CDW Corporation (CDW) Earnings Call Transcript & Summary

Hello, everyone. Thank you for joining us, and welcome to the CDW Third Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Steve O'Brien with Investor Relations. Steve, please go ahead.

Thank you, Joel. Good morning, everyone. Joining me today to review our third quarter 2026 results are Chris Leahy our Chair and Chief Executive Officer; and Al Miralles, our Chief Financial Officer. Our earnings release was distributed this morning and is available on our website investor.cdw.com, along with supplemental slides that you can use to follow along during the call. I'd like to remind you that certain comments made in this presentation are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Those statements are subject to a number of risks and uncertainties that could cause actual results to differ materially. Additional information concerning these risks and uncertainties is contained in the earnings release we furnished to the SEC today and in the company's other filings with the SEC. CDW assumes no obligation to update the information presented during this webcast. Our presentation also includes certain non-GAAP financial measures. For instance, non-GAAP operating income, non-GAAP operating income margin, non-GAAP net income and non-GAAP earnings per diluted share, non-GAAP selling and administrative expenses and non-GAAP effective tax rate. Net sales on a constant currency basis, free cash flow and adjusted free cash flow. Non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation charts in the slides made available on our website and in our earnings release. Please note, all references to growth rates or dollar amounts changes in our remarks today are versus the comparable period in 2025 with net sales growth rates described on an average daily basis, unless otherwise indicated. Replay of this webcast will be posted to our website later today. This conference call is property of CDW and may not be recorded or rebroadcast without specific written permission from the company. With that, let me turn the call over to Chris.

