PC CONNECTION INC (CNXN)

CIK: 0001050377. SIC: 5045 Wholesale-Computers & Peripheral Equipment & Software. Latest 10-K as of: 2026-02-24.

SIC breadcrumb: Wholesale Trade > SIC Major Group 50 > SIC 5045 Wholesale-Computers & Peripheral Equipment & Software

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1050377. Latest filing source: 0001104659-26-019108.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-24. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001050377.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-29. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001050377.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001104659-26-051493.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-04-29. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

​

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements generally relate to future events or our future financial or operating performance and include statements concerning, among other things, our future financial results, business plans (including statements regarding new products and services we may offer and future expenditures, costs and investments), liabilities, impairment charges, competition, and the expected impact of current macroeconomic conditions on our businesses and results of operations. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “would,” “should,” “expects,” “plans,” “could,” “intends,” “target,” “projects,” “believes,” “estimates,” “anticipates,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements reflect our current views and are based on assumptions as of the date of this report. Such assumptions are based upon internal estimates and other analyses of current market conditions and trends, management expectations, plans, and strategies, economic conditions, and other factors. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.

​

Such differences may result from actions taken by us, including expense reduction or strategic initiatives (including reductions in force, capital investments and new or expanded product offerings or services), the execution of our business plans (including our inventory management, cost structure and management and other personnel decisions) or other business decisions, as well as from developments beyond our control, including:

​

●

macroeconomic factors facing the global economy, including disruptions in or increased volatility of the capital markets, changes in trade policy, which may include the imposition of tariffs or other trade barriers, economic sanctions and economic slowdowns or recessions, government shutdowns, the impact of conflicts in Iran and the Middle East, changes in tax policy, rising inflation and changing interest rates modifying our potential for investment income and the timing thereof or reducing the level of investment our customers are willing to make in IT products;

●

supply constraints, such as the global memory (DRAM and NAND) shortage;

●

substantial competition reducing our market share;

●

significant price competition reducing our profit margins;

●

the loss of any of our major vendors adversely affecting the number or type of products we may offer;

●

virtualization of information technology, or IT, resources and applications, including networks, servers, applications, and data storage disrupting or altering our traditional distribution models;

●

service interruptions at third-party shippers negatively impacting our ability to deliver the products we offer to our customers;

●

increases in shipping and postage costs reducing our margins and adversely affecting our results of operations;

●

loss of key persons or the inability to attract, train and retain qualified personnel adversely affecting our ability to operate our business; and

●

cyberattacks or the failure to safeguard personal information and our IT systems resulting in liability and harm to our reputation.

Additional factors include those described in our Annual Report on Form 10-K for the year ended December 31, 2025, including under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” in our subsequent quarterly reports on Form 10-Q, including under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in the other subsequent filings we make with the Securities and Exchange Commission from time to time.

A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances. You should not place undue reliance on the forward-looking statements. We assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made except as required by law.

Unless the context otherwise requires, we use the terms “Connection”, the “Company”, “we”, “us”, and “our” in this Quarterly Report on Form 10-Q to refer to PC Connection, Inc. and its subsidiaries.

14

Table of Contents

OVERVIEW

​

We are a Fortune 1000 Global Solutions Provider that simplifies IT, guiding the connection between people and technology. Our dedicated account managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services. We provide a wide range of IT solutions, from the desktop to the cloud—including computer systems, data center solutions, security, artificial intelligence, software and peripheral equipment, networking communications, and other products and accessories that we develop internally and secure from manufacturers, distributors, and other suppliers. Our Technology Solutions and Services Organization, or TSSO, and state-of-the-art ISO 9001:2015 SOC 2 Type 2 certified Technology Integration and Distribution Center offer end-to-end services related to the design, configuration, and implementation of IT solutions. Our team also provides a comprehensive portfolio of managed services and professional services. These services are performed by our personnel and by third-party providers. Our GlobalServe offering ensures worldwide coverage for our multinational customers, delivering global procurement solutions through our network of in-country suppliers in over 150 countries.

​

The “Connection” brand includes Connection Enterprise Solutions, Connection Business Solutions, and Connection Public Sector Solutions, which provide IT solutions and services to enterprise, small- to medium-sized businesses, and public sector markets.

​

Financial results for each of our segments are included in the financial statements attached hereto. We generate sales through (i) outbound inside sales and field sales contacts by sales representatives focused on the business, educational, healthcare, retail, manufacturing, and government markets, (ii) our websites, and (iii) direct responses from customers responding to our advertising media. We offer a broad selection of over 460,000 products at competitive prices, including products from vendors like Apple, Cisco, Dell Inc., HP Inc., Hewlett-Packard Enterprise, Intel, Lenovo, Microsoft Corporation, and VMware by Broadcom, and we partner with more than 1,600 suppliers. We are able to leverage our state-of-the art logistic capabilities to rapidly ship product to customers.

​

As a value-added reseller in the IT supply chain, we do not manufacture IT hardware or software products. We are dependent on our suppliers—manufacturers and distributors that historically have only sold to resellers rather than directly to end users. However, certain manufacturers have, on multiple occasions, sold or attempted to sell directly to our customers, and in some cases, have restricted our ability to sell their products directly to certain customers, thereby attempting to and, in some cases successfully, eliminate our role. We believe that the success of these direct sales efforts by manufacturers will depend on their ability to meet our customers’ ongoing demands and provide solutions to meet their needs. We believe more of our customers are seeking out comprehensive and integrated IT solutions, rather than the ability to acquire specific IT products on a one-off basis. Our advantage is our ability to be product-neutral and provide a broader combination of products, services, and advice tailored to our customers’ individual needs. By providing customers with customized solutions from a variety of manufacturers, we believe we can mitigate the negative impact of continued direct sales initiatives from individual manufacturers. Through the formation of our TSSO, we are able to provide customers complete IT solutions, from identifying their needs, to designing, developing, and managing the integration of products and services to implement their IT projects. Such service offerings carry higher margins than traditional product sales. Additionally, the technical certifications of our service engineers permit us to offer higher-end, more complex products that generally carry higher gross margins. We expect these service offerings and technical certifications to continue to play a role in sales generation and gross margin improvements in this competitive environment.

