10-Q · May 7, 2026
ScanSource reported Q3 FY26 net sales of $766.8 million and diluted EPS of $0.78, both surpassing consensus estimates of $722.3 million and $0.92 respectively. The Specialty Technology Solutions segment experienced a…
Earnings analysis · 10-K
SCSC earnings analysis
Filed August 20, 2026 · Our reading of the company's report
The latest report
ScanSource exited fiscal 2026 with improving growth and profitability: revenue rose 6.1%, operating margin expanded to 3.1%, and diluted EPS increased 21% to $3.64. Growth was led by U.S. Specialty Technology Solutions…
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ScanSource exited fiscal 2026 with improving growth and profitability: revenue rose 6.1%, operating margin expanded to 3.1%, and diluted EPS increased 21% to $3.64. Growth was led by U.S. Specialty Technology Solutions and rising recurring revenue, while Brazil and broader international sales continued to decline. Strong operating cash generation and substantial buybacks support the outlook, but the pending $220.5 million MicroAge acquisition, tariff uncertainty and the Specialty segment’s limited goodwill valuation cushion create meaningful execution and downside risks.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $3.64
What stood out
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Broad technology and recurring-revenue platform
ScanSource describes its strategy as orchestrating complex, converging solutions across hardware, SaaS, connectivity and cloud through approximately 500 suppliers and approximately 25,000 channel sales partners. Recurring revenue increased to $161.2 million in fiscal 2026 from $145.7 million in fiscal 2025 and $110.6 million in fiscal 2024.
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Revenue and earnings inflected higher
Fiscal 2026 revenue was $3.226 billion, up 6.1% from $3.041 billion in fiscal 2025, after declining from $3.260 billion in fiscal 2024. Operating margin improved to 3.1% from 2.8% in both fiscal 2025 and 2024, while diluted EPS rose to $3.64 from $3.00 and $3.06, respectively.
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Specialty segment led expansion
Specialty Technology Solutions drove growth, with revenue up 6.2% to $3.125 billion and operating income up 12.2% to $74.1 million; its operating margin increased to 2.4% from 2.2%. Intelisys net billings reached approximately $2.88 billion, up 3.2%, supporting the higher-margin Intelisys & Advisory model.
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U.S. growth offset international decline
U.S. revenue increased 7.1% to $2.999 billion, while international revenue declined 5.6% to $226.6 million; international revenue declined 12.7% on a constant-currency basis. Brazil revenue was $227.4 million versus $240.1 million in fiscal 2025 and $338.6 million in fiscal 2024.
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Cash generation improved despite working capital
Operating cash flow increased to $123.1 million from $112.3 million in fiscal 2025, although working-capital investment rose by $18.1 million to $538.8 million and cash declined to $88.4 million from $126.2 million. Capital expenditures were $9.3 million and acquisition spending was $18.2 million.
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Aggressive buybacks and debt reduction
The company repurchased 2,420,668 shares for $97.5 million in fiscal 2026, leaving approximately $120.8 million under its authorization, and reduced term-loan debt to $98.8 million from $128.3 million. It paid no dividends, consistent with its history and credit-facility restrictions.
What to watch
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Tariffs could pressure demand and margins
The filing identifies a materially changed tariff and geopolitical environment: additional tariffs remain after the Supreme Court invalidated IEEPA tariffs, and the company expects to pass supplier price increases to channel partners, which may reduce demand. The company says it has incurred and expects to continue incurring tariff-related costs but cannot predict the ultimate impact.
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Large acquisition adds funding risk
On August 20, 2026, the company announced a pending all-cash MicroAge acquisition for $220.5 million, expected to be funded with borrowings under its credit facility and to close by September 30, 2026. The transaction adds execution and leverage risk: the company had only $88.4 million of cash at June 30, 2026 and $101.4 million of debt, while its credit agreement requires leverage of no more than 3.50-to-1.00 and interest coverage of at least 3.00-to-1.00.
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Thin Specialty goodwill cushion
Goodwill impairment sensitivity has increased for Specialty Technology Solutions: its $173.9 million goodwill balance had estimated fair value only 2% above carrying value at the annual test, compared with more than 100% excess fair value for Intelisys & Advisory. A deterioration in growth, margins, working capital or discount rates could therefore trigger a material non-cash impairment.
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Key supplier concentration
Supplier concentration remains material: products supplied by Cisco and Zebra each represented more than 10% of net sales in fiscal 2026, 2025 and 2024. Supplier agreements generally permit termination without cause on 30 to 120 days’ notice, and reduced rebates, supply interruptions or changed terms could compress the company’s narrow margins.
Management's outlook
The 10-K provides no revenue or EPS guidance. Management expects fiscal 2027 capital expenditures of $8.0 million to $12.0 million, primarily for IT and warehouse investments. Annual sales, EBITDA and free-cash-flow outlook was provided separately in the August 20, 2026 earnings release rather than in this 10-K.
Earlier filings 4
10-Q · February 5, 2026
ScanSource reported quarterly revenue of $766.5M and diluted EPS of $0.75 for the quarter ended December 31, 2025. Revenue was up slightly year-over-year (+$19.0M) but operating income and margins showed modest…
10-Q · November 6, 2025
ScanSource reported revenue of $739.65M for the quarter ended September 30, 2025, down from $775.58M a year earlier and down sequentially from the prior quarter's $813M; however gross margin and operating income…
10-K · August 21, 2025
ScanSource positions itself as a specialty technology distributor focused on hardware, SaaS, connectivity and cloud services delivered through two sales models (Specialty Technology Solutions and Intelisys & Advisory).…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.