CDW Clocks 19.4% Revenue Growth In Q2; Margin Expands Driven By Favorable Product Mix

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  • CDW Corp CDW reported second-quarter FY22 net sales growth of 19.4% year-on-year to $6.15 billion, missing the consensus of $6.19 billion. Average daily sales rose 19.4% Y/Y to $96 million.
  • Net sales from the Total Corporate segment increased 34.2% Y/Y to $2.66 billion, and the Total Small Business segment rose 3.5% to $500 million.
  • Total Public segment net sales grew 7.8% to $2.24 billion. An increase in net sales to Healthcare customers by 30.1% and Government customers by 18.7% drove the growth. Net sales to Education customers decreased by 6.4%.
  • Net sales for CDW's U.K. and Canadian operations, combined as "Other" for financial reporting purposes, grew 23.8% Y/Y to $742 million.
  • Margins: Gross margin expanded by 180 bps to 19%, driven by a more favorable product mix and rate, a higher mix of net service contract revenue, primarily within SaaS, and increased net sales and margins on professional services. The non-GAAP operating margin was flattish at around 8.4%.
  • Non-GAAP EPS of $2.49 beat the consensus of $2.42.
  • CDW held $541.6 million in cash and equivalents.
  • Dividend: CDW board approved a quarterly cash dividend per share of $0.50.
  • Outlook: CDW reiterated its expectation to exceed its 2022 outlook to outpace U.S. IT market growth by 200 bps - 300 bps on a constant currency basis.
  • Price Action: CDW shares closed lower by 0.65% at $180.33 on Tuesday.
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