Thank you, Steve, and good morning, everyone. I'll begin with an overview of our third quarter performance progress and outlook. Al will then provide detail on the financial results, capital allocation and expectations for the balance of the year. The team executed with precision and delivered record performance in a dynamic technology environment shaped by prioritization of infrastructure monetization and AI adoption. For the quarter, net sales increased 18% to $6.8 billion. Gross profit was $1.4 billion, 10% above last year. Expense efficiency delivered operating leverage and non-GAAP operating income increased by 17% to $620 million, while we continue to invest in our coworkers industry specialization and AI capabilities. Opportunistic share repurchases contributed to 20% growth in non-GAAP net income per diluted share of $3.26 and disciplined working capital management converted performance into adjusted free cash flow of more than $500 million. These results demonstrate the power of our model capture demand wherever it is most impactful to our customers and convert it into profitable growth. Meeting customer priorities drove record quarterly sales in both hardware and software with both contributing to double-digit gross profit growth. Momentum in AI enterprise adoption drove strong infrastructure investment, propelling hardware growth ahead of software. This delivered significant profit dollars today and opportunities for solutions and services over time. Capturing demand where it matters most to customers means mix will vary quarter-to-quarter. We expect that. What does not change is the underlying trajectory. Our strategy is driving stronger economics over time. Over the past 5 years, gross profit has increased at more than twice the rate of net sales. This quarter's performance reflects the power of strong execution and value of our deep industry and technology expertise. Let's take a look at the 3 drivers of performance this quarter. The breadth and depth of our customer end markets, our full stack full life cycle portfolio and our growth strategy, which underpins our value proposition in an AI forward world. First, our customer end markets. Our 3 U.S. segments are commercial, government and education our U.K. and Canadian operations are reported as Other. Within each, we align resources by customer type, size and complexity. Our unmatched scale powers this level of segmentation. Customer breadth sharpens our view of where demand is moving, and our deep specialization turns that insight into precise execution for each customer end market. With hundreds of thousands of customers, we had a unique view of technology priorities and how they are evolving. And what we see is convergence. Customers are modernizing and optimizing their foundations, advancing their AI priorities and demanding measurable returns on technology investments. We also see a familiar pattern in technology adoption. AI is starting with infrastructure for large sophisticated customers expanding across the stack and then out to the mid-market, small business and public sector. Across those markets, customer priorities are consistent. What differs is the outcomes customers are solving for. You see that in this quarter's broad-based growth, commercial top line increased 21%, international 26%; government 10% and education, 8%. For commercial, capacity and productivity drove investment. Corporate customers built more resilient, scalable environments to support increasingly complex workloads, driving investment across infrastructure modernization, cloud, AI readiness and more capable client devices. Small businesses emphasize productivity, cost control and security. For Financial Services, it was speed with control, investing to act on data faster, strength and resiliency and improved decision-making while maintaining security, governance and cost discipline. For Healthcare, doing more with constrained resources remain the top priority, investments centered on improving clinical workflows and operating efficiency while managing continued reimbursement and funding pressures. For government, technology investment was tied directly to mission. Federal and state and local customers prioritized operating efficiency and control of critical data and infrastructure. Education institutions invested to secure learning environments, improved student outcomes and ensure responsible AI adoption with K-12 extending device lives and higher education emphasizing optimization, security and greater value from data. And international reflected many of these same priorities, modernization, resilience and efficiency drove more than 20% growth in both the U.K. and Canada. Success addressing distinct end market priorities underscores the value of our second performance driver, our full stack full life cycle portfolio which delivers multiple paths to growth. Investments in modernization and AI prioritization pulled through demand across the technology stack, driving excellent performance across hardware and software. Availability of product and delivery conditions showed signs of normalizing with fewer surprises than earlier in the year. Hardware increased 21%, driven by modernization, including AI-related investments from foundational infrastructure to significant AI factory deployments. Data storage and servers more than doubled while NetComm increased 9%, investments that create follow-on opportunities across the life cycle. Client device performance was also strong, up 19%. Customers invested in greater processing power, memory and security to support evolving workloads and extend device lives. Although unit volumes declined, higher average selling prices more than offset the decline, reflecting both price increases and demand for more capable configurations. Modern technology environments are inherently hybrid, spanning hardware, software, cloud and services. And these environments become more interconnected, customer investment increasingly extends across multiple parts of the technology stack. You see this in our software and cloud performance. Software increased 14%, driven by double-digit growth across network management, virtualization and operating systems. Cloud delivered stellar growth, reflecting broad demand across SaaS and ID solutions and workloads. Services lead, enable and extend the technology life cycle. Professional and managed services returned to growth, up 2%. Performance