PC CONNECTION INC (CNXN): Results of Operations and Financial Condition
PC CONNECTION INC (CNXN) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Investor Relations Contact: Thomas Baker, 603.683.2505 Senior Vice President, CFO, and Treasurer tom@connection.com CONNECTION (CNXN) REPORTS SECOND QUARTER 2026 RESULTS SECOND QUARTER SUMMARY : FIRST HALF OF 2026 SUMMARY : ● Net
How this was made
The 30-second read
Why it matters
Traders can update valuation and positioning based on the newly reported Q2 and first-half financial performance, and incorporate the upcoming dividend record and payment dates.
Market read
Fresh earnings numbers (sales, gross profit, EPS) and a new dividend are actionable for short-term sentiment and near-term income positioning.
What to watch
Gross margin was up overall (18.4%), but Business Solutions gross margin decreased 50 bps to 23.0%, which could matter if mix or pricing deteriorates.
Connection reports record second-quarter financial performance, with net sales up 12.4% year over year and net income up 33.8% year over year.
Second-quarter net sales, gross profit, net income and diluted EPS all increased year over year, while consolidated gross margin expanded and SG&A as a percentage of net sales declined.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, second quarterGAAP | $854.0 million | – | up 12.4% |
| Gross billings, second quarterother | $1.2 billion | – | up 14.0% |
| Gross profit, second quarterGAAP | $157.5 million | – | up 14.3% |
| Gross margin, second quarterGAAP | 18.4% | – | up 30 basis points |
| Net income, second quarterGAAP | $33.2 million | – | up 33.8% |
| Diluted EPS, second quarterGAAP | $1.31 per diluted share | – | – |
| Adjusted Diluted EPS, second quarternon-GAAP | $1.31 | – | – |
| SG&A expenses, second quarterGAAP | $114.5 million | – | increased by 7.1% |
| SG&A as a percentage of net sales, second quarterGAAP | 13.4% | – | – |
| Interest income, second quarterGAAP | $2.5 million | – | – |
| Net sales, six monthsGAAP | $1.6 billion | – | up 7.9% |
| Gross billings, six monthsother | $2.2 billion | – | up 9.3% |
| Gross profit, six monthsGAAP | $290.2 million | – | up 9.5% |
| Gross margin, six monthsGAAP | 18.4% | – | up 30 basis points |
| Net income, six monthsGAAP | $50.4 million | – | up 31.7% |
| Diluted EPS, six monthsGAAP | $1.99 per diluted share | – | – |
| Adjusted Diluted EPS, six monthsnon-GAAP | $2.08 per share | – | – |
| Adjusted EBITDA, twelve months ended June 30, 2026non-GAAP | $144.5 million | – | increased 18% |
| Notebook/mobility and desktop sales, second quarterother | 51% of net sales | – | increased by 19% year over year |
| Software sales, second quarterother | 9% of net sales | – | increased by 15% year over year |
| Servers/storage sales, second quarterother | 7% of net sales | – | decreased by 18% year over year |
| Networking sales, second quarterother | 7% of net sales | – | increased by 12% year over year |
| Accessories sales, second quarterother | 10% of net sales | – | increased by 10% year over year |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Business SolutionsGross billings increased by 16.7% to $496.1 million, gross profit increased by 14.9% to $79.1 million, and gross margin decreased by 50 basis points to 23.0%. | $343.9 million | – | increased by 17.3% |
| Public Sector SolutionsGross billings increased by 1.7% to $197.1 million, gross profit increased by 9.2% to $23.2 million, and gross margin increased by 130 basis points to 16.5%. | $140.5 million | – | remained consistent |
| Enterprise SolutionsGross billings increased by 17.0% to $477.0 million, gross profit increased by 15.8% to $55.2 million, and gross margin increased by 30 basis points to 14.9%. | $369.6 million | – | increased by 13.4% |
Capital returns
- The Board of Directors declared a quarterly dividend of $0.20 per share of the Company’s common stock.
- Payment will be made on August 28, 2026, to shareholders of record on August 11, 2026.
What drove it
- Business Solutions net sales increased by 17.3% to $343.9 million.
- Enterprise Solutions net sales increased by 13.4% to $369.6 million.
- Notebook/mobility and desktop sales increased by 19% year over year and accounted for 51% of net sales.
- Software sales increased by 15% year over year.
- Networking sales increased by 12% year over year.
- Accessories sales increased by 10% year over year.
- Public Sector Solutions gross margin increased by 130 basis points to 16.5%.
Concerns
- Public Sector Solutions net sales remained consistent at $140.5 million for the second quarter of 2026 and 2025.
- Business Solutions gross margin decreased by 50 basis points to 23.0%.
- Servers/storage sales decreased by 18% year over year and accounted for 7% of net sales, compared to 9% of net sales in the second quarter of 2025.
- Interest income was $2.5 million, compared to $3.2 million in the second quarter of 2025.
