Thank you, Donna. Welcome everyone and thank you for joining the Insight Enterprises earnings conference call.

Today, we will be discussing the company’s operating results for the quarter and full year ended December 31, 2019. I'm Glynis Bryan, Chief Financial Officer of Insight and joining me is Ken Lamneck, President and Chief Executive Officer.

If you do not have a copy of the earnings release that was posted this morning and filed with the Securities and Exchange Commission on Form 8-K, you will find it on our website at insight.com under Investor Relations section. Today's call including the question-and-answer period is being webcast live and could be accessed by the Investor Relations page of our website at insight.com.

An archive copy of the conference call will be available approximately two hours after completion of the call and will remain on our website for a limited time. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, February 12, 2020.

This call is a property of Insight Enterprises. Any redistribution, retransmission or rebroadcasts of this call in any form without the express written consent of Insight Enterprises is strictly prohibited.

In today's conference call, we will refer to non-GAAP financial measures as we discuss the fourth quarter and full year 2019 financial results. When referring to non-GAAP measures we will refer to such measures as adjusted.

Non-GAAP measures to be discussed in today's call include adjusted earnings from operations, adjusted diluted earnings per share and return on invested capital. You will find a reconciliation of these adjusted measures to our actual GAAP results included in the press release and the accompanying slide presentation issued earlier today.

Also please note that unless highlighted as constant currency, all amounts and gross rates are discussed are in U.S. dollar terms.

Finally, let me remind you about forward-looking statements that will be made on today's call. All forward-looking statements that are made during this conference call are subject to risks and uncertainties that could cause our results to differ materially.

These risks are discussed in today's press release and in greater detail in our most recently filed periodic report and subsequent filings with the SEC. With that, I will now turn the call over to Ken.

And if you're following along with the slide presentation, we will begin on Slide 4.

Hello, everyone, and thank you for joining us today to discuss our fourth quarter and full year 2019 operating results. In the fourth quarter, we continue to execute against our strategy to deliver IT solutions to our clients globally, leading with services and solutions that drive business outcomes for our clients.

In addition, we focused on bringing PCM teammates into the Insight organization and completed our integration planning while delivering solid financial results to close out the year. Specifically for the fourth quarter of 2019, including the results of PCM for the fourth quarter, consolidated net sales were $2.3 billion, up 31% year-over-year.

Consolidated gross profit of $338 million in the fourth quarter was up 33% year-over-year and up 34% in constant currency. Gross margin expanded 20 basis points year-over-year to 14.7% reflecting a higher mix of up sales of Insight delivered services and cloud-based and other netted software offerings in our core business.

Adjusted earnings from operations were $82 million, up 29% year-over-year. And on a GAAP basis, earnings from operations were up 14% compared to the same period last year.

And adjusted diluted earnings per share was $1.57, up 10% year-over-year. And on a GAAP basis, diluted earnings per share was $1.20.

In the fourth quarter, PCM delivered results in line with our expectations including approximately $560 million in net sales and $8 million in EFO. In addition, we incurred approximately $6 million in additional interest expense related to the acquisition.

Moving on to Slide 5. Our fourth quarter results reflect the scale and momentum in our business and closure to another record year for our company.

For the full-year 2019, we reported record net sales of $7.7 billion, an increase of 9% over 2018. The addition of PCM, combined with our team's focus on our solutions strategy and expanding our services offering, drove gross profit faster than sales at 15% year-over-year and improved gross margin by 70 basis points to 14.7%, also a new record for the company.

We also expanded Services gross profit 90 basis points year over year to 47% of consolidated gross profit, up from 46% reported last year. Top line growth and gross margin expansion, combined with continued expense discipline drove adjusted earnings from operations up 11% in 2019 compared to the prior year.

Adjusted earnings per share for the full-year 2019 was $5.42, an increase of 9% over 2018 results and represents another record for us. On to Slide 6.

As we look back at our business for the full year of 2019, we are pleased with all that we accomplished. We completed the acquisition of PCM in the third quarter and are actively working to implement our integration plans.

In early December 2019, we on boarded the Canada business to our IT systems. In January 2020, we completed the systems work for PCM in EMEA.

And in early February, we began the migration of PCM’s U.S. clients over to our SAP platform.

We are on track to meet our previously-stated goal to add more than $0.70 of adjusted diluted EPS to our results from PCM business in 2020. Strategically, we continue to be very excited about the opportunity for growth in the combined client base of PCM and Insight.

