Hello, welcome to the CDW first quarter 2023 earnings call. My name is Alex. I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star one on your telephone keypad. If you'd like to withdraw your question, you may press star two. I'll now hand over to your host, Steve O'Brien, with Investor Relations. Please go ahead. Thank you, Alex. Good morning, everyone. Joining me today to review our first quarter 2023 results are Chris Leahy, our Chair and Chief Executive Officer, and Al Miralles, our Chief Financial Officer. Our first quarter and full earnings release was distributed this morning and is available on our website, investor.cdw.com, along with the 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 risks and uncertainties that could cause actual results to differ materially. Additional information concerning these risks and uncertainties is contained in the earnings release and Form 8-K we furnished to the SEC today and in the company's other filings with SEC. CDW assumes no obligation to update the information presented during this webcast. Our presentation also includes certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating income margin, non-GAAP net income, and non-GAAP earnings per share. All 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 for today's webcast and in our earnings release and Form 8-K. Please note all references to growth rates or dollar amounts changes in our remarks today are versus the comparable period in 2022, unless otherwise indicated. Replay of this webcast will be posted to our website later today. I also want to remind you that this conference call is the 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. Good morning, everyone. We have a lot to cover today. I'll begin with an overview of our results and our outlook, and Al will provide a deeper view into the financials as well as an overview of our capital allocation priorities, and then we'll move right to your questions. Market conditions were turbulent, with a marked downshift in demand as the quarter progressed, translating into lower business volume. For the first quarter, net sales were $5.1 billion, 16% lower than last year. Non-GAAP operating income was $434 million, down 6%, and non-GAAP net income per share was $2.03, down 8%. While clearly not satisfied with these results, our excellent cash flow and record gross margin reinforce the durability of our underlying profitability and integrity of our strategy. Let's take a look at what happened in the puts and takes of the quarter. First, what happened? In short, demand was weaker than anticipated in our commercial business. When we exited 2022, our forecasts called for a moderate softening of IT demand in 2023 and a mid-single-digit year-over-year decline in first quarter sales. As the quarter progressed, IT demand weakened more than expected as a confluence of events intensified already heightened economic concerns and recession fears. This led to a fairly rapid shift in customer behavior, most notably in our large commercial customers. Projects that drove cost reduction, productivity, and financial returns were prioritized. Project justification and budget scrutiny ruled the day, and although deals were not canceled, sales, sale cycles elongated, written sales slowed, and deal sizes compressed. All of this translated into lower sales, the value of the solutions we provided customers continued to grow. You see the impact of this in our gross margin momentum. Margins were consistent with last quarter with meaningful year-over-year expansion in each of our customer end markets. Unlike the fourth quarter, our strong margins did not fully offset the magnitude of our net sales decline. Let's take a look at the puts and takes of the quarter by customer end market. Recall we have five sales channels: corporate, small business, healthcare, government, and education. Each a meaningful business on its own with 2022 annual sales ranging from $1.9 billion to over $10 billion. Within each channel, the teams are further segmented to focus on customer end markets, including geography and verticals. Our commercial operations are organized around geographies, verticals, and customer size. Teams are similarly segmented in our U.K. and Canadian operations, which together delivered $2.9 billion in 2022 sales. These unique customer end markets often act in a countercyclical way, given the different macroeconomic and external factors that impact each, as was the case this quarter. The shift in large commercial customer behavior had an outsized impact on corporate results, with sales down 17% year-over-year. Declines were particularly steep in client devices, servers, and storage. Three meaningful hardware categories that require capital outlays under pressure and out of favor. The corporate team's success helping customers achieve ongoing network and application modernization led to excellent NetComm performance, up double digits. Momentum continued around projects focusing on increasing productivity and enhancing customer and coworker experiences, which drove strong growth in cloud and software spend. The small business team posted another quarter of solutions growth, driven by success helping customers address mission-critical priorities around security and productivity. Priorities that drove meaningful increases in cloud and software customer spend on pace with recent quarters. Network upgrade activity also drove a high single-digit increase in NetComm with resilience and demand for solutions. The gross margin of the small business channel continued to be accretive to overall margins. Strong solutions performance was more than offset by the ongoing impact of economic uncertainty on transactions. Small business net sales declined 23%. Public sales declined 12%. Performance in government and healthcare held firm as organizations called on CDW to help them extract more value out of their IT footprints, while education remained under pressure. Solutions momentum in healthcare was strong, driven by continued success helping customers adopt technology to drive productivity as an offset to higher costs from rising labor and materials inflation. Cloud performance was excellent as hesitancy over privacy concerns waned, and healthcare systems embraced the speed and efficiency that cloud solutions can deliver. Talent needs and data center projects remained focus areas, with customers increasingly using technology to address complex industry challenges. Patient care and patient experience continue to be mission-critical, driving ongoing investment in collaboration solutions. However, similar to our commercial markets, greater focus on shorter-term ROI and tight budgets resulted in elongated client devices replacement cycles and overall sales were flat. Government activities levels were strong. The credibility and track record of the combined and now fully integrated teams of Legacy CDW and Sirius opened doors and led to more seats at the table. Since the first quarter is a seasonally light quarter for both federal and state and local spending, our progress is a bit harder to see. Federal's low teens growth was offset by a mid-single digit decline in state and local, and sales were flat to last year. Federal growth was balanced across solutions and transactions categories. The team's ability to help civilian agencies achieve their priorities around data management drove strong server and storage performance and contributed to high single-digit growth in solution. Services increased high teens and cloud spend remained strong. Underscoring the value of our diverse end markets, federal posted year-over-year transactions growth, which was driven by client video and audio and collaboration. State and local's low single-digit growth in solutions reflected the team's success helping customers address talent gaps through enhanced training as well as professional services engagement. Double-digit cloud