SCSC

Let's dig into the relative performance of ScanSource (NASDAQ:SCSC) and its peers as we unravel the now-completed Q2 it distribution & solutions earnings season. IT Distribution & Solutions will be buoyed by the increasing complexity of IT ecosystems, rising cloud adoption, and demand for cybersecurity solutions. Enterprises are less likely than ever to embark on these complicated journeys solo, and companies in the sector boast expertise and scale in these areas. However, cloud migration also means less need for hardware, which could dent demand for large portions of the product portfolio and hurt margins. Additionally, planning for potentially supply chain disruptions is ongoing, as the COVID-19 pandemic showed how damaging a pause in global trade could be in areas like semiconductor procurement. The 8 it distribution & solutions stocks we track reported a stunning Q2. As a group, revenues beat analysts' consensus estimates by 9.5% while next quarter's revenue guidance was 11.5% above. In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results. Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ:SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers. ScanSource reported revenues of $953.1 million, up 17.3% year on year. This print exceeded analysts' expectations by 18.8%. Overall, it was an incredible quarter for the company with a beat of analysts' EPS estimates. ScanSource scored the biggest analyst estimate beat in the group. Unsurprisingly, the stock is up 14.2% since reporting and currently trades at $58.71. Is now the time to buy ScanSource? Access our full analysis of the earnings results here, it's free. With a century-long history of adapting to technological evolution, Avnet (NASDAQ:AVT) is a global electronic components distributor that connects manufacturers of semiconductors and other electronic parts with businesses that need these components. Avnet reported revenues of $8.30 billion, up 47.7% year on year, outperforming analysts' expectations by 10.5%. The business had an incredible quarter with a beat of analysts' EPS estimates. Avnet scored the highest guidance raise and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 10.2% since reporting. It currently trades at $101.94. Is now the time to buy Avnet? Access our full analysis of the earnings results here, it's free. Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ:CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services. CDW reported revenues of $6.57 billion, up 10% year on year, exceeding analysts' expectations by 5.2%. It may have had the worst quarter among its peers, but its results were still good as it also locked in a beat of analysts' EPS estimates. As expected, the stock is down 16.5% since the results and currently trades at $128.62. Read our full analysis of CDW's results here. Operating as the crucial link in the global technology supply chain with a presence in 57 countries, Ingram Micro (NYSE:INGM) is a global technology distributor that connects manufacturers with resellers, providing hardware, software, cloud services, and logistics expertise. Ingram Micro reported revenues of $14.53 billion, up 13.6% year on year. This print topped analysts' expectations by 4.8%. It was a stunning quarter as it also logged revenue guidance for next quarter exceeding analysts' expectations and a beat of analysts' EPS estimates. Ingram Micro had the weakest guidance update of the whole group. The stock is down 11.8% since reporting and currently trades at $26.82. Read our full, actionable report on Ingram Micro here, it's free. Serving as the crucial middleman in the technology supply chain, TD SYNNEX (NYSE:SNX) is a global technology distributor that connects thousands of IT manufacturers with resellers, helping businesses access hardware, software, and technology solutions. TD SYNNEX reported revenues of $21.56 billion, up 37.7% year on year. This result beat analysts' expectations by 13.5%. Overall, it was an incredible quarter as it also recorded a beat of analysts' EPS estimates. The stock is down 10.8% since reporting and currently trades at $256.88. Read our full, actionable report on TD SYNNEX here, it's free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market's biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market's primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market's dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

On August 20, ScanSource (NASDAQ:SCSC) reported fourth-quarter results that included a record non-GAAP profit and revealed a $220.5 million deal to acquire MicroAge. Net sales climbed 17.3% year over year to $953.1 million, and non-GAAP diluted earnings per share jumped 43.1% to $1.46. Management framed the results as a shift from playing defense to actively pursuing market share, a notable change in tone for a distributor that spent years fighting just to hold its ground. The quarter's growth wasn't confined to one corner of the business. Specialty Technology Solutions, ScanSource's hardware distribution segment, generated $927.2 million in net sales, up 17.6% year over year on demand for physical security, mobility, and networking gear. Segment adjusted EBITDA rose 28% to $36.7 million. The Intelisys and Advisory segment, which sells cloud and connectivity services through the channel, added $25.9 million in quarterly revenue, up 7.2% on higher Resourcive sales, and net billings for the full fiscal year reached $2.88 billion. Recurring revenue is becoming a bigger part of the story. It grew 10.6% for the fiscal year to $161.2 million and now makes up 33.7% of consolidated gross profit, a mix shift that tends to smooth out the lumpiness of hardware sales. The pending MicroAge acquisition, an all-cash purchase expected to close by the end of the first quarter of fiscal 2027, pushes further in that direction, adding cloud migration, cybersecurity, and AI implementation services that ScanSource's channel partners have historically had to source elsewhere. Many solution providers cannot pair a security sale with the ongoing implementation and support it requires, and that gap is what MicroAge is meant to close. The balance sheet backs up the growth. ScanSource generated $113.8 million in free cash flow for the year, a 124% conversion of non-GAAP net income, while net debt leverage sat at roughly zero relative to trailing 12-month adjusted EBITDA. The company still bought back $97.9 million in stock during the year and has about $121 million left under its current authorization. Not every region moved in the same direction. Net sales in Brazil fell 21.6% year over year to $53.5 million in the quarter, and the company said it had to reduce headcount there to protect profitability. The unit stayed profitable, but a double-digit sales decline in an international market isn't a small item to write off. Networking carries its own friction. Supply constraints tied to Juniper are expected to slow partner opportunities in the first half of fiscal 2027, even though most of the technology portfolio should see normal lead times. That's a reminder that ScanSource's growth still depends on getting physical product from vendors to partners on schedule. The fiscal 2027 outlook also leans on an assumption that hasn't fully played out. CFO Steve Jones said the guidance for 6% to 10% organic revenue growth assumes the return of the large-scale technology deployments seen in the back half of fiscal 2026, and he acknowledged that a macro environment outside the company's control remains a real variable. On top of that, the Specialty Technology Solutions segment, which drives most of ScanSource's revenue, runs on a thin 3.96% adjusted EBITDA margin, a reminder of how little cushion hardware distribution carries even in a strong quarter. Hedge fund ownership of ScanSource climbed from 16 funds in the prior quarter to 20 in the most recent one, a sign that institutional interest is building rather than fading. Short interest sits at 7.63% of the float, enough to show real skepticism without pointing to a crowded short trade. Meanwhile, the stock trades at a forward price-to-earnings ratio of just 11.85 as of August 28, a multiple that doesn't appear to price in much of the growth acceleration management is now guiding toward. ScanSource closed out fiscal 2026, the year ended June 30, 2026, with its strongest quarter in some time and a plan to reshape itself through the MicroAge deal. The bulls can point to record earnings, growing recurring revenue, and a balance sheet clean enough to keep funding buybacks. The bears can point to Brazil's decline, supply constraints in networking, and a fiscal 2027 outlook that depends on large deals repeating themselves. While we acknowledge the potential of SCSC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Future Stocks to Buy Under $10 and 12 Best Performing Semiconductor Stocks to Invest In. Disclosure: None. Follow Insider Monkey on Google News.

