Market insights

[Virtual Presenter] Good morning everyone! Today I am here to provide you with an update on the quarterly performance of C-D-W Insight and Softchoice in North America from Q1 2023 to Q1 2024. We will look at the differences in hardware software services and net sales and gross profit figures. Let us begin..

[Audio] Q1 comparison of the North American markets reveals that Insight had a successful quarter with an overall 4% increase in net sales and more than 10% increase in gross profit. This is despite a decline in hardware sales while software increased by 50% and services by more than 10%. In contrast Softchoice saw a 19% decrease in net sales with a 28% drop in software sales but with a 3% increase in gross profit. CDW’s sales were flatter with a 4% decrease in hardware sales a 5% decrease in net sales and a 2% decrease in gross profit..

[Audio] The update of competition for quarter one 2024 shows some significant differences in the sales mix among C-D-W Insight and Softchoice. CDW's sales were mostly made up of hardware which accounted for 73.2% of their revenue. Software and services represented very small portions at 18% and 8.8% respectively. Insight and Softchoice had greater contributions from software and services with 31.2% and 35.8% respectively of their total revenue. Compared to quarter one 2023 Insight's software share of their revenue increased by 9.7 percentage points with CDW's at only 0.6 percentage points. Softchoice's software portion decreased Y-0-Y but still accounted for 36% of their sales. CDW's services accounted for less than half of Insight's and Softchoice's at 8.8% of their total revenue. These results show a clear change in the sales mix to software and services from hardware for Insight and Softchoice while C-D-W remains largely reliant on hardware..

[Audio] The North American I-T solutions market is both sizable and rapidly growing. We at Softchoice focus our attention on the highest growth segments which are being propelled by cloud computing remote work capacities and integrated software programs. We have calculated our total addressable market to be around 300 billion dollars in North America by 2022. Our core offerings include software and cloud hardware professional services and managed services thus placing us in a great position to benefit from the growth of such a broad market..

[Audio] Softchoice is proud of its mix of national and local market knowledge providing customers with the best of both worlds. As of March 27th 2024 the company has 2 100 employees across the U-S and Canada and its customer base has grown to 4 952 in the trailing twelve months ended March 31st 2024 an increase of 216 from the same period last year. AE headcount is equal to 508 which marks a 55 increase from the previous year and its revenue retention rate was 98% in the T-T-M ended March 31st 2024. Softchoice is proud to provide this success to its customers..

[Audio] North America reported a 5.1% decline in gross sales and 18.7% decline in net sales for Softchoice in the first quarter of 2024. This decrease in net sales was mainly caused by an increasing mix of software and cloud solutions which are accounted for on a net basis. Although gross profit percentage stayed relatively stable at 16.0% income from operations rose by 10.3% to 10 point 6 million dollars. Furthermore adjusted EBITDA increased by 4.3% to 15 point 1 million dollars. Although the company reported a net loss of 1 million dollars due to higher income taxes the situation improved significantly on an adjusted basis with net income increasing by 37.6% to 4 point 4 million dollars..

[Audio] Our first quarter results indicate that we are in a good position to maintain healthy year-over-year growth in Software & Cloud and Services revenue. We are observing more demand for our solutions especially our public cloud security and workplace solutions and services demand is rising in all our customer segments. We are in the right place to remain optimizing our hardware margins. As evidenced by our first quarter results our Software & Cloud Services and Hardware sales saw a 1.8% 9.4% and 17.3% increase respectively. Gross profit also augmented driven by a broader customer base and growing demand in our strategic areas and was complemented by the no-reappearance of two sizable software-related orders from the corresponding quarter last year. We are sure that these results point to our strong position to maintain sustained growth in Software & Cloud and Services revenue in the upcoming quarters..

[Audio] Softchoice North America has earned the title of Best Workplace in Canada for 19 consecutive years a testament to its commitment to creating an environment where employees can succeed and reach their full potential. Receiving this accolade is an honour and the collective efforts of all staff deserve recognition..

[Audio] We understand that to remain successful in an ever-changing business climate our clients must come first. To enable secure end-to-end transformation of their operations we draw on 35 plus years of I-T experience cutting-edge solutions talented technical teams and comprehensive product portfolios. Our strong culture helps us to grow always striving to provide an excellent client experience. To become the leading solutions integrator we bring together the best services and products to rapidly implement transformation and bring positive outcomes to our clients..

