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What were the key takeaways from ScanSource's earnings call?

- **New Sales Team Launch**: Unified communications team to drive UCaaS/CX growth, aligning hardware and cloud solutions.
- **Financial Guidance Update**: FY26 revenue $3.0-$3.1B, EBITDA $140-$150M, reflecting STS challenges and Intelisys investments.
- **Key Risks**: Period costs (60bp EBITDA impact), large deal timing delays, Brazil market weakness.
- **Positive Trends**: Intelisys new orders +30% YoY, recurring revenue mix expanding, free cash flow resilience.
- **Strategic Focus**: Recurring revenue growth, margin improvement, disciplined capital deployment.

**【CEO Summary Section】**
- Q2 net sales grew 3% YoY across both segments, but profitability was impacted by unexpected expenses in the Specialty Technology Solutions (STS) segment.
- Launched a new converged communication sales team to unify hardware and Intelisys cloud-based solutions, aiming to capture growth in UCaaS and CX platforms.
- Intelisys & Advisory segment saw new order growth outpacing billings, driven by investments in sales teams and recurring revenue streams.
- Emphasized strategic focus on profitable growth, free cash flow, and 3-year goals of expanding recurring revenue contributions and profitability.

**【CFO Financial Commentary】**
- Q2 GAAP net sales: $765 million (3% YoY growth); adjusted EBITDA: $34 million (down 22% YoY due to STS margin pressure).
- STS segment: 3% YoY net sales growth, 1% gross profit growth; 30bp margin impact from freight, mix, and bad debt.
- Intelisys & Advisory: 3% YoY net sales growth, 3% gross profit growth; adjusted EBITDA margin: 41%.
- Full-year guidance updated to $3.0-$3.1 billion revenue and $140-$150 million adjusted EBITDA, reflecting slower STS growth and higher Intelisys investments.
- Free cash flow maintained at $80 million+ target, supported by strong balance sheet ($83M cash, 0x net debt).

**【Q&A Highlights】**
- **Period Costs**: One-time freight, mix, and bad debt expenses (60bp EBITDA impact) expected to normalize in H2.
- **STS Slowdown**: Large deal timing delays (e.g., broken into smaller invoices) caused Q2 underperformance; H2 recovery expected.
- **Memory Shortages**: Suppliers facing pricing/availability challenges, but no near-term impact on guidance.
- **Intelisys Growth**: New order growth (faster than billings) driven by restructured sales teams; 2026 billings to reflect 2025 investments.
- **Brazil Decline**: 9% YoY organic drop due to market conditions; high-margin segment contributing to profitability pressure.
- **Capital Allocation**: $179M remaining under $200M share repurchase authorization; prioritizing 3-year strategic goals over M&A.


ScanSource, Inc. (SCSC) Q2 2026 Earnings Call Transcript

- **Strong Financial Performance**: Q1 FY26 saw 26% YoY growth in non-GAAP EPS and 6% YoY gross profit expansion, driven by supplier price actions and recurring revenue.
- **Strategic Acquisitions**: DataXoom acquisition enhances mobile connectivity capabilities, complementing the 5G and IoT solutions strategy.
- **Guidance Reaffirmation**: Despite Q1 net sales decline, FY26 outlook remains unchanged, reflecting confidence in delayed large deals and pipeline strength.
- **Focus on Gross Profit**: Management prioritizes profitable growth, with 13% of STS gross profits from recurring revenue and double-digit new order growth in Intelisys.
- **Market Positioning**: Emphasizes role as a converged solutions provider, supporting channel partners' transition to technology architects.

**【CEO Summary Section】**
- Emphasized the convergence of hardware, software, and services, positioning ScanSource as a provider of integrated solutions for channel partners.
- Intelisys & Advisory segment investments include new tools like Tech Checks (AI-powered sales support) and Smart Series solutions (e.g., Smart Warehouse, Smart Retail) leveraging 5G connectivity.
- Acquired DataXoom to expand mobile data connectivity capabilities, complementing the August 2024 Advantix acquisition and enabling coverage across all major U.S. carriers.
- Highlighted the transition of channel partners from VARs to technology architects, with ScanSource supporting this evolution through strategic investments.

**【CFO Financial Commentary】**
- Q1 FY26: Gross profits +6% YoY, non-GAAP EPS +26% YoY, 5.2% adjusted EBITDA margin, $88M cash conversion of net income.
- Specialty Technology Solutions (STS): Net sales -5% YoY due to large deal delays, but gross profits +7% YoY driven by supplier price actions and recurring revenue mix (13%).
- Intelisys & Advisory (IAS): Net sales +4% YoY, gross profits +2% YoY, with EBITDA margin decline due to SG&A investments for future growth.
- Strong balance sheet ($125M cash, 0x net debt leverage), $21M share repurchases, and reaffirmed FY26 outlook: $3.1-3.3B net sales, $150-160M EBITDA, $80M+ free cash flow.
- Active M&A pipeline targeting capability expansion, with DataXoom as a margin-accretive tuck-in acquisition.