continued to reflect the timing of large deployments with services opportunities following as deployments move through the technology life cycle. Our ability to capture opportunities across the full technology life cycle is underpinned by our third performance driver, our growth strategy. Our growth strategy is anchored in our North Star, relevance. Relevance defines how we win. Scale sustains it with reach and insight. Specialized expertise turns that insight into action and repeatable solutions extend our impact. And today, relevance matters more than ever. Today's technology decisions are business decisions and mission decisions. As the stakes rise and AI investment grows, decisions are more consequential than ever. And getting those decisions right starts with the right foundation, data. Turning enterprise data and context into trusted intelligence is essential to scaling AI. AI adoption is creating an explosion of data, much of it fragmented across applications, cloud and infrastructure. trusted, secure and usable information is essential. Our recent addition of Lovelytics deepens the expertise we bring to this foundational work across data strategy and engineering, analytics, generative AI and machine learning and data migration and modernization. AI is in a consequential phase of its acceleration. The market is shifting from experimentation and task level productivity to production, workflow, redesign and performance. As it moves from fulfilling more tasks to changing how work gets done, AI unlocks greater productivity, capacity, speed, innovation, better decision-making and results, realizing that potential starts with the outcome. CDW's AI-first perspective puts outcomes first, then builds the strategy around what must connect across both the technology and the organization to deliver it. Customers will move at different speeds and from different starting points, but the 6 AI imperatives are the same. Enterprise data needs to become trusted intelligence. Infrastructure must be ready. AI needs to move into applications and workflows and security, governance and economics must keep pace. Bringing those elements together is at the heart of what CDW does, we orchestrate environment, connecting across the technology stack to deliver outcomes. Our position at the center of the technology ecosystem makes this orchestration possible. No single vendor can address every requirement. We connect partner innovation and customer needs, bringing together the right technology expertise and services. Few providers can bring it all together, CDW can. Significant AI capacity has been built. Return on that investment depends on adoption and sustained consumption. We know how to drive both. Our cloud performance demonstrates our success connecting innovation to customer needs and turning partner capacity into sustained consumption. AI is broader and more complex making our role even more valuable. AI momentum is building across the enterprise market, and we are selectively serving customers in this space, including those at the cutting edge, while staying disciplined on economics and returns. Now the next phase of adoption is underway, broadening into the mid-market, small business and public sector. Across these markets, teams are accelerating adoption and turning it into sustained consumption. Here's a customer example that shows what that looks like in practice. A major international airport goal was clear: [ move is ] critical terminal transportation system toward near 0 outages. The team developed a solution that seamlessly brings together AI, computer vision, LiDAR, telemetry, machine learning and advanced infrastructure. This integrated solution continuously monitors the entire system and identifies potential issues before they disrupt operations, enabling corrective actions sooner. The outcomes matter. Greater system reliability, reduced downtime, more efficient use of maintenance resources and better experience for the millions of passengers who rely on one of the world's busiest airports. And for CDW, related production monitoring and cloud analytics opportunities total about $2 million. This is orchestration in action, connecting technology, services and expertise to deliver a critical business outcome. It's also a great example of how we are turning what was once bespoke into repeatable solutions and what is repeatable into scalable outcomes. We built an AI IoT solution that is extensible across multiple operational environments from transportation systems to water and power infrastructure. This is how our AI flywheel works, solve, learn, repeat and scale across industries, customer sizes and stages of adoption. Because for our customers, the larger AI opportunity is not simply doing tasks faster, the opportunity isn't changing how customers operate to deliver meaningful outcomes. Helping customers achieve this quickly and efficiently requires even more than a broad portfolio and the ability to connect technologies that requires the scale to turn insight into precision to deliver faster, more cost-effective time to value. And our scale is a compounding advantage that extends well beyond AI. As technology change accelerates across the ecosystem, our deep customer understanding positions us to capture demand wherever customers invest. That leads me to our outlook. Current market conditions remain constructive. Customer engagement and written demand remained healthy. Writings continue to outpace invoicing and backlog is building, particularly in enterprise infrastructure. Given this backdrop, we are increasing our full year outlook. We now expect the U.S. IT addressable market to grow at a high single-digit rate in 2026 on a customer spend basis and we see 300 to 400 basis points of CDW outperformance compared to the market. The opportunity ahead is significant. Technology is undergoing tectonic change. In an AI forward world, we translate customer investment into outcomes and partner innovation into adoption and sustained consumption. Demand will shift, technology will evolve what endures is our relevance, powered by advantages that compound, unmatched scale, deep customer relationships, specialized expertise and a unique position at the center of the technology ecosystem. That gives us confidence in our strategy, the opportunity ahead and the forward earnings power behind today's dividend increase. With that, let me turn it over to Al.

