Erik Woodring • Morgan Stanley

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CEO Paul Bay characterized the cycle for servers, storage, and networking as being in the 'mid-innings,' partly driven by AI-related GPU activity, and noted early signs of recovery in the SMB market. EVP & CFO Mike Zilis explained that the OpEx increase was driven by a $32.8 million one-time charge related to divestitures, variable costs on higher revenue, annual merit increases, and some pulled-forward investments into the xVantage platform.

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CEO Paul Bay stated that any Q1 pull-forward was slight, not material, and primarily concentrated in the PC refresh cycle, not other product categories. He clarified that the Q2 guidance assumes continued but more moderate PC refresh growth. Regarding pricing, Bay explained there has been minimal impact so far, with some changes in peripherals, but no significant price increases from vendors in Q1 or early Q2. He emphasized that predictability is key and the company is able to adapt.

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CEO Paul Bay attributed confidence in 2025 growth to momentum in client endpoint solutions, an expected rebound in the networking business, and continued strength in North America. CFO Michael Zilis stated there are no notable one-time costs in the Q1 guide; the profit pressure stems from margin factors, including product mix and heightened competition, particularly in India.

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CEO Tom Conrad explained that the pricing strategy aims to optimize gross profit dollars while monitoring consumer response, without providing specific product details. He described the market as 'cyclically challenged' but noted favorable long-term trends. CFO Saori Casey stated that while not guiding for FY26, cost optimization efforts are ongoing and the full impact of recent workforce reductions will materialize in FY26, with an expectation of continued profitability improvement.

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Interim CEO Tom Conrad detailed that the previous business-unit structure created redundancies and inflexibility, and the new functional model enables more nimble, efficient project teams. He clarified this change was a refined "return to form," as the business-unit structure was only 18 months old. CFO Saori Casey acknowledged the difficulty in forecasting Q3 seasonality and could only point to the tough comparison from last year's ACE headphone launch, declining to provide further guidance.

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CEO Patrick Spence confirmed the plan to launch at least two new products annually, with a greater focus on impact and efficiency. He described the current retail environment as challenging and promotion-driven. CFO Saori Casey explained the move to quarterly guidance is due to market uncertainty. She noted the wide Q1 guidance range reflects the holiday season, new product launches, and a proactive effort to reduce channel inventory, which creates a 5-7 point headwind to year-over-year growth.

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Chris Leahy, Chair & CEO, affirmed that CDW is confident in delivering its 200-300 basis point premium over the market and that recent performance underscores this share gain. She characterized the client device refresh as being in its 'mid-cycle' and noted an uptick in infrastructure hardware. Al Miralles, CFO, added that the positive turn in solutions hardware this quarter was encouraging, though it is still early days.

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CEO Christine Leahy explained that the current lack of leverage is due to making significant strategic investments during a low-growth environment but expects leverage to return as conditions improve. On M&A, she stated the appetite is always large, and the company is now in a strong position to be opportunistic, with a particular focus on industry-specific capabilities.

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CEO Christine Leahy explained the decline is a combination of both factors: it reflects the broader market view but is also tempered by CDW's discipline in not "racing to the bottom" on uneconomic deals. She characterized the current competitive environment as featuring "irrational pricing" with an intensity not seen in years, driven by competitors feeling the pressure of elongated sales cycles and deferred spending.

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Rob Aarnes, President of ADI Global Distribution, explained that 2% of ADI's growth came from tariff-related pricing, with the rest from strong demand and market share gains. He clarified that SnapOne's performance is holding flat amid a tough residential market but noted the integration is paying dividends through cross-selling. Aarnes also confirmed the Control4 platform will remain with ADI post-spin. Thomas Surran, President of Products & Solutions, described the SC5 detector as a close partnership with Google and clarified that Resideo competes with the entity that acquired Google's former security product, not Google itself.

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CEO Jay Geldmacher, P&S President Thomas Surran, and ADI President Robert Aarnes all confirmed that customer pull-ahead activity was minimal in Q1 and through April, citing proactive communication and strong underlying demand. Regarding spending cycles, Tom Surran described the residential market as having more tailwinds ahead, with low existing home sales depressing the market but healthy remodeling activity. Rob Aarnes noted that while the residential AV market is soft, ADI is mitigating this through share gains and strength in its commercial categories.

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CEO Jay Geldmacher stated that the competitive landscape is mixed, with some competitors manufacturing in Mexico while others are in China and other locations. Robert Aarnes, President of ADI, confirmed that the pricing environment was highly competitive in Q4 but noted that the most margin-accretive channels, e-commerce and exclusive brands, are key strategic growth areas. He added that investments in a new ERP system are expected to improve future pricing discipline.

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CEO Jay Geldmacher stated that the company is now well-positioned for a new leader to drive future growth and profitability without the foundational challenges he faced upon joining. Robert Aarnes, President of ADI, attributed the segment's growth to sustained momentum in commercial categories, strong performance from large national accounts, and the fruition of multi-year investments in e-commerce and exclusive brands. The margin pressure was previously attributed by CFO Mike Carlet to diminished inflationary benefits and competitive pricing.

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President and CEO Steve McMillan explained that cost optimizations are ongoing, but the key driver for leverage is returning the company to total ARR growth in FY25, which builds a foundation for durable free cash flow. CFO John Ederer added that while not providing specific FY26 numbers, the actions taken this year are setting the company up for a strong finish and future growth. McMillan also highlighted that go-to-market changes, a focus on hybrid cloud and on-prem environments, and new AI workloads are key to the company's growth strategy.

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CEO Stephen McMillan stated the company is focused on profitable growth and has made the right investments to return to ARR growth in 2025. Interim CFO Charles Smotherman attributed the Q2 EPS decline to lower volume, higher claims, and lower CFC, partially offset by reduced headcount.

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CEO Stephen McMillan asserted the company is in its next pivot towards AI, building on its cloud foundation with new partnerships and technologies. CFO Claire Bramley explained that while cost actions are offsetting revenue headwinds, they are not fully offsetting a ~$20 million FX impact, as the company is prioritizing reinvestment to ensure it achieves its total ARR growth target for 2025.

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CEO Stephen McMillan expressed confidence in Teradata's competitive standing, citing a recent win-back from Snowflake and a performance win against Databricks, highlighting the platform's cost-effectiveness and unique hybrid capabilities. CFO Claire Bramley noted that recurring gross margin has been stable, as ongoing improvements in the cloud margin rate have successfully offset the negative impact from the mix shift.

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CEO Tim Cook stated that Apple is monitoring evolving consumer search behaviors. Regarding China, he reported 4% growth for the region, driven by iPhone and Mac. He noted that government subsidies had some effect, but also highlighted a record iPhone installed base, record upgraders in mainland China, and strong new customer acquisition across multiple product lines.

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CEO Tim Cook explained that for the June quarter, the majority of iPhones sold in the U.S. will originate from India, with most other products coming from Vietnam. He detailed the applicable tariff structures but declined to predict future production mixes. Cook also stated there was no obvious evidence of a demand pull-forward in the March quarter, noting that channel inventory levels were similar at the start and end of the period, though Apple did build ahead inventory, which is reflected in manufacturing purchase obligations.

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CEO Tim Cook confirmed that markets with Apple Intelligence showed stronger iPhone 16 performance. He noted that in China, where revenue fell 11%, over half the decline was due to channel inventory changes, and Apple Intelligence has not yet launched there.

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CEO Tim Cook stated that Apple Intelligence is a compelling reason to upgrade, citing high iOS 18.1 adoption. He clarified that the goal is to balance supply and demand quickly, noting iPhone 16 Pro models were constrained in October but are expected to reach balance soon. CFO Luca Maestri added that while most commodity prices are favorable, NAND and DRAM prices are increasing. He expressed confidence in the strong gross margin guidance of 46% to 47% for the December quarter.

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CFO Kris Sennesael expressed satisfaction with achieving a 41.3% gross margin, well above the long-term model. He attributed the strength to stable pricing, a favorable mix shift towards higher-capacity drives, and effective cost controls. Sennesael stated he is confident the team will continue to execute well and drive further gross margin improvements over time.