[Audio] Alpha-Sense's results this quarter show that hardware demand has slightly improved but infrastructure and I-T spending remain low. N-S-I-T saw a few big on-prem softwares deals which had created temporary profits. N-S-I-T anticipates the normal boost in the second and fourth quarters and is confident that client device demand will bounce back. With this data from Alpha-Sense we can be aware and make more efficient decisions for our business..

[Audio] Encouraging growth was seen this quarter particularly in software sales with a 51% increase due to a major multiyear transaction and higher volume of software licensing. A 12% increase was also seen in services net sales largely from higher sales of cloud solution offerings from sada and an increase of Insight Delivered services. Conversely hardware net sales decreased 14% largely from lower volume of sales to large enterprise and corporate clients..

[Audio] Net sales in North America increased 4% or 70 point 9 million dollars this quarter. This was largely catalyzed by an increase in products and services net sales allowing for an expansion of the gross profit margin to 18.4% a 120 basis point improvement from the previous year. This rise in gross profit was mainly due to an improved services margin. Taking all of this into consideration it is safe to assume that North America will remain strong in the first quarter of 2024..

[Audio] Insight has made notable progress in the market with adoption of A-I and investments in workplace diversity and inclusion initiatives acknowledged by top publications. Ranked as one of the world's best workplaces by Barron's 100 Most Sustainable Companies Fortune 2023 World's Best Workplace Forbes World's Best Employer and with 92 percent of teammates declaring Insight a great place to work Insight has demonstrated a dedication to creating a more inclusive atmosphere as evidenced by perfect scores in the 2023-2024 Corporate Equality Index for L-G-B-T-Q workplace equality and the 2023 Disability Equality Index. These commitments to corporate excellence illustrate Insight's ongoing commitment to progress..

[Audio] In 2024 Infocenter was awarded ServiceNow’s Partner of the Year since then we have been helping organisations across the world successfully tackle their ServiceNow projects. Our expansive range of support and services encompasses consulting professional and managed services. Our globally dispersed certified experts drive operational excellence through leveraging the Now Platform® and aiding digital transformation. Recently Insight Enterprises procured Infocenter forming one of the leading ServiceNow Elite Partners. This purchase allows us to supply customers with customised services to plan create and manage ServiceNow solutions that resolve specific business issues and enhance their investment. As customer appetite for intelligent enterprise automation accelerates estimated to be worth 220 billion dollars in 2025 we are prepared to meet that demand and enable our customers to realise their digital transformation ambitions..

[Audio] Analysis of the first quarter of 2024 has determined that net sales decreased by 4.5% compared to the first quarter of 2023. Despite this operating income of 328 million dollars was achieved by optimizing our cost of sales and reducing Selling and Administrative Expenses. While Net Income per Share has seen a slight decrease the quarterly performance has stayed strong in spite of the difficult trading conditions..

[Audio] Our presentation will focus on the market insights and business intelligence for Q1 of 2024. Data from C-D-W Global for the three-month period ended March 31 shows that Net Sales was $2 135.9 million in Corporate 380 point 9 million dollars in Small Business 543 point 3 million dollars in Government 596 point 8 million dollars in Education 584 point 6 million dollars in Healthcare and 631 point 2 million dollars in Other. This resulted in total Net Sales of $4 872.7 million a 4.5% decrease compared to the same period of 2023. We hope this overview of the Q1 2024 quarterly update of our competition is useful for your decision making..

[Audio] In the first quarter of 2024 our quarterly analysis of the competitive market gave us an insight into the most recent trends in the business intelligence market. Net sales rose significantly reaching 4.873 billion dollars with an overall growth of 7.3% from the same period in 2023. The United States market had the highest sales of 4.221 billion dollars while the rest of the world accounted for 652 million dollars. The report also provided detailed information on hardware sales which totaled 3.546 billion dollars and increased by 7.2% and software sales which totaled 874 million dollars and increased by 10.4%. Services sales of 425.8 million dollars rose by 11.1% while other products sales of 26.4 million dollars rose by 5.6%. This in-depth analysis of the market will help us make well-informed decisions and adequately plan for the upcoming quarters..

[Audio] For Q1 2024 both the corporate and public segments of the C-D-W business experienced changes in their net sales and operating income. The corporate segment saw a 3.1% decrease in net sales while operating income decreased by 7.9% when compared to the same period of the prior year. The public segment reported a 4.9% decrease in net sales with operating income decreasing by 1.2%. The decrease in net sales for both segments was primarily due to a decrease in netcomm products and collaboration within education partially offset by an increase in notebooks/mobile devices across all sales channels. The decrease in operating income was primarily due to lower gross profit dollars partially offset by lower bad debt expense and amortization expense on acquired intangible assets and integration expenses..