SCANSOURCE 2026 Q2
Earnings Overview & AI Insights

Earnings Performance

Summary of Financial Performance: ScanSource delivered a strong Q4 and full-year FY2026, with Q4 sales up 17% YoY and full-year sales up 6%. Non-GAAP EPS rose 43% in Q4 to a record $1.46. Full-year product net sales grew 5.9% and recurring revenue grew 10.6%, lifting recurring revenue to 34% of consolidated gross profit. Consolidated gross profit increased 7% YoY, free cash flow was $114 million, and cash conversion was 124% of non-GAAP net income. Specialty Technology Solutions Q4 net sales rose 18% with adjusted EBITDA margin of 3.96%; Intelisys/advisory Q4 net sales and gross profit each grew 78% YoY with a 36.4% EBITDA margin.

Company Outlook & Strategy: Management expects FY2027 organic revenue growth of 6% to 10%, adjusted EBITDA of $158 million to $165 million, adjusted EBITDA margin of 4.6% to 4.65%, and at least $85 million in free cash flow. The outlook excludes MicroAge, which is expected to close by the end of Q1 and will be added to guidance later. Strategy remains focused on expanding TAM, increasing services and recurring revenue, maintaining a strong balance sheet, and deploying capital through disciplined acquisitions and share repurchases.

Key Industry Trends: Demand improved across multiple technology categories, especially physical security, mobility, networking, CX, cloud compute, connectivity, cloud, cybersecurity, data center, and AI. Management highlighted a return of large deals and stronger second-half demand, while noting broad-based pricing increases across the industry. The company also emphasized the continued channel shift toward solutions that combine hardware, cloud, and services.

Operational Highlights: ScanSource announced a definitive agreement to acquire MicroAge, which will add new services capabilities and broaden channel reach. Management also cited progress in its converged communications strategy and improved focus on winning market share. Intelisys showed stronger performance through investments in growth areas like cloud compute, connectivity, and CX. In Brazil, profitability remained solid despite softer top-line performance, but headcount actions were taken to preserve leverage. Share repurchases totaled $98 million for the full year.

Challenges & Risks: Management noted macro uncertainty, potential supply chain constraints, and especially Juniper supply limitations that may delay the benefit from the HPE/Juniper relationship until later in FY2027. Brazil faced a difficult quarter and required structural changes. MicroAge integration and potential channel conflict were discussed, though management believes the risk is low and manageable.

Key Analyst Questions & Responses: Analysts questioned why Q4/full-year results beat guidance, with management attributing it to stronger-than-expected demand and the return of large deals. On FY2027 guidance cadence, management said first-half growth should be stronger due to easier comps, while the second half faces tougher comparisons. Regarding Juniper, management expects benefits to ramp slowly in the first half due to supply constraints, with more meaningful contribution in the second half. On MicroAge, management said the acquisition was driven by long-term strategy, services expansion, and attractive returns versus repurchases, while downplaying channel conflict and emphasizing partner collaboration. For Intelisys, management said the turnaround is being driven by a more proactive growth strategy and investment in fast-growing technologies; bookings were not disclosed.