As a reminder, the PCM acquisition expands our share in the mid-market, a target market that we believe values our expertise around modern workplace, cloud and data center and digital solutions. We've completed the internal organization alignment to ensure we bring our solutions to this market with the right technical skills, sales engagement and standardized delivery to grow profitably and at scale.

And look forward to realizing on the cross-sell opportunity beginning in 2020. Next, our focus on culture, teammate benefits and leadership development continue to be recognized with key awards including placing number 70 on Fortune's 100 best workplaces for diversity and number 23 on Fortune's 50 best workplaces in technology.

In addition to these national placements, we were recognized regionally as a best place to work in Chicago, Phoenix, Australia and the United Kingdom. As part of our intermediate term capital planning, we financed our debt facilities in 2019 to be more flexible and less expensive options including $350 million in convertible notes and a new $1.2 billion revolving asset base facility.

These facilities will comfortably cover current working capital needs and provide capacity for additional acquisitions in the future. While executing key elements over long-term strategy, we also delivered against our financial commitments for 2019.

Moving to Slide 7. As we head into 2020, we believe the IT market is healthy across the markets where we do business.

Industry analysts expect flat to low-single digit growth in hardware sales in 2020 and mid-single digit growth in software and services sales. Our plans in 2020 are focused on driving growth in excess of the market across our operating segments.

In 2020, we will continue to empower clients to manage their IT environments more efficiently for today as they continue to drive meaningful business outcomes and transform their own business for the future. To do this, we will leverage for solution areas to further enhance our value proposition to clients around the world.

As a reminder, our four solution areas are, first, digital innovation where we leverage emerging technologies to build innovative applications to improve clients’ businesses performance, engage customers, and uncover new revenue streams. Second, cloud and data center transformation where we help businesses modernize and secure critical platforms to transform IT.

Through end-to-end services, from architecture to management, we help leverage the right platforms to increase agility and support innovation. Third, supply chain optimization where, through Insight’s core business, we help clients effectively and efficiently acquire all of their information technology leads, leveraging our scale and supply chain expertise.

Fourth, connected workforce where we help clients deliver secure, modern experience to the workforce, driving productivity in the workplace and helping to attract and retain talent in the competitive marketplace. An example of our connected workforce solution area in action includes a project we recently completed with an international airline.

Our client needed to meet a critical deadline to refresh the iPhone and iPad devices used by its flight attendants across the globe. Our connected workforce team leveraged Insight’s managed deployment services to handle global distribution.

As part of this service, our dedicated integration labs configured more than 45,000 devices and packaged them with cases, screen protectors, and credit card readers to ensure they're ready to use upon receipt. Our solution provided centralized configuration, streamlined deployment, with greater visibility for the client, and ultimately reduced operating costs by extending the life of these devices.

This is just one example of how our connected workforce solution area helps clients optimize their workforce productivity and end user experience. As part of our 2020 plans, we plan to organize our resources, leverage our strategic partner relationships, and align our offerings to our clients’ needs to ensure we participate in key areas of market opportunity across our geographic footprint.

We have deep capabilities operational scale and wide geographic reach supporting large enterprise clients who are looking to optimize their workforce experience, modernize their data center and drive internal innovations through digital solutions for their business. PCM provides us an expanded but similar opportunity in the mid-market.

In 2020, we expect to align dedicated solution expertise with our mid-market motion to drive additional growth through our solution areas. First, we will work to consolidate our sales and service delivery teams across the business to ensure a common client experience and ability to sell across Insight portfolio of offerings.

We also see an early cross-sell opportunity to bring certain packaged cloud solutions wrapped with Insight managed services to this market segment. To support our go-to-market strategy globally, we have strong operational platform that includes scalable IT and e-commerce systems and processes, robust digital marketing capabilities, and a culture of continuous business process transformation and automation.

In 2020, we'll continue to invest in these critical areas to deliver a great client experience, while also optimizing our infrastructure to scale with future growth. In January, I celebrated my 10-year anniversary at Insight.

I'm proud of our accomplishments over the past decade and of our team's performance in 2019. We have made significant progress as a company, transforming our business from an IT reseller to a well-respected intelligent technology solutions provider with deep expertise across the multiple technology areas our clients value most.