spend was driven by both software and security upgrades. Consistent with the fourth quarter, customers made do with their current client devices, and client device declines continued. For education, solid higher ed growth was more than offset by the year-over-year declines in K12, and overall sales declined 27%. Higher ed sustained a track record of enabling student success programs used to promote enrollment. These programs, which are focused on improving security, campus connectivity, and delivering enhanced dorm room experiences, drove double-digit growth across cloud, NetComm, storage, software, and security. K12 posted another quarter of excellent solutions performance. Solutions mid-teens increase was driven by networking and data center efforts, with substantial double-digit increases in storage, servers, and NetComm. Our ability to wrap services around applications and physical security drove excellent services performance. The K12 team's solutions performance was more than offset by a meaningful year-over-year decline in client devices, and overall sales declined. Similar to last year, customers placed a lower priority on client devices as schools reached student-to-device ratios near or at parity and continued to digest endpoint investments made over the past several years. Instead, schools were focused on networking and data center needs, as well as planning for the next horizon of multi-year funding opportunities. Opportunities which, given the expertise that we have in this area, will generate even more ways to serve this important customer channel. Our U.K. and Canadian operations, which we report as other, continued to execute very well in the quarter, delivering consistent profit performance as customers prioritize strategic investments in solutions. Similar to the U.S., top-line growth for both markets experienced the impact of heightened economic uncertainty, which especially impacted client device demand. U.K. decreased by mid-single digits in local currency, while Canada decreased by high single digits in local currency. Similar to the U.S., strong gross margins reflected higher value mix. Now let's take a look at how the end market performance translated into portfolio performance. The economic uncertainty that led to the downshift in our commercial business impacted performance across all three of our portfolio categories: hardware, software, and services. As a full stack, full lifecycle provider, the deferral of major hardware projects results in lower attach of services and other solutions. All the components of the deliverables are delayed pending implementation of the project. Delays and pushbacks in hardware may dampen warranty and security opportunities, focus on in-year ROI often drives compressed deal sizes as many customers elected to favor short-term deals versus multi-year agreements. First quarter portfolio results were adversely impacted by all these cascading factors. U.S. hardware decreased by 21%, a further step down from the fourth quarter. Large commercial customer client device declines had the greatest category impact as corporations worked through the impact of slower hiring and layoffs. NetComm hardware growth was very strong in this quarter and increased across all customer end markets. This strong performance was largely driven by improvements in supply, also reflected better demand than we expected. U.S. services decreased 2%. Growth was impacted by weakness in services tied to hardware, particularly in warranties. Momentum and managed services growth was solid, and professional services continued to grow, though was impacted by the delayed timing of full stack IT integrations. U.S. software growth remained strong. Double-digit increases in network management software and storage SAN were partially offset by declines in software categories tied to full stack projects and employment levels. Security remained a key focus area for customers, but results were impacted by the shift in large commercial customers' buying behavior, and U.S. security sales declined slightly year-over-year. Significant growth in identity management, privileged access management, intrusion detection, and risk in governments was offset by declines in firewall, our largest category, which is also tied to either refresh of physical assets or expansion of customers' footprints. Overall, security demand remained very strong in small business. Once again, cloud was a meaningful contributor to performance, with double-digit increases in customer spend and gross profit led by security, platform, and productivity. Within this period of economic uncertainty and heightened customer caution, our trust and engagement with customers and partners was never stronger. Trust and engagement that when coupled with our capabilities and deep expertise, serves us well today, and trust and engagement that will serve us well when the temporal shift in demand recovers. Although volumes are down, our ability to help our customers drive outcomes across the five components of our ICARE framework, especially cost management right now, continues to drive our customer value. Our ability to drive outcomes and address customer priorities across the entire IT continuum enables us to pivot where our customers need us most. Any ability that reflects the impact of strategic investments we have made to enhance our high relevance and high growth solutions and services, investments that are exceeding our expectations in both capabilities and performance. Investments like our acquisition of Sirius have maximized our differentiation in the market, provided more and better seats at the table, increased customer stickiness, and contributed to our evolution as a one-stop trusted partner. A partner with the capabilities and expertise that can help customers achieve the outcomes they need from the technology and solutions they can trust. The strategic actions we've taken have not only strengthened our value proposition, they have also fortified our profitability, contributing to our operating profit margin expansion of more than 100 basis points since 2020. It's our strategy when combined with our flexible business model, execution rigor, and financial discipline that enables our ability to profitably outgrow the U.S. IT market. That leads us to our view for the balance of 2023. The initial 2023 U.S. IT market forecast we shared with you on our February call was for flattish growth. Given our belief that first quarter business conditions will persist through at least the second quarter, we now look for the U.S. IT market to contract at high single digit rate for the full year. We continue to target outperformance of the U.S. IT market by 200-300 basis points. This outlook assumes that we will see a moderate pickup in activity in the back half of the year and anticipates that ongoing economic uncertainty will continue to impact customer behavior. Wild cards include deeper recessionary conditions, heightened credit tightness, and debt ceiling-driven liquidity events. As we always do, we will provide an updated perspective on business conditions and refine our view of the market as we move through the year. We are operating in choppy waters right now. We have the strategy, capabilities, and discipline to continue to profitably outgrow the market. While we have durable processes to manage and align cost to opportunity, given our expectation for market demand, we have amplified our expense discipline to preserve profitability. A hallmark of CDW is to serve our customers whenever and wherever their needs may be. The outcomes technology delivers haven't diminished, and our customers know that we will be there for them regardless of market conditions. CDW is an all-weather team, always adapting and evolving to lead in the market. We have faced turbulent markets in the past and have leveraged our proven business model, unmatched competitive advantages, and deep