Key Highlights

  • Consensus EPS of 1.04 compares with second-quarter diluted EPS of 1.31, against 0.97 a year earlier.
  • Consensus revenue of USD 773.74 million compares with second-quarter net sales of USD 853,996 thousand, against USD 759,693 thousand.
  • Management projected third-quarter revenue sequentially lower than the second quarter, with year-over-year growth in the high single digits.
  • The company declared a quarterly dividend of 0.27 per share, up from 0.20 per share paid in the second quarter.

PC Connection (NASDAQ:CNXN) reports third-quarter results on Wednesday, Oct. 28, after the market closes. Consensus stands at EPS of 1.04 on revenue of USD 773.74 million, and the company has a market capitalization of USD 2.23 billion.

PC Connection sells information technology solutions through its Business Solutions, Enterprise Solutions and Public Sector segments. Second-quarter net sales were USD 853,996 thousand against USD 759,693 thousand, and net income was USD 33,168 thousand against USD 24,789 thousand.

Estimates Against Second-Quarter Results and the Sequential Outlook

The EPS estimate of 1.04 is below the second-quarter diluted EPS of 1.31, which compared with 0.97 a year earlier. The estimates table does not state its EPS basis. The revenue estimate of USD 773.74 million is below the USD 853,996 thousand of net sales reported, which compared with USD 759,693 thousand.

Management projected third-quarter revenue sequentially lower than the second quarter, with year-over-year growth in the high single digits. It also said it expects to outperform the U.S. IT market by 200 basis points for the full year 2026.

What Management Guided and What It Left Open

Management gave no numeric EPS range for the third quarter. It guided the sequential decline and the year-over-year growth rate in broad terms, and the 200 basis point market outperformance target applies to the full year.

Management left open supply chain constraints and other macroeconomic conditions that could cause demand variability, and tariff and cost pressures at manufacturing customers. It said software performance was aided by the Microsoft fiscal year-end in June, which typically results in higher transaction volumes.

Segment Sales and Gross Margin Detail

Business Solutions sales were USD 343.9 million, up 17.3%, with gross margin of 23.0%. Enterprise Solutions sales were USD 369.6 million, up 13.4%, with gross margin of 14.9%. Public Sector sales were USD 140.5 million, with gross margin of 16.5%.

Notebook, mobility and desktop sales rose 19%, software grew 15% and networking increased 12%. Endpoint device units sold increased 3%, and gross billings were USD 1.2 billion, up 14.0%. Business Solutions backlog reached its highest level in three years.

Income Statement Lines, Cash and Dividend

Gross profit was USD 157,473 thousand against USD 137,766 thousand, and gross margin was 18.4%. SG&A expenses were USD 114,461 thousand against USD 106,869 thousand, and operating income was USD 43,012 thousand against USD 30,897 thousand. Income before taxes was USD 45,537 thousand against USD 34,113 thousand.

Cash and cash equivalents were USD 123,717 thousand, and short-term investments were USD 216,973 thousand. Management put total cash and short-term investments at USD 340.7 million, and USD 81.2 million remained under the repurchase program. The estimates table lists a market capitalization of USD 2.23 billion.

Items to Track in the Report

Reported EPS against 1.04 and revenue against USD 773.74 million are the headline comparisons. Other markers are segment gross margins, backlog and the sequential third-quarter outlook.