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CDW's Q3 2026 EPS of $3.26 beat estimates by 11.6%, rising approximately 20% year over year.
Net sales grew 17.7% to $6.75 billion, led by demand for servers, storage, mobile devices and software.
Gross margin fell to 20.5% from 21.9%, while operating cash flow declined to $618.5 million.
CDW Corporation (CDW - Free Report) reported third-quarter 2026 non-GAAP earnings per share (EPS) of $3.26, beating the Zacks Consensus Estimate of $2.92. The bottom line increased approximately 20% year over year, driven by broad-based customer demand, enterprise AI adoption and strength across key product categories.
The company reported net sales of $6.75 billion, up 17.7% year over year. Growth was driven primarily by higher demand for data storage and servers, notebooks and mobile devices, and software. On a constant-currency (cc) basis, net sales increased 17.8% year over year. The consensus estimate was $6.12 billion.
CDW's board approved a quarterly cash dividend of 68 cents per share, payable on Dec. 10, 2026, to shareholders of record as of Nov. 25, 2026. Management highlighted strong demand across customer end markets and accelerating enterprise AI adoption. The company also reiterated its confidence in outpacing U.S. IT addressable market growth by 200-300 basis points on a cc basis, supported by its broad technology portfolio, customer relationships and strategic investments.
For the Commercial segment, net sales increased 20.8% year over year to $3.98 billion. Financial Services customers led growth with a 73.2% increase, followed by Corporate and Healthcare customers, up 16.8% and 9.3%, respectively.
Education net sales increased 7.5% to $982 million.
Net sales in Other (combined sales from its UK and Canadian operations) grew 26% to $880 million.
Margins & Expenses Remain Key Watchpoints
Gross profit grew 10.3% year over year to $1.4 billion. Despite strong revenue growth, CDW's gross margin came under pressure from sales mix shifts and lower margins in certain product categories. Gross margin declined from 21.9% to 20.5%.
Non-GAAP operating income increased 16.8% year over year to $619.8 million. The non-GAAP operating margin remained flat year over year at 9.2%.
Selling and administrative expenses increased 10.3% to $896 million, reflecting higher performance-based incentives, workplace optimization costs and acquisition-related expenses.
Balance Sheet & Cash Flow
As of Sept. 30, 2026, CDW had $1.5 billion in cash and cash equivalents compared with $361.8 million as of June 30.
The company had net long-term debt of $7.12 billion compared with $5.82 billion as of June 30, 2026.
For the nine months that ended on Sept. 30, 2026, CDW generated $618.5 million of cash flow from operating activities compared with $771.4 million in the year-ago period. Free cash flow was $537.8 million.
Cadence Design Systems, Inc. (CDNS - Free Report) reported strong third-quarter 2026 results, driven by robust demand for AI-oriented design solutions and hardware-assisted verification products. Non-GAAP earnings per share of $2.11 beat the Zacks Consensus Estimate by 3.4% and increased 9.3% year over year. Revenues of $1.633 billion surpassed the consensus mark by 1.4% and increased 22% year over year. The figure exceeded management’s guided range of $1.60-$1.63 billion.
Progress Software Corporation (PRGS - Free Report) reported third-quarter fiscal 2026 results wherein revenues came in at $246 million, down 2% year over year and on a constant currency (cc) basis. ARR of $873 million inched up 1% year over year on a cc basis. Progress Software Corporation reported a 13% year-over-year increase in non-GAAP earnings per share, which stood at $1.69.
Synopsys, Inc. (SNPS - Free Report) reported third-quarter fiscal 2026 non-GAAP earnings of $3.91 per share, which increased 15.3% year over year and beat the Zacks Consensus Estimate by 6.5%. Broad-based strength, led by EDA and Ansys, supported the earnings outperformance. Revenues for Synopsys rose 42.4% year over year to $2.48 billion, topping the consensus mark by 1.7%. Backlog remained strong at $10.9 billion, while Design IP returned to year-over-year growth.
