $299.6 million under our senior secured revolving credit facility (the “ABL facility”).
As a Fortune 500-ranked solutions integrator, we enable secure, end-to-end transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 34 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 at every opportunity.
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 enable secure, end-to-end transformation and meet the needs of our clients through a comprehensive portfolio of solutions, far-reaching partnerships and 35 years of broad IT expertise.
This increase reflects increases in all sales categories. Net sales of hardware, software and services increased 11%, 18% and 15%, respectively, year over year. The increases year over year were primarily the result of the following: • The increase in hardware net sales was due to higher volume of sales to large enterprise and corporate clients.
The net decrease year to year was primarily the result of the following: • The decrease in hardware net sales was due to lower volume of sales to large enterprise and corporate clients. This decrease reflects lower sales of devices throughout the year and decreases in infrastructure sales in the latter part of 2023.
(d) Calculated as DSOs plus DIOs, less DPOs. • Our cash conversion cycle was 40 days in the quarter ended December 31, 2022, an increase of 9 days when compared to the fourth quarter of 2021. • The changes in our cash conversion cycle compared to the same period in the prior year resulted from the net effect of a fifteen day increase in DSOs partially offset by a four day increase in DPOs and a two day decrease in DIOs. • The changes in our cash conversion cycle year over year were primarily the result of: • the impact to DSOs of an increase in other receivables including multi year transactions and changes in client mix (e.g., clients with longer payment terms); • the benefit to DPOs of changes in vendor mix partially offset by deferral of payments in the prior year; and • the benefit to DIOs of the impact of easing supply constraints. • Our cash conversion cycle is impacted by netted costs that we apply to our services net sales to appropriately record net sales that we earn as an agent.
(d) Calculated as DSOs plus DIOs, less DPOs. • Our cash conversion cycle was 29 days in the quarter ended December 31, 2023, a decrease of 11 days when compared to the fourth quarter of 2022. • The changes in our cash conversion cycle compared to the same period in the prior year resulted from the net effect of a 35 day increase in DPOs and a 3 day decrease in DIOs partially offset by a 27 day increase in DSOs. • The changes in our cash conversion cycle year over year were primarily the result of: 38 INSIGHT ENTERPRISES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) The results of operations for 2021 include the following items: • severance expenses of $6.4 million, $5.0 million net of tax; • a restructuring gain from the sale of properties of $8.0 million, $6.0 million net of tax; and • the repurchase of approximately 497,000 shares of the Company’s common stock for an aggregate of $50.0 million.
The results of operations for 2023 include the following items: • severance and restructuring expenses, net of $6.1 million, $4.4 million net of tax; • acquisition and integration related expenses of $7.4 million, $6.0 million net of tax; and • the repurchase of approximately 1.6 million shares of the Company’s common stock for an aggregate cost of $217.1 million. 30 INSIGHT ENTERPRISES, INC.
Net cash provided by operating activities. • Cash flow from operating activities in 2022 was $98.1 million, a decrease in cash generation compared to 2021.
Net cash provided by operating activities. • Cash flow from operating activities in 2023 was $619.5 million, a significant increase in cash generation compared to 2022. The increase in cash flow from operating activities was primarily driven by the decline in devices net sales experienced throughout 2023 when compared to 2022.
Our effective tax rate for 2022 was 25.1% compared to 25.0% in 2021. The marginal increase in the tax rate was primarily due to reduced tax benefits on share-based compensation in 2022 as compared to 2021, as well as nonrecurring benefits in 2021 related to tax credits.
Our effective tax rate for 2023 was 25.6% compared to 25.1% in 2022. The increase in the tax rate was primarily due to reduced foreign and research tax credit benefits available in 2023 as compared to 2022 and the effect of valuation allowances on certain foreign loss carryforwards.
Effect if Actual Results Differ from Assumptions We have not made any material changes in accounting methodology or key assumptions used to recognize income taxes and related reserves during the past three fiscal years. We do not believe there is a reasonable likelihood there will be a material change in the tax related balances or valuation allowances.
Effect if Actual Results Differ from Assumptions We have not made any material changes in the methodology or key assumptions used to evaluate the fair value of assets acquired and liabilities assumed during the past three fiscal years. While management believes the expectations and assumptions used in valuing assets acquired and liabilities assumed are reasonable, they are inherently uncertain.
Transformation costs are costs we are incurring to transform our business to help us achieve our strategic objectives, including becoming a leading solutions integrator. We expect to continue to incur further transformation costs in 2023; however, these costs are unique in nature and are not expected to recur in the longer term. Severance and Restructuring Expenses.
To support our clients that were impacted, the Company paid for certain equipment and services required to resolve the outage. Transformation costs are costs we incur to transform our business to help us achieve our strategic objectives, including becoming a leading solutions integrator.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk The information contained in Note 12 to the Consolidated Financial Statements in Part II, Item 8 of this report concerning a description of market risk management, including interest rate risk and foreign currency exchange risk, is incorporated by reference herein.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk The information contained in Note 12 to the Consolidated Financial Statements in Part II, Item 8 of this report concerning a description of market risk management, including interest rate risk and foreign currency exchange risk, is incorporated by reference herein. 45 INSIGHT ENTERPRISES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Other NSIT 10-K year-over-year comparisons