The UK emerged as a rare growth spot for CDW in a Q3 otherwise marred by tepid hardware demand.
The world’s largest reseller fell short of its expectations in the three months to 30 September 2024 as its sales and profits both headed south.
Net sales shrank 3.5% year on year to $5.5bn, with gross profits tumbling 2% to $1.2bn and non-GAAP operating income down 4% to $534m.
This partly reflected CDW’s efforts to avoid a “race to the bottom” in a depressed netcomm, server and storage market, CEO Christine Leahy acknowledged on an earnings call (see transcript here).
While software sales advanced 3.5%, hardware sales fell 7% as clients pushed back datacentre projects (client device sales rose “high single digits”, with netcomm, storage and servers all down “significant double digits”).
“While this performance delivered resilient margins that reinforce the integrity of our strategy, it was not enough to offset the impact of lower hardware solutions demand,” Leahy said.
UK bucks the trend
CDW’s combined business in Canada and the UK (where it recently installed Penny Williams as its new MD) beat its expectations by growing 4.8% to $640m during the quarter, however.
Both markets experienced “stronger demand, albeit off depressed results” in the prior period, the NASDAQ-listed outfit said.
In its native US, corporate and public sector sales fell 2.9% and 3.6% respectively, with small business down 0.3%, however.
On the earnings call, Leahy conceded that the shortfall in solutions hardware volumes reflects a mixture of external and “CDW-specific dynamics”.
“While our North Star is to provide value to our customers in highly competitive markets, we maintain our discipline when competitors pursue transactions at uneconomic terms,” she said.
CDW is confident that growth will return, Leahy added, however.
“The demand drivers are there, workload expansion and data explosion, increased security threats, client device obsolescence and adoption of AI-powered assistance and applications. And when demand picks up, we will be there to profitably capture these opportunities,” she said.
