Insight puts US biz on naughty step as EMEA thrives

Global reseller takes cost-cutting actions in home market as EMEA profits boom 57 per cent

Insight Enterprises endured a mixed Q1 as rocketing profits in EMEA were offset by a shrink in the money it took in from North America.

On a global basis, the NASDAQ-listed reseller giant saw profits shrivel by 33 per cent year on year as the performance of its domestic business fell behind expectations.

Quarterly sales were also down, dropping four per cent to $1.17bn (£800m), as revenues from EMEA and Asia-Pac both fell.

EMEA sales fell 15 per cent in dollar terms to $303.4m but operating profit from the region boomed 57 per cent to $2.7m. On a constant currency basis, hardware sales fell 13 per cent and software sales by nine per cent.

"Our EMEA team focused on profitability and delivered growth in our profit dollars, while decreasing operating expenses," Insight CEO Ken Lamneck said on a Q1 conference call.

North America, in contrast, has not met Insight's profitability expectations in recent quarters, Lamneck said, as he revealed that the firm recently concluded several cost-cutting initiatives across its US business.

"Annualised savings from these actions are expected to be approximately $20m beginning in May 2016," Lamneck said.

Despite the Q1 sales shrinkage, Insight expects full-year sales to rise by low- to mid-single digits.

When asked about its rosy outlook by an analyst on the call, CFO Glynis Bryan said Insight would enjoy a second-half sales boost as a result of its impending acquisition of 200 US sales staff from vendor partner HPE.

"We have confidence in the ability of our business to generate revenue, but a couple of other things will help us as well," Bryan said.

"We have the opportunity in the second half to take over the group of up to 200 teammates who will be on the inside salesforce and they will be productive at the time that we take them over. They are currently in role today where they are servicing a partner. That's going to help us generate incremental revenue growth in the second half of the year that was not in the original guidance we gave, so we are confident in the low- to mid-single-digit revenue range that we have put out there."