Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Management’s Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC's rules and forms.
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Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as described above. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013) .
Based on their assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on those criteria.
Our independent registered public accounting firm has issued an audit report on our internal control over financial reporting as of December 31, 2025. This report appears below.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of PC Connection, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of PC Connection, Inc. and subsidiaries (the "Company") as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 24, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 24, 2026
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Item 9B. Other information
Director and Officer Trading Arrangements
None of our directors or officers (as defined in Rule 16a-1(f)) adopted or terminated a Rule 10b5-1 trading agreement or a non-Rule 10b5-1 trading agreement (as defined in Item 408(c) of Regulation S-K) during the fourth quarter of 2025.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
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PART III
Item 10. Directors, Executive Officers, and Corporate Governance
In addition to the information included below, the information required by this item, which is included under the headings “Election of Directors,” “Information Concerning Directors, Nominees, and Executive Officers,” “Delinquent Section 16(a) Reports” (if applicable), “Director Candidates,” “Board Committees – Audit Committee,” and “ Insider Trading Policy ” in our definitive Proxy Statement for our 2026 Annual Meeting of Stockholders to be filed with the SEC, or Proxy Statement, is incorporated herein by reference. With the exception of the foregoing information and other information specifically incorporated by reference into this Annual Report on Form 10-K, the Proxy Statement is not being filed as a part hereof.
Information about our Executive Officers
Our executive officers and their ages as of February 24, 2026 are as follows:
Name
Age
Position
Patricia Gallup
71
Chair and Chief Administrative Officer
Timothy McGrath
67
President and Chief Executive Officer
Thomas Baker
60
Senior Vice President, Chief Financial Officer and Treasurer
Patricia Gallup is our co-founder and has served as Chair of our Board of Directors since September 1994, and as Chief Administrative Officer since August 2011. Ms. Gallup has served as a member of our executive management team since 1982.
Timothy McGrath has served as our Chief Executive Officer since August 2011, and as President since May 2010. Mr. McGrath has served as a member of our executive management team since he joined the Company in 2005.
Thomas Baker has served as our Chief Financial Officer and as a member of our executive management team since he joined the Company in March 2019.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our officers, including our principal executive, financial and accounting officers, and our directors and employees. We have posted the text of our Code of Business Conduct and Ethics under the “Investor Relations” section of our website, www.connection.com. We intend to disclose on our website any amendments to, or waivers from, the Code of Business Conduct and Ethics that are required to be disclosed pursuant to the disclosure requirements of Item 5.05 of Form 8-K.
Item 11. Executive Compensation
The information required by this item (other than the information required by Item 402(v) of Regulation S-K), which is included under the headings “Executive Compensation” and “Information Concerning Directors, Nominees, and Executive Officers – Director Compensation” in the Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item, which is included under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the Proxy Statement is incorporated herein by reference.
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Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item, which is included under the headings “Certain Relationships and Related Transactions,” “Policies and Procedures for Related Person Transactions” and “Information Concerning Directors, Nominees, and Executive Officers – Director Independence” in the Proxy Statement is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information required by this item, which is included under the heading “Principal Accounting Fees and Services” and “Pre-Approval Policies and Procedures” in the Proxy Statement is incorporated herein by reference.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)
List of Documents Filed as Part of this Report:
(1) Consolidated Financial Statements
The consolidated financial statements listed below are included in this document.
Consolidated Financial Statements
Page
References
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-4
Consolidated Statements of Income
F-5
Consolidated Statements of Other Comprehensive Income
F-6
Consolidated Statements of Changes in Stockholders’ Equity
F-7
Consolidated Statements of Cash Flows
F-8
Notes to Consolidated Financial Statements
F-9
(2) Consolidated Financial Statement Schedule:
The following Consolidated Financial Statement Schedule, as set forth below, is filed with this report:
Schedule
Page
Reference
Schedule II—Valuation and Qualifying Accounts
S-1
All other schedules have been omitted because they are either not applicable or the relevant information has already been disclosed in the financial statements.
(3) The exhibits listed in the Exhibit Index in Item 15(b) below are filed as part of this Annual Report on Form 10-K.
(b)
Exhibits
The exhibits listed below are filed herewith or are incorporated herein by reference to other filings.
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EXHIBIT INDEX
Exhibits
3.1(1)
Amended and Restated Certificate of Incorporation of Registrant, as amended.
3.2(2)
Amended and Restated Bylaws of Registrant.
4.1(3)
Form of specimen certificate for shares of Common Stock, $0.01 par value per share, of the Registrant.
4.2(4)
Description of Securities Registered Under Section 12 of the Exchange Act.
10.1(3)*
Form of Registration Rights Agreement among the Registrant, Patricia Gallup, David Hall, and the 1998 PC Connection Voting Trust.
10.2(5)*
2020 Stock Incentive Plan, as amended.
10.3(6)*
Amended and Restated 2007 Stock Incentive Plan, as amended.
10.4(5)*
Amended and Restated 1997 Employee Stock Purchase Plan, as amended.
10.5(7)*
Amended and Restated Form of Restricted Stock Agreement for Amended and Restated 2007 Stock Incentive Plan.
10.6(7)*
Form of Restricted Stock Unit Agreement for Amended and Restated 2007 Stock Incentive Plan.
10.7(8)*
Director Compensation and Executive Bonus Plan, as amended.
10.8(3)*
Employment Agreement, dated as of January 1, 1998, between the Registrant and Patricia Gallup.
10.9(9)*
Employment Agreement, dated as of May 12, 2008, between the Registrant and Timothy McGrath.
10.10(10)
Lease Agreement between the Registrant and Wilmington Investors, LLC, dated August 27, 2014, for property located at 3188 Progress Way, Building 11, Wilmington, Ohio.
10.11(11)*
Employment Agreement, dated March 1, 2019, between the Registrant and Thomas Baker.
10.12(12)
Amendment No. 1, dated April 16, 2015, to Lease Agreement between the Registrant and Wilmington Investors, LLC, dated August 27, 2014, for property located at 3336 Progress Way, Building 11, Wilmington, OH.
10.13(12)
Amendment No. 2, dated August 29, 2019, to Lease Agreement between the Registrant and Wilmington Investors, LLC, dated August 27, 2014, for property located at 3336 Progress Way, Building 11, Wilmington, OH.
10.14(13)
Form of Restricted Stock Units for 2020 Stock Incentive Plan.
10.15(14)
Incentive and Retention agreement, dated as of May 3, 2022, by and between PC Connection, Inc. and Timothy McGrath, as amended.
10.16(14)
Incentive and Retention agreement, dated as of May 3, 2022, by and between PC Connection, Inc. and Thomas Baker, as amended.
19.1(15)
PC Connection, Inc. Insider Trading Policy.
21.1(15)
Subsidiaries of Registrant.
23.1**
Consent of Deloitte & Touche LLP.
31.1**
Certification of the Company’s President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**
Certification of the Company’s Senior Vice President, Chief Financial Officer and Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of the Company’s President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of the Company’s Senior Vice President, Chief Financial Officer and Treasurer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1(16)*
Clawback Policy.
101.INS **
Inline XBRL Instance Document* - The Instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH **
Inline XBRL Taxonomy Extension Schema Document.
101.CAL **
Inline XBRL Taxonomy Calculation Linkbase Document.
101.DEF **
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB **
Inline XBRL Taxonomy Label Linkbase Document.
101.PER **
Inline XBRL Taxonomy Presentation Linkbase Document.
104 **
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
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(1) Incorporated by reference from the exhibits filed with the Company’s registration statement on Form S-4, File Number 333-63272, filed under the Securities Act of 1933 on June 19, 2001.
(2) Incorporated by reference from exhibits filed with the Company’s current report on Form 8-K, File Number 000-23827, filed on January 9, 2008.
(3) Incorporated by reference from the exhibits filed with the Company’s registration statement on Form S-1, as amended, File Number 333-41171, filed under the Securities Act of 1933 on February 23, 1998.
(4) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on February 6, 2020.
(5) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on July 30, 2025.
(6) Incorporated by reference from Appendix A filed with the Company’s proxy statement pursuant to Section 14(a), File Number 000-23827, filed on April 9, 2019.
(7) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on November 10, 2010.
(8) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on April 30, 2025.
(9) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on May 12, 2008.
(10) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on October 31, 2014.
(11) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on May 2, 2019.
(12) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on October 30, 2019.
(13) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on March 16, 2021.
(14) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on May 5, 2022.
(15) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on February 24, 2025.
(16) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on March 7, 2024.
*
Management contract or compensatory plan or arrangement.
**
Submitted electronically herewith.
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 2025 and December 31, 2024, (ii) Consolidated Statements of Income for the years ended December 31, 2025, 2024, and 2023, (iii) Consolidated Statements of Other Comprehensive Income for the years ended December 31, 2025, 2024, and 2023, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025, 2024, and 2023, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024, and 2023, and (vi) Notes to Consolidated Financial Statements.
Attached as Exhibit 104 to this report is the Cover Page Interactive Data File (embedded within the Inline XBRL document).
