PC Connection (CNXN) Q4 2025 earnings summary

Executive summary

• Gross profit reached a record in Business and Enterprise Solutions, offset by underperformance in Public Sector due to a non-repeating project and delayed K-12 rollouts.

• Gross billings rose 2.9% year-over-year to $1.06 billion in Q4, reflecting customer demand growth.

• Gross profit increased 4.5% to $135.6 million in Q4, with gross margin expanding 100 basis points to 19.3%.

• Net sales for Q4 declined 0.8% to $702.9 million; full year net sales were $2.9 billion, up 2.5%.

• Net income for Q4 was $20.7 million (flat year-over-year); full year net income was $83.7 million, down 3.9%.

Financial highlights

• Diluted EPS for Q4 increased 5.1% to $0.82; adjusted diluted EPS up 16.7% to $0.91.

• Adjusted EBITDA for the trailing twelve months was $126.4 million, up 6% year-over-year.

• SG&A increased 1.7% year-over-year, with headcount down 2% and payroll costs flat; SG&A as a percentage of sales was 15.5%.

• Operating income up 4.2% to $23.6 million; excluding severance, up 17.8% to $26.7 million.

• Q4 included $3.1 million in severance expenses related to cost reduction initiatives.

Outlook and guidance

• Expect to outperform the U.S. IT market by 200 basis points in 2026, with internal growth budget above the 4% market estimate.

• Operating leverage expected to improve, targeting operating margins of 3.7%-3.9% by year-end.

• Public sector headwinds to persist in Q1 2026, with improvement anticipated from Q2 onward.

• Management confident in strategy to drive profitable growth in an AI-first IT environment.

• Demand drivers include AI-enabled endpoints, cloud, and edge solutions.