Why did NSIT's EPS drop in 2024?

The EPS of Insight Enterprises Inc (NSIT) declined from $1.52 in Q3 2023 to $1.54 in Q3 2024, and further decreased to $1.52 in Q4 2024. This trend suggests that the company's earnings per share experienced a downturn throughout the year. Several factors may have contributed to this decline:

1. **Revenue Decline**: Although NSIT's revenue increased from $2.34 billion in Q3 2023 to $2.7 billion in Q4 2023, it fell short of the analyst estimate in Q3 2024, with reported net sales amounting to $2.1 billion, indicating a potential mismatch between anticipated and actual revenue realization. This decline in revenue could have indirectly impacted EPS by reducing the total earnings available to be divided among more diluted shares.
2. **Expense Management**: NSIT's gross profit increased by 6% year-over-year, reaching $432.1 million in Q3 2024. However, the company's net income decreased by 3.4% from the previous year, amounting to $58.2 million in Q3 2024. This discrepancy suggests that while revenue growth may have been reflected in higher gross profits, increased expenses or operational inefficiencies could have negated these gains, leading to a decline in net income and, consequently, EPS.
3. **Strategic Investments**: NSIT has been actively investing in strategic growth areas, such as cloud services, which may have temporarily impacted short-term profitability. For instance, the company reported strong growth in cloud gross profit, up by 33% driven by higher infrastructure as a service. Such investments often require significant upfront costs that may not be fully reflected in the income statement until they mature.

In summary, NSIT's EPS drop in 2024 can be attributed to a combination of factors, including a decline in revenue, increased expenses, and strategic investments that temporarily strain financial performance.