Adjustments for Non-Cash Items

Stock-Based Compensation

Changes in Working Capital

Capital Expenditures (CapEx)

Proceeds from Debt

Repayments of Debt

Share Repurchases

Dividend Payments

Net Change in Cash

d498c7dd1e60d8c58285291b8d4dd2d9a2ee0933bffeea175f13f21c4aaa1209

| Metric | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|--------|---------|---------|---------|---------|---------|---------|---------|---------|
| Cash Conversion Cycle **[0001402057-23-000052_cdw-20221231.htm:56]****[0001402057-23-000091_cdw-20230331.htm:25]****[0001402057-23-000132_cdw-20230630.htm:19]****[0001402057-23-000169_cdw-20230930.htm:21]****[0001402057-24-000015_cdw-20231231.htm:58]****[0001402057-24-000088_cdw-20240331.htm:17]****[0001402057-24-000138_cdw-20240630.htm:34]****[0001402057-24-000182_cdw-20240930.htm:22]** | **21** | **18** | **14** | **15** | **17** | **16** | **17** | **17** |
| Days of Sales Outstanding **[0001402057-23-000052_cdw-20221231.htm:56]****[0001402057-23-000091_cdw-20230331.htm:25]****[0001402057-23-000132_cdw-20230630.htm:31]****[0001402057-23-000169_cdw-20230930.htm:37]****[0001402057-24-000015_cdw-20231231.htm:58]****[0001402057-24-000088_cdw-20240331.htm:26]****[0001402057-24-000138_cdw-20240630.htm:34]****[0001402057-24-000182_cdw-20240930.htm:35]** | **71** | **72** | **67** | **73** | **77** | **75** | **72** | **79** |
| Days of Supply in Inventory **[0001402057-23-000052_cdw-20221231.htm:56]****[0001402057-23-000091_cdw-20230331.htm:25]****[0001402057-23-000132_cdw-20230630.htm:31]****[0001402057-23-000169_cdw-20230930.htm:37]****[0001402057-24-000015_cdw-20231231.htm:58]****[0001402057-24-000088_cdw-20240331.htm:26]****[0001402057-24-000138_cdw-20240630.htm:34]****[0001402057-24-000182_cdw-20240930.htm:35]** | **17** | **15** | **14** | **14** | **13** | **14** | **13** | **14** |
| Days of Purchases Outstanding **[0001402057-23-000052_cdw-20221231.htm:56]****[0001402057-23-000091_cdw-20230331.htm:25]****[0001402057-23-000132_cdw-20230630.htm:31]****[0001402057-23-000169_cdw-20230930.htm:37]****[0001402057-24-000015_cdw-20231231.htm:58]****[0001402057-24-000088_cdw-20240331.htm:26]****[0001402057-24-000138_cdw-20240630.htm:34]****[0001402057-24-000182_cdw-20240930.htm:35]** | **67** | **69** | **67** | **72** | **73** | **73** | **68** | **76** |

587a1eb9c2314fed18a26c5515e709e0dfb2d4c1b07f7188c61dbcabf95e5e0e

c6bfbb82ac71b22304e6967c8d0dd3dade1a01f95896c64661f74f0a42f2d04b

CDW Corporation is a Fortune 500 company and a leading multi-brand provider of information technology (IT) solutions to a diverse range of customers, including small, medium, and large businesses, government, education, and healthcare sectors in the United States, United Kingdom, and Canada **[0001402057-24-000015_cdw-20231231.htm:70]** **[0001402057-24-000088_cdw-20240331.htm:5]** **[0001308179-24-000494_lcdw2024_def14a.htm:4]** **[0001402057-24-000015_cdw-20231231.htm:4]**. The company's offerings span discrete hardware and software products to integrated IT solutions and services, which include on-premise and cloud capabilities across hybrid infrastructure, digital experience, and security **[0001402057-24-000015_cdw-20231231.htm:70]** **[0001402057-24-000088_cdw-20240331.htm:5]** **[0001308179-24-000494_lcdw2024_def14a.htm:4]** **[0001402057-24-000015_cdw-20231231.htm:4]**. CDW is vendor, technology, and consumption model unbiased, providing a broad selection of products and multi-branded solutions **[0001308179-24-000494_lcdw2024_def14a.htm:4]** **[0001402057-24-000015_cdw-20231231.htm:4]**.

1. **Hardware** - Offers a wide range of physical IT products, including computers, networking equipment, and data storage solutions.
2. **Software** - Provides various software products, including operating systems, productivity applications, and enterprise software solutions.
3. **Services** - Delivers IT services that encompass consulting, implementation, and managed services to support customer IT environments.
4. **Corporate Segment** - Serves US private sector businesses with more than 250 employees, offering tailored IT solutions and services.
5. **Public Segment** - Caters to government agencies, education, and healthcare institutions, providing specialized IT solutions and services.
6. **Small Business Segment** - Focuses on US businesses with up to 250 employees, delivering IT products and services suited to smaller enterprises.
7. **Other (UK and Canada Operations)** - Includes operations in the UK and Canada, offering a similar range of IT solutions and services as in the US.

f8f3a7feccee8e491d88641d6be2ac09181207a317a23a09b8a48f7cc678ca96

| Metric [USD Million] | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| United States        | **4,429.9**  **[0001402057-23-000091_cdw-20230331.htm:11]**  | **4,903.9**  **[0001402057-23-000132_cdw-20230630.htm:12]**  | **5,003.8**  **[0001402057-23-000169_cdw-20230930.htm:13]**  | N/A     | **4,220.6**  **[0001402057-24-000088_cdw-20240331.htm:12]**  | **4,809.1**  **[0001402057-24-000138_cdw-20240630.htm:13]**  | **4,863.1**  **[0001402057-24-000182_cdw-20240930.htm:14]**  | N/A     |
| Rest of World        | **673.2**  **[0001402057-23-000091_cdw-20230331.htm:11]**    | **722.2**  **[0001402057-23-000132_cdw-20230630.htm:12]**    | **624.5**  **[0001402057-23-000169_cdw-20230930.htm:13]**    | N/A     | **652.1**  **[0001402057-24-000088_cdw-20240331.htm:12]**    | **614.3**  **[0001402057-24-000138_cdw-20240630.htm:13]**    | **653.5**  **[0001402057-24-000182_cdw-20240930.htm:14]**    | N/A     |
| Total Net Sales      | **5,103.1**  **[0001402057-23-000091_cdw-20230331.htm:11]**  | **5,626.1**  **[0001402057-23-000132_cdw-20230630.htm:12]**  | **5,628.3**  **[0001402057-23-000169_cdw-20230930.htm:13]**  | N/A     | **4,872.7**  **[0001402057-24-000088_cdw-20240331.htm:12]**  | **5,423.4**  **[0001402057-24-000138_cdw-20240630.htm:13]**  | **5,516.6**  **[0001402057-24-000182_cdw-20240930.htm:14]**  | N/A     |

