Financial Data and Key Metrics Changes - Third quarter consolidated net sales were $5.7 billion, up 4% year-over-year [6] - Gross profit was $1.3 billion, up 5% [6] - Non-GAAP operating income was $531 million, down 1% [6] - Non-GAAP net income per share was $2.71, up 3% [23] - Adjusted free cash flow was $209 million [25] Business Line Data and Key Metrics Changes - Small Business delivered double-digit growth in top line and gross profit, driven by cloud and client device solutions [9] - Corporate delivered mid-single-digit top line growth with low single-digit gross profit [9] - Government net sales increased 8%, with state and local showing double-digit growth [10] - Healthcare gross profit grew faster than its 7% top line growth, driven by cloud solutions [11] - Services segment grew 9% top line, with managed and professional services up 14% [14][60] Market Data and Key Metrics Changes - U.K. and Canadian operations reported a 9% increase in net sales [11] - Demand for client devices remained strong, with a 7% growth rate [13] - Software sales increased by 4%, driven by cloud and security offerings [13] Company Strategy and Development Direction - The company is focused on embedding AI into operations to enhance productivity and efficiency [15] - Strategic investments are aimed at improving customer-facing capabilities and internal operations [14] - The company maintains a prudent full-year outlook, expecting low single-digit growth in the U.S. IT market [17][29] Management's Comments on Operating Environment and Future Outlook - Management highlighted the complexity and volatility of the current operating environment, impacting customer investment decisions [51] - The company is cautious about the potential impacts of the government shutdown on federal results and other markets [17] - Despite uncertainties, management remains confident in the company's strategy and ability to deliver customer value [18] Other Important Information - The company returned approximately $150 million in share repurchases and $82 million in dividends [25] - The dividend was increased by approximately 1% to $2.52 annually, marking the 12th consecutive year of increases [26] Q&A Session Summary Question: Impact of the government shutdown on guidance - Management has taken a conservative view of Q4, anticipating some pipeline and backlog but acknowledging constraints due to the shutdown [34][35] Question: Drivers of small business growth - Small businesses are leaning more into technology for competitive advantage, showing resilience and strong execution [37] Question: Outlook for the PC and endpoint market - Demand for PCs is expected to remain solid in the near term, driven by Windows 10 end-of-life transitions and AI productivity initiatives [42][43] Question: Complexity of the current spending environment - The primary challenge is volatility and uncertainty, affecting investment commitments from customers [51] Question: Healthcare market dynamics - Management is monitoring funding shifts and their potential impact on healthcare, but remains confident in long-term relationships and technology investments [78]

Financial Data and Key Metrics Changes - Consolidated net sales for the third quarter were $5.7 billion, up 4% year-over-year [7] - Gross profit increased to $1.3 billion, reflecting a 5% growth [7] - Non-GAAP operating income was approximately $531 million, down 1% [7] - Non-GAAP net income per share was $2.71, up 3% [7] - Adjusted free cash flow for the quarter was $209 million, totaling $668 million year-to-date [33] Business Line Data and Key Metrics Changes - Small business segment delivered double-digit growth in both top line and gross profit, driven by cloud and client device solutions [12] - Corporate segment achieved mid-single-digit top line growth, with low single-digit gross profit growth [12] - Government net sales increased by 8%, with state and local delivering double-digit growth [13] - Healthcare gross profit grew faster than its 7% top line growth, driven by cloud solutions [15] - Services segment saw a 9% increase in top line, with managed and professional services growing 14% [18][75] 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 [24] - U.K. and Canadian operations reported a 9% increase in net sales [16] - Demand for client devices remained strong, driven by the end of Windows 10 support [28] Company Strategy and Development Direction - The company is embedding AI into its operations to enhance productivity and efficiency [20] - Focus on delivering enterprise-grade AI solutions to help customers unlock value [21] - The strategy emphasizes a full stack, full lifecycle approach to meet customer needs [106] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the impact of the government shutdown on federal results and other end markets [24][46] - The current environment is characterized by volatility and uncertainty, affecting investment decisions [62][66] - The company maintains a prudent outlook for the remainder of the year, expecting low single-digit growth in the IT market [38] Other Important Information - Non-GAAP SG&A expenses totaled $725 million, up 8.7% year-over-year [30] - The company returned approximately $150 million in share repurchases and $82 million in dividends [34] - A 1% increase in the annual dividend was announced, marking the twelfth consecutive year of increases [35] Q&A Session Summary Question: Impact of the government shutdown on federal contributions - Management indicated a conservative view for Q4, acknowledging that the shutdown could impact pipeline and backlog but historically, lost sales are often just a timing issue [44][46] Question: Drivers of small business growth - Small businesses are increasingly leaning into technology for competitive advantage, showing resilience and strong execution from the team [49][50] Question: Outlook for the PC and endpoint market - Demand for PCs is expected to remain solid in the near term, driven by Windows 10 end-of-life transitions and AI productivity initiatives [54][55] Question: Complexity of the current spending environment - The primary challenge is volatility and uncertainty, which has led to hesitancy in making larger technology investments [62][66] Question: Healthcare market dynamics - Management noted that healthcare has been strong but is monitoring potential funding shifts that could impact growth [94][96]

