ScanSource 2025 Q3 Earnings Misses Targets as Net Income Rises 36.1%

ScanSource (SCSC) reported its fiscal 2025 Q3 earnings on May 8th, 2025. ScanSource fell short of revenue expectations, reporting $704.8 million against the anticipated $809.11 million. However, they surpassed earnings expectations with an EPS of $0.75, beating the predicted $0.72. The company has adjusted its guidance, lowering full-year revenue estimates to around $3 billion, below previous expectations. ScanSource also announced a new $200 million share repurchase authorization, reflecting confidence in its long-term growth strategy. Despite mixed results, ScanSource remains focused on operational improvements.

Revenue
ScanSource's total revenue for fiscal 2025 Q3 decreased by 6.3% to $704.85 million, compared to $752.60 million in 2024 Q3. The Specialty Technology Solutions segment recorded $678.43 million, while Intelisys & Advisory achieved $26.41 million. No revenue was reported under the Corporate segment, culminating in a total revenue of $704.85 million.

Earnings/Net Income
ScanSource saw its EPS rise 47.1% to $0.75 in 2025 Q3, up from $0.51 in 2024 Q3, showcasing continued earnings growth. The company also strengthened its profitability, with net income escalating by 36.1% to $17.43 million from the previous year's $12.81 million. This reflects positively on ScanSource's financial health and management strategies.

Post-Earnings Price Action Review
Over the past five years, buying ScanSource shares following a revenue increase quarter-over-quarter and holding for 30 days has consistently yielded robust returns. The strategy has generated an overall return of 108.29%, outperforming the benchmark return of 92.56% by 15.73%. Despite experiencing a maximum drawdown of -42.27% and a moderate Sharpe ratio of 0.38, the strategy's compound annual growth rate (CAGR) of 15.87% highlights its effectiveness in delivering steady returns. This proven approach demonstrates the potential benefits of strategic investment decisions based on ScanSource's revenue performance.

CEO Commentary
"Our business performed well this quarter with both segments achieving year-over-year gross profit growth and higher EBITDA margins," said Mike Baur, Chair and CEO of ScanSource, Inc. "For our third quarter, we delivered strong free cash flow and EPS growth including the benefit from our acquisitions. Hardware demand improved late in the quarter, along with a return of large deals."

Guidance
ScanSource updates its expectations for net sales and adjusted EBITDA for the full fiscal year ended June 30, 2025. The company now anticipates net sales of approximately $3 billion, down from the previous range of $3.1 billion to $3.5 billion. Adjusted EBITDA is projected to be between $140 million and $145 million, consistent with the prior guidance range. Free cash flow is expected to be at least $70 million.

Additional News
ScanSource announced its acquisition of Resourcive, a leading technology advisory firm, to enhance its service offerings and expand its market reach. This strategic move aims to strengthen ScanSource's position in the technology distribution space. Additionally, ScanSource's CEO, Mike Baur, was honored as the 2025 Channel Influencer of the Year by Channel Futures for his leadership and innovation in the technology channel. Furthermore, Intelisys, a ScanSource company, was recognized as the Wireline Business Agent of the Year in the 2024 Verizon Partner Network Recognition Program, underscoring its commitment to excellence and innovation in the industry.