**【Q&A Key Highlights】**
- **Revenue Decline**: Mike Baur emphasized focus on gross profit growth (+6% YoY) over net sales, attributing Q1 decline to delayed large deals rather than market share loss. Steve Jones noted 30 basis points of margin improvement from sustainable supplier rebates.
- **DataXoom Acquisition**: Adds 17 employees and higher-margin capabilities, aligning with mobile device connectivity strategy to drive recurring revenue.
- **Guidance Confidence**: Despite Q1 net sales -9% QoQ, reaffirmed FY26 outlook due to pipeline visibility and timing of large deals, not weakness in demand.
- **Intelisys Pipeline**: Double-digit new order growth YoY and QoQ, with 6-18 month lag to revenue realization.


ScanSource, Inc. (SCSC) Q1 2026 Earnings Call Transcript

- **Strategic Growth Engine**: 9% Q4 revenue growth driven by mobility tech and late-quarter deals; 3-year goals target 50% recurring revenue and >10% EBITDA margin.
- **New Initiatives**: Launch Point team secures $30M+ smart warehouse deals; Intelisys reorganizes to focus on growth partners with co-investment programs.
- **Financial Strength**: $104M free cash flow (122% of net income); 2026 outlook includes $150-160M EBITDA with H2 acceleration.
- **Market Expansion**: Brazil's recurring revenue model replicated in U.S.; Zebra/Elo deal seen as catalyst for retail tech innovation.

**【CEO Summary Section】**
- Emphasized convergence of IT, connectivity, and cloud computing as key growth drivers.
- Launched new 'Launch Point' team to partner with emerging tech companies, securing deals in smart warehouse solutions (e.g., private cellular networks, robotics).
- Highlighted a successful converged solution deal with a channel partner for a major auto retailer, combining hardware, software, and connectivity.
- Announced 3-year strategic goals focused on expanding recurring revenue, EBITDA margin, and ROIC.

**【CFO Financial Commentary】**
- Q4 2025: Net sales +9% YoY, Adjusted EBITDA +13%, Non-GAAP EPS $1.02 (+27.5% YoY).
- Specialty Tech Segment: 9% YoY growth driven by mobility, security, and large deals ($30-40M pull-ins).
- Intelisys Segment: 1% YoY growth despite investments in AI capabilities; annualized end-user billings $2.8B (+4.5% YoY).
- Full Year 2025: Net sales $3.0B (-6.7% YoY), Adjusted EBITDA $144.7M (+2.8%), Free Cash Flow $104M (122% of Net Income).
- Introduced 3-year goals: Adjusted EBITDA margin >10%, Recurring Revenue 50% of GP, ROIC >15%.

**【Q&A Key Highlights】**
- **Capital Allocation**: Prioritize M&A for recurring revenue growth, with share buybacks if no accretive deals; target net debt 1-2x EBITDA.
- **Intelisys Strategy**: Reorganize sales teams to focus on growth partners, launch 'Revenue Accelerator' program to co-invest with partners.
- **Brazil Outlook**: Local currency growth offset by FX headwinds; model seen as blueprint for U.S. recurring revenue strategy.
- **Zebra/Elo Acquisition**: Potential for new converged solutions; ScanSource benefits from multi-vendor ecosystems.
- **2026 Guidance**: Net Sales $3.1-3.3B, Adjusted EBITDA $150-160M; expect low single-digit growth H1, accelerating H2 with investments in Intelisys and emerging tech.

ScanSource, Inc. (SCSC) Q4 2025 Earnings Conference Call Transcript

- **Q3 Growth Drivers**: All segments delivered YoY gross profit growth, with North America up across key tech categories. 
- **Strategic Wins**: 
  - ISG's new business dev team to accelerate emerging tech growth. 
  - AI Master Class expanded Intelisys' supplier base by 9x. 
  - Acquisitions (Advantix, Resourcive) added $65M free cash flow. 
- **Q4 Outlook**: Sequential sales growth expected (vs. flat last year) driven by: 
  - Large deal pipeline (April bookings up). 
  - ISG program launches. 
  - Brazil recovery. 
- **Capital Allocation**: $200M buyback + strategic M&A (e.g., ISG partners) to drive 1-2x leverage. 
- **Financial Strength**: 13.6% ROIC (2-year high), $146M cash, no debt. 


