Company Overview - CDW Corporation, based in Vernon Hills, Illinois, provides IT solutions across the United States, the United Kingdom, and Canada, with a market cap of $21.5 billion [1][2] Stock Performance - CDW stock has experienced a significant decline of 28.8% from its 52-week high of $230.86 reached on September 20, 2024, and has dropped nearly 6% over the past three months, underperforming the Nasdaq Composite's 12.6% increase during the same period [3] - Over the longer term, CDW stock has decreased by 5.6% in 2025 and 24.9% over the past 52 weeks, while the Nasdaq Composite has gained 14.7% year-to-date and 26% over the past year [4] Financial Performance - In Q2, CDW reported net sales of approximately $6 billion, reflecting a year-over-year increase of 10.2%, which exceeded analysts' expectations by 8.6%. However, there was a slight contraction in gross margins, resulting in a modest 3.9% growth in non-GAAP EPS to $2.60, also surpassing consensus estimates [5] Competitive Position - CDW has outperformed its peer, Gartner, Inc., which has seen a 49% decline year-to-date and a 51.1% drop over the past 52 weeks [6] - Among 12 analysts covering CDW stock, the consensus rating is a "Moderate Buy," with a mean price target of $206.80, indicating a potential upside of 25.9% from current price levels [6]

Market Performance - All three major U.S. equity benchmarks, including the S&P 500, Nasdaq 100, and Dow Jones, reached record highs as investors favored risk assets amid expectations of falling interest rates [1][2] - The S&P 500 rose 0.8% to 6,585.53, the Nasdaq 100 increased 0.7% to 24,012.41, and the Dow Jones jumped 1.3% to 46,087.94 [2][7] - The Vanguard S&P 500 ETF increased by 0.8% to $604.49, while the SPDR Dow Jones Industrial Average rose 1.2% to $461.58 [7] Sector Performance - All 11 S&P sectors experienced gains, with consumer discretionary, materials, and financials leading the way [3] - The Consumer Discretionary Select Sector SPDR Fund outperformed, increasing by 1.3%, while the Energy Select Sector SPDR Fund lagged with a 0.1% rise [7] Company Performance - Top gainers in the S&P 500 included Synopsys, Inc. (+11.11%), Centene Corporation (+10.66%), and Micron Technology, Inc. (+9.57%) [8] - Notable losers included Delta Air Lines, Inc. (-4.30%), Oracle Corporation (-3.38%), and Netflix, Inc. (-2.83%) [9]

PresentationAsiya MerchantVP & Analyst Good morning, everyone. Asiya Merchant. I work here at Citi Research. I look after the tech hardware, tech supply chain stocks. Very pleased to have CDW here inaugurating our Global TMT Conference. I believe it's the 33rd Annual Conference. Don't quote me on that, but it feels like that, like Jayz said. So really happy to have Chris Leahy here as well as Al Miralles from CDW. This is a fireside chat. So we're going to have a few questions. If they want to kick off with ...

Summary of CDW (CDW) 2025 Conference Call Company Overview - **Company**: CDW - **Event**: 2025 Conference - **Date**: September 03, 2025 - **Speakers**: Christine Leahy, Al Miralles, Sia Merchant Key Points Industry and Market Performance - CDW reported a **10% year-on-year growth** in Q2 2025, indicating strong performance despite market complexities [6][7] - The company characterized its business as **highly resilient**, with strong execution across all end markets, particularly in the enterprise sector, which performed better than expected [7][9] - Caution was expressed regarding the second half of the year, particularly in federal and education markets, due to **administration policy changes** and funding challenges [9][10] Growth and Outlook - CDW's outlook for the second half of 2025 is **prudent**, with expectations of muted performance in federal and education sectors, despite potential catalysts for growth [9][10] - The company is looking for **consistent growth** in enterprise and small business sectors, along with clarity in budgetary and policy areas for education and federal government [13] Competitive Positioning - CDW has evolved from a reseller to a **technology integrator**, enhancing its relevance in a complex technology landscape [17][18] - The company benefits from its scale, which provides advantages in verticalization and cost leverage, making it a preferred partner for technology solutions [18][19] - CDW's partner ecosystem is robust, with strong relationships that position it as a leading channel player [19] Cloud and AI Integration - The transition to cloud services is complex, and CDW emphasizes the need for **advisory services** to help customers optimize their technology investments [23][24] - AI adoption among customers is increasing, with CDW positioned as a key partner in helping organizations become **AI-ready** [35][36] - The company is committed to being an **AI-native workforce**, integrating AI tools to enhance productivity internally [46][47] Financial Performance and Margins - CDW expects margins to remain consistent with 2024, driven by growth in solutions and services, particularly in higher-margin areas [26][32] - The company is focused on **durable gross profit growth** through strategic investments across the business cycle [29][30] - Free cash flow generation is strong, with a disciplined approach to capital allocation, including potential M&A opportunities [60] Strategic Acquisitions - CDW recently acquired **Mission Cloud Services**, enhancing its cloud solution capabilities and integration with AWS [61][62] - The integration of Mission Cloud is performing well, contributing positively to CDW's sales and AWS relationships [63] Investor Insights - Investors may underestimate the **complexity of the technology landscape**, which creates opportunities for CDW as businesses seek guidance in navigating new technologies [65][66] - The company is optimistic about future growth driven by AI and other secular catalysts, despite a cautious near-term outlook [64] Additional Important Points - CDW's diverse portfolio allows it to adapt to various market conditions, providing a buffer against macroeconomic events [20] - The company is actively investing in higher-margin areas such as managed services and security, which are expected to drive future profitability [32]

