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What changed in PC CONNECTION INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PC CONNECTION INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+215 added−240 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-24)

Top changes in PC CONNECTION INC's 2025 10-K

215 paragraphs added · 240 removed · 193 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

56 edited+3 added−8 removed79 unchanged
Biggest changeWe believe that increasing our sales force productivity is important to our future success, and we have increased our headcount and investments in our sales and sales support teams accordingly. ​ We market our products and services through our websites: www.connection.com, www.connection.com/enterprise , www.connection.com /publicsector, www.cnxnhelix.com , and www.macconnection.com .
Biggest changeWe believe that increasing our sales force productivity is important to our future success. ​ We market our products and services through our websites: www.connection.com, www.connection.com/enterprise , www.connection.com /publicsector, and www.cnxnhelix.com . Our websites provide extensive product information, customized pricing, rich content, and a digital platform for online orders.
In addition, U.S. government contractors are generally subject to other federal and state laws and regulations, including: ​ ● The Federal Acquisition Regulation, or FAR, agency supplements to the FAR, and related regulations, which regulate the formation, administration, and performance of U.S. federal government contracts; ​ ● The False Claims Act, which allows the government and whistleblowers filing on behalf of the government to pursue treble damages, civil penalties and sanctions for the provision of false or fraudulent claims to the U.S. federal government; ​ 10 Table of Contents ● The Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders; ​ ● The Procurement Integrity Act, which regulates access to competitor bid and proposal information, as well as certain internal government procurement sensitive information, and regulates our ability to provide compensation to certain former government procurement officials; ​ ● Laws and regulations restricting the ability of employees of the U.S. government to accept gifts or gratuities from a contractor; ​ ● Post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the U.S. government and deploy former employees of the U.S. government; ​ ● Laws, regulations, and executive orders requiring the safeguarding of and restricting the use and dissemination of information classified for national security purposes or determined to be “controlled unclassified information,” “covered defense information,” or “for official use only”; ​ ● Laws and regulations relating to the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work; ​ ● Laws, regulations, and executive orders regulating the handling, use, and dissemination of personally identifiable information in the course of performing a U.S. government contract; ​ ● Laws, regulations, and executive orders governing organizational conflicts of interest that may prevent us from bidding for or restrict our ability to compete for certain U.S. government contracts because of the work that we currently perform for the U.S. government; ​ ● Laws, regulations, and executive orders that mandate compliance with requirements to protect the government from risks related to our supply chain; ​ ● Laws, regulations, and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a government contract; and ​ ● The Cost Accounting Standards and the Cost Principles, which impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. government contracts and require consistency of accounting practices over time. ​ Our Public Sector Solutions is also subject to oversight by the U.S.
In addition, U.S. government contractors are generally subject to other federal and state laws and regulations, including: ​ ● The Federal Acquisition Regulation, or FAR, agency supplements to the FAR, and related regulations, which regulate the formation, administration, and performance of U.S. federal government contracts; ​ ● The False Claims Act, which allows the government and whistleblowers filing on behalf of the government to pursue treble damages, civil penalties and sanctions for the provision of false or fraudulent claims to the U.S. federal government; ​ ● The Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders; ​ ● The Procurement Integrity Act, which regulates access to competitor bid and proposal information, as well as certain internal government procurement sensitive information, and regulates our ability to provide compensation to certain former government procurement officials; ​ ● Laws and regulations restricting the ability of employees of the U.S. government to accept gifts or gratuities from a contractor; ​ ● Post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the U.S. government and deploy former employees of the U.S. government; ​ ● Laws, regulations, and executive orders requiring the safeguarding of and restricting the use and dissemination of information classified for national security purposes or determined to be “controlled unclassified information,” “covered defense information,” or “for official use only”; ​ ● Laws and regulations relating to the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work; ​ ● Laws, regulations, and executive orders regulating the handling, use, and dissemination of personally identifiable information in the course of performing a U.S. government contract; ​ 10 Table of Contents ● Laws, regulations, and executive orders governing organizational conflicts of interest that may prevent us from bidding for or restrict our ability to compete for certain U.S. government contracts because of the work that we currently perform for the U.S. government; ​ ● Laws, regulations, and executive orders that mandate compliance with requirements to protect the government from risks related to our supply chain; ​ ● Laws, regulations, and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a government contract; and ​ ● The Cost Accounting Standards and the Cost Principles, which impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. government contracts and require consistency of accounting practices over time. ​ Our Public Sector Solutions is also subject to oversight by the U.S.
Certain manufacturers who have traditionally used resellers to distribute their products have also, from time to time, established their own direct marketing operations, including sales through the Internet. ​ We believe new entrants to the IT solutions channel must overcome a number of obstacles, including: ​ ● substantial time and resources required to build a customer base of meaningful size and profitability for cost-effective operation; ​ ● significant upfront costs of developing the information systems and operating infrastructure required to successfully compete as a national solutions provider; ​ ● purchasing and operating efficiencies enjoyed by larger and more established competitors; ​ ● difficulty building relationships with vendors needed to gain favorable product allocations and attractive pricing terms; and ​ ● difficulty identifying and recruiting management personnel with significant direct marketing experience in the industry. ​ 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 2 Table of Contents productivity, mobility, virtualization, and security needs in a continuously evolving IT environment.
Certain manufacturers who have traditionally used resellers to distribute their products have also, from time to time, established their own direct marketing operations, including sales through the Internet. ​ We believe new entrants to the IT solutions channel must overcome a number of obstacles, including: ​ ● substantial time and resources required to build a customer base of meaningful size and profitability for cost-effective operation; ​ ● significant upfront costs of developing the information systems and operating infrastructure required to successfully compete as a national solutions provider; ​ ● purchasing and operating efficiencies enjoyed by larger and more established competitors; ​ ● difficulty building relationships with vendors needed to gain favorable product allocations and attractive pricing terms; and ​ ● difficulty identifying and recruiting management personnel with significant direct marketing experience in the industry. ​ 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.
These sales representatives focus on current and prospective customers and are supported by an increasing number of engineering, technical, and administrative staff through our TSO. Our Industry Solutions Group, or ISG, provides our sales team and customers with insights and guidance customized to the unique needs of our vertical markets, including healthcare, retail, finance, and manufacturing.
These sales representatives focus on current and prospective customers and are supported by an increasing number of engineering, technical, and administrative staff through our TSSO. Our Industry Solutions Group, or ISG, provides our sales team and customers with insights and guidance customized to the unique needs of our vertical markets, including healthcare, retail, finance, and manufacturing.
Supplementing our sales force, our TSO offers in-depth technical support across a wide range of advanced technology solutions. These teams of engineers and solution architects design end-to-end IT solutions tailored to our customers’ unique environments and serve as technology consultants. Our TIDC ensures a superior customer experience, with seamless configuration, deployment, and support services.
Supplementing our sales force, our TSSO offers in-depth technical support across a wide range of advanced technology solutions. These teams of engineers and solution architects design end-to-end IT solutions tailored to our customers’ unique environments and serve as technology consultants. Our TIDC ensures a superior customer experience, with seamless configuration, deployment, and support services.
We also host a series of Technology Summits each year, with a focus on building stronger relationships with our customers and reinforcing our reputation as a trusted source of expertise. ​ Customers. We maintain an extensive database of customers and prospects. However, no single customer accounted for more than 10% of our consolidated revenue in 2024, 2023, and 2022.
We also host a series of Technology Summits each year, with a focus on building stronger relationships with our customers and reinforcing our reputation as a trusted source of expertise. ​ Customers. We maintain an extensive database of customers and prospects. However, no single customer accounted for more than 10% of our consolidated revenue in 2025, 2024, and 2023.
Item 1. Business ​ GENERAL ​ We are a Fortune 1000 Global Solutions Provider that simplifies the IT customer experience, guiding the connection between people and technology. Our dedicated account managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services.
Item 1. Business ​ GENERAL ​ We are a Fortune 1000 Global Solutions Provider that simplifies IT, guiding the connection between people and technology. Our dedicated account managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services.
We also will stock product to support customer rollouts, including product that is running through our configuration and integration services prior to shipment. ​ MARKETING AND SALES ​ We sell our products through our direct marketing channels to (i) SMBs including small office/home office customers, (ii) government and educational institutions, and (iii) medium-to-large businesses.
We also will stock product to support customer rollouts, including product that is running through our configuration and integration services prior to shipment. ​ MARKETING AND SALES ​ We sell our solutions through our direct marketing channels to (i) SMBs including small office/home office customers, (ii) government and educational institutions, and (iii) medium-to-large businesses.
To better address their business needs, we have focused our solution service capabilities on several key areas: data and automation, workplace transformation, cloud, cybersecurity, and technology services. Our TSO is responsible for understanding the infrastructure needs of our customers, and for designing cost-effective technology solutions to address them.
To better address their business needs, we have focused our solution service capabilities on several key areas: data and automation, workplace transformation, cloud, cybersecurity, and technology services. Our TSSO is responsible for understanding the infrastructure needs of our customers, and for designing cost-effective technology solutions to address them.
We also compete with: ​ ● certain product manufacturers that sell directly to customers as well as some of our own suppliers, such as Apple, Dell Inc., HP Inc., and Lenovo; ​ ● software publishers, such as Microsoft Corporation, VMware, and Adobe; ​ ● companies that develop and deliver on bespoke AI projects, such as Palantir and Scale.ai; ​ ● local and regional VARs; ​ ● cloud providers, such as Amazon Web Services, Google and Microsoft Corporation; 9 Table of Contents ​ ● large service providers and system integrators, such as Accenture, CGI, and IBM; ​ ● communications service providers, such as AT&T and Verizon; ​ ● various franchisers, office supply superstores, and national computer retailers, such as Office Depot and Staples; and ​ ● e-tailers, such as Amazon, with more extensive commercial online networks. ​ Additional competition may arise if other new methods of distribution emerge in the future.
We also compete with: ​ ● certain product manufacturers that sell directly to customers as well as some of our own suppliers, such as Apple, Dell Inc., HP Inc., and Lenovo; ​ ● software publishers, such as Microsoft Corporation, VMware by Broadcom, and Adobe; ​ ● companies that develop and deliver on bespoke AI projects, such as Palantir and Scale.ai; ​ ● local and regional VARs; ​ ● cloud providers, such as Amazon Web Services, Google and Microsoft Corporation; ​ ● large service providers and system integrators, such as Accenture, CGI, and IBM; ​ ● communications service providers, such as AT&T and Verizon; ​ ● various franchisers, office supply superstores, and national computer retailers, such as Office Depot and Staples; and ​ ● e-tailers, such as Amazon, with more extensive commercial online networks. ​ Additional competition may arise if other new methods of distribution emerge in the future.
We believe that offering our customers superior value, through a combination of product knowledge, consistent and reliable service and support, and leading products at competitive prices, differentiates us from other global solutions providers and serves as the foundation for developing a broad and loyal customer base. ​ We invest in training programs for our service and support personnel, with an emphasis on putting customer needs and service first.
We believe that offering our customers superior value, through a combination of product knowledge, consistent and reliable service and support, and leading products at competitive prices, differentiates us from other global solutions providers and serves as the foundation for developing a broad and loyal customer base. ​ 4 Table of Contents We invest in training programs for our service and support personnel, with an emphasis on putting customer needs and service first.
We target each of the four distinct market sectors within this segment—federal government, higher educational institutions, school grades K-12, and state and local governments. ​ The following table sets forth the relative distribution of net sales by operating segment for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 2022 Operating Segment ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ 42 % 42 % 42 % Business Solutions ​ 38 ​ 38 ​ 40 ​ Public Sector Solutions ​ 20 ​ 20 ​ 18 ​ Total ​ 100 % 100 % 100 % ​ Our ISG works across all operating segments to service the unique needs of healthcare, retail, finance, and manufacturing customers.
We target each of the four distinct market sectors within this segment—federal government, higher educational institutions, school grades K-12, and state and local governments. ​ The following table sets forth the relative distribution of net sales by operating segment for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Operating Segment ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ 44 % 42 % 42 % Business Solutions ​ 38 ​ 38 ​ 38 ​ Public Sector Solutions ​ 18 ​ 20 ​ 20 ​ Total ​ 100 % 100 % 100 % ​ Our ISG works across all operating segments to service the unique needs of healthcare, retail, finance, and manufacturing customers.
Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the “Investor Relations” section of our corporate website. The contents of our corporate website are not, however, a part of this Annual Report on Form 10-K.
Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the “Investor Relations” section of our corporate website. The contents of our corporate website are not, however, a part of this Annual Report on Form 10-K. ​ ​ 13 Table of Contents
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-four years.
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-five years.
The following table sets forth our percentage of net sales for major product categories for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 2022 Notebooks/Mobility 35 % 33 % 37 % Desktops ​ 11 ​ 9 ​ 10 ​ Software ​ 10 ​ 12 ​ 9 ​ Servers/Storage 7 7 7 ​ Net/Com Products 8 10 7 ​ Displays and Sound ​ 10 ​ 9 ​ 10 ​ Accessories ​ 12 ​ 11 ​ 13 ​ Other Hardware/Services 7 9 7 ​ Total ​ 100 % 100 % 100 % ​ We offer a 30-day right of return on most of the products we sell, generally limited to defective merchandise.
The following table sets forth our percentage of net sales for major product categories for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Notebooks/Mobility 35 % 35 % 33 % Desktops ​ 12 ​ 11 ​ 9 ​ Software ​ 11 ​ 10 ​ 12 ​ Servers/Storage 8 7 7 ​ Net/Com Products 7 8 10 ​ Displays and Sound ​ 9 ​ 10 ​ 9 ​ Accessories ​ 11 ​ 12 ​ 11 ​ Other Hardware/Services 7 7 9 ​ Total ​ 100 % 100 % 100 % ​ We offer a 30-day right of return on most of the products we sell, generally limited to defective merchandise.
Incentive compensation is tied generally to gross profit dollars produced by the individual account manager. ​ E-commerce Sales. We generally provide product descriptions and prices for all of the products we offer through the e-commerce websites we maintain and operate. Our Connection website also provides updated information for more than 460,000 items.
Incentive compensation is tied generally to gross profit dollars produced by the individual account manager. ​ E-commerce Sales. We generally provide product descriptions and prices for all of the products we offer through the e-commerce websites we maintain and operate. Our Connection website also provides updated information for more 5 Table of Contents than 460,000 items.
We provide our employees with support, training, and engagement opportunities to build stronger and more diverse teams. Our culture—and the employees who share that culture with our customers and communities—are essential to our success and our ability to attract and retain top talent.
We provide our employees with support, training, and engagement opportunities to build stronger and more inclusive teams. Our culture—and the employees who share that culture with our customers and communities—are essential to our success and our ability to attract and retain top talent.
Although brand names and individual product offerings are important to our business, we believe that competitive products are available in substantially all of the merchandise categories offered by us. 8 Table of Contents ​ DISTRIBUTION ​ We fulfill orders from customers both from products we hold in inventory and through drop shipping arrangements with manufacturers and distributors.
Although brand names and individual product offerings are important to our business, we believe that competitive products are available in substantially all of the merchandise categories offered by us. ​ DISTRIBUTION ​ We fulfill orders from customers both from products we hold in inventory and through drop shipping arrangements with manufacturers and distributors.
These systems permit centralized management of key functions, including order taking and processing, inventory and accounts receivable management, purchasing, sales, and distribution, and the preparation of daily operating control reports on key aspects of the business. We also operate advanced telecommunications equipment to support our sales and customer service operations.
These systems permit centralized management of key functions, including order taking and processing, inventory and accounts receivable management, purchasing, sales, and distribution, and the preparation of daily operating control 8 Table of Contents reports on key aspects of the business. We also operate advanced telecommunications equipment to support our sales and customer service operations.
We offer a broad range of IT products and solutions, including personal computers and related peripheral products, servers, storage, managed services, cloud solutions, and networking infrastructure, at costs that are designed to allow our customers to be more productive while maximizing their IT budgets.
We offer a broad range of IT products and solutions, including personal computers and related peripheral products, servers, storage, managed services, cloud 2 Table of Contents solutions, and networking infrastructure, at costs that are designed to allow our customers to be more productive while maximizing their IT budgets.
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 12 Table of Contents complicating compliance efforts.
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.
