CDW Corporation

02/20/2026 | Press release | Distributed by Public on 02/20/2026 15:06

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise indicated or the context otherwise requires, as used in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," the terms "we," "us," "the Company," "our," "CDW," and similar terms refer to CDW Corporation and its subsidiaries. "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the Consolidated Financial Statements and the related notes included elsewhere in this report. This discussion contains forward-looking statements that are subject to numerous risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements. See "Forward-Looking Statements" above.
Overview
CDW Corporation ("Parent"), a Fortune 500 company and member of the S&P 500 Index, is a leading multi-brand provider of information technology ("IT") solutions to business, government, education, and healthcare customers in the United States ("US"), the United Kingdom ("UK"), and Canada. Our broad array of offerings ranges from discrete hardware and software products to integrated IT solutions and services that include on-premise and cloud capabilities across hybrid infrastructure, digital experience, and security.
We have three reportable segments: "Corporate," "Small Business," and "Public." Our Corporate segment primarily serves US private sector business customers with more than 250 employees. Our Small Business segment primarily serves US private sector business customers with up to 250 employees. Our Public segment is comprised of government agencies and education and healthcare institutions in the US. We also have two other operating segments: CDW UK and CDW Canada, each of which do not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category ("Other").
Effective January 1, 2026, we realigned our customer-facing organization to better meet the evolving needs of our customers and end markets. As a result, we will have the following three reportable segments: "Commercial," "Government," and "Education." Our "Commercial" segment will be comprised of corporate, financial services, and healthcare customers in the US, each of which will represent a unique customer channel. Small business customers will be included across the customer channels within our "Commercial" segment. Our "Government" segment will be comprised of federal, state, and local agencies in the US. The "Education" segment will be comprised of primary, secondary, and higher education institutions in the US. CDW UK and CDW Canada will remain unchanged in this new reporting structure, in an all other category ("Other"). We will reflect this change in segment presentation, including the recasting of historical results, in our periodic and annual reports beginning with the period ending March 31, 2026.
We are vendor, technology, and consumption model unbiased, with a solutions portfolio including more than 100,000 products and services from more than 1,000 leading and emerging brands. Our solutions are delivered in physical, virtual, and cloud-based environments through approximately 10,500 customer-facing coworkers, including sellers, highly-skilled specialists, and engineers. We are a leading sales channel partner for many original equipment manufacturers ("OEMs"), software publishers, and cloud providers (collectively, our "vendor partners") and wholesale distributors, whose products we sell or include in the solutions we offer. We provide our vendor partners with a cost-effective way to reach customers and deliver a consistent brand experience through our established end-market coverage, technical expertise, and extensive customer access.
We may sell all or only select products that our vendor partners offer. Each vendor partner agreement provides for specific terms and conditions, which may include one or more of the following: product return privileges, price protection policies, purchase discounts, and vendor incentive programs, such as purchase or sales rebates and cooperative advertising reimbursements. We also resell software for major software publishers. Our agreements with software publishers allow the end-user customer to acquire software or licensed products and services. In addition to helping our customers determine the best software solutions for their needs, we help them manage their software agreements, including warranties and renewals. A significant portion of our advertising and marketing expenses are reimbursed through cooperative advertising programs with our vendor partners. These programs are at the discretion of our vendor partners and are typically tied to sales or other commitments to be met by us within a specified period of time.
For a discussion of results for the year ended December 31, 2024, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024, compared with the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 21, 2025.
Trends and Key Factors Affecting our Financial Performance
We believe the following key factors may have a meaningful impact on our business performance, influencing our ability to generate sales and achieve our targeted financial and operating results:
•General economic conditions are a key factor affecting our results as they can impact our customers' willingness and ability to spend on IT. The prevailing economic conditions remain challenging, largely due to ongoing uncertainty surrounding evolving global trade policies and geopolitical conditions along with other drivers. These dynamics may continue to influence supply chains, drive inflationary pressures, and affect interest rates. The uncertainty in the current economic environment has impacted and may continue to impact the timing of our customers' investments in technology.
•Customers are evaluating the complex technology landscape in order to balance priorities and focus on solutions that lead to business optimization, cost management, and security risk management, among other factors, resulting in a more measured approach to their IT spending. We have orchestrated solutions that leverage security, software, artificial intelligence ("AI"), and hybrid and cloud offerings to help customers achieve their objectives.
•Changes and uncertainty related to spending policies, budget priorities, timing and funding levels are key factors influencing the purchasing levels of government, healthcare and education customers. As the duration and ongoing impact of current economic conditions remain uncertain, including any US government shutdowns, current and future budget priorities and funding levels for government, healthcare and education customers may be adversely affected, leading to lower IT spend.
