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]