Insight Enterprises (NSIT)

IT solutions integrator Insight Enterprises (NASDAQ:NSIT) fell short of the markets revenue expectations in Q3 CY2025, with sales falling 4% year on year to $2.00 billion. Its non-GAAP profit of $2.43 per share was 2.5% below analysts’ consensus estimates.

Company Overview

With over 35 years of IT expertise and partnerships with more than 8,000 technology providers, Insight Enterprises (NASDAQ:NSIT) provides end-to-end digital transformation solutions that help businesses modernize their IT infrastructure and maximize the value of technology.

IT Distribution & Solutions will be buoyed by the increasing complexity of IT ecosystems, rising cloud adoption, and demand for cybersecurity solutions. Enterprises are less likely than ever to embark on these complicated journeys solo, and companies in the sector boast expertise and scale in these areas. However, cloud migration also means less need for hardware, which could dent demand for large portions of the product portfolio and hurt margins. Additionally, planning for potentially supply chain disruptions is ongoing, as the COVID-19 pandemic showed how damaging a pause in global trade could be in areas like semiconductor procurement.

Insight Enterprises competes with systems integrators and digital consultants such as ePlus, Presidio, World Wide Technology, and Accenture, as well as solution providers and value-added resellers including CDW (NASDAQ:CDW), Cognizant (NASDAQ:CTSH), SHI, and Computacenter (LON:CCC).

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $8.27 billion in revenue over the past 12 months, Insight Enterprises is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because finding new avenues for growth becomes difficult when you already have a substantial market presence. For Insight Enterprises to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.

As you can see below, Insight Enterprises struggled to increase demand as its $8.27 billion of sales for the trailing 12 months was close to its revenue five years ago. This shows demand was soft, a poor baseline for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Insight Enterprises’s recent performance shows its demand remained suppressed as its revenue has declined by 6.4% annually over the last two years.

This quarter, Insight Enterprises missed Wall Street’s estimates and reported a rather uninspiring 4% year-on-year revenue decline, generating $2.00 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 6.3% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and suggests its newer products and services will spur better top-line performance.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Insight Enterprises’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 4.1% over the last five years. This profitability was lousy for a business services business and caused by its suboptimal cost structure.

Looking at the trend in its profitability, Insight Enterprises’s operating margin might fluctuated slightly but has generally stayed the same over the last five years, meaning it will take a fundamental shift in the business model to change.

This quarter, Insight Enterprises generated an operating margin profit margin of 4.6%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Insight Enterprises’s EPS grew at a solid 9.9% compounded annual growth rate over the last five years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Insight Enterprises, its two-year annual EPS growth of 1.9% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Insight Enterprises reported adjusted EPS of $2.43, up from $2.19 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Insight Enterprises’s full-year EPS of $9.60 to grow 11.1%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Insight Enterprises has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.9%, subpar for a business services business.

Taking a step back, an encouraging sign is that Insight Enterprises’s margin expanded by 6.8 percentage points during that time. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

Insight Enterprises’s free cash flow clocked in at $243.5 million in Q3, equivalent to a 12.2% margin. This result was good as its margin was 6.8 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Insight Enterprises historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 12.3%, somewhat low compared to the best business services companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Insight Enterprises’s ROIC has stayed the same over the last few years. If the company wants to become an investable business, it must improve its returns by generating more profitable growth.

Insight Enterprises reported $547 million of cash and $1.39 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $527.6 million of EBITDA over the last 12 months, we view Insight Enterprises’s 1.6× net-debt-to-EBITDA ratio as safe. We also see its $29.34 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We struggled to find many positives in these results. Its revenue missed and its EPS fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock remained flat at $103.33 immediately following the results.

Updated: December 4, 2025 at 10:59 PM EST

Before making an investment decision, investors should account for Insight Enterprises’s business fundamentals and valuation in addition to what happened in the latest quarter.

We see the value of companies helping their customers, but in the case of Insight Enterprises, we’re out. To kick things off, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. And while its rising cash profitability gives it more optionality, the downside is its operating margins reveal poor profitability compared to other business services companies. On top of that, its low free cash flow margins give it little breathing room.

Insight Enterprises’s P/E ratio based on the next 12 months is 8.8x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $128 on the company (compared to the current share price of $86.33).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.