and trusted relationships to come out stronger. We will do so again. Let me turn it over to Al now, who will provide a more detail on the financials and outlook. Al? Thank you, Chris, good morning, everyone. I'll start my prepared remarks with detail on the first quarter, move to capital allocation priorities, and finish up with our 2023 outlook. Turning to our first quarter P&L on slide 7, consolidated net sales were $5.1 billion, down 14.2% on a reported basis, and 15.6% on an average daily sales basis. Net sales results came in below expectations relative to our outlook. Transactions declined more than expected, despite greater resiliency and while flat year-over-year, solutions also came in lower than anticipated. Notwithstanding the lower than expected solutions performance, the decline in transactions drove a mix shift that benefited margins. As we've shared before, the impact of mixing into a higher relative percentage of solutions, and specifically netted down revenue, has a dampening effect on total net sales, but tends to bolster gross margins all else equal. Since we are not the primary obligor on these transactions, several important high-value components of our solutions portfolio, including cloud, software as a service, much of security, and partner-delivered services and warranties, are recorded on a netted down basis, where gross profit is our revenue. In the first quarter, these netted down revenues, and notably SaaS transactions, outgrew our overall net sales and represented 32% of our gross profit, compared to 31% in the fourth quarter and prior year first quarter. This continues to be an important trend in our business. Sequential net sales were down 6.1% versus the fourth quarter on a reported basis and 7.6% on an average daily sales basis. Our outlook anticipated better than normal first quarter seasonality, given the unusually soft demand in the fourth quarter. Our outlook assumed public would have better than historical sequential growth, which it did. It also assumed our commercial channels, corporate and small business, would remain firm and deliver close to historical sequential growth levels. They did not. The disconnect came from a downshift in large commercial customer spend, which had an adverse impact on our results. To dimensionalize the shortfall in net sales relative to our expectations, roughly two-thirds of the amount was driven by large commercial customer activity across both transactional and solutions business. On the supply side, the dollar value of our backlog did not change meaningfully relative to the fourth quarter. While the backlog and product lead times associated with transactional products are essentially back in line with normal levels, supply chain challenges have persisted in NetComm solutions, and the backlog here remains elevated. We continue to anticipate this remaining backlog will feather out over time as supply conditions ease, though this has been more drawn out than anticipated. As always, we continue to judiciously manage our working capital to support our customers while ensuring strong economic returns. Our free cash flow performance, which we'll discuss shortly, is emblematic of this discipline. Our team delivered excellent profitability in the quarter. Gross profit was $1.1 billion, a year-over-year decrease of only 1% despite a double-digit decline in sales. Gross profit margin was a first quarter record of 21.3%, up 280 basis points versus the prior year period. Down only 40 basis points versus the record fourth quarter. The year-over-year expansion in gross profit margin was driven by similar factors as in the fourth quarter. First, product margins benefited both mix into complex hybrid cloud solutions and a lower mix of transactional products. When we mix back into transactional products, we would expect for this benefit to moderate. Second, as we expected for the first quarter, a greater mix in the netted down revenues. The category outpaced overall net sales growing low single digits in Q1 compared to Q1 in the prior year, primarily driven by double-digit Software as a Service growth. Third, net sales contribution from high-margin services mix with significant contribution from our recent acquisitions. Turning to SG&A on slide 8. Non-GAAP SG&A totaled $655 million for the quarter. The year-over-year increase in non-GAAP SG&A was primarily due to higher fixed payroll as our co-worker count increased during last year. This was partially offset by a decline in sales payroll expense, reflecting the variable component of our compensation structure, which is principally tied to gross profit attainment. We expect the impact of the higher year-over-year fixed cost SG&A to diminish as we move through the year. To that end, we are focused on our efforts to innovate our operating model and drive productivity and savings. Given the demand environment, we've advanced initiatives to ensure our cost structure is aligned to our opportunity set. This includes driving structural savings as well as pacing our overall coworker count with the level of business demand and in the areas where it can provide the most value to our customers. Coworker count at the end of the first quarter was approximately 15,300, up slightly from the fourth quarter, principally due to the most recent acquisition, which added to our technical resources in professional and managed services. Strategic investments in our solutions and services capabilities remain key to our three-part strategy for growth, an important catalyst for the achievement of our profitability and margin goals. GAAP operating income was $355 million, down $32 million compared to the prior year. Non-GAAP operating income was $434 million, down $28 million versus prior year. non-GAAP operating income margin was strong at 8.5%, up 70 basis points from the prior year, although down 110 basis points compared to the record fourth quarter. Similar to last quarter, this year-over-year improvement was driven by our strong gross margin. The sequential decline reflected a higher ratio of fixed cost as a result of the lower volume of net sales and gross profit. Moving to slide 9. Interest expense was $58 million, modestly above the prior year, driven by higher interest rates, but relatively in line with our expectation for the quarter. Our GAAP effective tax rate shown on slide 10 was 22.3%. This resulted in first quarter tax expense of $66 million. To get our non-GAAP effective tax rate, we adjust taxes consistent with non-GAAP net income add backs, as shown on slide 11. For the quarter, our non-GAAP effective tax rate was 25.7%, within our expected range of 25.5%-26.5%. As you can see on slide 12, with fourth quarter weighted average diluted shares of 137 million, GAAP net income per diluted share was $1.68. Our non-GAAP net income was $279 million in the quarter, down 7.6% on a year-over-year basis. Non-GAAP net income per diluted share was $2.03, down 7.9%. Moving ahead to slide 13. At period end, cash and cash equivalents were $279 million, and net debt was $5.5 billion. During the quarter, we reduced our overall debt by almost $130 million, consistent with our plan to maintain our net leverage. Liquidity remains strong with cash plus revolver availability of approximately $1.3 billion. Moving to slide 14. The three-month average cash conversion cycle was 18 days, down three days from the fourth quarter, two days from the prior year first quarter, and within our targeted range of high teens to low twenties, reflecting our continued diligent management of working capital. Our effective working capital management also drove excellent year-to-date free cash flow of $411 million, as shown on slide 15. For the quarter, we utilized cash consistent with our 2023 capital allocation objectives, including returning $80 million to shareholders through dividends and $200 million in share repurchases. In addition to the $130 million in debt