Within each of these vertical markets, our ISG experts offer technology solutions and guidance backed by real-world experience. Our ISG combines extensive knowledge of the latest technologies, brands, and trends with industry experience that reassures our customers that we understand their businesses and their technology challenges.
Within each of these vertical markets, our ISG experts offer technology solutions and 6 Table of Contents guidance backed by real-world experience. Our ISG combines extensive knowledge of the latest technologies, brands, and trends with industry experience that reassures our customers that we understand their businesses and their technology challenges.
Order status with distributors is tracked online and a confirmation of shipment from manufacturers and/or distribution companies is received prior to initial recording of the transaction. Products drop shipped by suppliers were 69%, 69%, and 71%, of net sales in 2024, 2023, and 2022, respectively.
Order status with distributors is tracked online and a confirmation of shipment from manufacturers and/or distribution companies is received prior to initial recording of the transaction. Products drop shipped by suppliers were 69%, 69%, and 69%, of net sales in 2025, 2024, and 2023, respectively.
In the event of termination of a contract for convenience, a contractor is normally able to recover costs already incurred on the contract and profit on those costs up to the amount authorized under the contract, but not the remaining profit that would have been earned had the contract been completed.
In the event of termination of a contract for convenience, a contractor is normally able to recover costs already incurred on the contract and profit on those costs up to the amount authorized under the contract, but not the remaining profit that would have been earned had the contract 11 Table of Contents been completed.
We plan to expand our cloud-based solution sales and assist our customers in navigating the complex and growing field of multicloud-solution offerings. This focus on cloud includes investing in the training and certification resources required to help our customers adopt and 4 Table of Contents optimize cloud technologies.
We plan to expand our cloud-based solution sales and assist our customers in navigating the complex and growing field of multicloud-solution offerings. This focus on cloud includes investing in the training and certification resources required to help our customers adopt and optimize cloud technologies.
We generate sales through (i) outbound inside sales and field sales contacts by sales representatives focused on the business, educational, healthcare, retail, manufacturing, and government markets, (ii) our websites, and (iii) direct responses from customers responding to our advertising media.
We generate sales through (i) outbound inside sales and field sales contacts by sales representatives focused on the business, educational, healthcare, retail, manufacturing, and government markets, (ii) our websites, and (iii) direct responses from customers responding to our outreach.
We provide value by offering our customers efficient design, integration, deployment, and support of their IT environments. As of December 31, 2024, we employed 711 sales representatives. Sales representatives are responsible for managing enterprise, commercial, and public sector accounts, as specialization and a deep understanding of unique customer environments are more important than ever.
We provide value by offering our customers efficient design, integration, deployment, and support of their IT environments. As of December 31, 2025, we employed 679 sales representatives. Sales representatives are responsible for managing enterprise, commercial, and public sector accounts, as specialization and a deep understanding of unique customer environments are more important than ever.
We meet regularly with our partners to share feedback and explore strategies to promote greater engagement and better serve our mutual customers. 3 Table of Contents ​ GROWTH STRATEGIES ​ Our growth strategies are designed to increase revenues by maximizing operational efficiencies while offering innovative products and value-added service offerings, expanding our offerings to our existing customers, and expanding our customer base.
We meet regularly with our partners to share feedback and explore strategies to promote greater engagement and better serve our mutual customers. ​ GROWTH STRATEGIES ​ Our growth strategies are designed to increase revenues by maximizing operational efficiencies while offering innovative products and value-added service offerings, expanding our offerings to our existing customers, and expanding our customer base.
No other singular vendor supplied more than 10% of our total product purchases in 2024, 2023, and 2022, as applicable.
No other singular vendor supplied more than 10% of our total product purchases in 2025, 2024, and 2023, as applicable.
No other singular product manufacturer produced more than 10% of our total product purchases in 2024, 2023, and 2022, as applicable.
No other singular product manufacturer produced more than 10% of our total product purchases in 2025, 2024, and 2023, as applicable.
These and other factors related to our competitive position are discussed more fully in the “Overview” of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Item 1A, “Risk Factors—Substantial competition could reduce our market share and may negatively affect our business” of this Annual Report on Form 10-K. ​ We believe that price, product selection and availability, solutions capabilities, and service and support are the most important competitive factors in our industry. ​ 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™, CNXN Helix™, WebSPOC®, Softmart®, GlobalServe®, Raccoon Character, Connection Cloud MarkITplace™, ConnectOne™, QaaM™, and their related logos and all iterations thereof.
These and other factors related to our competitive position are discussed more fully in the “Overview” of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Item 1A, “Risk Factors—Substantial competition could reduce our market share and may negatively affect our business” of this Annual Report on Form 10-K. ​ We believe that price, product selection and availability, solutions capabilities, and service and support are the most important competitive factors in our industry. ​ 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™, 9 Table of Contents CNXN Helix™, WebSPOC®, Softmart®, GlobalServe®, Raccoon Character, Connection Cloud MarkITplace™, ConnectONE™, ConnectNOW™, OneSource™, Quality-as-a-Mindset™, QaaM™, WE SOLVE AI™, and their related logos and all iterations thereof.
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, storage, and networking products, along with cloud solutions, software and services.
We currently offer our customers over 460,000 IT products designed for business applications from more than 1,600 vendors. These products consist of hardware, including devices, peripherals, accessories, servers, storage, and networking products, along with cloud solutions, software and services.
We use a combination of outbound inside sales, including some on-site sales solicitation by business development managers, and Internet sales through customized Internet Business Accounts, to 6 Table of Contents reach these customers.
We use a combination of outbound inside sales, including some on-site sales solicitation by business development managers, and Internet sales through customized Internet Business Accounts, to reach these customers.
We provide a comprehensive benefits package to our employees, including medical coverage, retirement plans with matching contributions, tuition assistance, inclusive parental leave policies, adoption assistance, paid time off, paid volunteer hours, and wellness hours. ​ ● Oversight and Management.
We provide a comprehensive benefits package to our employees, including medical 12 Table of Contents coverage, retirement plans with matching contributions, tuition assistance, inclusive parental leave policies, adoption assistance, paid time off, paid volunteer hours, and wellness hours. ​ ● Oversight and Management.
Office of Federal Contract Compliance Programs, or OFCCP, for federal contract and affirmative action compliance, including the following areas: ​ ● affirmative action plans; ​ ● applicant tracking; ​ ● compliance training; ​ ● customized affirmative action databases and forms; ​ ● glass ceiling and compensation audits; ​ ● desk and on-site audits; ​ ● conciliation agreements; 11 Table of Contents ​ ● disability accessibility for applicants and employees; ​ ● diversity initiatives; ​ ● equal employment opportunity compliance; ​ ● employment eligibility verification (known as “E-Verify”); ​ ● internal affirmative action audits; ​ ● internet recruiting and hiring processes; ​ ● OFCCP administrative enforcement actions; ​ ● record-keeping requirements; and ​ ● Sarbanes-Oxley Act of 2002 compliance. ​ The U.S. federal government routinely revises its procurement practices and adopts new contract statutes, rules and regulations.
Office of Federal Contract Compliance Programs, or OFCCP, for federal contract compliance, including the following areas: ​ ● applicant tracking; ​ ● compliance training; ​ ● customized databases and forms; ​ ● glass ceiling and compensation audits; ​ ● desk and on-site audits; ​ ● conciliation agreements; ​ ● disability accessibility for applicants and employees; ​ ● equal employment opportunity compliance; ​ ● employment eligibility verification (known as “E-Verify”); ​ ● internet recruiting and hiring processes; ​ ● OFCCP administrative enforcement actions; ​ ● record-keeping requirements; and ​ ● Sarbanes-Oxley Act of 2002 compliance. ​ The U.S. federal government routinely revises its procurement practices and adopts new contract statutes, rules and regulations.
Electronic delivery for software licenses were approximately 10%, 12%, and 9% of total net sales in 2024, 2023, and 2022, respectively. ​ MANAGEMENT INFORMATION SYSTEMS ​ Our subsidiaries utilize management information systems which have been significantly customized for our use.
Electronic delivery for software licenses were approximately 11%, 10%, and 12% of total net sales in 2025, 2024, and 2023, respectively. ​ MANAGEMENT INFORMATION SYSTEMS ​ Our subsidiaries utilize management information systems which have been significantly customized for our use.
Our strategy is to be the primary single source procurement portal for our large corporate customers. ​ Business Solutions Segment . Our principal target markets in this segment are small to medium-sized business customers.
Our strategy is to be the primary single source procurement portal for our large corporate customers. ​ Business Solutions Segment . Our principal target markets in this segment are SMB customers.
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.
We 7 Table of Contents believe that, while we 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 us, 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%, 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.
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.
We are not including the information contained in our websites as part of, or incorporating by reference into, this Annual Report on Form 10-K. ​ MARKET AND COMPETITION ​ 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 are not including the information contained in our websites as part of, or incorporating by reference into, this Annual Report on Form 10-K. 1 Table of Contents ​ MARKET AND COMPETITION ​ In the fiscal year ended December 31, 2025, we generated approximately 44.6% of our sales from medium-to-large businesses (Fortune 1000), 37.7% from SMBs, and 17.7% 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 believe our investment in these areas may increase our share of our existing customers’ annual IT expenditures by broadening the range of products and services they purchase from us. ​ ● Delivering artificial intelligence, or AI, and automation solutions.
We believe our 3 Table of Contents investment in these areas may increase our share of our existing customers’ annual IT expenditures by broadening the range of products and services they purchase from us. ​ ● Delivering AI and automation solutions.
We offer a broad selection of over 460,000 products at competitive prices, including products from vendors like Apple, Cisco, Dell Inc., Hewlett-Packard Inc., Hewlett-Packard Enterprise, Intel, Lenovo, Microsoft Corporation, and VMware, and we partner with more than 2,500 suppliers.
We offer a broad selection of over 460,000 products at competitive prices, including products from vendors like Apple, Cisco, Dell Inc., HP Inc., Hewlett-Packard Enterprise, Intel, Lenovo, Microsoft Corporation, and VMware by Broadcom, and we partner with more than 1,600 suppliers.
We select the products and solutions we sell based upon their technology and 7 Table of Contents effectiveness, market demand, product features, quality, price, margins, and warranties.
We select the products and solutions we sell based upon their technology and effectiveness, market demand, product features, quality, price, margins, and warranties.
We generally accept returns directly from the customer and then either credit the customer’s account or ship the customer a replacement or similar product from our inventory. ​ PURCHASING AND VENDOR RELATIONS ​ 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.
We generally accept returns directly from the customer and then either credit the customer’s account or ship the customer a replacement or similar product from our inventory. ​ PURCHASING AND VENDOR RELATIONS ​ Product purchases from TD Synnex Corporation, Ingram Micro, Inc., and Microsoft Corporation accounted for approximately 25%, 21%, and 13%, respectively, of our total product purchases in 2025.
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.
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.
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.
We provide a wide range of IT solutions, from the desktop to the cloud—including computer systems, data center solutions, security, artificial intelligence, or AI, software and peripheral equipment, networking communications, and other products and accessories that we develop internally and secure from manufacturers, distributors, and other suppliers.
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 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.
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 majority of the year, we did not experience any significant challenges or disruptions in the supply chain and products were generally available in adequate supply.
Our Board of Directors understands the importance of our inclusive, performance-driven culture to our ongoing success and is actively engaged with our President and Chief Executive Officer and our Senior Vice President of Human Resources across a broad range of human capital management topics. ​ As of December 31, 2024, we employed 2,580 persons (full-time equivalent), of whom 1,035 (including 324 management and support personnel) were engaged in sales-related activities, 532 were engaged in providing IT services and customer service and support, 645 were engaged in purchasing, marketing, and distribution-related activities, 153 were engaged in the operation and development of management information systems, and 215 were engaged in administrative and finance functions.
Our Board of Directors understands the importance of our inclusive, performance-driven culture to our ongoing success and is actively engaged with our President and Chief Executive Officer and our Vice President of Legal Services & Administration across a broad range of human capital management topics. ​ As of December 31, 2025, we employed 2,525 persons (full-time equivalent), of whom 999 (including 320 management and support personnel) were engaged in sales-related activities, 444 were engaged in providing IT services and customer service and support, 665 were engaged in purchasing, marketing, and distribution-related activities, 210 were engaged in the operation and development of management information systems, and 207 were engaged in administrative and finance functions.
Our GlobalServe offering ensures worldwide coverage for our multinational customers, delivering global procurement solutions through our network of in-country suppliers in over 150 countries. ​ The “Connection®” brand includes Connection Enterprise Solutions, Connection Business Solutions, and Connection Public Sector Solutions.
These services are performed by our personnel and by third-party providers. Our GlobalServe offering ensures worldwide coverage for our multinational customers, delivering global procurement solutions through our network of in-country suppliers in over 150 countries. ​ The “Connection” brand includes Connection Enterprise Solutions, Connection Business Solutions, and Connection Public Sector Solutions.
We use multiple marketing approaches to reach existing and prospective customers, including: ​ ● outbound inside sales and field sales; ​ ● digital, web, and print media advertising; and ​ ● targeted marketing programs to specific customer populations. ​ All of our marketing approaches emphasize our broad product offerings, fast delivery, customer support, competitive pricing, and our wide range of service solutions. ​ 5 Table of Contents Sales Channels.
We use multiple marketing approaches to reach existing and prospective customers, including: ​ ● outbound inside sales and field sales; ​ ● digital and web advertising; and ​ ● targeted marketing programs to specific market segments. ​ All of our marketing approaches emphasize our innovative solution offerings, fast delivery, customer support, competitive pricing, and our wide range of services. ​ Sales Channels.
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. These services are performed by our personnel and by third-party providers.
Our Technology Solutions and Services Organization, or TSSO, and state-of-the-art ISO 9001:2015 SOC 2 Type 2 certified Technology Integration and Distribution Center, or TIDC, offer end-to-end services related to the design, configuration, and implementation of IT solutions. Our team also provides a comprehensive portfolio of managed services and professional services.
Our employees are not represented by a labor union, and, to date, we have never experienced a labor related work stoppage. 13 Table of Contents AVAILABLE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934 (the “Exchange Act”), and accordingly, we file reports, proxy and information statements, and other information with the Securities and Exchange Commission, or SEC.
AVAILABLE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, or the Exchange Act, and accordingly, we file reports, proxy and information statements, and other information with the Securities and Exchange Commission, or SEC.
Our Connection Cares initiative, launched in 2021, builds on the company’s long history of inclusivity and social responsibility with working groups focused on key areas: employee recognition, charitable giving, sustainability, and diversity, equity, and inclusion. Employees volunteer within these groups to share their ideas, conduct company-wide campaigns, and make a positive impact throughout the company and our wider community.
Our Connection Cares initiative, launched in 2021, builds on the company’s long history of inclusivity and social responsibility with working groups focused on key areas: employee recognition; charitable giving; sustainability; and cultivating a welcoming, accepting, and fair workplace.
At our 268,000 square foot technology TIDC in Wilmington, Ohio, we receive and ship inventory, configure and integrate technology solutions, provide depot maintenance and services, and process returned products. 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.
At our 268,000 square foot technology TIDC in Wilmington, Ohio, we receive and ship inventory, configure and integrate technology solutions, provide depot maintenance and services, and process returned products.
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.
The ISO 9001:2015 SOC 2 Type 2 certified TIDC features a state-of-the-art Configuration Lab that completed more than 550,000 custom configurations in 2025—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 technicians holding one or more CompTIA certifications.
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. ​ 1 Table of Contents 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.
We are able to leverage our state-of-the art logistic capabilities to rapidly ship product to customers. ​ 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 are able to leverage our state-of-the art logistic capabilities to rapidly ship product to customers. ​ 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.
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Towards the end of the year, a global memory (DRAM and NAND) shortage developed throughout the industry due to high demand from AI solutions. This is expected to extend into 2026. The business impact is yet to be determined. ​ Many product suppliers reimburse us for advertisements or other cooperative marketing programs through various marketing vehicles.
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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.
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Employees volunteer within these groups to share their ideas, conduct company-wide campaigns, and make a positive impact throughout the company and our wider community.
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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.
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We believe we have good relations with our employees. Our employees are not represented by a labor union, and, to date, we have never experienced a labor-related work stoppage.
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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.
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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.
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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.
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Our websites provide extensive product information, customized pricing, rich content, and a digital platform for online orders.