​

The primary challenges we continue to face in effectively managing our business are (1) increasing our product and service revenues while at the same time improving our gross margin in all three segments, (2) recruiting, retaining, and improving the productivity of our sales and technical support personnel, and (3) effectively controlling our selling, general and administrative, or SG&A, expenses while making major investments in our IT systems and solution selling personnel, especially in relation to changing revenue levels.

​

To support future growth, we have invested and expect to continue to invest in our IT solutions business, which requires the addition of highly skilled service engineers. Although we expect to realize the ultimate benefit of higher-margin service revenues under this multi-year initiative, we believe that our cost of services will increase as we add additional service engineers. If our service revenues do not grow enough to offset the cost of these headcount additions, our operating results may be negatively impacted.

​

15

Table of Contents

Market conditions and technology advances significantly affect the demand for our products and services. Virtual delivery of software products and advanced Internet technology providing customers enhanced functionality have substantially increased customer expectations, requiring us to invest on an ongoing basis in our own IT infrastructure to meet these new demands.

​

Our investments in IT infrastructure are designed to enable us to operate more efficiently and provide our customers enhanced functionality.

​

The ongoing global memory shortage (DRAM and NAND) could result in increased inventory costs, which may reduce our margins or require us to raise prices. The memory shortage could additionally result in a lack of availability of products, which could negatively impact our results of operations. As a result of these ongoing and anticipated shortages, we may purchase product in advance of customer orders, while customers may accelerate or delay purchasing depending on their capital resources.

​

The U.S. administration has announced or imposed a series of tariffs on U.S. trading partners. In response, several countries have threatened or imposed retaliatory measures. The imposition of new tariffs or increases in existing tariffs on goods imported from countries where our suppliers operate could result in increased inventory costs. These cost increases may reduce our margins or require us to raise prices. We continue to assess the impact of the tariffs on our supply chain. In addition, these actions and threatened actions and increased volatility in financial mark

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-24. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is intended to promote an understanding of our results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K. This section discusses the results of operations for the year ended December 31, 2025 and year-to-year comparison between the year ended December 31, 2025 and the year ended December 31, 2024. Discussion of the year ended December 31, 2024 and the year-to-year comparison between the year ended December 31, 2024 and the year ended December 31, 2023 can be found in Part II, Item 7 “Management’s Discussions and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024. Our MD&A also includes discussion of certain forward-looking trends and other statements that predict or anticipate future business or financial results that are subject to important factors that could cause our actual results to differ materially from those indicated. See “Cautionary Note Concerning Forward-Looking Statements” and “Item 1A. Risk Factors” of this Annual Report on Form 10-K.

​

OVERVIEW

​

We are a Fortune 1000 Global Solutions Provider that simplifies IT, guiding the connection between people and technology. Our dedicated account managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services. We provide a wide range of IT solutions, from the desktop to the cloud—including computer systems, data center solutions, security, AI, software and peripheral equipment, networking communications, and other products and accessories that we develop internally and secure from manufacturers, distributors, and other suppliers. Our TSSO and state-of-the-art ISO 9001:2015 SOC 2 Type 2 certified TIDC offer end-to-end services related to the design, configuration, and implementation of IT solutions. Our team also provides a comprehensive portfolio of managed services and professional services. These services are performed by our personnel and by third-party providers. Our GlobalServe offering ensures worldwide coverage for our multinational customers, delivering global procurement solutions through our network of in-country suppliers in over 150 countries.

​

The “Connection” brand includes Connection Enterprise Solutions, Connection Business Solutions, and Connection Public Sector Solutions, which provide IT solutions and services to enterprise, SMBs, and public sector markets.

​

Financial results for each of our segments are included in the financial statements attached hereto. We generate sales through (i) outbound inside sales and field sales contacts by sales representatives focused on the business, educational, healthcare, retail, manufacturing, and government markets, (ii) our websites, and (iii) direct responses from customers responding to our advertising media. We offer a broad selection of over 460,000 products at competitive prices, including products from vendors like Apple, Cisco, Dell Inc., HP Inc., Hewlett-Packard Enterprise, Intel, Lenovo, Microsoft Corporation, and VMware by Broadcom, and we partner with more than 1,600 suppliers. We are able to leverage our state-of-the art logistic capabilities to rapidly ship product to customers.

​

As a value-added reseller in the IT supply chain, we do not manufacture IT hardware or software products. We are dependent on our suppliers—manufacturers and distributors that historically have only sold to resellers rather than directly to end users. However, certain manufacturers have, on multiple occasions, sold or attempted to sell directly to our customers, and in some cases, have restricted our ability to sell their products directly to certain customers, thereby attempting to and, in some cases successfully, eliminate our role. We believe that the success of these direct sales efforts by manufacturers will depend on their ability to meet our customers’ ongoing demands and provide solutions to meet their needs. We believe more of our customers are seeking out comprehensive and integrated IT solutions, rather than the ability to acquire specific IT products on a one-off basis. Our advantage is our ability to be product-neutral and provide a broader combination of products, services, and advice tailored to our customers’ individual needs. By providing customers with customized solutions from a variety of manufacturers, we believe we can mitigate the negative impact of continued direct sales initiatives from individual manufacturers. Through the formation of our TSSO, we are able to provide customers complete IT solutions, from identifying their needs, to designing, developing, and managing the integration of products and services to implement their IT projects. Such service offerings carry higher margins than traditional product sales. Additionally, the technical certifications of our service engineers permit us to offer higher-end, more complex products that generally carry higher gross margins. We expect these service offerings and technical

29

Table of Contents

certifications to continue to play a role in sales generation and gross margin improvements in this competitive environment.

​

The primary challenges we continue to face in effectively managing our business are (1) increasing our product and service revenues while at the same time improving our gross margin in all three segments, (2) recruiting, retaining, and improving the productivity of our sales and technical support personnel, and (3) effectively controlling our SG&A expenses while making major investments in our IT systems and solution selling personnel, especially in relation to changing revenue levels.

​

To support future growth, we have invested and expect to continue to invest in our IT solutions business, which requires the addition of highly skilled service engineers. Although we expect to realize the ultimate benefit of higher-margin service revenues under this multi-year initiative, we believe that our cost of services will increase as we add additional service engineers. If our service revenues do not grow enough to offset the cost of these headcount additions, our operating results may be negatively impacted.

​

Market conditions and technology advances significantly affect the demand for our products and services. Virtual delivery of software products and advanced Internet technology providing customers enhanced functionality have substantially increased customer expectations, requiring us to invest on an ongoing basis in our own IT infrastructure to meet these new demands.