•Technology trends drive customer purchasing behaviors in the market. Current technology trends are focused on delivering greater flexibility and efficiency, as well as designing and managing IT securely, while balancing product availability creating an inflationary environment. These trends are driving customer adoption of cloud, AI, software defined architectures and hybrid on-premise and off-premise combinations. The trends are further driven by the evolution of the IT consumption model to more "as a service" solutions, including software as a service and infrastructure as a service, in addition to ongoing managed and professional service arrangements. Technology trends are likely to evolve and customers will prioritize spend that will produce the most important outcomes for their business.
Key Business Metrics
We monitor a number of financial and non-financial measures and ratios on a regular basis in order to track the progress of our business and make adjustments as necessary. Financial measures are presented both in accordance with the accounting principles generally accepted in the United States of America ("GAAP"), and non-GAAP, which excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. We believe that the most important of these measures and ratios include Gross profit, Gross profit margin, Operating income, Operating income margin, Non-GAAP operating income, Non-GAAP operating income margin, Net income, Non-GAAP net income, Net income per diluted share, Non-GAAP net income per diluted share, Average daily sales, Net cash provided by operating activities, Adjusted free cash flow, Cash conversion cycle, and Net debt. These measures and ratios are closely monitored by management, so that actions can be taken, as necessary, in order to achieve financial objectives.
For the definitions, discussion of management's use of non-GAAP measures and reconciliations to the most directly comparable GAAP measure, see "Results of Operations - Non-GAAP Financial Measure Reconciliations."
The results of certain key business metrics for the comparative periods are as follows:
Year Ended December 31,
(dollars in millions, except per share amounts) 2025 2024
Net sales $ 22,424.1 $ 20,998.7
Gross profit $ 4,873.4 $ 4,602.4
Gross profit margin 21.7 % 21.9 %
Operating income $ 1,655.6 $ 1,651.3
Operating income margin 7.4 % 7.9 %
Non-GAAP operating income $ 1,996.7 $ 1,947.0
Non-GAAP operating income margin 8.9 % 9.3 %
Net income $ 1,066.6 $ 1,077.8
Non-GAAP net income $ 1,323.0 $ 1,287.2
Net income per diluted share $ 8.08 $ 7.97
Non-GAAP net income per diluted share $ 10.02 $ 9.52
Average daily sales(1)
$ 88.3 $ 82.7
(1)Defined as Net sales divided by the number of selling days. There were 254 selling days for both the years ended December 31, 2025 and 2024.
(dollars in millions) December 31, 2025 December 31, 2024
Net debt(1)
$ 5,011.1 $ 5,125.1
Cash conversion cycle (in days)(2)
16 18
Net cash provided by operating activities $ 1,205.2 $ 1,277.3
Adjusted free cash flow(3)
$ 1,085.5 $ 1,079.0
(1)Defined as total debt minus Cash and cash equivalents and Short-term investments.
(2)Defined as days of sales outstanding related to the current portion of Accounts receivable and certain receivables due from vendors, plus days of supply in Merchandise inventory, minus days of purchases outstanding related to the current portion of Accounts payable-trade and Accounts payable-inventory financing, based on a rolling three-month average.
(3)Defined as Net cash provided by operating activities less Capital expenditures, adjusted to include cash flows from financing activities that relate to the purchase of inventory.
Results of Operations
Results of operations, including Gross profit margin and Operating income margin, expressed as Gross profit and Operating income as a percentage of Net sales, respectively, for the years ended December 31, 2025 and 2024 are below. For additional information on Net sales, Gross profit, and Operating income by segment, see the "Segment Results of Operations."
Year Ended December 31,
(dollars in millions) 2025 2024 Percent Change
Net sales $ 22,424.1 $ 20,998.7 6.8 %
Cost of sales 17,550.7 16,396.3 7.0
Gross profit 4,873.4 4,602.4 5.9
Gross profit margin 21.7% 21.9%
Selling and administrative expenses 3,217.8 2,951.1 9.0
Operating income 1,655.6 1,651.3 0.3
Operating income margin 7.4% 7.9%
Interest expense, net (227.4) (214.5) 6.0
Other expense, net (0.8) (1.4) *nm
Income before income taxes 1,427.4 1,435.4 (0.6)
Income tax expense (360.8) (357.6) 0.9
Net income $ 1,066.6 $ 1,077.8 (1.0) %
*nm - not meaningful
The year ended December 31, 2025 compared with the year ended December 31, 2024
Net sales increased $1,425 million, or 6.8%, with higher Net sales across all operating segments. Broadly, while economic and geopolitical uncertainty persists, all of our segments continued to experience improved customer spending during the period. The increase in customer demand drove Net sales growth primarily in notebooks/mobile devices, software, desktops, services, and netcomm products.