ScanSource’s second quarter was marked by strong top-line growth and a positive market reaction, driven largely by momentum in both its Specialty Technology Solutions and Intelisys and Advisory segments. Management pointed to organic net sales growth and solid free cash flow generation, while acknowledging some unexpected period expenses that weighed on margins. CEO Michael L. Baur attributed the quarter’s performance to increased partner engagement and the impact of recent acquisitions, such as DataZoom, noting, “Our investment strategy is driving growth and momentum in new orders.” Is now the time to buy SCSC? Find out in our full research report (it’s free). Revenue: $953.1 million vs analyst estimates of $802 million (17.3% year-on-year growth, 18.8% beat) Adjusted EPS: $1.46 vs analyst estimates of $1.14 (28% beat) Adjusted EBITDA: $46.15 million vs analyst estimates of $38.33 million (4.8% margin, 20.4% beat) EBITDA guidance for the full year is $161.5 million at the midpoint, above analyst estimates of $151 million Operating Margin: 3.5%, in line with the same quarter last year Market Capitalization: $1.13 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Gregory John Burns (Sidoti): asked about period costs and their persistence. CFO Stephen T. Jones clarified these were primarily related to freight and a specific bad debt reserve, and he expects them to be period-specific rather than ongoing. Gregory John Burns (Sidoti): probed the drivers behind slower Specialty Technology Solutions growth. CEO Michael L. Baur explained it was due to large deals being split and delayed, with expectations for normalization over the year. Keith Michael Housum (Northcoast Research): questioned the impact of memory supply issues. Baur stated that while suppliers anticipate challenges, no significant effect is currently assumed in guidance. Guy Drummond Hardwick (Barclays): asked if lower guidance was more about large deal timing or supply shortages. Baur confirmed the guidance reduction was tied to delayed large deals rather than expected product shortages. Adam Tyler Tindle (Raymond James): pressed on the rationale for the guidance reduction and the confidence in free cash flow. Jones said the adjustment reflects historical second-half patterns and ongoing large deal timing variability, with free cash flow supported by the business model shift. Looking ahead, the StockStory team will be watching (1) the pace at which large deals resume and their impact on revenue timing, (2) evidence that the new converged communications sales team is effectively driving partner engagement and cloud adoption, and (3) progress in converting Intelisys new order momentum into billings and recurring revenue. Continued monitoring of supply chain dynamics and margin improvement efforts will also be crucial for tracking execution of ScanSource’s strategy. ScanSource currently trades at $56.16, up from $51.42 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 20, 2026 at 10:30 a.m. ET Senior Vice President, Finance, and Treasurer - Mary Gentry Chair and Chief Executive Officer - Michael L. Baur Executive Vice President and Chief Financial Officer - Stephen T. Jones Operator: Welcome to the ScanSource Quarterly Earnings Conference Call. All lines have been placed in a listen-only mode. Today's call is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the call over to Mary Gentry, senior vice president, finance, and treasurer. Please go ahead. Mary Gentry: Good morning, and thank you for joining us. Our call will include prepared remarks from Michael L. Baur, our Chair and CEO and Steve Jones, our Chief Financial Officer. We will review our operating results for the quarter and the year and then open the line for your questions. We posted an earnings infographic that accompanies our comments and webcast in the Investor Relations section of our website. As you know, certain statements in our press release, infographic and on this call are forward looking and subject to risks and uncertainties that cause actual results to differ materially from expectations. These risks and uncertainties include the factors identified in our earnings release, and our Form 10-Ks for the year ended 06/30/2026. Forward looking statements represent our views only as of today, and ScanSource disclaims any duty to update these statements except as required by law. During our call, we will discuss both GAAP and non-GAAP results We have provided reconciliations on our website and in the press release included in our Form 8-K filed earlier today. I will now turn the call over to Mike. Michael L. Baur: Thanks, Mary. Good morning, everyone. I appreciate you joining us today. We finished our fiscal year with a strong fourth quarter and I am pleased with the progress our team made throughout the year. Our results reflect disciplined execution, improving demand, across the business and momentum toward our 3-year strategic goals. Sales were up 17% year over year in the fourth quarter and 6% for the full year. This growth reflects outstanding performance by our account management teams, including sales, engineering, financial services, and operations. And the deep relationships that we have maintained over decades with our partners. We were able to respond successfully to the increased demand for our technologies from our channel partners. For the second half of our year, we saw renewed growth for key technologies, including physical security, mobility, networking, CX, cloud compute, and connectivity. Our business has returned to growth, and we believe we are at the beginning of a stronger growth trajectory. We are excited about today's announcement that we signed a definitive agreement to acquire MicroAge. And I want to start with why we believe this is such a strong fit for ScanSource. The acquisition expands ScanSource's TAM, adds new services capabilities, and provides greater visibility into end user needs. First, MicroAge's Technologies. Many of them are new to ScanSource. Expand our TAM in high growth technologies like cloud, cybersecurity, data center, and AI. And second, MicroAge brings additional services offerings to enable ScanSource channel partners to partner and cosell new technologies. Capabilities, including cloud migration and management, cybersecurity services, next generation AI data center implementation, and AI solutions development. We see great opportunities ahead to help our trusted advisers and our solution providers take advantage of these new services that will become available from MicroAge. We built ScanSource over the years by identifying technologies that are transitioning to the channel. And we and require specialized expertise to deliver value to the end user. that is the driving force behind our converged communication business unit we started last quarter. Our first of in the on prem to cloud for many years. In a market where everything is connected. that is where our converged communications team comes in. Helping our partners capture the full stack of opportunities. The idea is simple. Help solution providers sell more cloud recurring revenue, help Intelisys trusted advisers attach more edge devices, and build on these successes to accelerate growth. We are proud to have 3 long standing brands in 1 channel company. ScanSource has been serving the channel for 34 years. Intelisys, also for 34 years, and MicroAge is celebrating its 50th anniversary this year. All 3 companies have built decades long relationships with channel partners and end users across most industries. ScanSource's differentiation is building specialized expertise while developing deep relationships with channel partners and end users founded on trust. I will now turn the call over to Steve to take you through our financial results and outlook for fiscal year 27. Stephen T. Jones: Thanks, Mike. Our Q4 results reflect strong demand and profitable growth across our technologies and reporting segments. Net sales and gross profits saw strong mid teen year over year growth, while our non GAAP EPS grew 43% to $1.46 per share, a record for the company. Our full year results reflect strengthening second half demand and the return of large deals. Our FY 2026 full year results align well with our 3-year goals. With net sales for products growing 5.9% year over year while recurring revenues increased 10.6% year over year. Consolidated gross profits increased 7% year over year, the higher end of our range. With the gross profit contribution from recurring revenues increasing to 34% of the consolidated results. We grew our business and delivered annual free cash flow of $114 million with cash conversion of non-GAAP net income of 124%. Turning to our segments. I will start with Specialty Technology Solutions. Net sales for