PC Connection 2025 Q2 Earnings Misses Targets as Net Income Falls 5%

PC Connection (CNXN) reported its fiscal 2025 Q2 earnings on Jul 30th, 2025. The total revenue of PC Connection increased by 3.2% to $759.69 million in 2025 Q2, up from $736.48 million in 2024 Q2. PC Connection's EPS declined 1.0% to $0.98 in 2025 Q2 from $0.99 in 2024 Q2. Meanwhile, the company's net income declined to $24.79 million in 2025 Q2, down 5.2% from $26.16 million reported in 2024 Q2.

Despite the revenue growth, PC Connection's earnings per share showed a slight decline, reflecting challenges in maintaining profitability.

Revenue

PC Connection's revenue in Q2 2025 reached $759.69 million, marking a 3.2% increase from the previous year. Enterprise Solutions generated $326.01 million, showcasing strong momentum. Business Solutions contributed $293.17 million, reflecting a steady performance, while Public Sector Solutions reported $140.51 million, indicating a sector-specific downturn. Overall, total net sales amounted to $759.69 million.

Earnings/Net Income

PC Connection's earnings per share fell slightly, down 1.0% to $0.98 from $0.99 in the previous year. The company's net income also experienced a decline, dropping by 5.2% to $24.79 million compared to $26.16 million in 2024 Q2. This downturn suggests challenges in sustaining earnings amid revenue growth.

Price Action

The stock price of PC Connection has edged down 0.06% during the latest trading day, has dropped 3.35% during the most recent full trading week, and has dropped 3.04% month-to-date.

Post-Earnings Price Action Review

The investment strategy of acquiring PC Connection shares post-revenue increase and holding for 30 days has yielded moderate returns over the past three years. This approach delivered a 52.95% return, falling short of the benchmark's 87.61% return, resulting in an excess return of -34.66%. The strategy achieved a compound annual growth rate (CAGR) of 8.93%, with no maximum drawdown, and maintained a Sharpe ratio of 0.31, indicating a low-risk profile with consistent growth. Despite the positive revenue trend, the strategy's returns fell below the benchmark, suggesting challenges in capturing optimal market performance.

CEO Commentary

Timothy J. McGrath, President and CEO, highlighted that PC Connection experienced its fifth consecutive quarter of revenue growth, with net sales reaching $759.7 million, driven by a 6% increase in mobility and desktop categories. Despite challenges from changes in subscription licensing programs, he expressed optimism about the future, noting a strong backlog and encouraging technology trends, particularly in AI and data center modernization. McGrath reaffirmed the company's commitment to investing in solutions and enhancing customer service, while expecting continued improvement in business performance through the second half of the year.

Guidance

McGrath stated that the company anticipates outperforming the U.S. IT market growth by 200 basis points. He noted a strong pipeline and backlog, with expectations for less impact from subscription licensing changes in the second half. The leadership is optimistic about the continued PC refresh cycle and investments in education and tools to support customers, with a focus on driving long-term growth and increasing productivity.

Additional News

In recent developments, PC Connection announced a share buyback initiative, repurchasing 254,695 shares at an aggregate purchase price of $15.5 million during Q2 2025. Additionally, the company declared a quarterly dividend of $0.15 per share, set for payment on August 29, 2025, to shareholders of record on August 12, 2025. Furthermore, PC Connection's senior management restructured its leadership team, appointing Thomas Baker as Senior Vice President, CFO, and Treasurer, effective immediately. These moves reflect the company's commitment to enhancing shareholder value and strategic leadership alignment amidst challenging market conditions.