Item 16. Form 10-K Summary
None.
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SIGNATURE S
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PC CONNECTION, INC.
Date: February 24, 2026
By:
/s/ TIMOTHY J. MCGRATH
Timothy J. McGrath
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ TIMOTHY J. MCGRATH
Timothy J. McGrath
President and Chief Executive Officer (Principal Executive Officer)
February 24, 2026
/s/ THOMAS C. BAKER
Thomas C. Baker
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
February 24, 2026
/s/ PATRICIA GALLUP
Patricia Gallup
Chairman of the Board
February 24, 2026
/s/ DAVID BEFFA-NEGRINI
David Beffa-Negrini
Director
February 24, 2026
/s/ JAY BOTHWICK
Jay Bothwick
Director
February 24, 2026
/s/ BARBARA DUCKETT
Barbara Duckett
Director
February 24, 2026
/s/ JACK FERGUSON
Jack Ferguson
Director
February 24, 2026
/s/ GARY KINYON
Gary Kinyon
Director
February 24, 2026
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PC CONNECTION, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No 34 )
F-2
Consolidated Balance Sheets as of December 31, 2025 and 2024
F-4
Consolidated Statements of Income for the years ended December 31, 2025, 2024, and 2023
F-5
Consolidated Statements of Other Comprehensive Income for the years ended December 31, 2025, 2024, and 2023
F-6
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025, 2024, and 2023
F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024, and 2023
F-8
Notes to Consolidated Financial Statements
F-9
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of PC Connection, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of PC Connection, Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholder’s equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2026, expressed an unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue — Refer to Note 2 to the financial statements
Critical Audit Matter Description
As described in Note 2 to the consolidated financial statements, the Company recognizes revenue when control is transferred to the customer. The amount of revenue recognized by the Company is dependent upon whether the Company is the principal in the transaction whereby revenue is recorded on a gross basis or the agent whereby the revenue is reported net. The Company applies judgment to determine if the Company is the principal or the agent in the transaction. The Company has determined that in general they are the principal in providing hardware products and on-premise software products, and that they are the agent in providing cloud-based software products and maintenance products. This determination is based on certain factors such as whether the Company controls the goods or services before they are transferred to the customer, whether the Company is primarily responsible for fulfilling the promise to provide the good or service, the inventory risk associated with the transaction, and the discretion in establishing price for good or service.
Given these factors and due to the volume of transactions, the related audit effort in evaluating management's judgments in determining principal versus agent determination for these customer agreements was extensive and required a high degree of auditor judgment.
F-2
Table of Contents
How the Critical Audit Matter Was Addressed in the Audit
Our principal audit procedures related to the Company's revenue recognition for these customer agreements included the following:
● We tested the effectiveness of controls over the Company’s principal versus agent determination for each performance obligation including those over the determination of the fulfillment type and on or off premise delivery.
● We evaluated the Company’s significant accounting policies and judgments related to principal versus agent determinations.
● We selected a sample of transactions and related customer agreements and performed the following procedures:
o Obtained and read contract source documents for each selection, including master agreements, customer purchase orders, and other documents that were part of the agreement and evaluated the nature of the product or services.
o Assessed the terms in the customer agreement and evaluated the appropriateness of management's judgment, application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions including an evaluation of the Company’s determination of product fulfillment type, on or off premise determination and determination of principal versus agent.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 24, 2026
We have served as the Company’s auditor since 1984.
F-3
Table of Contents
PC CONNECTION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share data)
December 31,
2025
2024
ASSETS
Current Assets:
Cash and cash equivalents
$
193,221
$
178,318
Short-term investments
213,457
264,295
Accounts receivable, net
648,020
611,433
Inventories, net
143,567
95,054
Prepaid expenses and other current assets
22,607
17,750
Total current assets
1,220,872
1,166,850
Property and equipment, net
46,912
52,520
Right-of-use assets
1,569
3,077
Goodwill
73,602
73,602
Intangibles, net
989
2,209
Other assets
6,981
1,096
Total Assets
$
1,350,925
$
1,299,354
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
$
338,202
$
300,242
Accrued payroll
30,939
23,330
Accrued expenses and other liabilities
51,251
47,633
Total current liabilities
420,392
371,205
Deferred income taxes
19,905
15,091
Non-current operating lease liabilities
498
1,552
Other liabilities
—
516
Total Liabilities
440,795
388,364
Commitments and Contingencies
Stockholders’ Equity:
Common stock, $ 0.01 par value, 100,000 shares authorized at December 31, 2025 and 2024; 29,525 issued and 25,221 outstanding at December 31, 2025 and 29,390 issued and 26,300 outstanding at December 31, 2024
295
294
Additional paid-in capital
144,608
137,036
Retained earnings
905,890
837,466
Accumulated other comprehensive income
78
174
Treasury stock at cost, 4,304 and 3,090 shares at December 31, 2025 and 2024, respectively
( 140,741 )
( 63,980 )
Total Stockholders’ Equity
910,130
910,990
Total Liabilities and Stockholders’ Equity
$
1,350,925
$
1,299,354
See notes to consolidated financial statements.
F-4
Table of Contents
PC CONNECTION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
Years Ended December 31,
2025
2024
2023
Net sales
$
2,872,746
$
2,802,118
$
2,850,644
Cost of sales
2,333,416
2,282,324
2,338,908
Gross profit
539,330
519,794
511,736
Selling, general and administrative expenses
434,035
422,317
405,896
Severance expenses and other charges
6,013
415
2,687
Income from operations
99,282
97,062
103,153
Interest income, net
14,370
18,725
9,961
Other income
76
1,700
—
Income before taxes
113,728
117,487
113,114
Income tax provision
( 30,006 )
( 30,392 )
( 29,843 )
Net income
$
83,722
$
87,095
$
83,271
Earnings per common share:
Basic
$
3.28
$
3.31
$
3.17
Diluted
$
3.27
$
3.29
$
3.15
Shares used in computation of earnings per common share:
Basic
25,511
26,322
26,287
Diluted
25,633
26,508
26,429
See notes to consolidated financial statements.
F-5
Table of Contents
PC CONNECTION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(amounts in thousands)
Years Ended December 31,
2025
2024
2023
Net income
$
83,722
$
87,095
$
83,271
Other comprehensive income:
Unrealized (losses) gains on available-for-sale investments, net of tax of $ 26 , $( 25 ), and $( 22 ) for the years ended December 31, 2025, 2024, and 2023, respectively
( 96 )
93
81
Comprehensive income
$
83,626
$
87,188
$
83,352
See notes to consolidated financial statements
F-6
Table of Contents
PC CONNECTION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUIT Y
(amounts in thousands)
Additional
Common Stock
Paid-In
Retained
Accumulated Other
Treasury Shares
Shares
Amount
Capital
Earnings
Comprehensive Income
Shares
Amount
Total
Balance - December 31, 2022
29,123
$
291
$
125,784
$
686,037
$
—
( 2,773 )
$
( 45,937 )
$
766,175
Stock-based compensation expense
—
—
7,022
—
—
—
—
7,022
Restricted stock units vested
118
2
( 2 )
—
—
—
—
—
Shares withheld for taxes paid on stock awards
—
—
( 3,015 )
—
—
—
—
( 3,015 )
Repurchase of common stock for treasury
—
—
—
—
—
( 129 )
( 5,446 )
( 5,446 )
Issuance of common stock under Employee Stock Purchase Plan
21
—
1,089
—
—
—
—
1,089
Dividend declaration
—
—
—
( 8,410 )
—
—
—
( 8,410 )
Net income
—
—
—
83,271
—
—
—
83,271
Other comprehensive income, net of tax
—
—
—
—
81
—
—
81
Balance - December 31, 2023
29,262
$
293
$
130,878
$
760,898
$
81
( 2,902 )
$
( 51,383 )
$
840,767
Stock-based compensation expense
—
—
8,475
—
—
—
—
8,475
Restricted stock units vested
110
1
( 1 )
—
—
—
—
—
Shares withheld for taxes paid on stock awards
—
—
( 3,424 )
—
—
—
—
( 3,424 )
Repurchase of common stock for treasury
—
—
—
—
—
( 188 )
( 12,597 )
( 12,597 )
Issuance of common stock under Employee Stock Purchase Plan
18
—
1,108
—
—
—
—
1,108
Dividend declaration
—
—
—
( 10,527 )
—
—
—
( 10,527 )
Net income
—
—
—
87,095
—
—
—
87,095
Other comprehensive income, net of tax
—
—
—
—
93
—
—
93
Balance - December 31, 2024
29,390
$
294
$
137,036
$
837,466
$
174
( 3,090 )
$
( 63,980 )
$
910,990
Stock-based compensation expense
—
—
9,343
—
—
—
—
9,343
Restricted stock units vested
114
1
( 1 )
—
—
—
—
—
Shares withheld for taxes paid on stock awards
—
—
( 3,004 )
—
—
—
—
( 3,004 )
Repurchase of common stock for treasury
—
—
—
—
—
( 1,214 )
( 76,761 )
( 76,761 )
Issuance of common stock under Employee Stock Purchase Plan
21
—
1,234
—
—
—
—
1,234
Dividend declaration
—
—
—
( 15,298 )
—
—
—
( 15,298 )
Net income
—
—
—
83,722
—
—
—
83,722
Other comprehensive loss, net of tax
—
—
—
—
( 96 )
—
—
( 96 )
Balance - December 31, 2025
29,525
$
295
$
144,608
$
905,890
$
78
( 4,304 )
$
( 140,741 )
$
910,130
See notes to consolidated financial statements.