the quarter increased 18% year over year led by broad based North America hardware sales growth across our technologies. Gross profit increased 16% year over year to $94 million Adjusted EBITDA increased 28% year over year to $36.7 million with an adjusted EBITDA margin of 3.96%. For the full year, segment revenues increased 6% to $3.12 billion while gross profits increased 8.4% to $338 million with approximately 15% of segment gross profits coming from recurring revenues. In our Intelisys and advisory segment, Q4 net sales and gross profits grew 78% year over year, respectively. Respectively. Adjusted EBITDA for the segment was $9.4 million with an adjusted EBITDA margin of 36.4%. For the full year, segment revenues grew 3.1% to $101 million. Intelisys' FY 2026 net billings increased to approximately $2.88 billion. Going a bit deeper on our balance sheet and cash flow. We ended Q4 with $88 million in cash and a net debt leverage ratio of approximately zero on a trailing 12-month adjusted EBITDA basis. For the full year, we generated $114 million in free cash flow, a 124% conversion of our non-GAAP net income. Share repurchases totaled $27 million for the quarter, taking our full year share repurchases to $98 million As of 06/30/2026, we had approximately a $121 million remaining under our share repurchase authorization. Adjusted ROIC was 18.2% for the quarter, and 14.7% for the full year, reflecting our disciplined approach to both working capital and capital allocation priorities. As Mike discussed, We signed a definitive agreement to acquire MicroAge which is expected to close by the end of Q1. The planned acquisition is an exciting opportunity to advance our 3-year goals and aligns with our capital allocation priorities. Expanding our total addressable market our technology stack, our capabilities, and our channel reach with accretive margins and positive free cash generation. Our capital allocation priorities remain the same. Maintain a strong balance sheet with leverage of 1x to 2x adjusted EBITDA and be disciplined in capital deployment, including strategic acquisitions and share repurchases. We are providing an annual outlook excluding the benefit from the planned acquisition of MicroAge. On an organic basis, we expect revenues to increase between 6% to 10%, believing we will see continued strong demand across our technologies and with normal lead times. We expect adjusted EBITDA to be between $158 million and a $165 million, reflecting an expected 4.6% to 4.65% adjusted EBITDA margin. For free cash flow, we expect to generate at least $85 million in free cash flow. We expect the FY 2027 effective income tax rate to range from 27.5% to 28.5%. We plan to update our annual outlook to include the MicroAge acquisition during our FY 2027 Q1 earnings call. Operator: We will now open up for questions. To ask a question, please press 1-1 on your telephone. And wait for your name to be announced. To withdraw your question, please press 1-1 again. Our first question comes from Gregory John Burns with Sidoti. Your line is open. Greg Burns: Morning. Can we just talk a little bit about the outperformance for the fourth quarter and the full year relative to your guide. What came in stronger than you were expecting? And it does not seem like it. But are you seeing I think last quarter, was a little caution around macro risks and maybe supply shortages around memory, but it does not seem like that is impacting your business. what is the risk of that going forward as we head into fiscal 27? Stephen T. Jones: Gregory, good morning. This is Steve. So I would say what we saw this year when we think about the full year was really what we thought was going to happen coming into the year. We believe we were going to have a stronger second half growth performance. As we saw the second half unfold, what we saw was actually a very strong demand environment and the return of those large deals that we continue to talk about being in our pipe as the fourth quarter unfolded. So we were very pleased. Like many other technologies, that we saw this strong demand. When we think about the macro environment, of course, we are always cautious about going on in the macro environment because it is out of our control. And we believe that in our guide, that we are not gonna ex we are not expecting to see any kind of supply disruption and we still believe we are gonna see continued strong demand. Greg Burns: Okay. Could you could you just maybe give us a little insight into product segment categories, where you were seeing particular strength? Or whether or not it sounds like it was across the board, but is there any particular areas of strength that are worth highlighting? Stephen T. Jones: No. I Gregory, again, it is Steve. I think it was across the board. You know, we saw all year long that physical security has been a been a great performer for us. As we saw the second half, it is been very broad based. Greg Burns: Okay. Okay. And then just flipping over to MicroAge, could you give us a little better understanding of their revenue mix? Is how much is it you know, product versus maybe services? Michael L. Baur: Hey, Gregory. it is Mike. Yeah. I think we are going to wait to talk more about the details of MicroAge after Q1. Once we get it closed, there will be some revenue in the quarter. So standby for that. But just in general, what we were looking for frankly, for the last year was a company that had a services strategy that we could not only buy into from their perspective, meaning selling their services business growing into their customer base, but also a services business that we could scale and have some of those services work with our existing channel partners. We found MicroAge as a company that had a services business, but also comes out of a traditional reseller business for 50 years. And so this company, for sure, comes out of the legacy hardware model moved into services and now have been very successful at the blend of selling hardware and providing services, whether they are some managed services, professional services, So we really like the composition. And we will talk more about that after our Q1 call. Greg Burns: Okay. And then just lastly, what is there any risk of channel conflict here for you? Michael L. Baur: We think the risk is very low. But we are also as we said when we acquired Resourcive a couple years ago, if any of our partners feel like there is some channel conflict with their customers, we are going to do our best to make sure we prefer our existing channel partner. If they are already in account and MicroAge shows up, But here's what the research really is showing across the IT landscape. Is and this is from third party research experts that most end users today at mid market and enterprise companies are working with 6 or more partners all the time. So we believe that MicroAge has a motion into their community. By the way, they are they are really only selling to about 2.5 thousand or so end users which is a very small number. But where MicroAge's lane is, it is very clear. We might today have someone else in there selling products For example, we could have a securities VAR in there selling security and not even know MicroAge is there. And we might have an agent in their selling connectivity And today, all 3 could be in the same account and not even know each other's there because the end users today again, from what the research shows, the IT end user today is comfortable working with a small set of partners as a team, not having 1 partner do it all. And so we really believe that just offers more opportunity for our channel partners today to actually go to market alongside MicroAge and vice versa. And that is really the model that we are talking about, and we will do everything we can to make sure no 1 feels like they have gotten disenfranchised And we think our long standing relationships with our partners have given us permission to be able to do this. Greg Burns: Alright. Great. Thank you. Operator: Our next question comes from Keith Michael Housum with Northcoast Research. Your line is open. Keith Housum: Good morning, guys, and congratulations on a great quarter. Great to see the leverage come for the model coming through. Hey, Steve, as we look at the guidance and we kind of think about the tougher comps that you are going to have in the second half of the year, is it fair to say that you expect a stronger, I guess, percentage growth in the first half of the year compared to second half of the year? Stephen T. Jones: Yeah, Keith. Good morning. Yeah. Thanks for the question. Yeah. I believe that is the way if you look at a percentage year over year growth that it is gonna lay out. I think our first half has easier comps to second half. Especially