CDW (NasdaqGS:CDW) Q3 2025 Earnings Call November 04, 2025 08:30 AM ET Speaker2Ladies and gentlemen, the CDW third quarter 2025 earnings call will begin shortly with your host, Steven O'Brien. We appreciate your patience as we prepare your session today. During the call, we encourage participants to raise any questions they may have. You can raise a question by pressing the star followed by one on your telephone keypad. To remove yourself from the line of questioning, star followed by two. As a reminder to ...

Core Insights - CDW reported quarterly earnings of $2.71 per share, exceeding the Zacks Consensus Estimate of $2.62 per share, and showing an increase from $2.63 per share a year ago, resulting in an earnings surprise of +3.44% [1] - The company achieved revenues of $5.74 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.86% and up from $5.52 billion year-over-year [2] - CDW has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] Earnings and Revenue Performance - The earnings surprise for the previous quarter was +4.42%, with actual earnings of $2.60 per share compared to an expected $2.49 per share [1] - The current consensus EPS estimate for the upcoming quarter is $2.51, with projected revenues of $5.16 billion, while the estimate for the current fiscal year is $9.86 on $22.03 billion in revenues [7] Market Position and Outlook - CDW shares have underperformed the market, losing about 11% since the beginning of the year, while the S&P 500 has gained 16.5% [3] - The company's Zacks Rank is currently 3 (Hold), suggesting that shares are expected to perform in line with the market in the near future [6] - The Computers - IT Services industry, to which CDW belongs, is currently in the top 28% of Zacks industries, indicating a favorable industry outlook [8]

Core Insights - CDW exceeded Wall Street profit estimates for the third quarter, driven by increased technology budgets from enterprise customers and a growing adoption of artificial intelligence in cloud services [1] Group 1: Financial Performance - CDW reported a profit that surpassed Wall Street expectations for the third quarter [1] - The increase in enterprise customers' technology budgets contributed significantly to the company's financial success [1] Group 2: Market Trends - There is a notable trend of enterprise customers embracing artificial intelligence and cloud adoption, which is positively impacting CDW's business [1]

CDW Corporation Non-GAAP Reconciliations Third Quarter 2025 Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial condition that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with US GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures. Our out ...

Core Viewpoint - CDW Corporation has declared a quarterly cash dividend of $0.630 per common share, reflecting its commitment to returning value to shareholders [1] Company Summary - The dividend will be paid on December 10, 2025, to all stockholders of record as of the close of business on November 25, 2025 [1] - The declared dividend amount represents approximately [1]