Gross profit increased $271 million, or 5.9%, due to higher Net sales, partially offset by lower gross profit margin. Gross profit margin decreased 20 basis points, to 21.7%, primarily driven by decreased rates in certain hardware categories.
Selling and administrative expenses increased $267 million, or 9.0%, primarily due to higher performance-based compensation, transformation related costs, and coworker-related costs.
Operating income increased $4 million, or 0.3%, to $1,656 million for the year ended December 31, 2025, compared to $1,651 million for the year ended December 31, 2024.
Interest expense, net includes interest expense and interest income. Interest expense, net increased $13 million, or 6.0%, primarily due to lower interest income earned on cash balances.
Income tax expense increased $3 million, or 0.9%. The effective income tax rate, expressed by calculating income tax expense as a percentage of Income before income taxes, was 25.3% and 24.9% for 2025 and 2024, respectively. The increase in effective income tax rate was primarily attributable to lower excess tax benefits on equity-based compensation.
Segment Results of Operations
Net sales by segment for the comparative periods are as follows:
Year Ended December 31,
2025 2024
(dollars in millions) Net Sales Percentage
of Total Net Sales 		Net Sales Percentage
of Total Net Sales 		Dollar
Change
Percent
Change(1)
Corporate $ 9,442.4 42.1 % $ 8,837.2 42.1 % $ 605.2 6.8 %
Small Business 1,726.7 7.7 1,523.5 7.3 203.2 13.3
Public:
Government 2,589.5 11.6 2,486.9 11.8 102.6 4.1
Education 3,109.6 13.9 3,167.3 15.1 (57.7) (1.8)
Healthcare 2,836.1 12.6 2,503.5 11.9 332.6 13.3
Total Public 8,535.2 38.1 8,157.7 38.8 377.5 4.6
Other(2)
2,719.8 12.1 2,480.3 11.8 239.5 9.7
Total Net sales $ 22,424.1 100.0 % $ 20,998.7 100.0 % $ 1,425.4 6.8 %
(1)There were 254 selling days for both the years ended December 31, 2025 and 2024. Average daily sales is defined as Net sales divided by the number of selling days.
(2)Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the reportable segment quantitative thresholds.
Gross profit by segment for the comparative periods are as follows:
Year Ended December 31,
2025 2024
(dollars in millions) Gross Profit
Gross Profit Margin(3)
Gross Profit
Gross Profit Margin(3)
Dollar Change Percent Change
Segments:(1)
Corporate $ 2,201.9 23.3 % $ 2,099.5 23.8 % $ 102.4 4.9 %
Small Business 393.8 22.8 352.9 23.2 40.9 11.6
Public 1,722.3 20.2 1,659.2 20.3 63.1 3.8
Other(2)
555.4 20.4 490.8 19.8 64.6 13.2
Total Gross profit $ 4,873.4 21.7 % $ 4,602.4 21.9 % $ 271.0 5.9 %
(1)Segment gross profit includes the segment's direct gross profit, allocations for gross profit from logistics services, and allocations for certain inventory adjustments, volume rebates, and cooperative advertising from vendors.
(2)Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the reportable segment quantitative thresholds.
(3)Gross profit margin represents segment Gross profit as a percentage of segment Net sales.
Operating income by segment for the comparative periods are as follows:
Year Ended December 31,
2025 2024
(dollars in millions) Operating Income Percentage of Segment Net Sales Operating Income Percentage of Segment Net Sales Dollar Change Percent Change
Segments:(1)
Corporate $ 889.3 9.4 % $ 879.5 10.0 % $ 9.8 1.1 %
Small Business 203.2 11.8 181.0 11.9 22.2 12.3
Public 750.3 8.8 745.9 9.1 4.4 0.6
Other(2)
154.2 5.7 112.1 4.5 42.1 37.6
Headquarters(3)
(341.4) nm* (267.2) nm* (74.2) 27.8
Total Operating income $ 1,655.6 7.4 % $ 1,651.3 7.9 % $ 4.3 0.3 %
*nm - not meaningful
(1)Segment operating income includes the segment's direct operating income, allocations for certain headquarters function costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates, and cooperative advertising from vendors.
(2)Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the reportable segment quantitative thresholds.
(3)Includes headquarters function costs that are not allocated to the segments.
