CDW (CDW) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $5.42B, down 3.6% YoY, as cautious customer behavior and economic uncertainty led to elongated sales cycles and prioritization of cost savings.

• Gross profit was $1.2B (flat YoY), with gross margin up 80 bps to 21.8%, driven by higher SaaS and services contributions.

• Operating income rose 5.1% to $433M, net income increased 7% to $281M, while non-GAAP EPS was $2.50, down 2.6% YoY.

• Cloud, security, and services drove profitability and cash flow, offsetting declines in hardware and collaboration.

• Unexpected headwinds included worsening UK market conditions, federal funding challenges, and macro/geopolitical uncertainty.

Financial highlights

• Gross profit: $1.2B, flat YoY; gross margin: 21.8%, up 80 bps YoY.

• Net sales: $5.4B, down 3.6% YoY; up 11.3% sequentially due to seasonal demand.

• Operating income: $433M, up 5.1% YoY; margin improved to 8.0% from 7.3% YoY.

• Non-GAAP net income: $339M, down 2.9% YoY; non-GAAP EPS: $2.50, down 2.6%.

• Adjusted free cash flow: $138M for Q2; $503M YTD; free cash flow for six months: $529.5M.

Outlook and guidance

• 2024 U.S. IT market growth expected at the lower end of low single digits, with company targeting 200–300 bps above market.

• Full-year 2024 guidance: flat to low single-digit gross profit and non-GAAP EPS growth, gross margin similar to 2023.

• Q3 2024: low single-digit gross profit growth YoY, gross margin comparable to 2023, mid-single-digit YoY EPS growth.

• Q4 expected to be meaningfully lower than Q3 due to seasonally lower education/government demand.

• Annual non-GAAP effective tax rate expected between 25.5% and 26.5%.