Connection (CNXN) Reports Fourth Quarter and Full Year 2025 Results

MERRIMACK, N.H.--( BUSINESS WIRE)--Connection (PC Connection, Inc.; NASDAQ: CNXN), a leading information technology solutions provider to business, government, healthcare and education markets, today announced results for the fourth quarter and year ended December 31, 2025. The Company also announced that its Board of Directors declared a quarterly dividend of $0.20 per share of the Company’s common stock. Payment will be made on March 6, 2026, to shareholders of record on February 17, 2026. The Board of Directors also approved a $50.0 million increase to Connection’s existing share repurchase program, bringing the total available to $81.2 million for future repurchases.

“In the fourth quarter, Connection delivered record gross profit in both our Enterprise and Business Solutions segments, reflecting strong execution as our customers modernize for an AI-first IT environment,” said Timothy McGrath, President and Chief Executive Officer. McGrath continued, “I believe that we have the right team and strategy to continue to drive profitable growth and enhance long-term shareholder value.”

Fourth Quarter of 2025 Results:

Net sales for the quarter ended December 31, 2025 decreased by 0.8%, year over year. Gross billings increased by 2.9% to $1.1 billion, compared to $1.0 billion in the fourth quarter of 2024 1. Gross profit increased by 4.5% to $135.6 million, compared to $129.8 million for the fourth quarter of 2024, and gross margin increased 100 basis points to 19.3%, compared to the prior year quarter. Net income remained flat at $20.7 million, or $0.82 per diluted share, compared $0.78 per diluted share, for the fourth quarter of 2024. Adjusted Diluted Earnings per Share 2 was $0.91 for the quarter ended December 31, 2025, compared to $0.78 per share for the quarter ended December 31, 2024.

Performance by Segment:

Sales by Product Mix:

Selling, general and administrative (“SG&A”) expenses increased in the fourth quarter of 2025 by 1.7% to $108.9 million from $107.1 million in the prior year quarter. SG&A as a percentage of net sales increased to 15.5%, compared to 15.1% in the prior year quarter. The increase in SG&A was driven by an increase in variable compensation due to higher levels of gross profit in the quarter.

In addition, the fourth quarter of 2025 results include $3.1 million of severance expenses related to internal cost reduction initiatives.

Interest income in the fourth quarter of 2025 was $3.6 million, compared to $4.8 million in the fourth quarter of 2024.

Cash and cash equivalents and short-term investments were $406.7 million as of December 31, 2025, compared to $442.6 million as of December 31, 2024. During the fourth quarter of 2025, the Company repurchased 179,235 shares of stock at an aggregate purchase price of $10.7 million.

Full Year 2025 Results:

Net sales for the year ended December 31, 2025 increased by 2.5%, compared to the year ended December 31, 2024. Gross billings increased by 2.7% to $4.1 billion, compared to $4.0 billion in the prior year 1. Gross profit increased 3.8% while gross margin expanded by 20 basis points to 18.8% year over year. Net income for the year ended December 31, 2025 decreased by 3.9% to $83.7 million, or $3.27 per diluted share, compared to net income of $87.1 million, or $3.29 per diluted share, for the year ended December 31, 2024. Adjusted Diluted Earnings per Share 2 increased to $3.44 per share for the year ended December 31, 2025, compared to $3.25 per share for the year ended December 31, 2024.

Earnings before interest, taxes, depreciation and amortization, adjusted for stock-based compensation expense, restructuring and other charges and non-routine legal settlements (“Adjusted EBITDA”) 2 increased 6% to $126.4 million for the year ended December 31, 2025, compared to $118.9 million for the year ended December 31, 2024.

Conference Call and Webcast

Connection will host a conference call and live web cast today, February 4, 2026 at 4:30 p.m. EST to discuss its fourth quarter financial results. For participants who would like to participate via telephone, please register here to receive the dial-in number along with a unique PIN number that is required to access the call. A web-cast of the conference call, which will be broadcast live via the Internet, and a copy of this press release, can be accessed on Connection’s website at ir.connection.com. For those unable to participate in the live call, a replay of the webcast will be available at ir.connection.com approximately 90 minutes after the completion of the call and will be accessible on the site for approximately one year.

Non-GAAP Financial Information

EBITDA, Adjusted EBITDA, LTM Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share are non-GAAP financial measures. These measures are included to provide additional information with respect to the Company’s operating performance and earnings. Non-GAAP measures are not a substitute for GAAP measures and should be considered together with the GAAP financial measures. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Definitions for each Non-GAAP measure and a reconciliation to their most directly comparable GAAP measures are available in the tables at the end of this release.