Today, we have a single united global leadership team, integrated and scalable IT systems and operations, a highly-engaged workforce and a clearly-defined go-to-market framework around our four solution areas. We believe we are well-positioned to compete in the marketplace as we had in 2020 and beyond.

I'll now turn the call back over to Glynis.

Thank you, Ken. As Ken noted earlier, we're pleased with the progress we made in 2019, making strategic investments in our business that will help us to conceive in the future, while also delivering another year of good financial results for our stakeholders.

I will take a few minutes to summarize the fourth quarter and full-year results of our geographic operating segments and then cover taxes and cash flow performance. Starting with North America on Slide 9, in North America in the fourth quarter, net sales were $1.9 billion, up 38% year-over-year including PCM and down 2% in the core business due to lower hardware sales to large enterprise clients.

Gross profit in North America was up 44% year-over-year with PCM and up 4% year-over-year organically. Gross margins increased 70 basis points year-over-year for the combined business due to a higher mix of hardware sales to mid-market clients in both the Insight core business and with PCM.

As Ken mentioned, mid-market clients tend to transact at higher gross margins than other client segments. In addition, we focus on controlling costs including early integration savings that allowed us to grow adjusted earnings from operations 40% year-over-year to $69 million including PCM and 14% year-over-year organically.

For the full year on Slide 10, North America sales grew 12% year-over-year including PCM for the four months of the year that they were with us, and net sales were down 1% year-over-year in the core business, reflecting again lower volume with large enterprise clients. Gross profit in North America grew faster than sales, up 19% for the full year including PCM and 5% organically while gross margins increased 80 basis points to a new annual record of 14.5%.

Expenses grew 22% in the combined business which led to adjusted earnings from operations growth of 14% for the full year of 2019, marking the fourth consecutive quarter of double-digit earnings growth in our North America business. We're on track to deliver our committed synergies of more than $35 million in the North America business in 2020, and we expect to realize the savings at an increased rate over the year such that more than half will be realized in the back half of the year.

We also remain confident that we will deliver on the full $70 million of committed synergies by the end of 2021. Moving on to EMEA on Slide 11.

Net sales in the fourth quarter grew 11% in constant currency. Gross profit grew 4% in constant currency slower than sales due to lower hardware margins with public sector clients and this drove adjusted earnings from operations down about $400,000 year-over-year to $10.8 million.

PCM did not have a material effect on these adjusted results. Moving on to Slide 12, for the full year in constant currency, our EMEA business reported net sales of $1.5 billion up 5% year-over-year in constant currency.

Strong growth with mid-market clients across the region was partially offset by lower volume of large clients in our UK operation. Gross profit grew 8% faster than sales including a higher mix of cloud and services sales which drove adjusted earnings from operations up 10% year-over-year in constant currency to $41 million.

While Brexit continues to provide a backdrop of uncertainty for the UK economy, we do not believe it has impacted our results materially to-date and we believe our EMEA business is healthy heading into 2020. Moving out to APAC on Slide 13.

Net sales of $34 million and gross profit of $9 million in the fourth quarter decreased 2% and 7% respectively year-over-year in constant currency due to lower software sales and related incentives in the region and this led to adjusted earnings from operations of $2 million in the quarter. For the full year on Slide 14 in constant currency, our APAC business grew net sales by 2% compared to 2018.

Strategically, our team delivered on certain large hardware and software and services offerings to select global clients and expanded digital innovations services sales with growth in new markets. As a result, adjusted earnings from operations to the full year of 2019 was $11 million up 2% in constant currency.

Before I go to taxes, I wanted to provide some color about how our strategy is impacting our business mix and profitability. In 2019, our services sales grew 20% year-over-year.

As Ken noted, our solution area strategy has refined our focus on modern service and solutions that best meet our client needs. This strategy is also important because of the positive effect on our overall profitability.

In 2019, services gross profit was 47% of our consolidated GP, an increase of 90 basis points over 2018. As a result, our services growth was the main driver of our gross margin expansion year-over-year to new annual record of 14.7%.

As we move on to our tax rate on Slide 15. Our effective tax rate for 2019 was 24.7% compared to 22.8% in 2018.

The increase in the tax rate from 2018 to 2019 was primarily because of non-recurring benefits recorded in 2018 to true-up provisional amounts related to the U.S. tax reform that occurred.