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Table of Contents
PC CONNECTION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
Years Ended December 31,
2025
2024
2023
Cash Flows provided by Operating Activities:
Net income
$
83,722
$
87,095
$
83,271
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
11,703
12,984
12,654
Adjustments to credit losses reserve
1,861
1,914
1,847
Stock-based compensation expense
9,343
8,475
7,022
Deferred income taxes
4,840
( 777 )
( 2,148 )
Amortization of discount on short-term investments, net
569
( 4,235 )
( 1,522 )
Gain on sale of short-term investments
( 76 )
—
—
Loss on disposal of fixed assets
44
58
572
Changes in assets and liabilities:
Accounts receivable
( 38,448 )
( 6,513 )
1,599
Inventories
( 48,513 )
29,125
84,503
Prepaid expenses and other current assets
( 4,300 )
2,690
( 8,540 )
Other non-current assets
( 4,087 )
618
( 659 )
Accounts payable
38,075
36,450
31,146
Accrued expenses and other liabilities
10,705
5,984
( 11,791 )
Net cash provided by operating activities
65,438
173,868
197,954
Cash Flows provided by (used in) Investing Activities:
Purchases of short-term investments
( 264,139 )
( 358,317 )
( 150,607 )
Proceeds from sale of short-term investments
108,763
—
—
Maturities of short-term investments
205,599
250,606
—
Purchases of property and equipment
( 7,389 )
( 7,575 )
( 9,595 )
Net cash provided by (used in) investing activities
42,834
( 115,286 )
( 160,202 )
Cash Flows used in Financing Activities:
Proceeds from short-term borrowings
732
26,051
88,198
Repayment of short-term borrowings
( 732 )
( 26,051 )
( 88,198 )
Purchase of treasury shares
( 76,265 )
( 12,375 )
( 5,392 )
Payments for excise tax on treasury purchases
( 36 )
—
—
Dividend payments
( 15,298 )
( 10,527 )
( 8,410 )
Issuance of stock under Employee Stock Purchase Plan
1,234
1,108
1,089
Payment of payroll taxes on stock-based compensation through shares withheld
( 3,004 )
( 3,424 )
( 3,015 )
Net cash used in financing activities
( 93,369 )
( 25,218 )
( 15,728 )
Increase in cash and cash equivalents
14,903
33,364
22,024
Cash and cash equivalents, beginning of year
178,318
144,954
122,930
Cash and cash equivalents, end of year
$
193,221
$
178,318
$
144,954
Non-cash Investing and Financing Activities:
Accrued purchases of property and equipment
$
85
$
200
$
90
Accrued purchase of treasury shares
$
58
$
240
$
—
Accrued excise tax on treasury purchases
$
678
$
36
$
54
See notes to consolidated financial statements.
F-8
Table of Contents
PC CONNECTION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except per share data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PC Connection, Inc. is a Fortune 1000 Global Solutions Provider that simplifies information technology, or IT, guiding the connection between people and technology. The Company’s dedicated account managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services. The Company provides 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 the Company develops internally and secures from manufacturers, distributors, and other suppliers. The Technology Solutions and Services Organization 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. The Company also provides a comprehensive portfolio of managed services and professional services. These services are performed by the Company’s personnel and by third-party providers. The Company’s GlobalServe offering ensures worldwide coverage for the Company’s multinational customers, delivering global procurement solutions through the Company’s network of in-country suppliers in over 150 countries.
The Company operates through three operating segments:
● Connection Enterprise Solutions – serving large enterprise customers
● Connection Business Solutions – serving small- to medium-sized businesses, or SMBs
● Connection Public Sector Solutions – serving federal, state, and local government and educational institutions
The following is a summary of the Company’s significant accounting policies:
Principles of Consolidation
The consolidated financial statements include the accounts of PC Connection, Inc. and its subsidiaries, all of which are wholly-owned. Intercompany transactions and balances are eliminated in consolidation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts and disclosures of assets and liabilities and the reported amounts and disclosures of revenue and expenses during the period. Management bases its estimates and judgments on the information available at the time and various other assumptions believed to be reasonable under the circumstances. By nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates and assumptions.
Revenue Recognition
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters 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. The Company accounts for an arrangement when it has approval and commitment from both parties, the rights are identified, the contract has commercial substance, and collectability of consideration is probable. The Company generally obtains oral or written purchase authorizations from its customers for a specified amount of product at a
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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. The Company generally invoices for its products at the time of shipping, and accordingly there is not a significant financing component included in its arrangements.
Cost of Sales and Certain Other Costs
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.
Cash and Cash Equivalents and Investments
The Company considers all highly liquid short-term investments with original maturities of 90 days or less to be cash equivalents. The carrying value of the Company’s cash equivalents approximates fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The majority of payments due from credit card processors and banks for third-party credit card and debit card transactions process within one to five business days. All credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents. Amounts due from banks for credit card transactions classified as cash equivalents totaled $ 1,934 and $ 1,854 at December 31, 2025 and 2024, respectively.
At the time of purchase, the Company determines the appropriate classification of investments based upon its intent with regard to such investments. All of the Company’s investments are classified as available-for-sale. The Company classifies investments as short-term when their remaining contractual maturities are one year or less from the balance sheet date, and as long-term when the investment has a remaining contractual maturity of more than one year from the balance sheet date. The Company records investments at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income on the consolidated balance sheets.
Included in interest income, net on the consolidated statements of income is interest income on cash equivalents and short-term investments of $ 14,295 , $ 18,838 , and $ 9,983 for the years ended December 31, 2025, 2024, and 2023, respectively.
Accounts Receivable
Accounts receivable are recorded at the invoice amount, net of allowances. Customers are evaluated for their credit worthiness at the time of contract inception and the Company performs ongoing credit evaluations of its customers and adjusts credit limits based on payment history and customer creditworthiness. Based on the results of the credit assessments, the Company will extend credit under its standard payment terms or may request alternative early payment actions. The Company determines the required allowance for expected credit losses using information such as its customer credit history and financial condition, industry and market segment information, credit reports, and economic trends and conditions. Allowances can be affected by changes in the industry, customer credit issues or customer bankruptcies or expectations of any such events in a future period when reasonable and supportable. Historical information is utilized beyond reasonable and supportable forecast periods. Amounts are charged against the allowance when it is determined that expected credit losses may occur. The Company assesses collectability by reviewing accounts receivable on an aggregated basis where similar characteristics exist and on an individual basis when the Company identifies specific customers with collectability issues, and if necessary, records a reserve against those receivables it determines may not be collectable. Trade receivables are written off in the period in which they are deemed uncollectible. Recoveries of trade receivables previously charged are recorded when received.
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Inventories
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 allowances are maintained for obsolete, slow moving, and nonsalable inventory.
Marketing Costs and Vendor Consideration
Vendors have the ability to fund marketing activities for which the Company receives marketing consideration. This vendor consideration, to the extent that it represents specific reimbursements of incremental and identifiable costs, is offset against selling, general and administrative, or SG&A, expenses. Marketing consideration that cannot be associated with a specific program or that exceeds the fair value of marketing expense associated with that program is classified as an offset to cost of sales. The Company’s vendor partners generally consolidate their funding of marketing and other marketing programs, and accordingly, the Company classifies substantially all vendor consideration as a reduction of cost of sales rather than a reduction of marketing expense. Other marketing costs are expensed as incurred. Marketing expense, which is classified as a component of SG&A expenses on the consolidated statements of income, totaled $ 24,754 , $ 25,091 , and $ 22,400 for the years ended December 31, 2025, 2024, and 2023, respectively.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation and amortization. The estimated useful lives of the assets range from three to seven years . Computer software, including licenses and internally developed software, is capitalized and amortized over lives generally ranging from three to ten years . Depreciation is recorded using the straight-line method. Leasehold improvements and facilities under capital leases are amortized over the terms of the related leases or their useful lives, whichever is shorter, whereas for income tax reporting purposes, they are amortized over the applicable tax lives.
Costs incurred to develop internal-use software during the application development stage are recorded in property and equipment at cost. External direct costs of materials and services consumed in developing or obtaining internal-use computer software and payroll-related costs for employees developing internal-use computer software projects, to the extent of their time spent directly on the project and specific to application development, are capitalized.
When events or circumstances indicate a potential impairment, the Company evaluates the carrying value of property and equipment based upon current and anticipated undiscounted cash flows. The Company recognizes impairment when it is probable that such estimated future cash flows will be less than the asset carrying value. No property and equipment impairment was recognized for each of the years ended December 31, 2025, 2024, and 2023.