341d78e99de6f0386aa675d76d39701c8ff812bf75d69ae93a9aeb468a9d45b4

1. Given the continued slow demand for networking and server solutions over the past three quarters, what specific strategies is CDW implementing to stimulate growth in these areas, and do you foresee any signs of recovery in the near term?
2. With a solid pipeline but challenges in conversion due to customer uncertainty, how does CDW plan to accelerate pipeline conversion to revenue, and what are your expectations for improved demand conditions, especially considering the macroeconomic environment?
3. In light of recent cybersecurity incidents like the CrowdStrike debacle, how has this affected CDW's relationships with security vendors and customers, and what impact do you anticipate on your cybersecurity business growth trajectory?
4. Considering the worsening market conditions in the U.K. and ongoing federal funding challenges, how are these factors impacting CDW's overall performance, and what measures are you taking to mitigate these risks and achieve your growth targets?
5. As customers, particularly in the SMB and mid-market segments, accelerate their shift toward cloud solutions over on-premise upgrades, how is CDW adapting its business model to address this trend, and what impact do you expect on your traditional hardware and infrastructure sales?

be6b66b92e90e148147b0050c350dcc9fa16b4f76b704696d479e7b90750ecb1

fbb87d2b1502b3c06be4d8005635839692b127711819a5a833987823967d6a5c

Cash Conversion Cycle **[0001402057-23-000052_cdw-20221231.htm:56]****[0001402057-23-000091_cdw-20230331.htm:25]****[0001402057-23-000132_cdw-20230630.htm:19]****[0001402057-23-000169_cdw-20230930.htm:21]****[0001402057-24-000015_cdw-20231231.htm:58]****[0001402057-24-000088_cdw-20240331.htm:17]****[0001402057-24-000138_cdw-20240630.htm:34]****[0001402057-24-000182_cdw-20240930.htm:22]**

Days of Sales Outstanding **[0001402057-23-000052_cdw-20221231.htm:56]****[0001402057-23-000091_cdw-20230331.htm:25]****[0001402057-23-000132_cdw-20230630.htm:31]****[0001402057-23-000169_cdw-20230930.htm:37]****[0001402057-24-000015_cdw-20231231.htm:58]****[0001402057-24-000088_cdw-20240331.htm:26]****[0001402057-24-000138_cdw-20240630.htm:34]****[0001402057-24-000182_cdw-20240930.htm:35]**

Days of Supply in Inventory **[0001402057-23-000052_cdw-20221231.htm:56]****[0001402057-23-000091_cdw-20230331.htm:25]****[0001402057-23-000132_cdw-20230630.htm:31]****[0001402057-23-000169_cdw-20230930.htm:37]****[0001402057-24-000015_cdw-20231231.htm:58]****[0001402057-24-000088_cdw-20240331.htm:26]****[0001402057-24-000138_cdw-20240630.htm:34]****[0001402057-24-000182_cdw-20240930.htm:35]**

Days of Purchases Outstanding **[0001402057-23-000052_cdw-20221231.htm:56]****[0001402057-23-000091_cdw-20230331.htm:25]****[0001402057-23-000132_cdw-20230630.htm:31]****[0001402057-23-000169_cdw-20230930.htm:37]****[0001402057-24-000015_cdw-20231231.htm:58]****[0001402057-24-000088_cdw-20240331.htm:26]****[0001402057-24-000138_cdw-20240630.htm:34]****[0001402057-24-000182_cdw-20240930.htm:35]**

fda84c84251f2fe12434ecf453fe616b0de00e2fa5878e2674bd4791149d8ae2

- Hardware resellers
- Manufacturers who sell directly to customers
- Large service providers and system integrators
- Communications service providers
- Cloud providers
- E-commerce companies
- Office supply retailers

These competitors are mentioned in the context of CDW's competitive landscape, which is expected to evolve with new technologies and consumption models such as cloud-based solutions, hyper-converged infrastructure, and embedded software solutions  **[0001402057-24-000015_cdw-20231231.htm:17]** .

7e51cd35e2110ab06cee09341a5f32b6e7ff1db03f604223e81ce68277c33c12

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Gross Margin**: Expected to be similar to the full year 2023 and the first half of 2024.
  2. **Non-GAAP Earnings Per Diluted Share**: Expected to be flat to up slightly year-over-year.
  3. **Gross Profit Growth**: Anticipated flat to low single-digit growth for the full year.
  4. **Seasonality**: Expected to be roughly in line with historical levels, with the first half contributing approximately 48% of net sales and gross profit.
  5. **Adjusted Free Cash Flow**: Expected to be in the range of 80% to 90% of non-GAAP net income for the full year.
  6. **Third Quarter Gross Profit Growth**: Anticipated low single-digit growth compared to the prior year.
  7. **Third Quarter Operating Expenses**: Expected to be moderately higher than Q3 2023 on a dollar basis, but at a similar ratio relative to gross profit.
  8. **Third Quarter Non-GAAP Earnings Per Diluted Share**: Expected to grow in the mid-single-digit range year-over-year.
  9. **Fourth Quarter**: Expected to be meaningfully lower compared to the third quarter, due to seasonally lower demand from education and government customers  **[CDW_3395270_7]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **U.S. IT Market Growth**: Expected to be in the low single digits, with CDW targeting to grow 200 to 300 basis points above the market.
  2. **Full Year Gross Profit Growth**: Expected to be in the low single-digit range.
  3. **Full Year Gross Margin**: Expected to be similar to the full year 2023.
  4. **Full Year Non-GAAP Earnings Per Diluted Share**: Expected to be up in the low single digits year-over-year.
  5. **Second Quarter Gross Profit Growth**: Anticipated to be in the low single-digit range compared to the prior year.
  6. **Second Quarter Operating Expenses**: Expected to be moderately higher than Q2 2023 on a dollar basis.
  7. **Second Quarter Non-GAAP Earnings Per Diluted Share Growth**: Expected to be in the low single-digit range year-over-year.
  8. **Adjusted Free Cash Flow for 2024**: Expected to be in the range of 80% to 90% of non-GAAP net income.
  9. **Capital Allocation**: Committed to returning 50% to 75% of adjusted free cash flow to shareholders via dividends and share repurchases.
  10. **Net Leverage Ratio**: Targeted to be within the range of 2 to 3x  **[CDW_3381834_7]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **IT Market Growth**: Expected to grow by low single digits in 2024.
  2. **Market Share Gain**: Aiming to gain 200 to 300 basis points of market share.
  3. **Gross Profit Growth**: Expected low to mid-single-digit growth.
  4. **Non-GAAP Earnings Per Diluted Share**: Anticipated mid-single-digit increase year-over-year.
  5. **Adjusted Free Cash Flow**: Expected to be in the range of 80% to 90% of non-GAAP net income.
  6. **First Quarter 2024 Guidance**:
     - **Gross Margin**: Expected to be comparable to 2023's level.
     - **Operating Expenses**: Expected to be higher at the beginning of 2024.
     - **Non-GAAP Earnings Per Diluted Share**: Expected to be in the low to mid-single-digit range year-over-year for the first quarter  **[CDW_3372163_6]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: N/A
- **Guidance**: The documents do not provide information about CDW's guidance from the Q3 2024 earnings call. The available information is from the Q2 2024 earnings call.