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CEO Irving Tan explained that the company's primary goal is to reduce net leverage to its target range, after which it intends to return 100% of excess cash to shareholders through both dividends and buybacks. He confirmed that new LTAs with two major hyperscale customers now extend into the first half of 2026, providing significant visibility and confidence in robust demand through calendar year 2025.

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President and CEO Clifton Pemble attributed growth to continuous innovation and differentiation across all segments, particularly in the wearables market where Garmin is gaining share. He clarified that price increases are tied to new products with enhanced utility, not hikes on existing SKUs. CFO and Treasurer Douglas Boessen confirmed the MyLabs acquisition is fully factored into the 2025 guidance.

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CEO Cliff Pemble explained that while the FX impact is quantifiable, it's difficult to disaggregate demand shifts and mitigations. He noted the company is only assuming a modest potential decrease in demand and that the net impact of FX and mitigations on EPS is zero. On mitigation, Pemble stated that "everything is on the table" and actions are being evaluated on a case-by-case basis. He affirmed that Garmin's global footprint and vertical integration are currently a benefit, not a detriment, and does not expect a major shift in strategy.

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CEO Clifton Pemble clarified that the reduced Auto OEM forecast is '100% due to the softening outlook of automakers,' particularly high-end brands exposed to a struggling China market. Regarding the full-year guidance, he explained that the company starts the year with a pragmatic outlook it has high confidence in, acknowledging the back-half seasonality of consumer markets, but always strives to overachieve.

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President and CEO Clifton Pemble emphasized that continuous cost-down efforts are a key part of their strategy and that margin sustainability is driven by creating products with unique differentiators that command premium pricing. Regarding the Auto OEM segment, Pemble acknowledged the softer market but stated it was too early to comment on 2025 targets or the impact on new programs, which will be addressed in the next outlook.

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CFO Gianluca Romano clarified that the estimate was significantly lower than what the guidance implies. He stated that Seagate is guiding for a notable increase in both gross and operating margins, keeping the company on its path to achieve the financial milestones discussed at its recent Investor Day.

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CEO Dave Mosley stated that the June quarter guidance would have been the same a month ago, attributing the stability to the predictability of their build-to-order model. He noted that previously discussed operational issues have been resolved and that the build-to-order process provides long-term visibility and financial predictability through product transitions.

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CEO Dave Mosley explained that the supply issue causing the shortfall is temporary and limited to the March quarter. While not directly confirming a dollar-for-dollar recovery, he expressed confidence in continued exabyte and demand growth, emphasizing the company's focus on predictability and successful product transitions.

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CFO Gianluca Romano explained that the September quarter's gross margin improvement included a non-recurring benefit of about 100 basis points from the elimination of underutilization charges, which will not be present in the December quarter. He emphasized that the company is still progressing on pricing and product mix, and the focus is on consistent, steady improvement rather than maximizing gains in a single quarter.

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Chairman, President & CEO Arvind Krishna explained that AI spend is largely incremental for infrastructure and enabling software layers. He stated that cannibalization occurs as clients reduce labor expenses to fund technology. In consulting, he noted that dollars are being directed toward transformative AI projects, which can cannibalize other forms of custom application development, making it crucial to be focused on high-impact areas.

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CFO Jim Kavanaugh responded that while they feel stronger about the $13.5 billion target, it is prudent not to raise guidance this early in the year with 85% of the cash flow yet to be generated. He explained that IBM's hedging program mitigates some of the bottom-line benefit from currency moves, as they hedge cash flows but not revenue. He emphasized that the primary driver for free cash flow remains strong growth in adjusted EBITDA, which is on track.

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CFO Jim Kavanaugh confirmed the 2025 guidance is 'all in' and includes the expected impact of HashiCorp. He detailed that the $13.5 billion free cash flow forecast is primarily driven by over $1.5 billion in adjusted EBITDA growth. This will be partially offset by headwinds including a couple hundred million dollars in higher CapEx, a couple hundred million more in cash taxes, and a couple hundred million from net interest opportunity loss.