repayment. We also closed the acquisition of Locus Recruiting in February. That brings me to our capital allocations on slide 16. Our execution remained consistent with our updated objectives we communicated last quarter. First, as always, increase the dividend in line with non-GAAP net income. Last November, we increased the dividend 18% to $2.36 annually. This increase demonstrated our confidence in the earnings power and cash flow generation of the business. Going forward, we'll continue to target a 25% payout ratio, growing the dividend in line with earnings. Ensure we have the right capital structure in place with a targeted net leverage ratio. We ended the first quarter at 2.6 x, flat to the end of the fourth quarter and within our new range of 2x-3 x. We continue to convert business performance into cash generation and have rigorous processes in place to maintain our flexibility and proactively manage liquidity. Finally, our third and fourth capital allocation priorities of M&A and share repurchase have remained important drivers of shareholder value. For 2023, we'll continue to target returning 50%-75% of free cash flow to investors through dividends and share repurchases. In the first quarter, we returned roughly 68%. As a reminder, the board authorized a $750 million increase to the company's share repurchase program last quarter on top of the remaining dollars from the prior authorization. Moving to the outlook for 2023 on slide 17. The current overall IT market sentiment reflects the caution and prudence of customers. We expect this to continue in the near term, with a modest recovery of demand conditions in the second half of the year. This informs our expectation that the IT market will contract at the upper end of high single digits. With this scenario as our baseline, we look for netted down revenues to continue to grow faster than our other product and solution categories. We maintain our long-held expectation to outgrow the market by two to three o n our basis points. Keeping in mind that in times of hardware softness, our overperformance tends to be on the lower end of this range and vice versa. We continue to expect a neutral currency impact for the full year, with modest headwinds in the first half and modest tailwinds in the second half. This assumes an exchange rate of $1.25 to the GBP and $0.77 for the CAD. Moving down the P&L. We expect our full-year non-GAAP operating income margin to be within the range of 9%. This reflects the expectation of lower net sales and gross profit, balanced with higher gross margins and a reduction in the level of our fixed expenses. Finally, we expect our full-year non-GAAP earnings to decline low single digits year-over-year in constant currency. Please remember, we hold ourselves accountable for delivering our financial outlook on a full-year constant currency basis. Additional modeling thoughts for annual depreciation and amortization, interest expense, and the non-GAAP effective tax rate can be found on slide 18. Moving to modeling thoughts for the second quarter. Related to average daily sales, we expect mid-single-digit sequential growth from Q1 to Q2. That equates to a low double-digit% year-over-year reported net sales decline for the second quarter. We anticipate continued strong margin performance in the second quarter, with a gross profit margin consistent with levels in Q1 and NGOI margin higher as expense efforts improve operating leverage. We expect second quarter non-GAAP earnings per diluted share to decline mid-single digits year-over-year. In 2023, we expect full year free cash flow to be at the high end of our new rule of thumb range of 4% - 4.5% of net sales as we continue to emphasize a return on working capital. While we are clearly operating in a cautious and uncertain environment, given our resilient business model, the rigor of our financial controls, we remain confident in our ability to deliver the profitability, margin, and cash flow our stakeholders have come to expect. That concludes the financial summary. As always, we'll provide updated views on the macro environment and our business on our future earnings calls. With that, I'll ask the operator to open it up for questions. We would ask each of you to limit your questions to one with a brief follow-up. Thank you. Thank you. As a reminder, if you'd like to ask a question, you can press star followed by one on your telephone keypad. If you'd like to withdraw your question, you may press star followed by two. Please ensure you're unmuted locally when asking your question. Our first question for today comes from Amit Daryanani from Evercore. Your line is now open. Please go ahead. Yep. Good morning, and thanks for taking my question. Yeah, I guess maybe to start with, Chris, one of the concerns I think folks have had is, you know, how much the issues that you saw in the March quarter are macro versus micro or really CDW specific. I think all the reasons you already mentioned sound like it's a much more broader trend rather than CDW specific. I'd love to hear, do you think there's any, anything company specific that may have impacted or magnified these issues? Any change in trends that you're seeing for the month of April so far versus what you saw in March? Good morning, Amit. Let me, well, let me just take you through and unpack it a little bit. Look, the key driver, the overwhelming driver of the performance miss to our expectation was the sharp uptick in concern and caution that we saw with our commercial customers as economic uncertainty intensified through the quarter, and the meaningful downshift in customer demand, particularly amongst our large commercial customers as a result. That translated into an outsized impact on results given the relative size of our commercial business. You know, if I dig a little deeper, look, 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. 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. I would say we didn't see cancellations. What we saw were delays and smaller deals and the knock-on effects of that. As a full stack, full life cycle provider, there's a cascading impact across hardware, software, and services, right? If you've got large delays, in deals, then you have less attached with services and other solutions at that point in time. When you think about commercial representing more than 50% of our business, the impact just created a major headwind for our top-line sales. You know, now I would say as you go through the rest of the portfolio, the balanced portfolio of customer end markets did help, particularly given the extreme softness in the client device market generally, it didn't help as much as we would have liked. When you think about government, high ed, and healthcare, they all performed well but did have some growth challenges, again, due to client. International executed well, K12 executed well in solutions, they certainly had, you know, continuing year-over-year pressures and didn't quite perform in the client area as well as we thought they might. As a result, you know, the top line was impacted. The other thing I would just unpack for you a little bit is if you go through the portfolio itself, NetComm was strong across the board, software was strong across the board, cloud growth remains strong. Services in the areas where we focus strategically, professional and managed services were strong and solid. You know, we had some impact on services relative to warranties that were softer. Up and down, you know, and across the portfolio, we felt very good about execution. This really, in our view, is a macro impact. Look, and you look in terms of profit, you know, contrary to Q4, record first quarter margins weren't enough to offset the magnitude of the shortfall, but we did have record first quarter margins and excellent free cash flow. I would say that the team's performing well in a really challenging environment, and our cash flow