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We believe we have good relations with our employees.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeLegislation enacted limiting or prohibiting the use of rented or exchanged mailing lists could negatively affect our business. ​ Risks Related to Regulatory and Legal Matters ​ We are exposed to risks from legal proceedings and audits, which may result in substantial costs and expenses or interruption of our normal business operations.
Biggest changeLegislation enacted limiting or prohibiting the use of rented or exchanged mailing lists could negatively affect our business. ​ Risks Related to Regulatory and Legal Matters ​ We are exposed to risks from legal proceedings and audits, which may result in substantial costs and expenses or interruption of our normal business operations. ​ We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial, employment, tort and other litigation. ​ We are subject to intellectual property infringement claims against us from time to time in the ordinary course of our business, either because of the products and services we sell or the business systems and processes we use to sell such products and services, in the form of cease-and-desist letters, licensing inquiries, lawsuits and other communications and demands.
More generally, these geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide in financial markets and in the economy, as well as other adverse impacts. For example, on February 24, 2022, Russian forces launched significant military actions against Ukraine, and sustained conflict and disruption in the region remains ongoing.
More generally, geopolitical, social and economic conditions could result in increased volatility in the United States and worldwide in financial markets and in the economy, as well as other adverse impacts. For example, on February 24, 2022, Russian forces launched significant military actions against Ukraine, and sustained conflict and disruption in the region remains ongoing.
Potential impacts related to the conflict include further market disruptions, including significant volatility in commodity prices, credit and capital markets, supply chain and logistics disruptions, adverse global economic conditions resulting from escalating domestic and geopolitical tensions, volatility and fluctuations in foreign currency exchange rates and interest rates, inflationary pressures on raw materials and heightened cybersecurity threats, all of which could adversely impact our business. ​ 18 Table of Contents We acquire a majority of our products for resale from a limited number of vendors.
Potential impacts related to the conflict include further market disruptions, including significant volatility in commodity prices, credit and capital markets, supply chain and logistics disruptions, adverse global economic conditions resulting from escalating domestic and geopolitical tensions, volatility and fluctuations in foreign currency exchange rates and interest rates, inflationary pressures on raw materials and heightened cybersecurity threats, all of which could adversely impact our business. ​ 17 Table of Contents We acquire a majority of our products for resale from a limited number of vendors.
Such pricing pressures could result in the erosion of our market share, reduced sales, and reduced operating margins, any of which could have a material adverse effect on our business, financial position, results of operations, and cash flows. ​ 16 Table of Contents Inflation may adversely impact our business, financial condition and results of operations. ​ Inflation has the potential to adversely affect our business, financial condition and results of operations by increasing our overall cost structure, including cost of products and selling, general and administrative, or SG&A, expenses.
Such pricing pressures could result in the erosion of our market share, reduced sales, and reduced operating margins, any of which could have a material adverse effect on our business, financial position, results of operations, and cash flows. 15 Table of Contents ​ Inflation may adversely impact our business, financial condition and results of operations. ​ Inflation has the potential to adversely affect our business, financial condition and results of operations by increasing our overall cost structure, including cost of products and selling, general and administrative, or SG&A, expenses.
Causes of these fluctuations include: ​ ● shifts in customer demand that affect our distribution models, including demand for total solutions; ​ ● loss of customers to competitors; ​ ● rising interest rates; ​ ● inflation; ​ ● industry shipments of new products or upgrades; ​ ● changes in overall demand and timing of product shipments related to economic markets and to government spending; ​ ● supply constraints; ​ ● changes in vendor distribution of products; 14 Table of Contents ​ ● changes in referral fee structures offered to us by partners; ​ ● changes in our product offerings and in merchandise returns; ​ ● changes in distribution models as a result of the growing adoption of cloud and software-as-a-service, or SaaS, offerings; and ​ ● adverse weather conditions that affect response, distribution, or shipping. ​ Our results also may vary based on our ability to manage personnel levels in response to fluctuations in revenue.
Causes of these fluctuations include: ​ ● shifts in customer demand that affect our distribution models, including demand for total solutions; ​ ● loss of customers to competitors; ​ ● rising interest rates; ​ ● inflation; ​ ● industry shipments of new products or upgrades; ​ ● changes in overall demand and timing of product shipments related to economic markets and to government spending; ​ ● supply constraints; ​ ● changes in vendor distribution of products; ​ ● changes in referral fee structures offered to us by partners; ​ ● changes in our product offerings and in merchandise returns; ​ ● changes in distribution models as a result of the growing adoption of cloud and software-as-a-service, or SaaS, offerings; and ​ ● adverse weather conditions that affect response, distribution, or shipping. ​ Our results also may vary based on our ability to manage personnel levels in response to fluctuations in revenue.
If our revenues do not meet anticipated levels in the future, we may not be able to reduce our staffing levels and operating expenses in a timely manner to avoid significant losses from operations. ​ Our sales are dependent on continued innovations in hardware, software and services by our vendor partners and the competitiveness of their offerings, and our ability to partner with new and emerging technology providers. ​ The technology industry is characterized by rapid innovation and the frequent introduction of new and enhanced hardware, software and services, such as cloud-based solutions and other virtual services, including SaaS, infrastructure as a service, or IaaS, platform as a service, or PaaS, device as a service, or DaaS, the internet of things, or IoT, and AI.
If our revenues do not meet anticipated levels in the future, we may not be able to reduce our staffing levels and operating expenses in a timely manner to avoid significant losses from operations. ​ Our sales are dependent on continued innovations in hardware, software and services by our vendor partners and the competitiveness of their offerings, and our ability to partner with new and emerging technology providers. ​ The technology industry is characterized by rapid innovation and the frequent introduction of new and enhanced hardware, software and services, such as cloud-based solutions and other virtual services, including SaaS, infrastructure 14 Table of Contents as a service, or IaaS, platform as a service, or PaaS, device as a service, or DaaS, the internet of things, or IoT, and AI.
Our three sales companies are registered in substantially all states, however, if a state were to determine that our earlier contacts with that state exceeded the constitutionally permitted contacts, the state could assess a tax liability relating to our prior year sales. ​ Risks Related to Our Common Stock Our common stock price may be volatile and may decline regardless of our operating performance, and holders of our common stock could lose a significant portion of their investment.
Our three sales companies are registered in substantially all states, however, if a state were to determine that our earlier contacts with that state exceeded the constitutionally permitted contacts, the state could assess a tax liability relating to our prior year sales. ​ Risks Related to Our Common Stock ​ Our common stock price may be volatile and may decline regardless of our operating performance, and holders of our common stock could lose a significant portion of their investment. ​ The market price for our common stock may be volatile.
Although the fair value of our Enterprise Solutions and Business Solutions reporting units exceeded their carrying value at our annual impairment test, should the financial performance of a reporting unit not meet expectations due to the economy or 20 Table of Contents otherwise, we would likely adjust downward expected future operating results and cash flows.
Although the fair value of our Enterprise Solutions and Business Solutions reporting units exceeded their carrying value at our annual impairment test, should the financial performance of a reporting unit not meet expectations due to the economy or 19 Table of Contents otherwise, we would likely adjust downward expected future operating results and cash flows.
As the number of on-line users continues to grow, such growth may impact the performance of our existing Internet infrastructure, which would adversely impact our business. ​ We could experience Internet and other system failures which would interfere with our ability to process orders. ​ We depend on the accuracy and proper use of our management information systems, including our telephone system.
As the number of online users continues to grow, such growth may impact the performance of our existing Internet infrastructure, which would adversely impact our business. ​ We could experience Internet and other system failures which would interfere with our ability to process orders. ​ We depend on the accuracy and proper use of our management information systems, including our telephone system.
In addition, we deliver and manage mission critical software, systems and network solutions for our customers. We also offer certain services, such as asset assessment, 17 Table of Contents implementation, maintenance, and disposal services, to our customers through various third-party service providers engaged to perform these services on our behalf.
In addition, we deliver and manage mission critical software, 16 Table of Contents systems and network solutions for our customers. We also offer certain services, such as asset assessment, implementation, maintenance, and disposal services, to our customers through various third-party service providers engaged to perform these services on our behalf.
In addition, hardware and software manufacturers have sold, and may intensify their efforts to sell, their products directly to end users. From time 19 Table of Contents to time, certain manufacturers have instituted programs for the direct sales of large order quantities of hardware and software to certain major corporate accounts.
In addition, hardware and software manufacturers have sold, and may intensify their efforts to sell, their products directly to end users. From time 18 Table of Contents to time, certain manufacturers have instituted programs for the direct sales of large order quantities of hardware and software to certain major corporate accounts.
We cannot accurately predict the rate at which on-line purchases will expand. ​ Our success in growing our Internet business will depend in large part upon our development of an increasingly sophisticated e-commerce experience and infrastructure. Increasing customer sophistication requires that we provide additional website features and functionality in order to be competitive in the marketplace and maintain market share.
We cannot accurately predict the rate at which online purchases will expand. ​ Our success in growing our Internet business will depend in large part upon our development of an increasingly sophisticated e-commerce experience and infrastructure. Increasing customer sophistication requires that we provide additional website features and functionality in order to be competitive in the marketplace and maintain market share.
The effect of any of these possible actions by any government department or agency could adversely affect our financial position, results of operations, and cash flows. 24 Table of Contents ​ We face uncertainties relating to the collection of state sales and use tax. ​ We collect and remit sales and use taxes in states in which we have either voluntarily registered or have a physical presence.
The effect of any of these possible actions by any government department or agency could adversely affect our financial position, results of operations, and cash flows. ​ We face uncertainties relating to the collection of state sales and use tax. ​ We collect and remit sales and use taxes in states in which we have either voluntarily registered or have a physical presence.
Our offerings utilize machine learning algorithms, predictive analytics, and other artificial intelligence technologies. If these artificial intelligence or machine learning models are incorrectly designed, the performance of our products, services, and business, as well as our reputation, could suffer or we could incur liability through the violation of laws or contracts to which we are a party.
Our offerings utilize machine learning algorithms, predictive analytics, and other AI technologies. If these AI or machine learning models are incorrectly designed, the performance of our products, services, and business, as well as our reputation, could suffer or we could incur liability through the violation of laws or contracts to which we are a party.
If we are unable to acquire products, or if we experienced a change in business relationship with any of these vendors, we could experience a short-term disruption in the availability of products, and such disruption could have a material adverse effect on our results of operations and cash flows. ​ Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc. represented approximately 15%, 12%, and 12%, respectively, of our total product purchases in 2024.
If we are unable to acquire products, or if we experienced a change in business relationship with any of these vendors, we could experience a short-term disruption in the availability of products, and such disruption could have a material adverse effect on our results of operations and cash flows. ​ Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc. represented approximately 16%, 13%, and 12%, respectively, of our total product purchases in 2025.
Because of her beneficial stock ownership, the stockholder can continue to elect the members of the Board of Directors and decide all matters requiring stockholder approval at a meeting or by a written consent in lieu of a meeting.
Because of her beneficial stock ownership, the 24 Table of Contents stockholder can continue to elect the members of the Board of Directors and decide all matters requiring stockholder approval at a meeting or by a written consent in lieu of a meeting.
Our investments in deploying such technologies may be substantial and may be more expensive than anticipated. ​ As with many technological innovations, artificial intelligence presents risks and challenges that could affect its adoption, and therefore our business.
Our investments in deploying such technologies may be substantial and may be more expensive than anticipated. ​ As with many technological innovations, AI presents risks and challenges that could affect its adoption, and therefore our business.
In addition, market acceptance of artificial intelligence and machine learning technologies is uncertain. ​ Additionally, we are making, and plan to make in the future, investments in adopting artificial intelligence and machine learning technologies across our business.
In addition, market acceptance of AI and machine learning technologies is uncertain. ​ Additionally, we are making, and plan to make in the future, investments in adopting AI and machine learning technologies across our business.
As a result, the integration of AI into our operations may not be 15 Table of Contents successful despite expending significant time and monetary resources to attempt to do so.
As a result, the integration of AI into our operations may not be successful despite expending significant time and monetary resources to attempt to do so.
No other singular vendor supplied more than 10% of our total product purchases in the year 2024.
No other singular vendor supplied more than 10% of our total product purchases in the year 2025.
No other singular product manufacturer produced more than 10% of our total product purchases in the year 2024.
No other singular product manufacturer produced more than 10% of our total product purchases in the year 2025.
Our stockholders may not be able to resell their shares of common stock at or above the price at which they purchased such shares, due to fluctuations in the market price of our common stock, which may be caused by a number of factors, many of which we cannot control, including the risk factors described in this Annual Report on Form 10-K and the following: ● changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of securities analysts to maintain coverage of our common stock; ​ ● downgrades by any securities analysts who follow our common stock; ​ ● future sales of our common stock by our officers, directors and significant stockholders; ​ ● market conditions or trends in our industry or the economy as a whole; ​ ● investors’ perceptions of our prospects; ​ ● announcements by us or our competitors of significant contracts, acquisitions, joint ventures or capital commitments; and ​ ● changes in key personnel.
Our stockholders may not be able to resell their shares of common stock at or above the price at which they purchased such shares, due to fluctuations in the market price of our common stock, which may be caused by a number of factors, many of which we cannot control, including the risk factors described in this Annual Report on Form 10-K and the following: ​ ● changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of securities analysts to maintain coverage of our common stock; ​ ● downgrades by any securities analysts who follow our common stock; ​ ● future sales of our common stock by our officers, directors and significant stockholders; ​ ● market conditions or trends in our industry or the economy as a whole; ​ ● investors’ perceptions of our prospects; ​ ● announcements by us or our competitors of significant contracts, acquisitions, joint ventures or capital commitments; and ​ ● changes in key personnel. ​ In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies, including companies in our industry.
Most of our product vendors provide us with trade credit, of which the amount outstanding at December 31, 2024 was $300.2 million.
Most of our product vendors provide us with trade credit, of which the amount outstanding at December 31, 2025 was $338.2 million.
We acquire products for resale both directly from manufacturers and increasingly indirectly through distributors and other sources. Although we purchase from a diverse vendor base, 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.
We acquire products for resale both directly from manufacturers and increasingly indirectly through distributors and other sources. Although we purchase from a diverse vendor base, product purchases from TD Synnex Corporation, Ingram Micro, Inc., and Microsoft Corporation accounted for approximately 25%, 21%, and 13%, respectively, of our total product purchases in 2025.
Many of our key functions depend on the quality and effective utilization of the information generated by our management information systems, including: ​ ● our ability to purchase, sell, and ship products efficiently and on a timely basis; ​ ● our ability to manage inventory and accounts receivable collection; and ​ ● our ability to maintain our operations.
Many of our key functions depend on the quality and effective utilization of the information generated by our management information systems, including our ability to: ​ ● purchase, sell, and ship products efficiently and on a timely basis; ​ ● manage inventory and accounts receivable collection; and ​ 22 Table of Contents ● maintain our operations. ​ Our management information systems require continual upgrades to effectively manage our operations and customer database.
If we were involved in securities litigation, we could incur substantial costs, and our resources and the attention of management could be diverted from our business. In the future, we may also issue our securities in connection with investments or acquisitions.
In the past, securities class action litigation has followed periods of market volatility. If we were involved in securities litigation, we could incur substantial costs, and our resources and the attention of management could be diverted from our business. ​ In the future, we may also issue our securities in connection with investments or acquisitions.
Noncompliance with government procurement regulations or contract provisions could result in civil, criminal, and administrative liability, including substantial monetary fines or damages, termination of government contracts, and suspension, debarment, or ineligibility from doing business with the government.
Government contracting is a highly regulated area. Noncompliance with government procurement regulations or contract provisions could result in civil, criminal, and administrative liability, including substantial monetary fines or damages, 23 Table of Contents termination of government contracts, and suspension, debarment, or ineligibility from doing business with the government.
Our business is heavily dependent upon IT networks and systems. We have experienced attacks and attempted attacks that have generally been in the form of active intrusion attempts from the Internet, passive vulnerability mapping from the Internet, and internal malware and or phishing attempts delivered through user actions.
We have experienced attacks and attempted attacks that have generally been in the form of active intrusion attempts from the Internet, passive vulnerability mapping from the Internet, and internal malware and or phishing attempts delivered through user actions.
Increasingly, many of these assertions are brought by non-practicing entities whose principal business model is to secure patent licensing revenue, but we may also be subject to demands from inventors, competitors or other patent holders who may seek licensing revenue, lost profits and/or an injunction preventing us from engaging in certain activities, including selling certain products or services.
