CDW Sales Down Due To Weak Commercial Spending (Q3 2023 Examined)
CDW's net sales downturn continues amid a cautious spending environment, but its cloud and SaaS-based solutions sales are growing and contributing to its netted-down sales.
Inside this note, we examine CDW's financials, comments from CDW's executives, and the macroeconomic environment.
Executive *******
*** ******** ** *% *** *** sales ******* ** ** ****,********** *** **** ********, ***** *** ******* ********** ** cautious ********** ******* *** ******** ************* markets.
**** *** *** ***** ********, *** company ********* "** ****** ******" ** security-related ********, "**** * *********** ******* being ********* *** ******** *** *** cloud," ** *** ******* ****. *** improvement ** ***** ****** *********** ** its ********* ****** ****** ******, ***** was ** *** ***** ****** *** to *.*%, ** *** ******* ****.
***** *** ********* * *% ****** at *** ***** ** *** ****, it *** ******* *** **** *** modestly ********* *** ********* ** ~**,*** in *** **** *******.
Lowers ** **** *** ***** *******
*** ******* *** ***** ******* **** on * *******-**-******* *** ****-****-**** ***** in ** ****, ***** *** ***** than *** ******** ***********, *** *******'* CFO ** ******** **********:
******** ******** *** *** ****** *******. For ******* ***** *****, ** *** expect * ******* ******** ***-******-***** ********** decline **** ** ** **.
**** ******* ** *low-to-mid-single-digit *** ***** ******* ** * ****-****-**** ***** *** *** ****** ******* in terms of average daily sales. This ** ***** **** ** ********** ******** *** ********** ** **** *** ******* ******** ********** *** *** **** *** ********** previously referenced. [Emphasis added]
Raises **** ****-**** ********* ****** ***********
*** ******** *** ******** ********* ****** margin ** ** ****** **** ********** expected ** * "*** ** ***-*% range" *** *** ** **** *** "reflects" ************ ** ********* ****** *** profit *******, ** ******** ****:
****** **** *** *&*. ** ****** our ****-**** ***-**** ********* ****** ****** to ** ** *** *** ** mid-9% *****, ** **** *** ***** expectation ** ************* *%. **** ******** our ************ ** ********* ******, ******** profit ******* ***** **** ******* ********** as ** ****** ******* **** ********* economic ***********.
Net ******* *********
*** **** ********* ********** *** ***-**** decline ** "********** ******** *********** *** cloud *** ****-***** *********," *** *******'* CEO, ********* *****, ********* *** ****** of ***** *****:
***** ********* ***** *********** ******** ***** that ** ****** **** ** [***] sales *** **** ****** [***] *** line ****** ***** ********* *** ***** margin."
*** ******-**** ********* ***** **** *% of ***'* ***** *** ***** ** the **** ******* *** **.*% ** its ***** ******, ******* **** *** decline *** ***** ******* ****** ** interpreted ***********, *** ******** *****:
* **** **** **** *** *** into ****** **** **** **** *** been **** *******, *** * ****** of ******* **** *'** **** ****: number ***, ****** **** *** *** quarter ** $*** ******* *** *% of *** *** *****, *** **.*% of *** ** *** *** *** go **** ************ *** **** ** what **** ****** ****.
** ***** ******* **** *** ******* in *** ***** ** ************ **** than ** *** ****** ** ** on **** ******** ***** *****.
Firm ***** ****** *********** ** ********* ******
***'* ******* ******* **** ****, *** over *** **** *** *****, **** have "***** ** ***** * ***" which *********** ** *** ********* *******, Miralles ****:
** *******, ******* ******* **** **** very ****. *** ** *** **** back **** *** **** *** *****, they've ******** ***** ** ***** * bit. ** *****'* **** ********** *****.
** ********* **** -- *********, ****** strong ***** ****** ******* ** *** basis ****** ****-****-****. * *** ** that ***** ****** ****** ****** ** dropping **** **** *** ********* *******.
******** ******* ** ******** *** ****** level **** *** **** ** *** netted-down ***** ******:
** ***** ** **********, *** *** expect **'** ***** ** ******** ** the ********** ***** ***** ** ****** in *** ******* ** ********* ** gross ******. *********, *** ******-**** ****** is ***** ** ******** ** **** that ** **** ******.
