PC Connection (CNXN) risk factors, FY2025 10-K

Risks Related to our Business, Operations and Industry

1. 01We have experienced variability in sales and may not be able to maintain profitable operations
2. 02Our 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
3. 03Substantial competition could reduce our market share and may negatively affect our business
4. 04We face and will continue to face significant price competition, which could result in a reduction of our profit margins
5. 05Inflation may adversely impact our business, financial condition and results of operations
6. 06The interruption of the flow of products from suppliers could disrupt our supply chain
7. 07Failure to provide high quality services to our clients could adversely affect our reputation, brand, business, results of operations or cash flows
8. 08General economic and political conditions, including unfavorable conditions in a business or industry sector, may lead our clients to delay or forgo investments in IT hardware, software and services
9. 09We acquire a majority of our products for resale from a limited number of vendors. The loss of any one of these vendors could have a material adverse effect on our business21% rewritten
10. 10Virtualization of IT resources and applications, including networks, servers, applications, and data storage may disrupt or alter our traditional distribution models
11. 11The methods of distributing IT products are changing, and such changes may negatively impact us and our business
12. 12We depend heavily on third-party shippers to deliver our products to customers and would be adversely affected by a service interruption by these shippers
13. 13We may experience increases in shipping and postage costs, which may adversely affect our business if we are not able to pass such increases on to our customers
14. 14We may experience a reduction in the incentive programs offered to us by our vendors
15. 15Should our financial performance not meet expectations, we may be required to record a significant charge to earnings for impairment of goodwill and other intangibles
16. 16We are exposed to inventory obsolescence due to the rapid technological changes occurring in the IT industry
17. 17We are exposed to accounts receivable risk and if customers fail to timely pay amounts due to us, our results of operations and/or cash flows could be adversely affected
18. 18We are dependent on key personnel and, more generally, skilled personnel in all areas of our business and the loss of key persons or the inability to attract, train and retain qualified personnel could adversely impact our business

Risks Related to Our Technology, Data and Intellectual Property

1. 19Cyberattacks 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
2. 20Our 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
3. 21We 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 operations68% rewritten
4. 22We are reliant on the continued development of electronic commerce and Internet infrastructure development to grow our overall sales23% rewritten
5. 23We could experience Internet and other system failures which would interfere with our ability to process orders
6. 24Privacy concerns with respect to list development and maintenance may materially adversely affect our business

Risks Related to Regulatory and Legal Matters

1. 25We are party to various legal proceedings that arise in the ordinary course of our business, which include commercial, employment, tort and other litigation
2. 26The failure to comply with our public sector contracts could result in, among other things, fines or liabilities
3. 27We face uncertainties relating to the collection of state sales and use tax

Risks Related to Our Common Stock

1. 28Our 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
2. 29We are controlled by one principal stockholder