We'll go ahead and get started. Good morning, everybody, and welcome to the Wells Fargo TMT Annual Summit. This morning, I have Insight Enterprises' for or fireside chat. My name is Kwame Yankson. I'm a member of our corporate and investment banking team and a part of the business and technology services team within Wells Fargo. So thanks, everyone, for joining, and let's go ahead and get started. So I have with me Joyce Mullen and James Morgado from Insight Enterprises. I'll maybe start and allow you all to introduce yourselves, and then we can get right into some conversation about Insight, the business, and where it's going in the future. Great. Well, I am Joyce Mullen, and I am the CEO of Insight. I've been at Insight now for four years, and I'm delighted to be here. Thank you very much for coming. James Morgado, SVP of Finance and CFO of North America. I've been at Insight three years now. I look forward to the discussion. James is our CFO, starting on January 1st. I've made up a name for it. I'm calling myself CFO elect. I don't know if that's an official term or not, but. Okay. All right. The CFO in waiting. Maybe just to start, obviously, Insight's undergone a tremendous evolution over the past decade or so. Would love to just get some of your perspectives of the changes that you've seen within the organization and where you're going strategically in the future as well. Sure. So I'll start. You know, I think Insight. I guess I'll start 10 years ago since that's where you started, Kwame, but for the last decade or so, Insight has been way before I got there, way before James got there, had been making really strategic investments organically and inorganically in service areas. And it was really the team's foresight that said, "Wait a second, you know, the world of traditional VARs is going to change a lot over the next several years." I happened to be at Dell at the time. Insight was one of my largest partners at Dell, and I ran the channel. And I could count on one hand the number of companies who were making strategic investments across various technology areas: cloud, data, AI, edge, security. So I made the decision to leave Dell. Had no intention of joining Insight at that time, but knew Insight well and started to have some conversations with Insight. Plus, my husband told me I had to go back to work or he was going to kill me, so anyway, I joined Insight four years ago, and we stepped back and said, "What's going on in the industry?" We could see systems integrators working hard on trying to build product practices, but I would argue without the knowledge of what it really takes to run a product practice. We could see VARs investing in cloud or data or edge, but Insight was differentiated because they were investing across these pillars, and if you think about the solutions that we have to build and the outcomes we must deliver to our customers, you cannot build a cloud solution without thinking about data. You cannot build a data solution without thinking about security. And so the interconnection and the opportunity is really in the seams, not the silos. So as I joined Insight, we had the opportunity to talk through our strategy at an Investor Day in October 2022. And we decided, as one does, to create a new category in the industry. We call it Solutions Integrator. And it is basically visually imagined sitting between traditional VARs and traditional systems integrators. Because at the end of the day, it's a combination of hardware, software, and services that allow the technology to deliver the outcomes that customers are looking for. And as we stepped back and thought about what would differentiate us from traditional VARs, we realized that we had to change a bunch of things about the company, but we had to double down on services capability in the fastest growing areas of the market: cloud, data, AI, edge, security. And we've done that both organically and inorganically. We also realized that we had to transform our client experience, and we had to basically deliver really terrific digital engagement platforms. We've made a lot of investments there. We realized we needed a presence in India because we had to offer blended rates for our services. So we, through acquisition and organically, built out our presence in India. We've bought companies that have capabilities that are more relevant to our clients around ServiceNow and Google Cloud. We've built our Azure business. We've built our AWS business, and that's resonating well. We had to work on our culture. We had to think more globally about our people and our talent. We had to recruit people who had skills that we did not have, particularly in the services areas, but also with our CDIO and also finance and other places. So that's been going well. And then we really doubled down on profitable growth and really thought carefully about the best of breed VARs out there who deliver great margins, and we used those as benchmarks for our hardware business and our software business. And we thought about best of breed services companies who deliver great margins and returns, and we thought about those as benchmarks for our services business. But at the end of the day, it's really about combining those hardware and software products with services that deliver the outcomes that customers are looking for. And we differentiate from SIs in a couple of ways. We basically say we think about delivering results fast and earning the right to do more. And we do that because the sales cycles of the technology companies are faster than SIs. The simplicity that we offer by scoping requirements and projects to a manageable size allows customers to reap the returns fast and then invest in the next project and the next project. And it's only through superior execution that we earn the right to do the next projects. So that's the strategy we're following. We're really excited about it. We think