Rounding out our cash flow performance on Slide 15. Our operations generated $128 million of cash in 2019.

We have made additional working capital investments to support the PCM business since closing. As we head into 2020, we will be focused on bringing the PCM accounts receivable aging metrics in line with ours such that for the full year of 2020 we expect cash flow from operations will be between $180 million and 200 million.

Also in 2019, we invested approximately $69 million in capital expenditures, including the purchase of a new building for our corporate headquarters for $48 million. In 2020, we will invest approximately $35 million and the build out of this facility.

In addition, we have been exploring the sale of several properties and have early interest from various parties. Subject to negotiation of all purchase agreements and fulfillment of all closing conditions, we expect to net - realize net proceeds of approximately $80 million, eight-zero million dollars and we’ll update you on our progress in future calls.

The sale of these properties and related cash receipts are not included in the guidance we gave today. We ended the year with a cash balance of $115 million at the end of the fourth quarter of which $102 two million was resident in our foreign subsidiaries.

And we had $859 million outstanding under our financing arrangement. This compares to $143 million of cash and $197 million of debt outstanding at the end of 2018.

Our cash conversion cycle was 38 days in the fourth quarter of 2019, up 5 days year-over-year. This increase resulted from the net effect of a two-day increase in DSO and a seven-day increase in DPO due to additional investments in working capital of the PCM business, equating to about three days and the relative time in prime seats and supply payments during the respective quarters in our core business.

I will now turn the call back to Ken to review our 2020 outlook.

Thank you, Glynis. Moving on to Slide 16, we're pleased with our execution in 2019 and believe our business is healthy across each of the markets in which we compete.

With respect to our 2020 outlook, we expect to deliver net sales growth between 20% and 25%. We also expect adjusted diluted earnings per share for the full year of 2020 to be between $6.55 and $6.65.

This outlook assumes interest expense between $35 million and $40 million, an effective tax rate of 25% to 26% for the full year 2020, capital expenditures of $55 million to $60 million including approximately $35 million for the build-out of a new corporate headquarters and an average share count for the full year of approximately 36 million shares. This outlook excludes acquisition-related intangibles amortization expense of approximately $37 million and noncash convertible debt discount issuance costs reported as part of Interest expense of approximately $12 million and assumes no acquisition-related or severance and restructuring expenses.

To assist with your modeling, we have posted a schedule on our website on the Investor Relations page that shows the expected amortization expense and non-cash convertible debt discount and issuance cost by quarter for 2020. Thank you again for joining us today.

I want to once again thank our teammates across the world for everything we do for Insight. I'm honored to be part of such a great team.

That concludes my comments. I’ll now open up your line for questions.

I just wanted to start Ken to ask a little bit on organic revenue trends. I think if you were to look at the quarter - the second quarter now of a little bit lighter revenue trends, I think on an organic basis.

It might be still down year-over-year, and you can correct me if I'm wrong there? You had some easier year-over-year comparisons in Q3 and Q4, so I was just trying to understand where that weakness is stemming from given it's a little bit different than what we're seeing from your largest competitor.

There may be something integration with PCM driving that. So it will be the first question I've got a follow-up?

Yes thanks, Adam for the question. Yes it’s not PCM-related at all.

Again, as we mentioned, we’re pleased with where PCM came in at for the quarter. And again as you suggested, we were pretty flat from a revenue point of view for the year.

A lot of that, of course, has to do with the netting and you certainly saw that with the gross margin improvement for the business overall which certainly benefited there. And I would say it had to do primarily with some large hardware clients that we did business with in the prior year that didn’t repeat.

As we know - these large enterprise clients drive substantial volumes, and it depends upon where you're positioned for that sort of cycle as they don't repeat each other every year. So I would say it really has to do solely with that.

Again, we're pleased with where PCM came in for the quarter, very pleased with where we are from an integration point of view. As I mentioned, we completed multiple ERP systems into our Canadian operation in December.

We converted the U.K. operation in January, and we're well on our way for the U.S.

integration as well where we started that a few weeks ago, at this stage. So, pleased with how that is coming together.

Yes, and I think to that point, your 2020 guidance suggests some bounce-back, and I wanted to ask about that as a follow-up. Maybe just touch on what underlies the confidence and improvement in organic revenue growth and trends.

I think the pushback that we might get on that from investors is concerned that the PC cycle is ending in 2020 and we're going to have some difficult comparisons on PCs? But it sounds like you're pretty confident in cross-selling opportunities.

