Brittany Smith Vice President, Investor Relations and Financial Planning and Analysis
Chris Leahy Chief Executive Officer
Collin Kebo Senior Vice President and Chief Financial Officer
Katy Huberty Morgan Stanley
Ruplu Bhattacharya Bank of America
Amit Daryanani Evercore
Adam Tindle Raymond James
Matt Cabral Credit Suisse
Tim Yang Citi
Matt Sheerin Stifel
Call transcript
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Good morning. My name is Cree. And I will be your conference operator today. At this time, I'd like to welcome everyone to the CDW Fourth Quarter 2020 Earnings Call. All lines have been placed on mute to prevent any background noise. there a presentation, session. speakers' the will question-and-answer be After [Operator you. Instructions] Thank the like and to now would conference FP&A. to IR I of turn over VP Brittany Smith,

You may begin.

Brittany Smith

Thank everyone. Good you. morning,

today Leahy, our Executive and remotely Joining Financial fourth our Collin Chief review Officer. results Chris financial Officer; quarter me are full to Kebo, year Chief and our

call. certain statements Our uncertainties available comments that statements, the website supplemental Litigation of slides considered actual like on you made in along earnings use and I'd along this differ was follow this Those distributed could that you release quarter presentation Reform remind our under fourth morning is to can that and are forward-looking to to with are XXXX. risks results Securities the to during cause subject Private materially. Act

SEC. uncertainties the Additional Form and today we earnings concerning risks information other presented to these during company's contained webcast. filings assumes and in the the this release is the update the furnished CDW SEC in no information to obligation X-K and with

SEC GAAP income in includes to Our operating including the non-GAAP been share. non-GAAP directly measures earnings financial per most comparable measures, also certain All with reconciled non-GAAP accordance non-GAAP presentation rules. and have measures

to are for remarks unless XXXX rates You'll furnished our and references comparable in Form note or indicated. find to Please in today's X-K dollar the increases today the the reconciliation growth charts our period on all otherwise slides that we and amount webcast earnings release versus SEC in today.

website results XXXX to was written the selling from or is Canada. and not With I do without in today the fourth fewer for from our CDW that, software of specific let the you this services only US remind that property XXXX. the today. want growth will permission call the day quarter represent rebroadcast net rates may to references this be Chris. conference later to recorded include or one to sales call compared me of also turn Also CDW to posted UK of be all as Replay hardware, webcast and addition, In company. over there not and

Chris Leahy

I'll Brittany. quarter of this at thoughts strategy drivers move through will look an and and take and allocation full-year performance of time on for our remarks questions. fourth prepared ensure overview and a some plenty results more of We'll share XXXX. you, capital we Thank with our begin Collin morning have outlook. quickly through you to financials, detailed

fourth model and Our demonstrate and business year quarter strength balance and fiscal of the strategy. CDW's results

billion, of $XXX quarter, the net year fewer XX.X% of were constant adjusted of For XXXX for basis an increase sales daily X.X%. one operating the $X to increased profit million. Gross currency. fourth on XX.X% and the in was impact Non-GAAP fourth in quarter day XX% an average than income XXXX business million, above up last sales $XXX

Our non-GAAP net and in share basis XX.X% reported year a on $X.XX, currency. constant above per XX.X% last income up was

basis. billion nearly constant net sales Gross to income on and increased X% basis well smartly Non-GAAP per of operating a profit partners $X.X to adapted in or X.X% a reported net the the how and solutions time. team and The end income customer extraordinary our For currency share reported providing on our driving and of during I XXXX, $XX.X to X.X% very $X.XX. served non-GAAP was an year, a customers proud portfolio exceptional us help markets balance and billion. up constant to $X.X were XXXX $X.X challenging am results. our year. diversity CDW and quickly billion increased and to billion, X.X% year-over-year increased currency

to acquisitions, service managed and COVID-XX. markets client including services Solutions, high a Dakota During expertise stack due IT growth team. in expanded operations three our varied. and capabilities, life ServiceNow from for experienced but needs full customer executed our all from their the and in our in We or end solution devices cycle disruption full - across and the last capabilities, services. IT design against to and change Southern in Performance and which solutions IGNW, excuse the invest team our provider Demand development year, some me, technology software continued increased leading others, to cloud-native their year to decreased helped and strategy to customers to cloud of

capabilities and value combined This meaningful proposition market. and the for deliver We broad portfolio emerged even compared We extensive strategy. and customers. to outperformance the from resonated distribution XXXX to best our services outcomes more stronger to our to Our US executing logistical knowledge with solutions our and our technical committed IT customers. with led

to Turning quarter. fourth the

and our end customers for enablement continue We resumed remote and customer solutions customer end for others projects. transformation. new remained to digital reduction, resilient markets the trends help resource cloud third optimization, strong. cost and most projects security, improved, with more quarter, markets and Performance some started customers to hybrid and impacted solutions our Similar

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market spend In of performance. take is levels quarters. deeper not Customer similar for look a customers XX% was transactions uniform. last two for there Corporate the fourth total, versus customer performance improvement with and declined let's end corporate Now quarter at solutions.

were the customers net to more impacted another which Business versus corporate geographies still mid-single Government cautious. double-digits. returned and digits, as are net be nimble were than Small up customers, strong and whereas spikes well who quarter in cases team industries growth. COVID to improvement those customers declined were or notebooks investing third excellent Business The drove doing sales the delivered quarter. Federal challenged Small tend XX%. sales with increased by Some other technology, customers, who in

as us for started our to returned we devices solution and the clean process Census completed. resell third-party re-marketers. to Device decommissioning, quarter, through the US All a was the the were for units mostly Service During Bureau

to It large nation's this complex the digital population a did to develop for program. an first once-a-decade the effort this paper multi-year Our excellent was time. count moving undertaking, from execute with job and team

Our services competition. us apart from and set solutions capabilities multi-vendor the logistical and