with this fourth quarter, it is going to be a tougher comp. But that is all captured in our 6% to 10% expectations. Keith Housum: Yep. And based on your guidance, I am assuming the pipeline coming out of the quarter and conversations you have at quarter end was just as strong as the prior quarter, if not even better. Stephen T. Jones: Yeah. I would say that our account management teams were very busy going through the end of June. Keith Housum: Great. Great. And then, you know, you guys had a press release with the Hewlett Packard Enterprise adding Juniper to your line card for networking. Can you perhaps talk about your expectations for when that might start to kick in and benefit you guys and how you are thinking the addition of 1 vendor. I know 1 vendor does always make the numbers, but, you know, Juniper, you guys used to carry, and Aruba, of course, you were there first, so it is important to you guys. Maybe help us understand how you are thinking about that benefit. Michael L. Baur: Thank you. it is Mike. I will comment on that. I would say right now, 1 of the challenges that we have already faced is Juniper has some supply chain constraints. They have had such a big year that by adding us, our partner opportunities are going to be a little slower to be fulfilled. And so they have got some--they just got some incredible pipelines of deals and opportunities. And so I think it will be slower than we would have wanted it to be, and what we thought even a quarter ago. So it is going to develop throughout I would say, slowly through the first half of our year. And then by the time we get to the second half, we should be in full swing. With Juniper from not only being able to sell, but also to deliver. So there is going to be a little bit of a backlog from us being able to get product to sell until we get to the second half. Keith Housum: You think the second half of the year, there can be a noticeable contributor to growth? Michael L. Baur: I think let us talk about that as the year unfolds. Because, again, some of these constraints are not anything we have control over. Keith Housum: Right. Right. I appreciate it. Hey. You know, your quarter was so strong this quarter. Did you guys have any new customer wins to help to drive that, or was it just broad demand across the board? Michael L. Baur: Well, I would say this is, as everybody on the call knows, we made some changes in our leadership and sales structure, And we have got a different mindset right now about winning instead of defending. And I think that is a reflection on the emphasis we have put on. We need to take market share and not just defend market share. And I think that is spirit is something that is coming through And all across the business, especially under Mark Morgan's leadership, there is a sense of people are excited and our partners are because, again, we probably had a little bit of complacency about being able to grow our market share. So that is a new trend that we expect to continue through 2027. Keith Housum: Great. Appreciate it. And then Mike, can you talk about the Intelisys turnaround? I know it is been a work in progress now for several quarters, but if you could talk about the progress of that. And then what Intelisys bookings were for the quarter? Michael L. Baur: Yeah. You know what we have done, again, under Ken's leadership is we have gotten our teams more focused on how do we win instead of just defend. And when you are the largest TSD as Intelisys has been, in its history, it is easier for competitors just to pick off partners with better commission splits, better margins, if you will, for them. So what we have done is focused more on some of the technologies that are growing faster than others put more resources behind it, And some of that, I think, is evident in our results for the year where we when you look at that segment, we have some investments that are showing up in the additional SG&A spend because we are adding some capabilities with resources. And some of the results we talked about earlier on the call, like in cloud compute and connectivity, and even CX. We had very strong results that we have not had in a while. And, frankly, the connectivity is 1 that I--we were talking to Ken about it some more, and some of that is coming from some of the new data center connections back to enterprises and they need more bandwidth and more connectivity, And so that is improving our opportunity in that space. So I think the whole space, Keith, is seeing a growth surge and acceleration. And, of course, as you know, we do not see all that right away. But the early days are very positive. Keith Housum: So how are bookings in this quarter for those guys? Well, as you know, we are not reporting on bookings these days. Alright. Alright. I guess final question for you. Brazil seemed to have another tough quarter, which, I guess, was a surprise to us. Anything happening in that business structurally that we should be thinking about? Michael L. Baur: Well, I think the main thing is we have got such great operators there that no matter how the marketplace treats us from a market demand for our products and technologies, always managing to a profitability, and this is a business that is been consistently profitable nicely profitable since we got into Brazil. And so, unfortunately, it means we have to take some actions We had to make some structural changes with headcount. And so that team understands that in their environment, they have to be responsive so that we do not lose leverage on the revenue that does come in, Keith. So, again, disappointed at the top line. Pleased with the profitability. Keith Housum: Great. Thanks, guys. Good luck. Michael L. Baur: Thank you. Thank you. Operator: Our next question comes from Guy Drummond Hardwick with Barclays. Your line is open. Guy Hardwick: Hi, good morning. Congrats on the excellent results. Michael L. Baur: Appreciate it. Thanks, Guy. Guy Hardwick: Steve, I think I heard you say when you gave the guidance for 2027, it is organic 6 to 10. So maybe if you could bear in mind the previous comments about first half versus second half. it is a question of what visibility do you have on that 6 to 10 To what extent are you factoring in large deals or new business prospects? Or the impacts of some of the changes that you said to kind of reenergize the business? Stephen T. Jones: Yes, Guy, thanks for the question. So when we think about that 6% to 10 that is our business, our organic business. And we want to be really clear in our guidance that it did not include the acquisition the benefits of the acquisition. We will update that when we do our Q1 results. But what we are seeing is that is the way this business should operate as large deals continue to roll out, the technologies that we are in. 1 of the things that I go back to for this year even is in our specialty technology segment, you look at the hardware versus the recurring revenues, and you see the 6 to 10%. So that is a that is a mixed statement. And so things we believe things will operate more normally, for FY 2027. Guy Hardwick: And just maybe in Q4, I mean, is it possible to give a kind of a split between, you know, price and volume, particularly in STS? How much of a tailwind to revenues or billings was inflation in the in the period on a on a year on year basis. Stephen T. Jones: Yes. Let me double click on that. it is a great question. We definitely benefited year over year from broad based price increases. Across our technologies. Like most of our most other distributors and those in the technology did. Remember that 80% plus of our sales are under special pricing agreements controlled by the supplier. So isolating the difference with, with custom configuration, the mix, isolating that price difference is really difficult for us. What I would say, though, is the majority is demand driven. Guy Hardwick: Okay. Thank you. Stephen T. Jones: Thank you. Operator: Our next question comes from Adam Tyler Tindle with Raymond James. Your line is open. Adam Tindle: Congrats on a strong Q4 finish. Mike, I want to start on MicroAge Just given the sheer magnitude of this, I think it is, more than 20% of your market cap. So a big bet on this acquisition. And I wonder if we just take a step back and have kind of walk investors through the decision on capital allocation here. I think you mentioned your core business is returning to growth, obviously, returns in the core business are very strong. Your stock's trading at 6x or 7x EBITDA right now. So doing this acquisition versus perhaps, more share repurchase, you know, why this was, you know, sort of the decision that you made? Michael L. Baur: Well, there is probably 2 different ways I would go at this. 1 is we have been planning this