What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-02-24 compared with 2024-03-07 · 38 added, 34 removed, 349 unchanged (17% of the section changed)

2 unchanged sentences

We provide a wide range of IT solutions, from the desktop to the cloud—including computer systems, data center solutions, software and peripheral equipment, networking communications, and other products and accessories that we purchase from manufacturers, distributors, and other suppliers.

In 2023, we restructured and combined our Technology Solutions Group and Technical Sales Organization into one organization to be referred to as our Technology Solutions Organization, or TSO.

Our TSO and state-of-the-art Technology Integration and Distribution Center, or TIDC, with ISO 9001:2015 certified technical configuration lab offer end-to-end services related to the design, configuration, and implementation of IT solutions.

Our Technology Solutions Organization, or TSO, and state-of-the-art Technology Integration and Distribution Center, or TIDC, with ISO 9001:2015 certified technical configuration lab, offer end-to-end services related to the design, configuration, and implementation of IT solutions.

Our team also provides a comprehensive portfolio of managed services and professional services.

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Since our founding in 1982, we have consistently served our customers’ needs by providing innovative, reliable, and timely service and technical support, and by offering an extensive assortment of industry-leading products through knowledgeable, well-trained sales and support teams.

Our strategy’s effectiveness is reflected in the recognition we have received, including being named to the Fortune 1000 and the CRN Solution Provider 500 for twenty-three straight years.

In recent years, we have received numerous awards, including the Microsoft Excellence in Operations, Double Gold Level Award for delivering market-leading operational excellence, Modern Work, Surface Hub Reseller 2023 Microsoft US Partner of the Year Award, Aruba Federal Public Sector Partner of the Year, HPE Federal GreenLake Partner of the Year, and HP U.S.

Personal Systems National Solution Provider of the Year Award, as well as being named to the CRN Tech Elite 250 for the eighth year.

Connection has also been twice named “America’s Best-in-State Employers” by Forbes and included on Newsweek’s list of Most Trustworthy Companies in America in 2022 and 2023.

Our strategy’s effectiveness is reflected in the recognition we have received, including being named to the Fortune 1000 and the CRN Solution Provider 500 for twenty-four straight years.

In recent years, we have received numerous awards, including HP U.S.

Personal Systems 2024 National Solutions Provider Partner of the Year;

Dell Technologies 2024 Federal Rising Star Partner of the Year;

and ServiceNow 2024 Americas Reseller Partner of the Year.

In addition to being named to the CRN Tech Elite 250, Connection has twice been recognized as one of “America’s Best-in-State Employers” by Forbes, honored as a Gold NH Veteran Friendly Business by the Department of Military Affairs & Veterans Services and NH Employment Security, and earned distinction as one of the “Most Trustworthy Companies in America” by Newsweek for the past three years.

Connection made its debut on Newsweek’s ranking of “World’s Most Trustworthy Companies” in 2024.

Our technical experts hold more than 5,000 professional certifications, and we have been awarded industry-leading partner authorizations, including Microsoft Azure Expert Managed Service Provider status.

We believe this pursuit of excellence and our ability to understand our customers’ needs and provide comprehensive and effective IT solutions has earned us strong brand name recognition and a broad and loyal customer base.

We also believe that through our strong vendor

relationships we can provide an efficient supply chain and be an effective IT solution provider for our diverse customer base.

We also believe that through our strong vendor relationships we can provide an efficient supply chain and be an effective IT solution provider for our diverse customer base.

We strive to identify the unique needs of our corporate, government, educational, and small business customers, and have designed our business processes to enable our customers to effectively manage their IT systems.

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We market our products and services through our websites:

www.connection.com, www.connection.com/enterprise , www.connection.com /publicsector, and www.macconnection.com .

www.connection.com, www.connection.com/enterprise , www.connection.com /publicsector, www.cnxnhelix.com , and www.macconnection.com .

Our websites provide extensive product information, customized pricing, rich content, and a digital platform for online orders.

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MARKET AND COMPETITION

In the fiscal year ended December 31, 2023, we generated approximately 37.7% of our sales from SMBs, 42.2% from medium-to-large businesses (Fortune 1000), and 20.1% from government and educational institutions.

The largest segment of the United States IT market that we operate within is served by local and regional value-added resellers, or VARs, many of whom we believe are transitioning from the hardware and software products business to higher-margin IT services.

We have transitioned from an end-user or desktop-centric computing supplier to a network or enterprise-wide IT solutions supplier.

In the fiscal year ended December 31, 2024, we generated approximately 42.2% of our sales from medium-to-large businesses (Fortune 1000), 37.4% from SMBs, and 20.4% from government and educational institutions.

The largest segment of the United States IT market that we operate within is served by local and regional value-added resellers, or VARs, many of whom engage in the sales of hardware and software products, as well as higher-margin IT services.