Thank you, Chris, and good morning, everyone. I'll begin with details on our third quarter performance, move to capital allocation priorities and then finish with our outlook for the remainder of 2026. As Chris mentioned, this quarter, demand was strongest in AI-driven hybrid infrastructure and data center modernization, particularly in servers, storage and cloud, and we're also seeing those investments pull-through opportunities across networking, data governance, security and services. The AI market is increasing both the scale and complexity of customer technology environments. Customers are evaluating how infrastructure, cloud, data, application security and endpoints work together in a secure, governed and cost-effective architecture reinforcing the value of CDW's full stack full life cycle model. Third quarter gross profit of $1.4 billion increased 10.3% year-over-year. This is well above our expectation for a mid-single-digit year-over-year increase. Spending is increasingly tied to measurable efficiency gains, data governance and cost optimization with focus on ROI. Third quarter gross profit gross margin was 20.5%, down 140 basis points year-over-year, but up 40 basis points from the second quarter. As we've discussed in prior quarters, gross margin will vary with changes in product and end market mix. In the current environment, our mix continues to be weighted towards large infrastructure projects, which carry higher hardware content. We experienced meaningful growth in cloud, SaaS and IaaS solutions which are transferred at a point in time where CDW is aging, also known as our netted down business. Demand also remains strong among large enterprise and financial services customers, making significant investments in hardware infrastructure, particularly servers and storage. These large projects generated meaningful gross profit dollars and helped to drive upside to that end in the third quarter. Over time, they also create opportunities for additional solutions and services. Netted down revenue streams increased 17.1% year-over-year and accelerated from the second quarter growth. They represented a record 38.2% of gross profit, up 220 basis points year-over-year and 230 basis points quarter-over-quarter. Professional and managed services returned to growth in the quarter, while continuing to be impacted by deployment timing and customer prioritization of hardware and cloud investments. As infrastructure, security and AI projects through from procurement, implementation, integration and ongoing management, we continue to expect services opportunities to follow. Turning to expenses for the third quarter. Non-GAAP SG&A totaled $766 million, up 5.6% year-over-year. The increase is primarily incentive related reflecting higher performance-based compensation tied to stronger gross profit growth. As expected, we began to capture benefits associated with our geared for growth efforts. As a percentage of gross profit, non-GAAP SG&A was 55.3%, an improvement of 240 basis points year-over-year and 260 basis points from the second quarter, consistent with our prior expectation for improvement on both a year-over-year and sequential basis. Keep in mind that Geared for Growth's long-term objective is durable operating leverage which incorporates both expense efficiencies and savings used for reinvestment. Seasonality impacts the expense leverage ratio, so improvement will not always be linear on a sequential basis. Coworker count totaled 14,600, while customer-facing coworker count was approximately 10,500. Our head count in the quarter reflects the addition of approximately 600 new coworkers from the Lovelytics acquisition. We remain laser-focused on our goal to balance growth, expansion of capabilities and exceptional customer experience with greater efficiency and cost leverage from our broader operations. Non-GAAP operating income was approximately $620 million, up 16.8% year-over-year demonstrating strong operating leverage. Notwithstanding the lower gross margin profile of the business compared to the prior year, non-GAAP operating income margin was solid at 9.2%, highlighting the flexibility of our operating model. Net interest expense was in line with our expectations at $66 million. This year, interest expense has been influenced by higher average borrowings under our revolving loan facility and lower interest income on cash balances. Our non-GAAP effective tax rate was within our range at 26%. Non-GAAP net income was $410 million, up 14.8% year-over-year. Third quarter non-GAAP net income per diluted share was $3.26 up 20.4% year-over-year, well above our expectation for growth at the high end of high single digits, impacted by the strong operating performance combined with our opportunistic share repurchases through 2026. Moving to the balance sheet. At period end, net debt of $5.6 billion and liquidity was $3.4 billion with cash plus revolver availability. During the quarter, we issued $1.5 billion of new senior notes. We will use the net proceeds to repay our $1 billion December 2026 senior notes at maturity with the remainder used to fund the Lovelytics acquisition. The 3-month average cash conversion cycle was 20 days, within our targeted range of high teens to low 20s. We continue to believe our target cash conversion range remains the best guidepost for modeling working capital longer term. Adjusted free cash flow was $506 million in the quarter or 123% of non-GAAP net income driven by profit growth and disciplined working capital management. That brings year-to-date adjusted free cash flow to $785 million or 73% of non-GAAP net income, slightly below our stated long-term rule of thumb of converting 80% to 90% of non-GAAP net income to cash, but demonstrating significant progress towards this annual role. We have line of sight towards achieving our cash flow objectives. This year, we've been focused on managing these objectives in a way that supports our customers and drive shareholder value even as ongoing hardware-driven growth has warranted investing in working capital. In the quarter, we utilized cash consistent with our 2026 capital allocation objectives. Returning $108 million through share repurchases and $79 million through dividends. Year-to-date, we've returned approximately $892 million to shareholders or 114% of adjusted free cash flow, well ahead of our 2026 target of returning 50% to 75%. Year-to-date, share repurchases of $653 million already matched our total for all of 2025. We have repurchased a total of 5.3 million shares this year at an average price of approximately $123 per share. That brings me to our capital allocation priorities moving forward. Our first capital priority is to increase the dividend in line with non-GAAP net income growth. Today, we announced approximately 8% increase in our quarterly dividend to $0.68 per share or $2.72 annually, our 13th consecutive year of an increase. We continue to prudently manage our dividend with respect to the growth environment and target a roughly 25% payout ratio of non-GAAP net income. Our second priority is to ensure we have the right capital structure in place. We ended the third quarter at 2.5x net leverage within our targeted range of 2 to 3x. We continue to proactively manage liquidity while maintaining flexibility. Finally, our third and fourth capital allocation priorities of M&A and share repurchases remain important drivers of shareholder value. On September 25, we completed the acquisition of Lovelytics, a leading data and AI services firm for $525 million. Lovelytics expands our capabilities and our services and solution offerings in modern cloud, data and AI. And while we remain active in the M&A market, we will also continue to be opportunistic or towards share repurchases with approximately $1 billion remaining under authorization. Now turning to our outlook. Budgets remain concentrated on the areas of greatest strategic importance including infrastructure modernization, security and resiliency, cloud adoption and optimization, AI-ready data and applications and targeted device investments, healthy written production and an elevated backlog support our view that underlying demand will remain durable in Q4. At the same time, we remain balanced given the complex and rapidly evolving technology landscape. Factoring in these variables, we now expect gross profit to grow at a mid- to high single-digit rate for the full year 2026, up from our prior expectation of mid-single digits. This leads to a first half versus second half split in the range of 48% to 52%, which is aligned to historical half -- second half weighted seasonality. Based on the anticipated mix of products and end markets, we continue to expect full year 2026 gross margin to be down compared to the full year 2025. The outlook for net interest expense is now higher in the range of $255 million to $260 million, driven by the $1.5 billion notes issuance during the third quarter. Finally, we now expect full year non-GAAP net income per diluted share growth to be in the low double-digit range year-over-year, up from our prior expectation for a high single-digit growth. Please remember, we hold ourselves accountable for delivering our financial outlook on a constant currency basis. On that note, our expectation is for currency to be relatively neutral to reported growth rates for the full year. Moving to modeling thoughts for the fourth quarter. We anticipate gross profit to increase at a mid-single-digit rate year-over-year, which equates to a seasonal low to mid-single-digit decline sequentially. Moving down the P&L, we expect fourth quarter non-GAAP SG&A to increase at a low single-digit rate year-over-year and sequentially. Non-GAAP operating expense as a percentage of gross profit will demonstrate continued efficiency improvement on a year-over-year basis, driven by our geared for growth efforts. Finally, we expect fourth quarter non-GAAP net income per diluted share to increase to a low double-digit rate year-over-year. With that, I want to thank our coworkers for an exceptional quarter of execution. Our performance reflects the strength of our customer relationships, the power of our business model and our ability to help customers navigate increasing complexity. This concludes the financial summary. I will now ask the operator to open up for questions. And we would ask each of you to limit your questions to one with a brief follow-up. Thank you.