​

Our investments in IT infrastructure are designed to enable us to operate more efficiently and provide our customers enhanced functionality.

​

Trends and Key Factors Affecting our Financial Performance

​

●

As the AI market continues to evolve, it is difficult to predict and forecast its potential impact on our business and results of operations in the future. We may be required to make significant investments to keep up with increasing competition surrounding AI. Additionally, potential issues with the AI products we sell could have an adverse effect on our business and results of operations in the future.

​

●

Inflation due to, among other things, higher interest rates and the uncertain economic environment, impacts product costs and wages. The increased product costs and wages due to inflation may adversely affect our business, financial condition and results of operations. If product costs and wages increase significantly or for an extended period of time, we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting customer demand.

​

●

The Federal Reserve decreased interest rates in 2025, but it is uncertain whether interest rates will remain the same, decrease, or increase in 2026. Should we need to borrow in the future, we may be exposed to high interest rates. Additionally, if interest rates were to decrease, our interest income on our cash equivalents and short-term investments would also decrease.

​

●

The impact of tariffs remains uncertain. If the economic impact of any imposed tariff is passed through to us by our vendors, our results of operations could be impacted.

​

●

Changes in partner funding programs could change the amount of incentives received by us, which could impact our results of operations.

​

●

The possibility of a U.S. Government shutdown could adversely impact our results of operations, particularly within our Public Sector Solutions segment.

​

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KEY OPERATING METRIC

​

Gross Billings

​

We utilize key operating metrics to track and assess the performance of our business, including gross billings. Gross billings is the total dollar value of goods and services billed during the period, net of customer returns, credit memos, and any applicable sales or other taxes and includes agency fees, and freight. As certain transactions are recognized on a net basis, gross billings include amounts not recognized in net sales.

​

We use the gross billings operating metric for planning, forecasting, and evaluating the sales performance of our operating segments by providing insight into the total value of our business transactions. We believe that gross billings provides the same insight to investors.

​

The following table sets forth the gross billings for each of our operating segments and our consolidated entity (in millions):

​

​

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31, 

​

​

2025

  ​ ​ ​

2024

  ​ ​ ​

2023

Gross billings

​

​

​

​

​

​

​

​

​

Enterprise Solutions

​

$

1,687.4

​

$

1,558.7

​

$

1,547.9

Business Solutions

​

1,691.5

​

1,632.1

​

1,601.7

Public Sector Solutions

​

​

755.2

​

836.1

​

823.3

Total gross billings

​

$

4,134.1

​

$

4,026.9

​

$

3,972.9

​

RESULTS OF OPERATIONS

​

The following table sets forth information derived from our statements of income expressed as a percentage of net sales for the periods indicated (dollars in millions):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31, 

​

​

​

2025

​

​

2024

  ​ ​ ​

​

2023

​

Net sales

​

$

2,872.7

​

$

2,802.1

​

$

2,850.6

​

Gross margin

​

​

18.8

%  

​

18.6

%  

​

18.0

%

Selling, general and administrative expenses

​

15.1

%  

15.1

%  

14.2

%

Income from operations

​

3.5

%  

3.5

%  

3.6

%

​

Net sales of $2,872.7 million in 2025 reflected an increase of $70.6 million compared to 2024, which was driven by higher net sales for our Enterprise Solutions and Business Solutions segments as shown in the table on page 34 of this Annual Report on Form 10-K. The increase in net sales was primarily driven by an increase in net sales of desktops of $53.5 million, as well as increase in net sales of advanced technology categories including software and servers/storage of $35.7 million and $15.3 million, respectively. These increases were partially offset by decreases in net sales of displays and sound, net/com products, and accessories of $22.4 million, $8.6 million, and $3.6 million, respectively, as shown in Note 2, “Revenue” to the consolidated financial statements. Gross profit increased year-over-year by $19.5 million as illustrated in the table and the discussion beginning on page 34 of this Annual Report on Form 10-K. Gross margin increased year-over-year by 20 basis points as shown in the above table. The increase in gross margin was primarily due to improved invoice margins in servers/storage, net/com products, and notebooks/mobility primarily as a result of higher-margin deals in the current year, combined with an increase in the amount of software sales recognized on a net basis as these sales are recognized in the financial statements at 100% margin. SG&A expenses as a percentage of net sales remained substantially the same year-over-year. Operating income as a percentage of net sales remained substantially the same year-over-year.

​

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Sales Distribution

​

The following table sets forth our percentage of net sales by operating segment and product mix:

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31, 

​

​

2025

  ​ ​ ​

2024

  ​ ​ ​

2023

Operating Segment

​

​

​

​

​

​

​

Enterprise Solutions

​

44

%  

42

%  

42

%

Business Solutions

​

38

38

38

​

Public Sector Solutions

​

18

20

20

​

Total

​

100

%  

100

%  

100

%

​

​

​

​

​

​

​

​

Product Mix

​

​

​

​

​

​

​

Notebooks/Mobility

​

35

%  

35

%  

33

%

Desktops

​

12

​

11

​

9

​

Software

​

11

​

10

​

12

​

Servers/Storage

​

8

​

7

​

7

​

Net/Com Products

​

7

8

10

​

Displays and Sound

​

9

10

9

​

Accessories

​

11

12

11

​

Other Hardware/Services

​

7

7

9

​

Total

​

100

%  

100

%  

100

%

​

Gross Margins

​

The following table summarizes our overall gross margins, as a percentage of net sales, for the last three years:  

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31, 

​

​

2025

  ​ ​ ​

2024

  ​ ​ ​

2023

Operating Segment

​

​

​

​

​

​

​

Enterprise Solutions

​

14.5

%  

15.2

%  

14.9

%  

Business Solutions

​

25.2

24.1

23.0

​

Public Sector Solutions

​

16.0

15.3

14.9

​

Total Company

​

18.8

%  

18.6

%  

18.0

%  

​

Cost of Sales

​

Cost of sales includes the invoice cost of the product, direct employee and third-party cost of services, direct costs of packaging, inbound and outbound freight, and provisions for inventory obsolescence, adjusted for discounts, rebates, and other vendor allowances.

