Insight Enterprises Q2 2026 Earnings: AI-Led Growth Expands Margins

Insight Enterprises (NASDAQ: NSIT) reported Q2 2026 net sales of $2.40 billion, up 15% from $2.09 billion a year earlier, while GAAP diluted EPS increased 76% to $2.57 from $1.46. Gross profit rose faster than sales and gross margin widened, with management attributing strength in cloud, infrastructure, and services to AI demand. The earnings expansion did not translate into positive operating cash flow for the quarter, while the company raised its full-year guidance.

Core Earnings Data

Gross profit increased 18%, three percentage points faster than net sales, and gross margin expanded by 60 basis points. Selling and administrative expenses rose by a slower 9%, helping GAAP operating income increase 51% and operating margin expand by approximately 130 basis points.

GAAP net earnings rose 65% to $77.6 million. Adjusted results moved in the same direction, including 44% growth in adjusted diluted EPS and a 29% increase in adjusted EBITDA, but operating activities used $12.2 million of cash.

Dollar figures are in millions except per-share data.

Adjusted measures exclude items including stock-based compensation, intangible asset amortization, transformation costs, restructuring expenses, and certain acquisition-related costs.

Business and Segment Performance

Services net sales increased 21%, compared with 13% growth in product sales. Within products, hardware sales rose 21% while software sales declined 6%, shifting the sales mix toward hardware and services. Reported consolidated sales growth of 15% compared with 14% on a constant-currency basis, indicating a modest currency benefit.

North America remained the main earnings contributor, while APAC recorded the fastest sales and gross profit growth. EMEA produced higher sales and gross profit but lower operating income.

Dollar figures are in millions.

North American selling and administrative expenses rose only 5% as gross profit increased 16%, supporting the segment’s operating leverage. In EMEA, selling and administrative expenses increased 14% and restructuring expenses rose to $3.4 million from $0.8 million, contributing to the decline in operating income despite a 130-basis-point gross margin expansion. APAC’s selling and administrative expenses increased 83%, causing operating income growth to lag its 67% gross profit increase.

Profitability Improved, but Cash Conversion Lagged

The consolidated margin improvement reflected stronger growth in higher-value profit streams. Services gross profit increased 27%, cloud gross profit rose 39%, and Insight Core services gross profit advanced 21%, compared with 5% growth in product gross profit. Combined with operating expenses growing more slowly than gross profit, this supported the increase in both GAAP and adjusted operating margins.

The gap between GAAP and adjusted earnings remained material. Adjusted net earnings were $116.4 million versus GAAP net earnings of $77.6 million, while adjusted diluted EPS was $3.86 compared with GAAP diluted EPS of $2.57. Investors should account for the excluded cost categories when comparing the adjusted full-year outlook with reported results.

Cash generation was the main counterpoint to the earnings improvement. Operating activities used $12.2 million even though the company generated $77.6 million of net earnings. The release did not provide a quarter-specific bridge explaining this difference, making subsequent cash conversion an important measure of whether earnings growth is translating into liquidity.

Full-Year Guidance

Insight raised its 2026 outlook for gross profit growth and adjusted diluted EPS. The release did not include the previous numerical ranges, so the size of the revisions cannot be calculated.

The $12.45 midpoint of adjusted EPS guidance represents approximately 16% growth from 2025 adjusted diluted EPS of $10.75. The outlook assumes approximately $95 million of interest and other expenses, a 25.5% to 26.5% effective tax rate, capital expenditures of $20 million to $30 million, and an average share count of approximately 30 million.

The guidance also assumes no significant change in debt instruments or the macroeconomic environment, including changes related to tariffs. Because the EPS outlook is adjusted, the company did not provide a corresponding GAAP reconciliation.

Recent Insider Transactions

Available insider data show aggregate purchases of 148,912 shares across 33 transactions during the latest six-month period and one sale of 559 shares, resulting in net purchases of 148,353 shares. The following was the only individual transaction provided with a clear direction and transaction value.

The aggregate and individual transaction data are presented objectively and do not establish insiders’ views regarding valuation or the company’s outlook.

Risks Investors Should Monitor

• Cash conversion: Operating cash flow was negative despite higher net earnings. Continued divergence could limit the liquidity benefit of reported profit growth.
• EMEA cost pressure: EMEA sales and gross profit increased, but operating income declined as administrative and restructuring expenses rose faster.
• Changing sales mix: Software sales fell 6% while hardware and services each grew 21%. Overall momentum has become more dependent on sustained infrastructure, cloud, and services demand.
• Guidance assumptions: The raised outlook assumes no significant deterioration in macroeconomic conditions, tariffs, or debt instruments. Changes in those assumptions could affect margins and adjusted EPS.
• GAAP versus adjusted earnings: Q2 adjusted net earnings exceeded GAAP net earnings by $38.8 million, and the company cannot reconcile its adjusted full-year EPS guidance to GAAP EPS. The level and persistence of excluded expenses remain relevant to reported profitability.

Summary

Insight Enterprises’ Q2 2026 results were defined by AI-related demand across cloud, infrastructure, and services, faster gross profit growth, and improved operating leverage. North America drove most of the operating income expansion, while EMEA costs and negative operating cash flow were the main areas of pressure. The next key indicators are cash conversion, EMEA expense control, continued services and cloud momentum, and execution against the raised full-year guidance.