A multi-brand IT solutions provider, CDW sells more than 100,000 hardware, software, and service products from over 1,000 vendor partners to business, government, education, and healthcare customers across the US, UK, and Canada. It began in 1984 when Michael Krasny placed a small newspaper ad to sell his personal computer, got an overwhelming response, and started reselling computers from his Chicago apartment under the name Computer Discount Warehouse—the initials that became CDW.
CDW's Q2 revenue rose 10% to $6.6B, but gross margin fell to 20.1% as lower-margin hardware dominated the mix.
growth accelerated, but profitability continued to erode. Net sales rose 10.0% to $6.57 billion on broad demand for hardware and software, yet contracted 70 to 20.1%—its lowest level in over three years—as data storage, servers, and notebooks outpaced higher-margin offerings. The company is selling more but earning less on each sale, a dynamic that leaves up only 2.0% despite the double-digit top-line gain.
Key takeaways
fell 70 to 20.1%, driven by a product mix shift toward lower-margin hardware categories including data storage, servers, notebooks, and netcomm products.
rose 10.0% to $6,572 million, with growth across all segments and particular strength in data storage, servers, notebooks, software, and netcomm products.
grew only 2.0% to $428.6 million despite the increase, as selling and administrative expenses rose 8.6% to $891 million on higher compensation and workplace optimization costs.
Section summaries
Management's Discussion and Analysis
Q2 2026 net sales rose 10% to $6.6B on broad demand, but gross margin fell 70 bps to 20.1% due to hardware mix.
⌄
Total grew 10.0% to $6,572 million, driven by data storage, servers, notebooks, software, and netcomm products across all segments.
The Government saw rise 13.6% but fell 2.7%, as its dropped 320 on a less favorable mix of hardware and services.
turned negative at -$55.1 million for the quarter, down from $433.8 million a year earlier, as higher and weighed on cash generation and the extended to 21 days.
The company repurchased 4.5 million shares for $545 million during the quarter and declared a $0.63 per share .
What changed
The Q1 2026 watch item on materialized: the 21.0% level did not stabilize, falling a further 90 sequentially to 20.1% as the hardware mix shift toward data center and netcomm products continued.
The Government 's decline deepened from the 260 basis-point drop flagged in Q1 2026, falling another 60 sequentially to 19.7% in Q2, confirming it is not a one-quarter event.
Operating expense growth moderated slightly from the 7.0% rise in Q1 2026 to an 8.6% increase in Q2, but compensation and workplace optimization costs continued to outpace gains, keeping growth at just 2.0%.
The DOJ Civil Investigative Demand on E-Rate Program bids, flagged in every prior filing, remains an open legal risk with no material change disclosed this quarter.
What to watch
Q3 2026 to see if the 20.1% level represents a floor or if the hardware mix shift toward data center and netcomm products pushes it below 20% for the first time.
Government to see if the 320 basis-point drop stabilizes or continues to deteriorate under the new segment structure.
Q3 2026 to see if the and build that drove cash flow to -$55.1 million reverses, or if the extended 21-day persists.
Resolution of the June 2024 DOJ Civil Investigative Demand on E-Rate Program bids, which remains an open legal risk with no update this quarter.
increased 6.3% to $1,320 million, but contracted 70 to 20.1%, pressured by lower-margin hardware mix.
Selling and administrative expenses rose 8.6% to $891 million on higher compensation and workplace optimization costs, limiting growth to 2.0%.
Government jumped 13.6%, but fell 2.7% as margin dropped 320 on hardware and services mix.
fell to $220 million from $443 million, driven by higher and ; the extended to 21 days.
The company repurchased 4.5 million shares for $545 million and declared a $0.63 quarterly .
Quantitative and Qualitative Disclosures About Market Risk
See “Quantitative and Qualitative Disclosures of Market Risks” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. As of June 30, 2026, there have been no material changes in this information. 36 Table of Contents
⌄
See “Quantitative and Qualitative Disclosures of Market Risks” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. As of June 30, 2026, there have been no material changes in this information.
36
Table of Contents
The information set forth in Note 10 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in “Part I, Item 1. Financial Statements” of this report is incorporated herein by reference.
⌄
The information set forth in Note 10 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in “Part I, Item 1. Financial Statements” of this report is incorporated herein by reference.
See “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to our risk factors during the six months ended June 30, 2026.
⌄
See “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to our risk factors during the six months ended June 30, 2026.