39f151a10dc398952d691903878dc8aebb1f93e4624e98328cb1a522d37066e2

00ca02fd7b6c464348bc1cb803868ef903038c47c5f893ea2bf836d5cf9bdbec

United States

Rest of World

Other

Total Revenue

8177319152fc43f53d440412eba621d66f5e3b10f3bfdb019050a0a4a6a28a1c

**Quarterly guidance for Q4 2024:**
- **Gross Profit**: decline in the low to mid single-digit range year-over-year  **[CDW_3404632_7]**  (no prior guidance)  
- **Gross Margin**: slightly above the first three quarters of 2024 but below Q4 2023 levels  **[CDW_3404632_7]**  (no prior guidance)  
- **Non-GAAP Earnings Per Diluted Share**: decline in the high single-digit range year-over-year  **[CDW_3404632_7]**  (no prior guidance)  
- **Operating Expenses**: similar to Q4 2023 on a dollar basis  **[CDW_3404632_7]**  (no prior guidance)

**Annual guidance for FY 2024:**
- **Gross Profit**: decline in the low single-digit range year-over-year  **[CDW_3404632_7]**  (lowered from flat to low single-digit growth  **[CDW_3395270_7]** )  
- **Gross Margin**: similar to FY 2023  **[CDW_3404632_7]**  (no change from prior guidance  **[CDW_3395270_7]** )  
- **Non-GAAP Earnings Per Diluted Share**: decline in the mid single-digit range year-over-year  **[CDW_3404632_7]**  (lowered from flat to up slightly year-over-year  **[CDW_3395270_7]** )  
- **Market Outlook**: U.S. IT market expected to be roughly flat with FY 2023  **[CDW_3404632_4]**  (no prior guidance)  

a0b8bedb9e4b61f33a6efdccb804ba31ef3aa3def993fc64c0c40ac95a60f2e9

| Name                  | Position                                                                 | Start Date           | Short Bio                                                                                                                                                                                                 |
|-----------------------|--------------------------------------------------------------------------|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Christine A. Leahy    | Chair, President, and Chief Executive Officer                            | January 2019         | Christine A. Leahy has been serving as the Chair, President, and CEO of CDW since January 2019. She became Chair of the Board on January 1, 2023. Previously, she was the Chief Revenue Officer  **[0001308179-24-000494_lcdw2024_def14a.htm:25]** **[0001402057-24-000015_cdw-20231231.htm:13]** **[0001308179-23-000596_cdw-20221231.htm:31]** . |
| Sona Chawla           | Chief Growth and Innovation Officer                                      | January 2020         | Sona Chawla has been serving as the Chief Growth and Innovation Officer at CDW since January 2020. Previously, she was the President of Kohl's Corporation  **[0001402057-24-000015_cdw-20231231.htm:13]** .                                           |
| Christina M. Corley   | President, International and Vice Chair                                  | October 25, 2024     | Christina M. Corley has been with CDW since September 2011. She transitioned to President, International and Vice Chair on October 25, 2024, focusing on international strategy  **[0001193125-24-243443_d897707d8k.htm:1]** **[0001402057-24-000015_cdw-20231231.htm:13]** .                   |
| Frederick J. Kulevich | Senior Vice President, General Counsel & Corporate Secretary             | October 2017         | Frederick J. Kulevich has been serving as the Senior Vice President, General Counsel and Corporate Secretary since October 2017. He became Interim Chief People Officer in November 2023  **[0001402057-24-000015_cdw-20231231.htm:13]** .              |
| Albert J. Miralles    | Senior Vice President and Chief Financial Officer                        | September 2021       | Albert J. Miralles has been the Senior Vice President and CFO of CDW since September 2021. Previously, he was the EVP and CFO at CNA Financial Corporation  **[0001402057-24-000015_cdw-20231231.htm:13]** .                                           |
| Mark C. Chong         | Senior Vice President, Product and Partner Management                    | N/A                  | Mark C. Chong is the Senior Vice President, Product and Partner Management at CDW Corporation  **[0001308179-24-000494_lcdw2024_def14a.htm:77]** .                                                                                                        |
| Elizabeth H. Connelly | Senior Vice President, Vertical Markets                                  | N/A                  | Elizabeth H. Connelly serves as the Senior Vice President, Vertical Markets at CDW Corporation. Specific start date details are not provided.                                                             |
| Michael S. Drory      | Senior Vice President, Strategy and Corporate Development                | N/A                  | Michael S. Drory serves as the Senior Vice President, Strategy and Corporate Development at CDW Corporation. Specific start date details are not provided.                                                |
| Andrew J. Eccles      | Senior Vice President, Integrated Technology Solutions                   | N/A                  | Andrew J. Eccles serves as the Senior Vice President, Integrated Technology Solutions at CDW Corporation. Specific start date details are not provided.                                                   |
| Robert F. Kirby       | Senior Vice President, Public Sales                                      | N/A                  | Robert F. Kirby serves as the Senior Vice President, Public Sales at CDW Corporation. Specific start date details are not provided.                                                                       |
| Aletha C. Noonan      | Senior Vice President, Corporate Sales                                   | N/A                  | Aletha C. Noonan serves as Senior Vice President, Corporate Sales at CDW. Specific start date details are not provided.                                                                                   |
| Anand J. Rao          | Senior Vice President, Chief Marketing and Digital Officer               | N/A                  | Anand J. Rao is the Senior Vice President, Chief Marketing and Digital Officer at CDW Corporation  **[0001308179-24-000494_lcdw2024_def14a.htm:77]** .                                                                                                    |
| Sanjay Sood           | Senior Vice President and Chief Technology Officer                       | N/A                  | Sanjay Sood is the Senior Vice President and Chief Technology Officer at CDW Corporation  **[0001308179-24-000494_lcdw2024_def14a.htm:77]** .                                                                                                             |
| Conor J. Waddell      | Senior Vice President, Integrated Technology Solutions                   | N/A                  | Conor J. Waddell serves as the Senior Vice President, Integrated Technology Solutions at CDW  **[0001308179-24-000494_lcdw2024_def14a.htm:77]** .                                                                                                          |
| Liz Connelly          | Chief Commercial Officer                                                 | 2018                 | Liz Connelly joined CDW in 2018 and has been appointed as the Chief Commercial Officer, responsible for U.S. sales and sales enablement  **[0001193125-24-243443_d897707dex991.htm:0]** .                                                              |

8d436392762c823a868a4c5adfa88ee115818b0677fe3e2aa29e7f7a8ee3c788

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | February 7, 2024  **[0001402057-24-000182_cdw-20240930.htm:45]**  |
| End Date/Duration        | N/A             |
| Total additional amount  | **$750 million**  **[0001402057-24-000182_cdw-20240930.htm:45]**  |
| Remaining authorization amount | **$733.5 million** as of September 30, 2024  **[0001402057-24-000182_cdw-20240930.htm:45]**  |
| Details                  | The program allows CDW Corporation to repurchase shares of its common stock in various transactions based on market conditions and other factors. It does not obligate the company to repurchase any minimum amount and can be modified, suspended, or discontinued at any time.  **[0001402057-24-000015_cdw-20231231.htm:92]** **[0001402057-24-000015_cdw-20231231.htm:43]**  |