- Cash and cash equivalents and short-term investments were $340.7 million as of June 30, 2026, compared to $406.7 million as of December 31, 2025.
What to watch
- Whether Business Solutions gross margin continues to decline from 23.0%.
- Whether Public Sector Solutions net sales move above $140.5 million.
- The trajectory of servers/storage sales following an 18% year-over-year decrease.
- The mix of notebook/mobility and desktop sales, which accounted for 51% of net sales.
- Any future financial outlook, as the release provided no forward guidance.
Balance sheet and cash flow
- Cash and cash equivalents and short-term investments were $340.7 million as of June 30, 2026, compared to $406.7 million as of December 31, 2025.
Analysis
Connection reported a strong second quarter ended June 30, 2026. Net sales increased by 12.4% year over year to $854.0 million, while gross billings increased by 14.0% to $1.2 billion. Gross profit increased by 14.3% to $157.5 million and consolidated gross margin increased 30 basis points to 18.4%. Net income increased by 33.8% to $33.2 million, and diluted EPS was $1.31 per diluted share compared to $0.97 per diluted share in the prior-year quarter.
Growth was concentrated in Business Solutions and Enterprise Solutions. Business Solutions net sales increased by 17.3% to $343.9 million and Enterprise Solutions net sales increased by 13.4% to $369.6 million. Public Sector Solutions net sales remained consistent at $140.5 million. Enterprise Solutions expanded gross margin by 30 basis points to 14.9%, while Public Sector Solutions expanded gross margin by 130 basis points to 16.5%. Business Solutions generated higher gross profit but its gross margin decreased by 50 basis points to 23.0%.
Product demand was led by notebook/mobility and desktop sales, which increased by 19% year over year and represented 51% of net sales. Software sales increased by 15%, networking sales increased by 12%, and accessories sales increased by 10%. The principal product-mix weakness was servers/storage, where sales decreased by 18% year over year and the category represented 7% of net sales compared to 9% in the prior-year quarter.
Expense performance supported the increase in earnings. SG&A expenses increased by 7.1% to $114.5 million, while SG&A as a percentage of net sales decreased to 13.4% from 14.1%. Interest income declined to $2.5 million from $3.2 million. Cash and cash equivalents and short-term investments were $340.7 million as of June 30, 2026, compared to $406.7 million as of December 31, 2025.
For the six months ended June 30, 2026, net sales increased by 7.9%, gross profit increased by 9.5% to $290.2 million, and net income increased by 31.7% to $50.4 million. Adjusted Diluted EPS increased to $2.08 per share from $1.56 per share. The company declared a quarterly dividend of $0.20 per share, but did not provide forward financial guidance in the release.
Management, verbatim
Our record financial performance reflects more than strong execution—it reflects the value that our customers are placing on their enterprise technology.
Timothy McGrath, President and Chief Executive Officer
As organizations increasingly operationalize AI, they need trusted partners like Connection who can modernize infrastructure, strengthen security, integrate cloud and data platforms, and deliver measurable business outcomes.
Timothy McGrath, President and Chief Executive Officer
Not in the filing
stated, not guessed- Forward revenue guidance
- Forward gross-margin guidance
- Forward operating-expense guidance
- Forward tax-rate guidance
- Prior guidance for comparison
- GAAP operating income
- Non-GAAP operating income
- Operating cash flow
- Free cash flow
- Debt balance
- Share repurchases
- Total capital returned through repurchases
- Second-quarter adjusted EBITDA
- Prior-year gross-margin percentages for consolidated second quarter and six months
- Prior-quarter comparisons for reported metrics
- Income tax rate
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The company filed an SEC Form 8-K (Item 2.02) with Exhibit 99.1 reporting second quarter 2026 results ended June 30, 2026.
Ticker impact
Connection reported Q2 2026 results with net sales up 12.4% y/y, net income up 33.8%, and EPS $1.31.
Likely positive bias for the next session and into earnings-follow-through, unless investors focus on the decline in cash balances or segment margin softness.
This is a primary-source 8-K earnings release with specific, time-stamped financial results and a new dividend declaration (payment Aug 28, record Aug 11).
Market effects
Reinforces demand for IT solutions tied to AI modernization, security, and cloud integration among enterprise and public sector customers.
Limited, as the disclosure is company-specific with no stated regional macro drivers.
Low, no international expansion or global supply-chain shocks mentioned.
Counterpoint
Investors may discount the headline EPS strength if they focus on cash and short-term investments declining to $340.7M from $406.7M at year-end, or on segment gross margin pressure in Business Solutions.
Key entities
- companyPC Connection, Inc.
NASDAQ-listed IT solutions provider reporting Q2 2026 results and declaring a quarterly dividend.
- governanceBoard of Directors
Declared a quarterly dividend of $0.20 per share with Aug 11 record date and Aug 28 payment date.
- executiveTimothy McGrath
CEO quoted on customer demand for AI modernization, security, and cloud/data integration.