and margins are really demonstrating that the strategy is working as our investments are contributing to enhanced profitability. The other thing I'd say, Amit, and you've seen this over the years, is in periods of uncertainty, we further strengthen the trust and engagement with our customers. We've been through turbulent times before, and these are the times when our customers turn to us and our partners turn to us to address their challenges. They know we're there for them regardless of the conditions in the market, and they know that when the temporal shift in demand lifts, we'll be there for them. Fair enough. You know, Chris, can I just follow up on that last part of what you were talking about? You know, I think historically, one of the things we've seen is, you know, as you come out of these pauses or recessions or whatever happens in the next six months, you tend to see an inflection of share gains going higher for CDW. I'm wondering, you know, I guess maybe you could touch on, you know, what do you think the duration of this pause could look like? Do you think you're well-positioned to see an acceleration in share gain as you come out of it, given the engagements you have with your customers? Yeah. Amit, I would say in these times, you can imagine what we're doing, controlling what we can control, staying in front of our customers, playing aggressive offense, and really doubling down on the relationship. That always bodes us well. We like to say accelerating out of the curve is what we do, and, you know, that's what we would expect. In terms of the timing, look, hard for any of us, I think, to predict the timing of client devices, you know, significantly turning around, for example. We do feel absolutely confident that as demand shifts, that we will be very well-positioned to capture more than our fair share of the uplift. Perfect. Thank you. Thank you, Amit. Thank you. Our next question comes from Samik Chatterjee from J.P. Morgan. Your line is now open. Please go ahead. Hey. Thanks for taking my questions, thanks for all the color today in your prepared remarks. I was just wondering, just starting off with the 2Q guide here for a mid-single-digit sales growth expectation. I understand that's not as robust as what you used to see pre-pandemic. In terms of what's driving the confidence of sort of guiding to a growth into 2Q, should we expect sort of that growth to continue to 3Q and 4Q? Is that sort of how you're thinking about customer activity starting to return and spending start to improve? What's baked into the second half, particularly in terms of your client device expectations. Then I've got follow-up. Thank you. Yeah. Good morning, Samik. This is Al. With respect to Q2, I think what you're seeing from our outlook is, again, both expectation that the overall conditions and customer buying behavior would be similar, and particularly in commercial that is softer, with an offset that we'd expect that regular seasonality, particularly from our public business, would be in play. The lift there, largely from that seasonality from public with a bit of a muting from our typical seasonality, given the softer conditions otherwise. With respect to your question on the second half. The second half, similar, we would expect we'd have our normal seasonality, including our government business and public, having higher seasonality in Q3. While obviously we've got extreme conditions we've seen, the last two quarters, we would anticipate at this point a pickup in activity. That pickup in activity, we'll say kind of balance between clients and solutions, and it's a little bit of a TBD exactly when you'd see client pickup, but there's reason to believe that, we'd see some of that activity in the back half of the year. Okay. Okay. Got it. For my follow-up, just maybe if I can ask you to double-click on the NetComm product momentum or the momentum in NetComm within your portfolio. Seems to be an outlier related to what you're seeing otherwise in the other parts of the portfolio. Any color on what's driving your customers to still continue to spend on NetComm? Obviously it's not been supply challenge but not really demand challenge even for the last couple of years. What's driving that momentum there still? Samik, it's Chris. I'd say a couple things driving the NetComm momentum. One is network momentum. One is supply chain. Obviously, we've got some release in the backlog, which has been good, but we are seeing demand. When you think about our customers modernizing their infrastructure and the cloud performance that you're seeing, we do have customers who are moving to the cloud, using networking to handle larger and heavier workloads. We do see customers like our K through 12 I mentioned earlier. You know, they're hard at work on classroom upgrades and modernization. When you also think about the trend towards back to the office and in the commercial space, notwithstanding the fact that these large corporate customers are in cost reduction mode, they are focusing on digital transformation and experiences of their own, their own coworkers and their employees, and networking is a very important part of that. Obviously, as you know. The data center networking drives the connectivity out to the employees and to the customers. It's not surprising given the amount of client investment that's been made over the past few years. Usually ingesting client devices actually requires upgrading networking, and that's what we're seeing. Okay. Thank you. Thanks for taking my questions. Yeah. Thank you. Thank you. Our next question comes from Shannon Cross of Credit Suisse. Shannon, your line is now open. Please go ahead. Thank you very much, good morning. I'm wondering what your customers are saying about artificial intelligence. I think you have a pretty unique position, I guess, in terms of your diverse customer base and ability to talk to them. I'm just wondering, you know, where are they at on their AI journey? Where are they thinking that they're gonna be investing as they look to AI? Anything you can give us would be helpful. Thank you. Yeah. Shannon, you know, it's a great question, and you're right. There's nobody who's not talking about it, and everybody's talking about it a lot. The good news for CDW is right now, it's moving fast and it's complex. And there are a lot of, a lot of work to be done around how the kind of new form of AI can support customers. What our customers are saying is, frankly, they're saying our CEO says we really need to be all over this. I say that because there's pressure on the system, which means, which is always good for CDW because the conversations that we're having around AI and generative AI are right now. We're at the front of the design with our customers. Here's how we think about it. Obviously, we think about it internally for CDW, but, as importantly for our customers. A, we've always helped our customers unlock the potential of technology to meet whatever the needs are for their current and future business. Okay. When we think about AI and what we offer our customers, it fits really nicely into the full stack, full life cycle, full outcome approach. What we're trying to do with customers is they're thinking about what the use cases could be going forward. Those are things, as you know, like workflows to build innovative products or improving efficiencies in their existing workflows, things that we've all been talking about. What do they need from CDW and how can we help them? A, it's identifying those use cases and building them out, and supporting them up and down the stack. Think professional services, right? Think applications and building B2B applications. Think computing and data infrastructure. Need a whole new kind of infrastructure to support what AI is driving. Think models and tooling. Our Digital Velocity team, that practice actually already orchestrates, you know, AI initiatives with