So maybe just touch on some of the buckets that drive some of the bounce-back in 2020?

Yes, yes certainly, I think you're correct. You've been certainly watching the PC refresh cycle for quite some time, and certainly the last three years, the channel has seen double-digit growth in those categories.

Certainly we’re approaching the end of the Win 10 cycle. There’s still certainly some runway still left there.

But as we’ve said, it’s really - it’s more about sort of a consistent refresh cycle that we see from our largest clients. So it all depends upon where you’re positioned with those large enterprise clients in our business from a refresh perspective.

So, we still think that there is certainly some gas left in the device cycle refresh. I don’t think it’s going to be double-digit this year like we’ve experienced in the last three years, but I don’t think it’s going away.

The other part to keep in mind as we talk about the three clouds, there’s the, of course the private cloud, which we all know in a data center world, we're still alive and well. The public cloud we're all very conversant on, the one that doesn't get a lot of play of course yet is the intelligent edge.

That will ultimately be the largest cloud. As things move more and more to the edge with technologies like AI and IoT, that will drive a significant amount of hardware that we haven't seen in the past.

We're still in very early innings. I'd say we're probably in the second inning there, but we remain bullish that our hardware will be alive and well.

And going forward primarily driven by what will occur in the intelligent edge which, again is just starting to formulate, and we're starting to see some interesting successes there in our solution areas for that - for those type of engagement. So that would be sort of the reasons why we believe that there's certainly growth in the business.

We're certainly see as you mentioned, cross-sell opportunities. We're taking our cloud and datacenter team are primarily the resources we obtained from the Datalink acquisition a few years ago and bringing down into the traditional Insight clients and also the PCM clients where they have deep expertise in this data center area to really help drive and really engage.

So, we've seen some nice growth towards the tail half of 2019 and that's continuing into 2020.

And maybe just one last one on services. You mentioned how mixes up for the full year in 2019.

Just wanted to clarify on Q4, services revenue grew nicely year-over-year but the gross margin was down pretty sizably year-over-year. Could you just maybe touch on the dynamics driving that?

Is there PCM services revenue that's coming in year-over-year that’s dilutive to the total company services gross margin? If there’s been temporary waiting on this and kind of what you think about a normalized services gross margin as we think about 2020?

We don’t think that the impact of PCM is going to be appreciable on the services gross margin percent. They have - we have about $200 million of services business, a lot of that is warranty and fee-based business related to Microsoft.

So, I don't think it's going to have an appreciable effect in terms of driving down our services gross margin because it's a smaller percentage of their total, it will impact our overall services as a percent of total revenue and gross profit. But it won't have an impact I don’t think it will have an impact on driving down services gross margin in particular.

And in Q4 I think the services gross margin was down about 500 basis points or so year-over-year. Is there a reason that would drive that is there something temporary Q4?

It’s really ultimately around the mix of cloud and in that particular segment of the business in Q4.

Okay. And does that…

But nothing - I wouldn’t say anything related to PCM.

Okay, okay all right. Thank you so much.

Adam, can I just go back maybe and expand a little bit on guidance because I do want to make sure that we all understand what's included in the guidance. So, we start out with 20% to 25% revenue growth.

That is higher in quarter’s one through three obviously and then lower in Q4 because it - anniversary in September. We actually anticipate that we’re going to have about 15 to 20 basis points contribution from PCM over the period in terms of gross margin.

We've scheduled that include the amortization of the intangible. There is - it’s pretty consistent for the first couple of quarters but in Q4 it changes.

That schedule is out there, it’s about $37 million as Ken mentioned in terms of his comments as we go through that. As we look at the synergies, we are on track to get to the $35 million of synergies in 2020 that we anticipate.

In fact, we think we’re going to get between $35 million to $40 million of synergies coming out of PCM - cost synergies coming out of PCM in 2020. But the - how those ramp, it’s a little bit more back end loaded towards 3 and 4 but starting in Q2 to Q4 specifically as we complete the on-boarding of all the PCM systems onto our SAP system.

So the net of all of that is that we anticipate that in Q1 as it relates to interest expense savings that occurs throughout the year, synergy savings that occur throughout the year, as well as a lower Q1, 2018 - 2020 as it relates to a large project we had in 2019. We anticipate that in Q1, we would forecast adjusted diluted earnings per share in the mid to low - low to mid-single digit growth range with it ramping significantly in Q2, Q3 and Q4 thereafter.