We agencies are refresh. unique deliver customers. and what we team can device Census in remote to the to federal our civilian the enablement project, of help Outside continued with

end on Defense priority pressure. be of strong despite Department that at double-digit We a state of third continued growth. also local the were team to delivered and investments budget awarded The quarter. IT the projects delivered

infrastructure. increased learning UK, softer flat in exit remote net increased job last strong with was and students a by remote has digits, a pressure, which notebooks, phenomenal address on growth projects XXX%, experience. team restart weeks, to decreased EU, continued currency. help its low [ph] reported learning, turn demand K-XX customers through driven resumed Brexit Education ongoing the schools education in complexity basis. drove continued digits to sales enablement, demand Over Other, a mitigation support net a declined and in quarter. mid-single continued meaningful extraordinary solution UK enablement the as improvement helped Performance done due navigate to agreement. care as before spending the compared areas communities and currency, double K-XX. focus net digits on several strategy and mid-teens, team like access corporate with on education Canadian Our third to accessories up was enable the increased solutions, to the UK as sales with of on remote triple-digit enable low was and UK capabilities remote cautious enhance for the the represents hard related in Higher operations for for by customers some pandemic, the remote In both prepared and telehealth executed us and holistic constant double announcement focus which customers budget to customers growth there and projects. potential markets constant for our the Canada to with customer helping with driven customers of focusing capabilities. equity new has performance. their key and student a great the connected and Healthcare pull-in comp to against spend to be creating Customers the health well-planned agreement

and Our deep portfolio. fourth and quarter performance benefited base broad from the our product of our diversity customer

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team digits, single excellent growth restore security customer some infrastructure markets, service, increased as as infrastructure productivity. robust strong continued engagement. and Solutions all spend by our a customers in larger end The across to delivered low customer cloud Cloud digits collaboration, declined growth driven practice. double in project and

cloud to continue. We expect solutions strong customer demand for

on customers us threats evolving also security emerging me more its digits, grew billion to customers strong security. color year, constantly their as Let framework are on little threat. importance share security to a our our and with $X respond double Security and cyber increasing. Last customers, increasing as to spend customer practice, improved given spent

financial of and reflected diversity other the the and end customer ongoing executing our of Our impact us impact The are industries and our our fourth our macro of customer across future of various three-part when our challenges year success services and landscape operating our solutions combined portfolio performance markets, important balanced suite They markets external full and quarter drivers our full of path differently. end strategy. customers performance. serves and or IT well

customer's solutions product across quickly IT of pivot to services and can our trends meet customer portfolio the to extensive and demand. needs total us positions spectrum Our in

capabilities. our design, is expand is, markets new for customers future. As and And orchestrate and crucial of profitably want manage customers share, today and second, our relevant strategy and to advise, our performance, environment. our balance enhance the solutions to solutions our our shared, and customer especially the our capture are third, offerings end driver services integrated first, three-part and pillar acquire capabilities, ability to in current technology our of growth final in I've Each the need

how and our me action we of and helped Let strategy a few quarter. last customers share examples

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partner is extension customers CDW This requiring team forward-thinking great an customer value full our the rely need. on our the that our service Our The of energy than as outcomes has customer to expertise deep technical creative more a to solutions pair brings leading ever provided customers. can and as customers that that portfolio their new us We saved issues pandemic and trust. time with created and broad to solutions the the team. deliver

world. significant created has around divide learning digital challenges the Finally, the

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the customers, the second, support key deliberate of health our our First, the protocols to configuration Since high coworker our update come principles: who Teams of business tools even response safeguard distribution managed an third, and the team tremendous briefly and COVID our now taken and to opportunities, are and me proud maintaining investment coworkers well-being and how include our done needs our productivity followed and COVID-XX we actions from leveraging coworkers, Let compensation our mission-driven efforts safeguard preserve are development while three distant. maintain learning pandemic, of to resource at work actions health to the We've centers beginning culture, has efforts. day. and to and of service new customer and outstanding the that health and connectivity groups known impact level you programs, adhering communities. of of have business. on recognize while I'm collaboration for, we and team's performance. every job, increased engagement to These the content the have our bolster and serve the we new foster well-being our also on well-being of expanded and

macroeconomic XXXX. near-term health on let global thoughts Now me is share The uncertain. some still and environment

grow Our to between to X%. return market current and growth outlook and is IT for the US X.X%

in new As for tax constant many and you ourselves accountable basis topline faster the government supply rollout; growing policies market, wildcards, to and XXX than from we currency. faster market in grow XXXX we the though, administration, COVID-XX vaccine the know, hold particular, IT and Chromebooks. stimulus and restrictions are constraints, There our changes, XXX including for including than to points in expect programs

accelerating we that teams cautious to for Even encouraged our planning also environment. all our more We an role in uncertainty years as important about QX every execution the three and rigorous and date prospects essential to went about has will how our are been are performance against continues, though We strategic macro year, and increasingly confidence through of are but Last do we ahead. the years, the the be believe never executing, economy technology process, we and our are we sectors in now investment will play the business it. higher.

our customers Board confidence to have position deliver to that led serve to by This of share sustainable, best and authorization our have profitable and increase repurchase has enhance strategy our competitive billion. We partners, our $X.XX growth. we right confidence Directors the to

customers trusted to Our partner role now a as more is strategic than ever. important our

continue competition. We what and we do address strategic advantages the to our priorities best, course, will of competitive leverage and help their do out-execute objectives; IT our achieve to their customers

Collin? performance. on share financial Colin our details Now, will more

Collin Kebo

and Good allocation Chris. full thoughts priorities more you, to fourth Thank initial going year morning, on detail and everyone. capital XXXX. provide on I'm quarter results,

daily sales slide sequential consolidated sales X.X% had constant less third reported grew average billion, to P&L average XX% basis, how up basis, to as sales on currency an selling impacting Consolidated Turning X.X% average basis On on than sales net This quarter. were primarily a increased XX.X%. digit was higher an COVID-XX quarter decline, differently. channels fourth basis mid-single our the a daily historical is versus net On sales day. one nine. a our we on of daily and due sales $X seasonality

time, seasonality has continue be, to than different to historical this is and During expected uncertain experience. been

K-XX, writings was last in end demand channels as Pockets for lower stronger Our other constraints our primarily consistent earnings of supply where such than Chromebooks. than the performed even the generally client customer call quarter, on commentary continued with demand devices shared expected.

and margin did supply navigating an to capabilities increase and into was as year. our a The driven basis strong distribution Service. team of million, relationships $XXX vendor gross margin XX.X%. great for healthy points profit by for expansion of down product fluid XX.X%, Gross primarily margin revenues, a last the customers. up Our over leveraged netted the XX mixing was Software partner was procure and share environment job a Gross quarter

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the lower a LIBOR to was $XX refinancing. due rate X.X%. was and million, XX. expense Interest down decrease from to savings slide August primarily Moving The

tax $XX resulted compared $XX million our rate, fourth tax effective on To get non-GAAP tax we in slide shown This to consistent on Our last XX. slide GAAP million shown XX.X%. with rate taxes to add-backs, net quarter year. XX income expense as adjust was of non-GAAP effective

our rate benefits income effective versus last was year's by and for with non-deductible tax rate, due credits. primarily low down global new regulations tax For quarter, non-GAAP partially tax XX.X%, associated tax the to basis points XXX offset lower intangible expenses,

million, can $X.XX, As income of share outstanding average XX.X%. slide diluted you shares with quarter net XX, $XXX was per fourth up on see weighted GAAP

year. Non-GAAP income from net $XXX up $X.XX, in non-GAAP the quarter, XX%. per Our share last up income was was million XX.X% net

XX Gross $X.X XX.X%, to Turning slides was mixing up of driven XX profit results netted down an full profit Gross Service. product into $XX.X billion, X.X%. margin X.X%. and a on our increase year margin billion, was XX. points, through basis up Revenue was revenues, Software as primarily by

the moving I Before to rest take P&L, want and moment XXXX in a profit sales down context. of to the gross put

points In the consistently have We growth end power gain customers customer serve markets. share. basis US highlighted growth. we to our the pivot better of the is, Census estimate down year-over-year and and diverse call faster leveraging X% CDW advantages gross points single net We XXXX, portfolio market low of than to XXX points market declined IT sales digits, contributed profit the and grew X%. grew sales net decline. basis it faster competitive XXX where XXX our basis

Excluding the net of excess delivered profit and in market. Census, gross meaningful sales growth CDW still

as XXXX, sales value. of also differently, our purchases, environment. In out because dynamics gross and XXXX the recession, the solution the profit we've services the pandemic, made paused During narrowed margin on partially but compressed to progress customers portfolio our pressure because capabilities of our performed premium the product the competitive and in unique hardware due building margin net of customers

totaled P&L. they in XX% for XX% $X.X income Returning operating profit. and to gross non-GAAP and For Operating billion, income XXXX, while X.X%. full collectively of the US was year software approximately was US example, sales billion accounted $X.X net up of US services

net expenses Our points income in rate global a decrease $XXX income per was was million, Net X.X%. regulations tax XX%, as of share contribute year's is tax $X.XX, non-GAAP the net was low Non-GAAP income down effective to in and expected rate new effective versus up income basis that benefit intangible rate are not due XXX and non-GAAP the X%. last much was to to up tax million The tax XXXX. rate. non-deductible $XXX primarily for

of were revolver X.X% on further balance sheet above deferred of historical this large and sales, cash rule and flow or and thumb and debt billion, billion, of billion. X.XX% the net cash as equates plus items, the terms, UK timing $X.X with extended of the portion well billion. $X.X cash our free Liquidity including payroll payments driven some shown was outperformance XX. was availability XX, of collections to the one-time mixing payment tax to Turning December on was customers. flow strengthened with cash cash XX, vendors Full A equivalents into to by Census, free approximately from of slide timing $X.X slide $X.X year At X.XX%.

the favorable next over We timing the to quarters. expect few reverse

by to from while was XX. terms. cash fourth quarter. with driven in three-month The conversion payment average was The Moving days, year's mixing one last DPO were last DPO unchanged vendors increased increase day down cycle from by XX primarily slide extended one into DIO and year, DSO day.

As buyback repurchasing program resumed our stock. we quarter, million previously fourth share of $XXX the in mentioned,

of average $XXX For to share. full $XXX approximately at shareholders, and returned of per we including million $XXX price share repurchases dividends year of million an $XXX XXXX, million

XX. slide on priorities allocation capital to Turning

strong the same. Given remain position, our our priorities liquidity

in dividend approximately target guide of XX% increases, grow these dividend non-GAAP income the the going with with income. forward. increase line and First, To we net net line in non-GAAP to earnings at will

in Second, have X.X a with place ratio X targeted leverage ended the year we to X.X structure times. We capital at net times. of right the ensure times

from our through third after fourth to repurchases. M&A solution dividends evaluating Our strategic growth on In We excess the active fourth, And is Aptris. return acquisition acquisitions. allocation supplement with XXXX quarter, of remain priority to small organic share two the targets. capital we practices shareholders build and acquired success ServiceNow to cash

times target through cash shareholders. forward, to move our times a net investments, to return Going combination and organic to we closer leverage ratio to expect X M&A of of X.X

$X in share with return repurchases end least on repurchase dividends. shareholders for share current At $X.X our remaining we including the of approximately billion at from the to balance $XXX to XXXX, December, had billion million We expect authorization.

$X.XX our mentioned, authorized Board of to priorities. of our support capital Chris in increase As repurchase billion share the allocation a program Directors

activity, course, we monitor liquidity, closely Of the do, needed. leverage environment, adjust we'll and as macroeconomic as always M&A

on be continues degree Moving making slide highly The providing it IT with confidence. to XX. market for environment XXXX perform growth base uncertain, a environment. challenging current forecast Therefore, how in case to a are business XXXX of the for to and outlook to growth expectations IT for high we market we expect CDW's that

base IT between assumes US market growth Our X.X% to case X%.

to We to to year, basis $X.XX full net Currency for expect the approximately Canadian of of to basis sales a be is faster points expected CDW and XXX grow rates the British assuming points XX XXX the dollar. than $X.XX market. pound exchange tailwind to

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last QX Business to to quicker environment. macroeconomic Corporate QX the side business, commercial respond year, steepest tend customers the declines Small and saw the the decline experienced then the was that quarterly thereafter. with On moderating We of quarter, strongest

the XXXX will be of timing customer the and virus. tied confidence, be expect function of rebound macroeconomic slope success a and We in containing the which to to the environment closely

to Moving Public.

We civilian supporting Department and agencies. expect continued Defense success of

historical overlaps in Education sales the feeds in the XXXX. we to pandemic at demand first loss customer clarity, the expect fully with comparison linked of of strong XXX Chromebook second and in is virus of to as due timing of support. to in the the expected expected experienced to budget growth rebound and in tougher supply containing to of beginning a project, the approximately above CDW continued year, be overlaps a contributed seasonality Census to to function and slope of the not up net make unusual the then seasonality which earlier the is the in Government year a in XXXX. basis sales is potential then throughout decelerate success Healthcare be total be which However, spiked points stimulus are The half XXXX and half. a wildcard.

are customers, driven so of Finally, Canada. more environments be macro recovery and the pace in our businesses Corporate international to the weighted by will UK the

P&L. the down Moving

X%, the current XXX end of basis This points growth earnings X.X% Currency approximately mid-X% of points to be per the share X.X% reported IT repurchases market growing headwind share single non-GAAP to the per to approximately operating and to interest mid share following XX.X% operating to typical margin growth to X% is on range to currency tax from points two, tax to contribute it non-GAAP low-end income contribution XXXX's constant below range, non-GAAP high expense per income. the on than Assuming assuming the in mid net Three, earnings rates. decline XX.X% per growth. basis One, rate, line be modest high expect we rate low creating a our The earnings XX% is XX with digits, share in to a basis. a assumptions. share the to non-GAAP at in of call approximately range reflects the growth. XXXs, a over effective XXX basis XXX non-GAAP earnings higher expected points basis faster than of

amortization for can modeling XX. Additional depreciation found be thoughts annual and on page

daily QX Historically, Turning the decline first an to has to the QX quarter. sales down approximately sequential on average averaged X%. basis

year's government commercial continued decline Census trends, reflecting historical partially year-over-year to the and down improving basis, strength, to digits expect Department Mississippi primarily equates average a digit offset sales On high than to growth, the due Education. of first mid-single work-from-home surge. seasonality, We this daily education overlap and be by quarter more single this sequential of March XXXX

will XXX January first points. which day, line we and quarterly is quarter non-GAAP with full higher as points than we be by growth of in to fourth quarter. one basis per partially selling recoup expectations. impacts the day earnings This are reserve, quarter overlap having commentary growth the in the year's basis increase loss fewer first in on adversely share by a expect last EPS credit approximately my profit currency We the trends constant hundred offset timing, outlook, segment couple year generally

slide Additional on cash can be thoughts on flow modeling components the found of XX.

to thumb net long-term cash tax of free flow X.XX% rates. remains rule assuming of sales, unchanged to current Our X.XX%

Given free at slightly cash delivery, to over the range. to timing or XXXX impacts that flow be below we contributed expect low significant end XXXX of the the

is a for We XX time of the our trusted customers fortify points partner XX sales, in make competitive XX us enabling the choice of higher vendor and transformation in basis digital believe own We approximately to historical than expect thumb. basis investment of position rule our run business, slightly the accelerate CDW partners. to to net and CapEx points now as percent to

As we our it earnings provide we a updated ask With future environment business you your please That always limit questions. questions we up brief each follow-up? Can with do, macro the that, summary. of one Cree concludes to on ask Thank to I'll for to views one will financial open calls. the you. on and


with Katy comes Our from question first Stanley. Morgan Huberty

Katy Huberty

you. And impacted you much have In Good year? better then, in those how Chromebooks constraints this the do you done morning. you loosen other December when supply Thank December? would up How on the think much supply expect constraints do to quarter? words,

Collin Kebo

into higher the Hi, out the Katy. Good morning. quarter backlog normal first We fourth quarter. did carry than a of

to the side through get we better, normal. to half would be to In of expect to we call supply return of But our year, terms on difficult fluid and business supply any obviously, the would first Chromebook of see course of with when expectation conditions begin the precision. very the the

Katy Huberty

Okay. then just as Great. And follow-up. a

and how expansion commission some revenue to we margins think drives increases higher, the margin operating should about the operating scale expansion? margin netted-down fully line? time? should see benefits flow-through Or we sales and Does potential margin offset over gross that As gross

Collin Kebo

a gross of a is on mean, the line There give you're back sales bit comp because profit I pay we dollars. right. little on Yeah.

secular from netted-down is a expect Katy, think, expectation business. with balance that to faster than I yours the of perspective, services we our the grow and in consistent would software items

a and little whether we're be. how understand refresh in think cycle careful could coming trying coming, of and the strong are to where hardware we it it if though I just a is is

margin gross and quarters. keep going that's think the think forward, something at netted-down in that several next has over it least impact I the as So on to you about mix mind

flow-through environment, to on an the margin I the the well the due think I some through really that that customers were and XXXX. premium margin supply placing as did we unique dynamics as think is thing product speed. of the NGOI to And from then margin benefit the of in to exceptional was on other think

as cyclical think something so think think And I to but about in secular probably that's more forward. I thing think we those mind also just to And margin another than - are gross about. going secular, keep

Katy Huberty

on That's helpful color. Congrats the quarter.

Collin Kebo

you. Thank


with Bhattacharya America. Ruplu next question is The Bank of from

Ruplu Bhattacharya

taking basis the XXX for the fiscal thanks year-on-year project. the questions. of XXX-odd another from And basis XXX that's points market. year my you're to guiding US headwind for points Hi, 'XX Chris, despite versus outperformance IT Census

for Given that I have? give and federal on can opportunities about, - your the on thoughts what thoughts are you you've guide driving talked us, mean, - point of Census? what's all your What that confidence you giving there the just on full basis what to that just you in full the So maybe headwind that are other outperformance? year, And uncertainty vein, the what XXX offset confidence is us year? can your for the from some to to opportunities XXX

Chris Leahy

we the Sure. on ourselves the Thanks, being accountable for Thanks Ruplu. always hold call. for market. Yeah, outperforming

do when a the in of combination periods about expect ourselves competitive to relative And play hardest in really them in history of you on think So you saw one XXXX. the our better. always advantages, basis, in we

to to work-from-everywhere But think straight we will the a be in compares, to the of a confident and outperform need we Census. That that advantages quarter us end in customers timing into position I allow everything. going we've last about education our of market and needs trend, will past this some the and going that remote not we to us got bring know, will all work, because us certainly it XXXX. work and where has market. And into certainly, the pivot are and to continue of year so grow back than believe. it faster be and of think significant to continue you to because of driving as the been situation. of kind continue So tailwinds the remote still we headwinds the that to be first very XXXX, will When about Everyone year, growth XXXX do a think should

that continue. believe digital We just is also acceleration going to this

And I full looking mean, they're stack, software a cloud services, full I always solution. our with and when and full strength so stack, for stack, our across the full customers say well plays very hardware customers and because are

for it about them a multi end I'll cycle. designing the the value-added full look across implementing, shop of very IT is spectrum component building, really orchestrating has provider great them. propelled And seems we you, managing. advising think that customers combined to integrating, partner for do front life and solutions, that whole that So the multi-vendor, take tell can can XXXX And as from to CDW and they trusted one-stop

very confident our continue our for So, in deliver we're to ability to customers.

federal said, maintain the of Defense the which side the tied to tell and Corporate, Department Look, tied on the I on is macro, strong. is It's we Colin recovery you and as On Business to speed asked pretty I'll you specifically which together. tied expect is side, confidence, and Small the to slope all tied the to virus. any think Civilian, of to commercial about continue the

to So that's they're growth absolutely during very will staying that as way their so to that confident to capture be growing. been them and customers XXXX we've help feel close hard on But we our to we predict. up well-positioned

side. administration, state another also and On if local that education, under out the should we And help support the stronger stimulus, to Government healthcare new see side, stimulus on there. is wildcard and some the

Ruplu Bhattacharya

That Okay. details makes for Chris. there, the sense. Thanks

your thoughts talked the to have operations? your on And Can UK, you follow-up. on us my give any you XXXX? the of seen for in given Thanks. COVID-XX, geographic Just M&A the just about possibility you impact resurgence call. expansion In any

Chris Leahy

In as anticipating you, Brexit. of that tell saw a mentioned we people UK, a hard as I little buy I'll customers were Yeah, possibly bit - the ahead sure.

customers fourth we've But the and strategy that in helping entity, saw in quarter. in the Ruplu, good news really some benefit So the with we been remember, entity mitigation EU. our we utilize Netherlands place the put

- - back they are way it customers optimizing are still in et So like and the to feels while does cetera. needs, buying used it like we've into have remote gone that areas feel working like work where remote work, lockdown,

would at seen quite So significant different we in we haven't any seen have a well managing point. this this impact than XXXX. really And we're

In we're to well to focused doing, never our capabilities. capabilities, expansion, as on but what terms technology you our look, of really expanding going as we M&A, pinpoint where we're - be know geographic be we're yeah, going

So, we continue to look.

to that that we have also operating very strategic continue be match. and are We financial the to our match and need CDW which to, doesn't to match, get deal there's I doubt cultural - screens a adhere active. there see, out to but store the we the

with to continue real year did cloud capabilities. that [indiscernible] we'll in continue grow to if And seeing to supply connections our the will, the ServiceNow native really you excited we organization we're frankly, IT those from So fulfilling. front at benefit with this this look. our We're that them about then we're because and terms chain, of sales traction devise and helping of solutions customers and our deeper end

winners customers. positive and been our have So real CDW for those

Ruplu Bhattacharya

strong results. Okay. Congrats the on

Chris Leahy

Thank you.


next Amit Evercore. is Daryanani with Your from question

Amit Daryanani

[ph] congrats print for my as good on guess, me for Thanks questions well. here. a really I taking two and

love how and does guess, I narrative do up guide, that that transactional about stack for X%, 'XX do /XX? First And to you X.X% calendar or SKU solutions? that give I when like? look understand in think how off, does revenue this PCs then to What take, I'd - between

Chris Leahy

dispersion the close the with as think what don't capabilities, needs. pandemic, it technology XXXX very working there forecast mix, morning. quite a to them go various And would a would to what in good IT answer harder and great it's it the that really growth. really out it's staying There's we say at it's be not refresh plan It's of but see given out we to What customers trends a what go Certainly, pivot that we're we interesting. in almost building things of see really of precisely. and hard that's do to whether the underneath I'm really know to - I we across comprises, year day-by-day, anybody I the us. than we're all what to them prolonged is in technology need don't unprecedented it's just Yeah, customers tell. as And sits area, essential We a But down, best, don't is, hope. some direction. and result hard of interesting vaccine rather, hardware, end the market very the rate of slowing which able tell uncertainty you in We of determine literally frankly. that that have. ever. technologies. I knows either their question is more where sorry, wide week-by-week is day, our know I whether a any our do be might to cloud is supporting the And still client

just people we and I be think And and ahead. felt of XXXX. to new where in and think coming in I in customers methodical now we sit be it's think and we're I and very cautious our to And doing. really we're sunrise some up, listening conscious have the good through sometimes, to ways we've and come vaccine care strains very them, which have XXXX, at of taking glory rollout in we

Amit Daryanani

a haven't on being cloud this That's the really then to I driving revenue with fair. P&L? a talked are and it's that good customers it more I to engaged cloud? get the and you to Or latter CDW to business that scenario, about Is profitability? shift migrating continue. and CDW's they you your how need in spend, times help Chris, cloud said guess is new off-premise? And think to that that that up that And Or before through double-digits, existing to impact? you for the out you few just [Indiscernible] Is to from on play thing customers does expect

Chris Leahy


Amit, question, I'd say On both. the first

in we're And ServiceNow customers our and earlier, so - Digital changing five, they're customer things are XX and we saw, a discussion are in capabilities in we're to help had We a Again, you value Velocity and that's ago of but quickly very of you front four, our mentioned mean processes that. are really current heavily that at know, expected the and months planning, customers that deal particular. particularly them penetrating the well-positioned to able into bringing where plans more as great new are advisory. certainly to and the bring I end place moving, with world in where cloud as and been we with

And would and customers cloud. note we see you migrating new it's the expect about and growth to existing. to do - the on existing I both customers, So that asked there. to continue

the just know already interesting it's also aware not you're it's cloud, are some of multi-cloud. migrating things to that the but and who that I of, One cloud customers becoming

that are multi - need some public public mirror cloud almost customers who capabilities have cloud, on-prem. to other they So that

bringing which is the narrow best it's a are to able the it So that with - the I'll we the the category teams and for environment, the real support because cloud sell. customer customer call now. Again, product it's whole not whole that ecosystem our customers some just advantage

to in going the impact In here. I terms Collin on jump think the P&L, of is

Collin Kebo

Amit. most down, it because has gross obviously of margin. margin morning, I it and the lift mean, operating Good on gets Yeah. netted

would it's example things terms say would think delivered are margins. are it of the A in would there I like cloud spending, commodity some you higher entire of divided portfolio. There that I customer Security our have are be on via offerings it look gross a things much and more cloud And if that other is that. margin. good cloud. lot the like at actually profit by very what in of is lower are

we of from value at then really is, from in value the it's offering another in the customer, around of rooted value margin-rich we - that as bring can perceived which is function profit, of absolute how the can So, typically well wrap the consumption. particular a the as by services amount terms

Amit Daryanani

Perfect. Thank much. you, very


from Adam with Next Raymond is question Tindle James.

Adam Tindle

Morning. Chris, the investments that. process and you strategic alluded planning accelerating alongside to

of going like 'XX look outline, the above rule year-over-year. margin early CapEx flattish to I at operating the be going is fiscal it to thumb. looks As is be

return of gauging think if or color on hoping how just nature we So we could can time? get about little more bit investments, over these success implied and the expected a

Chris Leahy

Sure. on let strategic Good Adam. morning, me back process. the step Yes,

that we three years. we're hone evolves. would my those say as evolve solutions hasn't services this I strategic what our And to where energy strategy where focusing every in need. and mentioned as I in our the remarks. prepared changed, really is and technology You business, are And know, areas do we do focusing our we overarching investments we're now, customers

You capabilities and hardware. heard way across that go solutions, software in is a and then solutions the services, security investments me full mention And full we to services, market. stack cloud cloud in our stack, obviously, that particular, such as

customers think where acquisitions, a I areas and and the we ServiceNow needing and cloud invested are capabilities are about that IGNW, that action in those capabilities, in couple advisers. of strategy recent DevOps examples Scalar, of and excellent as

in The area we're and think particular. is digital talent our other in investing you that about can that

that organization. our technology, talked in tools the technology, sellers. put about we're our we've made and what also we but mirror own those of own investing on kind past capabilities, technical decisions we the our as about for And ourselves some need an digital So in

our custom-wide, that those can and recoup then back reinvest really inefficiencies critical model we things for that elements really customer we're heard obviously, AMANDA for. platform in work in number what in to us our And I then integrated, [ph] of a you've that's re-imagine - I'd the then we business. going intelligent that think even sellers seamless e-commerce always talk tools do, as what And allow and our a and other about are digital we our in remove reviewing the also We pipeline where way. have for say to was operating platform, we're but digital our world a now more

have we workforce, and for So investing talked that we in last also to a in been quarter up in need, reduction people rules those technology, our about talent. a was there. open capacity capabilities investing in We and reduction also but investing

investment, those well growth people areas. and as see So the you digital where high is technology, as capabilities behind

Adam Tindle

in this It Okay. near maybe And term. sense. a more Colin, is for follow-up makes

You has for the different gotten next to expected and historical be tougher seasonality for talked continue is us. quarters about than modeling to how few

first You've maybe there half half, split those historically way a Is talked that in could about to we about terms? XXXX second XX of any think XX.

Collin Kebo

uncertain. uncertain of we highly which prepared think not that, the both inherently slope I my remarks to on some thoughts the Yeah. in environment on side, Adam, frankly. elected just of environment, given uncertain supply the economy were I virus, comments and and supply and recovery the is is tied to provide demand the mean,

So at on provide we get when the quarter, more no perspective on Obviously, thoughts on call this we point, that. can that. next

Adam Tindle

Okay. Understood. Thank you.


is Credit The from next with question Cabral Suisse. Matt

Matt Cabral

Yeah. on-premise dig hardware business. of the wanted I of the Thank more into to you. side

bit little some on for servers, categories think heading what Just storage, curious that should seeing if color could about And across NetComm? refresh you're how just a potential more you give activity we business and like the into XXXX?

Chris Leahy

comments Good back earlier, know made server storage hard of might we Matt. is, slope in Yeah. morning, go timing Yeah, I to see the it's when I'll pickup. the which particular to and

we office, won't space, the the example, to of through For customers getting timing be the year. when think back which Corporate really the in probably around second are half about

like in pickup areas a We where as higher on some example, community. are focused they're seeing Ed really connected

related we cautious campus to on-prem the is of looks strength think I But what see, to recovery, extended in really start pretty course, we're they've solutions. connected which, around that like. So until a virus,

been able get We to into We obviously too get into been many also customers still help our haven't to able there. locations. locations to haven't

beyond to just be. hard a will in coming. refresh when XXXX would It's know I will that say, So be look, or

Matt Cabral

the improvement in in trajectory And just a on Got more commercial bit modest this at Corporate. the uptick business, an it. then it - quarter, is Business, little looking Small of of in a the side fourth

Just and recovery, into as what And customer head bit contrast a of how little pace those XXXX? seeing wondering about can the you're particularly compare types? think we we should across if Corporate you two for

Chris Leahy

Yeah. Matt, said Small tend this be I Businesses think, nimble. you know, and before we to just more

and they've more come me, quickly. they of And beginning so quickly the more XXXX up they down - excuse went back slowed - at XXXX,

nature think I just Small that's of So Businesses. the

winners multiple losers, Corporate depends geography. - layers kind we It referenced to depends of segments, individual within really and by thing. the we're speak. as and and side, It it's same it seeing it's to so say by even really mosaics, that industry, On the customers

really which, So of customers. and cautious did like on good more we the which see in But going we a at individual a see subside flush be virus, geo until the see we say it's confidence, think mix to little of end course, I customer driven that a uncertainty budget by Corporate. thing. we're stemming the felt industry macroeconomics and year, is will success some across the still the again, I

and On things Business them again, saw do we that. and and would do we be really the to help 'XX XXXX Small Corporate look, to hand, similar when up normalize, pick in expect to other we'll well-prepared what

Matt Cabral

Thank you.


with The next is question Yang from Tim Citi.

Tim Yang

show on slide it six, you well. taking cadence for Corporate have I years be back financial Business X.X only Hi. Business to Small question your Chris, a and sub-sector on Thanks the to questions. level. pre-crisis crisis, recovery as and that X Corporate think took to and I in for recovery Small

more than Business do faster COVID you expect or uncertainties? there Corporate crisis, recover stimulus are financial to recovery, given and For might slower XXXX but package, Small we have also

Chris Leahy

answer No, predict it remarks, to them. harder the XXXX, made think, the I success and think downturn to as say, in I and to I his And hard It's I dynamics just have are is we 'XX what comparable wish 'XX. the the every really containing a speed of prepared in ball less the unique these recovery to in saw to Collin and crystal related questions. Yes. of the and the virus. way better pandemic really, this great had said slope

in and and period this of going we longer see allows we we'll think Certainly, the and if education, If can given growth it that make environment, is flow. cetera, need think which in stimulus just wildcard, importance more with can that which a that mentioned, we're and help under sure we the we see another to get the slope course diversity the make very impacts with our get predict see that, yet and it So businesses. stem can and healthy technology. But areas muted pandemic difficult more help the to quickly over maybe can control and beautiful the local, recover going our than uncertainty and macroeconomic a able we've of of they Again, I the customers state I think the time. growth the end to the et timing incredibly I is the momentum us environment where that the of thing positive consumer, markets us ultimately anyone. of are to better wherever support dynamics is don't

Tim Yang

it. Got That's helpful. very

sustainable maybe for your You better how should seasonality. education growth than year full mentioned QX about the was is? K-XX the normal demand performance demand talk and strength how sector? just sector the we Can think much And you about

Chris Leahy

the and understand And could of Yes. really their get because focus It's not schools And here success. solutions speed. equity lot to Well, needed in lot and full looking things K-XX. were schools was about a [ph] couple of students a what holistic get they access was quite say a therefore, that hands quickly. I providers with of to students of great the outcomes to do that happening to on would a important for student

it out which turnkey get they're had getting schools with in and we really the supply relationships bring to you a the at we're our constrained. tremendous when capabilities sure And K-XX, solutions was timely fashion. together there, of so success to to make literally proportion team of healthy And that the our have vendors able the it's is because look a the because in of

the of and clear And extraordinary would have. the to job. one, our execution teams seasonality I So a because just was schools timing, different an want couple of urgency I Number things. was Number two, that our say the because loud extraordinary. did say great

the normal confluence us we'll year, the which some first the seasonality back next But an demand going year, K-XX. the back both unbelievable and more, the capabilities into in it's in have backlog that get And would of team. into quarter. our next benefit We a of certainly expect execution guess, I of will and quarter first half the to by one going then

Tim Yang

helpful. Very

Collin Kebo

really color of Department to Thanks, had from also But on that build previous little and I we comments. knows large we Yeah. I mean extraordinary benefited Mississippi I more on earnings Tim. offering Chris' that add bit on calls. think with just a demand. everybody did want Chris QX Education talked Census. we see And about

to Just of dimensionalize the magnitude two offerings. those

you sales of daily would If in we to neighborhood results, our average QX a those have excluded X% range. grown from the X%

contribution those deals, two we the had big So part even meaningful still education of excluding from the a market.

Tim Yang

Thank so Great. much. you


with Your is Cross next Research. Cross Shannon question from

Unidentified Analyst

sort customers [ph] as while the of your non-profit spend, for to Then for wanted offerings, heightened Patrick the to demand year software from ask Hi. I continue there care Jackson considering also to and for time virtual security in a This follow-up. I budgets in what seeing you be as with health Shannon. solutions, referenced care work on care customers, provider. shift is seems and you're new lines during investment as focus quick have health on

Chris Leahy

certainly, than it. in more and that virus it. impacts components to segments, segment. in I virtual is It care budget. there, Yeah. continuing and The health care say is think to far. with not of tied we're real by in with performance is Long-term all everything wildcard healthcare repeat I it. the successfully so with of what any the opportunity agree quarter And improvement be to you I'd containing past so said the health - vital pleased there and care the quarter this the encouraged first

pandemic. XXXX, cetera. care are really bit with year et going care, the the a fluctuating forth urgent health care, On be me, to between revenue of streams, their because it's elective back reductions wildcard of and just a They in the to

we'll in it that on. have identified focused plays are just they but So to XXXX, the areas are that see out you've areas yet how

Unidentified Analyst

billion also you you being market targeted. security security then I to do And expect you. where during IT customers wanted securities you. you're total just primarily than XXXX? faster seeing Thank ask spend referenced on spent investments the with And grow company Thank $X Okay. to the XXXX. in

Chris Leahy

across stack. Yeah, sure. full is Security the

experience out to way the the all infrastructure, hybrid the digital endpoint and from So devices.

as software services but those, enablement So we're the around seeing We it is there in devices But diminish on, across stack. the data on full stack it's some security going given center reps things the and on all I Right the would across say, now, particular. full that's and full not remote endpoint security. focus provide focus to increased hardware endpoint certainly the well.

Unidentified Analyst

Thank you.

Chris Leahy



is from question Your Stifel. Sheerin next Matt with

Matt Sheerin

are a go back see potential an wave solution from as remote from customers and everywhere, a said, And but endpoints we've first of home strong hearing and that and Yes, hardware, customers ask your it. second investments. with we're customers Are conversations Chris, morning. put as thanks. But working very comments then as also to you good with about also those and from as concerning wave opportunity? seen upgrade Obviously, working and the wanted yet? other you infrastructure, work And security. working about having providers I you you

Chris Leahy

Yes. say customers are yes, different again, flavors we Matt, are. And there are of what doing. I'd

- kind not waiting, much are a type who of adaptable customers planning but flexible, someone of like way. CDW, optionality in and very dose so seeing, healthy a have We

whether end not are going go at et they're the cetera. back they going of on back So year clear or to the are XX% whether they

acculturation, setup we've are in guess what got cetera. still is et customers back be for saying who customers others already are But to obviously the the I of I'm saying, planning ought XX% that. what like. companies helping companies them things for office in-person collaboration, are saying workforce we've to mean, - So office, may in hear things need sure are innovation, types you of our some their be that and we office need they to for are I'm these in look be I the now the

is terms anywhere, work. of that. office times what into we in how So in your environment office blueprint throes productivity and like number of design different - If And interesting time talking it's work them efficiency decide a of frankly. think fact of because out, the was where workforce. suitable see with them talk we're for or of don't really the absolutely a to the begins create different kind I more we're lot right I hard of kind that XX% customers a what the and helping a mean, types of well, and in XX% in in can workforce the for where really about And looks are looks office for would you flavors, about this going alternatively work XX% coming different there spaces from to that now work, we're necessarily of I the the everybody for and settle planning while like at that are right that.

we'll of flavors. be - we're kinds with all So helping customers

Matt Sheerin

three-years Thanks thinking end Okay. client that. for upgrade both question regarding seen this devices. I year, know you the about in a ask we be I cycle PC Last strong particularly to we've for on most of another and the And Public talked now. your Corporate across that double-digit sector? on markets. year, the going wanted about strength should How number side

Chris Leahy


talked look, were those in And headwinds side. that look, for into long-term tailwinds refreshing refresh certainly them. you end We've depending and XXXX, need something where the mean, organizations I on going named and some XXXX. is client Also on XXXX. devices of think, devices bolstering we about one some those be point, remote might devices, that extending from our of terms more up some and have I at those. with

to thinking We use contactless will cases, winners we've And for that's that and overlaps, talked got client again, are tailwind state a to New advantage education have are we've investing heavily of big who really talking our companies interesting stimulus about have been example, a technology. Look, business client the think as there this use for and quite overcome, we'll keep about retailers, hiring But are health comes evolving some take devices. look, be what cases devices. how the and positive out there can be economy are local and for think purchasing. also a new from long on employment. time again, to an And organizations their see eye that CDW, it. there will for package - care we've for we'll in models, about in

Matt Sheerin

just follow-up. And a Great. Okay. quick

the gross in number? Regarding or a the netted-down spending. Is customer billion comment that number software, security about $X

Chris Leahy

number. a That's That's spend. gross customer

customers with that's spend So what us.

Matt Sheerin

what recognized netted-down, you right? really the that's because And of

Collin Kebo

customers is with Software No, that netted-down no, software because us. a that no. of We're assurance in what dollars as it's fewer because are getting The revenue in recognizing spending gross Service. and a lot is

Matt Sheerin


great. Okay, Thanks a lot.

Collin Kebo



next is Research. question Northcoast from Housum with Keith Your

Unidentified Analyst

for supply Or across How affected? were broad products portfolio? only chain were others? in filling is This Were the the Hi. Keith. constraints the Chromebooks Trevor there

Collin Kebo

of We see, hardware, tightness say did collaboration see getting say, gradually the Chromebooks lower far were things were like of biggest end pockets and by But of primary other were but I of in that. notebooks Chromebooks are some the continue on of I constraints. those the and better, would constraints. webcams area source some things would - to dislocation

Unidentified Analyst

Thanks. Would supply the Okay. got chain better got or quick a quarter you as quarter And the progress? say during follow-up. issues the worse

Collin Kebo

is, were by of a ability to would by were supply And also were a by to our We I target. what the amount chasing mean we in that's moving procure surprised because I question Chromebooks. think answer say pleasantly that difficult we surprised I demand. pleasantly

absolute so was just I basis, much bit a little because in it than still an was the but short So demand expected. of better, was came demand on think what supply

Unidentified Analyst

and great. quarter. lot, the a on Thanks Okay, congrats

Collin Kebo

you. Thank


At the CEO. time, I this now President no Leahy, questions. call like Chris there back would are over and to hand to

Chris Leahy

want head And you to quarter. our globe CDW. before our of participating forward to I in and commitment and and Take all. the you look And privilege you you interest thank the you again next And of with talking to their to appreciate investors in tremendous your and and Collin our you. off continued tremendous, opportunity our our I serving you. all CDW the thank customers dedication We serve recognize coworkers for call. partners extraordinary stakeholders. we customers, around to and this support Thank analysts of and care. to thank


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