​

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Operating Expenses

​

The following table reflects our most significant operating expenses for the last three years (dollars in millions):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31, 

​

​

2025

  ​ ​ ​

2024

  ​ ​ ​

2023

Personnel costs

​

$

330.8

​

$

320.6

​

$

311.6

​

Marketing

​

24.8

​

25.1

​

22.4

​

Service contracts/subscriptions

​

​

26.0

​

24.5

​

21.0

​

Professional fees

​

15.4

​

12.9

​

12.9

​

Depreciation and amortization

​

11.7

​

13.0

​

12.7

​

Facilities operations

​

7.5

​

7.6

​

8.2

​

Credit card fees

​

6.1

​

6.7

​

6.7

​

Other

​

11.7

​

11.9

​

10.4

​

Total SG&A expense

​

$

434.0

​

$

422.3

​

$

405.9

​

As a percentage of net sales

​

​

15.1

%  

​

15.1

%  

​

14.2

%

​

Severance expenses and other charges

​

During the years ended December 31, 2025, 2024, and 2023, we undertook actions to lower our cost structure. In connection with these initiatives, we incurred severance expenses and other charges of $6.0 million, $0.4 million, and $2.7 million for the years ended December 31, 2025, 2024, and 2023, respectively. The severance expenses and other charges were primarily related to voluntary and involuntary reductions in the Company’s workforce. Both the voluntary and involuntary reductions included cash severance and other related termination benefits. The majority of each of these costs are expected to be paid within a year of termination and any unpaid balances are included in accrued payroll on the consolidated balance sheets as of December 31, 2025.

​

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Table of Contents

YEAR-OVER-YEAR COMPARISONS

​

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

​

Changes in net sales and gross profit by operating segment are shown in the following table (dollars in millions):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31, 

​

​

​

​

​

​

​

2025

​

2024

​

​

​

​

​

​

​

​

​

​

% of

​

​

​

​

% of

​

$

​

%

​

​

​

Amount

​

Net Sales

​

Amount

​

Net Sales

​

Change

​

Change

​

Net Sales:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Enterprise Solutions

​

$

1,282.4

44.6

%  

$

1,181.2

42.2

%  

$

101.2

​

8.6

%

Business Solutions

​

​

1,081.8

​

37.7

​

​

1,049.1

​

37.4

​

​

32.7

​

3.1

​

Public Sector Solutions

​

508.5

17.7

​

571.8

20.4

(63.3)

​

(11.1)

​

Total

​

$

2,872.7

​

100.0

%  

$

2,802.1

​

100.0

%  

$

70.6

​

2.5

%

Gross Profit:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Enterprise Solutions

​

$

185.9

14.5

%  

$

180.0

15.2

%  

$

5.9

​

3.3

%

Business Solutions

​

​

272.1

​

25.2

​

​

252.4

​

24.1

​

​

19.7

​

7.8

​

Public Sector Solutions

​

81.3

16.0

​

87.4

15.3

(6.1)

​

(6.9)

​

Total

​

$

539.3

​

18.8

%  

$

519.8

​

18.6

%  

$

19.5

​

3.8

%

​

Net sales increased by 2.5% to $2,872.7 million in 2025, as explained below:

​

●

Net sales of $1,282.4 million for the Enterprise Solutions segment reflect an increase of $101.2 million, or 8.6% year-over-year, primarily due to increases in net sales of notebooks/mobility, desktops, servers/storage, accessories, software, and other hardware/services of $26.6 million, $21.8 million, $20.8 million, $20.4 million, $19.2 million, and $10.6 million, respectively. These increases were partially offset by decreases in net sales of displays and sound and net/com products of $12.2 million and $6.0 million, respectively.

​

●

Net sales of $1,081.8 million for the Business Solutions segment reflect an increase of $32.7 million, or 3.1% year-over-year, primarily due to increases in net sales of desktops, notebooks/mobility, and software of $23.9 million, $23.5 million, and $15.7 million, respectively. These increases were partially offset by decreases in net sales of accessories and servers/storage of $16.4 million and $14.4 million, respectively.

​

●

Net sales of $508.5 million for the Public Sector Solutions segment reflect a decrease of $63.3 million, or 11.1% year-over-year. The decrease was primarily driven by decreases in sales to state and local government and educational institutions of $40.0 million and sales to the federal government of $23.3 million. The decrease in net sales was primarily driven by decreases in net sales of notebooks/mobility, displays and sound, other hardware/services, and accessories of $50.7 million, $12.7 million, $8.9 million, and $7.7 million, respectively. These decreases were partially offset by increases in net sales of servers/storage and desktops of $9.0 million and $7.8 million, respectively.

​

Gross profit increased by 3.8% to $539.3 million in 2025, as explained below:

​

●

Gross profit for the Enterprise Solutions segment increased by $5.9 million, or 3.3% year-over-year as referenced in the above table, primarily as a result of the increase in net sales as discussed in the preceding paragraph.

​

●

Gross profit for the Business Solutions segment increased by $19.7 million, or 7.8% year-over-year as referenced in the above table, primarily as a result of improved invoice margins in notebooks/mobility primarily due to low-margin deals in the prior year.

​

●

Gross profit for the Public Sector Solutions segment decreased by $6.1 million, or 6.9% year-over-year as referenced in the above table, primarily as a result of the decrease in net sales as discussed in the preceding paragraph.

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Table of Contents

​

Gross margin increased by 20 basis points to 18.8% in 2025, as explained below:

​

●

Gross margin for the Enterprise Solutions segment decreased by 70 basis points compared to the prior year primarily due to a decrease in the amount of software sales recognized on a net basis, as well as reduced software agency fees.

​

●

Gross margin for the Business Solutions segment increased by 110 basis points compared to the prior year primarily due to an increase in the amount of software sales recognized on a net basis.

​

●

Gross margin for the Public Sector Solutions segment increased by 70 basis points compared to the prior year primarily due to an increase in the amount of software sales recognized on a net basis relative to total sales in the segment.