The year ended December 31, 2025 compared with the year ended December 31, 2024
Corporate segment Net sales increased $605 million, or 6.8%, primarily due to increased customer demand primarily in software, notebooks/mobile devices, netcomm products, and desktops.
Corporate segment Gross profit dollars increased $102 million, or 4.9%, due to higher Net sales, partially offset by lower gross profit margin. Gross profit margin decreased 50.0 basis points, to 23.3%, due to decreased rates in certain hardware categories, primarily data storage and servers.
Corporate segment Operating income increased $10 million, or 1.1%, primarily due to higher Gross profit dollars, partially offset by higher performance-based compensation, amortization expense on acquisition-related intangible assets, and coworker-related costs.
Small Business segment Net sales increased $203 million, or 13.3%, primarily due to increased customer demand primarily in notebooks/mobile devices, software, and desktops.
Small Business segment Gross profit dollars increased $41 million, or 11.6%, due to higher Net sales, partially offset by lower gross profit margin. Gross profit margin decreased 40.0 basis points, to 22.8%,due to mixing into certain lower margin hardware categories, primarily notebooks/mobile devices, partially offset by a higher contribution of netted down revenue.
Small Business segment Operating income increased $22 million, or 12.3%, primarily due to higher Gross profit dollars, partially offset by an increased provision for expected credit losses and higher performance-based compensation.
Public segment Net sales increased $378 million, or 4.6%, primarily due to an increased customer demand in software and services across all customer channels, notebooks/mobile devices in the education and healthcare customer channels.
Public segment Gross profit dollars increased $63 million, or 3.8%, due to higher Net sales. Gross profit margin remained relatively consistent at20.2%.
Public segment Operating income increased $4 million, or 0.6%, primarily due to higher Gross profit dollars, partially offset by higher performance-based compensation, transformation related costs, and coworker-related costs.
Net sales in Other increased $240 million, or 9.7%, primarily due to an increase in notebooks/mobile devices, desktops, and services within UK and Canada operations.
Other Gross profit dollars increased $65 million, or 13.2%, due to higher Net sales and Gross profit margin. Gross profit margin increased 60 basis points, to 20.4%, primarily due to a higher contribution of netted down revenue.
Other Operating income increased $42 million, or 37.6%, primarily due to higher Gross profit dollars, partially offset by higher performance-based compensation within the UK and Canada operations.
Non-GAAP Financial Measure Reconciliations
Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial condition that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.
Our non-GAAP performance measures include Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income per diluted share, and Net sales on a constant currency basis, and our non-GAAP financial condition measures include Free cash flow and Adjusted free cash flow. These non-GAAP performance measures and non-GAAP financial condition measures are collectively referred to as "non-GAAP financial measures." The GAAP measures most directly comparable to Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP net income, Non-GAAP net income per diluted share, and Net sales on a constant currency basis are Operating income, Operating income margin, Net income, Net income per diluted share, and Net sales, respectively. The GAAP measure most directly comparable to Free cash flow and Adjusted free cash flow is Net cash provided by operating activities.
Non-GAAP operating income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and the associated payroll taxes, acquisition and integration expenses, transformation initiatives, and workplace optimization. Non-GAAP operating income margin is defined as Non-GAAP operating income as a percentage of Net sales. Non-GAAP net income and Non-GAAP net income per diluted share exclude, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and the associated payroll taxes, acquisition and integration expenses, transformation initiatives, workplace optimization, and their associated income tax effects. Net sales on a constant currency basis is defined as Net sales excluding the impact of foreign currency translation on Net sales. Free cash flow is defined as Net cash provided by operating activities less capital expenditures. Adjusted free cash flow is defined as Free cash flow adjusted to include certain cash flows from financing activities incurred in the normal course of operations or as capital expenditures.
We believe our non-GAAP financial measures provide analysts, investors, and management with useful information regarding the underlying operating performance of our business, as they remove the impact of items that management believes are not reflective of underlying operating performance. Management uses these measures to evaluate period-over-period performance as management believes they provide a more comparable measure of the underlying business. We also present non-GAAP financial condition measures as we believe they provide analysts, investors, and management with more information regarding our liquidity and capital resources. Certain non-GAAP financial measures are also used to determine certain components of performance-based compensation.
We have included reconciliations of our non-GAAP financial measures to the most comparable GAAP financial measures for the years ended December 31, 2025 and 2024 below.
Non-GAAP operating income and Non-GAAP operating income margin
Year Ended December 31,
(dollars in millions) 2025 Percent of Net Sales 2024 Percent of Net Sales
Operating income, as reported $ 1,655.6 7.4 % $ 1,651.3 7.9 %
Amortization of intangibles(1)
169.8 150.9
Equity-based compensation 83.6 64.7
Transformation initiatives(2)
57.9 34.8
Acquisition and integration expenses 7.6 12.2
Workplace optimization(3)
16.2 25.4
Other adjustments 6.0 7.7
Non-GAAP operating income $ 1,996.7 8.9 % $ 1,947.0 9.3 %
(1)Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts, and trade names.
