Insight Enterprises (NASDAQ: NSIT) reported Q3 EPS of $1.38, $0.24 better than the analyst estimate of $1.14. Revenue for the quarter came in at $1.94 billion versus the consensus estimate of $2.01 billion.

• Gross profit increased 11% to $307.6 million
• Gross margin expanded 150 basis points to 15.9%
• Earnings from operations increased 38% to $61.5 million
• Adjusted earnings from operations increased 22% to $71.8 million
• Diluted earnings per share increased 45% to $1.10
• Adjusted diluted earnings per share increased 25% to $1.38
• Cash flow provided by operations in the first nine months of 2020 was $462.1 million compared to $168.6 million in the first nine months of 2019

In the third quarter of 2020, net sales increased 1%, year over year, while gross profit increased 11% and gross margin increased 150 basis points compared to the third quarter of 2019. The increase in gross profit and gross margin reflects our continued emphasis on growing our higher margin cloud and services business and an increase in margins on hardware. Diluted earnings per share for the quarter was $1.10, up 45%, year over year, and adjusted diluted earnings per share was $1.38, up 25%, year over year. Cash flow from operations was strong at $462.1 million.

“I am pleased to report that because of our dedicated team, resilient business model and the PCM acquisition, we delivered another quarter of double digit adjusted earnings growth year over year in the third quarter,” stated Ken Lamneck, President and Chief Executive Officer. “During the third quarter, we drove double digit growth in services and cloud solutions, which pushed gross margins to a new third quarter record,” stated Lamneck.

GUIDANCE:

Insight Enterprises sees FY2020 EPS of $5.88-$5.98, versus the consensus of $5.57. Insight Enterprises sees FY2020 revenue of $8.1-8.2 billion, versus the consensus of $8.22 billion.

When reporting its first quarter financial results, the Company withdrew its 2020 guidance for net sales and Adjusted diluted earnings per share due to the high level of economic uncertainty and disruption caused by COVID-19. The Company continued to observe the pronounced impact of COVID-19 on third quarter financial results compared to internal budgets and anticipates demand for products and services will continue to impact our results in the fourth quarter of 2020, as clients continue to evaluate the impact of COVID-19 on their businesses, their profitability and their liquidity. For the full year 2020, the Company expects to deliver net sales between $8.1 billion and $8.2 billion. The Company’s Adjusted diluted earnings per share outlook for the full year of 2020 is between $5.88 and $5.98. This outlook assumes a tax rate of 25.5% for the fourth quarter.

This outlook excludes acquisition-related expenses, excludes severance and restructuring expenses incurred, excludes amortization of intangible assets, and excludes amortization of convertible debt discount and issuance costs during the first nine months of 2020 and those that may be incurred during the balance of 2020. Due to the inherent difficulty of forecasting all of these types of expenses, which impact net earnings and diluted earnings per share, the Company is unable to reasonably estimate the impact of such expenses, if any, to net earnings and diluted earnings per share. Accordingly, the Company is unable to provide a reconciliation of GAAP to non-GAAP diluted earnings per share for the full year 2020 forecast.

For earnings history and earnings-related data on Insight Enterprises (NSIT) click here.