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- **Q3 Growth Drivers**: Small Business (+14%), Services (+9%), and AI-enabled solutions offset government/education headwinds.
- **Financial Resilience**: Non-GAAP EPS up 3%, free cash flow $209M, and 12% dividend increase amid cautious macro outlook.
- **Strategic Focus**: Accelerating AI adoption, maintaining 200-300bps IT market outperformance, and prudent capital allocation.
- **Risks**: Prolonged government shutdown, healthcare funding shifts, and uneven enterprise project spending.

**【CEO Summary Section】**
- **Q3 2025 Financial Highlights**: Net sales of $5.7 billion (+4% YoY), gross profit $1.3 billion (+5%), non-GAAP EPS $2.71 (+3%).
- **End Market Performance**: Small Business (+14%), Healthcare (+7%), Government (+8%), offsetting declines in Education (-9%).
- **AI and Services Growth**: Services revenue up 9%, driven by CDW Professional and Managed Services. AI workstations gaining traction in small businesses.
- **Strategic Focus**: Embedding AI in operations, guiding customers through AI adoption, and maintaining prudent outlook amid macro uncertainty.

**【CFO Financial Commentary】**
- **Gross Profit**: $1.3 billion (+4.6% YoY), margin 21.9% (flat YoY). Netted-down revenues (36% of gross profit) reflect strong cloud, software, and security demand.
- **Expenses**: Non-GAAP SG&A $725 million (+8.7% YoY) due to higher commissions and performance-based pay. Efficiency ratio 57.7% (target 55%-56%).
- **Liquidity**: Adjusted free cash flow $209 million (Q3), $668 million YTD. Net debt $5.2 billion, within 2x-3x leverage target.
- **Dividends and Buybacks**: Returned $747 million to shareholders (112% of adjusted free cash flow), including $150M share buybacks.

**【Q&A Key Highlights】**
- **Government Shutdown Impact**: Q4 federal sales conservative, but expect timing delays rather than lost sales. Small Business resilience and U.K./Canada growth offsetting government weakness.
- **PC Market Outlook**: Mid-single-digit client device growth expected, driven by Windows 10 end-of-life and AI workstations.
- **Services Momentum**: Services growth (+9%) led by data/AI, security, and cloud. Long-term target for services as 10%+ of revenue.
- **Expense Management**: SG&A growth aligning with gross profit, aiming for 55% efficiency ratio in 2026. SBC normalization reducing margin pressure.
- **Healthcare Funding Risks**: Watching Medicare payment impacts, but long-term tech adoption trends positive.


CDW Corporation (CDW) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

CDW

CDW fundamentals

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