(2)Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.
(3)Includes costs related to workforce reductions and charges related to the reduction of our real estate lease portfolio.
Non-GAAP net income and Non-GAAP net income per diluted share
Year Ended December 31,
2025 2024
(dollars and shares in millions, except per share amounts) Income before income taxes
Income tax
expense(1)
Net income Income before income taxes
Income tax
expense(1)
Net income
GAAP, as reported $ 1,427.4 $ (360.8) $ 1,066.6 $ 1,435.4 $ (357.6) $ 1,077.8
Amortization of intangibles(2)
169.8 (44.1) 125.7 150.9 (39.2) 111.7
Equity-based compensation 83.6 (19.1) 64.5 64.7 (26.7) 38.0
Transformation initiatives(3)
57.9 (15.0) 42.9 34.8 (9.1) 25.7
Acquisition and integration expenses 7.6 (2.0) 5.6 12.2 (2.1) 10.1
Workplace optimization(4)
16.2 (4.2) 12.0 25.4 (6.6) 18.8
Other adjustments 7.8 (2.1) 5.7 6.9 (1.8) 5.1
Non-GAAP $ 1,770.3 $ (447.3) $ 1,323.0 $ 1,730.3 $ (443.1) $ 1,287.2
Net income per diluted share, as reported $ 8.08 $ 7.97
Non-GAAP net income per diluted share $ 10.02 $ 9.52
Shares used in computing GAAP and Non-GAAP net income per diluted share 132.1 135.2
(1)Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.
(2)Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts, and trade names.
(3)Includes costs related to strategic transformation initiatives focused on optimizing various operations and systems.
(4)Includes costs related to workforce reductions and charges related to the reduction of our real estate lease portfolio.
Net sales on a constant currency basis
Year Ended December 31,
(dollars in millions) 2025 2024
Percent Change(1)
Net sales, as reported $ 22,424.1 $ 20,998.7 6.8 %
Foreign currency translation(2)
- 33.4
Net sales, on a constant currency basis $ 22,424.1 $ 21,032.1 6.6 %
(1)There were 254 selling days for both the years ended December 31, 2025 and 2024. Average daily sales is defined as Net sales divided by the number of selling days.
(2)Represents the effect of translating Net sales for the year ended December 31, 2024, of CDW UK and CDW Canada at the average exchange rates applicable in 2025.
Free cash flow and Adjusted free cash flow
Year Ended December 31,
(dollars in millions) 2025 2024
Net cash provided by operating activities $ 1,205.2 $ 1,277.3
Capital expenditures (117.1) (122.6)
Free cash flow 1,088.1 1,154.7
Net change in accounts payable - inventory financing (2.6) (75.7)
Adjusted free cash flow(1)
$ 1,085.5 $ 1,079.0
(1)Defined as Net cash provided by operating activities less Capital expenditures, adjusted to include cash flows from financing activities that relate to the purchase of inventory.
Seasonality
While we have not historically experienced seasonality throughout the year, sales in our Public segment have historically been higher in the second and third quarter than in other quarters primarily due to the buying patterns of education and government customers.
Liquidity and Capital Resources
Overview
We finance our operations and capital expenditures with cash from operations and borrowings under our variable rate senior unsecured revolving loan facility (the "Revolving Loan Facility"). As of December 31, 2025, we had $1.9 billion of availability for borrowings under our Revolving Loan Facility. Our liquidity and borrowing plans are established to align with our financial and strategic planning processes and ensure we have the necessary funding to meet our operating commitments, which primarily include the purchase of inventory, payroll, and general expenses. We also take into consideration our overall capital allocation strategy, which includes dividend payments, assessment of debt levels, acquisitions, and share repurchases. We believe we have adequate sources of liquidity and funding available for at least the next year; however, there are a number of factors that may negatively impact our available sources of funds. The amount of cash generated from operations will be dependent upon factors such as the successful execution of our business plan, general economic conditions, and working capital management.
Our material contractual obligations consist of debt and related interest payments and operating leases. For additional information regarding future maturities of debt and operating leases, see Note 8 (Debt) and Note 11 (Leases), respectively, to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Long-Term Debt and Financing Arrangements
During the second quarter of 2025, we repaid the $211 million remaining aggregate principal amount of the 4.125% Senior Notes due 2025 at maturity.