We have adapted our business over the years to become an enterprise-wide IT solutions supplier.

We have also partnered with third-party technology and telecommunications service providers to offer our customers access to the same services and technical expertise as local and regional VARs, but with a more extensive product selection, often at lower prices.

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BUSINESS STRATEGIES

We believe that we have become our customers’ IT provider of choice by calming the confusion surrounding IT procurement and solving complex business challenges with innovative IT solutions designed to meet their increased productivity, mobility, virtualization, and security needs in a continuously evolving IT environment.

productivity, mobility, virtualization, and security needs in a continuously evolving IT environment.

We offer our customers enhanced value by assisting them with both the design and implementation of IT solutions directed at cost-effectively maximizing the business opportunities created by new technologies and advanced service solutions.

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Since our founding in 1982, we have built a strong brand name and customer awareness.

We have been named to the Fortune 1000 and the CRN Solution Provider 500 for each of the last twenty-three years.

We actively work with our existing customers to become their IT provider of choice for products and enhanced solution services, while seeking to ensure our reputation of high-quality customer service, tailored marketing programs, and competitive pricing lead the way to expanding our share of the overall IT market we serve.

We have been named to the Fortune 1000 and the CRN Solution Provider 500 for each of the last twenty-four years.

We actively work with our existing customers to become their IT provider of choice for products and enhanced solution services, while seeking to ensure our reputation of high-quality support, tailored marketing programs, and competitive pricing that lead the way to expanding our share of the overall IT market we serve.

Through the use of creative, consistent marketing activities, our goal is to strengthen the Connection brand and reinforce our reputation as a trusted IT advisor with a history of innovation and customer-centric service.

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We have a history of strong relationships with vendors and were among the first global solutions providers qualified by manufacturers to market computer systems to end users.

By working closely with our vendors to provide an efficient channel for the advertising and distribution of their products and

solutions, we expect to expand market share and generate opportunities for optimizing partner incentive programs.

By working closely with our vendors to provide an efficient channel for the advertising and distribution of their products and solutions, we expect to expand market share and generate opportunities for optimizing partner incentive programs.

We promote communication and collaboration with our partner community at every level of our organization, from sales and product management to leadership.

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We currently offer AI workshops, which we deliver to customers, and AI infrastructure design and optimization services for core AI infrastructure.

We are currently in the process of expanding on these services to include other areas that represent a broader AI ecosystem of development.

We are currently in the process of expanding these services to include other areas that we believe are relevant to the broader AI ecosystem of development.

Working alongside leaders within our partner ecosystem, we are expanding our capabilities and capacity to identify and bring to market the technologies and guidance that customers—across a broad range of industries and specialized verticals—require to ensure a seamless transition into the AI era.

We believe our focus on helping customers understand this intricate landscape, discover and define their unique AI value path, and realize its envisioned potential will enable us to serve as a trusted advisor and deliver a holistic approach to AI and automation that encompasses strategy, technical expertise, and integration.

We believe our focus on helping customers understand this intricate landscape, discover and define their unique AI value path, and realize AI’s envisioned potential will enable us to serve as a trusted advisor and deliver a holistic approach to AI and automation that encompasses strategy, technical expertise, and integration.

We have developed and are investing in a core AI capability that is driven through our CNXN Helix effort, which was launched in 2023 and brings together industry-leading experts, resources, and support designed to help organizations of all sizes realize the benefits of AI and automation.

We believe this effort will set the foundation for our expanded capabilities and services within this fast-growing AI ecosystem.

● Targeting customer segments.

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optimize cloud technologies.

In 2023, we maintained Microsoft Azure Expert Managed Service Provider status—an exclusive designation that requires an intensive auditing process and a proven record of delivering exceptional customer service and in-depth technical expertise around core cloud competencies.

Connection is a Microsoft Azure Expert Managed Service Provider—an exclusive designation that requires an intensive auditing process and a proven record of delivering exceptional customer service and in-depth technical expertise around core cloud competencies.

● Pursuing strategic acquisitions and alliances.

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We maintain an extensive database of customers and prospects.

The federal government (and the other government entities we service) generally has the ability to terminate contracts, in whole or in part, with little or no prior notice, for convenience or for default based upon performance.

However, no single customer accounted for more than 10% of our consolidated revenue in 2024, 2023, and 2022.

The loss of any single customer would not have a material adverse effect on any of our operating segments.

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We currently offer our customers over 460,000 IT products designed for business applications from more than 2,500 vendors.

These products consist of hardware, including devices, peripherals, accessories, servers, and networking products, along with cloud solutions, software and services.

These products consist of hardware, including devices, peripherals, accessories, servers, storage, and networking products, along with cloud solutions, software and services.

We select the products and solutions we sell based upon their technology and

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Other Hardware/Services

We offer a 30-day right of return generally limited to defective merchandise.

