CDW (CDW) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 were $5.52 billion, down 2.0% year-over-year, with declines in Corporate and Public segments, partially offset by growth in UK and Canadian operations.

• Gross profit was $1.2 billion, down 2.2% year-over-year, with a stable margin of 21.8%.

• Operating income increased 0.7% to $482 million, while net income was stable at $316 million; non-GAAP net income declined 3.9% to $355 million.

• Cloud and services showed resilience, but hardware solutions remained under pressure, impacting overall results.

• Actions are underway to enhance seller effectiveness, expand cloud and as-a-service offerings, and accelerate pipeline growth.

Financial highlights

• Gross profit margin held steady at 21.8% for Q3 2024; operating income margin improved to 8.7%.

• Non-GAAP net income for Q3 2024 was $355 million, down 3.9% year-over-year; non-GAAP EPS was $2.63.

• Adjusted free cash flow for the nine months was $764 million; cash conversion cycle was 17 days.

• Cash and equivalents at quarter-end were $947 million; net debt was $4.87 billion.

• Average daily sales declined 3.5% year-over-year.

Outlook and guidance

• 2024 gross profit expected to decline low single digits year-over-year; full-year non-GAAP EPS expected to be down mid-single digits.

• Gross margin for 2024 anticipated to be similar to 2023.

• Q4 guidance: low to mid-single digit gross profit declines, with gross margin slightly above first three quarters but below Q4 2023.

• U.S. IT market expected to be roughly flat with 2023; company targets outperformance by 200–300 bps.

• Annual adjusted free cash flow expected at 80–90% of non-GAAP net income; capex $120–140 million.