Key Highlights

  • Third quarter net sales rose 17.7% to USD 6.75 billion, topping the USD 6.19 billion estimate.
  • Non-GAAP EPS of USD 3.26 beat the USD 2.98 estimate, while GAAP EPS was USD 2.46.
  • Gross profit margin narrowed to 20.5% from 21.9% as mix shifted toward lower-margin product categories.
  • Cash stood at USD 1.54 billion while total Debt rose to USD 7.12 billion from USD 5.63 billion.

CDW (NASDAQ:CDW) reported third quarter net sales of USD 6,754.5 million, up 17.7% from USD 5,737.4 million a year earlier and well above the USD 6.19 billion estimate. Selling days were unchanged at 64, so average daily sales rose 17.7% to USD 105.5 million. Non-GAAP Net Income per diluted share of USD 3.26 compared with the USD 2.98 estimate and USD 2.71 a year ago. GAAP net income per diluted share was USD 2.46, up 11.6%.

Segment Growth and Demand Drivers

Commercial net sales reached USD 3,979 million, up 20.8%, with Financial Services customers up 73.2%, Corporate up 16.8% and Healthcare up 9.3%. Government sales rose 9.9% to USD 913 million, and Education rose 7.5% to USD 982 million. The UK and Canadian operations, reported together as Other, grew 26.0% to USD 880 million. Demand centered on data storage and servers, notebooks and mobile devices, and software. Chair and chief executive Christine Leahy pointed to broad strength across end markets and strong momentum in enterprise AI adoption.

Margins, Expenses and Earnings Quality

Gross profit rose 10.3% to USD 1,385.3 million, slower than sales, so gross margin narrowed to 20.5% from 21.9% on mix and lower margin in certain product categories. Selling and administrative expenses rose 10.3% to USD 896 million, reflecting higher performance-based incentives, workplace optimization costs and Acquisition costs. Operating Income was USD 489.5 million, up 10.4%, for a 7.2% margin versus 7.7%.

Non-GAAP operating income climbed 16.8% to USD 619.8 million, holding the margin at 9.2%. Interest expense, net, increased 19.8% to USD 66 million, and the effective tax rate was 26.9% compared with 25.3%. Net income grew 6.5% to USD 309.8 million, while non-GAAP net income rose 14.8% to USD 410.2 million. Diluted shares fell to 126 million from 132 million, which added to per-share growth.

Balance Sheet, Cash Flow and Dividend

Cash and equivalents rose to USD 1,538.7 million from USD 618.7 million at year end, and total debt increased to USD 7,124.3 million from USD 5,629.8 million. Net debt was USD 5,585.6 million, up from USD 5,011.1 million. Revolver availability was USD 1,869.5 million. The cash conversion cycle lengthened to 20 days from 11 days a year earlier, with days of Supply in inventory at 18 versus 12.

For the first nine months, Operating Cash Flow was USD 618.5 million, compared with USD 771.4 million, and free cash flow was USD 537.8 million, compared with USD 692.2 million. The board approved a quarterly Dividend of USD 0.68 per share, payable December 10 to holders of record on November 25. The company's chief financial officer said Operating Leverage and Capital management supported non-GAAP EPS growth above 20%. No formal outlook was provided.

Signposts for the Next Quarter

Net sales growth of 17.7% compares with gross profit growth of 10.3% and non-GAAP operating income growth of 16.8%. Nine month net sales of USD 19.0 billion compare with USD 16.9 billion a year earlier, up 12.4%, while nine month non-GAAP EPS of USD 8.44 compares with USD 7.45. Net debt of USD 5.59 billion compares with USD 5.18 billion at September 30, 2025.