Increasingly, many of these assertions are brought by non-practicing entities whose principal business model is to secure patent licensing revenue, but we may also be subject to demands from inventors, competitors or other patent holders who may seek licensing revenue, lost profits and/or an injunction preventing us from engaging in certain activities, including selling certain products or services. ​ We also are subject to proceedings, investigations and audits by federal, state, international, national, provincial and local authorities, including as a result of our sales to governmental entities.
Nonetheless, we cannot predict the future course of events. ​ If, for example, a new health epidemic or outbreak were to occur, we likely would experience broad and varied impacts, including potentially to our workforce and supply chain, with inflationary pressures and increased costs (which may or may not be fully recoverable), schedule or production delays, market volatility and other financial impacts.
If, for example, a new health epidemic or outbreak were to occur, we likely would experience broad and varied impacts, including potentially to our workforce and supply chain, with inflationary pressures and increased costs, schedule or production delays, market volatility and other financial impacts.
Other events related to international activities that could cause disruptions to our supply chain include: ​ ● the imposition of additional trade law provisions or regulations, the adoption or expansion of trade restrictions, including new or expanded economic sanctions in response to the ongoing conflicts between Russia and Ukraine and in the Middle East; ​ ● the imposition of additional duties, tariffs and other charges on imports and exports, including any resulting retaliatory tariffs or charges and any reductions in the production of products subject to such tariffs and charges; ​ ● foreign currency fluctuations; and ​ ● restrictions on the transfer of funds.
Other events related to international activities that could cause disruptions to our supply chain include: ​ ● the imposition of additional trade law provisions or regulations, the adoption or expansion of trade restrictions, including new or expanded economic sanctions in response to the ongoing conflicts between Russia and Ukraine and in Venezuela and the Middle East; ​ ● the imposition of additional duties, tariffs and other charges on imports and exports, including any resulting retaliatory tariffs or charges and any reductions in the production of products subject to such tariffs and charges; ​ ● foreign currency fluctuations; and ​ ● restrictions on the transfer of funds. ​ We cannot predict whether the countries in which the products we sell, or any components of those products, are purchased or manufactured will be subject to new or additional trade restrictions or sanctions imposed by the United States or foreign governments, including the likelihood, type or effect of any such restrictions.
We could experience product constraints due to the failure of suppliers to accurately forecast customer demand, or to manufacture sufficient quantities of product to meet customer demand (including as a result of shortages of product components), among other reasons.
We could experience product constraints due to the failure of suppliers to accurately forecast customer demand, or to manufacture sufficient quantities of product to meet customer demand (including as a result of shortages of product components), among other reasons. For example, a global memory (DRAM and NAND) shortage is expected in 2026.
Although we maintain some redundant systems, with full data backup, a significant component of our computer and telecommunications hardware is located in a single facility in New Hampshire, and a substantial interruption in our management information systems or in our telephone communication systems, including those 23 Table of Contents resulting from extreme weather and natural disasters, as well as power loss, telecommunications failure, or similar events, would substantially hinder our ability to process customer orders and thus could have a material adverse effect on our business.
Although we maintain some redundant systems, with full data backup, a significant component of our computer and telecommunications hardware is located in a single facility in New Hampshire, and a substantial interruption in our management information systems or in our telephone communication systems, including those resulting from extreme weather and natural disasters, as well as power loss, telecommunications failure, or similar events, would substantially hinder our ability to process customer orders and thus could have a material adverse effect on our business. ​ Privacy concerns with respect to list development and maintenance may materially adversely affect our business. ​ We mail catalogs and other promotional materials to names in our customer database and to potential customers whose names we obtain from rented or exchanged mailing lists.
The number of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock and depress our stock price. ​ 25 Table of Contents We are controlled by one principal stockholder.
The number of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock and depress our stock price. ​ We are controlled by one principal stockholder. ​ Patricia Gallup, our principal stockholder, beneficially owned or controlled, in the aggregate, approximately 55% of the outstanding shares of our common stock as of December 31, 2025.
Such breaches, costs and consequences could adversely affect our business, results of operations, or cash flows. 22 Table of Contents Our business could be materially adversely affected by system failures, interruption, integration issues, or security lapses of our IT systems or those of our third-party providers.
Such breaches, costs and consequences could adversely affect our business, results of operations, or cash flows. ​ Our business could be materially adversely affected by system failures, interruption, integration issues, or security lapses of our IT systems or those of our third-party providers. ​ Our ability to effectively manage our business depends significantly on our information systems and infrastructure as well as, in certain instances those of our business partners and third-party providers.
Future internal or external attacks on our networks and systems could disrupt our normal operations centers and impede our ability to provide critical products and services to our customers and clients, subjecting us to liability under our contracts and damaging our reputation.
Future internal or external attacks on our networks and systems could disrupt our normal operations centers and impede our ability to provide critical products and services to our customers and clients, subjecting us to liability under our contracts and damaging our reputation. ​ Our business also involves the use, storage and transmission of proprietary information and sensitive or confidential data, including personal information about our employees, our clients and customers of our clients.
The risk of cyber incidents could also be increased by cyberwarfare in connection with the ongoing conflicts between Russia and Ukraine and in the Middle East, including potential proliferation of malware from the conflict into systems unrelated to the conflict.
The risk of cyber incidents could also be increased by cyberwarfare in connection with the ongoing conflicts between Russia and Ukraine and in the Middle East, including potential proliferation of malware from the conflict into systems unrelated to the conflict. ​ Breaches in security could expose us, our supply chain, our customers or other individuals to significant disruptions, a risk of public disclosure, loss or misuse of this information.
The failure to comply with our public sector contracts could result in, among other things, fines or liabilities. Revenues from the Public Sector Solutions segment are derived from sales to federal, state, and local government departments and agencies, as well as to educational institutions, through various contracts and open market sales. Government contracting is a highly regulated area.
Litigation, infringement claims, governmental proceedings and investigations, audits or indemnification claims involve uncertainties and the eventual outcome of any such matter could adversely affect our business, results of operations or cash flows. ​ The failure to comply with our public sector contracts could result in, among other things, fines or liabilities. ​ Revenues from the Public Sector Solutions segment are derived from sales to federal, state, and local government departments and agencies, as well as to educational institutions, through various contracts and open market sales.
Growth of our overall sales is dependent on customers continuing to expand their on-line purchases in addition to traditional channels to purchase products and services.
The online experience for our clients continues to improve, but the competitive nature of the e-commerce channel also continues to increase. Growth of our overall sales is dependent on customers continuing to expand their online purchases in addition to traditional channels to purchase products and services.
We also are subject to proceedings, investigations and audits by federal, state, international, national, provincial and local authorities, including as a result of our sales to governmental entities. We also are subject to audits by various vendor partners and large customers, including government agencies, relating to purchases and sales under various contracts.
We also are subject to audits by various vendor partners and large customers, including government agencies, relating to purchases and sales under various contracts.
To the extent that a vendor’s offering that is in high demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another vendor that we are authorized to sell in such customer channels, our business, results of operations or cash flows could be adversely impacted. ​ We use artificial intelligence in our business, as do certain of our business partners, and challenges with properly managing its use could result in reputational harm, competitive harm, significant unexpected expenses and legal liability, which may adversely affect our results of operations. ​ Our business utilizes artificial intelligence and machine learning technologies, which are offered by third parties, to add AI-based applications to our offerings.
As a result, we are subject to the risk that the activities of our business partners and third-party providers may adversely affect our business even if an attack or breach does not directly impact our systems. 21 Table of Contents We use AI in our business, as do certain of our business partners, and challenges with properly managing its use could result in reputational harm, competitive harm, significant unexpected expenses and legal liability, which may adversely affect our results of operations. ​ Our business utilizes AI and machine learning technologies, which are offered by third parties, to add AI-based applications to our offerings.
We are reliant on the continued development of electronic commerce and Internet infrastructure development to grow our overall sales. ​ We continue to have increasing levels of sales made through our e-commerce sites. The on-line experience for our clients continues to improve, but the competitive nature of the e-commerce channel also continues to increase.
Any of these factors could adversely affect our business, financial condition, and results of operations. ​ We are reliant on the continued development of electronic commerce and Internet infrastructure development to grow our overall sales. ​ We continue to have increasing levels of sales made through our e-commerce sites.
As discussed in our prior Form 10-K and Form 10-Q filings, our operations were impacted by the COVID-19 pandemic and its related economic challenges. However, we have worked hard to address and mitigate adverse impacts attributable to COVID-19, and we do not currently anticipate significant additional direct impacts from the pandemic itself on our operations.
For example, as discussed in our prior Form 10-K and Form 10-Q filings, our operations were impacted by the COVID-19 pandemic and its related economic challenges.
Failure to pass on these cost increases to our customers or mitigate the increase in wages by increasing our operational efficiency could have a material adverse effect on our profitability and results of operations. ​ 21 Table of Contents We face various risks related to health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and/or cash flows. ​ We face a wide variety of risks related to health epidemics, pandemics and similar outbreaks, especially of infectious diseases.
Failure to pass on these cost increases to our customers or mitigate the increase in wages by increasing our operational efficiency could have a material adverse effect on our profitability and results of operations. ​ 20 Table of Contents Risks Related to Our Technology, Data and Intellectual Property ​ Cyberattacks or the failure to safeguard personal information and our IT systems could result in liability and harm our reputation, which could adversely affect our business. ​ Our business is heavily dependent upon IT networks and systems.
Any of these factors could adversely affect our business, financial condition, and results of operations. ​ Substantial competition could reduce our market share and may negatively affect our business. ​ The direct marketing industry and the computer products retail business, in particular, are highly competitive.
To the extent that a vendor’s offering that is in high demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another vendor that we are authorized to sell in such customer channels, our business, results of operations or cash flows could be adversely impacted. ​ Substantial competition could reduce our market share and may negatively affect our business. ​ The direct marketing industry and the computer products retail business, in particular, are highly competitive.
In addition, these matters could lead to increased costs or interruptions of our normal business operations. Litigation, infringement claims, governmental proceedings and investigations, audits or indemnification claims involve uncertainties and the eventual outcome of any such matter could adversely affect our business, results of operations or cash flows.
In addition, these matters could lead to increased costs or interruptions of our normal business operations.
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We cannot predict whether the countries in which the products we sell, or any components of those products, are purchased or manufactured will be subject to new or additional trade restrictions or sanctions imposed by the United States or foreign governments, including the likelihood, type or effect of any such restrictions.
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Similar risks exist with respect to our business partners and third-party providers.
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For example, the COVID-19 pandemic dramatically impacted the global health and economic environment, including millions of confirmed cases and deaths, business slowdowns or shutdowns, labor shortages, supply chain challenges, changes in government spending and requirements, regulatory challenges, inflationary pressures and market volatility.
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If any or all of these items were to occur, we could experience adverse impacts on our overall performance, operations and financial results.
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Given the tremendous uncertainties and variables, we cannot at this time predict the impact of any future health epidemics, pandemics or similar outbreaks, but any one could have a material adverse effect on our business, financial position, results of operations and/or cash flows. ​ Risks Related to Our Technology, Data and Intellectual Property Cyberattacks or the failure to safeguard personal information and our IT systems could result in liability and harm our reputation, which could adversely affect our business.
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Our business also involves the use, storage and transmission of proprietary information and sensitive or confidential data, including personal information about our employees, our clients and customers of our clients.
Removed
Breaches in security could expose us, our supply chain, our customers or other individuals to significant disruptions, a risk of public disclosure, loss or misuse of this information.
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Our ability to effectively manage our business depends significantly on our information systems and infrastructure as well as, in certain instances those of our business partners and third-party providers.
Removed
Similar risks exist with respect to our business partners and third-party providers. As a result, we are subject to the risk that the activities of our business partners and third-party providers may adversely affect our business even if an attack or breach does not directly impact our systems.
Removed
Our management information systems require continual upgrades to effectively manage our operations and customer database.
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Privacy concerns with respect to list development and maintenance may materially adversely affect our business. ​ We mail catalogs and other promotional materials to names in our customer database and to potential customers whose names we obtain from rented or exchanged mailing lists.
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We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial, employment, tort and other litigation.
Removed
We are subject to intellectual property infringement claims against us from time to time in the ordinary course of our business, either because of the products and services we sell or the business systems and processes we use to sell such products and services, in the form of cease-and-desist letters, licensing inquiries, lawsuits and other communications and demands.
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The market price for our common stock may be volatile.
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In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies, including companies in our industry. In the past, securities class action litigation has followed periods of market volatility.
Removed
Patricia Gallup, our principal stockholder, beneficially owned or controlled, in the aggregate, approximately 52% of the outstanding shares of our common stock as of December 31, 2024.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Chief Information Officer has over 10 years of experience managing cybersecurity, data protection, and incident management teams, and over 20 years of experience managing compliance and regulatory processes and controls. ​ 26 Table of Contents As part of the administration of our Cybersecurity Risk Mitigation Practices, the Committee is tasked with managing and mitigating our exposure to cybersecurity threats, creating our cybersecurity policies, and establishing short and long-term cybersecurity goals and objectives that are designed to protect our information systems.
Biggest changeThe Chief Information Officer has over 10 years of experience managing cybersecurity, data protection, and incident management teams, and over 20 years of experience managing compliance and regulatory processes and controls. ​ As part of the administration of our Cybersecurity Risk Mitigation Practices, the Committee is tasked with managing and mitigating our exposure to cybersecurity threats, creating our cybersecurity policies, and establishing short and long-term cybersecurity goals and objectives that are designed to protect our information systems.
The Committee is also responsible for planning ordinary course security projects and initiatives aimed at ensuring that our organizational leaders are informing our employees about our cybersecurity policies and about cybersecurity basic practices.
The Committee is also responsible for planning ordinary course security projects and initiatives aimed at ensuring that our organizational 25 Table of Contents leaders are informing our employees about our cybersecurity policies and about cybersecurity basic practices.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also operate sales and support offices throughout the United States and lease facilities at these locations. These leased facilities are utilized by all three of our operating segments. Leasehold improvements associated with these properties are amortized over the terms of the leases or their useful lives, whichever is shorter.
Biggest changeThese leased facilities are utilized by all three of our operating segments. Leasehold improvements associated with these properties are amortized over the terms of the leases or their useful lives, whichever is shorter. We believe that our physical properties will be sufficient to support our anticipated needs through the next twelve months and beyond. ​
We have also continued to pay the real estate taxes, insurance, and common area maintenance charges which were required under the Merrimack lease. ​ We also entered into a lease for an office facility adjacent to our corporate headquarters in August 2008 from the same affiliated company, G&H Post, or the Second Merrimack lease, which is used by our Public Sector Solutions Segment.
It is our intention to enter into a written, long-term lease for this facility. ​ We also entered into a lease for an office facility adjacent to our corporate headquarters in August 2008 from the same affiliated company, G&H Post, or the Second Merrimack lease, which is used by our Public Sector Solutions Segment.
We also have continued to pay the real estate taxes, common area maintenance charges, and insurance premiums which were required under the Second Merrimack lease. ​ We lease a facility in Wilmington, Ohio, which houses our distribution and order fulfillment operations and services all three of our operating segments.
We also have continued to pay the real estate taxes, common area maintenance charges, and insurance premiums which were required under the Second Merrimack lease.
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We believe that our physical properties will be sufficient to support our anticipated needs through the next twelve months and beyond. ​
Added
We have also continued to pay the real estate taxes, insurance, and common area maintenance charges which were required under the Merrimack lease.