Investment Rating - The report maintains a constructive outlook on shares of Amphenol Corp (APH), Dell Technologies (DELL), Corning Inc (GLW), Hewlett Packard Enterprise (HPE), and the memory/disk drive sector including Seagate Technology (STX), Western Digital Corp (WDC), and SanDisk Corp (SNDK) [4]. Core Insights - The upcoming Citi's 33rd annual Global Technology Conference will feature over 240 technology companies, focusing on updates regarding customer and enterprise demand dynamics, as well as supply chain conditions [1]. - Key investor questions include the impact of Generative AI on infrastructure spending, enterprise spending intentions, consumer spending trends, margin impacts from rising component costs, and capital allocation strategies [2][3]. Company Summaries - **Amphenol Corp (APH)**: Current price at $109.36 with a market cap of $133.52 billion. The target price is set at $125.00 with an expected share price return of 14.3% [7]. - **CDW Corp (CDW)**: Current price at $167.00 with a market cap of $21.89 billion. The target price is $200.00 with an expected share price return of 19.8% [7]. - **Corning Inc (GLW)**: Current price at $65.77 with a market cap of $56.34 billion. The target price is $72.00 with an expected share price return of 9.5% [7]. - **Dell Technologies (DELL)**: Current price at $130.84 with a market cap of $88.50 billion. The target price is $160.00 with an expected share price return of 22.3% [7]. - **Hewlett Packard Enterprise (HPE)**: Current price at $22.45 with a market cap of $29.46 billion. The target price is $25.00 with an expected share price return of 11.4% [7]. - **SanDisk Corp (SNDK)**: Current price at $46.37 with a market cap of $6.76 billion. The target price is $57.00 with an expected share price return of 22.9% [7]. - **Seagate Technology (STX)**: Current price at $159.19 with a market cap of $33.86 billion. The target price is $167.00 with an expected share price return of 4.9% [7]. - **Western Digital Corp (WDC)**: Current price at $76.97 with a market cap of $26.70 billion. The target price is $88.00 with an expected share price return of 14.3% [7].

Group 1 - The core viewpoint is a reiteration of a buy rating on CDW Corporation, highlighting the significance of a hardware refresh cycle that is expanding, leading to increased infrastructure spending [1] - The hardware refresh cycle is expected to contribute to higher-value infrastructure spending, which is beneficial for CDW Corporation [1] Group 2 - The investment approach focuses on identifying undervalued companies with long-term growth potential, emphasizing a blend of value investing principles [1] - The strategy involves purchasing quality companies at a discount to their intrinsic value and holding them for long-term earnings and shareholder returns [1]