We offer a 30-day right of return on most of the products we sell, generally limited to defective merchandise.

Returns of non-defective products are subject to restocking fees.

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PURCHASING AND VENDOR RELATIONS

Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Microsoft Corporation accounted for approximately 21%, 19%, and 11%, respectively, of our total product purchases in 2023.

Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Dell Inc.

accounted for approximately 25%, 23%, and 11%, respectively, of our 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 our total product purchases in 2023.

Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Dell Inc.

accounted for approximately 23%, 22%, and 15%, respectively, of our total product purchases in 2022.

No other singular vendor supplied more than 10% of our total product purchases in 2023, 2022, and 2021.

We believe that, while we may experience some short-term disruption if products from Ingram Micro, Inc., TD Synnex Corporation, Microsoft Corporation, Dell Inc., or any of these vendors become unavailable to us, alternative sources are available.

No other singular vendor supplied more than 10% of our total product purchases in 2024, 2023, and 2022, as applicable.

We believe that, while we may experience some short-term disruption if products from Ingram Micro, Inc., TD Synnex Corporation, Dell Inc., Microsoft Corporation, or any of these vendors become unavailable to us, alternative sources are available.

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 HP Inc., Dell Inc., Microsoft Corporation, and Lenovo represented approximately 14%, 13%, 12%, and 11% of our total product purchases in 2022.

Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc.

represented approximately 15%, 13%, and 11%, respectively, of our total product purchases in 2023.

Products manufactured by HP Inc., Dell Inc., Microsoft Corporation, and Lenovo represented approximately 14%, 13%, 12%, and 11% of our total product purchases in 2022.

No other singular product manufacturer produced more than 10% of our total product purchases in 2023, 2022, and 2021.

No other singular product manufacturer produced more than 10% of our total product purchases in 2024, 2023, and 2022, as applicable.

We believe that in the event we experience either 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 our results of operations and cash flows.

Throughout the year, we saw continued improvement in the supply chain as constraints brought on by the COVID-19 pandemic were resolved and products now are generally in adequate supply.

Throughout the year, we did not experience any significant challenges or disruptions in the supply chain and products were generally available in adequate supply.

Many product suppliers reimburse us for advertisements or other cooperative marketing programs through various marketing vehicles.

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The TIDC features a state-of-the-art ISO 9001:2015-certified Configuration Lab that completed more than 550,000 custom configurations in 2024—including personal computing devices, servers, mobile devices, and networking hardware.

Our technicians maintain extensive certifications and authorizations from all major manufacturers, with more than 90% of the TIDC team holding one or more CompTIA certifications.

Our technicians maintain extensive certifications and authorizations from all major manufacturers, with more than 90% of the TIDC technicians holding one or more CompTIA certifications.

Through the TIDC, we are able to offer customers turnkey solutions for all of their IT needs, including hardware configuration, imaging and provisioning, asset management, remote management, white glove enrollment services, kitting, custom packaging, and depot repair services.

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● software publishers, such as Microsoft Corporation, VMware, and Adobe;

● distributors that sell directly to certain customers, such as Apple, Dell Inc., Lenovo, and HP Inc.;

● companies that develop and deliver on bespoke AI projects, such as Palantir and Scale.ai;

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INTELLECTUAL PROPERTY RIGHTS

Our trademarks include, among others, Connection®, PC Connection®, GovConnection®, MacConnection®, we solve IT®, Everything Overnight®, Mobile Connection®, Cloud Connection®, Education Connection®, MoreDirect™, WebSPOC®, Softmart®, GlobalServe®, Raccoon Character, Connection Cloud MarkITplace™, and their related logos and all iterations thereof.

Our trademarks include, among others, Connection®, PC Connection®, GovConnection®, MacConnection®, we solve IT®, Everything Overnight®, Mobile Connection®, Cloud Connection®, Education Connection®, MoreDirect™, CNXN Helix™, WebSPOC®, Softmart®, GlobalServe®, Raccoon Character, Connection Cloud MarkITplace™, ConnectOne™, QaaM™, and their related logos and all iterations thereof.

We intend to use and protect these and our other marks, as we deem necessary.

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We do not maintain a traditional research and development group, but we work closely with computer product manufacturers and other technology developers to stay abreast of the latest developments in computer technology, with respect to the products we both sell and use.

For example, we recognize AI as a potentially transformational force and anticipate that AI will significantly impact our product offerings and the business operations of our clientele in the long term.

REGULATORY MATTERS

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In the United States, numerous federal and state laws and regulations, including data breach notification laws and federal and state consumer protection laws and regulations, that govern the collection, use, disclosure, and protection of personal information could apply to our operations or the operations of our partners.

In addition, certain state and non-US laws, such as the California Consumer Privacy Act and the California Privacy Rights Act govern the privacy and security of personal information, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

complicating compliance efforts.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business