[Operator Instructions]. Your first question is from David Vogt with UBS.

Appreciate all the detail. Maybe Chris and Al, can you talk to the demand drivers in the quarter? I know you mentioned a lot of infrastructure programs and projects in the quarter. But can you maybe speak to a little bit more granular what you're seeing from a pricing backdrop, a supply chain backdrop and sort of a demand backdrop. For example, like how much of the strength that you're seeing in server stores, networking infrastructure is price-driven versus demand driven? And are you shipping -- or are you able to satisfy the demand that you see out there? Are there any sort of supply constraints that are maybe potentially impacting your ability to convert that demand into revenue?

David, thanks for the question. And I'd start by saying that we're seeing demand remain resilient. And when you think about what's been driving in it. Obviously, pricing is impacting results. But look, there are needs that the customers are leaning into that we've been seeing very high on the list. So think AI readiness, I think data growth, network modernization, cybersecurity, resiliency and hybrid architectures, all really in the in the preparation stage for utilizing AI. And what we are seeing is working with customers to make trade-offs in their budgets, in some cases, move to fewer units and higher capacity. But at the end of the day, we see the durability of that demand continuing. In terms of the pricing itself, I'll let Al address that.

Yes. Thanks for the question, David. I would say that the market is still driven by supply variables as well as pricing. But if we look across our different product set, the growth was substantially driven by units, and I'll give you one exception in a second. So if we look at the areas of greatest strength, server storage, definitely strong unit growth strong volume of customer spend coming through. While those buyers are influenced by price, that was not the driver of our growth. It was more so on the unit side. Now the one stand out in that regard, no surprise would be client devices, that is client devices grew at a nice clip at 19%, units were down and ASPs were up. But I will just note as well on clients. The one kind of kick for us is the ASPs were up partially because customers are choosing to move to more richer configurations. So it's not just price movement.

Great. And maybe just as a quick follow-up. So if I just take your comments around pricing on quant devices units and your netted down mix. Maybe you can flesh out where you saw a little bit of margin pressure. Is it just the configurations within server storage at lower margin or the infrastructure, other infrastructure assets? I'm just trying to get a sense because it looks like your product gross margin ex netted down, maybe ticked down slightly sequentially in the quarter?

