CDW Corporation Reports Strong Q1 2025 Earnings Growth

CDW Corporation announced its first-quarter 2025 non-GAAP earnings per share (EPS) at $2.15, exceeding the Zacks Consensus Estimate of $1.96. This reflects an approximate 12% increase compared to last year.

Revenues for the quarter climbed 6.7% year over year to $5.199 billion. This revenue boost was largely due to strong customer demand for notebooks, mobile devices, desktops, software, and services, even though several hardware categories saw a decline. The Corporate, Small Business, Public, and International segments contributed significantly to this growth. Additionally, quarterly revenues surpassed the consensus estimate of $4.89 billion.

CDW Corporation Price, Consensus, and EPS Surprise

CDW Corporation price-consensus-eps-surprise-chart | CDW Corporation Quote

The company began 2025 robustly, assisting customers in navigating the evolving market landscape. Management noted that the quarter’s performance showcases the diverse customer base and extensive product portfolio that support CDW’s customer-centric strategy.

Moreover, the company declared a quarterly dividend of 62.5 cents, set to be paid on June 10, 2025, to shareholders recorded as of May 26.

Following the results, CDW’s stock rose by 2% in pre-market trading on May 7. However, over the past year, shares have decreased by 25.6%, contrasting with a 4.2% increase in the Zacks Computers-IT Services industry.

Image Source: Zacks Investment Research

Segment Performance

In the Corporate segment, net sales reached $2.236 billion, reflecting a 6.3% increase year over year.

The Small Business segment saw net sales of $405 million, rising by 7.9% compared to the previous year.

Revenue in the Public segment totaled $1.878 billion, indicating a growth of 10.6% from the prior year. This increase was propelled by strong sales in Healthcare (up 19.5%) and Education (up 11.1%) sectors.

Additionally, net sales from Other (Canadian and U.K. operations) rose by 9.5% to $680 million.

Margin Analysis

CDW’s gross profit was $1.122 billion, a 5.5% increase year over year. However, the gross profit margin slightly declined from 21.8% to 21.6%, mainly due to a higher proportion of lower-margin products, including notebooks and mobile devices.

Non-GAAP operating income rose by 10% year over year to $444 million, leading to a non-GAAP operating margin increase to 8.5%, up from 8.3%.

Selling and administrative expenses increased by 3.5% year over year to $761 million, driven by lower performance-based compensation, transformation costs, and amortization of acquired intangibles, partially offset by reduced coworker expenses.

Balance Sheet and Cash Flow Overview

As of March 31, 2025, CDW held $471.4 million in cash and cash equivalents, down from $503.5 million on December 31, 2024. Long-term debt rose slightly to $5.622 billion, compared to $5.607 billion at the end of 2024.

For the three months ended March 31, 2025, CDW generated $287.2 million in cash flow from operating activities, down from $440 million during the same period last year.

CDW’s Zacks Rank

Currently, CDW holds a Zacks Rank #3 (Hold).

Performance of Other Companies in the Industry

Infosys (INFY) concluded fiscal 2025 with mixed results. Its fourth-quarter earnings exceeded the Zacks Consensus Estimate at 20 cents per share, reflecting a 15.3% year-over-year decline.

In contrast, shares of INFY increased by 3.9% over the last year.

Microsoft (MSFT) announced third-quarter fiscal 2025 earnings of $3.46 per share, surpassing expectations by 8.13% and reflecting a 17.7% yearly increase. Revenues reached $70.06 billion, marking a 13.3% rise.

MSFT’s stock has gained 2.6% over the past six months.

ServiceNow (NOW) reported adjusted earnings of $4.04 per share for the first quarter of 2025, beating expectations by 6.60% and representing an 18.5% year-over-year growth. Revenues totaled $3.09 billion, slightly above consensus and up by 18.6% year over year.

NOW’s shares have surged by 33.9% in the past year.