ScanSource sales return to growth as specialty tech recovers
Net sales rose 8.8% year-over-year to $766.8 million in the third quarter.
ScanSource (SCSC), the technology distributor, saw net sales return to growth in the third quarter of fiscal 2026, reversing a 4.6% year-over-year decline recorded in the first quarter. Net sales reached $766.8 million, remaining nearly flat compared with the $766.5 million reported in the second quarter.
The recovery was driven largely by the Specialty Technology Solutions segment. After a 4.9% year-over-year decrease in the first quarter, the segment's net sales rose 2.5% in the second quarter and increased 9.2% in the third quarter. This growth helped offset a downturn in the Intelisys & Advisory segment, which saw net sales fall 1.5% year-over-year to $26.0 million in the third quarter. The decline in that segment reflected lower Resourcive sales, following growth of 4.0% and 3.1% in the first and second quarters, respectively.
Profitability metrics fluctuated throughout the fiscal year. Gross profit margin compressed from 14.5% in the first quarter to 13.4% in the second quarter before recovering to 14.0% in the third quarter. Adjusted EBITDA margin followed a similar trajectory, falling from 5.22% in the first quarter to 4.07% in the second quarter and ending the third quarter at 4.65%.
Recurring revenue streams showed signs of deceleration. Growth in recurring revenue slowed from 15.9% year-over-year in the second quarter to 3.6% in the third quarter. The proportion of gross profit derived from recurring revenue also declined, falling to 34.7% in the third quarter from a peak of 37.2% in the second quarter.
ScanSource raised its full-year fiscal 2026 free cash flow outlook in its May 7 release. This followed previous updates to net sales and adjusted EBITDA guidance provided on February 5.
In other corporate developments, the company acquired DataXoom on October 20, 2025, adding 17 employees to support mobile deployments. Peter C. Browning retired from the Board of Directors on August 12, 2026, reducing the Board to seven members.