CDW (CDW)·Q4 2025 Earnings Summary
CDW Q4 2025: Small Business Surge Powers 6% Revenue Growth, Stock Jumps 5%
February 4, 2026 · by Fintool AI Agent
CDW Corporation reported Q4 2025 results that sent shares up nearly 5% in after-hours trading, driven by an 18.4% surge in its Small Business segment and improved gross margins. Despite ongoing economic and geopolitical uncertainty, the IT solutions provider delivered $5.51 billion in revenue (+6.3% YoY) and Non-GAAP EPS of $2.57 (+3.8% YoY).
CEO Christine Leahy highlighted the company's positioning as a "trusted advisor" amid complex IT environments: "Our position as a trusted advisor remains a clear differentiator, and our results highlight the resilience of our diversified customer base and the depth of our product and solutions portfolio."
Did CDW Beat Earnings in Q4 2025?
CDW delivered solid year-over-year growth across key metrics:
Gross margin expanded 50 basis points to 22.8%, primarily driven by higher contribution from netted-down revenue (agent model transactions).
Ask Fintool AI AgentWhat Drove Segment Performance?
The standout story was Small Business, which delivered 18.4% growth on an average daily sales basis—far outpacing other segments.
Within Public, education led the charge with 13% growth, including a major Chromebook solutions rollout with NYC Department of Education. Government increased 4% as strong double-digit state and local growth offset the 43-day federal shutdown impact. Healthcare rose 5% despite tough prior-year comps.
Product mix favored higher-margin categories: software, notebooks/mobile devices, and services all contributed to revenue growth.
What Did Management Guide for 2026?
CDW reiterated its strategy to outpace the broader IT market with specific financial targets:
"For 2026, we continue to target exceeding US IT addressable market growth by 200 to 300 basis points." — Christine Leahy, CEO
Forward consensus estimates:
*Values retrieved from S&P Global
CFO Albert Miralles emphasized capital allocation discipline: "Strong cash flow generation through growth and disciplined working capital management enabled flexibility across our capital priorities, including M&A and returning approximately $982M to shareholders via dividends and share repurchases this year."
How Did the Stock React?
CDW shares jumped in after-hours trading following the release:
The stock has declined significantly from its 52-week high of $222.92, trading near 52-week lows heading into earnings. The after-hours pop suggests the market was positioned for weaker results.
Ask Fintool AI AgentWhat Changed From Last Quarter?
Comparing Q4 2025 to Q3 2025:
Key shifts:
- Seasonality: Q4 typically sees stronger hardware sales but lower sequential revenue vs. Q3
- Margin improvement: Gross margin expanded meaningfully on better product mix
- Small Business acceleration: From healthy Q3 growth to exceptional 18.4% in Q4
- Corporate deceleration: The largest segment slipped negative (-0.6%) after modest Q3 growth
Full Year 2025 Performance
CDW's full year results showed resilience despite a challenging IT spending environment:
Full year segment highlights:
- Small Business: +13.3%
- Other (International): +9.7%
- Corporate: +6.8%
- Public: +4.6%
Capital Allocation & Dividend
CDW returned significant capital to shareholders and maintained financial flexibility:
Management's 2026 capital allocation priorities target returning 50-75% of adjusted FCF to shareholders through dividends and buybacks. In FY 2025, CDW returned 90% of adjusted FCF to shareholders. Net leverage stands at 2.4x as of Q4 2025, within the target range of 2.0-3.0x.
"Since our IPO in June 2013, our dividend has increased nearly fifteen-fold, with twelve consecutive years of increases." — Albert Miralles, CFO
2026 Modeling Guidance
Management provided detailed guidance for financial modeling:
Currency is expected to be neutral to growth for the year.
AI and Technology Trends
Management highlighted AI as a key growth driver for 2026:
"In today's complex environment, our value proposition continues to strengthen as customers turn to CDW for mission-critical IT and operational needs across the full solutions stack and lifecycle, including guidance on their AI journeys." — Christine Leahy, CEO
The company serves over 250,000 customers globally and partners with more than 1,000 technology brands, positioning it to benefit from the ongoing AI infrastructure buildout.
Ask Fintool AI AgentQ&A Highlights: Memory Pricing and AI Momentum
The earnings call Q&A revealed key dynamics around memory pricing and AI adoption:
Memory Pricing Impact: Management quantified ~$50M in net sales pull-forward during Q4 due to memory-related price increases and supply chain concerns, with similar or slightly more expected in Q1 2026.
"While we saw some moderate levels of pull-forward in the range of $50 million in net sales, driven by memory-related price increases and supply chain concerns, the overall impact to fourth quarter growth was minor." — Albert Miralles, CFO
CFO Miralles noted that price increases vary significantly by partner and product, ranging from small single digits to higher in some cases, and the situation remains "very fluid." First-half hardware growth may be stronger due to this dynamic, with second-half potentially seeing supply chain challenges.
AI Case Studies: CEO Leahy shared two AI deployment examples that showcase CDW's full-stack capabilities:
-
Large Enterprise: One of the largest enterprise deployments of next-generation accelerated compute for a customer wanting hybrid data center AI capabilities. The solution offers 90-day payback potential and reduces regulatory/data governance risk.
-
Small Business: A multi-location automobile service business deployed a generative AI virtual agent for IT support, enabling the lean IT team to hold headcount while shifting to higher-value work.
"Organizations don't struggle with access to models. They struggle with making them work to solve problems, real problems... that plays to our strengths and structural advantages that we've built over decades." — Christine Leahy, CEO
Corporate vs. Small Business Divergence: Management explained the spending cycle differences — larger enterprises are taking more time to understand AI integration into their estates, while small businesses are more nimble and cloud-forward, adopting packaged AI solutions for fast ROI.
New Channel Reporting Structure (Coming Q1 2026)
CFO Miralles previewed changes to segment reporting effective Q1 2026:
- More granular Public disclosure: Gross profit and operating income for Government and Education separately
- New Commercial segment: Will include Corporate, Healthcare, and Financial Services (new vertical disclosure)
- Small Business integration: Folded into Commercial segment but maintaining dedicated support model
Key Risks and Concerns
Management flagged several risk factors:
- 43-day federal government shutdown: The longest shutdown on record impacted federal channel results, with pipeline rebuild expected in early 2026
- Corporate segment weakness: The largest segment showed slight decline (-0.6%), indicating cautious enterprise spending
- Margin pressure: Non-GAAP operating margin contracted 50 bps YoY to 9.1% from 9.6%
- Elevated SG&A: Selling and administrative expenses rose 10.3% YoY on higher performance-based compensation
- AI-related supply constraints: Potential disruptions from heightened demand for AI workloads
- Interest expense: Net interest expense increased 3.5% YoY
Balance Sheet Snapshot
The Bottom Line
CDW delivered a solid finish to FY 2025 with revenue growth outpacing the broader IT market. The Small Business segment's 18.4% surge and 50 bps gross margin expansion offset modest Corporate segment softness. With $1.1B in adjusted free cash flow, continued dividend growth, and confident 2026 guidance targeting 200-300 bps above market growth, CDW remains well-positioned as a diversified IT solutions provider benefiting from AI-driven infrastructure demand.
The +5% after-hours move suggests investors welcomed the results and forward outlook, particularly given the stock was trading near 52-week lows heading into the report.
Related Resources: