CDW Clocks 11% Revenue Growth In Q3, Raises FY21 Outlook

CDW Corp CDW reported third-quarter FY21 net sales growth of 11.4% year-on-year to $5.3 billion, missing the consensus of $5.35 billion. Average daily sales rose 11.4% Y/Y to $82.8 million.
Net sales from the Total Corporate segment increased 24.5% Y/Y to $2.07 billion, and the Total Small Business segment rose 38.6% to $467 million.
Total Public segment net sales declined 6.1% to $2.15 billion. An increase in net sales to Education customers by 2.4% and Healthcare customers by 30.9% drove the growth. Net sales to Government customers decreased 32.9%.
Net sales for CDW's U.K. and Canadian operations, combined as "Other" for financial reporting purposes, grew 31.4% Y/Y to $612 million.
Margins: Gross margin remained flat at 17.3%, primarily driven by lower product margin, partially offset by an increase in the mix of net service contract revenue, mainly Software as a Service, and increased Net sales and margins on professional services. The non-GAAP operating margin was flat at 8.2%.
Non-GAAP EPS of $2.13 beat the consensus of $2.06.
CDW generated $636.7 million in operating cash flow during the nine months ended September 30 and held $245.1 million in cash and equivalents.
Dividend: CDW board approved a quarterly cash dividend of $0.50 payable on December 10 to all stockholders of record on November 24.
Outlook: CDW expects to exceed its 2021 outlook to outpace U.S. I.T. market growth by 200 bps- 300 bps on a constant currency basis.
CDW raised 2021 constant currency non-GAAP EPS growth expectations from mid-teens to high-teens.
Price action: CDW shares traded lower by 3.45% at $182.69 on the last check Wednesday.

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