In December 2025, we entered into a new credit agreement consisting of a five-year $2.25 billion senior unsecured revolving loan facility (the "Revolving Loan Facility") and a five-year $634.5 million senior unsecured term loan facility (the "Term Loan Facility"). The Revolving Loan Facility replaced our previous senior unsecured revolving loan facility and increased the borrowing capacity available to us by $650 million. The Term Loan Facility replaces the previous senior unsecured term loan facility, and the principal amount of the term loan remains unchanged.
As of December 31, 2025, we had total unsecured indebtedness of $5.6 billion, and we were in compliance with the covenants under our credit agreements and indentures.
We may from time to time repurchase one or more series of our outstanding unsecured senior notes, depending on market conditions, contractual commitments, our capital needs, and other factors. Repurchases of our senior notes may be made by open market or privately negotiated transactions and may be pursuant to Rule 10b5-1 plans or otherwise.
For additional information regarding our debt and refinancing activities, see Note 8 (Debt) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Inventory Financing Agreements
We have entered into agreements with certain financial intermediaries to facilitate the purchase of inventory from various suppliers under certain terms and conditions to enhance working capital. These amounts are classified separately as Accounts payable-inventory financing on the Consolidated Balance Sheets. We do not incur any interest expense or other incremental expenses associated with these agreements as balances are paid when they are due. For additional information, see Note 7 (Inventory Financing Agreements) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Share Repurchase Program
During 2025, we repurchased 4.0 million shares of our common stock for $653 million under the previously announced share repurchase program. For additional information about our share repurchase program, refer to Note 12 (Stockholders' Equity) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Dividends
A summary of 2025 dividend activity for our common stock is as follows:
Dividend Amount Declaration Date Record Date Payment Date
$ 0.625 February 4, 2025 February 25, 2025 March 11, 2025
0.625 May 6, 2025 May 26, 2025 June 10, 2025
0.625 August 5, 2025 August 25, 2025 September 10, 2025
0.630 November 3, 2025 November 25, 2025 December 10, 2025
$ 2.505
On February 4, 2026, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of $0.630 per share. The dividend will be paid on March 10, 2026, to all stockholders of record as of the close of business on February 25, 2026.
The payment of any future dividends will be at the discretion of our Board of Directors and will depend upon our results of operations, financial condition, business prospects, capital requirements, contractual restrictions (including in current or future agreements governing our indebtedness), restrictions imposed by applicable law, tax considerations, and other factors that our Board of Directors deems relevant.
Cash Flows
Cash flows from operating, investing, and financing activities are as follows:
Year Ended December 31,
(dollars in millions) 2025 2024
Net cash provided by operating activities $ 1,205.2 $ 1,277.3
Net cash provided by (used in) investing activities 70.2 (659.2)
Net cash used in financing activities (1,184.5) (686.9)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 20.3 (12.2)
Net increase (decrease) in cash, cash equivalents, and restricted cash $ 111.2 $ (81.0)
Operating Activities
Cash flows from operating activities are as follows:
Year Ended December 31,
(dollars in millions) 2025 2024 Change
Net income $ 1,066.6 $ 1,077.8 $ (11.2)
Adjustments for the impact of non-cash items(1)
424.9 362.2 62.7
Net income adjusted for the impact of non-cash items 1,491.5 1,440.0 51.5
Changes in assets and liabilities:
Accounts receivable (1,166.5) (559.4) (607.1)
Merchandise inventory 48.2 61.1 (12.9)
Accounts payable-trade 815.4 443.8 371.6
Other assets and liabilities 16.6 (108.2) 124.8
Net cash provided by operating activities $ 1,205.2 $ 1,277.3 $ (72.1)
(1)Includes items such as depreciation and amortization, deferred income taxes, provision for credit losses, and equity-based compensation expense.
Net cash provided by operating activities decreased $72 million in 2025 compared to 2024. This decrease was primarily attributable to Accounts receivable, partially offset by Accounts payable-trade. The decrease from Accounts receivable and the increase from Accounts payable-trade was primarily due to higher sales activity in 2025 and timing of collections and payments.