for a long time. When I go back to literally 2016 when we bought Intelisys, we have been talking about how the business the IT business is going to change in the channel over 10 years. And the idea for why we believe an acquisition of a company like this is important to the future growth of our business because our channel partners need access to more services and capabilities, not just selling hardware. We have we, we predicted this. We forecast. We have slides back in 2016 where we were trying to locate managed services capabilities to add over time. And as we went through those 10 years, at different times, we made a big bet. We made a big bet back then, if you recall, That, at the time, was the largest transaction we would ever done. Of course, it was an earn out, so that made it a little more palatable from a cash perspective. But that was a bet on adjacencies. And, again, what we believe this is not only adjacent, but it also is gonna help not only micro age grow. This is a growth company. This is a company that we believe if we do nothing to it, from a, synergy with our existing channel partners, where our channel partners can bring them in on their own. This company is growing fantastically and very profitable. Because they are in the sweet spots of technology growth and they have long standing relationships. The average tenure of their employees is way up there compared to other companies we have seen. So if the core business that they are in is going to grow and give strong returns, why would we not want to invest in that with our balance sheet? So this became almost an easy decision from is this a as good or better return than share repurchases? Absolutely, it is. And it fits our long term plan. that is why we did it. Adam Tindle: Okay. And any kind of color you can give on that? If I was to back into, you know, this versus share repurchase, this acquisition should bring $30 million so of EBITDA. Is that a reasonable ballpark? I know we are gonna get more details, but just, you know, so we can sort of think about, you know, what could be coming after a close. Michael L. Baur: Yeah. Adam, I would say, you know, we are we are still not closed. And so right now, probably not appropriate for us to project on what that might look like. Stay tuned to Q1. We will give you we will give you a lot of color because we will update our annual guidance to include it. Adam Tindle: Okay. And then Mike, you know, as I kinda think about, you know, MicroAge under ScanSource care, if and when that does, happen, I would be curious your view on both the vendor and customer reaction to this. On 1 hand, you know, the vendors sometimes you know, when a bigger entity acquires they may be excited about this and potentially consolidate more share to, to the company. So I, you know, I imagine obviously, conversations may have been limited given it was just announced. Just as you kind of did your diligence, how you think vendors might react, especially given some of them are new? To ScanSource and then customers. You know, as mentioned earlier, that there is, you know, potential for channel conflict here, which is obvious. But, you know, there is also potential for synergy and your existing, partners. So how you are thinking about the reaction from vendors and customers is the part of the question. Thanks. Michael L. Baur: Sure. And I will go back just a little bit to when we met the management team not that long ago. And the first question they had for us is we went in to ask them questions with, Mike, what is your thesis for this? And, again, this is a management team that is been at MicroAge a long time. Some of them 30 years. And when we talked about 1 of the things that ScanSource channel partners need both our solution providers and our trusted advisers under Intelisys, they are always asking us how can we grow and what can you do, ScanSource, to help us grow. And 1 of the things we keep seeing is they are not most of our partners and we have a subset that are very large and have a lot of capability to add skills. But for example, if you are trying to sell cybersecurity today as a solution provider or an agent, trusted adviser, they do not have the resources to follow a sale of security, cyber products with implementation, deployment, and then follow on support None of our partners except the very largest have their own NOC or SOC. And so this is something we have been trying to figure out. How can we provide that service from ScanSource on a wholesale model, if you will, to our channel And by buying a company that is already doing that for their own customers and then us adding scale to that because we can now MicroAge can now add people they were not able to do under a private equity ownership. They with they can add more scale and provide services that, frankly, none of our competitors can offer our channel. So we believe that this is gonna allow our partners and by the way, so I had a call in anticipation, of course, of the announcement with 4 of our long time Barcode Mobility partners, not to tell them the name, but to tell them the idea. And, they were enthusiastic. Because they trust that we are not gonna bring a partner in that will compete with them. Whereas today, if they wanna go to a partner to say, help us with cybersecurity or help us with data center, If they do not know them really well, they do not know if that entity might not compete with them, but they trust that we will manage the competition and they trust us to it. So we had this call Mark Morgan and I did a couple of days ago with 4 partners and said, if we do this, what will your reaction be? And they were enthusiastic. And I did talk to a couple of vendors and told them what we are doing. And they were thrilled because, frankly, we have got a lot more financial ability to expand the MicroAge business than they could without us. So the vendors are delighted. These because MicroAge is doing a fantastic job with those key vendors. And they see giving them access to ScanSource balance sheet is nothing but positive. that is helpful. Thank you. You bet. Operator: Thank you. I am showing no further questions at this time. I would now like turn it back to Steve Jones for closing remarks. Stephen T. Jones: Thank you for joining us today. We expect to hold our next conference call to discuss our September 30, quarterly results on Thursday, November 5, at approximately 10:30 AM. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Before you buy stock in ScanSource, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ScanSource wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $439,308!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,286,826!* Now, it’s worth noting Stock Advisor’s total average return is 964% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 27, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. ScanSource (SCSC) Q4 2026 Earnings Call Transcript was originally published by The Motley Fool

ScanSource, Inc. recently reported full-year 2026 results showing sales of US$3.23 billion and net income of US$78.87 million, alongside a quarterly earnings beat and guidance that topped analyst expectations. The company also announced an agreement to acquire IT solutions integrator MicroAge for US$220.50 million in cash, aiming to widen its reach into areas such as AI, cybersecurity, and data center solutions while tightening its board to seven members. With earnings surpassing forecasts and management guiding to 6%–10% year-on-year net sales growth for fiscal 2027, we’ll examine how this shapes ScanSource’s investment narrative. Uncover the next big thing with 22 elite penny stocks that balance risk and reward. For ScanSource, the big-picture belief is that a low-multiple, execution-focused distributor can steadily improve earnings while leaning into higher-value technologies like AI, security and cloud. The latest quarter reinforced that story: revenues and EPS beat expectations, full-year numbers moved higher, and management sounded confident enough to guide to mid‑single to low‑double digit net sales growth for fiscal 2027. The MicroAge deal adds another layer, potentially sharpening ScanSource’s shift toward solutions and services, but also introducing near-term integration and execution risk right after a strong share price run. The buyback program and tighter seven-person board signal a more concentrated approach to capital allocation and oversight, yet they also raise the bar for future performance. Overall, the news looks materially supportive of near-term catalysts, while slightly amplifying operational risk. However, there is one operational risk in this story that investors should not ignore. ScanSource's shares have been on the rise but are still potentially undervalued