3a66f1d285adff1cc14c9bab05cd8294858e99d398658384d297b59b8db54bca

| Name               | Start Date | End Date | Reason for Change |
|--------------------|------------|----------|-------------------|
| Ernst & Young LLP | 2011  **[0001402057-24-000015_cdw-20231231.htm:65]**  | Present  | Current auditor   |

9655a6c0dcff685495004d28233ce046ce8330ca0bddeead4904ad5d53556886

357da1e44d61c0597e1ad62a4b4f416b69f8c3c5dcf774e67be018799b77e1c7

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- **CDW's small business and corporate segments showed signs of stabilization** in Q4 after two years of weakness, indicating a potential positive shift in end market demand. This reflects less unevenness and more stability in business activities.  **[CDW_3414398_15]**
- **Healthcare was a standout performer**, delivering **exceptional performance** driven by strategic investments in this space, showcasing the success of CDW's focus on high-growth, high-relevance areas like healthcare, cloud, and security.  **[CDW_3414398_19]** **[CDW_3414398_21]**
- **CDW's strategic investments in cloud services and acquisitions like Mission Cloud Services** enhance their differentiation and provide a competitive moat. Being named **AWS Marketplace Partner of the Year** underscores their expertise in helping customers navigate the complexities of hybrid cloud environments, positioning them well for future growth.  **[CDW_3414398_20]** **[CDW_3414398_14]**

52fc7880c22107c5387985d6964c21c384da778e3ecd242212aa6ca2d01e0dc8

- For the first time in over a decade, **2024 was the first year that CDW's earnings growth did not outpace revenue growth**, and they are guiding for **EPS growth largely in line with gross profit and revenue growth** in 2025.  **[CDW_3414398_19]**  This indicates reduced operating leverage and could be a concern for profitability.
- There is evidence of **gross margin compression**, particularly in the product side of the business. **"We saw a bit of compression, particularly in the product side of the house... the most notable area where we saw a little bit of compression was clients"**.  **[CDW_3414398_18]**  This margin pressure could continue going forward.
- CDW is experiencing **increased competition and pricing pressure** in a tough down cycle of hardware. **"We've been in a tough down cycle of hardware. And with that competition, quite fierce. That's continued."**.  **[CDW_3414398_22]**  This ongoing fierce competition may impact margins and growth prospects.

cbbd23da1f68bfb6f37fe6dec0cd6849fd955a937075210984e3e6c5b27cd0bf

1. **Earnings Growth vs. Revenue Growth**  
   **Q:** Why isn't earnings growth outpacing revenue growth?  
   **A:** Management explained that the company's earnings growth did not outpace revenue growth in 2024 due to investments in capabilities during a **low-growth environment**, which led to **deleveraging**.  **[CDW_3414398_19]**  They emphasized balancing growth investments with operational efficiency, noting that **operating leverage is expected to return** as growth resumes.  **[CDW_3414398_19]** 

2. **Gross Profit Growth Outlook**  
   **Q:** What's causing muted gross profit dollar growth?  
   **A:** Management noted that the **low single-digit** gross profit dollar growth is due to slight shifts in **mix**, with a little compression in net sales as they continue to lean into netted down revenue, which bolsters gross profit.  **[CDW_3414398_11]**  The variance between customer spend, gross profit, and EPS growth rates is **not significant**.  **[CDW_3414398_11]** 

3. **Healthcare Vertical Performance**  
   **Q:** What drove strong Healthcare growth this quarter?  
   **A:** Healthcare was a **standout**, growing close to **30% year-over-year**, driven by balanced success across offerings and investments in capabilities.  **[CDW_3414398_12]**  The company has seen consistent performance in Healthcare over several quarters, reflecting their strategy and value to customers.  **[CDW_3414398_12]** 

4. **Mission Cloud Acquisition Impact**  
   **Q:** How does the Mission Cloud acquisition affect financials?  
   **A:** Management is **excited** about Mission Cloud, a **profitable**, fast-growing business with AWS expertise.  **[CDW_3414398_17]**  While it won't significantly impact the bottom line in 2025 due to **foregone interest**, it's expected to have a significant **strategic impact** and contribute to growth rates going forward.  **[CDW_3414398_17]** 

5. **SMB Segment Growth**  
   **Q:** Can SMB now grow year-over-year?  
   **A:** Management observed signs of **stabilization** in the SMB segment, which grew about **3% year-over-year** after two years of weakness.  **[CDW_3414398_15]**  While customers remain cautious, they are **cautiously optimistic** but wouldn't call it a rebound yet.  **[CDW_3414398_15]** 

6. **Competition and Pricing Pressure**  
   **Q:** Is increased competition and pricing pressure ongoing?  
   **A:** The company continues to face **fierce competition**, especially in hardware during the down cycle.    However, management noted that competition is **not having a meaningful impact on margins**.   

7. **M&A Appetite**  
   **Q:** Is your appetite for M&A higher today?  
   **A:** Management always has a **strong appetite for M&A** and is **opportunistic**.  **[CDW_3414398_20]**  They are focusing on adding capabilities and fortifying existing ones, with focal areas remaining consistent.  **[CDW_3414398_20]**  They are **patient** and look for **great assets**.  **[CDW_3414398_20]** 

00541d8253ac03e08f3720d057dc754c45c3f0834dcb21bd0084e664d9406057

- Total Revenue: $5.517B (-2% YoY)  **[0001402057-24-000182_cdw-20240930.htm:2]** **[0001402057-24-000182_cdw-20240930.htm:14]**   
- Public – Government: $691.0M (**-11%** YoY)  **[0001402057-24-000182_cdw-20240930.htm:14]** **[0001402057-24-000182_cdw-20240930.htm:18]**   
- Hardware – Netcomm Products: $667.6M (**-24%** YoY)  **[0001402057-24-000182_cdw-20240930.htm:14]** **[0001402057-24-000182_cdw-20240930.htm:18]**   
- Hardware – Collaboration: $460.3M (-6% YoY)  **[0001402057-24-000182_cdw-20240930.htm:14]** **[0001402057-24-000182_cdw-20240930.htm:18]**   
- Hardware – Data Storage & Servers: $506.0M (**-12%** YoY)  **[0001402057-24-000182_cdw-20240930.htm:14]** **[0001402057-24-000182_cdw-20240930.htm:18]**   
- Hardware – Desktops: $291.4M (+10% YoY)  **[0001402057-24-000182_cdw-20240930.htm:14]** **[0001402057-24-000182_cdw-20240930.htm:18]**   
- Hardware – Other Hardware: $662.9M (**-11%** YoY)  **[0001402057-24-000182_cdw-20240930.htm:14]** **[0001402057-24-000182_cdw-20240930.htm:18]**   
- Software: $1,048.3M (+5% YoY)  **[0001402057-24-000182_cdw-20240930.htm:14]** **[0001402057-24-000182_cdw-20240930.htm:18]**   
- Services: $481.9M (**+14%** YoY)  **[0001402057-24-000182_cdw-20240930.htm:14]** **[0001402057-24-000182_cdw-20240930.htm:18]**   