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CDW Q3 Earnings Beat, Revenues Jump 18% Y/Y Despite Margin Compression
Key Takeaways
CDW Corporation (CDW - Free Report) reported third-quarter 2026 non-GAAP earnings per share (EPS) of $3.26, beating the Zacks Consensus Estimate of $2.92. The bottom line increased approximately 20% year over year, driven by broad-based customer demand, enterprise AI adoption and strength across key product categories.
The company reported net sales of $6.75 billion, up 17.7% year over year. Growth was driven primarily by higher demand for data storage and servers, notebooks and mobile devices, and software. On a constant-currency (cc) basis, net sales increased 17.8% year over year. The consensus estimate was $6.12 billion.
CDW's board approved a quarterly cash dividend of 68 cents per share, payable on Dec. 10, 2026, to shareholders of record as of Nov. 25, 2026. Management highlighted strong demand across customer end markets and accelerating enterprise AI adoption. The company also reiterated its confidence in outpacing U.S. IT addressable market growth by 200-300 basis points on a cc basis, supported by its broad technology portfolio, customer relationships and strategic investments.
In the past year, shares have gained 2.4% against the Zacks Computers-IT Services industry’s fall of 17.4%.
Image Source: Zacks Investment Research
Segmental Details
For the Commercial segment, net sales increased 20.8% year over year to $3.98 billion. Financial Services customers led growth with a 73.2% increase, followed by Corporate and Healthcare customers, up 16.8% and 9.3%, respectively.
CDW Corporation Price, Consensus and EPS Surprise
CDW Corporation price-consensus-eps-surprise-chart | CDW Corporation Quote
Government net sales rose 9.9% to $913 million.
Education net sales increased 7.5% to $982 million.
Net sales in Other (combined sales from its UK and Canadian operations) grew 26% to $880 million.
Margins & Expenses Remain Key Watchpoints
Gross profit grew 10.3% year over year to $1.4 billion. Despite strong revenue growth, CDW's gross margin came under pressure from sales mix shifts and lower margins in certain product categories. Gross margin declined from 21.9% to 20.5%.
Non-GAAP operating income increased 16.8% year over year to $619.8 million. The non-GAAP operating margin remained flat year over year at 9.2%.
Selling and administrative expenses increased 10.3% to $896 million, reflecting higher performance-based incentives, workplace optimization costs and acquisition-related expenses.
Balance Sheet & Cash Flow
As of Sept. 30, 2026, CDW had $1.5 billion in cash and cash equivalents compared with $361.8 million as of June 30.
The company had net long-term debt of $7.12 billion compared with $5.82 billion as of June 30, 2026.
For the nine months that ended on Sept. 30, 2026, CDW generated $618.5 million of cash flow from operating activities compared with $771.4 million in the year-ago period. Free cash flow was $537.8 million.
CDW’s Zacks Rank
CDW currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Recent Performance of Other Firms
Cadence Design Systems, Inc. (CDNS - Free Report) reported strong third-quarter 2026 results, driven by robust demand for AI-oriented design solutions and hardware-assisted verification products. Non-GAAP earnings per share of $2.11 beat the Zacks Consensus Estimate by 3.4% and increased 9.3% year over year. Revenues of $1.633 billion surpassed the consensus mark by 1.4% and increased 22% year over year. The figure exceeded management’s guided range of $1.60-$1.63 billion.
Progress Software Corporation (PRGS - Free Report) reported third-quarter fiscal 2026 results wherein revenues came in at $246 million, down 2% year over year and on a constant currency (cc) basis. ARR of $873 million inched up 1% year over year on a cc basis. Progress Software Corporation reported a 13% year-over-year increase in non-GAAP earnings per share, which stood at $1.69.
Synopsys, Inc. (SNPS - Free Report) reported third-quarter fiscal 2026 non-GAAP earnings of $3.91 per share, which increased 15.3% year over year and beat the Zacks Consensus Estimate by 6.5%. Broad-based strength, led by EDA and Ansys, supported the earnings outperformance.
Revenues for Synopsys rose 42.4% year over year to $2.48 billion, topping the consensus mark by 1.7%. Backlog remained strong at $10.9 billion, while Design IP returned to year-over-year growth.