PC Connection Inc (NASDAQ:CNXN) reported mixed results for the third quarter of 2024, with record net income and earnings per share but declining gross margins and operating income. The company's stock plummeted by 5.02% following the earnings release, as investors reacted to the challenges and uncertainties highlighted by the management.
While the company achieved record net income of $27.1 million and diluted earnings per share of $1.02, driven by growth in notebook and desktop sales, as well as strong performance in the software, cloud, and cybersecurity segments, the overall results were tempered by declining gross margins and reduced profitability in certain areas.
Gross margins decreased by 30 basis points to 18.7% in Q3 2024 compared to the prior year quarter, primarily due to large project rollouts with lower margins in the federal government and enterprise sectors. Operating income also declined by 6.2% compared to Q3 2023, reflecting the impact of increased selling, general, and administrative expenses.
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