1a5e732270ecfb150a788d1441785b1d8ffb2ea0811ac8b7c674a052085dbecd

1. **Guidance and Forecasting Changes**  
   **Q:** Why did you miss guidance, and what's changed in forecasting?  
   **A:** Al acknowledged recent volatility impacting their guidance, noting that the miss was due to unanticipated weakness in the **federal business and international markets**.  **[CDW_3395270_22]**  Excluding these factors, results were close to historical seasonality. Going forward, they expect **mid-single-digit sequential growth**, following a more normal glide path with a **48-52 split between first and second half**.  **[CDW_3395270_22]** 

2. **Pipeline Conversion and Demand Outlook**  
   **Q:** What's the outlook for demand and pipeline conversion?  
   **A:** Christine stated that while the business feels more stable, the **appetite to convert pipeline into sales is lacking**.  **[CDW_3395270_15]**  They continue to engage closely with customers, focusing on cost optimization solutions. As stability increases, she expects pipeline conversion to improve, leading to growth.  **[CDW_3395270_15]** 

3. **Gross Margin Sustainability**  
   **Q:** Can core gross margins continue to grow?  
   **A:** Al expects gross margins to remain similar to the first half and **much like 2023 overall**.  **[CDW_3395270_16]**  Netted down revenues, particularly from **cloud and SaaS renewals**, are expected to remain strong.  **[CDW_3395270_16]**  Product margins have held firm, and they anticipate this trend to continue.  **[CDW_3395270_16]** 

4. **Impact of AI on Business**  
   **Q:** How is AI affecting your business and customers?  
   **A:** Christine mentioned they're in the **early stages of AI monetization**, investing in people and enablement.  **[CDW_3395270_17]**  AI is causing customers to reevaluate their **compute, storage, and networking architectures**.  **[CDW_3395270_18]**  While this assessment phase may delay some sales cycles, they see AI as an accelerant that will be embedded in every layer of the stack.  **[CDW_3395270_17]** **[CDW_3395270_18]** 

5. **End Markets Performance and Recovery**  
   **Q:** Any signs of recovery in networking and server markets?  
   **A:** On networking, customers prioritize modernization but are still **digesting previous purchases**.  **[CDW_3395270_10]**  Supply chain normalization hasn't yet translated into increased demand. In mid-market servers, there's some strength, but customers are cautious, **pivoting towards cloud solutions**.  **[CDW_3395270_10]** 

6. **Market Share Gains**  
   **Q:** Are you gaining market share despite the sluggish macro?  
   **A:** Christine is confident they're **continuing to gain share across virtually every category**, including security, services, cloud, and client devices.  **[CDW_3395270_19]**  This is validated by both their data and partner reviews.  **[CDW_3395270_19]** 

7. **Operating Expenses and Leverage**  
   **Q:** How should we think about your OpEx trajectory?  
   **A:** Al explained that the first half showed higher expenses due to **seasonality and lower gross profit production**.  **[CDW_3395270_14]**  They expect operating leverage to improve in the back half as expenses balance out and gross profit increases.  **[CDW_3395270_14]** 

8. **Security Business and CrowdStrike Impact**  
   **Q:** How did the CrowdStrike issue affect you?  
   **A:** Christine noted that the **impact was minimal**, but it reinforced the importance of their **trusted adviser role**.  **[CDW_3395270_12]**  They swiftly helped customers with fixes and see such events as opportunities to strengthen customer relationships.  **[CDW_3395270_12]** **[CDW_3395270_13]**  Customers are on **high alert around cybersecurity**, leading to heightened conversations but not delaying other projects.  **[CDW_3395270_23]** 

9. **Netted Down Revenues Mix**  
   **Q:** Can you elaborate on netted down revenues?  
   **A:** Al clarified that netted down revenues include **software assurance, warranty, SaaS, and cloud**.  **[CDW_3395270_21]**  The strength is primarily in **SaaS and cloud**, covering various workloads. **Software assurance and warranty have lagged** due to their attachment to hardware and licensed software, which have been slower.  **[CDW_3395270_21]** 

10. **Government Business Outlook**  
    **Q:** Are there offsets to federal weakness?  
    **A:** Al stated they expect **normal seasonality** in government business, with **strength in state and local** offsetting federal softness.  **[CDW_3395270_11]**  Overall, they foresee regular seasonality with a slight downtick in federal for Q3 and Q4.  **[CDW_3395270_11]** 

010aa27da5867a90e41a1125bc2e65cace69b1ad2b0f695ea18c4d7cca6835e1

042e643b40812b3c145ed2cdf00f64a2f6a4cdbe8f2d7e2ec923b8b4ec92307e

f23531a910a1ae5fd2336119ff14598613564e9c6ad04b096572be1bf7c44883

Days of Sales Outstanding (days)

Days of Supply in Inventory (days)

Days of Purchases Outstanding (days)

Cash Conversion Cycle (days)

739afa8cb8ac6fdf9c0cafcf650aa83d6e5977bfeeb2860fec839038d67ec2df

- **Declining solutions revenue and delays in complex solution sales**: CDW is experiencing a decline in solutions revenue, particularly in areas where AI spending would be expected. Customers are cautious due to macroeconomic uncertainties and the added complexity of AI considerations, leading to **elongated sales cycles** and **delays in purchasing decisions** for complex solutions.  **[CDW_3381834_8]** ,  **[CDW_3381834_10]** ,  **[CDW_3381834_16]**
- **Optimistic guidance despite weaker Q1 performance**: Despite **weaker-than-expected trends in Q1**, CDW is projecting **sequential growth in gross profit for Q2**, above last year's levels. This optimism may be challenged by the persistent macroeconomic uncertainties and customer spending delays, potentially leading to **missed targets**.  **[CDW_3381834_9]** ,  **[CDW_3381834_17]**
- **Reliance on lower-margin client device sales**: CDW is seeing an **increase in client device sales** as customers prioritize necessary refreshes over complex solutions. However, **client devices typically have lower margins** compared to solutions, which may **pressure overall profitability** if the trend continues.  **[CDW_3381834_8]** ,  **[CDW_3381834_10]** ,  **[CDW_3381834_16]**

ab718cbc1e2b3a1395fdbb2c2c60e30d3b71dc2bdad3aa4585d2b6c212ee6488

- **CDW is gaining market share across virtually every category**, including security, services, and cloud, even in a low-demand market.  **[CDW_3395270_19]**
- **Strong pipeline and customer engagement** suggest that as customer cautiousness decreases, CDW is well-positioned to convert its pipeline into growth.  **[CDW_3395270_15]**
- **Sustained growth expected in cloud, security, and services**, which are not slowing down and provide cost optimization opportunities for customers, aligning with CDW's broad portfolio and capabilities.  **[CDW_3395270_20]**