many customers today, and they're having deeper conversations. I would just say, look, we're at the forefront of this. There is a lot to be worked out, but it is definitely one of those trends that is, you know, the hype is real in this case. There is going to be a fast and growing market that AI is gonna drive, and it fits really nicely within our full stack solution. We're having lots of conversations with customers. We're doing the same internally. Look, we're looking at all the ways that we can use the new AI to basically drive efficiency within our organization. Great. Thank you. Just, you're at the high end of cash flow for the year. We're about two years, well, not quite, but a year and a half past the Sirius acquisition. What are your current thoughts on acquisitions? What do you see in the landscape like? Are prices coming down or valuations coming down at this point, or are people still, you know, thinking we're a couple years back and valuations are high? you know, it's really interesting because I would say valuations have not ticked down significantly, although the pipeline and the outreach has increased. That tells you something at what the landscape might look like three to four months from now. Great. Thank you. You're welcome. Thank you. Our next question comes from Erik Woodring of Morgan Stanley. Erik, your line is now open. Please go ahead. Thank you so much. Good morning, guys. Chris, maybe I'll ask you a question. You know, I appreciate all the color you provided, by end market and product, and clearly there's a lot of moving pieces. I guess if we step back and think about your product exposure and think about, you know, what you reported relative to how you guided in February, can you just understand which products are kind of most responsible for the guide down or for the miss in 1Q and then for the guide down for the rest of 2023? Just trying to understand kind of what is incrementally weaker, as we moved through March and into April, and how which products are impacting that guide the most. Then I have a follow-up. Thanks. Yeah, sure. Good morning, Erik. Well, let me start with client device. Let me just start with hardware and client devices because that's really was the core of the impact. Again, primarily or the largest impact came from our larger commercial customers. Number one, on the client side, we continue to see the market generally has got kind of an extreme, is an extreme softness right now, and that continues. Okay. That, that had an impact. We saw in the client space it moderating even further down as we progressed throughout the quarter. You know, you continue to see staff reductions across every industry, and those things are impacting client device purchases. I think I mentioned in my prepared remarks that the large commercial, large commercial customers, client device category was the biggest downshift in the corporate space. Client device is number one. Server storage, hardware, things that are customers are looking at and finding ways to save money, that's another source of the downshift. What happens when you've got hardware either being refreshed, not refreshed, delayed or paused is you have a knock-on effect. It's like a cascading effect. If, if projects are delayed, the services that go with the project obviously aren't implemented some of them until the integration of the, of the product. You also have things like warranty that are gonna be a bigger impact to warranty when you're not buying hardware. If I come back to the categories, I, you know, I'd say it all starts with large customers reducing their costs immediately, which means let's reduce hardware, let's extend the useful life of assets, when we're purchasing software, for example, we can purchase a one-year deal instead of a three-year deal. They're pausing on making decisions on things because they don't wanna get locked in. It does start with the areas of hardware. Where we saw softness. In places that I would say are very strategic for us, that really was, again, an effect of the delay or deferral of larger projects. I would say overall, look, our services business is very strong in the areas that are strategic. If you take out warranties, professional services, managed services, strong, yet impacted. Security, strong in the areas that we've been investing heavily in, weaker in firewalls, which are related primarily to the, you know, when you're buying physical assets or extending your geographic footprint. Then cloud. I mean, cloud is continuing to be extremely robust across every one of our customer segments. I'm trying to dig into the weeds a little bit here for you, and I hope I'm getting to the heart of your question. It's starting with the climate. I mean, that's really what happened. It's starting with the climate and a climate of cost containment. Nope. That was exactly what I was looking for. Thank you for that, Chris. Okay ... maybe my follow-up. We've gotten a lot of questions about CDW's definition of U.S. IT market growth versus how other companies might portray it. Obviously, there is an impact of netted down revenue mix that it would be helpful to maybe understand, but said differently, you know, if U.S. IT market growth in CDW's eyes is down high single-digit year-over-year, how would you think about your overall customer spending to trend in 2023? I think that would be helpful just again, because there is an impact of this netted down revenue that dampens the view of your U.S. IT market growth. Just wanted to unpackage that, please. Thank you. Yeah, Eric, let me take that. This is Al. Just a couple of things. You're definitely right with respect to netted down revenues, and the impact from that. The other component is obviously, you have a mix component. If you think about the broader IT market relative to our mix, there is a translation, if you will. I think, you know, most notably in normalized years, that does not create significant distortion. In a year like this where the mix has shifted significantly, that is client coming down considerably and more solutions and netted down revenues being up, it does create more exaggerated results. What I would tell you is if you think about our full year guide with respect to the IT market, it is high single digits decline. If we think about that on a gross spend basis, obviously, that would be more muted than that decline. Does that help you? Yep, that makes sense. Thank you very much, guys. Thanks, Erik. Thank you. Our next question comes from Adam Tindle of Raymond James. Adam, your line is now open. Please go ahead. Okay, thanks. Good morning. Al, I hate to be the one to question guidance again, but it's a question that we're getting a lot here this morning. Q2 is obviously very clear, so appreciate all the details, but more on the shape of the back half of this year embedded in your guidance. If I look last year, you guided Q3 to low single digit sequential growth. If I applied that here, it would imply a really big hockey stick in Q4. Conversely, if Q3 was above that level, it's implying a bigger Fed quarter, but we've got debt ceiling concerns causing a potential Fed slowdown in that quarter. A little bit of a double-edged sword, and just wondering if there's any way we could be thinking about waiting in the back half because there's a fear that this might not be the last cut. Yeah, sure, Adam. Happy to address that. On the back half, first of all, let me just say our expectation that Q2 would look a lot like Q1 obviously informs then the seasonality for the rest of the year, right? Because we would apply our typical seasonality. Q3 definitely reflects, I'll call it reasonably normal public seasonality, you have that in play. Look, the comps, frankly, for Q3 are much tougher than Q4. Q4 was really the first time that we felt the effect of softening, and particularly in client. I think Q3 probably looks a little bit more normalized from a seasonality