CDW delivered a strong Q2 with record sales and EPS, driven by robust AI infrastructure demand. The company raised its full-year outlook, citing healthy demand and a strong backlog, but noted margin pressure from a richer mix of large enterprise hardware deals. Revenue grew 10% to $6.6 billion, with EPS up 12% to $2.91, beating expectations.
CDW delivered a strong Q2 with record sales and EPS, driven by robust AI infrastructure demand. The company raised its full-year outlook, citing healthy demand and a strong backlog, but noted margin pressure from a richer mix of large enterprise hardware deals. Revenue grew 10% to $6.6 billion, with EPS up 12% to $2.91, beating expectations.
Management emphasized AI as a key demand driver, with customers investing in AI readiness and infrastructure, and CDW capturing opportunities across infrastructure, security, and services. They highlighted AI's role in increasing complexity and CDW's relevance, with examples of…
Demand remains healthy with strong written demand, shipping, and backlog trends. Customers are prioritizing AI readiness, modernization, and security, with infrastructure demand leading the adoption cycle. Management expects services to follow as customers move from procurement…
AI infrastructure investments are driving growth, particularly in enterprise and government sectors.
Reported gross margin was 20.08%, reinforcing the quarter's better-than-guided profitability.
Management emphasized AI as a key demand driver, with customers investing in AI readiness and infrastructure, and CDW capturing opportunities across infrastructure, security, and services. They highlighted AI's role in increasing complexity and CDW's relevance, with examples of multi-year AI engagements and a strategy to productize AI solutions for broader customer segments.
Demand remains healthy with strong written demand, shipping, and backlog trends. Customers are prioritizing AI readiness, modernization, and security, with infrastructure demand leading the adoption cycle. Management expects services to follow as customers move from procurement to implementation.
No explicit discussion of CDW's own capex; however, management highlighted customer infrastructure investment in AI and modernization, with strong hardware demand (servers, storage, networking) and elevated backlog.
Management expressed confidence in improving operating leverage, raising full-year guidance, and highlighting strong demand and backlog, while also noting prudence in setting guidance.
“Written demand, shipping activity, and backlog trends remain robust, with writings exceeding invoicing and backlog significantly elevated.”
“Memory price inflation also contributed to cloud adoptions as some customers thought helped finding alternatives to hardware expenditures.”
“In the second quarter, margins reflected the contribution from large hardware infrastructure opportunities tied to modernization and AI readiness and particularly associated with enterprise customers.”
“We certainly are seeing larger customers now starting to test in the cloud... but getting more rigorous around optimizing costs and therefore bringing some Workloads back to on-prem.”
CDW is partnering with Anthropic's Claude Mythos to offer AI-driven security services, indicating Anthropic's models are being integrated into enterprise security offerings.
“Through our Claude Mythos AI Security Vulnerability Program, the team brought in CW expertise across security, observability, cloud DevOps...”
Memory price inflation is driving some customers to shift from on-prem hardware to cloud adoption to avoid high costs. — This is creating a substitution effect away from hardware (which benefits memory makers like Micron) towards cloud services, a key dynamic for the value chain.
… despite pricing pressures. Higher average selling prices more than offset lower unit volume. Software, cloud and security all delivered healthy top line and gross profit growth. Software increased by low double digits driven by security, application suites and storage and network area management software. Robust cloud growth reflected continued prioritization of application modernization AI Evaluation, and Hybrid Environment Optimization. Memory price inflation also contributed to cloud adoptions as some customers thought helped finding alternatives to hardware expenditures. For security, both top line and gross profit increased double digits, driven by demand for both protecting advanced technology architectures and strengthening governance and compliance capabilities. Services increased 1%. Just like every part of the business, services demand follows customer priorities. This quarter, customer focus on hardware and cloud investments, combined with deployment timing, influenced the mix of services demand. We expect a pickup in lifecycle and professional services as customers move from procurement to implementation to management. The third performance driver, our growth …