by 18%. Find out what it's worth. Two fair value estimates from the Simply Wall St Community span roughly US$46 to US$61, reflecting very different views of upside just as MicroAge integration risk and execution on FY 2027 guidance could influence how the ScanSource story unfolds from here. Explore 2 other fair value estimates on ScanSource - why the stock might be worth 15% less than the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your ScanSource research is our analysis highlighting 3 key rewards that could impact your investment decision. Our free ScanSource research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate ScanSource's overall financial health at a glance. Early movers are already taking notice. See the stocks they're targeting before they've flown the coop: We've uncovered the 12 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them. The latest GPUs need a type of rare earth metal called Dysprosium and there are only 28 companies in the world exploring or producing it. Find the list for free. Capitalize on the AI infrastructure supercycle with our selection of the 55 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SCSC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. ScanSource (SCSC) stock moved after the company reported full year 2026 results, issued guidance for 2027, and highlighted expected benefits from its planned MicroAge acquisition and recent business initiatives. See our latest analysis for ScanSource. ScanSource’s recent earnings beat, upbeat 2027 guidance, and the planned MicroAge acquisition come after a share price that is up 39.14% year to date and a 5 year total shareholder return of 50.76%, suggesting momentum has been building over multiple years despite a pullback of 3.62% in the latest session. If ScanSource’s move has you thinking about other potential opportunities in tech infrastructure, this can be a useful moment to see what else is setting up in 55 AI infrastructure stocks The recent jump in ScanSource, layered on top of strong multi year returns and earnings beats, leaves one key issue for you as an investor: Is most of the upside already reflected, or is there still value on the table? Compared with ScanSource’s last close at $54.35, the most followed narrative points to a fair value of $71.00, which implies meaningful upside and hinges on how recurring revenue, margins, and acquisitions play out over time. Read the complete narrative. Curious what sits behind that confidence in higher recurring revenue, richer margins, and acquisition driven growth. The narrative leans on a tight set of earnings, revenue, and valuation assumptions that you may or may not share. Result: Fair Value of $71 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, there are still risks that could challenge the bullish ScanSource narrative if hardware commoditization pressures margins or if major vendors push more aggressively into direct sales. Find out about the key risks to this ScanSource narrative. With the ScanSource story skewing optimistic, it can help to check whether the numbers back up that sentiment and where risks still sit. To see why some investors are focusing on potential upsides here, take a closer look at the 3 key rewards If ScanSource has sharpened your focus on opportunities, do not stop here. Broader idea hunting with solid filters can help you spot what others overlook. Target stability first and stress test your portfolio with 77 resilient stocks with low risk scores that aim to keep drawdowns more under control. Hunt for quality at a fair price through the 48 high quality undervalued stocks and see which companies line up with your return and risk expectations. Spot potential future winners early by scanning the screener containing 19 high quality undiscovered gems before they hit everyone else's radar. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SCSC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in ScanSource, Inc.? Here are five stocks we like better. Strong fiscal 2026 performance: Fourth-quarter sales rose 17% year over year, while non-GAAP EPS increased 43% to a record $1.46. Full-year recurring revenue grew 10.6%, and free cash flow reached $114 million. MicroAge acquisition expands capabilities: The planned deal is expected to add cloud, cybersecurity, data center and AI offerings, along with managed and professional services. ScanSource expects the transaction to close by the end of fiscal first quarter 2027 but has not yet provided detailed financial terms. Positive fiscal 2027 outlook: Excluding MicroAge, ScanSource forecasts organic revenue growth of 6% to 10%, adjusted EBITDA of $158 million to $165 million and at least $85 million in free cash flow, supported by continued demand and the return of larger deals. ScanSource (NASDAQ:SCSC) reported a strong fiscal fourth quarter and full-year 2026, citing improving demand across its technologies, the return of larger deals and growth in recurring revenue. The company also announced a definitive agreement to acquire MicroAge, a move management said would expand its technology offerings, services capabilities and reach into end-user markets. Chairman and Chief Executive Officer Mike Baur said fourth-quarter sales increased 17% year over year, while full-year sales rose 6%. He attributed the performance to execution by the company’s sales, engineering, financial services and operations teams, as well as demand from channel partners for technologies including physical security, mobility, networking, customer experience, cloud compute and connectivity. → Datavault AI Locks Down CyberCatch in $94M Security Rollup “Our business has returned to growth, and we believe we’re at the beginning of a stronger growth trajectory,” Baur said. Chief Financial Officer Steve Jones said fourth-quarter net sales and gross profit posted mid-teen year-over-year growth. Non-GAAP earnings per share rose 43% to a company record of $1.46. → Michael Burry Is Betting Against Palantir Again—Should Investors Care? For fiscal 2026, product net sales increased 5.9%, while recurring revenue increased 10.6%. Consolidated gross profit rose 7%, at the high end of the company’s stated range, and recurring revenue accounted for 34% of consolidated gross profit. Free cash flow totaled $114 million for the year, representing 124% conversion of non-GAAP net income. ScanSource ended the fourth quarter with $88 million in cash and a net debt leverage ratio of approximately zero times trailing 12-month adjusted EBITDA. Fourth-quarter share repurchases totaled $27 million, bringing full-year repurchases to $98 million. As of June 30, 2026, approximately $121 million remained under the company’s share repurchase authorization. Adjusted return on invested capital was 18.2% in the fourth quarter and 14.7% for the full year. In the Specialty Technology Solutions segment, fourth-quarter net sales rose 18% year over year, driven by broad-based hardware growth in North America. Gross profit increased 16% to $94 million, while adjusted EBITDA climbed 28% to $36.7 million. The segment’s adjusted EBITDA margin was 3.96%. → Home Depot Analysts See a Path to $375 and Beyond For the full year, Specialty Technology Solutions revenue rose 6% to $3.12 billion and gross profit increased 8.4% to $338 million. Approximately 15% of the segment’s gross profit came from recurring revenue. In the Intelisys & Advisory segment, fourth-quarter net sales increased 7% and gross profit rose 8%. Adjusted EBITDA was $9.4 million, producing an adjusted EBITDA margin of 36.4%. Full-year segment revenue increased 3.1% to $101 million, while Intelisys net billings reached approximately $2.88 billion. Management said the planned MicroAge acquisition, expected to close by the end of ScanSource’s fiscal first quarter, would add exposure to cloud, cybersecurity, data center and artificial intelligence technologies. Baur also said MicroAge would bring service capabilities including cloud migration and management, cybersecurity services, AI data center implementation and AI solutions development. Baur characterized MicroAge as a company with a traditional hardware-reseller heritage that has expanded into managed and professional services. He said ScanSource sees an opportunity to scale those capabilities and make them available to its existing channel partners. The company did not provide detailed financial information on MicroAge during the call, saying it would discuss the business further after the transaction closes and update its outlook during its fiscal first-quarter earnings report. Addressing potential channel conflict, Baur said ScanSource believes the risk is low and intends to prioritize existing channel partners where appropriate. He noted that MicroAge serves roughly 2,500 end