perspective. Then Q4, you know, I'll call it more of the pickup there, particularly given the lower comps that we saw there, with education and with client. Okay. Got it. Maybe just as a follow-up, Chris, I'll ask a higher level one. You often talk about the CDW story and culture as a differentiator, in particular for the company, leads to your ability to outperform the IT market consistently and profitably. Here most recently, you made a tough decision to reduce coworker count. I'm just wondering how you thought about that decision to implement layoffs, essentially, and efforts that you made to try and preserve culture. Al, if you wanted to maybe talk more quantitatively about how you're able to maintain expectations to outperform the market by 200-300 basis points while reducing workforce, what your sales productivity expectations look like, post that would be helpful. Thank you. Yeah, Adam, it's a great question, you know as well. As you can imagine, we approached a decision like that with great care, and respect. I'll tell you, look, we have been our operating discipline, cost discipline is something that is evergreen. We are always focused on finding productivity and efficiencies. It's just how we operate. As we've been in a cautious environment, we've been very prudent and I think proactive in culling our costs and calibrating to the environment, which as we've mentioned in Q1, really, we got a pickup in intensity of the economic uncertainty. You know, we went into high gear in terms of our prudence. What we've done is really pull every lever we can pull to align our current cost structure with the demand that we're seeing. When I say every lever, I mean all the things you would imagine, discretionary spend, hiring, promotion, staffing, geographic locations, et cetera. One of the decisions we had to make was to adjust our staffing to current demand environment. Now, look, these are really hard decisions. I'm proud of the team and how they put it together and how we communicated it. You know, everybody was very respectful. Now, all that said, the teams are looking forward because that's what the organization needs to do. We're pivoting to the future and focused really heavily on our customers. You're right, it was a tough decision, but the right decision for the business and for the customers ultimately. Adam, I'll just add a couple comments to your questions on productivity and, you know, hitting on our goals, if you will. To Chris's point, look, this was not a reaction. We had been pacing our hiring, and our coworker count, and our discretionary spend in the quarters building up. Obviously, we saw a sharp turn in Q1, and we expect some of that to persist. We had structural efforts, activities in place to drive productivity and savings, and we basically just amplified those efforts. Let me just parse it for you. When we think about kinda allocation of our coworkers, first from a revenue-producing GP in going through something like this, we're looking at where are the areas in the practice areas that the demand vectors are stronger, and we should allocate more resources, and where are areas where maybe that demand could be softer for a more prolonged period. That was part of the calculus in going through that. When we think about kinda more of the support layer and the infrastructure, again, we got structural initiatives, but we also expect that we're gonna drive productivity coworker savings from that. They're all the things that went into this decision and these actions, and we believe while difficult obviously to go through, ultimately, will add the greatest value for customers and obviously improve efficiency. Understood. Thank Thank you very much. Thank you. Our next question comes from Matt Sheerin from Stifel. Matt, your line is now open. Please go ahead. Yes. Thank you, and good morning. I have a question on your cloud-related revenue, which continues to be strong. There are some concerns that large customers are now digesting their cloud investments and looking to optimize those investments. Are you seeing any signs of that, or do you expect continued strength as customers elect to move workloads off-prem instead of refreshing their own data centers? Matt, hi. It's Chris. I'd say both actually. We're seeing large customers who are optimizing for sure, you know, particularly in this environment of cost optimization and reduction. Opportunity for CDW with our professional services and our FinOps services and things that we can offer to our customers to help them do exactly that, and then potentially convert that into managed services going forward. Equally, we are seeing organizations that are kind of optimizing their cloud environment, not just workloads on the cloud, but the cloud environment or their cloud environment, and continuing to make decisions about where workloads are best optimized, whether it's on-prem, you know, whether it's... Now we're moving towards, you know, private on-prem, but where that should sit. In multi-cloud public arena as well, so moving workloads potentially from one public cloud to another public cloud, again, for optimizing either for performance, functionality, cost, et cetera. All of this requires help from CDW, to, you know, design the movements to actually do the migrations. As I said, ultimately, we're seeing more and more opportunity to convert some of this into managed services, cloud-managed services, which of course is a positive thing for us and for our customers. Okay. Thanks for that. I had a question regarding your comments on maintenance contracts, which appears to be weak. In my past experience with CDW in down cycles, you've actually seen an increase in maintenance contracts and renewals as customers, look to so-called sweat their assets longer. What's different this time, or am I missing something? No, no, you're not. It's a great question. We asked the question earlier. What's different? What's different is we do see when folks are sweating assets, they are, you know, extending warranties typically. They're extending them for short periods. At a time when you would typically see a hardware renewal with a three-year contract, for example, warranties are coming in at, you know, shorter time periods. We also have, you know, we also have some folks who are making the decision not to extend warranties. We're just seeing softening across the board there. What we, what we don't have is the offset of, Hardware purchases elsewhere, software purchases elsewhere, we're seeing new warranties come into play. It's a, it's a bit of a... While you'd expect warranties to have an uptick because people are, our customers are extending the useful life of their assets, the size of those warranties, the deals are smaller. It's muting the impact of, you know, the top line. Matt, maybe just let me add. Got it. just a couple comments. Number one is just recall that warranty business shows up as netted down revenues. For us, the recognition is up front. Therefore, if we have a typical four-year warranty that turns into a one-year, obviously the recognition and the result for us obviously becomes muted. The other element I would just add here, and look, maybe somewhat obvious, is just some of this focus on shorter ROI and the financial impacts therein are creating more conversations that will come back around with customers. That is the, there's a sweating assets, an expectation that that business will come back around, both in terms of refreshing some of the infrastructure and some of the clients, as well as, in some cases, renewals of software assurance, software and warranties that we're seeing in a little bit shorter duration here. Thank you very much. Yeah, I would just add to what Al said. I think it's an important point. You know, the delays, the pauses, the deferrals that we're seeing is really just that. We haven't seen the cancellation. All of this really reflects itself in