Shares fell 7.8% following the earnings release as investors were likely disappointed by continued deceleration in Education segment growth, margin pressure from pricing volatility, and a cautious outlook on spending despite top-line gains.
- Net sales rose 10% to $6.6 billion, driven by broad demand but with notable weakness in Education, which grew only about 1% amid funding constraints and fulfillment timing issues.
- Commercial and Government segments showed solid growth at 9% and 14%, respectively, led by infrastructure modernization and federal momentum.
- International operations surged 23%, with Canada and the U.K. experiencing mid-teens or better local currency growth.
- Hardware revenue increased 10%, benefiting from AI readiness investments, but pricing pressures led to margin compression despite higher average selling prices on notebooks and desktops.
- Management maintained a cautious tone on customer spending patterns, reflecting ongoing volatility and uncertainty in technology purchasing cycles.
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