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# PC Connection CEO Says Most Of The PC Upgrade Cycle Is Behind It, Sees Endpoint Demand Possibly Dipping In 2027
- URL: https://www.bullished.co/pc-connection-ceo-says-most-of-the-pc-upgrade-cycle-is-behind-it-sees-endpoint-demand-e956afc0/
- Published: 2026-10-28T21:27:22.000Z
- Updated: 2026-10-28T21:27:22.000Z
- Description: Tim McGrath said endpoint demand "might be down slightly" next year, even after third-quarter net sales rose 23.3% to $874.3 million.
- Author: Matteo Parrino
- Tags: Earnings, CNXN, Industry: Technology

[PC Connection](https://www.bullished.co/tag/cnxn/) CEO Tim McGrath said on the company's third-quarter earnings call Wednesday that "the majority of the endpoint device upgrade cycle is now behind us," and that endpoint demand "might be down slightly in 27 from 26." He spoke after the company reported record quarterly [net sales of $874.3 million](https://www.wusa9.com/article/syndication/associatedpress/pc-connection-q3-earnings-snapshot/616-bb570f23-f1f2-41fc-bf57-c14fabd74a4c?ref=bullished.co), up 23.3% from a year earlier.

## A cycle that pulled purchases forward

McGrath, who is president and CEO, answered a question from an analyst at Sidoti about how the company can sustain its record growth into 2027\. He said some customers pulled purchases forward while others delayed and swept assets, and that AI should keep driving endpoint demand regardless.

He called 2027 an optimistic outlook but "a little down from 2026." He also said demand for on-prem, agentic server, networking security and software "will continue to be pretty solid."

On the fourth quarter, CFO Tom Baker said history points to a sequential drop of 3% or 4% from the third quarter, and that he expects the pattern to repeat. McGrath said the company is hearing no signs of a year-end budget flush, which he called a little uncharacteristic of the fourth quarter, and cited some budget crowding among customers.

## Laptop revenue up 30%, units down 5%

Baker told an analyst at Raymond James that notebook and laptop revenue rose more than 30% while unit count fell about 5%, and said the gap shows the pricing environment. Gross margin fell 110 basis points to 18.5%. Baker said about half of that decline came from software accounting, a lower mix of software booked net, and half from customer and product mix, with endpoint devices sold to large customers carrying lower margins.

Gross profit grew 16.7% to a record $161.9 million. Operating income rose 35.4% to $41 million, net income rose 27.2% to [$31.5 million](https://www.wusa9.com/article/syndication/associatedpress/pc-connection-q3-earnings-snapshot/616-bb570f23-f1f2-41fc-bf57-c14fabd74a4c?ref=bullished.co), and diluted earnings per share were $1.24.

## What PC Connection sells

PC Connection, which sells computers, software, networking gear and IT services to businesses and public institutions, saw growth across product lines. Notebooks, mobility and desktops grew 26.6%, software 23.2%, server and storage 45.1% and networking 43.3%.

By segment, Enterprise Solutions net sales rose 27.4% to a record $407.5 million and ended the quarter with a record backlog. Business Solutions rose 27.8% to $328.2 million. Public Sector Solutions rose 4.6% to $138.6 million, as state, local and education business outshone a federal unit that McGrath said is still being rebuilt but returned to growth.

The board declared a $0.20 per share dividend payable November 27, 2026 to holders of record on November 10, and $81.2 million remains available under the buyback program.

### Sources

- [Is PC Connection (CNXN) Stock Already Pricing In Too Much Earnings Hope?](https://finance.yahoo.com/markets/stocks/articles/pc-connection-cnxn-stock-already-111424675.html?ref=bullished.co) — Yahoo Finance
- [PC Connection: Q3 Earnings Snapshot | wusa9.com](https://www.wusa9.com/article/syndication/associatedpress/pc-connection-q3-earnings-snapshot/616-bb570f23-f1f2-41fc-bf57-c14fabd74a4c?ref=bullished.co) — Associated Press

### More on PC Connection

- [Connection Profit Climbs 27.2% To $31.5 Million As Server Sales Jump 45%](https://www.bullished.co/connection-profit-climbs-27-2-to-31-5-million-as-server-sales-jump-45-85d4ef41/)
- [PC Connection Earned $81.8 Million In Nine Months, Yet Operations Burned $39.8 Million In Cash](https://www.bullished.co/pc-connection-earned-81-8-million-in-nine-months-yet-operations-burned-39-8-million-in-b7bfcacd/)
- [PC Connection Names Ex-Tusker CEO Matt Zafirovski President And COO At $700,000 Base Salary](https://www.bullished.co/pc-connection-names-ex-tusker-ceo-matt-zafirovski-president-and-coo-at-700-000-base-salary-cb12b666/)

[All PC Connection (CNXN) coverage →](https://www.bullished.co/tag/cnxn/)