1 Gross billings is the total dollar value of goods and services billed during the period, net of customer returns, credit memos, and any applicable sales or other taxes and include agency fees, and freight. As certain transactions are recognized on a net basis, gross billings include amounts not recognized in net sales.

2 Adjusted Diluted Earnings per Share and Adjusted EBITDA are non-GAAP measures. See page 10 for definitions and reconciliations of these measures.

About Connection

PC Connection, Inc. and its subsidiaries, dba Connection, ( www.connection.com; NASDAQ: CNXN) is a Fortune 1000 company headquartered in Merrimack, NH. With offices throughout the United States, Connection delivers custom-configured IT solutions from its ISO 9001:2015 SOC 2 Type 2 certified Technology Integration and Distribution Center in Wilmington, OH. In addition, the Company has more than 5,000 professional certifications to ensure that it can solve the most complex issues of its customers. Connection also services international customers through its GlobalServe subsidiary, a global IT procurement and service management company. Investors and media can find more information about Connection at http://ir.connection.com.

Connection Business Solutions (800.800.5555) is a rapid-response provider of IT products and services serving primarily the small- and medium-sized business sector. It offers more than 460,000 brand-name products through its staff of technically trained sales account managers, publications, and its website at www.connection.com.

Connection–Enterprise Solutions (561.237.3300), www.connection.com/enterprise, provides corporate technology buyers with best-in-class IT solutions, in-depth IT supply-chain expertise, and real-time access to over 460,000 products and 1,600 vendors through MarkITplace ®, a proprietary next-generation, cloud-based supply chain solution. The team’s engineers, software licensing specialists, and subject matter experts help reduce the cost and complexity of buying hardware, software, and services throughout the entire IT lifecycle.

Connection Public Sector Solutions (800.800.0019), is a rapid-response provider of IT products and services to federal, state, and local government agencies and educational institutions through specialized account managers, publications, and online at www.connection.com/publicsector.

Cautionary Note Regarding Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance and include statements concerning, among other things, our future financial results, business plans (including statements regarding new products and services we may offer and future expenditures, costs and investments), liabilities, impairment charges, competition and the expected impact of current macroeconomic conditions on our businesses and results of operations. You can generally identify forward-looking statements by words such as “believe,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “may,” “should,” “will,” or similar statements or variations of such terms, although not all forward-looking statements include such terms. These statements reflect our current views and are based on assumptions as of the date of this report. Such assumptions are based upon internal estimates and other analysis of current market conditions and trends, management’s expectations, plans and strategies, economic conditions and other factors. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.

Such differences may result from actions taken by us, including expense reduction or strategic initiatives (including reductions in force, capital investments and new or expanded product offerings or services), the execution of our business plans (including our inventory management, cost structure and management and other personnel decisions) or other business decisions, as well as from developments beyond our control, including;

Additional factors include those described in our Annual Report on Form 10-K for the year ended December 31, 2024, including under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” in our subsequent quarterly reports on Form 10-Q, including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in the other subsequent filings we make with the Securities and Exchange Commission from time to time.

A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances. You should not place undue reliance on the forward-looking statements included in this release. We assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made except as required by law.

CONSOLIDATED SELECTED FINANCIAL INFORMATION

At or for the Three Months Ended December 31,

2025

2024

% Change

Operating Data:

Net sales (in thousands)

702,939

708,897

Diluted earnings per share

0.82

0.78

Gross margin

19.3

18.3

Operating margin

3.4

3.2

Inventory turns (1)

Days sales outstanding (2)

% of

Product Mix:

Net Sales

Notebooks/Mobility

Software

Accessories

Desktops

Displays and Sound

Net/Com Products

Servers/Storage

Other Hardware/Services

Total Net Sales

100

Stock Performance Indicators:

Actual shares outstanding (in thousands)

25,221

26,300

Closing price

57.76

69.27

Market capitalization (in thousands)

1,456,765

1,821,801

Trailing price/earnings ratio

17.7

21.1

LTM Net Income (in thousands)

83,722

87,095

LTM Adjusted EBITDA (3) (in thousands)

126,417

118,936

(1)

Represents the annualized cost of goods sold for the period divided by the average inventory for the prior four-month period.

(2)

Represents the trade receivable at the end of the period divided by average daily net sales for the same three-month period.

(3)

LTM Adjusted EBITDA is a non-GAAP measure defined as EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation, severance expenses and non-routine legal settlements for the last twelve months. See page 10 for a reconciliation.

