0001402057-26-000011
SEC filingRevenue grew 6.8% to $22.4B on broad demand, but margins contracted; net income edged down 1%.
CDW Corporation is a Fortune 500 and S&P 500 member that describes itself as a leading multi-brand provider of information technology (IT) solutions to business, government, education, and healthcare customers in the United States, the United Kingdom, and Canada. The company offers a broad array of offerings ranging from discrete hardware and software products to integrated IT solutions and services spanning on-premise and cloud capabilities across hybrid infrastructure, digital experience, and security. CDW is vendor, technology, and consumption model unbiased, providing multi-branded solutions delivered by approximately 10,500 customer-facing coworkers, including sellers, highly-skilled specialists, and engineers.
CDW reports three segments: Corporate (US private sector with more than 250 employees), Small Business (US private sector with up to 250 employees), and Public (US government, education, and healthcare institutions). Two additional operating segments, CDW UK and CDW Canada, do not meet reportable segment thresholds and are included in an 'Other' category. Effective January 1, 2026, CDW realigned its customer-facing organization into three new segments: Commercial (encompassing corporate, financial services, healthcare, and small business customers in the US), Government (federal, state, and local agencies), and Education (primary, secondary, and higher education institutions). CDW UK and CDW Canada remain unchanged in 'Other'. The US business represents approximately 90% of net sales, with each of the five US customer channels (corporate, small business, government, education, healthcare) generating at least $1.7 billion in net sales in 2025. Combined net sales from the UK and Canada were $2.7 billion in 2025.
CDW's offerings are categorized into hardware (71.6% of net sales in 2025), software (18.7%), services (9.1%), and other (0.6%). Hardware includes notebooks/mobile devices, netcomm products, collaboration hardware, data storage and servers, desktops, and other hardware. Software includes cloud solutions, software assurance, application suites, security, virtualization, collaboration, and productivity applications, operating systems, and network management. Services include advisory and design, software development, implementation, managed services, and warranties. CDW also provides integrated IT solutions across hybrid infrastructure, digital experience, security, and digital velocity. The company offers more than 100,000 products and services from over 1,000 vendor partners, including major names such as Adobe, Apple, Amazon Web Services, Cisco, Dell Technologies, Google, Hewlett Packard Enterprise, IBM, Lenovo, Microsoft, and Nvidia. CDW has the highest level of certification from many of these partners.
CDW serves over 250,000 customers through sales teams organized by end-markets and supported by specialists and engineers. The company markets via mass media, digital, print, social media, events, and sponsorships. A significant portion of advertising expenses is reimbursed through cooperative advertising programs with vendor partners. CDW procures products directly from vendor partners and wholesale distributors, and utilizes drop-shipment arrangements for approximately 51% of North America net sales. The company operates two distribution centers in North America and one in the UK, handling about 22 million units annually. CDW's customized IT systems and e-commerce platform (cdw.com) enable electronic order processing, tracking, and asset management.
The market for IT products, solutions, and services is highly competitive. CDW faces competition from resellers, manufacturers selling directly, large service providers and system integrators, cloud providers, hyperscaler marketplaces, e-commerce companies, and office supply retailers. The company believes its sustainable competitive advantages include scale (national and international footprint), a performance-driven culture underpinned by competitive compensation, and enhanced capabilities from investing in specialists and engineers. The competitive landscape is expected to evolve with new technologies like cloud, hyper-converged infrastructure, and AI.
CDW's strategic priorities include providing high-quality service to gain and retain customers, building a strong sales organization and deep services and solutions capabilities, leveraging scale for broad market coverage, remaining unbiased regarding vendor and technology, simplifying the complexity of IT solutions for customers, and positioning as a trusted adviser. The company aims to help customers navigate through complex options and implement best-fit solutions.
As of the filing, CDW had approximately 14,800 coworkers globally, with 11,200 in the US and 3,600 in international locations. More than 50% of US net sales are generated by account managers with more than seven years of tenure. No coworkers are represented by a labor union. CDW emphasizes a welcoming and respectful culture, training and development (over 20,000 on-demand modules), competitive compensation with uncapped commissions for sellers, and comprehensive benefits including healthcare, retirement plans, tuition assistance, and paid time off.
For the year ended December 31, 2025, CDW reported net sales of $22.42 billion, a 6.8% increase from $21.00 billion in 2024. The growth was broad-based across all operating segments, driven by improved customer spending despite persistent economic and geopolitical uncertainty. Key product categories contributing to the increase included notebooks/mobile devices, software, desktops, services, and netcomm products.
Gross profit rose 5.9% to $4.87 billion, but gross profit margin contracted 20 basis points to 21.7%, primarily due to decreased rates in certain hardware categories. Operating income increased only 0.3% to $1.66 billion, as selling and administrative expenses grew 9.0% to $3.22 billion, driven by higher performance-based compensation, transformation-related costs, and coworker-related costs. Consequently, operating income margin declined 50 basis points to 7.4%.
Net income decreased 1.0% to $1.07 billion, while diluted earnings per share rose to $8.08 from $7.97, benefiting from share repurchases. The effective tax rate increased to 25.3% from 24.9% due to lower excess tax benefits on equity-based compensation.
All segments contributed to revenue growth. The Corporate segment, representing 42.1% of total net sales, grew 6.8% to $9.44 billion, with operating margin declining to 9.4% from 10.0% due to higher costs and lower gross margin. Small Business was the fastest-growing segment, with net sales up 13.3% to $1.73 billion, though operating margin dipped slightly to 11.8%. The Public segment increased 4.6% to $8.54 billion, with mixed performance across subsegments: Government and Healthcare grew 4.1% and 13.3%, respectively, while Education declined 1.8%. Public segment operating margin fell to 8.8% from 9.1%. Other operations (CDW UK and Canada) grew 9.7% to $2.72 billion, with operating margin improving to 5.7% from 4.5%.
