SCSC · ScanSource, Inc.

ScanSource delivered strong Q3 FY26 results, with net sales rising 8.8% year-over-year to $766.8 million, driven by 9.2% growth in Specialty Technology Solutions to $740.8 million from improved hardware demand across most North American technologies, partially offset by a 1.5% decline in Intelisys & Advisory to $26.0 million due to lower Resourcive sales. Gross profit increased 6.9% to $107.1 million, though the margin contracted 20 basis points to 14.0%, reflecting pricing pressures or mix shifts, with recurring revenue gross profit mix at 34.7% versus 35.5% prior year. Operating income grew modestly 3.5% to $23.1 million on GAAP basis, while non-GAAP operating income rose to $27.7 million. CEO Mike Baur highlighted the team's execution, stating results bolster confidence in annual outlook and three-year strategic goals focused on 5-7% gross profit CAGR, recurring GP to 50%, ~6% Adjusted EBITDA margin, and consistent 80%+ free cash flow conversion. Balance sheet remains solid with $120.3 million cash exceeding $102.0 million debt, enabling $71.4 million in share repurchases YTD. The company raised FY26 free cash flow guidance to at least $90 million from prior $80 million, supported by YTD generation of $118.6 million, while reaffirming net sales at $3.0-3.1 billion and Adjusted EBITDA at $140-150 million. Organic sales growth was 7.6% excluding FX and acquisitions, underscoring underlying momentum amid macroeconomic risks noted in forward-looking statements.