e00e0e1cb9772bf5ff3039a8fa3f5ab2fe04abc28967d2fb7d692ff43760fd03

| Year | Amount Due (in millions) | Debt Type                     | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|------------------------------------|-----------------------|------------------------------------------------------------------------------------|
| 2024     | 183.5 **[0001402057-24-000182_cdw-20240930.htm:9]**                | Senior Notes                      | 5.500 **[0001402057-24-000182_cdw-20240930.htm:9]**         | 3.3% = (183.5 / 5,607.5) * 100 **[0001402057-24-000182_cdw-20240930.htm:9]** **[0001402057-24-000182_cdw-20240930.htm:2]**                                    |
| 2025     | 211.1 **[0001402057-24-000182_cdw-20240930.htm:9]**                | Senior Notes                      | 4.125 **[0001402057-24-000182_cdw-20240930.htm:9]**         | 3.8% = (211.1 / 5,607.5) * 100 **[0001402057-24-000182_cdw-20240930.htm:9]** **[0001402057-24-000182_cdw-20240930.htm:2]**                                    |
| 2026     | 1,634.5 **[0001402057-24-000182_cdw-20240930.htm:9]**              | Term Loan Facility & Senior Notes | 2.670 **[0001402057-24-000182_cdw-20240930.htm:9]**         | 29.2% = (1,634.5 / 5,607.5) * 100 **[0001402057-24-000182_cdw-20240930.htm:9]** **[0001402057-24-000182_cdw-20240930.htm:2]**                                 |
| 2028     | 1,100.0 **[0001402057-24-000182_cdw-20240930.htm:9]**              | Senior Notes                      | 4.250 & 3.276 **[0001402057-24-000182_cdw-20240930.htm:9]** | 19.6% = (1,100.0 / 5,607.5) * 100 **[0001402057-24-000182_cdw-20240930.htm:9]** **[0001402057-24-000182_cdw-20240930.htm:2]**                                 |
| 2029     | 700.0 **[0001402057-24-000182_cdw-20240930.htm:9]**                | Senior Notes                      | 3.250 **[0001402057-24-000182_cdw-20240930.htm:9]**         | 12.5% = (700.0 / 5,607.5) * 100 **[0001402057-24-000182_cdw-20240930.htm:9]** **[0001402057-24-000182_cdw-20240930.htm:2]**                                   |
| 2030     | 600.0 **[0001402057-24-000182_cdw-20240930.htm:9]**                | Senior Notes                      | 5.100 **[0001402057-24-000182_cdw-20240930.htm:9]**         | 10.7% = (600.0 / 5,607.5) * 100 **[0001402057-24-000182_cdw-20240930.htm:9]** **[0001402057-24-000182_cdw-20240930.htm:2]**                                   |
| 2031     | 1,000.0 **[0001402057-24-000182_cdw-20240930.htm:9]**              | Senior Notes                      | 3.569 **[0001402057-24-000182_cdw-20240930.htm:9]**         | 17.8% = (1,000.0 / 5,607.5) * 100 **[0001402057-24-000182_cdw-20240930.htm:9]** **[0001402057-24-000182_cdw-20240930.htm:2]**                                 |
| 2034     | 600.0 **[0001402057-24-000182_cdw-20240930.htm:9]**                | Senior Notes                      | 5.550 **[0001402057-24-000182_cdw-20240930.htm:9]**         | 10.7% = (600.0 / 5,607.5) * 100 **[0001402057-24-000182_cdw-20240930.htm:9]** **[0001402057-24-000182_cdw-20240930.htm:2]**                                   |

dfcd9cf51ce28ee092a2740405b11cc444199ede4eea21b79dbf6af3e7425100

1. **Earnings Growth Expectations**  
   **Q:** Should investors reset expectations for earnings growth?  
   **A:** Management views 2024 as a **transitory period** with **mid-single-digit earnings growth**.  **[CDW_3372163_9]**  They anticipate significant catalysts beyond this period that will enhance returns and remain confident in long-term growth prospects.  **[CDW_3372163_9]** 

2. **AI Investment Impact**  
   **Q:** Are AI investments cannibalizing IT budgets?  
   **A:** AI is a **hyper-focus**, but budgets are not shifting from IT.  **[CDW_3372163_13]**  Instead, funds come from functional areas like HR, finance, and marketing, viewing AI as **business transformation** with **incremental investments**.  **[CDW_3372163_13]** 

3. **Market Share Gains and Gross Profit**  
   **Q:** How are market share gains and gross profit trending?  
   **A:** CDW gained share in 2023, delivering **200–300 basis points** above IT market growth.  **[CDW_3372163_11]**  Gross profit is expected to accelerate through the year, bolstered by netted-down revenues and strong gross margins.  **[CDW_3372163_11]** **[CDW_3372163_12]** 

4. **Strategic M&A Plans**  
   **Q:** What are the strategic M&A priorities?  
   **A:** CDW focuses on M&A to drive growth in areas like **security, cloud, and AI**.  **[CDW_3372163_10]**  They have a pipeline of targets and are open to geographic expansion and capability bolstering.  **[CDW_3372163_10]** 

5. **Gross Margin Expansion Drivers**  
   **Q:** Is gross margin expansion secular or cyclical?  
   **A:** Expansion is driven by a mix shift to netted-down revenues, particularly **SaaS and cloud**, and softer hardware sales.  **[CDW_3372163_14]**  Product margins are holding firm, and these trends are expected to be **durable**.  **[CDW_3372163_14]** 

6. **Catalysts for Second-Half Recovery**  
   **Q:** What will drive recovery in the second half?  
   **A:** There is **pent-up demand**, with customers ready to act when economic confidence improves.  **[CDW_3372163_20]**  Elevated inflation and interest rates cause caution, but investment needs persist.  **[CDW_3372163_20]** 

7. **NetComm Products Outlook**  
   **Q:** What's the outlook for NetComm products after weakness?  
   **A:** Expecting headwinds due to tough comparisons from prior **20–40% growth**.  **[CDW_3372163_7]**  Underlying demand is solid but declines are expected for the next few quarters.  **[CDW_3372163_7]** 

8. **PC Demand and Client Devices**  
   **Q:** What is the outlook for PC demand?  
   **A:** No strength expected in hardware, including PCs, in the first half.  **[CDW_3372163_8]**  A **modest recovery** is anticipated in the back half, with PCs expected to rebound eventually.  **[CDW_3372163_8]** **[CDW_3372163_12]** 

9. **AI Opportunities and Full-Stack Solutions**  
   **Q:** Is AI more consulting or hardware opportunity?  
   **A:** Currently, demand is in **advisory and consulting services** due to complexity.  **[CDW_3372163_15]**  Long term, AI is a **full-stack opportunity**, including hardware and software across the edge to the core.  **[CDW_3372163_15]** **[CDW_3372163_18]** 

