ScanSource reported a sharp increase in first-quarter sales, but earnings fell as gross margins narrowed and operating costs weighed on results. The technology distributor said demand was strong in both of its segments and that its September acquisition of MicroAge expanded its solution capabilities.
For the quarter ended September 30, 2026, revenue rose 30.1% to $962.3 million from a year earlier. The company’s reported profit measures declined, including adjusted EBITDA and non-GAAP earnings per share.
Key details
- Sales growth spanned both businesses. Specialty Technology Solutions revenue increased 28.2% to $917.3 million, with the company citing broad-based growth in North America. Intelisys & Solution Services revenue rose 85.9% to $45.0 million, including the MicroAge acquisition. On a non-GAAP basis, growth in that segment was 3.2%, which ScanSource attributed to growth in the Intelisys business.
- Product and services sales increased 30.8%; recurring revenue grew 15.7%. ScanSource also reported total revenue growth of 26.8% on a non-GAAP basis, compared with 30.1% growth on a reported basis.
- Gross profit rose more slowly than sales. It increased 8.8% to $116.9 million, while gross margin fell to 12.2% from 14.5%. ScanSource said the decline was primarily due to sales mix, including strong hardware demand and a higher share of large, lower-margin deals.
- Operating income and GAAP earnings declined. Operating income fell 52.2% to $12.4 million. Net income dropped 56.3% to $8.7 million, and diluted earnings per share fell 52.8% to $0.42.
- Adjusted measures also weakened, though less sharply than GAAP results. Adjusted EBITDA declined 18.9% to $31.3 million, and its margin fell to 3.25% from 5.22%. Non-GAAP net income decreased 25.2% to $17.7 million, while non-GAAP diluted earnings per share fell 18.9% to $0.86.
- MicroAge closed in September. CEO Mike Baur said the acquisition enhances ScanSource’s solution capabilities and aligns with the company’s three-year strategic goals.
The quarter shows a clear contrast: ScanSource expanded sales substantially, but lower-margin deal mix meant gross profit did not keep pace, and profitability declined. The reported revenue growth also includes the MicroAge acquisition; the company separately provided non-GAAP growth comparisons.