CDW Q4 Earnings & Revenues Beat, Stock Rallies on AI-Led Demand Trends

CDW Corporation CDW reported fourth-quarter 2025 non-GAAP earnings per share (EPS) of $2.57, beating the Zacks Consensus Estimate of $2.44. Also, the bottom line increased 3.8% year over year.

CDW reported fourth-quarter net sales of $5.51 billion, a 6.3% year-over-year increase. The improvement reflects gradually strengthening customer spending, particularly in software, notebooks and mobile devices, and services, despite broader macroeconomic and geopolitical unrest. The standout was the Small Business segment, which significantly outpaced overall company growth, suggesting healthy demand and improving budget visibility among smaller customers. Quarterly revenues surpassed the consensus mark of $5.3 billion.

For 2025, net sales rose 6.8% year over year to $22.4 billion.

Management added that strong gross profit growth, disciplined working capital management and robust cash generation enabled the company to return approximately $982 million to shareholders in 2025 through dividends and share repurchases, while preserving flexibility for M&A.

CDW Corporation Price, Consensus and EPS Surprise

CDW Corporation price-consensus-eps-surprise-chart | CDW Corporation Quote

Moreover, CDW reaffirmed its long-term growth ambition, targeting 200–300 basis points of growth above the U.S. IT addressable market in 2026, driven by demand across hardware, software, services and AI-related guidance.

Separately, the company announced a quarterly dividend of 63 cents, which will be paid on March 10, 2026, to shareholders on record as of Feb. 25. 

Following a resilience performance against a mixed macroeconomic environment, CDW’s shares went up 7% in pre-market trading today. In the past year, its shares have declined 38.8% compared with the Zacks Computers-IT Services industry’s fall of 31.9%.

Segmental Details

Net sales of CDW’s Corporate segment amounted to $2.37 billion, down 0.6% on a year-over-year basis, reflecting ongoing caution among large enterprise customers.

The Small Business segment’s net sales of $457 million rose 18.4% year over year, highlighting improving investment activity among SMB customers.

The Public segment’s revenues totaled $2.02 billion, up 7% from the year-ago quarter. The upside was fueled by higher net sales across key customer groups, with the Education sector leading at 12.9% growth, followed by Healthcare at 4.6% and Government customers at 4.3%.

Net sales in Other (Canadian and U.K. operations) rose 8.4% to $669 million, reflecting steady international momentum.

Margin Details

Gross profit rose 8.6% year over year to $1.25 billion, outpacing revenue growth and signaling favorable mix trends. Gross margin expanded to 22.8% from 22.3% a year ago, primarily due to a higher contribution of netted-down revenue, often associated with software and services.

Selling and administrative expenses increased 10.3% to $824 million, driven mainly by higher performance-based compensation and coworker-related costs. As a result, operating income grew at a slower pace than gross profit.

The non-GAAP operating income inched up 0.6% year over year to $502 million. The non-GAAP operating margin was down to 9.1% from 9.6%.

Balance Sheet and Cash Flow

As of Dec. 31, 2025, CDW had $618.7 million of cash and cash equivalents compared with $452.9 million as of Sept. 30, 2025.

The company had a long-term debt of $5.63 billion compared with $5.62 billion as of Sept. 30, 2025.

For the year ended Dec. 31, 2025, CDW generated $1.2 billion of cash flow from operating activities compared with $1.28 million in the year-ago period. Free cash flow was $1.1 billion.

CDW’s Zacks Rank

CDW currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Recent Performance of Other Companies

SAP SE SAP reported fourth-quarter 2025 non-IFRS EPS of €1.62, which increased 16% from the year-ago quarter. SAP’s fourth quarter was defined by strong cloud bookings and profitability. It reported total revenues on a non-IFRS basis of €9.68 billion, which increased 3% year over year (up 9% at constant currency or cc). At the center of this performance is SAP Business AI, which has rapidly evolved from a feature set into a meaningful growth driver across the ERP suite. Two-thirds of cloud order entry included SAP Business AI, signaling AI’s growing importance in deal conversion and expansion.

Badger Meter, Inc. BMI reported EPS of $1.14 for fourth-quarter 2025, which missed the Zacks Consensus Estimate by 0.9%. However, the bottom line compared favorably with the year-ago quarter’s EPS of $1.04. Quarterly net sales were $220.7 million, up 7.6% from $205.2 million in the year-ago quarter, driven by higher utility water sales. The Zacks Consensus Estimate was pegged at $230.8 million.

Dolby Laboratories, Inc. DLB reported first-quarter fiscal 2026 non-GAAP EPS of $1.06, surpassing the Zacks Consensus Estimate of 90 cents. It reported $1.14 in the prior-year quarter. Total revenues were $346.7 million, down from $357 million in the year-ago quarter but surpassed the Zacks Consensus Estimate by 4.2%. However, the revenues came in above the high end of the previous guidance of $315 million to $345 million, primarily due to deal closures occurring earlier than expected and a favorable $7 million true-up related to fourth-quarter shipments.

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This article originally published on Zacks Investment Research (zacks.com).

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