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CDW Q3 numbers show coronavirus impact

Channel player saw corporate and SME sales dip as the recovery from the worst of the pandemic continued

CDW’s third-quarter numbers show that the Covid-19 pandemic has caused changes to both private and public sector customers.

The channel player saw its net sales decrease by 3.1% in the three months to 30 September, coming in at $4,756m. Net income, at $193m, was down 4.2% on the $202m generated in the equivalent period last year.

Speaking to analysts, Chris Leahy, CEO of CDW, echoed the views of some of his peers at other large channel players about the robustness of the business.

“The quarter demonstrated the balance and strength of CDW’s business model,” he said. “The diversity of our customer end markets served us well. For our most impacted customer end market, the rate of decline stabilised and generally improved in the quarter. Trends for more resilient customer end markets continue to be strong.

“Our value proposition really resonated with customers this quarter. There was a flight to quality as customers start to de-risk projects in their technology investments.”

But Leahy also acknowledged that the pandemic had caused some disruption, with the corporate business down by 13% and small business declining at the same rate. Those were improvements on the quarter before, but showed the ongoing impact of the pandemic on customer activity.

“The duration and varying potential implications of Covid-19 on our more than 250,000 customers remain uncertain and unknowable,” he said. “However, we will remain laser-focused on meeting our customers’ needs, while being the partner of choice for more than 1,000 leading and emerging technology brands as the technology market continues to evolve and becomes increasingly essential and more complex.”

The response of authorities to the pandemic helped drive public sector spending up by 9.2% in the quarter, with education and government customers fuelling most of that growth.

Demand for software as a service (SaaS) increased and things were also up in the cloud and security segments. Leahy indicated that the small business customer base was continuing to show improvement in the fourth quarter.

Specifically in the UK, CDW saw net sales decline in high single digits. “UK corporate and public channels declined as government support programmes ramped down during the quarter,” said Leahy.

“This quarter demonstrated the importance of our competitive advantages, the success of past investments in cloud and security and our trusted partner relationships with customers. We believe that technology will be more essential to all sectors of the economy and will play an increasingly important role in the years to come. We have confidence that we have the right strategy in place.”

Collin Kebo, CFO at CDW, said that financially, the firm was in a strong position and its cashflow generation capacity remained strong.

“After investing in the business, our capital allocation priorities remain the dividend, managing leverage to our target ratio, making strategic acquisitions, and share repurchases,” he said.

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