Cloud Computing Arrangements
The Company enters into certain cloud-based software hosting arrangements for internal use that are accounted for as service contracts. Costs incurred in implementing a cloud computing arrangement are deferred during the application development stage and presented within prepaid expenses and other current assets or other assets, as applicable, on the consolidated balance sheets. Once a cloud computing arrangement is ready for its intended use, the implementation costs are amortized on a straight-line basis over an estimated useful life, taking into consideration the term of the cloud computing arrangement, including options to extend or terminate the cloud computing arrangement, and other economic factors. Amortization expenses related to cloud computing arrangements are recognized within the same line item on the consolidated statements of income as the expense for fees applicable to the associated cloud computing arrangement.
Capitalized cloud computing arrangements and the related accumulated amortization totaled $ 7,925 and $ 779 , respectively, as of December 31, 2025. Net balances of capitalized cloud computing arrangements of $ 1,757 and $ 5,389 were included in prepaid expense and other current assets and other assets, respectively, on the consolidated balance sheets. Amortization expense related to cloud computing arrangements was $ 779 for the year ended December 31, 2025 and was included in SG&A expenses on the consolidated statements of income.
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Leases
The Company enters into operating lease contracts, as assessed at contract inception, primarily for real estate and equipment. On the lease commencement date, the Company records operating lease liabilities based on the present value of the future lease payments. In determining the present value of future lease payments, the Company utilized estimated rates that it would have incurred to borrow, over a similar term, the funds necessary to purchase the respective leased asset with cash.
The Company elects to apply the short-term lease exception to any leases with contractual obligations of one year or less. These leases will not have right-of-use, or ROU, assets and associated lease liabilities on the balance sheet. Instead, rent will be recognized on a straight-line basis.
Goodwill and Other Intangible Assets
The Company’s intangible assets consist of (1) goodwill, which is not subject to amortization; (2) an Internet domain name, which is an indefinite-lived intangible asset not subject to amortization; and (3) amortizing intangibles, which consist of customer lists, trade names, and customer relationships, which are being amortized over their useful lives.
Note 4, “Goodwill and Other Intangible Assets” to the consolidated financial statements describes the annual impairment methodology that the Company uses each year in calculating the recoverability of goodwill and non-amortizing intangibles. This same impairment test is performed at other times during the course of a year should an event occur or circumstance change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Recoverability of amortizing intangible assets is assessed only when events have occurred that may give rise to impairment. When a potential impairment has been identified, forecasted undiscounted net cash flows of the operations to which the asset relates are compared to the current carrying value of the long-lived assets present in that operation. If such cash flows are less than such carrying amounts, long-lived assets including such intangibles are written down to their respective fair values. No intangible assets impairment was recognized for each of the years ended December 31, 2025, 2024, and 2023.
Concentrations
Concentrations of credit risk with respect to trade account receivables are limited due to the large number of customers comprising the Company’s customer base. No single customer accounted for 10% or more of total net sales in 2025, 2024, and 2023.
Product purchases from TD Synnex Corporation, Ingram Micro, Inc., and Microsoft Corporation accounted for approximately 25 %, 21 %, and 13 %, respectively, of the Company’s total product purchases in 2025. Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Dell Inc. accounted for approximately 25 %, 23 %, and 11 %, respectively, of the Company’s total product purchases in 2024. Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Microsoft Corporation accounted for approximately 21 %, 19 %, and 11 %, respectively, of the Company’s total product purchases in 2023. No other singular vendor supplied more than 10% of the Company’s total product purchases in 2025, 2024, and 2023, as applicable. The Company believes that, while it may experience some short-term disruption if products from TD Synnex Corporation, Ingram Micro, Inc., Microsoft Corporation, Dell Inc., or any of these vendors become unavailable to it, alternative sources are available.
Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc. represented approximately 16 %, 13 %, and 12 %, respectively, of our total product purchases in 2025. Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc. represented approximately 15 %, 12 %, and 12 %, respectively, of our total product purchases in 2024. Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc. represented approximately 15 %, 13 %, and 11 %, respectively, of our total product purchases in 2023. No other singular product manufacturer produced more than 10% of our total product purchases in 2025, 2024, and 2023, as applicable. In the event the Company experiences either
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a short-term or permanent disruption of supply of Microsoft Corporation, HP Inc., or Dell Inc. products, such disruption would likely have a material adverse effect on the Company’s results of operations and cash flows.
Severance Expenses and Other Charges
The severance expenses and other charges recorded for the years ended December 31, 2025, 2024, and 2023 were primarily related to voluntary and involuntary reductions in the Company’s workforce to lower the Company’s cost structure. 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. Included in accrued payroll on the consolidated balance sheets as of December 31, 2025 was $ 3,763 related to unpaid severance expenses.
Costs incurred for severance expenses and other charges were as follows (in thousands):
Years Ended December 31,
2025
2024
2023
Severance expenses
$
6,013
$
415
$
2,416
Other charges
—
—
271
Total severance expenses and other charges
$
6,013
$
415
$
2,687
Earnings Per Share
Basic earnings per common share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributable to nonvested stock units and stock options outstanding, if dilutive.
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
Years Ended December 31,
2025
2024
2023
Numerator:
Net income
$
83,722
$
87,095
$
83,271
Denominator:
Denominator for basic earnings per share
$
25,511
$
26,322
$
26,287
Dilutive effect of employee stock awards
122
186
142
Denominator for diluted earnings per share
$
25,633
$
26,508
$
26,429
Earnings per share:
Basic
$
3.28
$
3.31
$
3.17
Diluted
$
3.27
$
3.29
$
3.15
For the years ended December 31, 2025, 2024, and 2023, the Company did no t exclude any outstanding nonvested stock units or stock options from the computation of diluted earnings per share because including them would have had an anti-dilutive effect.
Recently Adopted and Recently Issued Financial Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This guidance is intended to improve the transparency of income tax disclosures through, among other things, enhancement of the disclosure requirements within the rate reconciliation, as well as increased income tax disaggregation disclosures. This ASU is effective for the Company’s annual reporting periods beginning January 1, 2025, with early adoption permitted. The Company adopted this standard for the fiscal year ended December 31, 2025 and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. See Note 12, “Income Taxes” to the consolidated financial statements for more information on the effect of this ASU adoption.
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In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . This guidance is intended to provide more detailed disclosure about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expenses, and depreciation expense. This ASU is effective for the Company’s annual reporting periods beginning January 1, 2027, and for interim reporting periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets . This guidance provides a practical expedient related to estimating expected credit losses for accounts receivable and contract assets by assuming that current conditions remain unchanged over the life of the asset. This ASU is effective for the Company’s annual reporting periods beginning January 1, 2026, and for interim reporting periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . This guidance was issued to establish new criteria to be considered for capitalization of software costs under Subtopic 350-40, as well as link the disclosure requirements of Subtopic 360-10 to capitalized costs accounted for under Subtopic 350-40. This ASU is effective for the Company’s annual reporting periods beginning January 1, 2028, and for interim reporting periods beginning January 1, 2029, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements . This guidance is intended to improve the navigability of required interim disclosures and clarify when the guidance is applicable, as well as provide additional guidance on what disclosures should be provided in interim reporting periods. This ASU is effective for the Company’s interim reporting periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statement disclosures.
2. REVENUE
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. The Company recognizes revenue as the principal in the transaction with the customer (i.e., on a gross basis), as it controls the product prior to delivery to the customer and derives the economic benefits from the sales transaction given the Company’s control over customer pricing.
The Company does not recognize revenue for goods that remain in its 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 the Company has 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. The Company is the principal in these transactions and recognizes 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
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support services. The Company does not have control over the delivery of these performance obligations, and accordingly the Company is the agent in these transactions. The Company recognizes revenue for security software net of the related costs of sales at the point in time when its 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. The Company does not exercise control over these products or services and therefore is an agent in these transactions. The Company recognizes revenue for cloud products net of the related costs of sales at the point in time when its vendor and customer accept the terms and conditions in the sales arrangements.
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 the Company sells these items separately. The Company recognizes revenue related to the software maintenance as the agent in these transactions because it does not have control over the on-going software maintenance service. Revenue allocated to software maintenance is recognized at the point in time when the Company’s vendor and customer accept the terms and conditions in the sales arrangements.
Certain of the Company’s 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, the Company’s vendors will transfer the license and bill the customer directly, paying resellers, such as the Company, an agency fee or commission on these sales. The Company records these agency fees as a component of net sales as earned and there is no corresponding cost of sales amount. In certain instances, the Company invoices the customer directly under an EA and accounts for the individual items sold based on the nature of each item. The Company’s vendors typically dictate how the EA will be sold to the customer.
The Company also offers extended service plans, or ESPs, on IT products, both as part of the initial arrangement and separately from the IT products. The Company recognizes revenue related to ESPs as the agent in the transaction because it does not have control over the on-going ESPs service and does not provide any service after the sale. Revenue allocated to ESPs is recognized at the point in time when the Company’s vendor and customer accept the terms and conditions in the sales arrangement.