​

SG&A expenses in 2025 increased year-over-year in dollars but remained substantially the same as a percentage of net sales. SG&A expenses attributable to our three operating segments and the remaining unallocated Headquarters/Other expenses are summarized below (dollars in millions):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31, 

​

​

​

​

​

​

​

2025

​

2024

​

​

​

​

​

​

​

​

​

  ​ ​

% of 

  ​ ​ ​

​

​

  ​ ​

% of

​

​

​

​

​

​

​

​

​

​

Segment Net

​

​

​

​

Segment Net

​

$

​

%

​

​

​

Amount

​

Sales

​

Amount

​

Sales

​

Change

​

Change

​

Enterprise Solutions

​

$

150.4

11.7

%  

$

146.0

12.4

%  

$

4.4

​

3.0

%

Business Solutions

​

​

179.3

​

16.6

​

​

175.6

​

16.7

​

​

3.7

​

2.1

​

Public Sector Solutions

​

90.7

17.8

​

85.1

14.9

5.6

​

6.6

​

Headquarters/Other, unallocated

​

13.6

​

​

​

15.6

​

​

(2.0)

​

(12.9)

​

Total

​

$

434.0

​

15.1

%  

$

422.3

​

15.1

%  

$

11.7

​

2.8

%

​

●

SG&A expenses for the Enterprise Solutions segment increased in dollars but decreased as a percentage of net sales. The year-over-year increase in SG&A dollars was primarily attributable to increases in personnel costs and the use of shared Headquarter services of $4.1 million and $1.7 million, respectively, partially offset by a decrease in service contracts/subscriptions of $1.0 million. SG&A expenses as a percentage of net sales were 11.7% for the Enterprise Solutions segment for the year ended December 31, 2025, which reflects a decrease of 70 basis points and is primarily due to the increase in net sales discussed above.

​

●

SG&A expenses for the Business Solutions segment increased in dollars but remained substantially the same as a percentage of net sales. The year-over-year increase in SG&A dollars was primarily attributable to an increase in the use of shared Headquarter services of $6.6 million, partially offset by decreases in personnel costs, other expenses, marketing, and credit card fees of $0.9 million, $0.8 million, $0.5 million, and $0.4 million, respectively.

​

●

SG&A expenses for the Public Sector Solutions segment increased both in dollars and as a percentage of net sales. The year-over-year increase in SG&A dollars was primarily attributable to increases in the use of shared Headquarter services, professional fees, and other expenses of $3.3 million, $2.7 million, and $0.6 million, respectively, partially offset by a decrease in marketing of $0.7 million. SG&A expenses as a percentage of net sales were 17.8% for the Public Sector Solutions segment for the year ended December 31, 2025, which reflects an increase of 290 basis points and is primarily due to the decrease in net sales discussed above combined with the increase in SG&A expenses.

​

●

SG&A expenses for the Headquarters/Other decreased by $2.0 million primarily due to an increase in the allocated amounts to the operating segments of $11.6 million and a decrease in depreciation and amortization of $1.2 million, partially offset by increases in personnel costs, service contracts/subscriptions, and marketing of $7.2 million, $2.3 million, and $1.2 million, respectively. The Headquarters/Other provides services to the three segments in areas such as finance, distribution center, human resources, IT, marketing, and product management. Most of the operating

35

Table of Contents

costs associated with such corporate Headquarters/Other services are charged to the segments based on their estimated allocation usage of the underlying services.

​

Severance expenses and other charges for the year ended December 31, 2025 were $6.0 million, compared to $0.4 million for the same period in the prior year. The severance expenses and other charges were related to voluntary and involuntary reductions in our workforce. Both the voluntary and involuntary reductions included cash severance and other related termination benefits.

​

Income from operations for the year ended December 31, 2025 increased to $99.3 million, compared to $97.1 million for the same period in the prior year, primarily due to increase in gross profit, partially offset by the increases in SG&A expenses and severance expenses and other charges, as discussed above. Income from operations as a percentage of net sales remained substantially the same for the year ended December 31, 2025, compared to the prior year.

​

Interest income, net for the year ended December 31, 2025 decreased to $14.4 million, compared to $18.7 million for the same period in the prior year, primarily due to a decrease in interest income of $4.4 million as a result of lower realized interest rates in the current year combined with lower cash equivalent and investment balances in the current year.

​

Other income for the year ended December 31, 2025 was $0.1 million as a result of a realized gain on sale of short-term investments, compared to $1.7 million for the same period in the prior year as a result of a legal settlement received.

​

Income taxes. Our provision for income taxes for the year ended December 31, 2025 was $30.0 million, compared to $30.4 million for the same period in the prior year. The decrease in our provision for income taxes was primarily due to the decrease in income before taxes, partially offset by a decreased benefit in stock-based compensation. Our effective tax rate was 26.4% for the year ended December 31, 2025, compared to 25.9% for the year ended December 31, 2024. The increase in our effective tax rate is primarily due to the decreased benefit in stock-based compensation.

​

Net income for the year ended December 31, 2025 decreased to $83.7 million, compared to $87.1 million for the same period in the prior year, primarily due to the decreases in interest income, net and other income, as discussed above.

​

LIQUIDITY AND CAPITAL RESOURCES

​

Liquidity Overview

​

Our primary sources of liquidity are internally generated funds from operations and short-term investments. We have historically used and expect to use in the future those funds to meet our capital requirements, which consist primarily of working capital for operational needs, capital expenditures for computer equipment and software used in our business, repurchases of common stock for treasury, dividend payments, and as opportunities arise, possible acquisitions of new businesses.

​

We believe that funds generated from operations and short-term investments will be sufficient to finance our working capital, capital expenditures, and other requirements for at least the next twelve calendar months and beyond such twelve calendar month period. Our investments in IT systems and infrastructure are designed to enable us to operate more efficiently and to provide our customers enhanced functionality.

​

We expect to meet our cash requirements for 2025 and beyond through a combination of cash on hand, short-term investments, and cash generated from operations, as follows:

​

●

Cash on Hand. As of December 31, 2025, we had $193.2 million in cash and cash equivalents.

​

●

Short-term Investments. As of December 31, 2025, we had $213.5 million in short-term investments.

​

36

Table of Contents

●

Cash Generated from Operations. We expect to generate cash flows from operations in excess of operating cash needs by generating earnings and managing net changes in inventories and receivables with changes in payables to generate positive cash flow.

​

Our ability to continue funding our planned growth, both internally and externally, is dependent upon our ability to generate sufficient cash flow from operations or to obtain additional funds through equity or debt financing, or from other sources of financing, as may be required. While we do not anticipate needing any additional sources of financing to fund our operations at this time, if demand for IT products declines, or our customers are materially adversely impacted by the developing macroeconomic trends characterized by inflation and increased interest rates, our cash flows from operations may be substantially affected. For additional discussion regarding the factors which may have a material adverse effect on our results of operations, see our discussion under “Item 1A. Risk Factors” of this Annual Report on Form 10-K.