it allows us to grow, as I said, both organically and inorganically. And we really like this notion of leveraging our vast coverage with sales to sell even more relevant solutions like ServiceNow solutions, like Google Cloud solutions, like Azure solutions, I mean, like data solutions. That's working quite well. We're excited about it. That's all very exciting to hear. You mentioned. You look excited, Kwame. This is how I always look. You mentioned Azure at the very end, and I think obviously there's been quite a lot of chatter, I'll say, around the Microsoft program and some of the changes there. Would love just some perspective on kind of what you're hearing from them and how that might impact you all going forward? Yeah. So Microsoft is our top partner and has been our top partner for quite some time. So we have a lot of experience with Microsoft program changes. They happen every year, sometimes more than every year. And it's really incumbent upon us as partners to understand their strategic objectives and to put sort of our go-to-market motions and our services capabilities in line with those strategic objectives. And this is no different. So Microsoft has; we were just at a Microsoft Ignite conference two weeks ago. And here's the story with Microsoft. You have to always be agile. You have to respond. And I'll give you some examples in a moment if that's interesting. And we've done that very, very well for decades, like more than two decades, almost three. So this is the same story. Microsoft is investing more in the channel than ever before. We heard that a couple of weeks ago at Ignite from Judson Althoff, their CCO, but also from their channel chief, Nicole Dezen. We're happy about that. That is a good thing for us. They are also focusing that investment more than ever on the corporate space, the mid-market space. We call that our sweet spot, I think Fortune 300 and below, because those are companies with big budgets. They have the same problems as large companies. They can't get the same access to talent. Our services resonate. Our solutions really resonate in that space. That's a good thing for us. We basically are, as we look at these program changes, we know that there's going to be a timing impact as we adjust our business in 2025. I can spend more time on those changes if you want, but there is a bit of a timing impact that'll show up in our Cloud GP growth. And that has one of our KPIs that we've been talking about for a couple of years now. So that Cloud GP will grow at sort of mid-single digits, low single digits in 2025. And then it will rebound to that 16%-20% CAGR that we outlined in our Investor Day KPIs in 2026. So this is a timing issue we've got to adjust, which we've got plenty of history doing. And we'll come out the other side with a stronger corporate business, stronger mid-market business, and a stronger cloud business, and also buoyed by the services capabilities. Because at the end of the day, Microsoft really wants us to drive consumption and adoption of new technologies, and they're providing incentives to do that. The third thing is when you think about that impact on Cloud GP, it also translates into an EPS impact. We will grow our adjusted diluted earnings per share next year in mid-single digits. And we're pretty excited about that given the fact that we are absorbing these timing changes. And we'll provide more guidance when we do our Q4 earnings in February. Sounds good. Yeah. Maybe talking about 2025 a little bit more since you allowed that opening. Just curious, we're at the end of the year. It seems like we've made it through at least the election season. A lot of folks, a lot of companies, Fortune 300, above, below, are all looking at their IT budgets, determining what their spend will be next year. Just curious, as we sit here today, any insights you can provide on what you think 2025 will look like, or is it too early to tell still? We don't give guidance until February. Part of that is we want to see how the rest of this year ends up. Generally, aside from the Microsoft changes, did I miss anything on the Microsoft point? Aside from the Microsoft changes, here's the other thing that we are expecting, and we have been expecting now for a couple of years, and I don't think we're alone in this. We've been expecting hardware to rebound. We've been expecting PCs to refresh. We've been expecting infrastructure to refresh. There's a lot of old servers out there. There's Windows 11 coming in October. We are later in the refresh cycle than we have been historically from a PC point of view. We're a little bit later in the server refresh cycle as well as customers have been sweating assets. I think what we're seeing is a bit of caution because of macro-environmental issues. But I also feel like there's a little bit of trepidation around what infrastructure do I really need? What does this GenAI stuff really mean to me, and how do I future-proof my investment decisions? That's starting to loosen up, I think, because there's a little bit more opportunity for customers to see their way clear, to understand that they can make workload-by-workload decisions, understand that there's the public cloud, understand that there are cloud alternatives, and understand that there's on-prem infrastructure requirements to make things run smoother and actually get a pretty good TCO based on power consumption alone with some of the newer products. And with PCs, we see something similar. So we're not expecting a massive hardware growth. We don't have massive hardware growth expectations for next year, but we expect hardware to grow, and that's off the base of two years of pretty significant hardware decline, so there's just sort of that natural cyclicality that we would expect to start to recover. We've already seen it start to recover. We expect that to continue to recover in 2025. And the only thing I would add to that, Joyce, is