The Company uses its own engineering personnel to assist in projects involving the design and installation of systems and networks, and also engages third-party service providers to perform warranty maintenance, implementations, asset disposal, and other services. Service revenue is recognized in general over time as the Company performs the underlying services and satisfies its performance obligations. The Company evaluates such engagements to determine whether it is the principal or the agent in each transaction. For those transactions in which the Company does not control the service, the Company acts as an agent and recognizes 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.
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.
Significant Judgments
The Company’s contracts with customers often include promises to transfer multiple products or services to a customer. Determining whether the Company is 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.
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The Company estimates 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. The Company maximizes the use of observable inputs in the determination of the estimate for SSP for the items that it does 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 the Company does not sell the product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs.
The Company provides its 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 it is 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. The Company makes estimates of product returns based on significant historical experience. The Company records its 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.
Description of Revenue
The Company disaggregates revenue from its arrangements with customers by type of products and services, as it believes this method best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
The following tables represent a disaggregation of revenue from arrangements with customers for the years ended December 31, 2025, 2024, and 2023, along with the segment for each category (in thousands).
Year Ended December 31, 2025
Enterprise
Solutions
Business
Solutions
Public Sector
Solutions
Total
Notebooks/Mobility
$
395,257
$
396,844
$
201,207
$
993,308
Desktops
197,821
97,416
56,524
351,761
Software
124,341
152,182
44,603
321,126
Servers/Storage
74,993
95,920
49,478
220,391
Net/Com Products
83,047
79,273
39,698
202,018
Displays and Sound
119,908
85,785
44,712
250,405
Accessories
179,000
97,913
42,208
319,121
Other Hardware/Services
108,053
76,521
30,042
214,616
Total net sales
$
1,282,420
$
1,081,854
$
508,472
$
2,872,746
Year Ended December 31, 2024
Enterprise
Solutions
Business
Solutions
Public Sector
Solutions
Total
Notebooks/Mobility
$
368,678
$
373,364
$
251,949
$
993,991
Desktops
176,027
73,540
48,690
298,257
Software
105,120
136,462
43,862
285,444
Servers/Storage
54,230
110,338
40,519
205,087
Net/Com Products
89,008
81,108
40,472
210,588
Displays and Sound
132,112
83,283
57,430
272,825
Accessories
158,562
114,266
49,923
322,751
Other Hardware/Services
97,411
76,778
38,986
213,175
Total net sales
$
1,181,148
$
1,049,139
$
571,831
$
2,802,118
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Year Ended December 31, 2023
Enterprise
Solutions
Business
Solutions
Public Sector
Solutions
Total
Notebooks/Mobility
$
391,667
$
352,116
$
207,887
$
951,670
Desktops
137,679
73,302
55,946
266,927
Software
124,478
157,715
47,321
329,514
Servers/Storage
65,034
90,697
45,564
201,295
Net/Com Products
112,069
121,717
62,488
296,274
Displays and Sound
106,419
92,219
60,244
258,882
Accessories
155,498
111,542
49,992
317,032
Other Hardware/Services
108,287
76,291
44,472
229,050
Total net sales
$
1,201,131
$
1,075,599
$
573,914
$
2,850,644
Contract Balances
The following table provides information about contract liabilities from arrangements with customers as of December 31, 2025 and December 31, 2024 (in thousands):
December 31, 2025
December 31, 2024
Contract liabilities, which are included in "Accrued expenses and other liabilities"
$
8,801
$
10,290
Changes in the contract liability balances during the years ended December 31, 2025 and 2024 are as follows (in thousands):
2025
Balance at December 31, 2024
$
10,290
Cash received in advance and not recognized as revenue
35,862
Amounts recognized as revenue as performance obligations satisfied
( 37,351 )
Balance at December 31, 2025
$
8,801
2024
Balance at December 31, 2023
$
4,206
Cash received in advance and not recognized as revenue
28,014
Amounts recognized as revenue as performance obligations satisfied
( 21,930 )
Balance at December 31, 2024
$
10,290
k
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3. FAIR VALUE MEASUREMENTS
Cash equivalents and short-term investments consist of the following (in thousands):
December 31, 2025
Amortized Cost
Unrealized Gains
Unrealized Losses
Fair Value
Cash equivalents:
Money market funds
$
170,826
$
—
$
—
$
170,826
Short-term investments:
U.S. Government treasury securities
213,358
99
—
213,457
Total
$
384,184
$
99
$
—
$
384,283
December 31, 2024
Amortized Cost
Unrealized Gains
Unrealized Losses
Fair Value
Cash equivalents:
Money market funds
$
161,094
$
—
$
—
$
161,094
Short-term investments:
U.S. Government treasury securities
264,074
309
( 88 )
264,295
Total
$
425,168
$
309
$
( 88 )
$
425,389
Investments with maturities of 90 days or less from the date of purchase are classified as cash equivalents; investments with maturities of greater than 90 days from the date of purchase but less than one year are generally classified as short-term investments; and investments with maturities of one year or greater from the date of purchase are generally classified as long-term investments. All short-term investments had stated maturity dates of less than one year. The Company has recorded the securities at fair value in its consolidated balance sheets and unrealized gains and losses are reported as a component of accumulated other comprehensive income. The amount of realized gains and losses reclassified into earnings and the related adjustments to deferred taxes are based on the specific identification of the securities sold or securities that reached maturity date.
Fair Value
The Company measures certain financial assets at fair value. Fair value is determined based upon the exit price that would be received to sell an asset in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques are classified based on a three-level hierarchy, as follows:
● Level 1 inputs: Quoted prices for identical assets or liabilities in active markets;
● Level 2 inputs: Observable inputs other than those described as Level 1; and
● Level 3 inputs: Unobservable inputs that are supportable by little or no market activities and are based on significant assumptions and estimates.
As of December 31, 2025 and 2024, the fair value of the Company’s cash equivalents and short-term investments were all measured using level 1 inputs.
4. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Goodwill is held by the Company’s Enterprise Solutions and Business Solutions segments. Goodwill and intangible assets with indefinite lives are subject to an annual impairment test as of November 30 and tested more frequently if events or circumstances occur that would indicate a potential decline in fair value.
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In 2025 and 2024, the Company performed a qualitative “step 0” 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 above qualitative analysis, the Company determined goodwill was not impaired as of December 31, 2025 and 2024.
The carrying amount of goodwill for the periods presented is detailed below (in thousands):
Balance at December 31, 2025
Enterprise
Solutions
Business
Solutions
Public Sector
Solutions
Total
Goodwill, gross
$
66,236
$
8,539
$
7,634
$
82,409
Accumulated impairment losses
─
( 1,173 )
( 7,634 )
( 8,807 )
Net balance
$
66,236
$
7,366
$
—
$
73,602
Balance at December 31, 2024
Enterprise
Solutions
Business
Solutions
Public Sector
Solutions
Total
Goodwill, gross
$
66,236
$
8,539
$
7,634
$
82,409
Accumulated impairment losses
─
( 1,173 )
( 7,634 )
( 8,807 )
Net balance
$
66,236
$
7,366
$
—
$
73,602
Intangible Assets
At December 31, 2025 and 2024, the Company’s intangible assets included a domain name for $ 450 , which has an indefinite life and is not subject to amortization. In addition, in 2016 the Company acquired customer relationships from its Softmart and GlobalServe acquisitions, which are amortized on a straight-line basis over their estimated useful lives of 10 years . The Company’s remaining intangible assets are amortized in proportion to the estimates of the future cash flows underlying the valuation of the assets. Intangible assets and related accumulated amortization are detailed below (dollars in thousands):
December 31, 2025
December 31, 2024
Estimated
Gross
Accumulated
Net
Gross
Accumulated
Net
Useful Lives
Amount
Amortization
Amount
Amount
Amortization
Amount
Customer list
8
$
3,400
$
3,400
$
—
$
3,400
$
3,400
$
—
Tradename
5
1,190
1,190
—
1,190
1,190
—
Customer relationships
10
12,200
11,661
539
12,200
10,441
1,759
Total intangible assets
$
16,790
$
16,251
$
539
$
16,790
$
15,031
$
1,759
In 2025, 2024, and 2023, the Company recorded amortization expense of $ 1,220 , $ 1,219 , and $ 1,220 , respectively. The estimated amortization expense relating to intangible assets in each of the five succeeding years and thereafter is as follows (in thousands):
For the Years Ended December 31,
2026
$
539
2027
—
2028
—
2029
—
2030 and thereafter
—
$
539
.
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5. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following (in thousands):
December 31,
2025
2024
Trade
$
590,171
$
557,856
Vendor consideration, returns and other
64,250
60,615
Due from employees
65
79
Total gross accounts receivable
654,486
618,550
Allowances for:
Sales returns
( 3,398 )
( 3,843 )
Credit losses
( 3,068 )
( 3,274 )
Accounts receivable, net
$
648,020
$
611,433
6. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following (in thousands):
December 31,
2025
2024
Software
$
97,349
$
98,625
Furniture and equipment
30,352
32,400
Leasehold improvements
8,427
8,427
Total
136,128
139,452
Accumulated depreciation and amortization
( 89,216 )
( 86,932 )
Property and equipment, net
$
46,912
$
52,520
The Company recorded depreciation and amortization expense for property and equipment of $ 10,483 , $ 11,765 , and $ 11,434 in 2025, 2024, and 2023, respectively.