In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle, defined as days of sales outstanding (DSO) in accounts receivable plus days of supply in inventory (DIO) minus days of purchases outstanding (DPO) in accounts payable, based on a rolling three-month average. Netted down revenue results in an increase to both DSO and DPO as the corresponding receivables and payables reflect the gross amounts due from customers and due to vendors while the corresponding sales and cost of sales are reflected on a net basis within Net sales. Additionally, as customers continue to shift to multi-year software purchases, unbilled receivables and DSO are expected to continue to increase. This customer shift in purchasing is also expected to increase accounts payable and DPO, as the timing of vendor payments aligns with customer collections. Components of our cash conversion cycle are as follows:
December 31,
(in days) 2025 2024
Days of sales outstanding (DSO)(1)
95 84
Days of supply in inventory (DIO)(2)
11 13
Days of purchases outstanding (DPO)(3)
(90) (79)
Cash conversion cycle 16 18
(1)Represents the rolling three-month average of the balance of the current portion of Accounts receivable, net at the end of the period, divided by average daily Net sales for the same three-month period. Also incorporates components of other miscellaneous receivables.
(2)Represents the rolling three-month average of the balance of Merchandise inventory at the end of the period divided by average daily Cost of sales for the same three-month period.
(3)Represents the rolling three-month average of the combined balance of the current portion of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily Cost of sales for the same three-month period.
The cash conversion cycle decreased to 16 days at December 31, 2025, compared to 18 days at December 31, 2024. The improvement was primarily due to DIO, which declined by 2 days as a result of lower average stocking positions. DSO and DPO both increased due to an increase in netted down revenue and multi-year transactions.
Investing Activities
Net cash provided by investing activities increased $729 million for the year ended December 31, 2025 compared to December 31, 2024. This increase was primarily driven by 2024 cash outflows to acquire Mission Cloud Services, Inc. and the purchase of short-term investments, compared to the 2025 cash inflow due to maturity of the short-term investments.
Financing Activities
Net cash used in financing activities increased $498 million for the year ended December 31, 2025 compared to December 31, 2024. This increase was primarily driven by long-term debt issuance in 2024, repayment of long-term debt in 2025, and higher share repurchases in 2025. These increases were partially offset by extinguishment of long-term debt in 2024. For additional information regarding the inventory financing and debt, see Note 7 (Inventory Financing Agreements) and Note 8 (Debt) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, results of operations, or liquidity.
Issuers and Guarantors of Debt Securities
Each series of our outstanding unsecured senior notes (collectively, the "Notes") are issued by CDW LLC and CDW Finance Corporation (the "Issuers") and are guaranteed by Parent (the "Guarantor"). In 2025, all guarantees by CDW LLC's direct and indirect, 100% owned domestic subsidiaries were released pursuant to the customary release provisions in the applicable indentures; as a result, Parent is now the sole remaining guarantor of the Notes. All guarantees by Parent are joint and several, and full and unconditional.
The Notes and the related guarantees are the Issuers' and the Guarantor's senior unsecured obligations and are:
•structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries and
•rank equal in right of payment with all of the Issuers' and the Guarantor's existing and future unsecured senior debt.
Given that Parent, the sole Guarantor of the notes, is a holding company that does not conduct business operations of its own and depends on cash dividends, distributions, and other transfers from its subsidiaries to meet its obligations, we concluded that providing summarized financial information of the Issuers and Guarantor on an unconsolidated basis, excluding the non-guarantor subsidiaries, would not provide meaningful information to investors.
Commitments and Contingencies
The information set forth in Note 16 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Critical Accounting Policies and Estimates
The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosure of contingent assets and liabilities in the Consolidated Financial Statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances and in accordance with GAAP. Historically, we have not made significant changes to the methods for determining these estimates as our actual results have not differed materially from our estimates. We do not believe it is reasonably likely that the estimates and related assumptions will change materially in the foreseeable future; however, actual results could differ from those estimates under different assumptions, judgments, or conditions.
Critical accounting policies and estimates are those that are most important to the portrayal of our financial condition and results of operations, and which require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and estimates addressed below. For additional information related to significant accounting policies used in the preparation of our Consolidated Financial Statements, see Note 1 (Description of Business and Summary of Significant Accounting Policies) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Revenue Recognition
We sell some of our products and services as part of bundled contract arrangements containing multiple performance obligations, which may include a combination of different products and services. Significant judgment may be required when determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together.
For contracts consisting of multiple performance obligations, the total transaction price is allocated to each performance obligation based upon its standalone selling price. Judgment is required to determine the standalone selling price for each distinct performance obligation. For certain types of performance obligations, we use a combination of methods to estimate the standalone selling price based on recent transactions. When evidence from recent transactions is not available to confirm that the prices are representative of the standalone selling price, an expected cost plus margin approach is used.