That’s very helpful. Just one clarification on the $30 million to $35 million PCM synergies is that a run rate exiting Q4 or is that a total amount for 2020?

Right if I said $30 million to $35 million my error, it's $35 million to $40 million exiting Q4. Savings in the quarter, sorry savings in the year exiting by the end of the year, sorry not exiting by the end of the year.

And we've said $35 million was what we anticipated. As of right now based on what we're seeing schedule that we have around the systems migration, et cetera we anticipate getting somewhere between $35 million and $40 million in 2020.

Yes, thanks and good morning. Just following up on those - the questions regarding the revenue growth this year Ken, you look like as you said, you’ve got some tough comps still on the enterprise hardware side and what’s your take on - your other markets the PCM core, SMB market?

Are you still seeing upgrade trends in terms of Win 10 or is that lagging and what's your overall take on those markets and when do we start to see easier comps on the enterprise side?

Yes good question, Matt. So the midmarket space, again, we've got a - traditional Insight has a pretty substantial midmarket business as well.

And we see really good growth and have through 2019 on that business and of course PCM adds to that. So, we certainly are bullish in that segment, that SMB segment of the marketplace.

PCM of course adds quite a bit of growth to us and what we're doing there with our traditional business. So, we're certainly bullish and we're seeing that the - that that's going to continue.

So yes, on the refresh cycles we'll see that continue with that sort of midmarket space. So very, very pleased with how that's - that segment of the market is progressing.

And of course you see that with CDW of course who is got a very dominant position in the midmarket space. And you saw their growth numbers.

Well, what’s your take on the enterprise I mean previously - I mean you just said on the previous question about expecting a hardware growth in enterprise. Is that going to be more a shift toward more the solutions the on-premise/off-premise hybrid solutions versus the more commodity parts like IPCs?

We think - for us, as we look at enterprise clients, we definitely will see growth in hardware sales in 2020 on that segment of the business for us. And, yes, it certainly - there’s also a complement of course of growing in the cloud aspects of that business as well.

But certainly the hardware sales will certainly grow this year for us in the enterprise segment.

And I wanted to ask about your take on the coronavirus and the crisis in China. I know you don’t have much direct exposure.

You do have some APAC exposure. But in terms of any potential product constraints, supply constraints, any other issues that you’re seeing or planning for, if this Fuzhou extended shutdowns?

Yes. So we have – as you might know, we have three operations in China.

We have three locations there, and an operation in Hong Kong as well, and they're all certainly working from home at this stage. That's extended another week, as you know, so certainly impacting certainly business in the region.

No question about that. For us, of course, it's a very - it's a small portion of our business, so we're not going to see any material effect there.

As far as the supply chain is concerned, we're monitoring that very closely, as you can imagine. I think it overlapped a little bit with the Chinese New Year, so money of the OEMs of course account for that already.

So this is sort of now an extension of maybe sort of instead of a one-week sort of Chinese New Year, which everybody accounts for, looking more like a three-year sort of…

Three-week.

Chinese - sorry, three-week Chinese New Year situation. So that starts to - if it goes beyond that, I think it definitely starts to impact the supply chain.

But at this stage, we're monitoring closely but haven't seen any impact or sort of hoarding of product or anything at this stage. But again, it's a pretty dynamic situation if that continues.

Beyond that, then I think we might see some impact there. But today I’d say nothing at this stage.

Okay. And just a quick clarification on, Glynis, your commentary below - I mean, earlier about how the year plays out in revenue and margins and the synergies.

I think you said that because of really tough comps last year with the hardware refresh cycle, that you’re expecting the organic growth to be down year-on-year in Q1. Is that correct?

It wasn’t - I wasn’t making a commentary around revenues so much as I was making a commentary on GP production. It was not related to hardware.

It was related to software specifically in a large deal that we transacted in Q1 of 2019. That was impacting overall gross margins and hence our results in the core business.

I think most of my questions had been answered. But clearly, there’s been a lot of consolidation in the space recently.

Some of it is probably taking place now in the private equity world. What does this do to two things, one is sort of pricing to the extent you experience kind of competitive pricing, and what does it do in terms of your M&A prospects moving forward?

