ScanSource reported another quarter of double-digit recurring revenue growth as the technology distribution company continues shifting more of its business toward higher-value services and recurring revenue streams.
For the fiscal fourth quarter of 2026, ScanSource generated net sales of $953.1 million, up 17.3% from the prior-year period. Product and services sales increased 17.4%, while recurring revenue increased 13.5%, including contributions from acquisitions.
Recurring revenue remained an outsized contributor to profitability. The business accounted for 31.5% of ScanSource’s fourth-quarter gross profit, nearly unchanged from 31.6% a year earlier.
For the full fiscal year, recurring revenue increased 10.6%, while its contribution to gross profit increased to 33.7% from 32.8%. ScanSource noted that recurring revenue is reported on a netted-down basis, meaning its share of reported revenue understates its contribution to gross profit.
Fourth-quarter gross profit increased 14% to $119.8 million, although gross margin declined to 12.6% from 12.9%.
Operating income increased to $31.7 million from $26.8 million, while GAAP net income climbed to $25.6 million from $20.1 million. Diluted earnings per share increased to $1.24 from $0.88.
The recurring-revenue expansion is particularly important as ScanSource broadens its exposure to advisory, connectivity, cloud and managed-services businesses that can generate more predictable and higher-margin gross profit than traditional hardware distribution.
That strategy is also central to ScanSource’s pending acquisition of MicroAge. The company agreed to acquire MicroAge for $220.5 million in cash, adding a U.S. client base of approximately 2,400 customers and more than 200 employees. The transaction is expected to close during the quarter ending September 30, subject to regulatory approval and customary closing conditions.
For fiscal 2027, excluding MicroAge and related purchase accounting effects, ScanSource expects net sales growth of 6% to 10%, adjusted EBITDA of $158 million to $165 million and free cash flow of at least $85 million.
KEY QUOTE:
“We’re also excited about our agreement to acquire MicroAge, which we believe will accelerate growth, expand margins, and adds new services capabilities.”
Mike Baur, Chair and CEO of ScanSource