​

Summary Sources and Uses of Cash

​

The following table summarizes our sources and uses of cash over the last three years (in millions):

​

​

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31, 

​

​

2025

  ​ ​ ​

2024

  ​ ​ ​

2023

Net cash provided by operating activities

​

$

65.5

​

$

173.9

​

$

197.9

Net cash provided by (used in) investing activities

​

42.8

​

(115.3)

​

(160.2)

Net cash used in financing activities

​

(93.4)

​

(25.2)

​

(15.7)

Increase in cash and cash equivalents

​

$

14.9

​

$

33.4

​

$

22.0

​

Cash provided by operating activities is summarized as follows (in millions):

​

​

​

​

​

​

​

​

​

​

​

​

Years Ended December 31, 

​

2025

​

2024

​

Change

Net income

​

$

83.7

​

$

87.1

​

$

(3.4)

Adjustments to reconcile net income to net cash provided by operating activities:

​

​

​

​

​

​

​

​

​

Depreciation and amortization

​

​

11.7

​

​

13.0

​

​

(1.3)

Adjustments to credit losses reserve

​

​

1.9

​

​

1.9

​

​

—

Stock-based compensation expense

​

​

9.3

​

​

8.5

​

​

0.8

Deferred income taxes

​

​

4.8

​

​

(0.8)

​

​

5.6

Amortization of discount on short-term investments, net

​

​

0.6

​

​

(4.2)

​

​

4.8

Other adjustments

​

​

—

​

​

—

​

​

—

Changes in assets and liabilities:

​

​

​

​

​

​

​

​

​

Accounts receivable

​

​

(38.4)

​

​

(6.5)

​

​

(31.9)

Inventories

​

​

(48.5)

​

​

29.1

​

​

(77.6)

Prepaid expenses and other current assets

​

​

(4.3)

​

​

2.7

​

​

(7.0)

Other non-current assets

​

​

(4.1)

​

​

0.6

​

​

(4.7)

Accounts payable

​

​

38.1

​

​

36.5

​

​

1.6

Accrued expenses and other liabilities

​

10.7

​

​

6.0

​

4.7

Net cash provided by operating activities

​

$

65.5

​

$

173.9

​

$

(108.4)

​

The decrease in net cash from operating activities of $108.4 million for the year ended December 31, 2025 was primarily attributable to changes in inventories and accounts receivable of $77.6 million and $31.9 million, respectively. The decrease in cash from operating activities attributable to inventories is primarily due to increased inventory purchases related to customer rollouts. The decrease in cash from operating activities attributable to accounts receivable is primarily driven by the timing of customer deliveries.

​

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Table of Contents

In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle, defined as days of sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts payable, based on a rolling three-month average. Components of our cash conversion cycle are as follows:

​

​

​

​

​

​

​

​

​

​

December 31,

(in days)

​

2025

​

2024

Days of sales outstanding (DSO)(1)

​

​

76

​

​

72

Days of supply in inventory (DIO)(2)

​

​

23

​

​

15

Days of purchases outstanding (DPO)(3)

​

​

(54)

​

​

(47)

Cash conversion cycle

​

​

45

​

​

40

​

(1) Represents the trade receivable at the end of the period divided by average daily net sales for the same three-month period.

​

(2) Represents the merchandise inventory balance at the end of the period divided by average daily cost of sales for the same three-month period.

​

(3) Represents the accounts payable balance at the end of the period divided by average daily cost of sales for the same three-month period.

​

The cash conversion cycle increased to 45 days for the quarter ended December 31, 2025, compared to 40 days for the quarter ended December 31, 2024, as evidenced in the above cash conversion table. The increase in DSO is primarily due to the increase in accounts receivable as of December 31, 2025 compared to December 31, 2024. The increase in DIO is primarily due to the increase in inventory as of December 31, 2025 compared to December 31, 2024. The increase in DPO is primarily due to the increase in accounts payable as of December 31, 2025 compared to December 31, 2024.

​

Cash provided by investing activities for the year ended December 31, 2025 consisted of $264.1 million of purchases of short-term U.S. Government treasury securities, $108.8 million of sales of U.S. Government treasury securities, $205.6 million of maturities of U.S. Government treasury securities, and $7.4 million of purchases of property and equipment. The property and equipment expenditures were primarily for computer equipment and capitalized internally-developed software in connection with investments in our IT infrastructure. Cash used in investing activities for the prior year consisted of $358.3 million of purchases of short-term U.S. Government treasury securities, $250.6 million of maturities of U.S. Government treasury securities, and $7.6 million of purchases of property and equipment.

​

Cash used in financing activities for the year ended December 31, 2025 consisted primarily of $0.7 million of aggregate borrowings and repayments under our credit facility, $76.3 million of treasury repurchases, $15.3 million of dividend payments, $1.2 million of issuances of stock under the 1997 Employee Stock Purchase Plan, and $3.0 million of payroll taxes on stock-based compensation through shares withheld. In the prior year period, financing activities consisted of $26.1 million of aggregate borrowings and repayments under our credit facility, $12.4 million of treasury repurchases, $10.5 million of dividend payments, $1.1 million of issuances of stock under the 1997 Employee Stock Purchase Plan, and $3.4 million of payroll taxes on stock-based compensation through shares withheld.

​

Debt Instruments, Contractual Agreements, and Related Covenants

​

Below is a summary of certain provisions of our credit facility and other contractual obligations. For more information about our obligations, commitments, and contingencies, see our consolidated financial statements and the accompanying notes included in this annual report.

​

Credit Facility. Our credit facility collateralized by our accounts receivable expired March 31, 2025. We did not elect to extend or replace this credit facility given our significant cash, cash equivalent, and short-term investment balances. Amounts outstanding under this facility bore interest at the greatest of (i) the prime rate (7.50% at March 31, 2025), (ii) the federal funds effective rate plus 0.50% per annum, and (iii) the daily Secured Overnight Financing Rate, or SOFR, plus 1.00% per annum, but at no time less than 1.00% per annum. While we used this credit facility from time

38

Table of Contents

to time, we did not have any borrowings outstanding immediately prior to the expiration of the credit facility nor at December 31, 2024.

​

Cash receipts were automatically applied against any outstanding borrowings. Any excess cash on account could either remain on account to generate earned credits to offset up to 100% of cash management fees, or be invested in short-term qualified investments. Borrowings under the credit facility were classified as current in our consolidated balance sheets.