where we've seen it start to recover is in our commercial space, our commercial customers. Typically, in a refresh cycle or in an upturn cycle, we'll see it in that customer segment first, and it'll move up the customer segments to corporate and into the largest enterprises. And we've seen this year; it's very modest, but we have seen some improvement in the commercial segment. Yeah, and normally that lags a couple of quarters. Now we're a couple of quarters into that. Anyway, the patterns are now different post-COVID than they were pre-COVID, but some of those things we expect to continue to hold. Sounds good. By the way, services also we expect to improve. That was a market that was going bananas during COVID and then softened quite substantially over the last couple of years. And we are already seeing good improvement there as well. And maybe let's explore services further and then AI. I think those are two areas where I know that you all have been growing quite well and are really part of the future of the Insight story. Just curious, and it'd be great if you have any examples, case studies of how you've integrated your services and AI with some of the other delivery and products that you all have as well, just to kind of provide investors, the audience, on how you are able to really differentiate with that one integrated solution. Yeah. I mean, there's this notion of, well, first of all, let me give you a case study, and then we can talk about sort of generally services. But we sell to, let's just take some North America numbers, 30,000 customers in North America. So every customer, 70% of customers who have more than $100 million in revenue buy from us something. And so the premise is we've got this incredible base of customers. We've got relationships with all these customers. The opportunity is to expand our share of wallet and offer more relevant services and solutions to those customers. If they're only buying PCs, we want them to think about us as a partner who can help them manage their infrastructure, for example. If they're only buying infrastructure, we want them to help. We want them to think about us as somebody who can help them with their GitHub Copilot implementation, for example, so that is working, but we've got to be selective about targeting those customers, so we're not trying to go to every single one of the 30,000 customers and say, "Hey, let us talk to you about GitHub Copilot." That would be dumb, but we are saying, "Look, customers who have a propensity to buy these types of solutions look like this. Let's use our data. Let's figure out how to price effectively. Let's figure out how to understand how to target them effectively," and we've done that with several customers, so there's a big appliance customer. I don't think we have permission to use their name, but I'm thinking of right now who started off buying services from us and is now buying infrastructure from us because if they trust us in one area, it's easy for them to trust us in another, and then we have plenty of examples that go the other way where we've started out as a PC provider, for example, and now we are doing Azure Managed Services for them, so I like that opportunity. We just have to get increasingly better at the propensity analysis so that we can target them the most effectively, and the services focus that we have is to really expand our capabilities in the fastest growing areas of the market and the areas where customers need the most help. Everybody needs help with data. Everybody needs help optimizing their cloud spend. Nobody is happy with their cloud bills. So everybody is looking to figure out how to make sure they've got future-proof, if they're interested in a multi-cloud strategy, future-proof cloud strategy around how do I manage which workloads and which clouds. Everybody needs help with incident response, unfortunately. But we have a very significant security practice focused on incident response and security, incident prevention. So those are the areas where we're focusing our acquisition activities and key applications and platforms that are growing and most relevant. So that's a ServiceNow example. That's a Google Cloud example. That's the Azure example. Did I miss anything? I don't know. If you had any AI examples or anything more specific you're doing there, I'd be curious. Just kind of can't have a summit without discussing that topic. Yeah. So I mean, there's a bunch of different, so first of all, there are lots. I think we have over 120 proof of concepts moving along and using AI technologies to try to eliminate soul-sucking work, I like to call it. And those can be anything from call center kind of agents to computer vision, which can reduce fraud and reduce theft at grocery stores, for example. So there's those types of examples that we see. There is a lot of work on GitHub Copilot. This is all about software developer productivity improvements. We're seeing some really good traction there. I think we're the top Microsoft partner today on GitHub Copilot design wins. So that's been very exciting. We're doing a lot of work internally to try to figure out how to be sort of client zero for a bunch of these technologies as we perfect the access to the data and figuring out how to bring the data to bear to support kind of the sales process, for example. If we're thinking about our inside sales teammates, they have to have access to software specialists, for example. And we're automating some of that, which is quite exciting, so there's a lot of examples, but I think mostly it's people testing the waters and using it project by project. I wouldn't say it's adopted at massive scale yet, but it will come. Sounds good. And then maybe you could touch on a little bit. You all obviously have a global platform, and part of your acquisition strategy has been to find more regions to deliver across services, solutions, et