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7. LEASES
The Company leases certain facilities from a related party, which is affiliated with the Company through common ownership. The costs for these leases are presented within short-term lease cost in the below table.
As of December 31, 2025, the Company had no leases that were classified as financing leases and there were no additional significant operating or financing leases that have not yet commenced. Refer to the following table for quantitative information related to the Company’s leases for the years ended December 31, 2025 and 2024 (dollars in thousands):
Year Ended December 31, 2025
Related Parties
Others
Total
Lease Cost
Capitalized operating lease cost
$
—
$
1,852
$
1,852
Short-term lease cost
1,679
655
2,334
Total lease cost
$
1,679
$
2,507
$
4,186
Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows
$
—
$
1,963
$
1,963
Weighted-average remaining lease term (in years):
Capitalized operating leases
—
1.45
1.45
Weighted-average discount rate:
Capitalized operating leases
0.00 %
4.39 %
4.39 %
Year Ended December 31, 2024
Related Parties
Others
Total
Lease Cost
Capitalized operating lease cost
$
—
$
1,941
$
1,941
Short-term lease cost
1,830
569
2,399
Total lease cost
$
1,830
$
2,510
$
4,340
Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows
$
—
$
2,078
$
2,078
Weighted-average remaining lease term (in years):
Capitalized operating leases
—
2.01
2.01
Weighted-average discount rate:
Capitalized operating leases
0.00 %
4.31 %
4.31 %
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As of December 31, 2025, future lease payments over the remaining term of capitalized operating leases were as follows (in thousands):
For the Years Ended December 31,
2026
$
1,330
2027
354
2028
161
2029
—
2030
—
Thereafter
—
1,845
Imputed interest
( 57 )
Lease liability balance at December 31, 2025
$
1,788
As of December 31, 2025, the ROU asset had a balance of $ 1,569 . The long-term lease liability was $ 498 and the short-term lease liability, which is included in accrued expenses and other liabilities on the consolidated balance sheets, was $ 1,290 .
As of December 31, 2024, the ROU asset had a balance of $ 3,077 . The long-term lease liability was $ 1,552 and the short-term lease liability, which is included in accrued expenses and other liabilities on the consolidated balance sheets, was $ 1,805 .
8. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consisted of the following (in thousands):
December 31,
2025
2024
Customer and vendor deposits
$
28,190
$
26,486
Sales tax
8,158
7,753
Short term lease liability
1,290
1,805
Other
13,613
11,589
Accrued expenses and other liabilities
$
51,251
$
47,633
9. BANK BORROWINGS
The Company previously had a $ 50,000 credit facility collateralized by its account receivables that expired March 31, 2025 that the Company elected not to renew or replace. 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. Cash paid for interest was $ 0 , $ 6 , and $ 24 for the years ended December 31, 2025, 2024, and 2023, respectively.
Cash receipts were automatically applied against any outstanding borrowings. During the years ended December 31, 2025 and 2024, the Company borrowed incremental amounts that were each repaid in full. These borrowings for the years ended December 31, 2025 and 2024 totaled $ 732 and $ 26,051 , respectively; however, at no time were the outstanding borrowings greater than the $ 50,000 limit under the credit facility. The Company had no outstanding borrowings under the credit facility immediately prior to the expiration of the credit facility, or as of December 31, 2024.
10. STOCKHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION
Preferred Stock
The Company’s Amended and Restated Certificate of Incorporation, or the Restated Certificate, authorizes the issuance of up to 10,000 shares of preferred stock, $ 0.01 par value per share, or the Preferred Stock. Under the terms of
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the Restated Certificate, the Board is authorized, subject to any limitations prescribed by law, without stockholder approval, to issue by a unanimous vote such shares of Preferred Stock in one or more series. Each such series of Preferred Stock shall have such rights, preferences, privileges, and restrictions, including voting rights, dividend rights, redemption privileges, and liquidation preferences, as shall be determined by the Board. There were no preferred shares outstanding as of December 31, 2025 or 2024.
Share Repurchase Authorization
As of December 31, 2017, there was $ 30,000 authorized for share repurchase. In 2018, the Company’s Board approved a share repurchase program authorizing up to $ 25,000 in additional share repurchases. In November 2022, the Company’s Board approved a $ 25,000 increase to the Company’s existing share repurchase authorization. In May 2024, the Company’s Board approved a $ 40,000 increase to the Company’s existing share repurchase authorization. In April 2025, the Company’s Board approved a $ 50,000 increase to the Company’s existing share repurchase authorization, bringing the aggregate size of the share repurchase program to $ 170,000 as of December 31, 2025. There is no fixed termination date for this repurchase program. Purchases may be made in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions. The timing and amount of any share repurchases will be based on market conditions and other factors.
The Company repurchased 1,214 , 188 , and 129 shares for $ 76,761 , $ 12,597 , and $ 5,446 during the years ended December 31, 2025, 2024, and 2023, respectively, under the Board-authorized repurchase program. Such cost reflects the applicable one percent excise tax imposed by the Inflation Reduction Act of 2022 on the net value of certain stock repurchases made after December 31, 2022. As of December 31, 2025, the Company has repurchased an aggregate of 4,130 shares for $ 136,398 under the Board-authorized repurchase program, and the maximum approximate dollar value of shares that may yet be purchased under the Company’s existing Board-authorized program is $ 33,602 .
On February 4, 2026, the Company announced that its Board of Directors authorized a $ 50,000 increase to the share repurchase program, which was incremental to the approximately $ 33,602 remaining as of December 31, 2025.
Dividend Payments
The following tables summarize the Company’s quarterly cash dividends declared during the years ended December 31, 2025, 2024, and 2023 (in thousands, except per share data):
Year Ended December 31, 2025
Dividend per Share
Declaration Date
Record Date
Payment Date
Total Dividend
$
0.15
February 4, 2025
February 25, 2025
March 14, 2025
$
3,910
$
0.15
April 29, 2025
May 13, 2025
May 30, 2025
$
3,810
$
0.15
July 29, 2025
August 12, 2025
August 29, 2025
$
3,799
$
0.15
October 28, 2025
November 11, 2025
November 28, 2025
$
3,779
Year Ended December 31, 2024
Dividend per Share
Declaration Date
Record Date
Payment Date
Total Dividend
$
0.10
February 12, 2024
February 27, 2024
March 15, 2024
$
2,636
$
0.10
April 30, 2024
May 14, 2024
May 29, 2024
$
2,635
$
0.10
July 30, 2024
August 13, 2024
August 30, 2024
$
2,629
$
0.10
October 29, 2024
November 12, 2024
November 29, 2024
$
2,627
Year Ended December 31, 2023
Dividend per Share
Declaration Date
Record Date
Payment Date
Total Dividend
$
0.08
February 9, 2023
February 21, 2023
March 10, 2023
$
2,107
$
0.08
May 4, 2023
May 16, 2023
June 2, 2023
$
2,099
$
0.08
August 2, 2023
August 15, 2023
September 1, 2023
$
2,101
$
0.08
October 31, 2023
November 14, 2023
December 1, 2023
$
2,103
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Declaration of any future cash dividends will depend upon the Company’s financial position, strategic plans, and general business conditions.
Equity Compensation Plan Descriptions
In 2007, the Board adopted and the Company’s stockholders approved the 2007 Stock Incentive Plan. In 2010, the Board adopted and the stockholders approved the Amended and Restated 2007 Stock Incentive Plan, or the 2007 Plan, which, among other things, extended the term of the 2007 Plan to 2020. In May 2019, the Company’s stockholders approved an amendment to the 2007 Plan, which authorized the issuance of up to 1,900 shares of common stock. Under the terms of the 2007 Plan, the Company is authorized, for a ten-year period, to grant options, stock appreciation rights, nonvested stock, nonvested stock units, and other stock-based awards to employees, officers, directors, and consultants.
In 2020, the Board adopted and the Company’s stockholders approved the 2020 Stock Incentive Plan, or the 2020 Plan, which replaces the Amended and Restated 2007 Stock Incentive Plan. In May 2025, the Company’s stockholders approved an amendment to the 2020 Plan bringing the total amount authorized for issuance under the 2020 Plan to 1,653 shares of common stock. As of December 31, 2025, there were 301 shares eligible for future grants under the 2020 Plan.
1997 Employee Stock Purchase Plan
In November 1997, the Board adopted and the Company’s stockholders approved the 1997 Employee Stock Purchase Plan, or the Employee Stock Purchase Plan. The Employee Stock Purchase Plan authorizes the issuance of common stock to participating employees. Under the Employee Stock Purchase Plan, as amended, employees are eligible to purchase Company stock at 95 % of the purchase price as of the last business day of each six-month offering period. In May 2025, the Board adopted and the Company’s stockholders approved an amendment to the Employee Stock Purchase Plan, which reserved an aggregate of 1,353 shares of common stock for issuance under the Employee Stock Purchase Plan, of which 1,260 shares have been purchased as of December 31, 2025.