10. **Pricing Environment and Inflation Impact**  
    **Q:** How is the pricing environment shaping up?  
    **A:** Pricing remains **firm**, with no drastic changes anticipated.  **[CDW_3372163_19]**  The environment is stable, and ASPs have held steady.  **[CDW_3372163_19]** 

11. **Cash Flow Conversion Expectations**  
    **Q:** What are the cash flow conversion expectations?  
    **A:** Cash flow conversion is expected to be **80–90%** in 2024.  **[CDW_3372163_21]**  This accounts for potential working capital usage due to very low inventory levels.  **[CDW_3372163_21]** 

12. **Optimization Charges in EPS**  
    **Q:** What's behind the optimization charges?  
    **A:** Charges stem from **workforce optimization** and **real estate rationalization**.  **[CDW_3372163_17]**  They are aligning costs with business levels and adjusting for hybrid work models.  **[CDW_3372163_17]** 

1c35799bc2a98f196e64f2e3dad4a67541c4cf6a90b97020f0afa70d485eeb3e

1. **AI Spending Participation**  
   **Q:** Is CDW participating in AI spending despite weaker Q1 results?  
   **A:** CDW is in the early stages of AI adoption but is uniquely positioned to capitalize on AI opportunities. While Q1 saw cautious customer spending and delays in complex solutions due to economic uncertainty and AI considerations, CDW's strong customer engagement and broad portfolio position it well for the full-stack AI opportunity.  **[CDW_3381834_8]** 

2. **Gross Profit Guidance**  
   **Q:** How should we interpret Q2 gross profit guidance?  
   **A:** Despite a weaker Q1, CDW expects low single-digit year-over-year gross profit growth in Q2, modestly below historical seasonality. This confidence is based on a solid pipeline, particularly in solutions, and the anticipation that customers will resume critical spending.  **[CDW_3381834_9]** 

3. **Customer Spending Trends**  
   **Q:** Why is solutions business pulling back while transactional business opens up?  
   **A:** Customers are shifting budgets to refresh aging client devices, driven by the need to upgrade operating systems and replace old equipment. This shift is influenced by macroeconomic uncertainty and added complexity from AI considerations, leading to cautious spending on complex solutions.  **[CDW_3381834_10]** 

4. **Gross Margin Expectations**  
   **Q:** Will gross margins remain stable throughout the year?  
   **A:** CDW expects gross margins for the full year to be similar to 2023, around the high **21%** range. While quarter-to-quarter variability may occur due to product mix, the company is holding to these expectations despite a shift toward lower-margin client devices in Q1.  **[CDW_3381834_11]** 

38f66bbef140ce7f7bf676ff82eddd2ea39dc40b0d945b13e747783dce67992b

- **CDW anticipates significant growth catalysts**, including digital transformation, network modernization, increasing cybersecurity threats, aging client devices, and the promise of AI, **positioning the company for future growth** as customer spending resumes.  **[CDW_3372163_9]**
- **Despite a challenging environment with decreased net sales, CDW has maintained profitability through strong execution and cost controls**, resulting in increased gross margins and stable non-GAAP operating income, **demonstrating the resilience and effectiveness of their strategy**.  **[CDW_3372163_5]** **[CDW_3372163_11]**
- **CDW is actively pursuing strategic M&A to expand capabilities in high-growth areas like security, cloud, and AI**, which have proven effective in driving customer value and revenue growth in the past, **positioning the company for future success in these markets**.  **[CDW_3372163_10]**

45168d3a8eff5c68b96280bc828da0170b6aab70eec273a86e157a3b6e979b4a

1. **Operating Leverage and Workforce Reduction**  
   **Q:** Why is negative operating leverage increasing and what's the workforce reduction impact?  
   **A:** CDW is experiencing negative operating leverage due to lower-than-expected gross profits and a fixed cost base that hasn't adjusted quickly to the declining demand environment.  **[CDW_3404632_8]**  They have implemented actions to reduce fixed costs, including a workforce reduction of about **2%**, not the **10-15%** reported elsewhere.  **[CDW_3404632_8]**  This aligns them more closely with their fixed cost needs and preserves profitability while investing in growth areas.  **[CDW_3404632_8]** 

2. **Gross Profit Declines and Market Position**  
   **Q:** Why is CDW seeing consecutive gross profit declines, and what's expected for 2025?  
   **A:** CDW is undergoing a transformation, investing heavily in cloud and SaaS businesses, which haven't yet scaled to offset hardware declines.  **[CDW_3404632_14]**  The persistent softness in hardware, combined with strategic investments leading to lumpier, larger deals, has impacted results.  **[CDW_3404632_14]**  Despite these challenges, CDW expects gross profit dollars to increase as growth resumes, likely in 2025.  **[CDW_3404632_14]** 

3. **Competitive Landscape and Pricing Pressure**  
   **Q:** What has changed with competition and pricing intensity recently?  
   **A:** CDW is facing increased competition characterized by irrational pricing, with competitors offering low-margin deals.  **[CDW_3404632_13]**  This intense pricing pressure is unique compared to previous years and is occurring up and down the value chain, including among value-added resellers.  **[CDW_3404632_13]** **[CDW_3404632_12]**  CDW is maintaining financial discipline by walking away from uneconomic deals to protect profitability.  **[CDW_3404632_13]** **[CDW_3404632_12]** 

4. **Market Outlook and Hardware Demand Recovery**  
   **Q:** How is CDW performing relative to the market, and what's the outlook for hardware demand?  
   **A:** CDW continues to aim for delivering a premium to the IT market growth rate.  **[CDW_3404632_10]**  While hardware demand has been low, they are performing well in cloud, SaaS, and services.  **[CDW_3404632_10]**  They've seen **eight quarters** of hardware declines but expect an eventual recovery as catalysts like data growth and security needs drive demand.  **[CDW_3404632_10]** **[CDW_3404632_11]**  They are cautious about timing, noting that uncertainty may persist until after the election.  **[CDW_3404632_10]** **[CDW_3404632_11]** 

5. **Strategic Transformation and Digital Investment**  
   **Q:** What actions is CDW taking to balance large projects and smaller transactions?  
   **A:** CDW is accelerating important parts of their strategy by investing in digital capabilities to deliver personalized recommendations and improve customer experience.  **[CDW_3404632_20]**  This allows sales professionals to focus on higher-value deals while increasing velocity in smaller transactions through digital tools.  **[CDW_3404632_20]**  The goal is to drive growth across all deal sizes while enhancing profitability.  **[CDW_3404632_20]** 

6. **Impact of Vendor Channel Changes**  
   **Q:** How will changes in vendors' channel strategies affect CDW's growth?  
   **A:** CDW's investments in their cloud business align with vendor strategies from companies like Cisco and Microsoft.  **[CDW_3404632_14]**  By delivering seamless cloud services and managed solutions, CDW is positioned to benefit from these channel changes, which should drive better economics and growth in 2025 and beyond.  **[CDW_3404632_14]** 