Financial Performance - Net sales for Q3 2025 were $5,737 million, a 4.0% increase from $5,517 million in Q3 2024[4] - Gross profit for Q3 2025 was $1,256 million, up 4.6% from $1,201 million in Q3 2024, with a gross profit margin of 21.9%[5] - Operating income decreased by 8.0% to $443 million in Q3 2025, with a non-GAAP operating income of $531 million, down 0.6%[7] - Net income for Q3 2025 was $291 million, an 8.0% decrease from $316 million in Q3 2024, while non-GAAP net income increased by 0.6% to $357 million[10] - For the nine months ended September 30, 2025, net sales increased by 7.0% to $16,913.1 million, compared to $15,812.7 million in the same period of 2024[29] - The company reported a net cash provided by operating activities of $771.4 million for the nine months ended September 30, 2025[60] Tax and Expenses - The effective income tax rate decreased to 25.3% in Q3 2025 from 26.0% in Q3 2024, resulting in a tax expense of $98 million[9] - Selling and administrative expenses rose by 12.9% to $812 million in Q3 2025, primarily due to higher performance-based compensation and acquisition-related costs[6] - The net income before income tax for the nine months ended September 30, 2025, was $1,058.3 million, with an effective tax rate of 25.6%[53] Segment Performance - Corporate segment net sales were $2,255 million, up 4.4% compared to 2024, while the Small Business segment saw a 14.2% increase to $434 million[13] - Healthcare sales increased by 6.9% to $693.9 million in Q3 2025, while Education sales decreased by 8.5% to $911.2 million[31] - The Corporate segment saw a 4.4% increase in sales to $2,255.4 million for Q3 2025, while the Small Business segment grew by 14.2% to $433.8 million[31] Cash Flow and Working Capital - Net cash provided by operating activities for the nine months ended September 30, 2025, was $771.4 million, down from $932.0 million in the same period of 2024, reflecting a decline of 17.3%[41] - Free cash flow for the nine months ended September 30, 2025, was $692.2 million, down from $838.0 million in 2024[60] - Cash conversion cycle improved to 11 days in September 2025, down from 18 days in December 2024, suggesting better efficiency in managing working capital[38] Assets and Liabilities - Total assets increased to $15,197.6 million as of September 30, 2025, up from $14,678.4 million at December 31, 2024, representing a growth of 3.5%[36] - Total debt decreased to $5,628.8 million from $5,842.8 million, a reduction of 3.7% compared to the previous period[38] - Total current liabilities rose to $5,593.8 million from $5,474.4 million, an increase of 2.2%[36] Shareholder Returns - A quarterly cash dividend of $0.630 per common share was approved, to be paid on December 10, 2025[2] Other Financial Metrics - Days of sales outstanding increased to 92 days in September 2025 from 84 days in December 2024, indicating a longer collection period[38] - Non-GAAP operating income for the three months ended September 30, 2025, was $530.6 million, accounting for 9.2% of net sales, compared to $534.0 million or 9.7% in 2024[45] - Non-GAAP net income for the three months ended September 30, 2025, was $476.7 million, with a net income per diluted share of $2.21, compared to $479.1 million and $2.34 in 2024[49] - The amortization of intangibles for the nine months ended September 30, 2025, was $127.6 million[53] - The company incurred $44.1 million in costs related to transformation initiatives during the nine months ended September 30, 2025[53]

Core Insights - Wedgewood Partners' third-quarter 2025 investor letter indicates that AI stocks remain a focal point for Wall Street, with the Wedgewood Composite's net return at 5.9%, underperforming the S&P's 8.1% and the Russell 1000 Growth Index's 10.5% [1] Company Performance - CDW Corporation (NASDAQ:CDW) is highlighted as an IT solutions provider, with a one-month return of -2.56% and a 52-week loss of 28.16%, closing at $156.36 per share on October 22, 2025, with a market cap of $20.493 billion [2][3] - CDW's revenues grew by 10% while adjusted operating income only increased by 2%, indicating potential challenges in profitability despite revenue growth [3] Market Position and Outlook - CDW Corporation is not among the top 30 most popular stocks among hedge funds, with 44 hedge fund portfolios holding its shares at the end of Q2 2025, unchanged from the previous quarter [4] - The company reported consolidated net sales of $6 billion in Q2 2025, reflecting a 10% increase compared to Q2 2024, suggesting a stable revenue trajectory [4] - Wedgewood Partners believes that while CDW has investment potential, other AI stocks may offer greater upside with less downside risk, indicating a competitive landscape for investment opportunities [4]

Core Insights - CDW Corporation, based in Vernon Hills, Illinois, is a leading provider of IT solutions with a market capitalization of $19 billion, offering a range of products including hardware, software, cloud computing, and security solutions [1] Financial Performance - Analysts anticipate CDW will report a diluted earnings per share (EPS) of $2.53 for the fiscal third quarter of 2025, reflecting a 3.1% decrease from $2.61 in the same quarter last year [2] - For the full fiscal year, EPS is projected to be $9.44, which is a 2.2% increase from $9.24 in fiscal 2024, and is expected to rise to $9.99 in fiscal 2026, marking a year-over-year increase of 5.8% [3] Stock Performance - CDW's stock has significantly underperformed, with a decline of 34.6% over the past 52 weeks, contrasting with the S&P 500 Index's gain of 13.4% and the Technology Select Sector SPDR Fund's increase of 20.8% during the same period [4] Recent Earnings Report - On August 6, CDW reported its Q2 results, with an adjusted EPS of $2.60, surpassing Wall Street's expectations of $2.49, and revenue of $5.98 billion, exceeding forecasts of $5.51 billion [5] Analyst Ratings - The consensus opinion among analysts is moderately bullish, with a "Moderate Buy" rating overall. Out of 12 analysts, five recommend a "Strong Buy," two suggest a "Moderate Buy," and five advise a "Hold." The average price target for CDW is $206.80, indicating a potential upside of 42.6% from current levels [6]