​

Supplier Finance Programs. We have entered into agreements with financial institutions to facilitate the purchase of inventory from designated suppliers under certain terms and conditions to enhance liquidity. We do not incur any interest or other incremental expenses associated with these agreements as balances are paid when they are due. See Note 16, “Supplier Finance Programs” to the consolidated financial statements for additional information.

​

Operating Leases. We lease facilities, including our corporate headquarters and a facility adjacent to our corporate headquarters, from a related party, which is a company affiliated with us through common ownership. The lease agreements of these two Merrimack, New Hampshire facilities have expired. We continue to occupy the facilities on a month-to-month basis under the terms of the prior written lease agreements. It is our intention to enter into a written, long-term lease for the facilities. We also lease facilities from third parties under non-cancelable operating leases. Certain leases require us to pay real estate taxes, insurance, and common area maintenance charges. See “Item 2. Properties” of this Annual Report on Form 10-K for additional information regarding our operating leases.

​

Factors Affecting Sources of Liquidity

​

Internally Generated Funds. The key factors affecting our internally generated funds are our ability to manage costs and fully achieve our operating efficiencies, timely collection of our customer receivables, and management of our inventory levels.

​

Credit Facility. Our credit facility collateralized by our accounts receivable expired March 31, 2025 and we elected not to renew or replace the credit facility given our significant cash, cash equivalent, and short-term investment balances.

​

Capital Markets. Our ability to raise additional funds in the capital market depends upon, among other things, general economic conditions, the condition of the IT industry, our financial performance and stock price, and the state of the capital markets. In addition, market volatility, inflation and interest rate fluctuations may increase our cost of financing or restrict our access to potential sources of future liquidity.

​

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

​

A critical accounting policy has been defined as one that is both important to the portrayal of the registrant’s financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Further, “critical accounting policies” are those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions.

​

We believe that our accounting policies described below meet the definition of critical accounting policies and estimates.

​

Revenue Recognition

​

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In most instances, when several performance obligations are aggregated into one single transaction, these performance obligations are fulfilled at the same point in time. We account for an arrangement when it has approval and commitment from both parties, the rights are identified, the contract has commercial substance,

39

Table of Contents

and collectability of consideration is probable. We generally obtain oral or written purchase authorizations from our customers for a specified amount of product at a specified price, which constitutes an arrangement. Revenue is recognized at the amount expected to be collected, net of any taxes collected from customers, which are subsequently remitted to governmental authorities. We generally invoice for our products at the time of shipping, and accordingly there is not a significant financing component included in our arrangements.

Nature of Products and Services

IT products typically represent a distinct performance obligation, and revenue is recognized at the point in time when control is transferred to the customer which is generally upon delivery to the customer. We recognize revenue as the principal in the transaction with the customer (i.e., on a gross basis), as we control the product prior to delivery to the customer and derive the economic benefits from the sales transaction given our control over customer pricing.

We do not recognize revenue for goods that remain in our physical possession before the customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from the products, the goods are ready for physical transfer to and identified as belonging to the customer, and when we have no ability to use the product or to direct it to another customer.

Licenses for on-premise software provide the customer with a right to take possession of the software. Customers may purchase perpetual licenses or enter into subscriptions to the licensed software. We are the principal in these transactions and recognize revenue for the on-premise license at the point in time when the software is made available to the customer and the commencement of the term of the software license or when the renewal term begins, as applicable.

For certain on-premise licenses for security software, the customer derives substantially all of the benefit from these arrangements through the third-party delivered software maintenance, which provides software updates and other support services. We do not have control over the delivery of these performance obligations, and accordingly we are the agent in these transactions. We recognize revenue for security software net of the related cost of sales at the point in time when our vendor and customer accept the terms and conditions in the sales arrangement. Cloud products allow customers to use hosted software over the contractual period without taking possession of the software and are provided on a subscription basis. We do not exercise control over these products or services and therefore are an agent in these transactions. We recognize revenue for cloud products net of the related costs of sales at the point in time when our vendor and customer accept the terms and conditions in the sales arrangements.

We use our own engineering personnel to assist in projects involving the design and installation of systems and networks, and we also engage third-party service providers to perform warranty maintenance, implementations, asset disposal, and other services. Service revenue is recognized in general over time as we perform the underlying services and satisfy our performance obligations. We evaluate such engagements to determine whether we are the principal or the agent in each transaction. For those transactions in which we do not control the service, we act as an agent and recognize the transaction revenue on a net basis at a point in time when the vendor and customer accept the terms and conditions in the sales arrangement.

Similarly, we recognize revenue from agency sales transactions on a net sales basis. In agency sales transactions, we facilitate product sales by equipment and software manufacturers directly to our customers and receive agency, or referral, fees for such transactions. We do not take title to the products or assume any maintenance or return obligations in these transactions; title is passed directly from the supplier to our customer.

Amounts recognized on a net basis included in net sales for such third-party services, agency sales, and off-premise software transactions were $138.8 million, $147.5 million, and $141.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Certain software sales include on-premise licenses that are combined with software maintenance. Software maintenance conveys rights to updates, bug fixes and help desk support, and other support services transferred over the underlying contract period. On-premise licenses are considered distinct performance obligations when sold with the software maintenance, as we sell these items separately. We recognize revenue related to the software maintenance as

40

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the agent in these transactions because we do not have control over the on-going software maintenance service. Revenue allocated to software maintenance is recognized at the point in time when our vendor and customer accept the terms and conditions in the sales arrangements.

Certain of our larger customers are offered the opportunity by vendors to purchase software licenses and maintenance under enterprise agreements, or EAs. Under EAs, customers are considered to be compliant with applicable license requirements for the ensuing year, regardless of changes to their employee base. Customers are charged an annual true-up fee for changes in the number of users over the year. With most EAs, our vendors will transfer the license and bill the customer directly, paying resellers, such as us, an agency fee or commission on these sales. We record these agency fees as a component of net sales as earned and there is no corresponding cost of sales amount. In certain instances, we invoice the customer directly under an EA and account for the individual items sold based on the nature of each item. Our vendors typically dictate how the EA will be sold to the customer.

We also offer extended service plans, or ESPs, on IT products, both as part of the initial arrangement and separately from the IT products. We recognize revenue related to ESPs as the agent in the transaction because we do not have control over the on-going ESPs service and do not provide any service after the sale. Revenue allocated to ESPs is recognized at the point in time when our vendor and customer accept the terms and conditions in the sales arrangement.