REVENUE AND MARGIN INFORMATION

For the Three Months Ended December 31,

2025

2024

Net

Gross

Net

Gross

(amounts in thousands)

Sales

Margin

Sales

Margin

Enterprise Solutions

338,662

14.2

302,711

14.9

Business Solutions

273,460

25.5

262,440

23.9

Public Sector Solutions

90,817

19.4

143,746

15.4

Total

702,939

19.3

708,897

18.3

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended December 31,

Year Ended December 31,

(amounts in thousands, except per share data)

2025

2024

2025

2024

Net sales

702,939

708,897

2,872,746

2,802,118

Cost of sales

567,331

579,123

2,333,416

2,282,324

Gross profit

135,608

129,774

539,330

519,794

Selling, general and administrative expenses

108,928

107,136

434,035

422,317

Severance expenses and other charges

3,083

—

6,013

415

Income from operations

23,597

22,638

99,282

97,062

Interest income, net

3,565

4,672

14,370

18,725

Other income

—

1,700

Income before taxes

27,162

27,310

113,728

117,487

Income tax provision

(6,450

)

(6,589

)

(30,006

)

(30,392

)

Net income

20,712

20,721

83,722

87,095

Earnings per common share:

Basic

0.82

0.79

3.28

3.31

Diluted

0.82

0.78

3.27

3.29

Shares used in the computation of earnings per common share:

Basic

25,220

26,289

25,511

26,322

Diluted

25,330

26,484

25,633

26,508

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31,

(amounts in thousands)

2025

2024

ASSETS

Current Assets:

Cash and cash equivalents

193,221

178,318

Short-term investments

213,457

264,295

Accounts receivable, net

648,020

611,433

Inventories, net

143,567

95,054

Prepaid expenses and other current assets

22,607

17,750

Total current assets

1,220,872

1,166,850

Property and equipment, net

46,912

52,520

Right-of-use assets

1,569

3,077

Goodwill

73,602

Intangibles, net

989

2,209

Other assets

6,981

1,096

Total Assets

1,350,925

1,299,354

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

338,202

300,242

Accrued payroll

30,939

23,330

Accrued expenses and other liabilities

51,251

47,633

Total current liabilities

420,392

371,205

Deferred income taxes

19,905

15,091

Non-current operating lease liabilities

498

1,552

Other liabilities

—

516

Total Liabilities

440,795

388,364

Stockholders’ Equity:

Common stock

295

294

Additional paid-in capital

144,608

137,036

Retained earnings

905,890

837,466

Accumulated other comprehensive income

174

Treasury stock at cost

(140,741

)

(63,980

)

Total Stockholders’ Equity

910,130

910,990

Total Liabilities and Stockholders’ Equity

1,350,925

1,299,354

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended December 31,

Year Ended December 31,

(amounts in thousands)

2025

2024

2025

2024

Cash Flows provided by Operating Activities:

Net income

20,712

20,721

83,722

87,095

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

2,850

3,166

11,703

12,984

Adjustments to credit losses reserve

628

1,084

1,861

1,914

Stock-based compensation expense

2,241

2,279

9,343

8,475

Deferred income taxes

1,655

(3,211

)

4,840

(777

)

Amortization of discount on short-term investments, net

2,181

167

569

(4,235

)

Gain on sale of short-term investments

—

(76

)

—

Loss on disposal of fixed assets

Changes in assets and liabilities:

Accounts receivable

(31,944

)

(27,441

)

(38,448

)

(6,513

)

Inventories

(8,549

)

18,637

(48,513

)

29,125

Prepaid expenses and other current assets

554

6,095

(4,300

)

2,690

Other non-current assets

(284

)

(4,087

)

618

Accounts payable

26,170

7,309

38,075

36,450

Accrued expenses and other liabilities

11,190

(3,659

)

10,705

5,984

Net cash provided by operating activities

27,418

25,248

65,438

173,868

Cash Flows (used in) provided by Investing Activities:

Purchases of short-term investments

(108,565

)

(103,242

)

(264,139

)

(358,317

)

Proceeds from sale of short-term investments

—

108,763

—

Maturities of short-term investments

104,271

99,999

205,599

250,606

Purchases of property and equipment

(2,188

)

(2,360

)

(7,389

)

(7,575

)

Net cash (used in) provided by investing activities

(6,482

)

(5,603

)

42,834

(115,286

)

Cash Flows used in Financing Activities:

Proceeds from short-term borrowings

—

847

732

26,051

Repayment of short-term borrowings

—

(847

)

(732

)

(26,051

)

Purchase of treasury shares

(10,735

)

(4,643

)

(76,265

)

(12,375

)

