Global reseller duo Insight and CDW have both reported revenue growth for the first quarter of 2018, driven by an increase in hardware sales.
For the three months ending 31 March 2018 Insight saw revenue rocket 19 per cent year on year to $1.76bn, while CDW saw growth over the same period of 10.8 per cent to $3.6bn.
Insight's gross profit increased 15 per cent to $240m, while CDW's was up nine per cent to $603.9m.
On an earning's call, transcribed by Seeking Alpha, Insight CEO Ken Lamneck said that the firm has increased its market share in various hardware spaces, which contributed to the revenue increase.
"Notebooks were, by the way, really strong across the whole channel and we picked up further share," he said.
"There was also pretty substantial growth in the categories of servers and storage in the channel as well, and we picked up considerable growth in both of those areas, so those are the primary areas.
"Those are all really big segments of the business in regards to hardware; those are the main drivers. Basically devices is number one, networking products are two and then server storage [is] three."
Lamneck added that customer demand for devices has been strong for the last six quarters as a refresh cycle continues, but he expects this demand to tail off into low single-digit growth in the second half of the year.
He explained that it is more difficult to establish Insight's market share when it comes to software, but claimed that "pretty good information" provided by Microsoft each quarter confirms that Insight has retained its "number one status" with the vendor globally.
Public cloud sales, Lamneck said, account for around 40 per cent of Insight's consolidated gross profit.
CDW echoed the demand for hardware sales when releasing its results, claiming that datacentre sales were up mid-single digits and demand for devices showed no signs of waning.
"Customer focus remained on optimising datacentre infrastructure with economical yet high-performing solutions," CEO Thomas Richards said.
"This drove growth in emerging technologies like hyper converged, which grew more than 70 per cent in the quarter. NetComm hardware also increased mid-single digits."
The hardware growth however led to a decline in gross margins for both Insight and CDW. Insight's margin fell four percentage points to 15.1 per cent, and CDW's was down 0.3 points to 16.7 per cent.
CDW said that revenue in its "other" business - which encompasses the UK and Canada operations - was up 30.6 per cent year on year to $483m.
The Kelway model
On the earnings call CDW CEO Richards hinted that the firm could expand its global footprint further after seeing success with its acquisition of Kelway. He said that this strategy will form the basis of any future acquisitions.
"As I've told my team, if I could replicate the Kelway experience every time we do an acquisition I'm all in, because it's met an expanding customer need, it was accretive to the business [and] they've benefited from being part of CDW," he said.
"We have benefited from some of their experience, like managed services.
"I'd love to have that every time we go forward. Having said that, I think it's given us increased confidence and awareness of expanding our international footprint because of what we learned and the success we've had."
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