PC Connection, Inc. reported first‑quarter 2026 results that surpassed analyst expectations, with net sales of $721.9 million, a 3.0% year‑over‑year increase, and a gross margin of 18.4% versus 18.2% in the same quarter last year. Net income reached $17.2 million, translating to $0.68 per diluted share on a GAAP basis and $0.77 on an adjusted basis. The company also announced a quarterly dividend of $0.20 per share, payable on May 29 to shareholders of record on May 12.
The earnings were driven by strong performance in the Enterprise and Business Solutions segments, which combined for $622.1 million in net sales—Enterprise alone generated $346.5 million and Business Solutions $275.6 million. The Public Sector segment, however, declined 31.0% to $20.8 million, contributing to a modest overall revenue growth. The shift of customers from AI experimentation to AI production helped lift demand in the core segments, offsetting the weakness in the public‑sector business.
Gross margin expansion to 18.4% was largely a result of a favorable product mix and disciplined cost management. The company’s focus on higher‑margin AI‑related solutions and the ability to maintain pricing power in the Enterprise market helped offset the slight margin contraction seen in the Business Solutions segment, where product mix changes reduced profitability.
"Our financial performance was strong as we experienced solid demand in Q1 for both our Enterprise and Business Solutions segments, driven in part by our customers moving from AI experimentation to AI production," said President and CEO Timothy McGrath. He added that the company "continues to operate with a high degree of expense discipline," citing a 3% year‑over‑year headcount reduction and a $3.1 million severance charge that helped preserve operating leverage.
Market reaction to the results was muted, with investors focusing on the lack of forward guidance and the significant decline in the Public Sector segment. While the earnings beat was notable, the absence of a clear outlook and the headwinds in the public‑sector business tempered enthusiasm.
Cash and cash equivalents stood at $411.4 million as of March 31, up from $406.7 million at the end of December 2025, providing a solid liquidity base that supports the dividend increase and ongoing operational needs.
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