Added
It is our intention to enter into a written, long-term lease for this facility. ​ We lease a facility in Wilmington, Ohio, which houses our distribution and order fulfillment operations and services all three of our operating segments. We also operate sales and support offices throughout the United States and lease facilities at these locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures ​ Not applicable. ​ ​ 27 Table of Contents ​ PART II ​
Biggest changeMine Safety Disclosures ​ Not applicable. ​ ​ 26 Table of Contents PART II ​

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. Mine Safety Disclosures 27 PART II ​ ​ ​ ITEM 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 ITEM 6. [Reserved] 29 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 ITEM 7A. Quantitative and Qualitative Disclosure About Market Risk 43
Biggest changeITEM 4. Mine Safety Disclosures 26 ​ ​ ​ PART II ITEM 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 ITEM 6. [Reserved] 28 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 ITEM 7A. Quantitative and Qualitative Disclosure About Market Risk 43

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMeasurement points are December 31, 2019, December 31, 2020, December 31, 2021, December 31, 2022, December 31, 2023, and December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Base Period ​ Years Ended Company Name / Index Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 PC Connection, Inc. 100.00 95.22 ​ 89.27 ​ 97.66 ​ 140.87 ​ 146.02 ​ Nasdaq Stock Market-Composite 100.00 144.92 ​ 177.06 ​ 119.45 ​ 172.77 ​ 223.87 ​ Nasdaq US Benchmark TR Index 100.00 121.27 ​ 152.67 ​ 122.55 ​ 154.93 ​ 192.86 ​ ​ ​
Biggest changeMeasurement points are December 31, 2020, December 31, 2021, December 31, 2022, December 31, 2023, December 31, 2024, and December 31, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Base Period ​ Years Ended December 31, Company Name / Index ​ December 31, 2020 ​ ​ ​ 2021 ​ 2022 ​ 2023 ​ 2024 ​ 2025 PC Connection, Inc. $ 100.00 $ 93.75 ​ $ 102.57 ​ $ 147.95 ​ $ 153.36 ​ $ 129.07 Nasdaq Stock Market-Composite $ 100.00 $ 122.18 ​ $ 82.43 ​ $ 119.22 ​ $ 154.48 ​ $ 187.14 Nasdaq US Benchmark TR Index $ 100.00 $ 125.89 ​ $ 101.05 ​ $ 127.76 ​ $ 159.03 ​ $ 186.96 ​ ​
The timing and amount of any share repurchases will be based on market conditions and other factors. ​ Stock Performance Graph ​ The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing. ​ The following graph compares our annual percentage change in cumulative total return on shares of our common stock over the past five years with the cumulative total return of companies comprising the NASDAQ Composite Index and the NASDAQ US Benchmark TR Index.
The timing and amount of any share repurchases will be based on market conditions and other factors. ​ Stock Performance Graph ​ The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing. ​ The following graph compares our annual percentage change in cumulative total return on shares of our common stock over the past five years with the cumulative total return of companies comprising the NASDAQ Composite Index and the NASDAQ US Benchmark TR Index.
This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 2019, and that dividends received were immediately invested in additional shares of our common stock. The graph plots the value of the initial $100 investment at one-year intervals for the fiscal years shown.
This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 2020, and that dividends received were immediately invested in additional shares of our common stock. The graph plots the value of the initial $100 investment at one-year intervals for the fiscal years shown.
This figure does not include an estimate of the number of beneficial holders whose shares are held of record by brokerage firms. ​ Dividends ​ The following table summarizes our 2024 quarterly dividends paid (in millions, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividend per Share Declaration Date Record Date Payment Date Total Dividend $ 0.10 ​ February 12, 2024 ​ February 27, 2024 ​ March 15, 2024 ​ $ 2.6 $ 0.10 ​ April 30, 2024 ​ May 14, 2024 ​ May 29, 2024 ​ $ 2.6 $ 0.10 ​ July 30, 2024 ​ August 13, 2024 ​ August 30, 2024 ​ $ 2.6 $ 0.10 ​ October 29, 2024 ​ November 12, 2024 ​ November 29, 2024 ​ $ 2.6 ​ On February 5, 2025, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of $0.15 per share.
This figure does not include an estimate of the number of beneficial holders whose shares are held of record by brokerage firms. ​ Dividends ​ The following table summarizes our 2025 quarterly dividends paid (in millions, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividend per Share ​ ​ ​ Declaration Date ​ ​ ​ Record Date ​ ​ ​ Payment Date ​ ​ ​ Total Dividend $ 0.15 ​ February 4, 2025 ​ February 25, 2025 ​ March 14, 2025 ​ $ 3.9 $ 0.15 ​ April 29, 2025 ​ May 13, 2025 ​ May 30, 2025 ​ $ 3.8 $ 0.15 ​ July 29, 2025 ​ August 12, 2025 ​ August 29, 2025 ​ $ 3.8 $ 0.15 ​ October 28, 2025 ​ November 11, 2025 ​ November 28, 2025 ​ $ 3.8 ​ On February 4, 2026, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of $0.20 per share.
The dividend will be paid on March 14, 2025 to all stockholders of record as of the close of business on February 25, 2025.
The dividend will be paid on March 6, 2026 to all stockholders of record as of the close of business on February 17, 2026.
The following table summarizes information relating to purchases of common stock made by or on our behalf during the quarter ended December 31, 2024 (dollars in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar Value ​ ​ ​ ​ ​ ​ ​ Shares Purchased as ​ of Shares that May Yet Be ​ ​ ​ Total Number ​ ​ ​ Part of Publicly ​ Purchased Under the Plans ​ ​ ​ of Shares ​ Average Price Paid ​ Announced Plans or ​ or Programs ​ Period Purchased Per Share Programs (1) (in thousands) (1)(2) ​ 10/01/24-10/31/24 ​ 3,419 ​ $ 68.31 ​ 3,419 ​ $ 64,334 ​ 11/01/24-11/30/24 ​ 31,097 ​ $ 70.19 ​ 31,097 ​ $ 62,152 ​ 12/01/24-12/31/24 ​ 34,850 ​ $ 70.78 ​ 34,850 ​ $ 59,685 ​ ​ ​ 69,366 ​ $ 70.39 ​ 69,366 ​ ​ ​ ​ ​ (1) As of December 31, 2024, we have repurchased in the aggregate approximately 2.9 million shares of our common stock for approximately $60.3 million pursuant to the repurchase program approved by our Board of Directors. ​ (2) On March 28, 2001, we announced that our Board of Directors authorized the spending of up to $15.0 million to repurchase shares of our common stock.
The following table summarizes information relating to purchases of common stock made by or on our behalf during the quarter ended December 31, 2025 (dollars in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar Value ​ ​ ​ ​ ​ ​ Shares Purchased as ​ of Shares that May Yet Be ​ ​ Total Number ​ ​ ​ Part of Publicly ​ Purchased Under the Plans ​ ​ of Shares ​ Average Price Paid ​ Announced Plans or ​ or Programs Period ​ ​ ​ Purchased ​ ​ ​ Per Share ​ ​ ​ Programs (1) ​ ​ ​ (in thousands) (1)(2) 10/01/25-10/31/25 ​ 110,285 ​ $ 60.43 ​ 110,285 ​ $ 37,607 11/01/25-11/30/25 ​ 61,469 ​ $ 57.97 ​ 61,469 ​ $ 34,044 12/01/25-12/31/25 ​ 7,481 ​ $ 59.10 ​ 7,481 ​ $ 33,602 ​ ​ 179,235 ​ $ 59.53 ​ 179,235 ​ ​ ​ ​ (1) As of December 31, 2025, we have repurchased in the aggregate approximately 4.1 million shares of our common stock for approximately $136.4 million pursuant to the repurchase program approved by our Board of Directors. ​ (2) On March 28, 2001, we announced that our Board of Directors authorized the spending of up to $15.0 million to repurchase shares of our common stock.
On each of February 11, 2014, December 17, 2018, November 22, 2022, and May 1, 2024, our Board of Directors approved increases of $15.0 million, $25.0 million, $25.0 million, and $40.0 million, respectively, to the repurchase program bringing the aggregate authorized amount 28 Table of Contents under the repurchase program to $120.0 million.
On each of February 11, 2014, December 17, 2018, November 22, 2022, May 1, 2024, April 30, 2025, and February 4, 2026, our Board of Directors approved increases of $15.0 million, $25.0 million, $25.0 million, $40.0 million, $50.0 million, and $50.0 million, respectively, to the repurchase program bringing the aggregate authorized amount under the repurchase program to $220.0 million. 27 Table of Contents There is no fixed termination date for this repurchase program.
As of February 14, 2025, there were 26,160,014 shares of our common stock outstanding, held by approximately 36 stockholders of record.
As of February 13, 2026, there were 25,198,472 shares of our common stock outstanding, held by approximately 36 stockholders of record.
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.
Purchases may be made in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRisk Factors” of this Annual Report on Form 10-K. ​ Summary Sources and Uses of Cash ​ The following table summarizes our sources and uses of cash over the last three years (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2024 2023 2022 Net cash provided by operating activities ​ $ 173.9 ​ $ 197.9 ​ $ 34.9 ​ Net cash used in investing activities ​ (115.3) ​ (160.2) ​ (9.1) ​ Net cash used in financing activities ​ (25.2) ​ (15.7) ​ (11.2) ​ Increase in cash and cash equivalents ​ $ 33.4 ​ $ 22.0 ​ $ 14.6 ​ ​ Cash provided by operating activities was $173.9 million for the year ended December 31, 2024, which resulted primarily from $87.1 million of net income, $18.4 million of total non-cash charges added back to net income (including $13.0 million of depreciation and amortization and $8.5 million of stock-based compensation expense added back to net income, and $4.2 million of amortization of discount on short-term investments removed from net income), a $36.5 million increase in accounts payable, and a $29.1 million decrease in inventory.
Biggest changeRisk Factors” of this Annual Report on Form 10-K. ​ Summary Sources and Uses of Cash ​ The following table summarizes our sources and uses of cash over the last three years (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Net cash provided by operating activities ​ $ 65.5 ​ $ 173.9 ​ $ 197.9 Net cash provided by (used in) investing activities ​ 42.8 ​ (115.3) ​ (160.2) Net cash used in financing activities ​ (93.4) ​ (25.2) ​ (15.7) Increase in cash and cash equivalents ​ $ 14.9 ​ $ 33.4 ​ $ 22.0 ​ Cash provided by operating activities is summarized as follows (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2025 ​ 2024 ​ Change Net income ​ $ 83.7 ​ $ 87.1 ​ $ (3.4) Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 11.7 ​ ​ 13.0 ​ ​ (1.3) Adjustments to credit losses reserve ​ ​ 1.9 ​ ​ 1.9 ​ ​ — Stock-based compensation expense ​ ​ 9.3 ​ ​ 8.5 ​ ​ 0.8 Deferred income taxes ​ ​ 4.8 ​ ​ (0.8) ​ ​ 5.6 Amortization of discount on short-term investments, net ​ ​ 0.6 ​ ​ (4.2) ​ ​ 4.8 Other adjustments ​ ​ — ​ ​ — ​ ​ — Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ (38.4) ​ ​ (6.5) ​ ​ (31.9) Inventories ​ ​ (48.5) ​ ​ 29.1 ​ ​ (77.6) Prepaid expenses and other current assets ​ ​ (4.3) ​ ​ 2.7 ​ ​ (7.0) Other non-current assets ​ ​ (4.1) ​ ​ 0.6 ​ ​ (4.7) Accounts payable ​ ​ 38.1 ​ ​ 36.5 ​ ​ 1.6 Accrued expenses and other liabilities ​ 10.7 ​ ​ 6.0 ​ 4.7 Net cash provided by operating activities ​ $ 65.5 ​ $ 173.9 ​ $ (108.4) ​ The decrease in net cash from operating activities of $108.4 million for the year ended December 31, 2025 was primarily attributable to changes in inventories and accounts receivable of $77.6 million and $31.9 million, respectively.
An impairment review is undertaken on (1) an annual basis for goodwill and an indefinite-lived intangible; and (2) on an event-driven basis for all long-lived assets when facts and circumstances suggest that cash flows from such assets may be diminished. We have historically reviewed the carrying value of all these assets based partly on our projections of cash flows.
An impairment review is undertaken on (1) an annual basis for goodwill and indefinite-lived intangible assets; and (2) on an event-driven basis for all long-lived assets when facts and circumstances suggest that cash flows from such assets may be diminished. We have historically reviewed the carrying value of all these assets based partly on our projections of cash flows.
We expect these service offerings and technical certifications to continue to play a role in sales generation and gross margin improvements in this competitive environment. ​ The primary challenges we continue to face in effectively managing our business are (1) increasing our product and service revenues while at the same time improving our gross margin in all three segments, (2) recruiting, retaining, and improving the productivity of our sales and technical support personnel, and (3) effectively controlling our SG&A expenses while making major investments in our IT systems and solution selling personnel, especially in relation to changing revenue levels. ​ To support future growth, we have invested and expect to continue to invest in our IT solutions business, which requires the addition of highly skilled service engineers.
We expect these service offerings and technical 29 Table of Contents certifications to continue to play a role in sales generation and gross margin improvements in this competitive environment. ​ The primary challenges we continue to face in effectively managing our business are (1) increasing our product and service revenues while at the same time improving our gross margin in all three segments, (2) recruiting, retaining, and improving the productivity of our sales and technical support personnel, and (3) effectively controlling our SG&A expenses while making major investments in our IT systems and solution selling personnel, especially in relation to changing revenue levels. ​ To support future growth, we have invested and expect to continue to invest in our IT solutions business, which requires the addition of highly skilled service engineers.
If product costs and wages increase significantly or for an extended period of time, we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting customer demand. ​ ● The Federal Reserve decreased interest rates in 2024, but it is uncertain whether interest rates will remain the same, decrease, or increase in 2025.
If product costs and wages increase significantly or for an extended period of time, we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting customer demand. ​ ● The Federal Reserve decreased interest rates in 2025, but it is uncertain whether interest rates will remain the same, decrease, or increase in 2026.
Risk Factors” of this Annual Report on Form 10-K. ​ OVERVIEW ​ We are a Fortune 1000 Global Solutions Provider that simplifies the IT customer experience, guiding the connection between people and technology. Our dedicated account managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services.
Risk Factors” of this Annual Report on Form 10-K. ​ OVERVIEW ​ We are a Fortune 1000 Global Solutions Provider that simplifies IT, guiding the connection between people and technology. Our dedicated account managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services.
Historically, there have been no unusual charges precipitated by specific technological or forecast issues. ​ Goodwill and Long-Lived Assets, Including Intangibles ​ We carry a variety of long-lived assets on our consolidated balance sheet, which are all currently classified as held for use.
Historically, there have been no unusual charges precipitated by specific technological or forecast issues. ​ Goodwill and Long-Lived Assets, Including Intangibles ​ We carry a variety of long-lived assets on our consolidated balance sheets, which are all currently classified as held for use.
Through the formation of our TSO, we are able to provide customers complete IT solutions, from identifying their needs, to designing, developing, and managing the integration of products and services to implement their IT projects. Such service offerings carry higher margins than traditional product sales.
Through the formation of our TSSO, we are able to provide customers complete IT solutions, from identifying their needs, to designing, developing, and managing the integration of products and services to implement their IT projects. Such service offerings carry higher margins than traditional product sales.
Discussion of the year ended December 31, 2023 and the year-to-year comparison between the year ended December 31, 2023 and the year ended December 31, 2022 can be found in Part II, Item 7 “Management’s Discussions and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023.
Discussion of the year ended December 31, 2024 and the year-to-year comparison between the year ended December 31, 2024 and the year ended December 31, 2023 can be found in Part II, Item 7 “Management’s Discussions and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024.
Our GlobalServe offering ensures worldwide coverage for our multinational customers, delivering global procurement solutions through our network of in-country suppliers in over 150 countries. ​ The “Connection®” brand includes Connection Enterprise Solutions, Connection Business Solutions, and Connection Public Sector Solutions, which provide IT solutions and services to enterprise, SMBs, and public sector markets. ​ Financial results for each of our segments are included in the financial statements attached hereto.
Our GlobalServe offering ensures worldwide coverage for our multinational customers, delivering global procurement solutions through our network of in-country suppliers in over 150 countries. ​ The “Connection” brand includes Connection Enterprise Solutions, Connection Business Solutions, and Connection Public Sector Solutions, which provide IT solutions and services to enterprise, SMBs, and public sector markets. ​ Financial results for each of our segments are included in the financial statements attached hereto.
When the variables used to estimate these reserves change, or if actual results differ significantly from the estimates, we would be required to increase or reduce revenue to reflect the impact. ​ Accounts Receivable ​ We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and current creditworthiness.
When the variables used to estimate these reserves change, or if actual results differ significantly from the estimates, we would be required to increase or reduce revenue to reflect the impact. ​ 41 Table of Contents Accounts Receivable ​ We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and current creditworthiness.
We account 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. We generally obtain oral or written purchase authorizations from our customers for a specified amount of product at a specified price, which constitutes an arrangement.
