Connection began 2026 with results that exceeded Wall Street’s expectations, supported by robust demand in its Enterprise and Business Solutions segments. Management credited growth in endpoint devices, networking, and cloud security, while disciplined pricing and proactive supply chain strategies helped navigate industry-wide memory shortages. CEO Timothy McGrath noted, “Our Business Solutions and Enterprise Solutions segments delivered strong growth and consistent execution,” emphasizing the company’s ability to offset a sharp decline in Public Sector sales due to a nonrecurring federal contract. The quarter’s positive momentum reflected the resilience and diversification of Connection’s business model.

Is now the time to buy CNXN? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Connection’s Q1 Earnings Call

• Adam Tindle (Raymond James) asked about the risk of double ordering and the nature of the current backlog. CEO Timothy McGrath and CFO Thomas Baker responded that improved visibility and strict non-cancelable purchase order policies limit this risk, with no evidence of double ordering currently observed.
• Adam Tindle (Raymond James) inquired about the extent and impact of price increases versus unit volume trends. McGrath explained that memory shortages are driving prices higher, which offsets declining unit sales, while Baker added that these dynamics will influence growth rates as the year progresses.
• Adam Tindle (Raymond James) requested perspective on the timing of backlog conversion and potential growth trends in the second half of the year. Baker indicated some backlog and inventory would roll off in Q2 and Q3 but cautioned that overall trends are difficult to predict due to ongoing pricing volatility.
• Anthony Lebiedzinski (Sidoti) followed up on pricing versus unit volume dynamics, seeking more detail on their respective contributions. Baker confirmed that price increases are widespread and unit volumes have declined, with each supplier handling pricing adjustments differently.
• Anthony Lebiedzinski (Sidoti) asked about the outlook for the PC refresh cycle and SG&A trends. McGrath expects the refresh cycle to continue through 2026, front-loaded to the first half, while Baker forecasted only a modest increase in SG&A as a share of gross profit for the rest of the year.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will closely monitor (1) how quickly Connection can convert its record backlog into revenue, (2) the pace and sustainability of AI-enabled device adoption across key customer segments, and (3) the evolution of supply chain constraints and memory price inflation. The trajectory of expense management and the ability to offset Public Sector headwinds will also be critical to watch.

Connection currently trades at $65.40, up from $63.38 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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