7. **Gross Margin Guidance for Q4**  
   **Q:** Why is Q4 gross margin expected to decline year-over-year?  
   **A:** CDW anticipates continued softness in their solutions business, which carries moderately higher gross margins.  **[CDW_3404632_17]**  While client sales are expected to continue, the mix shift results in lower overall gross margins.  **[CDW_3404632_17]**  Additionally, last year's Q4 had an outsized pickup in netted-down revenues that may not repeat at the same level.  **[CDW_3404632_17]** 

8. **Move to As-a-Service Models**  
   **Q:** How is the shift to as-a-service models impacting CDW's hardware sales?  
   **A:** The move to consumption-based services like SaaS and cloud is growing, leading to revenue being recognized over time rather than upfront.  **[CDW_3404632_19]**  While not yet a material dollar amount, this shift creates a temporary gap when hardware sales decline and as-a-service revenues are still growing.  **[CDW_3404632_19]**  CDW expects this segment to grow and contribute more significantly over time.  **[CDW_3404632_19]** 

9. **Federal Government Spending and Election Impact**  
   **Q:** How is election uncertainty affecting federal government spending?  
   **A:** Federal government spending is currently paused due to delayed budgets and awaiting policy priorities post-election.  **[CDW_3404632_21]** **[CDW_3404632_11]**  CDW is cautious about immediate changes, noting that this election cycle is unique and timing depends on administrative and congressional actions.  **[CDW_3404632_21]**  They have factored political uncertainty into their Q4 outlook.  **[CDW_3404632_21]** 

10. **Client Device Growth and AI PCs**  
    **Q:** What is driving client device growth, and how will AI PCs impact this?  
    **A:** CDW is seeing client device growth across most end markets, driven by the refresh of aging fleets.  **[CDW_3404632_16]**  Small businesses are more cautious due to cash preservation.  **[CDW_3404632_16]**  The current growth is less influenced by Windows 11 or AI PCs, but CDW expects **AI PCs to be an accelerant for PC refreshes** in the next year.  **[CDW_3404632_16]** 

a34ee98fa181169d22f8cbd3e8f6bd9d61d8c9e0a370f1183f13342a709ec4ce

- **Steeper-than-expected deterioration in international markets (U.K. and Canada), with performance down mid-teens and conditions worsening beyond anticipation.** The company expects the weakness to persist for a couple more quarters, impacting international revenue growth.  **[CDW_3363222_6]**
- **Continued weakness in commercial hardware spending, particularly in client devices, with hopes for a modest recovery unmet.** Customers remain hesitant to make significant upfront capital investments, and there are no signs of improvement in client device demand, affecting hardware sales.  **[CDW_3363222_3]** **[CDW_3363222_10]**
- **Potential risks from federal government budget issues and possible shutdowns, which may lead to projects being put on hold, impacting future federal spending.** This could affect the government's segment revenues in upcoming quarters, especially into 2024.  **[CDW_3363222_4]**

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- **CDW's growth is slowing, with earnings growth projected to be mid-single-digit in 2024, compared to historical double-digit growth, suggesting a potential shift in the company's long-term growth trajectory.**  **[CDW_3372163_9]**
- **The company expects continued weakness in hardware sales, including PCs and client devices, persisting through at least the first half of 2024, which could negatively impact revenues given their exposure to hardware.**  **[CDW_3372163_8]** **[CDW_3372163_20]**
- **CDW is undertaking workforce optimization and real estate rationalization, including layoffs and office closures, indicating underlying pressures on margins and efforts to align costs with lower business activity.**  **[CDW_3372163_17]**

da4dcf2def781379d30769c2a022fc62da8909520cac8b3f5abf9f81ff3d32cc

- **Delayed Revenue Conversion Due to Customer Caution:** Despite a strong pipeline, CDW is not seeing customers' "appetite to convert," indicating potential delays in revenue realization due to cautious customer spending.  **[CDW_3395270_15]**
- **Persistent Weakness in Networking and Server Demand:** CDW continues to face slow demand in networking and server products as customers digest prior purchases and exercise caution in new spending, with a pivot towards cloud solutions over traditional infrastructure upgrades.  **[CDW_3395270_10]**
- **Shift Towards Cloud Solutions Affecting Traditional Revenue Streams:** Customers are increasingly opting for cloud and elastic solutions instead of on-premise infrastructure investments, which may negatively impact CDW's traditional hardware revenue segments.  **[CDW_3395270_10]**

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- *Bull Case for CDW based on the Q&A section of the Earnings Call:**
- **CDW continues to gain market share**, outperforming the market by more than their long-term target of **200 to 300 basis points**, with **customer spend through CDW showing a delta of more than 5%**.  **[CDW_3363222_16]**
- **Strong double-digit growth in cloud, security, and software solutions**, reflecting demand for mission-critical technologies, positions CDW well to capitalize on this trend.  **[CDW_3363222_8]**

8bf3ae05c3f4061aa59fc6aede25cfde72b8dbb187cedc0f1f6177c2d5ee1098

- **CDW is uniquely positioned to capitalize on the growing interest in AI technologies**, leveraging its full stack capabilities and broad portfolio to help customers navigate AI adoption. CEO Christine Leahy stated that CDW is "uniquely positioned in the space to take advantage of what will be ubiquitous and a full stack opportunity."  **[CDW_3381834_8]**
- **Increasing demand for client device refreshes** is driving positive signs in the business, as customers can no longer postpone upgrades. CDW is capitalizing on this demand, with **client device sales increasing** and customers moving forward due to aging machines and the need for updated operating systems.  **[CDW_3381834_8]** **[CDW_3381834_12]** **[CDW_3381834_15]**
- **CDW has a solid pipeline and expects improved conversion of solutions spending** in upcoming quarters. The company is confident that customers will act on critical IT spending, particularly in areas like security and cloud, driving growth in solutions revenue. CFO Albert Miralles mentioned, "our confidence on the solutions front is that ultimately, customers will have to act on those things."  **[CDW_3381834_9]** **[CDW_3381834_10]** **[CDW_3381834_16]**

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**Annual guidance for FY 2025:**  
- **Gross profit**: low single-digit year-over-year growth  **[CDW_3414398_9]** **[CDW_3414398_8]**  (raised from low single-digit year-over-year decline  **[CDW_3404632_7]** )  
- **Gross margin**: expected to remain stable, within the range of 2024 levels  **[CDW_3414398_9]**  (no change from prior guidance  **[CDW_3404632_7]** )  
- **Non-GAAP EPS**: low single-digit year-over-year growth  **[CDW_3414398_9]**  (raised from mid single-digit year-over-year decline  **[CDW_3404632_7]** )  
- **IT Market Growth**: low single digits  **[CDW_3414398_8]**  (no prior guidance)  
- **Currency Impact**: slight headwind  **[CDW_3414398_9]**  (no prior guidance)  
- **Cash Conversion Cycle**: high teens to low 20s  **[CDW_3414398_8]**  (no prior guidance)  

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CDW Corp (CDW)

Financials