Insight’s latest figures show that EMEA business is its shining star, while other world regions are grinding to a halt.
Insight’s EMEA business has been doing well since the completion of an expensive $3.5 million restructure last year and the third quarter proved to be another three months of positive developments for Insight’s EMEA business.
Revenues increased by 11 percent to $345.2 million, while earnings from operations rocketed by more than 100 percent on a year-on-year comparison. Earnings climbed from $2.1 million in the red from the third quarter last year to a positive $4.6 million this year.
Meanwhile, the company’s US business suffered a three percent dip in overall revenues to $1.21 billion, with hardware sales declining by five percent, while APAC sales were down 22 percent to $19.1 million.
Insight’s services business in EMEA – which regional boss Wolfgang Ebermann revealed would receive $10 million in investment over the next year saw sales surge by 38 percent to $29.1 million, while product revenues jumped by nine percent to $316.1 million. Services accounted for eight percent of total sales in EMEA in the third quarter.
Profitability remains healthy across the group, growing 21 percent to $49.9 million during the three-month period.
Kenneth Lamneck latest CEO to warn of a slowdown in the hardware business
Insight’s CEO Kenneth Lamneck attributed Insight’s revenue decline during the third quarter to one large customer transaction set for completion this year being pushed into 2019.
He also pointed to a general slowdown in customer spending on devices and an overall maturing of refresh cycles which could put a strain on product revenues in the coming quarters.
The fact that Insight confidently raised its earnings-per-share forecast for the year at the end of Q2 indicates that Insight did not anticipate a slowdown in customer spending for the second half of the year.
CFO Glynis Bryan admitted on an earnings call that Insight had made some assumptions for the latter part of 2018 “which didn’t materialise”.
Lamneck said: “We began to see trends soften in September as compared with the first two months of the quarter. We attribute this softness partly to the maturing refresh cycle within our large enterprise client base and the completion of certain client-related projects.”
Bryan added: “When we look at the quarter we had some assumptions on the second half of the year that didn’t materialise, due to some of the softness as we mentioned in September.
“The biggest driver in the difference between the third and fourth quarter is related to differences we are seeing in our large enterprise clients primarily. We are seeing a little bit of a slowdown with those large enterprise clients as it relates to devices. We also had a large deal that we assumed was going to transact in the second half of the year that has moved into the first half of next year. Those are the primary drivers in the difference of our results that we saw in the third quarter and in the fourth quarter based on the guidance that we gave.”