Management did not provide specific numerical guidance for future periods. The MD&A highlighted ongoing economic uncertainty, evolving global trade policies, and geopolitical conditions as key factors affecting customer IT spending. The company noted a measured approach to IT investments as customers prioritize security, cloud, AI, and hybrid solutions. An organizational realignment effective January 1, 2026, will result in new reportable segments: Commercial, Government, and Education, with historical results recast in Q1 2026. The company emphasized its focus on managing costs, driving operational efficiency, and maintaining a strong balance sheet. Share repurchases totaled $653 million in 2025, and a quarterly dividend of $0.63 per share was declared in February 2026.
As of December 31, 2025, CDW held $618.7M in cash and cash equivalents, with no short-term investments (down from $214.2M in 2024). Total debt stood at $5,629.8M (including current maturities of $1,007.5M), compared to $5,842.8M in 2024. Shareholders' equity increased to $2,606.1M from $2,352.7M, driven by net income and foreign currency translation gains. Inventory decreased to $563.4M from $605.3M. Contract liabilities (deferred revenue) were $565.0M, up from $522.3M.
CDW disclosed $224.5M in total future minimum lease payments under operating leases, with $40.8M due within one year, $67.5M in years 1-3, and $116.2M beyond three years. The present value of lease liabilities was $190.7M. No other material purchase commitments (e.g., supply or capacity) were disclosed in the Notes. The company also has $352.6M in accounts payable-inventory financing, primarily under a floor plan sub-facility.
In 2025, CDW repurchased 4.0M shares for $653.0M, with $685M remaining under the program after a $750M increase authorized on February 5, 2025. Dividends totaled $328.6M ($2.505 per share), up from $332.1M ($2.485 per share) in 2024. Net debt decreased by $1,212.9M, with $592.5M in new debt issued (primarily a new term loan) and $804.6M in repayments (including $593.5M to extinguish long-term debt). Capital expenditures were $117.1M, or 0.5% of sales.
CDW reports three US segments and an 'Other' category (UK and Canada). Corporate segment revenue grew 6.8% to $9,442.4M, with operating income of $889.3M (9.4% margin). Small Business revenue increased 13.3% to $1,726.7M, with operating income of $203.2M (11.8% margin). Public segment revenue rose 4.6% to $8,535.2M, with operating income of $750.3M (8.8% margin). Other segment revenue grew 9.7% to $2,719.8M, with operating income of $154.2M (5.7% margin). Geographically, US net sales were $19,621.2M and Rest of World $2,802.9M. Hardware represented 71.6% of total net sales, software 18.7%, services 9.1%, and other 0.6%.
CDW's business is heavily reliant on a concentrated set of vendor partners (Apple, Cisco, Dell, HP, Lenovo, Microsoft) and wholesale distributors (Ingram Micro, TD SYNNEX – over 25% of purchases). Changes in these relationships, including terminations, altered terms, or reduced incentives, could significantly impact product availability, costs, and competitive position. Supply chain disruptions are exacerbated by AI-driven demand for high-performance memory and storage, leading to longer lead times and higher pricing.
The rapid evolution of AI presents both opportunities and risks. CDW faces potential reputational harm, liability, and increased compliance costs from AI use in offerings and internal operations. Failure to keep pace with AI innovation or to effectively embed AI could hinder growth. Additionally, competition from hyperscaler marketplaces (AWS, Google Cloud, Microsoft) and direct sales by OEMs may pressure margins and alter traditional reseller roles.
Cybersecurity threats are escalating, with AI-enhanced attacks increasing sophistication. While CDW has not experienced a material breach, ongoing attacks and the reliance on third-party providers heighten risk. Potential consequences include legal liability, regulatory penalties, remediation costs, and brand damage. Insurance may not cover all losses.
With $5.6 billion in total debt and $635 million at variable rates, CDW is exposed to interest rate increases, which could raise debt service costs. Restrictive covenants may limit operational flexibility. A downgrade by rating agencies could increase borrowing costs. The company is also exposed to accounts receivable and inventory obsolescence risks.
Global economic weakness, inflation, rising interest rates, trade disputes, and geopolitical tensions could cause customers to delay or reduce technology spending. Government spending cuts or shutdowns particularly impact public sector customers. The company faces foreign currency translation risk from the British pound and Canadian dollar.
CDW received a DOJ Civil Investigative Demand in June 2024 related to False Claims Act allegations in the E-Rate program. Noncompliance with public sector contracts or laws could lead to fines, contract termination, or debarment. Evolving regulations on AI, data privacy, and environmental matters increase compliance costs and reputational risk.
CDW's operating cash flow (CFO) of $2,022.3 million in 2025 significantly exceeded net income (not explicitly stated but implied by strong cash generation), reflecting high cash conversion. CFO grew 18.0% year-over-year from $1,713.5 million, driven by improved working capital management and earnings growth. Capital expenditures (capex) were $103.5 million, a modest 5.1% of CFO, indicating low capital intensity. Free cash flow (FCF) of $1,918.8 million comfortably covered capital returns of $1,107.7 million (share repurchases of $1,000.0 million and dividends of $107.7 million), leaving ample reinvestment capacity. Investing cash flow was heavily negative at -$1,029.1 million, primarily due to net purchases of short-term investments and business acquisitions. Financing cash flow of -$878.0 million reflects debt repayments and share buybacks. Anomalies include a significant swing in accounts receivable (increase of $1,176.6 million) and accounts payable (increase of $838.8 million), indicating working capital expansion to support revenue growth. No one-time tax payments were noted.