**【CEO Opening Remarks】**
- **Q3 Performance Highlights**: All segments achieved year-over-year gross profit growth and higher EBITDA margins. North America saw growth in mobility, networking, and wireless connectivity. Large deals returned, with Q3 sales declining 6% QoQ (better than seasonal trend). 
- **Strategic Initiatives**: 
  - Expanded business presidents' roles to include strategy and acquisitions. 
  - Launched AI Master Class for channel partners, with 9 new suppliers added to Intelisys. 
  - Integrated Solutions Group (ISG) launched a new business development team to accelerate growth for emerging tech companies. 
- **Acquisition Momentum**: Recent acquisitions (Advantix, Resourcive) are accretive to EPS and ROIC. Q4 will see more details on innovative programs targeting channel-agnostic tech companies. 

**【CFO Financial Summary】**
- **Q3 Financials**: 
  - Net sales: $732M (-6% YoY) 
  - Gross profit: $104M (+6% YoY) 
  - Adjusted EBITDA: $36M (+6% YoY) 
  - Non-GAAP EPS: $1.08 (vs. $0.94 prior year) 
  - Free cash flow: $65M (year-to-date: $99M) 
- **Segment Breakdown**: 
  - Specialty Tech: 14% recurring revenue mix, 10.9% gross margin. 
  - Intelisys: 16% YoY sales growth, $2.86B annualized end-user billings. 
- **Balance Sheet Strength**: $146M cash, 0x net debt leverage, 13.6% ROIC (2-year high). 
- **FY25 Outlook**: $3B net sales, $140-145M EBITDA, $70M+ free cash flow. 

**【Q&A Key Takeaways】**
- **Q4 Growth Expectation**: Sequential improvement driven by: 
  - Return of large deals (April bookings up vs. Q3). 
  - ISG program launches. 
  - Brazil recovery. 
- **Capital Allocation**: 
  - $200M new share buyback authorization (total $242M available). 
  - Acquisitions (e.g., ISG partners) will be prioritized for margin accretion. 
  - Target leverage: 1-2x EBITDA. 
- **Acquisition Strategy**: Business presidents leading M&A in their segments. Recent wins (Advantix, Resourcive) validate model. 


ScanSource (SCSC)-8 May 25-2025 Q3 Earnings call transcript

- **Q2 Results**: 15.5% YoY sales decline but 13.6% gross margin driven by 32% recurring revenue mix
- **Strategic Wins**: Advantix solution growth, Channel Exchange SaaS platform launch, and 5% CX billings growth
- **Guidance Confidence**: Maintaining FY25 targets despite Q2 miss, citing recurring revenue resilience and channel optimism
- **Cash Management**: $34M YTD free cash flow with disciplined share buybacks


**【CEO Opening Remarks】**
- Q2 net sales declined 4% sequentially, missing expectations due to a 15.5% YoY decline in Specialty Technology Solutions segment. However, gross profit margin improved to 13.6% driven by recurring revenue mix (32% of gross profit). 
- Hybrid distribution strategy emphasizes flexibility across hardware, SaaS, connectivity, and cloud. Key investments include:
  - **Resourcive acquisition**: Expanding advisory services and next-gen tech offerings (CX, AI)
  - **Advantix solution**: High-margin managed connectivity product with 4% Q2 sequential growth
  - **Channel Exchange platform**: New SaaS tool for Intelisys partners

**【CFO Financial Highlights】**
- Q2 financials:
  - GAAP net income: $420M
  - Non-GAAP EPS: $1.08 (flat YoY)
  - Adjusted EBITDA: $140M (down 8% YoY)
  - Free cash flow: -$8M (Q2) / $34M (YTD)
- Segment performance:
  - **Specialty Tech Solutions**: 16% YoY sales decline, but 12% recurring revenue contribution to gross profit
  - **Intelisys & Advisory**: 4% YoY sales growth (including Resourcive), 99% gross margin
- Balance sheet remains strong with $111M cash and 0.2x net debt leverage

**【Q&A Key Takeaways】**
1. **Demand Environment**: 
   - Sequential weakness in Q2 driven by large deal underperformance (double-digit decline)
   - Management maintains FY25 guidance ($3.1-3.5B net sales, $140-160M EBITDA) despite Q2 miss
   - Cautious optimism for H2 recovery, citing channel partner sentiment and recurring revenue visibility

2. **Intelisys Strategy**:
   - New Channel Exchange platform to attract exclusive SaaS partners
   - Partner segmentation to optimize commission splits
   - 5% YoY end-user billings growth in CX solutions

3. **Acquisition Strategy**:
   - Focused on building channel model of future vs. rolling up EBITDA
   - Resourcive and Advantix integration driving recurring revenue opportunities

4. **Cash Flow Discipline**:
   - $24M Q2 share buybacks
   - Free cash flow target of $70M+ for FY25


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