Yes. On the - certainly, the M&A prospects, we were certainly going to take our time to make sure we fully digest PCM before we do anything of real substantial size.

But certainly, we always continue to monitor that, so we think, again, as you stated, there will be continued consolidation in the industry. That’s just the norm, and that will certainly be an area that we’ll participate in.

But for the foreseeable future, you might see us continue to do more sort of tuck-in acquisitions as we continued to digest PCM and make sure, of course, we started paying the debt down here over the next couple of years. On the pricing side, it wasn’t exactly clear when you talked about consolidation.

Are you referring to consolidation at the client level where they might be further buying power or - I wasn’t really sure.

Well, that's - certainly, there’s some truth there, but I'm thinking more in terms of there’s fewer participants than you would expect them to start pricing rationally for business. I suspect it’s so fragmented that that’s not a consideration, but I'm interested in your answer?

Yes. And I think, certainly, if you look at history that would certainly prove the case - today that’s still a pretty fragmented market.

So, it has a long way to go in that regard. But certainly it does have an impact when you do have more rational players coming together and consolidate and that certainly has an impact.

But I think in our segment of the industry where it’s still pretty fragmented where the top sort of 10 players represent a pretty small portion of the overall share. It’s a lot of ways to go, I think, before we see me full impact from a pricing sort of rationalization point of view.

Certainly that happened down the distribution front where there is really now primarily three, sort of core distributors that three to four that we buy from. That certainly been rationalized.

My follow-up question really is to do with your couples of the OEMs. This might just be a variation on the cloud migration theme.

But we’re seeing some of the OEMs push the as-a-service business paradigm more aggressively at the moment. What does that do for you?

Is it good, bad, just a neutral outcome?

Yes. We certainly participate pretty heavily as you discuss now, cloud sales for us which is primarily sort of the subscription based, services based sort of business now is 18% of our GP dollars.

So, we continue to whatever – which way our customers want to go, we’ll support them if they want to do an on-premise, they want to do in subscription base. so, for us we’re agnostic to which way it goes but we’re certainly participating pretty heavily as clients do that migrations we’re certainly participating in that business and we think certainly for the future it will become a more meaningful part where if I went back five years ago it was very, very small portion of our GP dollars being generated from cloud sales and now it’s – in 2019 it was 18%.

And I'm not talking private cloud, I'm not talking about data center, private cloud infrastructure at all. This is really sort of what we call the public cloud realm being a substantial portion of what we do.

I'm wondering if you could provide some clarification on the gross margin contraction in APAC and EMEA and maybe expectations for those markets going forward?

At the gross margin contraction in both - well, I’ll talk to EMEA first. EMEA’s related to just a mix of business in terms of less cloud-related kind of fee-based business in EMEA and more hardware business transacted in Q4 in particular at lower margins because it was primarily transacted.

The growth came from public sector business. In APAC, I think it’s also the mix of cloud business in the portfolio versus other forms of business in terms of selling through in that location as well.

It’s really around the mix of business that drives the gross margin. When you have more EA’s in your mix, you have higher gross margins.

When you have more fee-based business around cloud, etcetera, you have high gross margins. As that mix changes in any given quarter, it has a direct impact on gross margin.

But I wouldn’t say that there is a trend towards declining gross margins as a matter of course either in EMEA or in APAC.

Understood. Thank you.

Ken, you mentioned edge devices potentially being a growth for hardware. Is the potential a little slower 5G rollouts maybe slowing that growth, or maybe talk a little bit more about what you’re seeing with deployments there?

Yes. I mean, I think 5G ultimately will accelerate that.

But in our mind, we’re not planning for that for a couple of years before that becomes any kind of meaningful driver for that. So we’re basically just looking at what is the occurring with IoT today when I talk edge devices.

So that’s not really not dependent upon 5G rollouts at this stage. But, again, that’s probably realistically again I think two to three years from now before that becomes meaningful and that will be certainly an accelerator of this trend towards the intelligent edge.

But, in and of itself, the intelligent edge is alive and well and is starting to make some - again, we're starting to see some meaningful movements in that area.

Understood. And last one for me.

Historically, what have you seen around spending around election cycles and kind of how have you been planning that into the guidance?

Yes. We really haven't seen that have a significant impact and during the cycle for us.

So, for us, we actually do no plan and that doesn't influence any of our plan in that regard.

Okay. Thank you.