CDW Corporation 2025 Annual Report (10-K) Summary
Business Context and Reporting Period
This filing is the Annual Report on Form 10-K for CDW Corporation for the fiscal year ended December 31, 2025. CDW is a leading multi-brand provider of information technology (IT) solutions to business, government, education, and healthcare customers in the US, UK, and Canada. The company operates through three reportable segments: Corporate, Small Business, and Public. Effective January 1, 2026, the company will realign its reporting structure into Commercial, Government, and Education segments.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Net Sales | $22,424.1 million | $20,998.7 million |
| Gross Profit | $4,873.4 million | $4,602.4 million |
| Gross Profit Margin | 21.7% | 21.9% |
| Operating Income | $1,655.6 million | $1,651.3 million |
| Operating Income Margin | 7.4% | 7.9% |
| Net Income (GAAP) | $1,066.6 million | $1,077.8 million |
| Net Income Per Diluted Share | $8.08 | $7.97 |
| Non-GAAP Net Income | $1,323.0 million | $1,287.2 million |
| Net Cash Provided by Operating Activities | $1,205.2 million | $1,277.3 million |
| Adjusted Free Cash Flow | $1,085.5 million | $1,079.0 million |
| Total Debt Outstanding | $5.6 billion | $5.6 billion |
| Net Debt | $5,011.1 million | $5,125.1 million |
| Cash Conversion Cycle | 16 days | 18 days |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 6.8% year-over-year, driven by higher demand across all segments, particularly in notebooks/mobile devices, software, desktops, and services.
- Margin Compression: Gross profit margin decreased 20 basis points to 21.7%, primarily due to decreased rates in certain hardware categories. Operating income margin decreased 50 basis points to 7.4% due to higher selling and administrative expenses (9.0% increase), driven by performance-based compensation and transformation costs.
- Segment Performance:
- Corporate: Sales up 6.8%; Operating income up 1.1%.
- Small Business: Sales up 13.3%; Operating income up 12.3%.
- Public: Sales up 4.6%; Operating income up 0.6%. Education sales declined 1.8%, while Healthcare sales grew 13.3%.
- Other (UK/Canada): Sales up 9.7%; Operating income up 37.6%.
- Capital Allocation: The company repurchased 4.0 million shares for $653 million in 2025. A new $750 million authorization was added to the share repurchase program in February 2025, leaving approximately $685 million remaining as of year-end.
Guidance, Outlook, and Risks
Outlook and Commentary: Management notes that while economic and geopolitical uncertainty persists, customer spending improved across all segments. The company is focusing on solutions leveraging security, software, AI, and hybrid cloud offerings. A new enterprise resource planning (ERP) system was implemented in 2025 to streamline processes.
Risks and Contingencies:
- Legal Proceedings: The company received a Civil Investigative Demand from the US Department of Justice in June 2024 regarding a False Claims Act investigation related to the E-Rate Program. The company provided information in November 2024 but cannot currently assess the financial impact.
- Supply Chain: Risks include potential disruptions in the supply of high-performance memory and storage due to AI workload demand, which could lead to longer lead times and higher pricing.
- Debt: The company has $5.6 billion in total debt. A new credit agreement was entered in December 2025, increasing the Revolving Loan Facility capacity by $650 million to $2.25 billion.
- Segment Realignment: Historical results will be recast starting in the period ending March 31, 2026, to reflect the new Commercial, Government, and Education segment structure.
Key Facts for Investor Verification
- Revenue Mix: Hardware remains the dominant category at 71.6% of net sales, though Software (18.7%) and Services (9.1%) are growing.
- Working Capital Efficiency: The cash conversion cycle improved to 16 days, driven by a reduction in days of supply in inventory.
- Debt Structure: Verify the impact of the new $2.25 billion Revolving Loan Facility and the $634.5 million Term Loan Facility entered in December 2025 on future interest expense, given the variable rate nature of these instruments.
- Legal Exposure: Monitor the status of the DOJ False Claims Act investigation regarding the E-Rate Program for potential future liabilities.
- Segment Recasting: Be aware that future reporting will use a new segment taxonomy (Commercial, Government, Education), requiring adjustments when comparing historical data.