PC Connection (CNXN) investor relations material

Executive summary

• Net sales for Q2 2025 increased 3.2% year-over-year to $759.7 million, marking the fifth consecutive quarter of growth, driven by desktops, servers/storage, notebooks/mobility, and net/com products.

• Gross profit reached a record $137.8 million, up 0.9% year-over-year, but gross margin declined 40 basis points to 18.1% due to changes in partner subscription licensing and reduced software agency fees.

• Net income for Q2 was $24.8 million, down 5.2% from $26.2 million in the prior year, mainly due to lower interest income.

• Operating income remained flat at $30.9 million year-over-year.

• Board declared a $0.15 per share quarterly dividend, payable August 29, 2025.

Financial highlights

• Q2 2025 net sales: $759.7M (+3.2% YoY); gross profit: $137.8M (+0.9% YoY); gross margin: 18.1% (down from 18.5%).

• Q2 2025 operating income: $30.9M; net income: $24.8M; diluted EPS: $0.97 (down $0.02 YoY); adjusted diluted EPS: $0.97 (down $0.03 YoY).

• Trailing twelve-month adjusted EBITDA was $122.5M, down 2% from $125.4M a year ago.

• Interest income fell to $3.2M from $4.7M due to lower cash balances and interest rates.

• Cash and short-term investments totaled $346.1M at quarter end; cash and equivalents at $186.7M.

Outlook and guidance

• Expect less impact from subscription licensing program changes in the second half of the year.

• Anticipate continued PC refresh cycle and strong demand for data center modernization and edge solutions.

• Optimistic about outperforming U.S. IT market growth by 200 basis points for the remainder of the year.

• Gross margins expected to remain stable, within 10–15 basis points of Q2 levels.

• Management expects to meet cash requirements for the next twelve months and beyond through cash on hand, short-term investments, and operating cash flows.