CDW UK sales grew 'high teens' in Q4, claims CEO

Christine A. Leahy also gives update on integrating Sirius Computer Solutions business, health of the PC market and how supply issues will impact CDW's business in 2022

CDW's UK sales grew by double digits in Q4, according to CEO Christine A. Leahy, as she gave an update on the health of the PC market and how supply issues will impact the reseller giant going into 2022.

Leahy revealed on an earnings call that its UK business delivered "high teens local market growth" in Q4, contributing to a 20 per cent year-on-year increase for its "Other" business segment which includes sales for the UK and Canada.

Sales for this segment reached $699m during the quarter.

Leahy added that customer priorities in the UK and Canada were "similar to those in the US", with cloud adoption growing and security remaining a top priority.

At a group level, CDW grew net sales by 11.7 per cent in Q4 to $5.54bn, including $197m in net sales from its acquisition of Sirius Computer Solutions which closed on 1 December 2021.

Its Corporate segment enjoyed the highest growth at 33.1 per cent higher than 2020 to $2.32bn. Small Business sales meanwhile grew by 30.9 per cent to $487m, while public sector sales fell by 13 per cent to $2.03bn due to a decrease in government and education spending.

For the full year, CDW hit sales of $20.82bn, up 12.7 per cent on 2020, while operating income ballooned by 20.3 per cent to $1.42bn.

CDW acquired US solution provider Sirius Computer Solutions last year for $2.5bn, in a move which adds 2,500 new staff to the business.

Speaking on an earnings call, transcribed by Seeking Alpha, Leahy said that integration efforts are on track and CDW and Sirius teams are already collaborating on deals.

"Integration is going really quite well, and it's moving with smart speed. We're very disciplined as you know, but we also understand moving with the appropriate amount of speed to make sure that our customers are benefiting from the combined organisations, which is critically important."

And the Sirius coworkers, now CDW coworkers are fully aligned with our culture: customer-first, coworker-first and collaborative. We're already seeing benefits of us coming together, winning deals together, going to meet customers together."

Answering questions about how current supply issues are affecting CDW, CFO Al Miralles answered that the reseller doesn't "see any meaningful end in sight", adding that chip issues were just as severe in Q4 as in other quarters.

"Maybe there's silver lining there that some of the transparency has improved. So there's a better line of sight for lead times and where things stand, but I'm not sure that we would translate that as indicating that things are going to get better in the near term. Really we're hunkered down on consistent similar outlook with respect to this supply chain environment and we'll continue to execute as we have during this time."

Supply issues could be accelerating a move to off-prem infrastructures, one analyst suggested to Leahy.

But the CEO relied that clients are being "thoughtful" about their shift to cloud and said there is still plenty of opportunity selling on-prem infrastructure - particularly as customers continue to return the office.

"We are seeing acceleration to the cloud. But, we've said this before, our clients are being very thoughtful about the strategy and what technology best serves their organisational needs."

Leahy also said that the PC market will continue to shine in 2022, but said Q1 will be a "tough quarter" for the market.

"We really do see client devices as a tool for employees, as a tool for people generally and expectations of using them for productivity have increased. And the demand for client devices as people come back to the office and remotely and anywhere, also adds demand to the market.

"The other thing we've talked about is technology cycles and technology innovation and upgrades happening more quickly than we've typically seen in the past. And when you think about remote and virtual, think about breakage, so you've got a couple of pressure points that are compressing cycle times.

"People are buying PCs, we are in a very good position to make sure that we get our fair share of inventory to supply them. And while we see moderating growth, we just see it as a positive contribution to our overall performance."