Additional judgment is required in determining whether we are the principal, and report revenues on a gross basis, or agent, and report revenues on a net basis. For each identified performance obligation in a transaction, we evaluate the facts and circumstances present to determine whether or not we control the specified good or service prior to transfer to the customer. This evaluation includes, but is not limited to, assessing indicators such as whether: (i) we are primarily responsible for fulfilling the promise to provide the specified goods or service, (ii) we have inventory risk before the specified good or service has been transferred to a customer, and (iii) we have discretion in establishing the price for the specified good or service. When the evaluation indicates we control the specified good or service prior to transfer to the customer, we are acting as a principal. When the evaluation indicates we do not control the specified good or service prior transfer to the customer, we are acting as an agent.
The nature of our contracts give rise to variable consideration, primarily in the form of volume rebates and sales returns and allowances. We estimate variable consideration at the most likely amount to which we expect to be entitled. The estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of our anticipated performance and all information that is reasonably available.
We recognize revenue from performance obligations when, or as, the customer obtains control over the specified good or service. That is, when the customer has the ability to direct the use of and obtain substantially all of the benefits from the good or service. For the sale of hardware, this is generally upon delivery to the customer. As a result, we perform an analysis to estimate the amount of Net sales in-transit at the end of the period and adjust revenue and the related costs to reflect only what has been delivered to the customer. This analysis requires judgment whereby we perform an analysis of the estimated number
of days of sales in-transit to customers at the end of each reporting period based on a weighted-average analysis of commercial delivery terms that include drop-shipment arrangements. Changes in delivery patterns may result in a different number of business days estimated to make this adjustment. For the sale of professional services, we recognize the revenue over time given that our customers simultaneously receive and consume the benefits from these services as they are performed. Depending on the arrangement, revenues from fixed fee contracts on professional services are recognized using an input method, which requires management to make estimates regarding the amount of resources required for each engagement in order to satisfy the performance obligation.
Goodwill
Goodwill is allocated to reporting units expected to benefit from the business combination. Goodwill is subject to periodic testing for impairment at the reporting unit level on an annual basis during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset may be impaired. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.
We may elect to utilize a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. As part of our qualitative assessment, judgment is required in weighing the effect of various positive and negative factors that may affect the fair value. We consider various factors, including the excess of fair value over carrying value from the last quantitative test, macroeconomic conditions, industry and market considerations, the projected financial performance, and actual financial performance compared to prior year projected financial performance.
If we elect to bypass the qualitative assessment, or if indicators of impairment exist, a quantitative impairment test is performed. As part of the quantitative assessment, application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, and determination of the fair value of each reporting unit. Fair value of a reporting unit is determined by using a weighted combination of an income approach and a market approach, as this combination is considered the most indicative of our fair value in an orderly transaction between market participants. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, determination of our weighted average cost of capital, future market conditions, and profitability of future business strategies. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. However, since our last quantitative analysis, our past estimates of fair value would not have indicated an impairment when revised to include subsequent years' actual results.
We completed our annual impairment analysis during the fourth quarter of 2025. We performed a qualitative analysis for all reporting units and concluded that it was more likely than not that the fair values of all reporting units exceeded their respective carrying values and, therefore, did not result in an impairment. The last quantitative analysis was performed in the fourth quarter of 2023, and it was determined that the fair values of each reporting unit substantially exceeded their carrying values, resulting in no goodwill impairment.
Business combinations
We allocate purchase price consideration to the assets acquired and liabilities assumed based on their fair values as of the acquisition date. Determining the fair value of these assets and liabilities requires the use of significant estimates, particularly in valuing acquired intangible assets and goodwill.
Purchased intangible assets other than goodwill are initially recognized at fair value and amortized over their useful lives. We determine the fair value of purchased intangible assets using an income approach on an individual asset basis. The fair value measurements were primarily based on significant inputs that are not observable, which are categorized as a Level 3 measurement in the fair value hierarchy. The values assigned to consideration transferred, assets acquired, and liabilities assumed may be adjusted during the measurement period as new information arises that existed as of the acquisition date.
We use the multi-period excess earnings method to determine the fair value of customer relationships. This method identifies the portion of revenue expected to be generated through repeat customers existing as of the valuation date and includes an attrition rate to account for the loss of customers over time. Critical estimates utilized in valuing customer relationships include estimated forecasted future revenue and EBITDA margin growth rates, customer attrition rates, and market-participant discount rates. The assumptions we apply in forecasting future revenue and customer attrition rates is based on analysis of historical data, assessment of current and anticipated market conditions, estimated growth rates, and management plans.
Recent Accounting Pronouncements
See the information set forth in Note 2 (Recent Accounting Pronouncements) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report.
Subsequent Events
The information set forth in Note 18 (Subsequent Events) to the accompanying Consolidated Financial Statements included in Part II, Item 8 of this report is incorporated herein by reference.
CDW Corporation published this content on February 20, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 20, 2026 at 21:06 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]