Core Viewpoint - CDW Corporation reported strong first-quarter 2025 results, with non-GAAP EPS of $2.15, exceeding estimates and showing a 12% year-over-year increase [1][2] Financial Performance - Revenues grew 6.7% year over year to $5.199 billion, driven by strong demand for notebooks, mobile devices, desktops, software, and services, despite declines in some hardware categories [2] - Quarterly revenues surpassed the consensus estimate of $4.89 billion [2] - Gross profit increased 5.5% year over year to $1.122 billion, while gross profit margin slightly decreased from 21.8% to 21.6% due to a higher mix of lower-margin products [6] - Non-GAAP operating income rose 10% year over year to $444 million, with the non-GAAP operating margin increasing to 8.5% from 8.3% [6] Segment Performance - Corporate segment net sales were $2.236 billion, up 6.3% year over year [4] - Small Business segment net sales increased 7.9% year over year to $405 million [4] - Public segment revenues reached $1.878 billion, representing a 10.6% growth, driven by significant increases in Healthcare (19.5%) and Education (11.1%) customer sales [5] - Other operations (Canadian and U.K.) saw net sales rise 9.5% to $680 million [5] Expenses and Cash Flow - Selling and administrative expenses rose 3.5% year over year to $761 million, influenced by lower performance-based compensation and transformation-related costs [8] - Cash flow from operating activities for the quarter was $287.2 million, down from $440 million in the previous year [9] Dividend Announcement - The company announced a quarterly dividend of 62.5 cents, payable on June 10, 2025, to shareholders on record as of May 26 [3] Stock Performance - Following the results, CDW's shares increased by 2% in pre-market trading on May 7, although shares have declined 25.6% over the past year compared to the industry growth of 4.2% [4]

Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2025 were $700 million, representing a 10.9% increase compared to Q1 2024 [6] - Gross profit increased by nearly 8% to $127.3 million, while gross margins slightly decreased to 18.2%, down 50 basis points year over year [6][8] - Operating income for Q1 was $14.5 million, a 7.9% increase year over year, with operating income as a percentage of sales remaining flat at 2.1% [7][8] - Net income was $13.5 million, up 2.5% from $13.2 million in the prior year, with diluted earnings per share increasing by 2% to $0.51 [8][14] - Adjusted diluted earnings per share rose by 20% to $0.60 [8][14] Business Line Data and Key Metrics Changes - Net sales for notebooks and desktops increased by 21% year over year, driven by device refresh initiatives [9] - Advanced Technologies and Integrated Solutions revenue grew by 7%, supported by software and server storage solutions [9] - Business Solutions segment net sales were $258.4 million, a 1% increase, with gross profit rising by 8.4% to $65.4 million [10] - Public Sector Solutions net sales increased by 4.7% to $144.6 million, with gross profit up 30.9% [11] - Enterprise Solutions segment net sales grew by 5.4% to $298 million, although gross profit decreased by 1% [12] Market Data and Key Metrics Changes - Financial Services net sales increased by 32% and gross profit by 31% year over year [20] - Healthcare segment net sales grew by 13% and gross profit by 10% year over year [20] - The backlog at the end of Q1 was at its highest level in nearly two years, indicating strong future demand [23] Company Strategy and Development Direction - The company is focused on integrated IT solutions and customer service, aiming to drive internal efficiencies and reduce costs [6][19] - There is a strong emphasis on AI technology and its implementation, with investments in frameworks and advisory capabilities to support customer needs [21][22] - The company anticipates outperforming the U.S. IT market growth by 200 basis points, aligning its strategy with shifting customer technology consumption dynamics [24] Management Comments on Operating Environment and Future Outlook - Management noted a mixed customer response to economic conditions, with some accelerating purchases while others delayed due to cost concerns [29] - The company remains optimistic about future growth, driven by device refresh momentum and data center modernization initiatives [22][23] - There is caution regarding the economic backdrop, but management believes they can navigate through challenges and capitalize on opportunities [46][48] Other Important Information - The company declared a quarterly dividend of $0.15 per share, payable on May 30, 2025 [16] - A significant increase in share buyback activity was noted, with 697,000 shares repurchased at an average price of $64.22 [15] Q&A Session Summary Question: Customer purchasing patterns in Q1 - Management indicated a mixed response from customers, with some accelerating purchases due to cost containment concerns while others delayed spending [29][30] Question: Expected growth for the year - Management projected mid to high single-digit growth for the year, with a solid enterprise funnel but caution due to economic conditions [36][39] Question: Q1 performance progression - The quarter saw stronger performance in March compared to January and February, attributed to improved customer confidence and pre-tariff buying [43][44] Question: Q2 outlook amidst tariffs - Management acknowledged that tariffs are impacting customer decisions, but they are working to help customers navigate these challenges [46][48] Question: Acquisition plans - The company remains open to acquisitions, particularly tuck-in deals that expand capabilities or enter new markets, despite current market conditions [49][50]