Accounting for Share-Based Compensation
The Company measures the grant date fair value of equity awards given to employees and recognizes that cost, adjusted for forfeitures, over the period that services are performed. The Company values grants with multiple vesting periods as a single award, estimates expected forfeitures based upon historical patterns of employee turnover, and records share-based compensation as a component of SG&A expenses.
The following table summarizes the share-based compensation expenses included on the consolidated statements of income (in thousands):
Years Ended December 31,
2025
2024
2023
Pre-tax expense for nonvested units
$
9,343
$
8,475
$
7,022
Tax benefit
( 2,465 )
( 2,192 )
( 1,853 )
Net effect on net income
$
6,878
$
6,283
$
5,169
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In 2025, 2024, and 2023, the Company issued nonvested stock units that settle in stock and vest over periods of up to four years . Recipients of nonvested stock units do not possess stockholder rights. The fair value of nonvested stock units is based on the end of day market value of the Company’s common stock on the grant date. The following table summarizes the Company’s nonvested stock unit activity in 2025 (shares in thousands):
Weighted-Average
Grant Date
Shares
Fair Value
Nonvested at January 1, 2025
455
$
55.44
Granted
265
$
61.05
Vested
( 164 )
$
51.06
Canceled
( 47 )
$
63.80
Nonvested at December 31, 2025
509
$
59.03
The weighted-average grant-date fair value of nonvested stock units granted in 2025, 2024, and 2023 was $ 61.05 , $ 67.83 , and $ 62.50 , respectively. The total fair value of nonvested stock units that vested in 2025, 2024, and 2023 was $ 9,961 , $ 11,264 , and $ 9,700 , respectively. Unearned compensation cost related to the nonvested portion of outstanding nonvested stock units was $ 26,270 as of December 31, 2025, and is expected to be recognized over a weighted-average period of approximately 3.0 years. The aggregate intrinsic value of the nonvested stock units at December 31, 2025, which is calculated based on the positive difference between the fair value of the Company’s stock on December 31, 2025 and the grant price of the underlying awards, was $ 29,379 .
11. ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income, which is included as a component of stockholders’ equity, is comprised of unrealized gains on short-term investments, net of tax. The changes in accumulated other comprehensive income were as follows (in thousands):
Year Ended
December 31, 2025
Balance - December 31, 2024
$
174
Other comprehensive income before reclassifications, net of tax
78
Less amounts reclassified from accumulated other comprehensive income, net of tax
174
Net other comprehensive loss
( 96 )
Balance - December 31, 2025
$
78
Year Ended
December 31, 2024
Balance - December 31, 2023
$
81
Other comprehensive income before reclassifications, net of tax
174
Less amounts reclassified from accumulated other comprehensive income, net of tax
81
Net other comprehensive income
93
Balance - December 31, 2024
$
174
Included in amounts reclassified from accumulated other comprehensive income, net of tax for the year ended December 31, 2025 is $ 76 of realized gain, which is included in “Other income” on the consolidated statements of income.
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12. INCOME TAXES
There are no foreign amounts included in income before taxes on the consolidated statements of income. The provision for income taxes consisted of the following (in thousands):
Years Ended December 31,
2025
2024
2023
Current:
Federal
$
19,160
$
23,642
$
24,648
State
6,006
7,528
7,343
Total current
25,166
31,170
31,991
Deferred:
Federal
4,598
( 690 )
( 1,845 )
State
242
( 88 )
( 303 )
Total deferred
4,840
( 778 )
( 2,148 )
Provision for income taxes
$
30,006
$
30,392
$
29,843
A reconciliation of the Company’s provision for income taxes to the amount computed by applying the 21 % statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows (dollars in thousands):
Year Ended December 31, 2025
Amount
Percent
Federal income taxes, at statutory tax rate
$
23,883
21.0
%
State and local income taxes, net of federal effect 1
4,812
4.2
Tax credits
( 23 )
—
Nondeductible expenses
Nondeductible compensation
1,127
1.0
Other
144
0.1
Other, net
63
0.1
Income tax provision
$
30,006
26.4
%
1) The state and local jurisdictions that make up the majority ( greater than 50% ) of the tax effect in this category are California, New York, Massachusetts, Florida, and New York City.
A reconciliation of the Company’s provision for income taxes to the amount computed by applying the 21 % statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows (in thousands):
Years Ended December 31,
2024
2023
Federal income taxes, at statutory tax rate
$
24,672
$
23,754
State income taxes, net of federal benefit
5,859
5,498
Nondeductible expenses
732
589
Other, net
( 871 )
2
Income tax provision
$
30,392
$
29,843
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Table of Contents
The components of the deferred taxes as of December 31, 2025 and 2024 are as follows (in thousands):
2025
2024
Deferred tax assets:
Allowance for credit losses
$
790
$
843
Inventory costs capitalized for tax purposes
118
99
Inventory valuation reserves
338
467
Sales return reserves
135
143
Deductible expenses, primarily employee-benefit related
35
35
Accrued compensation
1,905
1,738
Operating lease liability
459
863
Unclaimed property reserve
784
668
Other
1,111
1,080
Capitalized research and development
—
2,262
Stock-based compensation
433
352
State tax loss carryforwards
843
699
State tax credit carryforwards
1,579
1,159
Total gross deferred tax assets
8,530
10,408
Less: Valuation allowance
( 1,839 )
( 1,502 )
Net deferred tax assets
6,691
8,906
Deferred tax liabilities:
Goodwill and other intangibles
( 14,714 )
( 14,555 )
Property and equipment
( 7,458 )
( 8,215 )
Capitalized research and development
( 3,730 )
—
Right-of-use assets
( 403 )
( 791 )
Prepaid expenses
( 163 )
( 153 )
Other
( 128 )
( 283 )
Total gross deferred tax liabilities
( 26,596 )
( 23,997 )
Net deferred tax liability
$
( 19,905 )
$
( 15,091 )
Current deferred tax assets
$
—
$
—
Noncurrent deferred tax liability
( 19,905 )
( 15,091 )
Net deferred tax liability
$
( 19,905 )
$
( 15,091 )
The Company has state net operating loss carryforwards aggregating $ 1,067 as of December 31, 2025 representing state tax benefits, net of federal taxes, of approximately $ 843 . These loss carryforwards are subject to three , five , fifteen , twenty-year , or indefinite carryforward periods, with $ 29 expiring in 2026, $ 1 expiring in 2027, $ 2 expiring in 2028, $ 2 expiring in 2029, $ 86 expiring in 2030, $ 720 expiring beyond 2030, and $ 227 with no expiration. The Company has provided valuation allowances of $ 363 and $ 343 as of December 31, 2025 and 2024, respectively, against the state tax loss carryforwards, representing the portion of carryforward losses that the Company believes are not likely to be realized.
The Company also has state tax credit carryforwards aggregating $ 1,998 as of December 31, 2025 representing state tax benefits, net of federal taxes, of approximately $ 1,578 . These credit carryforwards are subject to five and ten-year carryforward periods, with $ 78 in 2029, $ 51 in 2030, and $ 1,869 expiring beyond 2030. The Company has provided a valuation allowance of $ 1,476 and $ 1,159 as of December 31, 2025 and 2024, respectively, against the state tax loss carryforwards, representing the portion of credit carryforwards that the Company believes are not likely to be realized.
The net change in the total valuation allowance reflects a $ 337 increase and a $ 287 decrease in 2025 and 2024, respectively.
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The Company files one consolidated U.S. Federal income tax return that includes all of its subsidiaries as well as several consolidated, combined, and separate Company returns in many U.S. state tax jurisdictions. The tax years 2022-2024 remain open to examination by the Internal Revenue Service and the major state taxing jurisdictions in which the Company files.
Previously, the Company recognized interest and penalties related to unrecognized income tax benefits as a component of income tax expense, and the corresponding accrual was included as a component of the Company’s liability for unrecognized income tax benefits. The Company did no t recognize any unrecognized income tax benefits, interest, and penalties for the years ended December 31, 2025, 2024 or 2023.
Cash paid for income taxes, net of refunds for the year ended December 31, 2025 is as follows (in thousands):
Year Ended December 31, 2025
Federal
$
23,549
State and local
6,156
Total income taxes paid, net of refunds received
$
29,705
Cash paid for income taxes for the years ended December 31, 2024 and 2023 was $ 29,295 and $ 41,668 , respectively.
13. EMPLOYEE BENEFIT PLAN
The Company has a contributory profit-sharing and employee savings plan covering all qualified employees. No contributions to the profit-sharing element of the plan were made by the Company in 2025, 2024, and 2023. The Company made matching contributions to the employee savings element of such plan of $ 7,236 , $ 6,765 , and $ 6,873 in 2025, 2024, and 2023, respectively.