pipeline in the future. You know, that's a positive sign. Thank you. Thank you. Our next question comes from Keith Housum from Northcoast Research. Keith, your line is now open. Please go ahead. Thank you, guys. I know we're running late, so I'll just get the one in here. You know, I know client devices has been very important for you guys. As you look out going forward, I think it was as early as last quarter, you guys were talking about perhaps a return of client devices. I'm assuming that that thought process has changed a little bit. As you think about client devices in particular, you know, is there a period for which you can no longer sweat these assets? Is it a few quarters? Does it go out to a few years? Any color around that would be helpful. Thank you. Good morning, Keith, it's Chris. I think I understood your question was around kind of when assets have to be replaced. Was that the question? I just want to make sure I was getting the question right. Yeah, I think the... You know, PCs have been under, you know, particularly have been under pressure, and the thought process was that in the second half of the year, you might see some recovery. I'm assuming, one, that's not the same assumption anymore. And then two, like PCs or client devices, when they are sweated, is there a period of time that you can no longer sweat them for and you really have to make the investment regardless? Yeah. Okay. You got the question. It's a good question. You know, I'd say, look, when it comes to PCs, the PC themselves can go four or five years. You know, I'd say four, five and a half years. Now, that's not ideal because the feature functionality gets to be very old by that point in time. If customers are really sweating the assets because their financial situation needs to do so, it can go that long. All that said, if you look back over the last four to five years, you're gonna see a number of PC refresh requirements that are coming up. I'd add that you have things like Windows 11, which is gonna add more pressure to those device refreshes. You know, we said this before, we do expect refresh cycles to be starting sooner rather than later, whether it's federal government, when we know when their buying cycle is, whether it's Chromebooks. I mean, we're seeing a number of large RFPs related to Chromebooks for our education students already. You know, our expectation is refreshes are going to be under pressure to begin later in the year into 2024. You know, and when they do, we'll reap the benefit of that. Great. Thank you. Thank you. Our next question comes from Ruplu Bhattacharya from Bank of America. Your line is now open. Please go ahead. Hi. Thanks for taking my questions. Chris, in the past, in a downturn, corporate and small business typically decline first, followed later by government and other public sector channels. Revenues from government and healthcare looks like in 1Q were slightly up year-on-year. Are you seeing any weakness in those sectors, and are you concerned at all about those end markets, and what have you factored in for the full year for those end markets? I have a follow-up. Okay. Good morning, Ruplu. In terms of federal and healthcare, you know, the countercyclicality that you pointed to, we're a bit in the reverse of that actually. You know, we had some softness in the public space going back a bit. What we're seeing now is public, federal in particular, we're seeing strong activity, I'd say getting back to our normal seasonality and stronger activity as we run into the back half of the year. In fact, you know, their performance this quarter was quite balanced across transactions and solutions. We're not seeing any issues there that we're concerned about and expect normal seasonality in the back half of the year. Healthcare is another one. It's been, you know, pretty good balance across transactions and solutions. A little tougher in the client space, but healthcare is really doing well. Given the increases in costs and wage inflation and everything they're experiencing, they're needing more help in technology and people help as well. We're actually seeing our value proposition with our healthcare customers accelerate in many ways. You add our Sirius team into the mix here, and, you know, as I said before, it opens doors and gets more seats at the table. Healthcare is also equally feeling very robust. We don't have concerns of either of those end markets going into the end of the year. maybe, Ruplu, just. Okay, thanks for-. Component I'd add there is just remember that one of the big drivers always is funding. We would say from a funding perspective, both government and education, we're at a reasonable level there. We think that there certainly is the impetus and catalyst there for continued spending. Okay. Thanks for the details there. Can I just ask, you know, Chris, why is high single digits year-over-year the correct number for U.S. IT market growth? I mean, why not down double digits or down even mid single digits? I mean, just if you could give a little bit more color on what you're assuming for data center products like server, storage, networking growth versus PC growth, and how much of the backlog that you have factors in, into, you know, your particular revenue growth down mid single digits year-over-year in 2023? Thank you. Let me just, maybe Ruplu, you start on the backlog. Backlog, not a meaningful contributor in our expectations. I think I mentioned in my prepared remarks that NetComm continues to be a sticking point. We would expect that to feather out. It's taken longer. We would not consider that to be a meaningful contribution for the remainder of the year. Yeah. Yes, Ruplu, I would add. Look, let me just start with how we shape our view of the IT market. You know, it's substantially grounded in 11,000 customer-facing coworkers who are in market every day. They've got the pulse of what's going on in the market and what customers are doing, saying, and feeling. While we have a number of market factors that we look at and analyze, that, you know, the customer pulse is the most relevant one that we consider. So I'd just say that's one thing that we are looking at. Then we're factoring in as we think about the year, the caution and concern that we've already mentioned, that that will continue at least in the short run, and we've reflected that in our Q2 outlook. Then expecting some moderation in the back end, some moderating recovery in the back end. All of that combined is a reflection of, as I said, what we're seeing in the market, the current activity, in terms of written demand, in terms of back order, in terms of all of the things that we triangulate. Frankly, that's where we end up because of what we're seeing, because of seasonality. We've already kinda gone through our Q2. It's gonna feel about the same as Q1, right? We'll get a little bump in seasonality, but that'll be muted as Al mentioned earlier. When you think about the back half of the year, what we have benefiting us there is seasonality from our government business, for example, and education running into the third quarter. We also have, lower overlaps. You know, compares are easier in the last quarter. All of those things combined, you put them together, and that's where we end up. Okay. All right. Thank you for all the details. Appreciate it. Thank you. Thank you. At this time, we have no further questions, so I'll hand back to the CDW team for any further remarks. All right. Well, thank you very much. Let me close by re-emphasizing my confidence in this team, in our strategy, and the durability of our resilient business model. Thank you to our CDW coworkers across the globe for your unwavering commitment to our customers. Thank you to our customers for the privilege and opportunity to help you achieve your goals. Al and I look forward to seeing you next quarter. Thank you for joining today's call. You may now disconnect your lines.