users and said many midmarket and enterprise customers work with multiple technology partners. Management said discussions with certain partners and vendors ahead of the announcement were encouraging. Baur said partners were interested in gaining access to cybersecurity, data center and other services that many smaller solution providers cannot independently deliver. ScanSource issued fiscal 2027 guidance excluding any contribution from MicroAge. The company expects organic revenue growth of 6% to 10%, adjusted EBITDA of $158 million to $165 million, and an adjusted EBITDA margin of 4.6% to 4.65%. It expects to generate at least $85 million in free cash flow and forecasts an effective income tax rate of 27.5% to 28.5%. Jones said the company expects the first half of fiscal 2027 to show stronger year-over-year percentage growth than the second half because of more challenging comparisons later in the year, particularly following the strong fourth quarter. Management said the outlook assumes continued demand strength and normal lead times, with no anticipated supply disruption. Jones said the company saw strong demand and the return of large deals during the second half of fiscal 2026. During the question-and-answer session, Baur said physical security remained a strong category throughout the year, but demand in the second half was broad-based. He also said the company benefited from broad price increases across technologies, although he described the majority of growth as demand-driven. ScanSource also recently added Juniper networking products through Hewlett Packard Enterprise. Baur said Juniper supply constraints are likely to limit the near-term benefit, with the offering expected to develop gradually during the first half of fiscal 2027 and potentially reach fuller availability in the second half. In Brazil, Baur said revenue conditions remained disappointing, though the business has remained profitable. He said the company made structural and headcount changes to preserve profitability in response to market demand. ScanSource, Inc is a global provider of technology products and solutions designed to help businesses enhance operational efficiency and customer engagement. The company specializes in the distribution of point-of-sale (POS) systems, barcode and data capture devices, networking and communications equipment, and value-added software and cloud services. By combining hardware, software and professional services, ScanSource supports channel partners in delivering end-to-end solutions across multiple industries, including retail, hospitality, healthcare and logistics. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource has built a broad international footprint, serving customers throughout North, Central and South America as well as Europe, the Middle East and Africa. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "ScanSource Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

ScanSource (SCSC) came out with quarterly earnings of $1.46 per share, beating the Zacks Consensus Estimate of $1.11 per share. This compares to earnings of $1.02 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +31.53%. A quarter ago, it was expected that this technology products distributor would post earnings of $0.91 per share when it actually produced earnings of $0.94, delivering a surprise of +3.3%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. ScanSource, which belongs to the Zacks Technology Services industry, posted revenues of $953.11 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 22.10%. This compares to year-ago revenues of $812.89 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. ScanSource shares have added about 31.6% since the beginning of the year versus the S&P 500's gain of 12.6%. While ScanSource has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for ScanSource was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.03 on $759.7 million in revenues for the coming quarter and $4.30 on $3.17 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Technology Services is currently in the bottom 40% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, ZenaTech, Inc. (ZENA), is yet to report results for the quarter ended June 2026. This company is expected to post quarterly loss of $0.21 per share in its upcoming report, which represents a year-over-year change of -50%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. ZenaTech, Inc.'s revenues are expected to be $6.97 million, up 330.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ScanSource, Inc. (SCSC) : Free Stock Analysis Report ZenaTech, Inc. (ZENA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Q4 Net Sales: Increased 17% year-over-year. Full-Year Net Sales: Increased 6% year-over-year. Q4 Non-GAAP EPS: $1.46 per share, a record for the company, up 43% year-over-year. Full-Year Product Net Sales: Increased 5.9% year-over-year. Full-Year Recurring Revenues: Increased 10.6% year-over-year. Consolidated Gross Profit: Increased 7% year-over-year, with recurring revenues contributing 34% of consolidated gross profit. Full-Year Free Cash Flow: $114 million, with cash conversion of non-GAAP net income at 124%. Specialty Technology Solutions Q4 Net Sales: Increased 18% year-over-year. Specialty Technology Solutions Q4 Gross Profit: Increased 16% year-over-year to $94 million. Specialty Technology Solutions Q4 Adjusted EBITDA: Increased 28% year-over-year to $36.7 million, with an adjusted EBITDA margin of 3.96%. Specialty Technology Solutions Full-Year Revenue: Increased 6% to $3.12 billion. Specialty Technology Solutions Full-Year Gross Profit: Increased 8.4% to $338 million, with approximately 15% of segment gross profits from recurring revenues. Intelisys & Advisory Q4 Net Sales: Increased 7% year-over-year. Intelisys & Advisory Q4 Gross Profit: Increased 8% year-over-year. Intelisys & Advisory Q4 Adjusted EBITDA: $9.4 million, with an adjusted EBITDA margin of 36.4%. Intelisys & Advisory Full-Year Revenue: Increased 3.1% to $101 million. Intelisys FY26 Net Billings: Approximately $2.88 billion. Q4 Cash: $88 million, with a net debt leverage ratio of approximately zero. Q4 Share Repurchases: $27 million, bringing full-year repurchases to $98 million. Adjusted ROIC: 18.2% for the quarter and 14.7% for the full year. FY27 Organic Revenue Outlook: Expected to increase between 6% and 10%. FY27 Adjusted EBITDA Outlook: Expected between $158 million and $165 million, with an adjusted EBITDA margin of 4.6% to 4.65%. FY27 Free Cash Flow Outlook: Expected to generate at least $85 million. FY27 Effective Income Tax Rate Outlook: Expected to range from 27.5% to 28.5%. Warning! GuruFocus has detected 6 Warning Sign with SCSC. Is SCSC fairly valued? Test your thesis with our free DCF calculator. Release Date: August 20, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. ScanSource Inc (NASDAQ:SCSC) delivered a strong Q4 with sales up 17% year-over-year and record non-GAAP EPS of $1.46, reflecting robust demand and profitable growth. The company saw broad-based growth across key technologies including physical security, mobility, networking, and cloud, with a return of large deals in the second half. Recurring revenues increased 10.6% year-over-year, now contributing 34% of consolidated gross profits, aligning with strategic goals. The planned acquisition of MicroAge expands ScanSource Inc (NASDAQ:SCSC)'s TAM into high-growth areas like cloud, cybersecurity, data center, and AI, and adds new services capabilities. ScanSource Inc (NASDAQ:SCSC) generated strong free cash flow of $114 million with 124% cash conversion, and maintained a near-zero net debt leverage ratio, supporting future investments. ScanSource Inc (NASDAQ:SCSC) faces potential supply chain constraints for Juniper products, which may slow the ramp of new networking opportunities in the first half of fiscal 2027. The company's guidance for fiscal 2027 implies tougher year-over-year comparisons in the second half, which could temper growth expectations. Brazil operations continue to face challenging market conditions, requiring structural changes and headcount reductions to maintain profitability. The MicroAge acquisition carries integration risks and potential channel conflict, though management believes the risk is low. ScanSource Inc (NASDAQ:SCSC) expects a higher effective tax rate of 27.5% to 28.5% for fiscal 2027, which could pressure net income. Q: Can you walk investors through the decision on capital allocation regarding the MicroAge acquisition, given the core business is returning to growth and the stock is trading at a low EBITDA multiple? Why this acquisition versus more share repurchases?A: Mike Baur, Chairman and CEO: We've been planning this for a long time, dating back to 2016 when