We account for an arrangement when it has approval and commitment from both parties, the rights are identified, the contract has commercial substance, 39 Table of Contents and collectability of consideration is probable. We generally obtain oral or written purchase authorizations from our customers for a specified amount of product at a specified price, which constitutes an arrangement.
Amounts recognized on a net basis included in net sales for such third-party services, agency sales, and off-premise software transactions were $147.5 million, $141.8 million, and $127.5 million for the years ended December 31, 2024, 2023, and 2022, respectively. Certain software sales include on-premise licenses that are combined with software maintenance.
Amounts recognized on a net basis included in net sales for such third-party services, agency sales, and off-premise software transactions were $138.8 million, $147.5 million, and $141.8 million for the years ended December 31, 2025, 2024, and 2023, respectively. Certain software sales include on-premise licenses that are combined with software maintenance.
At December 31, 2024, we recorded sales reserves of $3.8 million and $0.1 million as components of accounts receivable and accrued expenses, respectively. At December 31, 2023, we recorded sales reserves of $3.1 million and $0.1 million as components of accounts receivable and accrued expenses, respectively. We regularly evaluate the adequacy of our estimates for product returns.
At December 31, 2025, we recorded sales reserves of $3.4 million and $0.1 million as components of accounts receivable and accrued expenses, respectively. At December 31, 2024, we recorded sales reserves of $3.8 million and $0.1 million as components of accounts receivable and accrued expenses, respectively. We regularly evaluate the adequacy of our estimates for product returns.
Our investments in IT systems and infrastructure are designed to enable us to operate more efficiently and to provide our customers enhanced functionality. ​ We expect to meet our cash requirements for 2025 and beyond through a combination of cash on hand, short-term investments, cash generated from operations, and borrowings under our credit facility, as follows: ​ ● Cash on Hand .
Our investments in IT systems and infrastructure are designed to enable us to operate more efficiently and to provide our customers enhanced functionality. ​ We expect to meet our cash requirements for 2025 and beyond through a combination of cash on hand, short-term investments, and cash generated from operations, as follows: ​ ● Cash on Hand .
We recognize revenue related to the software maintenance as the agent in these transactions because we do not have control over the on-going software maintenance service. Revenue allocated to software maintenance is recognized at the point in time when our vendor and customer accept the terms and conditions in the sales arrangements.
We recognize revenue related to the software maintenance as 40 Table of Contents the agent in these transactions because we do not have control over the on-going software maintenance service. Revenue allocated to software maintenance is recognized at the point in time when our vendor and customer accept the terms and conditions in the sales arrangements.
Increased obsolescence or decreased customer demand beyond management’s expectations could require additional provisions, which could negatively impact our earnings. Our provision for inventory obsolescence was $2.1 million, $2.4 million, and $4.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Increased obsolescence or decreased customer demand beyond management’s expectations could require additional provisions, which could negatively impact our earnings. Our provision for inventory obsolescence was $1.5 million, $2.1 million, and $2.4 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Any impairment charge that is recorded negatively impacts our earnings. ​ Our Enterprise Solutions and Business Solutions segments hold $66.2 million and $7.4 million of goodwill, respectively. We test goodwill for impairment each year and more frequently if potential impairment indicators arise. In 2024 and 2023, we performed a “step 0” qualitative analysis.
Any impairment charge that is recorded negatively impacts our earnings. 42 Table of Contents ​ Our Enterprise Solutions and Business Solutions segments hold $66.2 million and $7.4 million of goodwill, respectively. We test goodwill for impairment each year and more frequently if potential impairment indicators arise. In 2025 and 2024, we performed a “step 0” qualitative analysis.
This section discusses the results of operations for the year ended December 31, 2024 and year-to-year comparison between the year ended December 31, 2024 and the year ended December 31, 2023.
This section discusses the results of operations for the year ended December 31, 2025 and year-to-year comparison between the year ended December 31, 2025 and the year ended December 31, 2024.
Write offs of customer and vendor receivables totaled $2.4 million in 2024 and $3.3 million in 2023. ​ Considerable estimates are used in assessing the ultimate realization of customer receivables and vendor/supplier receivables, including reviewing the financial stability of a customer, vendor information, and gauging current market conditions.
Write offs of customer and vendor receivables totaled $2.1 million in 2025 and $2.4 million in 2024. ​ Considerable estimates are used in assessing the ultimate realization of customer receivables and vendor/supplier receivables, including reviewing the financial stability of a customer, vendor information, and gauging current market conditions.
We recognize revenue as 39 Table of Contents the principal in the transaction with the customer (i.e., on a gross basis), as we control the product prior to delivery to the customer and derive the economic benefits from the sales transaction given our control over customer pricing.
We recognize revenue as the principal in the transaction with the customer (i.e., on a gross basis), as we control the product prior to delivery to the customer and derive the economic benefits from the sales transaction given our control over customer pricing.
Additionally, the technical certifications of our service engineers permit us to offer higher-end, 30 Table of Contents more complex products that generally carry higher gross margins.
Additionally, the technical certifications of our service engineers permit us to offer higher-end, more complex products that generally carry higher gross margins.
Operating income decreased year-over-year in dollars but remained consistent as a percentage of net sales primarily due to the increase in SG&A expenses. ​ Sales Distribution ​ The following table sets forth our percentage of net sales by operating segment and product mix: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2024 2023 2022 Operating Segment ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ 42 % 42 % 42 % Business Solutions ​ 38 38 40 ​ Public Sector Solutions ​ 20 20 18 ​ Total ​ 100 % 100 % 100 % ​ ​ ​ ​ ​ ​ ​ ​ Product Mix ​ ​ ​ ​ ​ ​ ​ Notebooks/Mobility ​ 35 % 33 % 37 % Desktops ​ 11 ​ 9 ​ 10 ​ Software ​ 10 ​ 12 ​ 9 ​ Servers/Storage ​ 7 ​ 7 ​ 7 ​ Net/Com Products ​ 8 10 7 ​ Displays and Sound ​ 10 9 10 ​ Accessories ​ 12 11 13 ​ Other Hardware/Services ​ 7 9 7 ​ Total ​ 100 % 100 % 100 % ​ 32 Table of Contents Gross Margins ​ The following table summarizes our overall gross margins, as a percentage of net sales, for the last three years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2024 2023 2022 Operating Segment ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ 15.2 % 14.9 % 14.7 % Business Solutions ​ 24.1 23.0 20.1 ​ Public Sector Solutions ​ 15.3 14.9 14.4 ​ Total Company ​ 18.6 % 18.0 % 16.8 % ​ Cost of Sales ​ Cost of sales includes the invoice cost of the product, direct employee and third-party cost of services, direct costs of packaging, inbound and outbound freight, and provisions for inventory obsolescence, adjusted for discounts, rebates, and other vendor allowances. ​ Operating Expenses ​ The following table reflects our most significant operating expenses for the last three years (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ($ in millions) ​ 2024 2023 2022 Personnel costs ​ $ 320.6 ​ $ 311.6 ​ $ 308.4 ​ Marketing ​ 25.1 ​ 22.4 ​ 20.2 ​ Service contracts/subscriptions ​ ​ 24.5 ​ 21.0 ​ 19.7 ​ Professional fees ​ 12.9 ​ 12.9 ​ 15.3 ​ Depreciation and amortization ​ 13.0 ​ 12.7 ​ 12.0 ​ Facilities operations ​ 7.6 ​ 8.2 ​ 8.6 ​ Credit card fees ​ 6.7 ​ 6.7 ​ 6.9 ​ Other ​ 11.9 ​ 10.4 ​ 14.5 ​ Total SG&A expense ​ $ 422.3 ​ $ 405.9 ​ $ 405.6 ​ As a percentage of net sales ​ ​ 15.1 % ​ 14.2 % ​ 13.0 % ​ Restructuring and other charges ​ During the years ended December 31, 2024 and December 31, 2023, we undertook actions to lower our cost structure.
Operating income as a percentage of net sales remained substantially the same year-over-year. ​ 31 Table of Contents Sales Distribution ​ The following table sets forth our percentage of net sales by operating segment and product mix: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Operating Segment ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ 44 % 42 % 42 % Business Solutions ​ 38 38 38 ​ Public Sector Solutions ​ 18 20 20 ​ Total ​ 100 % 100 % 100 % ​ ​ ​ ​ ​ ​ ​ ​ Product Mix ​ ​ ​ ​ ​ ​ ​ Notebooks/Mobility ​ 35 % 35 % 33 % Desktops ​ 12 ​ 11 ​ 9 ​ Software ​ 11 ​ 10 ​ 12 ​ Servers/Storage ​ 8 ​ 7 ​ 7 ​ Net/Com Products ​ 7 8 10 ​ Displays and Sound ​ 9 10 9 ​ Accessories ​ 11 12 11 ​ Other Hardware/Services ​ 7 7 9 ​ Total ​ 100 % 100 % 100 % ​ Gross Margins ​ The following table summarizes our overall gross margins, as a percentage of net sales, for the last three years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Operating Segment ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ 14.5 % 15.2 % 14.9 % Business Solutions ​ 25.2 24.1 23.0 ​ Public Sector Solutions ​ 16.0 15.3 14.9 ​ Total Company ​ 18.8 % 18.6 % 18.0 % ​ Cost of Sales ​ Cost of sales includes the invoice cost of the product, direct employee and third-party cost of services, direct costs of packaging, inbound and outbound freight, and provisions for inventory obsolescence, adjusted for discounts, rebates, and other vendor allowances. ​ 32 Table of Contents Operating Expenses ​ The following table reflects our most significant operating expenses for the last three years (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Personnel costs ​ $ 330.8 ​ $ 320.6 ​ $ 311.6 ​ Marketing ​ 24.8 ​ 25.1 ​ 22.4 ​ Service contracts/subscriptions ​ ​ 26.0 ​ 24.5 ​ 21.0 ​ Professional fees ​ 15.4 ​ 12.9 ​ 12.9 ​ Depreciation and amortization ​ 11.7 ​ 13.0 ​ 12.7 ​ Facilities operations ​ 7.5 ​ 7.6 ​ 8.2 ​ Credit card fees ​ 6.1 ​ 6.7 ​ 6.7 ​ Other ​ 11.7 ​ 11.9 ​ 10.4 ​ Total SG&A expense ​ $ 434.0 ​ $ 422.3 ​ $ 405.9 ​ As a percentage of net sales ​ ​ 15.1 % ​ 15.1 % ​ 14.2 % ​ Severance expenses and other charges ​ During the years ended December 31, 2025, 2024, and 2023, we undertook actions to lower our cost structure.
In the prior year period, financing activities consisted of $88.2 million of aggregate borrowings and repayments under our credit facility, $5.4 million of treasury repurchases, $8.4 million of dividend payments, $1.1 million of issuances of stock under the 1997 Employee Stock Purchase Plan, and $3.0 million of payroll taxes on stock-based compensation through shares withheld. ​ Debt Instruments, Contractual Agreements, and Related Covenants ​ Below is a summary of certain provisions of our credit facilities and other contractual obligations.
In the prior year period, financing activities consisted of $26.1 million of aggregate borrowings and repayments under our credit facility, $12.4 million of treasury repurchases, $10.5 million of dividend payments, $1.1 million of issuances of stock under the 1997 Employee Stock Purchase Plan, and $3.4 million of payroll taxes on stock-based compensation through shares withheld. ​ Debt Instruments, Contractual Agreements, and Related Covenants ​ Below is a summary of certain provisions of our credit facility and other contractual obligations.
We have historically used and expect to use in the future those funds to meet our capital requirements, which consist primarily of working capital for operational needs, capital expenditures for computer equipment and software used in our business, repurchases of common stock for treasury, dividend payments, and as opportunities arise, possible acquisitions of new businesses. ​ We believe that funds generated from operations, together with available capacity under our credit facility, will be sufficient to finance our working capital, capital expenditures, and other requirements for at least the next twelve calendar months and beyond such twelve calendar month period.
We have historically used and expect to use in the future those funds to meet our capital requirements, which consist primarily of working capital for operational needs, capital expenditures for computer equipment and software used in our business, repurchases of common stock for treasury, dividend payments, and as opportunities arise, possible acquisitions of new businesses. ​ We believe that funds generated from operations and short-term investments will be sufficient to finance our working capital, capital expenditures, and other requirements for at least the next twelve calendar months and beyond such twelve calendar month period.
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.
We provide a wide range of IT solutions, from the desktop to the cloud—including computer systems, data center solutions, security, AI, software and peripheral equipment, networking communications, and other products and accessories that we develop internally and secure from manufacturers, distributors, and other suppliers.
We offer a broad selection of over 460,000 products at competitive prices, including products from vendors like Apple, Cisco, Dell Inc., Hewlett-Packard Inc., Hewlett-Packard Enterprise, Intel, Lenovo, Microsoft Corporation, and VMware, and we partner with more than 2,500 suppliers.
We offer a broad selection of over 460,000 products at competitive prices, including products from vendors like Apple, Cisco, Dell Inc., HP Inc., Hewlett-Packard Enterprise, Intel, Lenovo, Microsoft Corporation, and VMware by Broadcom, and we partner with more than 1,600 suppliers.
Our cash flows would be impacted to the extent that receivables could not be collected. ​ Our bad debt expense for the year ended December 31, 2024 was $1.9 million, compared to $1.8 million for the year ended December 31, 2023. 41 Table of Contents ​ In addition to accounts receivable from customers, we record receivables from our vendors/suppliers for cooperative marketing, price protection, supplier reimbursements, rebates, and other similar arrangements.
Our cash flows would be impacted to the extent that receivables could not be collected. ​ Our bad debt expense was $1.9 million for each of the years ended December 31, 2025 and December 31, 2024. ​ In addition to accounts receivable from customers, we record receivables from our vendors/suppliers for cooperative marketing, price protection, supplier reimbursements, rebates, and other similar arrangements.
We recorded obsolescence charges of $2.5 million, $2.8 million, and $3.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.
We recorded obsolescence charges of $2.1 million, $2.5 million, and $2.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Our TSO and state-of-the-art 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. These services are performed by our personnel and by third-party providers.
Our TSSO and state-of-the-art ISO 9001:2015 SOC 2 Type 2 certified TIDC offer end-to-end services related to the design, configuration, and implementation of IT solutions. Our team also provides a comprehensive portfolio of managed services and professional services. These services are performed by our personnel and by third-party providers.
Sales are reported net of sales, use, or other transaction taxes that are collected from customers and remitted to taxing authorities. Critical Accounting Estimates Our contracts with customers often include promises to transfer multiple products or services to a customer.
Costs related to shipping and handling billing are classified as cost of sales. Sales are reported net of sales, use, or other transaction taxes that are collected from customers and remitted to taxing authorities. Critical Accounting Estimates Our contracts with customers often include promises to transfer multiple products or services to a customer.
Components of our cash conversion cycle are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (in days) ​ 2024 ​ 2023 Days of sales outstanding (DSO) (1) ​ ​ 72 ​ ​ 73 Days of supply in inventory (DIO) (2) ​ ​ 15 ​ ​ 20 Days of purchases outstanding (DPO) (3) ​ ​ (47) ​ ​ (42) Cash conversion cycle ​ ​ 40 ​ ​ 51 ​ (1) Represents the trade receivable at the end of the period divided by average daily net sales for the same three-month period. ​ (2) Represents the merchandise inventory balance at the end of the period divided by average daily cost of sales for the same three-month period. ​ (3) Represents the accounts payable balance at the end of the period divided by average daily cost of sales for the same three-month period. ​ 37 Table of Contents The cash conversion cycle decreased to 40 days for the quarter ended December 31, 2024, compared to 51 days for the quarter ended December 31, 2023, as evidenced in the above cash conversion table.
Components of our cash conversion cycle are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (in days) ​ 2025 ​ 2024 Days of sales outstanding (DSO) (1) ​ ​ 76 ​ ​ 72 Days of supply in inventory (DIO) (2) ​ ​ 23 ​ ​ 15 Days of purchases outstanding (DPO) (3) ​ ​ (54) ​ ​ (47) Cash conversion cycle ​ ​ 45 ​ ​ 40 ​ (1) Represents the trade receivable at the end of the period divided by average daily net sales for the same three-month period. ​ (2) Represents the merchandise inventory balance at the end of the period divided by average daily cost of sales for the same three-month period. ​ (3) Represents the accounts payable balance at the end of the period divided by average daily cost of sales for the same three-month period. ​ The cash conversion cycle increased to 45 days for the quarter ended December 31, 2025, compared to 40 days for the quarter ended December 31, 2024, as evidenced in the above cash conversion table.