Payments for excise tax on treasury purchases

—

(36

)

—

Dividend payments

(3,779

)

(2,627

)

(15,298

)

(10,527

)

Issuance of stock under Employee Stock Purchase Plan

615

571

1,234

1,108

Payment of payroll taxes on stock-based compensation through shares withheld

(1,661

)

(2,139

)

(3,004

)

(3,424

)

Net cash used in financing activities

(15,560

)

(8,838

)

(93,369

)

(25,218

)

Increase in cash and cash equivalents

5,376

10,807

14,903

33,364

Cash and cash equivalents, beginning of year

187,845

167,511

178,318

144,954

Cash and cash equivalents, end of year

193,221

178,318

193,221

178,318

Non-cash Investing and Financing Activities:

Accrued purchases of property and equipment

200

Accrued purchase of treasury shares

240

Accrued excise tax on treasury purchases

678

EBITDA AND ADJUSTED EBITDA

A reconciliation of EBITDA and Adjusted EBITDA to Net Income is detailed below. Adjusted EBITDA is defined as EBITDA (defined as earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation, severance expenses and non-routine legal settlements. Both EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either includes or excludes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. We believe that EBITDA and Adjusted EBITDA provide helpful information with respect to our operating performance including our ability to fund our future capital expenditures and working capital requirements. Adjusted EBITDA also provides helpful information as it is the primary measure used in certain financial covenants contained in our credit agreement. When analyzing our operating performance, investors should use EBITDA and Adjusted EBITDA in addition to, and not as alternatives for Net income or any other performance measure presented in accordance with GAAP. Our non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.

Three Months Ended December 31,

LTM Ended December 31, (1)

(amounts in thousands)

2025

2024

% Change

2025

2024

% Change

Net income

20,712

20,721

83,722

87,095

Depreciation and amortization

2,850

3,166

(10

)

11,703

12,984

(10

)

Income tax expense

6,450

6,589

)

30,006

30,392

)

Interest income

(3,591

)

(4,779

)

(25

)

(14,451

)

(18,891

)

(24

)

Interest expense

107

(76

)

166

(51

)

EBITDA

26,447

25,804

111,061

111,746

)

Severance expenses and other charges (2)

3,083

—

100

6,013

415

1,349

Legal settlement (3)

—

(1,700

)

(100

)

Stock-based compensation

2,241

2,279

)

9,343

8,475

Adjusted EBITDA

31,771

28,083

126,417

118,936

(1)

LTM: Last twelve months

(2)

Severance expenses and other charges in 2025 consisted of voluntary retirement offering and internal restructuring activities and 2024 consisted of internal restructuring activities.

(3)

The Company recorded $1.7 million of other income as a result of a legal settlement received.

ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE

A reconciliation of Adjusted Net Income to Net Income is detailed below. Adjusted Net Income is defined as Net Income plus severance expenses, net of tax plus or minus loss or income from non-routine legal settlements. A reconciliation of Adjusted Diluted Earnings per Share to Diluted Earnings per Share is detailed below. Adjusted Diluted Earnings per Share is defined as diluted earnings per share adjusted for severance expenses, net of tax. Adjusted Net Income and Adjusted Diluted Earnings Per Share are considered non-GAAP financial measures (see note above in EBITDA and Adjusted EBITDA for a description of non-GAAP financial measures). The Company believes that Adjusted Net Income and Adjusted Diluted Earnings per Share provide helpful information with respect to the Company's operating performance. When analyzing our operating performance, investors should use Adjusted Net Income and Adjusted Diluted Earnings per Share in addition to, and not as alternatives for Net income and Diluted Earnings per Share or any other performance measure presented in accordance with GAAP. Our non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.

Three Months Ended December 31,

Year Ended December 31,

(amounts in thousands, except per share data)

2025

2024

% Change

2025

2024

% Change

Net income

20,712

20,721

83,722

87,095

Severance expenses and other charges (1)

3,083

—

100

6,013

415

1,349

Legal settlement (2)

—

(1,700

)

(100

)

Tax benefit

(732

)

—

100

(1,586

)

332

(578

)

Adjusted Net Income

23,063

20,721

88,149

86,142

Diluted shares

25,330

26,484

25,633

26,508

Diluted Earnings per Share

0.82

0.78

3.27

3.29

Adjusted Diluted Earnings per Share

0.91

0.78

3.44

3.25

(1)

Severance expenses and other charges in 2025 consisted of voluntary retirement offering and internal restructuring activities and 2024 consisted of internal restructuring activities.

(2)

The Company recorded $1.7 million of other income as a result of a legal settlement received.