LINCOLNSHIRE - CDW Corporation (NASDAQ:CDW), a prominent IT solutions provider, reported a decline in both earnings and revenue for the first quarter of 2024, missing analyst estimates. The company's shares fell 5.3% as investors reacted to the news of a profit and revenue miss for the quarter.
For the first quarter, CDW posted adjusted earnings per share (EPS) of $1.92, falling short of the analyst consensus of $2.15. Revenue also came in lower than expected at $4.87 billion, compared to the anticipated $5 billion.
Compared to the first quarter of the previous year, the company's net sales decreased by 4.5%, reflecting a challenging economic climate that has led customers to be more cautious with their technology spending.
The company's Corporate segment saw a 3.1% decrease in net sales, while the Small Business segment experienced a more pronounced 7.4% drop. The Public segment's net sales declined by 4.9%, with Education customers contributing to a significant 10.4% decrease. CDW's UK and Canadian operations, collectively reported as "Other," also saw a 6.5% reduction in net sales.
Despite the revenue downturn, CDW's gross profit margin improved slightly to 21.8% in the first quarter of 2024, up from 21.3% in the same period last year. This was primarily due to a more favorable mix of netted down revenue, notably from software as a service, though this was partially offset by lower product margins from a higher mix of notebooks and mobile devices.
Christine A. Leahy, CDW's CEO, commented on the results, "Within a persistently challenging environment, our strong gross margin reinforces the significant progress we continue to make executing our long-term strategy." She highlighted the role of CDW as a trusted advisor in helping customers navigate complexity and maximize their IT investment returns.
Operating income for the quarter was $328 million, a decrease of 7.7% from the first quarter of 2023. The company also reported a decrease in net income to $216 million, down 6.1% from the previous year, and a 5.5% decrease in non-GAAP net income per diluted share.
Looking ahead, CDW did not provide specific guidance for the upcoming quarters, but the management remains focused on optimizing cash flow and maintaining strategic flexibility. Leahy concluded with a commitment to exceeding US IT market growth and continuing to meet the needs of their global customer base.
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