All amounts billed to a customer in a sales transaction related to shipping and handling, if any, represent revenues earned for the goods provided, and these amounts have been included in net sales. Costs related to shipping and handling billing are classified as cost of sales. Sales are reported net of sales, use, or other transaction taxes that are collected from customers and remitted to taxing authorities.

Critical Accounting Estimates

Our contracts with customers often include promises to transfer multiple products or services to a customer. Determining whether we are the agent or the principal and whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

We estimate the standalone selling price, or SSP, for each distinct performance obligation when a single arrangement contains multiple performance obligations and the fulfillment occurs at different points in time. We maximize the use of observable inputs in the determination of the estimate for SSP for the items that we do not sell separately, including on-premise licenses sold with software maintenance, and IT products sold with ESPs. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs.

We provide our customers with a limited thirty-day right of return, which is generally limited to defective merchandise, and gives rise to variable consideration. Revenue is recognized based on the most likely amount to which we are expected to be entitled. The estimated variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once the uncertainty is resolved. We make estimates of product returns based on significant historical experience. We record our sales return reserve as a reduction of revenues and either as reduction of accounts receivable or, for customers who have already paid, as accrued expenses and as a reduction of cost of sales and an associated right of return asset. At December 31, 2025, we recorded sales reserves of $3.4 million and $0.1 million as components of accounts receivable and accrued expenses, respectively. At December 31, 2024, we recorded sales reserves of $3.8 million and $0.1 million as components of accounts receivable and accrued expenses, respectively.

We regularly evaluate the adequacy of our estimates for product returns. Future market conditions and product transitions may require us to take action to change such programs and related estimates. When the variables used to estimate these reserves change, or if actual results differ significantly from the estimates, we would be required to increase or reduce revenue to reflect the impact.

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Accounts Receivable

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We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and current creditworthiness. Our allowance for credit losses is generally computed by (1) applying specific percentage reserves on accounts that are past due, and (2) specifically reserving for customers known to be in financial difficulty. Therefore, if the financial conditions of certain customers were to deteriorate, or if we noted there was a lengthening of the timing of the settlement of receivables that was symptomatic of a general deterioration in the ability of our customers to pay, we would have to increase our allowance for credit losses. This would negatively impact our earnings. Our cash flows would be impacted to the extent that receivables could not be collected.

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Our bad debt expense was $1.9 million for each of the years ended December 31, 2025 and December 31, 2024.

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In addition to accounts receivable from customers, we record receivables from our vendors/suppliers for cooperative marketing, price protection, supplier reimbursements, rebates, and other similar arrangements. A portion of such receivables is estimated based on information available from our vendors at discrete points in time. While such estimates have historically approximated actual cash received, a change in estimates could give rise to a reduction in the receivable. This could negatively impact our earnings and our cash flows.

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Our trade receivables are charged off in the period in which they are deemed uncollectible. Recoveries of trade receivables previously charged are recorded when received. Write offs of customer and vendor receivables totaled $2.1 million in 2025 and $2.4 million in 2024.

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Considerable estimates are used in assessing the ultimate realization of customer receivables and vendor/supplier receivables, including reviewing the financial stability of a customer, vendor information, and gauging current market conditions. If our evaluations are incorrect, we may incur additional charges in the future on our consolidated statements of income.

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Inventories

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Inventories (all finished goods) are stated at cost (which approximates the first-in, first-out method) or net realizable value, whichever is lower. Inventory quantities on hand are reviewed regularly, and provisions are made for obsolete, slow moving, and non-saleable inventory, based primarily on management’s forecast of customer demand for those products in inventory.

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Estimates are used to determine the quarterly inventory allowance provision. Actual future write-offs of inventory for salability and obsolescence reasons may differ from estimates and calculations used to determine valuation allowances due to changes in customer demand, customer negotiations, technology shifts and other factors. The IT industry is characterized by rapid technological change and new product development that could result in increased obsolescence of inventory on hand. Increased obsolescence or decreased customer demand beyond management’s expectations could require additional provisions, which could negatively impact our earnings. Our provision for inventory obsolescence was $1.5 million, $2.1 million, and $2.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. We recorded obsolescence charges of $2.1 million, $2.5 million, and $2.8 million for the years ended December 31, 2025, 2024, and 2023, respectively. Historically, there have been no unusual charges precipitated by specific technological or forecast issues.

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Goodwill and Long-Lived Assets, Including Intangibles

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We carry a variety of long-lived assets on our consolidated balance sheets, which are all currently classified as held for use. These include property and equipment, identifiable intangibles, an Internet domain name, which is an indefinite-lived intangible asset not subject to amortization, and goodwill. An impairment review is undertaken on (1) an annual basis for goodwill and indefinite-lived intangible assets; and (2) on an event-driven basis for all long-lived assets when facts and circumstances suggest that cash flows from such assets may be diminished. We have historically reviewed the carrying value of all these assets based partly on our projections of cash flows. Any impairment charge that is recorded negatively impacts our earnings.

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Our Enterprise Solutions and Business Solutions segments hold $66.2 million and $7.4 million of goodwill, respectively. We test goodwill for impairment each year and more frequently if potential impairment indicators arise. In 2025 and 2024, we performed a “step 0” qualitative analysis. Accounting Standards Codification 350—Intangible – Goodwill and Other states that an entity may assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. This analysis allows the Company to consider qualitative factors that might impact the carrying amount of its goodwill to determine whether a more detailed quantitative analysis would be necessary. Factors considered when performing the impairment assessment included the Company’s performance relative to historical and projected future operating results, macroeconomic conditions, industry and market trends, cost factors that may have a negative impact on earnings and cash flows, changes in the Company’s stock price and market capitalization, and other relevant entity-specific events. Based on the qualitative analysis, the Company determined goodwill was not impaired as of December 31, 2025 and 2024. While we believe that our conclusions are reasonable, different assumptions could materially affect our valuations and result in impairment charges against the carrying values of those remaining assets in our Enterprise Solutions and Business Solutions segments.

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Please see Note 4, “Goodwill and Other Intangible Assets” to the consolidated financial statements included in Item 8 of Part II of this report for a discussion of the significant assumptions used in our annual impairment test analysis.

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RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

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Recently issued financial accounting standards are detailed in Note 1, “Summary of Significant Accounting Policies” to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

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