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The section presents unaudited consolidated financial statements for the periods ended June 30, 2025 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $15.27 billion, driven by higher accounts receivable and inventory Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $7,836.5 | $7,373.1 | | **Total Assets** | **$15,265.7** | **$14,678.4** | | **Total Current Liabilities** | $5,805.7 | $5,474.4 | | **Total Long-term Debt** | $5,623.2 | $5,607.0 | | **Total Liabilities** | $12,798.5 | $12,325.7 | | **Total Stockholders' Equity** | $2,467.2 | $2,352.7 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net sales grew 10.2% in Q2 2025, though operating income and diluted EPS saw slight declines Key Performance Indicators - Three Months Ended June 30 (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $5,976.6 | $5,423.4 | 10.2% | | Gross profit | $1,241.2 | $1,183.1 | 4.9% | | Operating income | $420.2 | $433.1 | -3.0% | | Net income | $271.2 | $281.1 | -3.5% | | Diluted EPS | $2.05 | $2.07 | -1.0% | Key Performance Indicators - Six Months Ended June 30 (in millions, except EPS) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $11,175.7 | $10,296.1 | 8.5% | | Gross profit | $2,363.5 | $2,246.4 | 5.2% | | Operating income | $781.6 | $761.1 | 2.7% | | Net income | $496.1 | $497.2 | -0.2% | | Diluted EPS | $3.73 | $3.66 | 1.9% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $443.1 million due to working capital changes Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $443.1 | $589.9 | | Net cash provided by (used in) investing activities | $154.6 | $(60.6) | | Net cash (used in) financing activities | $(649.2) | $(449.6) | | **Net (decrease) increase in cash** | **$(26.5)** | **$76.6** | - Key financing activities in the first six months of 2025 included **$350.1 million in common stock repurchases** and **$165.1 million in dividend payments**[16](index=16&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, segment performance, debt, and legal matters - The company is a leading multi-brand provider of IT solutions to business, government, education, and healthcare customers in the US, UK, and Canada[24](index=24&type=chunk) - Total long-term debt stood at **$5.62 billion** as of June 30, 2025, and the company repaid **$211 million** of its 4.125% Senior Notes in May 2025[44](index=44&type=chunk)[47](index=47&type=chunk) - The company received a Civil Investigative Demand from the Department of Justice related to a **False Claims Act investigation** concerning the E-Rate Program, with the outcome currently indeterminable[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial results, highlighting sales growth offset by margin pressure - Key factors affecting performance include general economic conditions, a measured approach to IT spending by customers, and technology trends driving adoption of cloud, AI, and hybrid solutions[94](index=94&type=chunk)[96](index=96&type=chunk) Key Business Metrics Summary | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales ($M) | $5,976.6 | $5,423.4 | $11,175.7 | $10,296.1 | | Gross profit margin | 20.8% | 21.8% | 21.1% | 21.8% | | Operating income margin | 7.0% | 8.0% | 7.0% | 7.4% | | Non-GAAP operating income margin | 8.7% | 9.4% | 8.6% | 8.9% | | Non-GAAP net income per diluted share | $2.60 | $2.50 | $4.74 | $4.41 | [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q2 2025 net sales grew 10.2%, but a decline in gross margin led to lower operating income - **Q2 2025 vs Q2 2024:** Net sales increased by **$553 million (10.2%)**, but Gross Profit only grew by **$58 million (4.9%)** due to a 100 basis point decline in gross profit margin, leading to a **$13 million (3.0%) decrease in Operating Income**[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - **H1 2025 vs H1 2024:** Net sales increased by **$880 million (8.5%)**, and Gross Profit grew by **$117 million (5.2%)**, resulting in an Operating Income increase of **$21 million (2.7%)**[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) [Segment Results of Operations](index=28&type=section&id=Segment%20Results%20of%20Operations) The Corporate segment led sales growth, while the Public segment's operating income declined Net Sales Growth by Segment - Q2 2025 vs Q2 2024 | Segment | Q2 2025 Net Sales ($M) | % Change YoY | | :--- | :--- | :--- | | Corporate | $2,581.5 | 17.6% | | Small Business | $431.3 | 12.6% | | Public | $2,291.7 | 2.2% | | Other | $672.1 | 11.6% | Operating Income by Segment - Q2 2025 vs Q2 2024 | Segment | Q2 2025 Op. Income ($M) | % Change YoY | | :--- | :--- | :--- | | Corporate | $243.1 | 23.4% | | Small Business | $47.8 | 4.8% | | Public | $187.5 | -10.4% | | Other | $42.6 | 76.0% | | Headquarters (cost) | $(100.8) | -135.0% | - The Public segment's performance was mixed: **Healthcare sales grew 24.1%**, Government sales grew 2.7%, but **Education sales declined 10.9%** year-over-year in Q2 2025[113](index=113&type=chunk)[124](index=124&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by operations and a revolving facility despite lower operating cash flow - As of June 30, 2025, the company had **$1.2 billion of availability** under its Revolving Loan Facility and total unsecured debt of **$5.6 billion**[150](index=150&type=chunk)[151](index=151&type=chunk) - During H1 2025, the company repurchased **2.0 million shares for $350 million**[154](index=154&type=chunk) - The cash conversion cycle decreased by one day to **16 days**, driven by an increase in Days of Purchases Outstanding (DPO)[159](index=159&type=chunk)[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk disclosures remain materially unchanged from the previous annual report - There have been **no material changes** in market risk information since the last annual report[176](index=176&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective with no material changes to internal controls - Management concluded that disclosure controls and procedures were **effective** as of the end of the period covered by the report[177](index=177&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[178](index=178&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings and a DOJ investigation - The company is subject to various legal proceedings and is cooperating with a **Department of Justice investigation** related to the Schools and Libraries Program (E-Rate Program)[63](index=63&type=chunk)[66](index=66&type=chunk)[180](index=180&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) Risk factors remain materially unchanged from the 2024 Annual Report on Form 10-K - There are **no material changes** to the risk factors previously disclosed in the company's 2024 Form 10-K[181](index=181&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 0.9 million shares for $150 million in Q2 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased (millions) | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 0.2 | $152.83 | | May 2025 | 0.3 | $182.93 | | June 2025 | 0.4 | $175.94 | | **Total** | **0.9** | **-** | - As of June 30, 2025, **$987.5 million remained available** for future repurchases under the authorized program[183](index=183&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including certifications and XBRL data - Exhibits filed include CEO and CFO certifications pursuant to Rule 15d-14(a) and 18 U.S.C. 1350, as well as Inline XBRL documents[188](index=188&type=chunk)

