CDW (CDW) J.P. Morgan 54th Annual Global Technology, Media and Communications Conference summary

AI strategy and customer engagement

• Customers are moving beyond AI experimentation, seeking scalable, secure, and cost-effective implementation across full infrastructure stacks, including servers, networking, storage, governance, and cloud security.

• Full stack capabilities and a diverse customer ecosystem enable delivery of AI-powered modernization, workflow simplification, and embedded AI across the enterprise.

• AI solutions, such as AI factories and GPU as a service, are increasingly repeatable and margin-accretive, with managed services and workload optimization across hybrid environments.

• Demand for advisory, design, deployment, and managed services is rising, especially in the mid-market, driving higher-margin, recurring revenue opportunities.

• Customers are seeking guidance on optimizing spend across multiple AI models and LLMs, with a notable uptick in software demand.

Financial performance, supply chain, and pricing

• Q1 results showed strength in infrastructure and software, with customers advancing AI spend and modernization.

• Supply constraints and price increases are being managed through scale, partner leverage, and early access to inventory, helping customers navigate volatility.

• Hardware demand saw significant pull-forward in Q1, with backlog building into Q2; SaaS and cloud revenues are expected to provide stability in the second half.

• Services growth was impacted by customer timing, with hardware shipped but not yet implemented; long-term services outlook remains robust.

• The recurring revenue model is expanding, with as-a-service offerings across hardware and managed services, including major events like the 2028 Olympics.

Geared for Growth initiative and operational efficiency

• Geared for Growth targets $100 million in savings by 2027 and $200 million by 2028, with about half reinvested in growth areas.

• Focus areas include workflow and process optimization, supply chain improvements, AI-driven tech spend analysis, and operating model centralization.

• Productivity gains are intended to drive operating leverage, reinvestment, and shareholder value, with a disciplined ROI process for investments.

• SG&A ratio is targeted to return to 55-56% of gross profit, with sequential improvement expected in the back half of the year and into 2027.

• The initiative is structural, aiming for sustainable cost base improvement and enhanced profitability, with flexibility to scale further if needed.