AI *** ********
***** *** **** * ******-***** ******** in ***'* ******** ********* ** *** past *******, ***** ****:
***** ** ******* ** *** ***** stages ** ***************** *** *********** *** not *** *********** **** ********** ******** spend,our **** ********* ** ******** ********* *********** ** * ******-***** ******** ** ******** ********. Ongoing network modernization also led to excellent net comp performance, once again up double digits. [Emphasis added]
* "*********** *******" ** **** ** delivered *** ******** *** *** *****, Leahy *****:
******** ******** ********* ** ****** ******,with * *********** ******* ***** ********* *** ******** *** *** *****. Cloud *** ******** ******* *********** ** * ***-***** ******** ** ********. [Emphasis added]
Commercial ******* ********
***** *** ******* ******** ** *********** in ********, **** *** *** ******. Leahy ********** **** ** *** ****** conditions *** *** *********' **********, ***** drove ******** **********:
********** ****** ********** ******** ** ***** on ******** ********** *** ***** ******** purchasing ********.Instead ** *** ****** *********** ** ******** ** ********, ** ******** ** ********** ********, particularly in client devices. Corporate net sales decreased 12%. The momentum continued around projects focused on increasing productivity, as well as projects focused on enhanced customer and go-over experiences. [Emphasis added]
*** **** *** ***** ******* ** small ********** ***** "******* ******** ** the **** ******," ***** *****:
****** ******* ******** ** ***** ***** business *** **** *********** ** ******* remained ** *** **** ******, *** declines **** ** *** **** *** second *******.
Solution ** *********** ****
***'* ******** ******** **** ** ***** its ************ **********, ****** ******** *****, were ****, ***** ****:
******* ** *** ****** *******, ********* sales ********* ***-****** ******, ***** ************ remained ***** ********, **** **** *****. Hardware ******** ** ****** ******. ******* to *** ****** *******, *********** ********* to ******* ********* ****** ****** ******, particularly ** *** ********** *****.
UK *** ****** ***** ***********
** ******** ** * ********* ********** sector, *** **** ********* * ********* market ********* ** *** ** *** Canada, ***** **** *********** ** *** net ***** ******* ** *** **** quarter, ***** ****:
Our ******** ** *** ****** ******** **** ** ***** *** ************, down mid-teens. While the teams continued to execute well, the deterioration in market conditions in the UK and Canada was deeper than we anticipated; both the UK and Canada decreased by double-digits in local currency. [Emphasis added]
*** ****** ********* ** ***** ** demand ** *** ** *** ****** is "* *** ******** ******" *** US ******, ******** *****:
* ***** **** **** ** *** international *******, ** *********** **** *** would *** **** ********** ** *** demand **** ** **, *** *** expectations *** **. * ***** *** that's ***** **** ********. ***we ***** **** ** ***** * *** ******** ****** **** **'** **** ** *** ****** ****** ** *** **. So there are a couple of the puts and takes in terms of the demand environment, what we saw in Q3 as well as Q4. [Emphasis added]
Headcount **
***** *** ********* ****** ** *% of *** ********* ** *** ***** of ****, ** *** ******** ********* its ********* ** *** **** *******, Miralles ****:
******** ***** ** *** ***** ******* was ************* **,***, ** ******** **** the ****** *******.
Not ****** ******* ******* *******
*** ** ******** ** ********* * concrete ******* *** ****, *** ***** said **** *** ******* **** *** see "***** ** * ******," *** expected ** *** ** *** ****** half ** ****, ********* ** ******* earnings ***** **** ****:
** ** ***** ***** **** ****, look, **'** **** *** *** ***** as ** *** ******* *** ****. One ***** *'* *** ***** ***** client ******* **we're *** ****** *** ****** ** ***** ** * ****** **** ** **** ****** ** *** ** *** **** **** ** *** ****. [Emphasis added]
******* ******* *******, ***** **** *** thinks *** ****** ********* ** "** the **** ***" ** *** *****, but ***** ** ***** *********** *****, and *** ******* ** ********** *********' sentiment:
*** ********* ** **** ** **'** at *** **** *** ** **** cycle, ** *** ****, ** ******* to *** ***** ** **** *****.
**** ****, ** ** *********, **'* really * *********-****** ****** ***** *** driving ******. ***** *** ****** ********** customers **** * ***** ** ********** in *** ******** *******, ** ***** that ****** ******* *** **** **** center ******* **** ** **** ** the **** ***** ***** **** ***** to ****** **** *******.
CDW ***** ********
***'* ***** ******* ~*% ***** ***** its ******** ******* ** ******** * but *** ***** ********* ~** ***** later.
******* * ******** ** *** ***** throughout *** **** *** * ***** dip ** ***** ****** ***-****, *** is ** ~**% ******* ***** *** beginning ** ****: