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About Insight Distribution Network, Inc.

Insight Enterprises distributes computer hardware and software and provides IT services for businesses, schools, and government agencies and departments. The company offers thousands of devices and applications from major manufacturers (including Microsoft, HP Inc., IBM, and Cisco), as well as cloud services. Insight also provides integration services to knit hardware and software together for its customers. The company uses direct telesales, field sales agents, and an e-commerce site to reach its clients. Geographically, Insight gets about 60% of sales from customers in the US, and, in terms of customers, its large business clients provide about 70% of sales.

Operations

Insight sells technology in three areas: Hardware, software, and services.

In hardware, about 60% of sales, the company offer products from Cisco Systems, Dell Technologies, HP Inc., Lenovo, Hewlett Packard Enterprise Co., NetApp, Apple, Microsoft, IBM, and hundreds of others.

The software segment, about 30% of sales, carries products from Microsoft, VMware, Adobe, IBM Software, Symantec, Citrix, and more.

Insight’s services business, about an eighth of sales, combines the hardware and software aspects for its customers. Among the needs it addresses are supply chain, outfitting the workforce with appropriate equipment, helping companies move operations to cloud environments, and implementing digital technologies.

Geographic Reach

Insight’s sales are concentrated in the US, which provides 70% of revenue, with Canada contributing another few percentage points. The Europe, the Middle East and Africa region contributes about 20%, and the Asia-Pacific, less than 5%. The Tempe, Arizona-based company has operations in about 20 counties.

Sales and Marketing

Although the company sells software and hardware from hundreds of companies, Insight relies on five major vendors Microsoft, Dell, Cisco System, HP Inc., and Lenovo, for about 55% of its sales. Microsoft alone accounts for 20% of Insight’s sales.

Insight makes more than 70% of its sales to large corporate customers while government and small and medium business customers about split the other 30%.

Financial Performance

Insight has posted rising sales for the past five years (since 2015) at a 7% annual clip, boosted by a 22% jump in 2017 from 2016 due to increased integration work and acquisitions.

In 2018, revenue rose about 6% to $7.1 billion, up about $1.4 billion from 2017, on higher sales in all geographic regions, as well as stronger hardware and services sales. Hardware revenue increased 8%, driven by sales of client devices, storage, and networking products to large customers. Service sales jumped 23% from cloud, maintenance, and enterprise agreement fees, as well as contributions from the Cardinal acquisition. Software sales dropped 15% as customers moved to cloud offerings, which are billed over a longer period.

Insight’s net income leaped 80% to $163.6 million in 2018 from 2017, boosted by a lower tax rate from the US Tax Cuts and Jobs Act. The company’s effective tax rate was about 23% in 2018 compared to 43% in 2017.

The company’s cash and equivalents rose to $142.7 million in 2018, an increase of about $30 million from 2017. Operations generated $292.6 million in 2018 while investing activities and financing activities used $91.7 million and $159 million, respectively.

Although capital expenditures dipped 10% to $17.3 million in 2018 from 2017, Insight continued to invest in its enterprise resource planning systems and its e-commerce and digital marketing platforms.

Strategy

Insight transfers hardware and software from vendors to clients, using its scale to get the best prices for the goods. But perhaps the most valuable part of its business is in integrating the hardware and software to best suit the customer. While generating just around 10% of sales, service-related activities -- professional services, Insight-delivered services, cloud component, and others – accounts for about 45% of gross profit. This reflects investment the company has made over the past five years to become systems integrator, as well as an equipment and software provider.

The company’s cloud business has grown, with the help of acquisitions, accounting for 18% of consolidated gross profit in 2018 compared to 13% in 2017.

Insight has put resources toward workforce development and has made Fortune’s list for best companies for diversity and workplaces in technology. At the same time, the company has turned to automation to make customer-facing operations more efficient through process automation and optical scanning technologies. It also has devoted capital expenditures to it e-commerce and digital marketing platforms. 

Insight has made acquisitions to strengthen parts of its portfolio, including its digital capabilities and cloud services. The Datalink acquisition, made in 2017, has produced revenue from cross-selling in data center and cloud services.

Insight’s is a fiercely competitive business with rivals among other suppliers and integrators such as CDW and Accenture, as well as Insight’s own partners such as Microsoft, Dell Technologies, and HP Inc. (especially true for big customers, which provide about 70% of Insight’s revenue). The competition puts constant pressure on pricing and bigger companies with deep pockets can ride out low prices.

Mergers and Acquisitions

In 2018 Insight acquired Cardinal Solutions Group, a provider of digital tools and services to bolster its digital innovations capabilities.

In 2017 Insight acquired Datalink, a Minnesota-based IT service and enterprise data center solutions provider, for $257.5 million. The acquisition addresses market opportunities in hybrid cloud and other data center categories.

In another 2017 transaction Insight bought Caase Group B.V. to boosts its cloud and data center portfolio for its clients in the EMEA region.

In 2016, it acquired Ignia, an Australian digital, mobile, and cloud company with a foot in application design, digital solutions, cloud, mobility, and business analytics. The acquisition will also further Insight's reach into the APAC market.

Company Background

Eric Crown worked for a small computer retail chain in the mid-1980s before leaving to market PCs. In 1986, he and his brother, Tim, pooled $2,000 from credit cards and $1,300 in savings and, anticipating a drop in hard drive prices, placed an ad for low-cost hard drives in a computer magazine. The ad pulled in $20,000 worth of sales and, since costs did indeed drop, the profit was enough to start a new company, Hard Drives International. In 1988, they changed the name to Insight Enterprises; by 1991 the Crowns also sold Insight-branded PCs, software, and peripherals (discontinued in 1995). The company passed the $100 million revenue mark in 1992.

Over the years, through organic growth and acquisitions, Insight expanded into new markets and exited others and growing to compete with top distributors and integrators such as CDW and Accenture.

Insight Distribution Network, Inc.

6820 S HARL AVE
Tempe, AZ 85283-4318
Phone: 1 (480) 902-1001

Stats

Employer Type: Privately Owned
Employees (This Location): 150
Employees (All Locations): 200

Major Office Locations

Tempe, AZ