Core Insights - CDW Corporation reported second-quarter 2025 non-GAAP EPS of $2.60, exceeding the Zacks Consensus Estimate of $2.49, with a year-over-year increase of 3.9% [1][9] - Net sales for the quarter reached $5.98 billion, reflecting a solid 10.2% year-over-year growth, with a 9.8% increase on a constant currency basis [2][9] Financial Performance - The Corporate segment's net sales were $2.6 billion, up 17.6% year-over-year, while the Small Business segment reported $431 million in net sales, a 12.6% increase [7] - The Public segment generated $2.3 billion in revenues, representing a 2.2% growth, driven by a 24.1% increase in Healthcare and a 2.7% increase in Government, offset by a 10.9% decline in Education [7] - Gross profit grew 4.9% year-over-year to $1.24 billion, but gross margin declined from 21.8% to 20.8% due to pricing pressures [11] - Non-GAAP operating income increased 1.8% year-over-year to $519.7 million, with non-GAAP operating margin falling to 8.7% from 9.4% [11] Market Dynamics - Growth was supported by strong demand in IT lifecycle services, device refresh cycles, and international markets [9] - CDW's customer-focused approach and extensive product portfolio are crucial for addressing complex technology needs across the IT stack [4] Future Outlook - CDW aims to outpace U.S. IT market growth by 200–300 basis points on a constant currency basis, focusing on trends like cloud modernization and cybersecurity [5] - The company announced a quarterly dividend of 62.5 cents, payable on September 10, 2025 [5] Share Performance - Following strong demand across core commercial and international markets, CDW's shares rose 4.3% in pre-market trading on August 6 [6] - Over the past year, CDW's shares have declined by 21%, compared to a 3.1% decline in the Zacks Computers-IT Services industry [6] Balance Sheet and Cash Flow - As of June 30, 2025, CDW had $481 million in cash and cash equivalents, with long-term debt remaining at $5.623 billion [13] - For the first half of 2025, CDW generated $443.1 million in cash flow from operating activities, down from $589.9 million a year ago [13]