14. COMMITMENTS AND CONTINGENCIES
Contingencies
The Company is subject to various legal proceedings and claims, which have arisen during the ordinary course of business. In the opinion of the Company’s management, the outcome of such matters is not expected to have a material effect on the Company’s business, financial position, results of operations, or cash flows.
The Company records a liability when it believes that a loss is both probable and reasonably estimable. On a quarterly basis, the Company reviews each of these legal proceedings to determine whether it is probable, reasonably possible, or remote that a liability has been incurred and, if it is at least reasonably possible, whether a range of loss can be reasonably estimated. Significant judgment is required to determine both the likelihood of there being a loss and the estimated amount of such loss. Until the final resolution of such matters, there may be an exposure to loss in excess of the amount recorded, and such amounts could be material. The Company expenses legal fees in the period in which they are incurred.
The Company is subject to audits by states on sales and income taxes, employment matters, and other assessments. Additional liabilities for these and other audits could be assessed, and such outcomes could have a material negative impact on the Company’s financial position, results of operations, and cash flows.
15. SEGMENT AND RELATED DISCLOSURES
The internal reporting structure used by the Company’s chief operating decision maker, or CODM, to assess performance and allocate resources determines the basis for the Company’s operating segments. The Company’s operations are organized under three reporting segments—the Enterprise Solutions segment, which serves primarily medium-to-large corporations; the Business Solutions segment, which serves primarily SMBs; and the Public Sector Solutions segment, which serves primarily federal, state, and local government and educational institutions. In addition,
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the Headquarters/Other provides services in areas such as finance, human resources, IT, marketing, and product management. Most of the operating costs associated with the Headquarters/Other functions are charged to the operating segments based on their estimated usage of the underlying functions. The Company reports these charges to the operating segments as “Allocations”. Headquarters/Other amounts that are not allocated to the operating segments are shown as reconciling items in the tables below.
The Company’s CODM is its Chief Executive Officer, and he assesses the segments’ performance by using each segment’s operating income (which includes certain corporate overhead allocations attributable to each of the segments). Net sales presented below exclude inter-segment product revenues. The CODM uses operating income for each segment in the annual budget, periodic forecasting, and quarterly results processes. Segment information applicable to the Company’s operating segments and the related reconciliations to consolidated amounts for the years ended December 31, 2025, 2024, and 2023 are shown below (in thousands):
Year Ended December 31, 2025
Enterprise
Solutions
Business
Solutions
Public Sector
Solutions
Total
Net sales
$
1,282,420
$
1,081,854
$
508,472
$
2,872,746
Cost of sales
1,096,557
809,737
427,123
Personnel costs
66,429
69,565
36,545
Marketing
5,021
15,630
2,910
Allocated corporate overhead
74,279
88,520
44,260
Depreciation and amortization
777
620
89
Other segment expenses 1
4,029
6,714
7,568
Operating income (loss)
$
35,328
$
91,068
$
( 10,023 )
$
116,373
Unallocated Headquarters/Other expenses
( 17,091 )
Interest income, net
14,370
Other income
76
Income before taxes
$
113,728
Segment assets
$
772,828
$
653,168
$
96,299
$
1,522,295
Headquarters/Other assets
( 171,370 )
Consolidated assets
$
1,350,925
1) Other segment expenses for each of the reportable segments include service contracts/subscriptions, professional fees, facilities operations, credit card fees, and other miscellaneous expenses.
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Table of Contents
Year Ended December 31, 2024
Enterprise
Solutions
Business
Solutions
Public Sector
Solutions
Total
Net sales
$
1,181,148
$
1,049,139
$
571,831
$
2,802,118
Cost of sales
1,001,187
796,684
484,453
Personnel costs
62,378
70,472
36,661
Marketing
5,318
16,127
3,646
Allocated corporate overhead
72,601
81,918
40,959
Depreciation and amortization
852
620
91
Other segment expenses 1
4,831
6,467
3,733
Operating income
$
33,981
$
76,851
$
2,288
$
113,120
Unallocated Headquarters/Other expenses
( 16,058 )
Interest income, net
18,725
Other income
1,700
Income before taxes
$
117,487
Segment assets
$
737,405
$
564,110
$
114,524
$
1,416,039
Headquarters/Other assets
( 116,685 )
Consolidated assets
$
1,299,354
Year Ended December 31, 2023
Enterprise
Solutions
Business
Solutions
Public Sector
Solutions
Total
Net sales
$
1,201,131
$
1,075,599
$
573,914
$
2,850,644
Cost of sales
1,022,273
828,499
488,136
Personnel costs
68,112
73,103
37,031
Marketing
4,683
13,755
3,486
Allocated corporate overhead
59,825
77,420
38,710
Depreciation and amortization
1,452
628
84
Other segment expenses 1
5,570
6,044
4,290
Operating income
$
39,216
$
76,150
$
2,177
$
117,543
Unallocated Headquarters/Other expenses
( 14,390 )
Interest income, net
9,961
Other income
—
Income before taxes
$
113,114
1) Other segment expenses for each of the reportable segments include service contracts/subscriptions, professional fees, facilities operations, credit card fees, and other miscellaneous expenses.
The assets of the Company’s operating segments presented above consist primarily of accounts receivable, net intercompany receivable, goodwill, and other intangibles. Goodwill of $ 66,236 and $ 7,366 is held by the Enterprise Solutions and Business Solutions segments, respectively, as of December 31, 2025. Assets reported under the Headquarters/Other are managed by corporate headquarters, including cash, inventory, property and equipment and intercompany balance, net. Total assets for the Headquarters/Other are presented net of intercompany balances eliminations of $ 59,050 and $ 69,695 for the years ended December 31, 2025 and 2024, respectively. The Company’s capital expenditures consist largely of IT hardware and software purchased to maintain or upgrade its management information systems. These systems serve all of the Company’s subsidiaries, to varying degrees, and as a result, the CODM does not evaluate capital expenditures on a segment basis.
Substantially all of the Company’s sales in 2025, 2024, and 2023 were made to customers located in the United States. Shipments to customers located in foreign countries were not more than 2 % of total net sales in 2025, 2024, and 2023. All of the Company’s assets as of December 31, 2025 and 2024 were located in the United States. The Company’s
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primary target customers are SMBs, medium-to-large businesses, and federal, state, and local government agencies and educational institutions.
16. SUPPLIER FINANCE PROGRAMS
The Company has agreements with third-party financial institutions, instituted by request of participating suppliers, that allow for the ability to finance payment obligations from the Company. The third-party financial institutions have separate arrangements with the Company’s suppliers and provide them with the option to request early payment for invoices confirmed by the Company. The Company does not determine the terms or conditions of the arrangements between the third-parties and its suppliers and receives no compensation from the third-party financial institutions. The Company’s obligation to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to finance amounts under the arrangements. The payment terms under these arrangements are typical with industry standards and range from 30 to 50 days . The agreements with the financial institutions are collateralized by the inventory purchased through the financing agreements. The Company’s outstanding payment obligations under the supplier finance programs, which are included in accounts payable on the consolidated balance sheets, were $ 58,563 and $ 47,763 at December 31, 2025 and 2024, respectively. The rollforwards of the Company’s outstanding obligations confirmed as valid under the supplier finance programs for the years ended December 31, 2025 and 2024 are as follows (in thousands):
2025
Confirmed obligations outstanding at December 31, 2024
$
47,763
Invoices confirmed
483,754
Confirmed invoices paid
( 472,954 )
Confirmed obligations outstanding at December 31, 2025
$
58,563
2024
Confirmed obligations outstanding at December 31, 2023
$
44,617
Invoices confirmed
466,909
Confirmed invoices paid
( 463,763 )
Confirmed obligations outstanding at December 31, 2024
$
47,763
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PC CONNECTION, INC. AND SUBSIDIARIES
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(amounts in thousands)
Balance at
Charged to
Balance at
Beginning
Costs and
Deductions/
End of
of Period
Expenses
Write-Offs
Period
Description
Allowance for Sales Returns
Year Ended December 31, 2023
$
3,806
$
34,477
$
( 35,162 )
$
3,121
Year Ended December 31, 2024
$
3,121
$
36,718
$
( 35,996 )
$
3,843
Year Ended December 31, 2025
$
3,843
$
27,517
$
( 27,962 )
$
3,398
Allowance for Credit Losses
Year Ended December 31, 2023
$
5,267
$
1,847
$
( 3,326 )
$
3,788
Year Ended December 31, 2024
$
3,788
$
1,914
$
( 2,428 )
$
3,274
Year Ended December 31, 2025
$
3,274
$
1,861
$
( 2,067 )
$
3,068
Inventory Valuation Allowance
Year Ended December 31, 2023
$
2,539
$
2,432
$
( 2,751 )
$
2,220
Year Ended December 31, 2024
$
2,220
$
2,135
$
( 2,479 )
$
1,876
Year Ended December 31, 2025
$
1,876
$
1,548
$
( 2,108 )
$
1,316
S-1
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.