Financial Data and Key Metrics Changes - For Q4 2025, the company reported net sales of $5.5 billion, an increase of 5% year-over-year, and gross profit of $1.25 billion, up 9% [5][6] - Full-year 2025 results showed net sales of over $22 billion, up 7%, with gross profit nearly $5 billion, up 6% [8][9] - Non-GAAP operating income for Q4 was $503 million, up 1%, and non-GAAP net income per share was $2.57, up 4% [6][21] - Full-year non-GAAP net income per diluted share reached $10.02, up 5% [8][27] Business Line Data and Key Metrics Changes - Strong double-digit growth was observed in software, cloud, and professional managed services, contributing to the highest gross margin of the year [6][12] - Corporate sales were relatively flat, down 1%, while small business sales grew by 18% [10][11] - The healthcare segment increased by 5%, and education saw a 13% increase in top line [11][12] Market Data and Key Metrics Changes - U.K. and Canadian operations delivered sales of $2.7 billion in 2025, with strong performance in small business and state and local markets [10] - The public sector showed growth in healthcare and government, with state and local growth offsetting declines in federal due to the government shutdown [11][12] Company Strategy and Development Direction - The company aims to deliver sustainable, profitable growth by deepening customer value and deploying capital with discipline [19][32] - A focus on AI solutions is evident, with the company positioning itself to lead in the AI era through its full stack, full lifecycle offerings [15][16] - The company plans to maintain a target of returning 50%-75% of adjusted free cash flow to shareholders through dividends and share repurchases [31][32] Management's Comments on Operating Environment and Future Outlook - Management noted that the IT addressable market is expected to grow in the low single digits in 2026, with CDW targeting 200-300 basis points of outperformance [18][35] - The company anticipates gross profit growth in the low single digits for 2026, with a slight increase in gross margin compared to 2025 [36][37] - Management expressed optimism about AI adoption among customers and its potential to drive growth [56][57] Other Important Information - The company reported adjusted free cash flow of $1.09 billion for the full year, representing 82% of non-GAAP net income [30] - The company has made a tuck-in acquisition to enhance capabilities in the education sector [31][32] Q&A Session Summary Question: Impact of memory price changes on demand - Management indicated that there is uncertainty regarding the impact of memory prices on demand, but they expect a similar pull forward in Q1 as seen in Q4 [40][41] Question: SG&A expenses and operating leverage - Management acknowledged that SG&A expenses are expected to show operating leverage in 2026, with a focus on optimizing costs [43][45] Question: IT budget allocation for 2026 - Management expects client device growth to remain strong, with cloud, SaaS, and security categories continuing to be important [59][60] Question: Corporate versus small business performance - Management noted differences in spending cycles, with small businesses being more agile in adopting AI compared to larger corporations [70][72]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net sales of $5.5 billion, an increase of 5% year-over-year, and gross profit of $1.25 billion, up 9% [5][6] - Non-GAAP operating income was $503 million, up 1%, and non-GAAP net income per share was $2.57, up 4% compared to 2024 [6][8] - Full-year 2025 results showed net sales of over $22 billion, up 7%, with gross profit nearly $5 billion, up 6%, and non-GAAP net income per share reaching $10.02, up 5% [8][27] Business Line Data and Key Metrics Changes - The company experienced strong double-digit growth in software, cloud, and professional managed services, which contributed to the highest gross margin of the year [6][12] - Corporate sales were relatively flat, down 1%, while small business sales grew by 18%, driven by cloud consumption and client device modernization [10][11] - The healthcare segment increased by 5%, and education saw a 13% increase, driven by strong relationships and lifecycle services capabilities [11][12] Market Data and Key Metrics Changes - The U.S. IT addressable market is expected to grow in the low single digits in 2026, with the company targeting 200-300 basis points of outperformance [18][35] - The company’s U.K. and Canadian operations delivered sales of $2.7 billion in 2025, with strong performance in small business and state and local markets [10][11] - The government segment saw a 4% increase, with strong growth in state and local offsetting declines in federal due to the government shutdown [11][21] Company Strategy and Development Direction - The company aims to deliver sustainable, profitable growth by deepening customer value, sharpening efficiency, and deploying capital with discipline [19][32] - The focus is on high relevance, high growth areas, particularly in AI, where the company believes it has the architectural depth and partner reach to lead [15][19] - The company is actively evaluating M&A opportunities to bolster its end-to-end lifecycle capabilities, as demonstrated by the acquisition of Lexicon Tech Solutions [32] Management's Comments on Operating Environment and Future Outlook - Management noted that 2025 was a year of transition and resilience amid economic uncertainties, including tariffs and government spending changes [7][27] - The company expects gross profit to grow in the low single digits for 2026, with a slight increase in gross margin compared to 2025 [35][36] - Management highlighted the importance of AI adoption and consumption, indicating that customers are increasingly looking for help in integrating AI into their operations [55][72] Other Important Information - The company generated $1.1 billion in adjusted free cash flow in 2025, returning nearly $1 billion to shareholders through dividends and share repurchases [9][30] - Non-GAAP SG&A expenses for Q4 totaled $752 million, up 14.6% year-over-year, primarily due to higher performance-based expenses [24][25] - The company plans to increase its dividend in line with non-GAAP net income growth, targeting a payout ratio of approximately 25% going forward [31][32] Q&A Session Summary Question: Impact of memory pricing on demand - Management indicated that they expect a similar amount of pull forward in Q1 as seen in Q4, with strong demand for PCs despite potential deceleration in growth [40][41] Question: SG&A as a percentage of gross profit - Management acknowledged that while operating leverage is a priority, the SG&A ratio will improve as growth picks up and expenses are optimized [42][44] Question: Drivers of IT budget allocation in 2026 - Management expects client device growth to remain strong, with cloud, SaaS, and security continuing to be important categories for spending [57][58] Question: Corporate versus small business performance divergence - Management noted that larger companies are taking time to integrate AI, while small businesses are more agile in adopting new technologies [71][72]