we bought Intelisys. Our channel partners need access to more services and capabilities, not just hardware. MicroAge is a growth company in the sweet spots of technology with long-standing relationships. If the core business is going to grow and give strong returns, why would we not invest in that with our balance sheet? This became an easy decision because it offers as good or better returns than share repurchases and fits our long-term plan. Q: What is your view on both the vendor and customer reaction to the MicroAge acquisition, especially given some vendors are new to ScanSource and there is potential for channel conflict?A: Mike Baur, Chairman and CEO: We believe the risk of channel conflict is very low. Research shows most end users work with six or more partners. MicroAge only sells to about 2,500 end users, and our partners can go to market alongside MicroAge. We had a call with four longtime partners who were enthusiastic because they trust we won't bring in a partner that competes with them. Vendors are delighted because MicroAge is doing a fantastic job with key vendors, and they see access to the ScanSource balance sheet as positive. Q: What came in stronger than expected in the fourth quarter relative to your guidance, and are you seeing any macro risks or supply shortages around memory impacting the business?A: Steve Jones, CFO: What we saw this year was what we thought was going to happen coming into the yeara stronger second-half growth performance. As the second half unfolded, we saw a very strong demand environment and the return of large deals. We're always cautious about the macro environment, but in our guide, we're not expecting any supply disruption and still believe we'll see continued strong demand. Q: As we look at the guidance and think about tougher comps in the second half, is it fair to say you expect stronger percentage growth in the first half compared to the second half?A: Steve Jones, CFO: Yes, I believe that is the way it will lay out. Our first half has easier comps. The second half, especially with this fourth quarter, is going to be a tougher comp. But that is all captured in our 6% to 10% expectations. Q: Can you talk about the expectations for when the Hewlett Packard Enterprise Juniper addition to your line card might start to benefit you?A: Mike Baur, Chairman and CEO: Juniper has some supply chain constraints because they've had such a big year. Adding us means partner opportunities will be slower to fulfill. It will develop slowly through the first half of our year, and by the second half, we should be in full swing with Juniper from both selling and delivering perspectives. Q: Can you talk about the Intelisys turnaround progress and what bookings were for the quarter?A: Mike Baur, Chairman and CEO: We've gotten our teams more focused on winning instead of defending. We've focused on technologies growing faster and put more resources behind them. We saw strong results in cloud, compute, connectivity, and CX. Connectivity is improving due to new data center connections back to enterprises needing more bandwidth. The whole space is seeing a growth surge and acceleration, and the early days are very positive. Q: Brazil seemed to have another tough quarter. Is there anything happening structurally that we should think about?A: Mike Baur, Chairman and CEO: We have great operators there who always manage to profitability regardless of market demand. The business has been consistently profitable since we entered Brazil. We had to make structural changes with headcount so we don't lose leverage on revenue. We're disappointed at the top line but pleased with profitability. Q: What visibility do you have on the 6% to 10% organic growth guidance for 2027, and to what extent are you factoring in large deals or new business prospects?A: Steve Jones, CFO: That 6% to 10% is our organic business and does not include the acquisition benefits. We'll update that when we do Q1 results. What we're seeing is that's the way this business should operate as large deals continue to roll out. We believe things will operate more normally for FY27. Q: Can you give a split between price and volume in STS for Q4? How much of a tailwind was inflation on a year-over-year basis?A: Steve Jones, CFO: We've definitely benefited year-over-year from broad-based price increases across our technologies. However, 80%-plus of our sales are under special pricing agreements controlled by suppliers, so isolating the price difference is difficult. What I would say is the majority is demand-driven. Q: Did you have any new customer wins to help drive the strong quarter, or was it truly broad demand across the board?A: Mike Baur, Chairman and CEO: We made changes in our leadership and sales structure, and we have a different mindset about winning instead of defending. That spirit is coming through across the business under Mark Morgan's leadership. Our partners are excited because we had some complacency about growing market share. That's a new trend we expect to continue through 2027. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes the 17% year-over-year Q4 sales growth to disciplined execution and a broad-based recovery in demand for key technologies like physical security, mobility, and networking. The company has shifted its organizational mindset from defending market share to actively winning it, driven by new leadership and a focus on taking share in high-growth segments. The acquisition of MicroAge is framed as a strategic move to expand the company's Total Addressable Market (TAM) into high-growth areas including AI, cybersecurity, and data center solutions. Management emphasizes that the business has returned to a stronger growth trajectory following a period of renewed demand for large deals in the second half of the fiscal year. The 'converged communications' strategy aims to bridge the gap between on-premise hardware and cloud recurring revenue by helping partners capture the full technology stack. Operational improvements in the Intelisys segment are focused on specialized resources for high-growth technologies like CX and cloud compute to counter aggressive competitor commission structures. Organic revenue growth for FY 2027 is projected between 6% and 10%, assuming continued strong demand and normalized lead times across all technology categories. Management expects year-over-year growth percentages to be higher in the first half of FY 2027 due to easier comparisons against the prior year's first half. The MicroAge acquisition is expected to close by the end of Q1 FY 2027, at which point the company will update its annual guidance to include the new business unit. Strategic focus for the upcoming year includes scaling MicroAge's services capabilities—such as cloud migration and AI solutions—to enable co-selling opportunities for existing channel partners. The company maintains a capital allocation priority of keeping a net debt leverage ratio between 1x and 2x adjusted EBITDA while continuing disciplined share repurchases. Structural changes, including headcount reductions, were implemented in the Brazil business to maintain profitability despite disappointing top-line revenue performance. Management identified supply chain constraints for Juniper networking products that are expected to limit sales fulfillment in the first half of the year before easing in the second half. The acquisition of MicroAge represents a significant capital deployment, which management justifies as offering better long-term returns than share repurchases alone due to its growth profile. A record non-GAAP EPS of $1.46 for the quarter was driven by mid-teen growth in net sales and gross profits alongside disciplined working capital management. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management believes the risk of conflict is low because end users typically work with multiple partners, and ScanSource will prioritize existing partners if overlaps occur. The acquisition is intended to provide specialized services (like SOC/NOC) that most smaller partners cannot afford to build themselves, creating a wholesale service model for the channel. The Q4 outperformance was driven by the return of large deals that had been in the pipeline, rather than just inflationary price increases. While cautious about the macro environment, management stated they are not currently seeing supply shortages in memory or other components impacting their FY 2027 guide. Management noted that while they are excited to add Juniper, existing supply chain constraints at Juniper will lead to a slower ramp-up than originally anticipated. Significant contributions to growth from this partnership are expected to materialize in the second half of the fiscal year as backlogs are cleared.