Yes. Happy to take that, David. So first, like Chris said, the demand was broad-based across all of our end markets. That being said, our results reflected significant upside relative to our expectations. A good piece of that overperformance came from our enterprise customers and our financial services customers focused on infrastructure. That was not a phenomena of like-for-like margin compression, more a function of mixing strong into particular products and mixing strong into particular end markets like those 2 noted, will have an impact on your margin. And we do believe that, that is part and parcel to where we are in the adoption cycle with AI. And so at the end of the day, we are most guided by how do we drive gross profit growth, how do we get operating leverage. And so while we care about kind of where we stop the gross margin, it's not the only variable for the quarter.

Your next question is from Amit Daryanani with Evercore.

Congrats on a nice set of numbers here guys. Chris, I just sort of talk about the high single-digit IT spend expectation for the year you talked about. Can you just talk about how the mix been hardware and software sort of tracking? And when you talk to your vendors, you sort of share that sentiment that, hey, demand is much ahead of supply right now, and you sort of echo that as well. Does that suggest that these high single-digit IT spend growth rates could persist beyond [ down ] to '26? Just trying to get a sense of the durability of the goodness we're seeing over here, especially if demand seems to be in a crisis supply.

Amit, thanks for the question. And yes, look, as I mentioned in the last question, the demand that we're seeing is based on a number of factors, all of which are our customers are not choosing not to purchase. They're just getting really disciplined in what they're buying and how they're buying. But at the end of the day, the data explosion, the need to be ready for cybersecurity risks that are exponentially expanding and the need for optimization across hybrid infrastructure. We're just finding that to be durable is what I would say. As I think forward, I don't want to project too much forward, but the bottom line is they're evaluating what they need based on the component parts of sorry, being successful in AI. We don't see that dampening any time soon. So I don't want to project into 2027. But what I -- what we see now is strength. We think the underlying demand drivers will continue, and we would expect to take advantage of those in 2027.

And then just a follow-up. I think your gross margin first profit dollars are up 10% year-over-year. Your operating income dollars that were up like 17%. So clearly, some fairly impressive OpEx leverage in the model in the quarter. Can you just talk about what exactly is driving that? Is that the Geared for Growth perhaps ahead of track? You could update us on that. Or were there other factors that helped that OpEx leverage in the quarter?

Yes, I'll take this. Yes, substantially, what you're seeing there in terms of the operating leverage is our Geared for Growth efforts kicking in and those savings coming to fruition in the quarter. So we had previously given indications of what that run rate expense base could look like as we go into 2027, to go into 2028. I would say we are at or above expectations in terms of the progress there in. The one caveat I would give you is a great print for us in that regard in terms of that SG&A ratio at 55%. But there will be variability in terms of when the savings land relative to our reinvestment. And so therefore, I'll take you back to our commitment is year-over-year improvement in our operating leverage. That does not mean that every quarter will be perfectly linear with respect to the SG&A ratio, but super pleased with our progress to date.

Your next question is from Keith Housum with Northcoast Research.

In terms of the Lovelytics acquisition that just closed here, I guess you got some deep dive a little bit deeper into it in terms of the acquisition you're making in terms of how you guys are going to manage them and integrate within the existing CDW portfolio and the type of revenue synergies that we can expect going forward from the acquisition.

Yes, sure. I'll start. Look, Lovelytics, we're very excited about the acquisition. It's not just a great company. It's a great team of people. And as we've said, it really expands our modern cloud data analytics and AI capabilities that are very much at the front end of AI adoption. Look, in terms of the integration, we are doing our greenhouse approach, and we've shared that with investors. Before with a company like Lovelytics, the size that they are, the capabilities they have, we like to operate them almost separately for a period of time in CDW as a channel. The reason is, look, we don't want to overwhelm them. We want to keep the growth going, and we want to be really disciplined about the opportunities from our broad base of customers that we bring to Lovelytics. So far, so good. It's worked in the past, and we're really looking forward to growing that business and utilizing their skill sets across our broad customer base.

And maybe, Keith, I'll just add to your question on how does that get baked into our outlook. Like Chris said, super excited about this business. Our focus, particularly in Q4, is getting off to a great start with respect to our integration and scaling the business. Our incorporation of Lovelytics in the Q4 outlook is measured, as you would expect from us. And as we look into 2027, we will certainly provide more in terms of what we think the contribution effect is. But you should think of this business as smaller relative to the obvious overall scale of CDW, but growing very fast. And so we're really excited about the prospects of what the future holds here.