SCSC Q3 Deep Dive: Revenue Miss Sparks Focus on Profitability and Acquisition Strategy

Core Insights - ScanSource (SCSC) missed Wall Street's revenue expectations for Q3 CY2025, reporting sales of $739.7 million, a 4.6% decline year on year, and a 6.1% miss against analyst estimates of $787.4 million [1][4] - The company's full-year revenue guidance of $3.2 billion at the midpoint exceeded analysts' estimates by 0.6% [1] - Non-GAAP profit per share was reported at $1.06, which was 14% above analysts' consensus estimates of $0.93 [1][4] Revenue Performance - Q3 revenue was $739.7 million, down 4.6% year on year, and missed analyst expectations by 6.1% [4] - Adjusted EBITDA was $38.59 million, beating analyst estimates of $35.03 million, with a margin of 5.2% [4] - The company reaffirmed its full-year revenue guidance of $3.2 billion and EBITDA guidance of $155 million, which is above analyst estimates of $150.8 million [4] Management Commentary - Management attributed the revenue decline to ongoing weakness in Brazil and changes in revenue reporting, particularly in the Specialty Technology Solutions segment [3] - CEO Mike Baur noted growth in some technology categories in North America but acknowledged declines in certain legacy areas [3] - The company is focusing on profitable growth through acquisitions and a shift towards higher-margin, recurring revenue businesses [3] Strategic Outlook - Management emphasized the importance of strategic M&A and channel programs for emerging tech suppliers [3] - Investments in AI education, channel expansion, and acquisition integration are seen as key drivers for future growth [3] - CFO Steve Jones highlighted potential variability in quarterly performance due to the timing of large deals and the evolving revenue mix [3]