PC Connection (CNXN) Q1 2026 earnings summary

Executive summary

• Net sales for Q1 2026 rose 3% year-over-year to $721.9 million, driven by strong growth in Business and Enterprise Solutions, partially offset by a decline in Public Sector Solutions.

• Gross profit increased 4.3% to $132.7 million, with gross margin expanding by 20 basis points to 18.4%.

• Net income rose 27.8% to $17.2 million, with diluted EPS at $0.68, up from $0.51 last year; adjusted diluted EPS was $0.77.

• Operating income improved to $20.2 million, or 2.8% of net sales, and adjusted operating income was $23.3 million.

• Backlog reached its highest level since mid-2022, positioning the company for continued momentum.

Financial highlights

• Gross billings grew 4.3% to $1 billion year-over-year.

• Adjusted EBITDA for the trailing twelve months was $132.3 million, up 7%.

• SG&A expenses were $109.5 million, 15.2% of net sales, down from 15.7% year-over-year.

• Cash and short-term investments totaled $411.4 million as of March 31, 2026.

• Net cash provided by operating activities was $14.3 million, a significant improvement from the prior year.

Outlook and guidance

• Expect to outperform the U.S. IT market by 200 basis points in 2026.

• PC refresh cycle and AI adoption are expected to drive demand through 2026, with some potential softening in the back half of the year due to pricing and supply dynamics.

• Management expects internally generated funds and short-term investments to be sufficient for capital needs for at least the next twelve months.

• Ongoing investments in IT infrastructure and service engineers are expected to support future growth and margin improvement.

• Backlog and customer demand remain strong, but pricing and supply chain uncertainties persist.