Nasdaq:CNXN
PC CONNECTION INC
A premier North American distributor of enterprise-grade computing and networking infrastructure with strong operational cash flows.
Key Metrics
Investment Thesis
Bull Case
Investors may favor PC Connection due to its consistent generation of positive free cash flow and disciplined capital allocation evident in significant share buybacks. The company's established market position offers a defensive profile within the cyclical technology distribution sector, providing stable returns even during industry downturns.
Bear Case
Concerns regarding inventory valuation are heightened by recent increases in accounts receivable and inventory levels against flat revenue growth. The company faces margin pressure from rising operating expenses and potential supply chain disruptions that could impact its ability to maintain current profit margins.
About PC CONNECTION INC
PC Connection Inc. is a leading distributor of computer hardware and networking equipment serving enterprise IT departments, government agencies, and retail markets across North America. The company generates revenue primarily through the procurement and distribution of high-demand technology products including servers, storage systems, and connectivity solutions.
Analysis
Management Discussion
Despite a slight revenue decline to $2.87B, the company demonstrated resilient profitability with net income stabilizing at $83.7M in 2025 after recent fluctuations. Strong operating cash flow of $65.4M and a healthy balance sheet with $193.2M in cash provide flexibility for shareholder returns via repurchases totaling $76.3M.
Industry Overview
The technology distribution sector is characterized by high volatility driven by global supply chain dynamics and rapid product lifecycle changes. Industry leaders differentiate themselves through supply reliability and value-added services, making market share consolidation a key trend for the next few years.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $3.12B | $2.85B | $2.80B | $2.87B |
| Cost of Revenue | $2.60B | $2.34B | $2.28B | $2.33B |
| Gross Profit | $526.2M | $511.7M | $519.8M | $539.3M |
| Operating Expenses | $405.6M | $408.6M | $422.7M | $440.0M |
| Operating Income | $120.6M | $103.2M | $97.1M | $99.3M |
| G&A | $405.6M | $405.9M | $422.3M | $434.0M |
| Stock-Based Comp | $5.7M | $7.0M | $8.5M | $9.3M |
| D&A | $10.8M | $11.4M | $11.8M | $10.5M |
| Amortization | $1.2M | $1.2M | $1.2M | $1.2M |
| Other OpEx | $0 | $2.7M | $415.0K | $6.0M |
| Non-Operating Income | $1.1M | $10.0M | $20.4M | $14.4M |
| Pre-Tax Income | $121.6M | $113.1M | $117.5M | $113.7M |
| Income Tax | $32.4M | $29.8M | $30.4M | $30.0M |
| Continuing Ops | $89.2M | $83.3M | $87.1M | $83.7M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $89.2M | $83.3M | $87.1M | $83.7M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $89.2M | $83.3M | $87.1M | $83.7M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $953.8M | $1.05B | $1.17B | $1.22B |
| Cash & Equivalents | $122.9M | $145.0M | $178.3M | $193.2M |
| Marketable Securities | — | $152.2M | $264.3M | $213.5M |
| Accounts Receivable | $610.3M | $606.8M | $611.4M | $648.0M |
| Inventory | $208.7M | $124.2M | $95.1M | $143.6M |
| Prepaid Expenses | $11.9M | $16.1M | $15.4M | $22.6M |
| Other Current Assets | $0 | $4.3M | $2.4M | $0 |
| Long-Term Assets | $146.0M | $139.7M | $132.5M | $130.1M |
| PP&E (Net) | $59.2M | $56.7M | $52.5M | $46.9M |
| Intangibles | $4.6M | $3.4M | $2.2M | $989.0K |
| Goodwill | $73.6M | $73.6M | $73.6M | $73.6M |
| Operating Leases | $7.6M | $4.3M | $3.1M | $1.6M |
| Other LT Assets | $1.1M | $1.7M | $1.1M | $7.0M |
| Total Assets | $1.10B | $1.19B | $1.30B | $1.35B |
| Current Liabilities | $310.5M | $328.0M | $371.2M | $420.4M |
| Accounts Payable | $232.6M | $263.7M | $300.2M | $338.2M |
| Current Leases | $3.2M | $1.7M | $1.8M | $1.3M |
| Other Current Liab | $74.7M | $62.5M | $69.2M | $80.9M |
| Long-Term Liabilities | $23.1M | $19.6M | $17.2M | $20.4M |
| LT Operating Leases | $5.0M | $3.2M | $1.6M | $498.0K |
| Other LT Liab | $18.1M | $16.5M | $15.6M | $19.9M |
| Total Liabilities | $333.7M | $347.6M | $388.4M | $440.8M |
| Shareholders' Equity | $766.2M | $840.8M | $911.0M | $910.1M |
| Retained Earnings | $686.0M | $760.9M | $837.5M | $905.9M |
| AOCI | — | $81.0K | $174.0K | $78.0K |
| Total L&E | $1.10B | $1.19B | $1.30B | $1.35B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $89.2M | $83.3M | $87.1M | $83.7M |
| Non-Cash Adjustments | $1.2M | $180.8M | $67.6M | $-162.4M |
| Working Capital Changes | $-55.5M | $-66.1M | $19.2M | $144.1M |
| Cash from Operations | $34.9M | $198.0M | $173.9M | $65.4M |
| Capital Expenditures | — | — | — | $7.4M |
| Cash from Investing | $-9.1M | $-160.2M | $-115.3M | $42.8M |
| Share Buybacks | — | $5.4M | $12.4M | $76.3M |
| Dividends Paid | $8.9M | $8.4M | $10.5M | $15.3M |
| Cash from Financing | $-11.2M | $-15.7M | $-25.2M | $-93.4M |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $14.6M | $22.0M | $33.4M | $14.9M |
| Beginning Cash | $108.3M | $122.9M | $145.0M | $178.3M |
| Ending Cash | $122.9M | $145.0M | $178.3M | $193.2M |
Frequently Asked Questions
How does PC CONNECTION INC make money?
The company operates through direct sales to enterprise clients and government contracts, wholesale distribution to retail partners, and specialized services such as logistics and supply chain management for technology hardware.
What are the main risks for CNXN?
Rapid technological obsolescence requires continuous capital investment in inventory that can become obsolete quickly if demand shifts. Intense competition from other distributors and direct-to-consumer manufacturer sales could compress gross margins. Geopolitical tensions or trade policy changes affecting semiconductor supply chains pose significant operational risks.
What is CNXN's competitive advantage?
PC Connection leverages its massive scale and long-standing relationships with major manufacturers to secure favorable pricing and inventory access. Its robust supply chain infrastructure allows it to mitigate shortages effectively, while its diversified client base reduces reliance on any single market segment.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.