Most of the operating costs associated with such corporate Headquarters services are charged to the segments based on their estimated allocation usage of the underlying services. ​ Restructuring and other charges for the year ended December 31, 2024 were $0.4 million, compared to $2.7 million for the same period in the prior year.
Most of the operating 35 Table of Contents costs associated with such corporate Headquarters/Other services are charged to the segments based on their estimated allocation usage of the underlying services. ​ Severance expenses and other charges for the year ended December 31, 2025 were $6.0 million, compared to $0.4 million for the same period in the prior year.
We record these agency fees as a component of net sales as earned and there is no corresponding cost of sales amount. In certain 40 Table of Contents instances, we invoice the customer directly under an EA and account for the individual items sold based on the nature of each item.
We record these agency fees as a component of net sales as earned and there is no corresponding cost of sales amount. In certain instances, we invoice the customer directly under an EA and account for the individual items sold based on the nature of each item. Our vendors typically dictate how the EA will be sold to the customer.
SG&A expenses attributable to our three operating segments and the remaining unallocated Headquarters/Other expenses are summarized below (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ % of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment Net ​ ​ ​ ​ Segment Net ​ $ ​ % ​ ​ ​ Amount ​ Sales ​ Amount ​ Sales ​ Change ​ Change ​ Enterprise Solutions ​ $ 146.0 12.4 % $ 138.5 11.5 % $ 7.5 ​ 5.4 % Business Solutions ​ ​ 175.6 ​ 16.7 ​ ​ 170.9 ​ 15.9 ​ ​ 4.7 ​ 2.7 ​ Public Sector Solutions ​ 85.1 14.9 ​ 83.6 14.6 1.5 ​ 1.9 ​ Headquarters/Other, unallocated ​ 15.6 ​ ​ ​ 12.9 ​ ​ 2.7 ​ 21.3 ​ Total ​ $ 422.3 ​ 15.1 % $ 405.9 ​ 14.2 % $ 16.4 ​ 4.0 % ​ ● SG&A expenses for the Enterprise Solutions segment increased both in dollars and as a percentage of net sales.
SG&A expenses attributable to our three operating segments and the remaining unallocated Headquarters/Other expenses are summarized below (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment Net ​ ​ ​ ​ Segment Net ​ $ ​ % ​ ​ ​ Amount ​ Sales ​ Amount ​ Sales ​ Change ​ Change ​ Enterprise Solutions ​ $ 150.4 11.7 % $ 146.0 12.4 % $ 4.4 ​ 3.0 % Business Solutions ​ ​ 179.3 ​ 16.6 ​ ​ 175.6 ​ 16.7 ​ ​ 3.7 ​ 2.1 ​ Public Sector Solutions ​ 90.7 17.8 ​ 85.1 14.9 5.6 ​ 6.6 ​ Headquarters/Other, unallocated ​ 13.6 ​ ​ ​ 15.6 ​ ​ (2.0) ​ (12.9) ​ Total ​ $ 434.0 ​ 15.1 % $ 422.3 ​ 15.1 % $ 11.7 ​ 2.8 % ​ ● SG&A expenses for the Enterprise Solutions segment increased in dollars but decreased as a percentage of net sales.
Amounts outstanding under this facility bear interest at the greatest of (i) the prime rate (7.50% at December 31, 2024), (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, provided that the rate shall at no time be less than 1.00% per annum.
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.
Government treasury securities and $9.6 million of purchases of property and equipment. ​ Cash used in financing activities for the year ended December 31, 2024 consisted of $26.1 million of aggregate borrowings and repayments under our credit facility, $12.4 million of treasury repurchases, $10.5 million of dividend payments, $1.1 million of issuances of stock under the 1997 Employee Stock Purchase Plan, and $3.4 million of payroll taxes on stock-based compensation through shares withheld.
Government treasury securities, and $7.6 million of purchases of property and equipment. ​ Cash used in financing activities for the year ended December 31, 2025 consisted primarily of $0.7 million of aggregate borrowings and repayments under our credit facility, $76.3 million of treasury repurchases, $15.3 million of dividend payments, $1.2 million of issuances of stock under the 1997 Employee Stock Purchase Plan, and $3.0 million of payroll taxes on stock-based compensation through shares withheld.
Although we do not have any borrowing under our credit facility, should we need to borrow in the future, we may be exposed to high interest rates. Additionally, if interest rates were to decrease, our interest income on our cash equivalents and short-term investments would also decrease. ​ ● The impact of proposed tariffs remains uncertain.
Should we need to borrow in the future, we may be exposed to high interest rates. Additionally, if interest rates were to decrease, our interest income on our cash equivalents and short-term investments would also decrease. ​ ● The impact of tariffs remains uncertain.
Based on the 42 Table of Contents qualitative analysis, the Company determined goodwill was not impaired as of December 31, 2024 and 2023.
Based on the qualitative analysis, the Company determined goodwill was not impaired as of December 31, 2025 and 2024.
The year-over-year increase in SG&A dollars was primarily attributable to increases in the use of shared Headquarter services and marketing of $4.5 million and $2.4 million, respectively. These increases were partially offset by a decrease in personnel costs of $2.6 million.
The year-over-year increase in SG&A dollars was primarily attributable to increases in personnel costs and the use of shared Headquarter services of $4.1 million and $1.7 million, respectively, partially offset by a decrease in service contracts/subscriptions of $1.0 million.
The key factors affecting our internally generated funds are our ability to manage costs and fully achieve our operating efficiencies, timely collection of our customer receivables, and management of our inventory levels. ​ 38 Table of Contents Credit facility. Our credit facility extends until March 2025 and is collateralized by our accounts receivable.
The key factors affecting our internally generated funds are our ability to manage costs and fully achieve our operating efficiencies, timely collection of our customer receivables, and management of our inventory levels. ​ Credit Facility.
Income from operations as a percentage of net sales remained substantially the same for the year ended December 31, 2024, compared to the same period in the prior year. ​ Interest income, net for the year ended December 31, 2024 increased to $18.7 million, compared to $10.0 million for the same period in the prior year, primarily due to an increase in interest income of $8.9 million as a result of higher cash equivalent balances and interest rates on short-term investments. ​ Other income for the year ended December 31, 2024 was $1.7 million as a result of a legal settlement received. ​ Income taxes.
Income from operations as a percentage of net sales remained substantially the same for the year ended December 31, 2025, compared to the prior year. ​ Interest income, net for the year ended December 31, 2025 decreased to $14.4 million, compared to $18.7 million for the same period in the prior year, primarily due to a decrease in interest income of $4.4 million as a result of lower realized interest rates in the current year combined with lower cash equivalent and investment balances in the current year. ​ Other income for the year ended December 31, 2025 was $0.1 million as a result of a realized gain on sale of short-term investments, compared to $1.7 million for the same period in the prior year as a result of a legal settlement received. ​ Income taxes.
In connection with these initiatives, we incurred restructuring and other charges of $0.4 million and $2.7 million for the years ended December 31, 2024 and December 31, 2023, respectively. These restructuring charges were primarily related to an involuntary reduction in our headquarter workforce and included cash severance and other related termination benefits.
In connection with these initiatives, we incurred severance expenses and other charges of $6.0 million, $0.4 million, and $2.7 million for the years ended December 31, 2025, 2024, and 2023, respectively. The severance expenses and other charges were primarily related to voluntary and involuntary reductions in the Company’s workforce.
SG&A expenses as a percentage of net sales were 14.9% for the Public Sector Solutions segment for the year ended December 31, 2024, which reflects an increase of 30 basis points and is primarily due to the decrease in net sales combined with the increase in SG&A expenses. ​ ● SG&A expenses for the Headquarters/Other increased by $2.7 million primarily due to increases in personnel costs and service contracts/subscriptions of $17.7 million and $4.0 million, respectively.
SG&A expenses as a percentage of net sales were 17.8% for the Public Sector Solutions segment for the year ended December 31, 2025, which reflects an increase of 290 basis points and is primarily due to the decrease in net sales discussed above combined with the increase in SG&A expenses. ​ ● SG&A expenses for the Headquarters/Other decreased by $2.0 million primarily due to an increase in the allocated amounts to the operating segments of $11.6 million and a decrease in depreciation and amortization of $1.2 million, partially offset by increases in personnel costs, service contracts/subscriptions, and marketing of $7.2 million, $2.3 million, and $1.2 million, respectively.
Certain leases require us to pay real estate taxes, insurance, and common area maintenance charges. See “Item 2. Properties” of this Annual Report on Form 10-K for additional information regarding our operating leases. ​ Factors Affecting Sources of Liquidity ​ Internally Generated Funds.
See “Item 2. Properties” of this Annual Report on Form 10-K for additional information regarding our operating leases. ​ Factors Affecting Sources of Liquidity ​ Internally Generated Funds.
SG&A expenses as a percentage of net sales were 12.4% for the Enterprise Solutions segment for the year ended December 31, 2024, which reflects an increase of 90 basis points and is primarily due to the decrease in net sales combined with the increase in SG&A expenses. ​ ● SG&A expenses for the Business Solutions segment increased both in dollars and as a percentage of net sales.
SG&A expenses as a percentage of net sales were 11.7% for the Enterprise Solutions segment for the year ended December 31, 2025, which reflects a decrease of 70 basis points and is primarily due to the increase in net sales discussed above. ​ ● SG&A expenses for the Business Solutions segment increased in dollars but remained substantially the same as a percentage of net sales.
These decreases were partially offset by increases in net sales of notebooks/mobility, servers/storage, and accessories of $21.2 million, $19.6 million, and $2.7 million, respectively. ​ ● Net sales of $571.8 million for the Public Sector Solutions segment reflect a decrease of $2.1 million, or 0.4%, year-over-year.
These increases were partially offset by decreases in net sales of accessories and servers/storage of $16.4 million and $14.4 million, respectively. ​ ● Net sales of $508.5 million for the Public Sector Solutions segment reflect a decrease of $63.3 million, or 11.1% year-over-year.
These decreases were partially offset by increases in net sales of notebooks/mobility and desktops of $42.3 million and $31.3 million, respectively, as shown in Note 2, “Revenue” to the Consolidated Financial Statements.
These increases were partially offset by decreases in net sales of displays and sound, net/com products, and accessories of $22.4 million, $8.6 million, and $3.6 million, respectively, as shown in Note 2, “Revenue” to the consolidated financial statements.
Our provision for income taxes for the year ended December 31, 2024 was $30.4 million, compared to $29.8 million for the same period in the prior year. The increase in our provision for income taxes was primarily due to the increase in interest income, net, partially offset by the decrease in income from operations.
Our provision for income taxes for the year ended December 31, 2025 was $30.0 million, compared to $30.4 million for the same period in the prior year. The decrease in our provision for income taxes was primarily due to the decrease in income before taxes, partially offset by a decreased benefit in stock-based compensation.
The property and equipment expenditures were primarily for computer equipment and capitalized internally-developed software in connection with investments in our IT infrastructure. Cash used in investing activities for the prior year consisted of $150.6 million of purchases of short-term U.S.
Government treasury securities, $205.6 million of maturities of U.S. Government treasury securities, and $7.4 million of purchases of property and equipment. The property and equipment expenditures were primarily for computer equipment and capitalized internally-developed software in connection with investments in our IT infrastructure.
These increases were partially offset by an increase in the allocated amounts to the sales segments of $19.5 million. The Headquarters/Other provides services to the three segments in areas such as finance, distribution center, human resources, IT, marketing, and product management.
The Headquarters/Other provides services to the three segments in areas such as finance, distribution center, human resources, IT, marketing, and product management.
The decrease was primarily driven by a decrease in sales to state and local government and educational institutions of $21.1 million, partially offset by an increase of sales to federal governments of $19.0 million.
The decrease was primarily driven by decreases in sales to state and local government and educational institutions of $40.0 million and sales to the federal government of $23.3 million.
As of December 31, 2024, we had $178.3 million in cash and cash equivalents. ​ ● Short-term Investments . As of December 31, 2024, we had $264.3 million in short-term investments. ​ ● Cash Generated from Operations .
As of December 31, 2025, we had $193.2 million in cash and cash equivalents. ​ ● Short-term Investments . As of December 31, 2025, we had $213.5 million in short-term investments. ​ 36 Table of Contents ● Cash Generated from Operations .
As of December 31, 2024, we were in compliance with the covenants of our credit facility. 36 Table of Contents ​ Our ability to continue funding our planned growth, both internally and externally, is dependent upon our ability to generate sufficient cash flow from operations or to obtain additional funds through equity or debt financing, or from other sources of financing, as may be required.
We expect to generate cash flows from operations in excess of operating cash needs by generating earnings and managing net changes in inventories and receivables with changes in payables to generate positive cash flow. ​ Our ability to continue funding our planned growth, both internally and externally, is dependent upon our ability to generate sufficient cash flow from operations or to obtain additional funds through equity or debt financing, or from other sources of financing, as may be required.
These decreases were partially offset by increases in net sales of desktops, displays and sound, and accessories of $38.3 million, $25.7 million, and $3.1 million, respectively. ​ ● Net sales of $1,049.1 million for the Business Solutions segment reflect a decrease of $26.5 million, or 2.5% year-over-year, primarily due to a decrease in net sales of advanced technologies.
These increases were partially offset by decreases in net sales of displays and sound and net/com products of $12.2 million and $6.0 million, respectively. ​ ● Net sales of $1,081.8 million for the Business Solutions segment reflect an increase of $32.7 million, or 3.1% year-over-year, primarily due to increases in net sales of desktops, notebooks/mobility, and software of $23.9 million, $23.5 million, and $15.7 million, respectively.
The increase in DPO is consistent with the increase in accounts payable discussed above. ​ Cash used in investing activities for the year ended December 31, 2024 consisted of $358.3 million of purchases of short-term U.S. Government treasury securities, $250.6 million of maturities of U.S. Government treasury securities, and $7.6 million of purchases of property and equipment.
Cash used in investing activities for the prior year consisted of $358.3 million of purchases of short-term U.S. Government treasury securities, $250.6 million of maturities of U.S.
We did not have any borrowings outstanding under the credit facility as of December 31, 2024. ​ Cash receipts are automatically applied against any outstanding borrowings. Any excess cash on account may either remain on account to generate earned credits to offset up to 100% of cash management fees, or may be invested in short-term qualified investments.
Any excess cash on account could either remain on account to generate earned credits to offset up to 100% of cash management fees, or be invested in short-term qualified investments. Borrowings under the credit facility were classified as current in our consolidated balance sheets. ​ Supplier Finance Programs.
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.
Revenue allocated to ESPs is recognized at the point in time when our vendor and customer accept the terms and conditions in the sales arrangement. All amounts billed to a customer in a sales transaction related to shipping and handling, if any, represent revenues earned for the goods provided, and these amounts have been included in net sales.
The year-over-year increase in SG&A dollars was primarily attributable to an increase in the use of shared Headquarter services of $12.8 million. This increase was partially offset by a decrease in personnel costs of $5.7 million.
The year-over-year increase in SG&A dollars was primarily attributable to increases in the use of shared Headquarter services, professional fees, and other expenses of $3.3 million, $2.7 million, and $0.6 million, respectively, partially offset by a decrease in marketing of $0.7 million.
If the economic impact of any imposed tariff is passed through to us by our vendors, our results of operations could be impacted. ​ ● Changes in partner funding programs could change the amount of incentives received by us, which could impact our results of operations. ​ ​ ​ 31 Table of Contents RESULTS OF OPERATIONS ​ The following table sets forth information derived from our statements of income expressed as a percentage of net sales for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2024 ​ ​ 2023 ​ 2022 ​ Net sales (in millions) ​ $ 2,802.1 ​ $ 2,850.6 ​ $ 3,125.0 ​ Gross margin ​ ​ 18.6 % ​ 18.0 % ​ 16.8 % Selling, general and administrative expenses ​ 15.1 ​ 14.2 ​ 13.0 ​ Income from operations ​ 3.5 ​ 3.6 ​ 3.9 ​ ​ Net sales of $2,802.1 million in 2024 reflected a decrease of $48.5 million compared to 2023, which was driven by lower net sales for our Enterprise Solutions and Business Solutions segments as shown in the table on page 34 of this Annual Report on Form 10-K.
