CDW Fireside Chat at Citi Global TMT Conf. 2025: Biz Resilience, AI Adoption, & Growth Strat in Tech Solutions/Services

Key Takeaways

TL;DR: CDW posted +10% YoY rev. in 2Q25, led by enterprise outperformance, high-margin svc. progress, and a ramping AI/cloud strat. Mgmt remains cautious for 2H25 (fed/edu headwinds, policy risk), but sees ongoing GP margin expansion and durable GP growth as AI adoption accelerates (clients + internal). Notable M&A (e.g., Mission Cloud), robust partner ecosystem, and scale-based edge highlighted.

Key Investment Topics

1. Fin. Perf. & Outlook

• **+10% YoY Rev. in 2Q25:**Leahy: “Resilient perf. reflects portfolio diversity and disciplined execution.”
• Enterprise Outperformance:
  • 1H25 enterprise “above expectations, very strong.”
• Cautious 2H25 Guide (Enterprise, Fed, Edu):
  • Mgmt: “Prudent” 2H view amid uncertainty.
  • Fed/edu to stay “muted” in 3Q/4Q (policy/funding/protocol changes).
  • Upside if macro/budget clarity improves, but not base case.
  • “Feels like the right place to be” given fed/edu volatility.
• Healthcare & Intl.:
  • Both strong in 1H, modeled for “modest” 2H perf.

2. GP Margin & Op. Leverage

• **2025 Margins “Consistent” w/ 2024:**Miralles: “We feel good about margins…2025 expected to be consistent w/ 2024.”
• LT Margin Expansion:
  • “Holy Grail is full stack, full lifecycle.”
  • High-margin from “svc. capabilities, managed svc., data, security” (non-PC, high value-add).
• OpEx Trends:
  • Strong 1Q25 op. leverage, but “asymmetry” for rest of year (comp accruals, tough comps).
  • “Modest deleverage” for FY25, but “durable GP growth” keeps LT op. leverage focus.

3. Portfolio Diversification & Resilience

• Diversified End-Markets:
  • Broad portfolio = “resilience” vs. sector volatility; “breadth…customers use us for everything.”
• Competitive Edge:
  • “Scale,” “verticalization,” “cost leverage,” “partner ecosystem” = “powerful position.”
  • “No competitors our scale” = market advantage.

4. Services, Cloud, & High-Value Mix Shift

• Reseller → Tech Integrator:
  • Moving to “higher margin” biz (advisory, managed svc., cloud, data, security).