CDW Corporation CDW

The business

CDW sells hardware, software, and services to three customer end-markets: Corporate, Small Business, and Public, the last bundling government, education, and healthcare, across the US, UK, and Canada. The engine is the Corporate segment at $9.44B of FY2025 net sales (6.8% growth), with Public close behind at $8.54B (4.6%) and Small Business the fastest grower at $1.73B (13.3%); the UK and Canada "Other" operations add roughly $2.7B. By product, hardware is still the bulk of billings at ≈$16.1B, but software ($4.2B) and services ($2.0B) are the higher-margin, faster-growing mix and the reason gross profit is the truer scale gauge than net sales. A meaningful and growing share of CDW's software, SaaS, cloud, and warranty revenue is booked on a net basis, meaning only the margin lands in net sales rather than the full customer billing, so reported revenue understates the volume CDW actually moves and gross-profit dollars are what compound. FY2025 gross profit was $4.87B, up 5.9% on net sales up 6.8%, with the gap explained by that netted-down mix.

The qualitative fact the financials do not show is where the demand cycle sits. CDW spent 2023 and 2024 in a soft IT-spending trough with customers deferring device purchases; that is now inflecting. The Windows 10 end-of-support date of October 2025 forces a commercial PC refresh that runs through 2026, AI-capable PCs raise the replacement value per unit, and datacenter and networking demand tied to AI build-outs is lifting infrastructure orders. Q1 2026 showed it: net sales up 9% to $5.68B, Commercial up 9.6% with Financial Services customers up 28.2%, and international up 17.9%. The offset is mix: gross margin slipped to 21.0% from 21.6% as hardware (lower margin, gross-booked) outgrew netted-down software, which is why net sales can outrun gross profit in a refresh year.