We believe that gross billings provides the same insight to investors. ​ The following table sets forth the gross billings for each of our operating segments and our consolidated entity (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Gross billings ​ ​ ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ $ 1,687.4 ​ $ 1,558.7 ​ $ 1,547.9 Business Solutions ​ 1,691.5 ​ 1,632.1 ​ 1,601.7 Public Sector Solutions ​ ​ 755.2 ​ 836.1 ​ 823.3 Total gross billings ​ $ 4,134.1 ​ $ 4,026.9 ​ $ 3,972.9 ​ RESULTS OF OPERATIONS ​ The following table sets forth information derived from our statements of income expressed as a percentage of net sales for the periods indicated (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ 2025 ​ ​ 2024 ​ ​ ​ ​ 2023 ​ Net sales ​ $ 2,872.7 ​ $ 2,802.1 ​ $ 2,850.6 ​ Gross margin ​ ​ 18.8 % ​ 18.6 % ​ 18.0 % Selling, general and administrative expenses ​ 15.1 % 15.1 % 14.2 % Income from operations ​ 3.5 % 3.5 % 3.6 % ​ Net sales of $2,872.7 million in 2025 reflected an increase of $70.6 million compared to 2024, which was driven by higher net sales for our Enterprise Solutions and Business Solutions segments as shown in the table on page 34 of this Annual Report on Form 10-K.
Our effective tax rate was 25.9% for the year-ended December 31, 2024, compared to 26.4% for the year ended December 31, 2023, primarily due to the release of the valuation allowance on state net operating losses. ​ Net income increased by $3.8 million to $87.1 million for the year ended December 31, 2024, from $83.3 million in the prior year, primarily due to the increase in interest income, net, partially offset by the decrease in income from operations, as explained above. ​ LIQUIDITY AND CAPITAL RESOURCES ​ Liquidity Overview ​ Our primary sources of liquidity are internally generated funds from operations, short-term investments, and borrowings under our credit facility.
The increase in our effective tax rate is primarily due to the decreased benefit in stock-based compensation. ​ Net income for the year ended December 31, 2025 decreased to $83.7 million, compared to $87.1 million for the same period in the prior year, primarily due to the decreases in interest income, net and other income, as discussed above. ​ LIQUIDITY AND CAPITAL RESOURCES ​ Liquidity Overview ​ Our primary sources of liquidity are internally generated funds from operations and short-term investments.
Gross profit increased year-over-year by $8.1 million as shown in the table on page 34 of this Annual Report on Form 10-K, primarily due to improved margins in desktops in the current year.
Gross profit increased year-over-year by $19.5 million as illustrated in the table and the discussion beginning on page 34 of this Annual Report on Form 10-K. Gross margin increased year-over-year by 20 basis points as shown in the above table.
The restructuring and other charges were primarily related to expenses incurred in connection with the involuntary reduction in our headquarter workforce and included cash severance and other related termination benefits. 35 Table of Contents ​ Income from operations for the year ended December 31, 2024 decreased to $97.1 million, compared to $103.2 million for the same period in the prior year, primarily due to the increase in SG&A expenses explained above.
Both the voluntary and involuntary reductions included cash severance and other related termination benefits. ​ Income from operations for the year ended December 31, 2025 increased to $99.3 million, compared to $97.1 million for the same period in the prior year, primarily due to increase in gross profit, partially offset by the increases in SG&A expenses and severance expenses and other charges, as discussed above.
There were no restructuring related costs incurred for the year ended December 31, 2022. ​ 33 Table of Contents YEAR-OVER-YEAR COMPARISONS ​ Year Ended December 31, 2024 Compared to Year En ded December 31, 2023 ​ Changes in net sales and gross profit by operating segment are shown in the following table (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ $ ​ % ​ ​ ​ Amount ​ Net Sales ​ Amount ​ Net Sales ​ Change ​ Change ​ Net Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ $ 1,181.2 42.2 % $ 1,201.1 42.2 % $ (19.9) ​ (1.7) % Business Solutions ​ ​ 1,049.1 ​ 37.4 ​ ​ 1,075.6 ​ 37.7 ​ ​ (26.5) ​ (2.5) ​ Public Sector Solutions ​ 571.8 20.4 ​ 573.9 20.1 (2.1) ​ (0.4) ​ Total ​ $ 2,802.1 ​ 100.0 % $ 2,850.6 ​ 100.0 % $ (48.5) ​ (1.7) % Gross Profit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ $ 180.0 15.2 % $ 178.9 14.9 % $ 1.1 ​ 0.6 % Business Solutions ​ ​ 252.4 ​ 24.1 ​ ​ 247.1 ​ 23.0 ​ ​ 5.3 ​ 2.2 ​ Public Sector Solutions ​ 87.4 15.3 ​ 85.7 14.9 1.7 ​ 1.9 ​ Total ​ $ 519.8 ​ 18.6 % $ 511.7 ​ 18.0 % $ 8.1 ​ 1.6 % ​ Net sales decreased by 1.7% to $2,802.1 million in 2024 from $2,850.6 million in 2023, as explained below: ​ ● Net sales of $1,181.2 million for the Enterprise Solutions segment reflect a decrease of $19.9 million, or 1.7%, year-over-year, primarily due to a decrease in net sales of advanced technologies.
The majority of each of these costs are expected to be paid within a year of termination and any unpaid balances are included in accrued payroll on the consolidated balance sheets as of December 31, 2025. ​ 33 Table of Contents YEAR-OVER-YEAR COMPARISONS ​ Year Ended December 31, 2025 Compared to Year En ded December 31, 2024 ​ Changes in net sales and gross profit by operating segment are shown in the following table (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ $ ​ % ​ ​ ​ Amount ​ Net Sales ​ Amount ​ Net Sales ​ Change ​ Change ​ Net Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ $ 1,282.4 44.6 % $ 1,181.2 42.2 % $ 101.2 ​ 8.6 % Business Solutions ​ ​ 1,081.8 ​ 37.7 ​ ​ 1,049.1 ​ 37.4 ​ ​ 32.7 ​ 3.1 ​ Public Sector Solutions ​ 508.5 17.7 ​ 571.8 20.4 (63.3) ​ (11.1) ​ Total ​ $ 2,872.7 ​ 100.0 % $ 2,802.1 ​ 100.0 % $ 70.6 ​ 2.5 % Gross Profit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Enterprise Solutions ​ $ 185.9 14.5 % $ 180.0 15.2 % $ 5.9 ​ 3.3 % Business Solutions ​ ​ 272.1 ​ 25.2 ​ ​ 252.4 ​ 24.1 ​ ​ 19.7 ​ 7.8 ​ Public Sector Solutions ​ 81.3 16.0 ​ 87.4 15.3 (6.1) ​ (6.9) ​ Total ​ $ 539.3 ​ 18.8 % $ 519.8 ​ 18.6 % $ 19.5 ​ 3.8 % ​ Net sales increased by 2.5% to $2,872.7 million in 2025, as explained below: ​ ● Net sales of $1,282.4 million for the Enterprise Solutions segment reflect an increase of $101.2 million, or 8.6% year-over-year, primarily due to increases in net sales of notebooks/mobility, desktops, servers/storage, accessories, software, and other hardware/services of $26.6 million, $21.8 million, $20.8 million, $20.4 million, $19.2 million, and $10.6 million, respectively.
We recognize revenue related to ESPs as the agent in the transaction because we do not have control over the on-going ESPs service and do not provide any service after the sale. Revenue allocated to ESPs is recognized at the point in time when our vendor and customer accept the terms and conditions in the sales arrangement.
We also offer extended service plans, or ESPs, on IT products, both as part of the initial arrangement and separately from the IT products. We recognize revenue related to ESPs as the agent in the transaction because we do not have control over the on-going ESPs service and do not provide any service after the sale.
Gross margin 34 Table of Contents increased 110 basis points compared to the prior year primarily due to an increase in the amount of software sales recognized on a net basis. ​ ● Gross profit for the Public Sector Solutions segment increased by $1.7 million, or 1.9% year-over-year as referenced in the table on the previous page, primarily as a result of improved invoice margins in notebooks/mobility.
These decreases were partially offset by increases in net sales of servers/storage and desktops of $9.0 million and $7.8 million, respectively. ​ Gross profit increased by 3.8% to $539.3 million in 2025, as explained below: ​ ● Gross profit for the Enterprise Solutions segment increased by $5.9 million, or 3.3% year-over-year as referenced in the above table, primarily as a result of the increase in net sales as discussed in the preceding paragraph. ​ ● Gross profit for the Business Solutions segment increased by $19.7 million, or 7.8% year-over-year as referenced in the above table, primarily as a result of improved invoice margins in notebooks/mobility primarily due to low-margin deals in the prior year. ​ ● Gross profit for the Public Sector Solutions segment decreased by $6.1 million, or 6.9% year-over-year as referenced in the above table, primarily as a result of the decrease in net sales as discussed in the preceding paragraph. 34 Table of Contents ​ Gross margin increased by 20 basis points to 18.8% in 2025, as explained below: ​ ● Gross margin for the Enterprise Solutions segment decreased by 70 basis points compared to the prior year primarily due to a decrease in the amount of software sales recognized on a net basis, as well as reduced software agency fees. ​ ● Gross margin for the Business Solutions segment increased by 110 basis points compared to the prior year primarily due to an increase in the amount of software sales recognized on a net basis. ​ ● Gross margin for the Public Sector Solutions segment increased by 70 basis points compared to the prior year primarily due to an increase in the amount of software sales recognized on a net basis relative to total sales in the segment. ​ SG&A expenses in 2025 increased year-over-year in dollars but remained substantially the same as a percentage of net sales.
The decrease in net sales was primarily driven by a decrease in net sales of advanced technology categories including net/com products and software of $85.7 million and $44.1 million, respectively.
The increase in net sales was primarily driven by an increase in net sales of desktops of $53.5 million, as well as increase in net sales of advanced technology categories including software and servers/storage of $35.7 million and $15.3 million, respectively.
Gross margin increased year-over-year by 60 basis points as shown in the above table primarily due to an increase in the amount of software sales recognized on a net basis, combined with improved margins in desktops.
The increase in gross margin was primarily due to improved invoice margins in servers/storage, net/com products, and notebooks/mobility primarily as a result of higher-margin deals in the current year, combined with an increase in the amount of software sales recognized on a net basis as these sales are recognized in the financial statements at 100% margin.
The decrease in DSO is primarily due to an increase in net sales for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023. The decrease in DIO is consistent with the decrease in inventory discussed above.
The increase in DSO is primarily due to the increase in accounts receivable as of December 31, 2025 compared to December 31, 2024. The increase in DIO is primarily due to the increase in inventory as of December 31, 2025 compared to December 31, 2024.
Cash provided by operating activities for the year ended December 31, 2023 resulted primarily from net income of $83.3 million, $18.4 million of other non-cash charges added back to net income, including $12.7 million of depreciation and amortization and $7.0 million of stock-based compensation expense, an $84.5 million decrease in inventory, and a $31.1 million increase in accounts payable, partially offset by a decrease in accrued expenses and other liabilities of $11.8 million and an increase in prepaid expenses and other current assets of $8.5 million. ​ In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle, defined as days of sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts payable, based on a rolling three-month average.
The decrease in cash from operating activities attributable to accounts receivable is primarily driven by the timing of customer deliveries. ​ 37 Table of Contents In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle, defined as days of sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts payable, based on a rolling three-month average.
For more information about the restrictive covenants in our debt instruments and inventory financing agreements, see “Factors Affecting Sources of Liquidity” below. For more information about our obligations, commitments, and contingencies, see our consolidated financial statements and the accompanying notes included in this annual report. ​ Credit facility.
For more information about our obligations, commitments, and contingencies, see our consolidated financial statements and the accompanying notes included in this annual report. ​ Credit Facility. Our credit facility collateralized by our accounts receivable expired March 31, 2025. We did not elect to extend or replace this credit facility given our significant cash, cash equivalent, and short-term investment balances.
The year-over-year increase in SG&A dollars was primarily attributable to an increase in the use of shared Headquarter services of $2.2 million.
The year-over-year increase in SG&A dollars was primarily attributable to an increase in the use of shared Headquarter services of $6.6 million, partially offset by decreases in personnel costs, other expenses, marketing, and credit card fees of $0.9 million, $0.8 million, $0.5 million, and $0.4 million, respectively. ​ ● SG&A expenses for the Public Sector Solutions segment increased both in dollars and as a percentage of net sales.
Removed
SG&A expenses increased year-over-year both in dollars and as a percentage of net sales primarily due to investments in resources to strengthen our sales, technical sales, and services capabilities combined with the decrease in net sales.
Added
If the economic impact of any imposed tariff is passed through to us by our vendors, our results of operations could be impacted. ​ ● Changes in partner funding programs could change the amount of incentives received by us, which could impact our results of operations. ​ ● The possibility of a U.S.
Removed
No amounts related to these costs are included in accrued expenses and other liabilities on the consolidated balance sheets as all such amounts have been paid as of December 31, 2024.
Added
Government shutdown could adversely impact our results of operations, particularly within our Public Sector Solutions segment. ​ 30 Table of Contents KEY OPERATING METRIC ​ Gross Billings ​ We utilize key operating metrics to track and assess the performance of our business, including gross billings.
Removed
Net sales of net/com products, notebooks/mobility, software, other hardware/services, and servers/storage decreased year-over-year by $23.1 million, $23.0 million, $19.4 million, $10.9 million, and $10.8 million, respectively.
Added
Gross billings is the total dollar value of goods and services billed during the period, net of customer returns, credit memos, and any applicable sales or other taxes and includes agency fees, and freight.
Removed
Net sales of net/com products, software, and displays and sound decreased year-over-year by $40.6 million, $21.3 million, and $8.9 million, respectively.
Added
As certain transactions are recognized on a net basis, gross billings include amounts not recognized in net sales. ​ We use the gross billings operating metric for planning, forecasting, and evaluating the sales performance of our operating segments by providing insight into the total value of our business transactions.
Removed
Net sales of net/com products, desktops, other hardware/services, servers/storage, software, and displays and sound decreased year-over-year by $22.0 million, $7.3 million, $5.5 million, $5.0 million, $3.5 million, and $2.8 million, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed1 unchanged
Biggest changeOur average outstanding borrowings during 2024 were minimal, and as such a hypothetical 10% increase or decrease in interest rates is not material. While the nature of our short-term investments protects us from changes in short-term interest rates, a change in short-term interest rates could affect the fair value of our short-term investments.
Biggest changeWhile the nature of our short-term investments protects us from changes in short-term interest rates, a change in short-term interest rates could affect the fair value of our short-term investments. However, the change in earnings resulting from a hypothetical 10% increase or decrease in interest rates is not material.
We believe the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations, and cash flows should not be material. Our bank of line credit, along with our cash equivalents and short-term investments exposes earnings to changes in short-term interest rates since interest rates on the underlying obligations are variable.
We believe the effect, if any, of reasonably possible near-term changes in interest rates on our financial position, results of operations, and cash flows should not be material. Our cash equivalents and short-term investments expose earnings to changes in short-term interest rates since interest rates on the underlying obligations are variable.
However, our operations may be subject to inflation in the future. ​ Item 8. Financial Statements and Supplementary Data ​ The information required by this Item is included in this Report beginning at page F-1. ​ Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ​ None. ​
Financial Statements and Supplementary Data ​ The information required by this Item is included in this Report beginning at page F-1. ​ Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ​ None. ​
However, the change in earnings resulting from a hypothetical 10% increase or decrease in interest rates is not material. Inflation generally affects us by increasing our cost of labor and research, manufacturing and development costs. We believe that inflation has not had a material effect on our financial statements included elsewhere in this Annual Report on Form 10-K.
Inflation generally affects us by increasing our cost of labor and research, manufacturing and development costs. We believe that inflation has not had a material effect on our financial statements included elsewhere in this Annual Report on Form 10-K. However, our operations may be subject to inflation in the future. ​ Item 8.
Removed
In addition, our credit facility provides for borrowings which bear interest at the greatest of (i) the prime rate (7.50% at December 31, 2024), (ii) the federal funds effective rate plus 0.50% per annum, and (iii) the daily SOFR Rate plus 1.00% per annum, provided that the rate shall at no time be less than 1.00% per annum.

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