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CFO Jim Kavanaugh explained that the company will begin to 'wrap' the period of discretionary spending pullback in the first half of 2025. Based on historical technology shifts like Red Hat, he anticipates a significant revenue inflection from these AI projects in the second half of 2025. At that point, the volume of new business is expected to build a sufficient backlog to drive healthy, incremental growth for the segment.

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CFO Marshall Witt described demand as strong in March and April with mid-teens growth, softening slightly in May but still showing good year-over-year growth. He noted that June trends reflect the Q3 guidance. CEO Patrick Zammit added color on technology trends, highlighting continued strength in software, cloud, and PCs, and a positive return to growth for the networking category.

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Jeff Clarke, Vice Chairman and COO, explained that while storage and networking attach has seen modest improvement, the attach rate for deployment and installation services has improved significantly and is a key market differentiator. He stated that the opportunity to attach storage, particularly object storage, is substantial as enterprises adopt disaggregated architectures. Clarke admitted they are 'not satisfied' with current attach rates, viewing it as 'all upside and opportunity' that the sales team is focused on.

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COO and Vice Chairman Jeffrey Clarke acknowledged that ODMs are present in large deals but emphasized Dell's differentiation through significant engineering and architectural capabilities for custom solutions. He highlighted Dell's value-add in services, global support, financing, and go-to-market expertise, stating that customers value the end-to-end solutions and faster deployment times Dell provides, as evidenced by being first to market with a GB200 rack.

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Executive Jeffrey Clarke explained that the opportunity extends beyond the server node to full rack-scale solutions, including networking, storage, cooling, and power management. He emphasized that services like deployment, high-level support, and financing through DFS are key differentiators and margin-accretive opportunities that Dell is increasingly capitalizing on.

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COO Jeffrey Clarke confirmed that while large Tier 2 CSPs remain a significant part of the backlog and pipeline, the number of enterprise customers and the revenue they represent are growing each quarter. He noted this signals enterprises are moving from experimentation to piloting AI, with expansion seen in life sciences, higher education, and financial services.

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CEO Enrique Lores attributed the prudent PC outlook to macroeconomic uncertainty and industry-wide price increases, while maintaining that HP aims to gain share. CFO Karen Parkhill affirmed that the Windows 11 refresh remains a catalyst. Regarding growth businesses, Mr. Lores confirmed they are growing faster and have higher margins than core businesses, citing AI PCs, Workforce Solutions, and Industrial Print as examples, but did not disclose their aggregate size.

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CFO Karen Parkhill explained that while they expect to continue operating at the high end of the range, maintaining the lower end provides flexibility to invest in opportunities. CEO Enrique Lores added this allows them to place more positive hardware units if the opportunity arises. Regarding market share, Lores stated the guidance is conservative and the goal remains to gain profitable share, not just share for its own sake.

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CEO Enrique Lores confirmed the PC recovery is driven by commercial, with the major refresh cycle still ahead. CFO Karen Parkhill clarified that cost savings are already enabling HP to hit margin targets while funding strategic reinvestments, which can result in a P&L geography shift with higher gross profit offset by higher OpEx.

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CEO Ronen Samuel stated the $14.5M ARR is a mix of Apollo and Atlas MAX systems and that the pipeline for AIC is strong, expecting meaningful revenue contribution in the second half of 2025. Regarding the timeline for broader market shifts, Samuel indicated that while some growth from screen printers is happening now, major brand adoption involves pilot programs and will likely take longer to scale, with more significant impact expected in H2 2025 and into 2026.

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CEO Ronen Samuel attributed his strong confidence to a convergence of factors: market demand for speed and sustainability, superior technology like MAX and Apollo meeting quality and volume needs, and the innovative AIC business model which accelerates adoption. On costs, Ronen pointed to long-term margin expansion goals, while CFO Lauri Hanover added that the company is focused on reallocating resources to drive future growth rather than just cutting expenses.

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CEO James Kelly responded that the company is not seeing a spending pullback from its B2B customer base, which has very low attrition. He noted customers are eager to upgrade to the new platform. CFO Brian Webb-Walsh explained that the Q1 retail margin decline was driven by lower hardware revenue and an unfavorable sales mix of lower-margin third-party products. He affirmed that margins are expected to recover and that the full-year retail margin guidance of 19-20% is maintained.

