PC Connection Reports 10.9% Net Sales Increase to $701M in Q1 2025

PC Connection, Inc. reported a net sales increase of 10.9% for the first quarter of 2025, reaching $701.0 million compared to $632.0 million in the same period last year. The company's gross profit also rose by 7.8% to $127.3 million, although the gross margin slightly decreased from 18.7% to 18.2%. This decline in gross margin was attributed to a shift in product mix towards lower-margin sales of endpoint devices, including notebooks and desktops. Operating income for the quarter was $14.5 million, a modest increase from $13.5 million in the prior year, while net income rose to $13.5 million from $13.2 million.

In terms of operational changes, PC Connection experienced a significant increase in its Public Sector Solutions segment, which saw sales jump by 54.7% to $144.6 million, driven largely by substantial orders from federal government clients. The Enterprise Solutions segment also contributed to growth, with sales increasing by 5.4% to $298.0 million, while the Business Solutions segment saw a more modest increase of 1.0% to $258.4 million. The company incurred severance expenses of $2.9 million during the quarter as part of efforts to streamline its cost structure.

The company’s balance sheet as of March 31, 2025, showed total assets of $1.25 billion, a decrease from $1.30 billion at the end of 2024. Current assets fell to $1.12 billion, primarily due to a reduction in short-term investments and accounts receivable. Current liabilities also decreased to $353.9 million from $371.2 million, contributing to a reduction in total liabilities to $370.5 million. Stockholders' equity decreased to $877.0 million, reflecting the impact of treasury stock repurchases totaling $45.2 million during the quarter.

PC Connection's cash flow from operating activities was negative at $52.4 million, primarily due to an increase in inventory and a decrease in accounts payable. In contrast, cash provided by investing activities was positive at $104.7 million, driven by the sale of U.S. Government treasury securities. The company ended the quarter with $182.5 million in cash and cash equivalents, indicating a solid liquidity position. Looking ahead, PC Connection anticipates continued growth in its IT solutions business, although it remains cautious about potential macroeconomic challenges that could impact customer spending.