Sales Drop Stems From Large Commercial Customer Slowdown
Leahy said the main driver of CDW's 14 per cent revenue drop was a "downshift" in its commercial business, particularly from larger customers, that impacted hardware, software and services.
"When our customers got cautious and exhibited a lot of concern, they went into decisions around deferring and pausing, and reducing costs generally, which is a playbook for larger customers," said Leahy. "And that brought greater scrutiny to projects. That brought a focus on shorter term ROI. That brought a focus on overarching cost reductions—all of which created longer sales cycles, and shorter duration contracts."
This downshift in demand amongst CDW's large commercial customers was the leading cause of CDW's revenue drop in first quarter 2023, she said. CDW's commercial business represents more than 50 percent of CDW overall business. "That impact just created a major headwind for our top line sales," she said.
"So as a full stack, full lifecycle provider, there's a cascading impact across hardware, software and services. So if you've got large delays in deals, then you have less attachment of services and other solutions," said Leahy.