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CEO James Kelly noted that while tariff news is dynamic, the company's contracts generally allow for passing those costs to customers. He and executive Brian Webb-Walsh explained that the revenue growth lag is partly due to the services business model. They expect growth rates to converge as the business mix shifts to 80% recurring revenue post-ODM and as new drivers like payments are layered on.

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CEO David Wilkinson explained the value proposition centers on a renewed focus on core retail and restaurant markets, deep industry expertise, and an open, flexible technology platform. CFO Brian Webb-Walsh reiterated the capital allocation plan: maintain leverage at or below 2x, execute the announced $100M buyback and $20M product investment, and then prioritize internal growth and potential tuck-in acquisitions.

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CFO Mirlanda Gecaj explained that guidance was maintained because tariff policies are not yet final, and the company aims to remain accountable to its original targets. For IT Solutions margins, CEO Steven Bandrowczak stated the goal is to achieve double-digit operating profit by leveraging a lower SG&A structure. President and COO John Bruno added that the business mix, including value-added services like cloud and security, carries healthy operating margins. Bandrowczak also noted that recent growth in lower-margin entry-level equipment will drive future high-margin supplies sales.

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An executive attributed the Q4 gross margin decline to the mix of A4 equipment, lower print volumes, and the inclusion of ITsavvy. For 2025, they expect gross margins to be lower than 2024, primarily due to the full-year impact of the lower-margin ITsavvy business, which will be partially offset by pricing and productivity initiatives. CEO Steven Bandrowczak added that strong growth in lower-margin A4 hardware will yield higher-margin supplies revenue in future years. Regarding the forward flow program, an executive confirmed it's a 4-year plan with about $800 million of receivables expected to be sold over the next two years.

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CEO Steven Bandrowczak attributed his confidence to the management team's 'pattern recognition' from past experiences and internal visibility into the progress of various reinvention workstreams, such as cost savings and strategic acquisitions. CFO Xavier Heiss detailed the ITsavvy accretion, citing its ~$440M LTM revenue, ~$30M EBITDA, and an expected $15M in cost synergies, which would yield an accretive EBITDA margin. Heiss also noted the deal advances their strategy by increasing IT and Digital Services to 15% of total revenue.

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CEO Hanneke Faber stated the Suzhou facility will remain critical for producing goods for the 70% of Logitech's business outside the U.S. The U.S. volume will shift to the company's existing 'China plus 5' manufacturing footprint. Regarding demand, she noted consumer resilience with varied behaviors, while B2B customers show more caution, though demand for Logitech for Business remains positive. She highlighted video conferencing as a natural hedge against corporate travel reductions.

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CEO Hanneke Faber clarified that the flat net sales outlook for the second half is due to the normalization of the sell-in versus sell-out dynamic, while underlying demand is expected to remain strong. CFO Matteo Anversa attributed the lower operating income forecast to tougher year-over-year gross margin comparisons, freight cost pressures, and higher seasonal promotions. Faber confirmed that while Q2 OpEx was elevated for strategic investments, the full-year OpEx will remain within the 24-26% target range, reflecting a disciplined shift toward R&D and marketing.

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John C. Dorman, Chairman of the Board, clarified that the issue was an over-distraction on developing hardware point solutions rather than strategically using hardware to drive SaaS growth. He described customer feedback on the transition as "encouragingly positive," with primary concerns being the low stock price, which are addressed by highlighting the company's financial strength. Daryl Stemm, CFO, added that strong metrics like low churn and net revenue retention above 100% reflect positive customer experience.

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CEO Ashish Arora explained that engagement pressure stems from the large 2020-2021 user cohorts aging, which is not fully offset by new user acquisition. However, he pointed to positive leading indicators for new users, such as a 50% improvement in machine connection times and more projects completed in the first week, which historically correlate with better long-term engagement. CFO Kimball Shill added that the 5% subscriber growth exceeded expectations and demonstrates the company's ability to monetize its existing base. Regarding margins, Shill confirmed the outlook for a one-point year-over-year improvement for the full year remains unchanged, noting that Q4 margins are typically lower due to holiday promotions.

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