cetera. Just if you can update us on where you all have been strategizing from a global perspective, it'd be great. Okay. Yeah. So the way we think about it, so we actually sell, have a license to sell in 19 countries. We have the ability to use partners everywhere else. So we do provide global services to 120 or so countries. But I would say we've really doubled down on those 19 countries. Our goal is not to be physically and have license to sell in 100 countries. That's not the goal. But we are leveraging the global talent footprint. So through our acquisitions, we have now built out very significant development centers and services capabilities in Eastern Europe. We are in Romania, Moldova, Bulgaria, Armenia to a certain extent. We have a very strong presence now in India that has been very deliberate so that we could offer those blended rates. Now almost 2,000 people in India, which is really terrific and allows us to deliver the same services in multiple markets. So that's been working quite well. So we would expect to be very prudent about our expansion. We are $9 billion in a $5 trillion market. We have plenty of room to grow in the countries where we are. So we're not trying to necessarily be everywhere, but we are trying to be really exceptional in the countries we're in. There's one other spot in the Philippines, Manila. Oh, sorry. We have a large center there that is primarily focused on back office, but managed services as well. I think we've gotten tremendous leverage from that location, particularly in the back office. Yeah. Sounds good. I guess maybe just kind of thinking about the capital structure and kind of finance topic, James, if you could just maybe provide everyone with current cap structure, what you're looking to do. Obviously, you have a convertible note that's coming due soon. Any insight that you can share there, that'd be great as well. Yeah. So what I would say is we're going to continue to be prudent with how we manage the capital structure and the balance sheet overall. I'm a big proponent of optionality. So I love keeping optionality for as long as we can. And I think we've done that. Glynis has guided us with the convert. It's turned out, I think the convert has been a favorable instrument for us if you look over time, particularly when you look at where rates are today. I think as we move forward, it's going to depend a little bit on our needs from an M&A standpoint on what we do with our debt structure. Just as a reminder, our capital allocation priorities have been and will remain. Number one, to make sure that we have enough to fund the organic growth of the business. Number two, our priorities are M&A. I think we've done a very good job over the last handful of years of driving capital into very good M&A. Third will be to return capital to shareholders. We use buybacks for that. Over the last handful of years, we've returned hundreds millions of dollars in the form of buyback. I think those will remain our priorities. That sounds good. No, no, no. You no. You mentioned the M&A topic. And like you said, you've been pretty active there. Several acquisitions. SADA was a pretty meaningful one as well. Could you give any forecasts of how you're continuing to look through that? I assume because the market has been less active overall, I think, just given some of the performance that some of the companies have had, you hadn't seen as much activity. But it seems like there could be a pretty busy next 12-24 months. We'll see. But just curious on your thoughts there. Yeah. We remain very, very focused on how do we buy companies that we can actually make better given our sales capacity and the customer footprint that we have via cross-sell. And we've seen some very nice success from the ability to cross-sell from our existing traditional Insight customer base into ServiceNow, into Google Cloud Services, into software development in Europe with Amdaris, for example. So what we like is the scalability of our M&A strategy. It allows us to bring in business units. So we operate these as business units and allows them to have access to a very broad distribution footprint from a selling point of view. And as long as we choose carefully and we're buying companies that have a lot of relevance to our customers, we think that's a really winning strategy. It's also great for the company because they get to operate in a bigger environment, but they also get to have access to this customer base and the leads that we can generate. So it seems to be working well. We're happy with the performance from a services point of view across all of the acquisitions. Yep. Sounds good. We'll have some time for questions. But maybe one last one for James. You mentioned that you are the CFO-elect in waiting. Just curious what you're looking for to start the new year and taking over the new role from Glynis, who's been with the company for such a long time and. 64 earnings calls, I think. Yeah. She's had an amazing career at Insight. And you know what I love, by the way, those of you who have had the pleasure of meeting Glynis, she has impeccable style. So one of the things that we joke. Just like James. Yeah. One of the things we joke about is I have big shoes to fill, but really fancy shoes to fill as well. I don't look very good in high heels, but I'll do my best with the shoes that I have. So Glynis is handing me a really just a great opportunity. That's the reason that I joined Insight is the opportunity. And when I look forward, that's the thing that's most exciting for me. In terms of my focus areas as I take the reins from Glynis, number one, I want to continue the drive of operational excellence that we started a few years ago. I think there's still tremendous opportunity for us to drive not only a better experience for our customers, but continue to drive leverage from our operating expenses. That's one of the key priorities. The second