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 2025 were $6 billion, up 10% year-over-year [8] - Gross profit was $1.2 billion, an increase of 5% [8] - Non-GAAP operating income rose to $520 million, up 2% [8] - Non-GAAP net income per share was $2.60, reflecting a 4% increase [9] - Adjusted free cash flow for the quarter was $210 million [9] Business Line Data and Key Metrics Changes - Corporate net sales increased by 18%, while small business sales rose by 13% [12] - Health care sales surged by 24%, while education saw an 11% decline [13] - Hardware sales grew by 9%, driven by infrastructure solutions and client devices [17] - Software sales increased by 16%, with strong growth across all markets except K-12 [18] - Services revenue was up 8%, with professional managed services growing by 13% [18] Market Data and Key Metrics Changes - The commercial market showed strong performance, offsetting declines in federal and education sectors [12][14] - UK and Canadian operations reported a combined top line increase of 12% [16] - Federal market performance was mixed, with a 3% increase in government sales but declines in federal purchases [15] Company Strategy and Development Direction - The company maintains a focus on full stack, full life cycle solutions to address customer needs [6][19] - Strategic investments in services capabilities are seen as key differentiators in the market [19] - The company aims to navigate market dislocations in government and education while leveraging its scale and expertise [24][25] Management's Comments on Operating Environment and Future Outlook - Management expects continued challenges in the government and education sectors for the remainder of the year [23][24] - The outlook for 2025 remains cautious, with low single-digit growth anticipated for the IT market [23][38] - Management emphasizes a commitment to delivering customer value and executing with precision [25] Other Important Information - Non-GAAP SG&A expenses totaled $722 million, up 7.2% year-over-year [30] - The company returned approximately $150 million in share repurchases and $82 million in dividends during the quarter [33] - The liquidity position remains strong, with cash and revolver availability of approximately $1.7 billion [32] Q&A Session Summary Question: Performance vs. Market Expectations - Analyst inquired about the company's outperformance relative to market expectations and share gain [43] - Management confirmed confidence in outperforming the market by 200 to 300 basis points, attributing recent performance to strong execution and customer demand [44][45] Question: Product Segment Performance - Analyst asked about the performance of hardware segments and market cycles [46] - Management noted mid-cycle strength in client devices and an uptick in infrastructure hardware demand [47][48] Question: Corporate Market Strength - Analyst sought clarification on the motivating factors behind strong corporate market performance [54] - Management highlighted pent-up demand and strategic investments as key drivers [57][59] Question: Free Cash Flow Conversion - Analyst questioned the subdued free cash flow conversion rate [67] - Management attributed this to timing effects and expects improvement in the second half of the year [68] Question: AI Impact on Revenues - Analyst asked about the influence of AI on client device upgrades and data center demand [97] - Management indicated a growing urgency around AI, with increased conversations and demand across all product lines [99][100]

Financial Data and Key Metrics Changes - Consolidated net sales for Q2 2025 were $6 billion, up 10% year-over-year [6] - Gross profit was $1.2 billion, an increase of 5% [6] - Non-GAAP operating income rose to $520 million, up 2% [6] - Non-GAAP net income per share was $2.60, reflecting a 4% increase [7] - Adjusted free cash flow for the quarter was $210 million [7] Business Line Data and Key Metrics Changes - Corporate net sales increased by 18%, while small business sales rose by 13% [10] - Health care sales surged by 24%, while education saw an 11% decline [11][12] - Hardware sales grew by 9%, driven by infrastructure solutions and client devices [15] - Software sales increased by 16%, with strong growth across all markets except K-12 [16] Market Data and Key Metrics Changes - U.S. IT market growth is expected to be in the low single digits, with CDW targeting a growth premium of 200 to 300 basis points [22] - Federal and education markets are facing ongoing challenges, impacting overall performance [22] - UK and Canadian operations reported a combined top line increase of 12% [14] Company Strategy and Development Direction - The company emphasizes a diversified portfolio of products and services to navigate market complexities [6] - Focus on full stack, full life cycle solutions to enhance customer relationships and drive growth [18] - Continued investment in AI capabilities to support customer needs across various sectors [19] Management's Comments on Operating Environment and Future Outlook - Management expects continued challenges in government and education sectors, impacting growth [22] - The company remains committed to executing its strategy and maximizing its business model strengths [23] - Anticipated gross profit growth for the full year 2025 is expected to be low to mid single digits [37] Other Important Information - Non-GAAP SG&A expenses totaled $722 million, up 7.2% year-over-year [29] - The company returned approximately $150 million in share repurchases and $82 million in dividends [32] - The cash conversion cycle was 16 days, reflecting effective working capital management [31] Q&A Session Summary Question: Regarding outperformance versus market expectations - Management confirmed that the outperformance is driven by market conditions and customer demand, expecting to maintain a growth premium [44] Question: Insights on hardware market cycles - Management indicated that the client device refresh cycle is mid-cycle, with positive trends in infrastructure hardware [47][50] Question: Factors behind corporate market strength - The corporate market's strength is attributed to pent-up demand and strategic investments in mission-critical technology [57] Question: Guidance for Q4 earnings - Management expressed conservatism in Q4 guidance due to expected softness in federal and education segments [82] Question: Impact of AI on revenues - AI is becoming a significant part of customer conversations, with increasing demand for AI-driven solutions across client devices and infrastructure [96] Question: M&A opportunities - The company is focused on growing capabilities in high-relevance areas, particularly in services-led capabilities [102]