is I will continue to be a shepherd of our capital allocation and our balance sheet. I think Glynis has done an amazing job of that over the years, and that will be a top priority for me moving forward, and then the third is to continue to drive profitable growth to support the organization. I think we have, as I mentioned, a tremendous opportunity to drive growth, and I think we also have room to continue to drive EBITDA margin expansion, gross margin expansion, and OpEx leverage. I pretty much covered the whole income statement by saying that, but yeah, I think we have a great opportunity, so those will be the three primary focuses for me. Sounds good. It seems like you got all the financial statements covered. Yeah. Audience, any questions? Feel free to go ahead. So I wonder if you've given some thought to this whole coming government efficiency movement and how that may affect your business. I think you're less than 10% public entities, but really the knock-on effect to your customer base and so forth. I know it's very early, but if you give some thought to that and how that may potentially play out in demand as this rolls out. I mean, the numbers I talked about are pretty incredible. The government's a huge consumer of IT and consulting services. I'm wondering about your thoughts around this. So, just a little bit to talk a little bit about our mix. About 14% of our revenue is public sector. The vast majority of that is state and local government. So, the federal initiatives, at least the immediate impact of the federal initiatives, we think probably could be really helpful and good. If we're delivering great value, we think there's an opportunity to deliver better value than some of maybe our competitors. So, there's an opportunity, I think, to be a disruptor a bit in that space. We've mostly been thinking, frankly. I've been mostly thinking about the impacts of tariffs and trying to sort of figure out that because that will have an impact on our industry, depending again how far-reaching, which countries, et cetera, et cetera. So a lot of hardware in particular comes from China, but then also a bunch of those supply chains have moved to Mexico. And so I mean, we're trying to figure out kind of how that's all going to work. But I think in terms of the Department of Government Efficiency, I don't feel like we have huge exposure in terms of impact to our business. I feel like it's more of an opportunity. Pretty early though. We don't really know. Just talking to the priorities from M&A, et cetera, this pullback in stock, you mentioned buyback. Is it more interesting coming on this? What have you got announced in terms of your authorization on buyback? Yeah. We haven't announced anything officially. We typically, if you look at historically, we typically do in our Q1, we typically do somewhere around $50 million of a buyback that's primarily focused on offsetting dilution. One of the tenets beyond M&A, when I said returning capital to shareholders, is opportunistically buying back shares. We're certainly aware of where our stock price is right now. There are rules that we have to follow in terms of open windows, et cetera. So what I would say is just stay tuned for us in the Q1 earnings. We have authorization, though, to your point, of $300 million. Thank you. Where are you in your ValueAct relationship now? My understanding is that they're very focused on stock-related movement and so forth. Where does that sort of stand and where do you think that relationship goes from? So ValueAct has been a tremendous partner, advisor. Alex Baum is on our board. He's been on our board since February of 2022. Fantastic board member. I can't speak for ValueAct, but I can tell you that from an Insight point of view, they have been constructive. They have been supportive. They have been helpful. They challenge us on certain things and respond really effectively. But I mean, I couldn't ask for a better board member or partner or investor. So the relationship's very good. How long they'll stay in, I don't know. I don't know what their plans are necessarily, but we're really happy with the relationship. Did you achieve the milestones? Yeah. So we set out in our Investor Day in 2022. We said we would achieve several. We had about six KPIs. I would say we are well on our way or ahead on about Cloud GP, Services GP, free cash flow. EBITDA margin. EBITDA margin. We're behind on EPS growth. We certainly didn't expect to see the downturn in hardware when we put those in place. So from a dollar point of view, we're behind on EPS growth. We're behind on one. Oh, and ROIC, we're behind primarily due to the acquisitions. So we don't have a perfect scorecard, but we're pretty happy with the progress we've made. By the way, when James was talking about the priorities, the growth priority for us could not be bigger. I mean, I think the opportunity to rebound from this period of contraction is really, really significant, and as you all know, because we've done so much work on the P&L, James has really led all of that work on the P&L in terms of profitability of services, profitability of product, made the structural changes that are now in place. We feel very, very good about the benefits of growth on top of that work. So we just got to grow. Any more questions? One more point on growth. We've basically just implemented a program just like we did on the profitability improvement. We called that Ambition. We call this program Accelerate. It's basically applying the same principles, engineering the company to grow. So this program is really around making sure that we're in a position to gain market share, but do it profitably. So we're very excited about that. It's very early days of that, but we're excited about the return so far. Okay. Okay. Thank you all. Thanks everybody for joining Joyce and James today. Good luck with the rest of the conference. Thank you. Thanks.