ScanSource, Inc. (SCSC): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed assessment of ScanSource, Inc.'s portfolio, and honestly, the BCG Matrix is the perfect tool to map their strategic pivot from hardware distributor to hybrid cloud enabler. We've mapped their current state, showing where 31.8% recurring revenue growth fuels their Stars, while the $2.94 billion Specialty Technology Solutions segment acts as a solid Cash Cow funding the future. Still, you need to see which legacy hardware Dogs are draining resources and which high-potential Question Marks, like the $98.1 million Intelisys segment, demand immediate investment decisions. Dive in below to see the precise breakdown of where ScanSource, Inc. is winning and where the real risk lies right now.

Background of ScanSource, Inc. (SCSC)

You're looking at ScanSource, Inc. (SCSC) as of late 2025, so let's ground ourselves in what the company actually does and how it performed heading into the new fiscal year. ScanSource, Inc. was founded way back in 1992 and keeps its corporate home in Greenville, South Carolina. It positions itself as a leading technology distributor, uniquely set up to help channel partners deliver solutions that involve complex, converging technologies across hardware, Software as a Service (SaaS), connectivity, and the cloud. Honestly, they act as the crucial link between leading technology suppliers and the resellers who serve the end users.

The firm organizes its business into two main segments for reporting purposes: Specialty Technology Solutions and the Intelisys & Advisory Segment. You should know that the Specialty Technology Solutions segment is where the bulk of the revenue comes from, covering areas like mobility and barcode, Point of Sale (POS), payments, security, and networking technologies. Geographically, ScanSource, Inc. pulls most of its revenue from the United States and Canada, though they maintain a presence in Brazil and other international spots.

Looking at the numbers for the full fiscal year 2025, which ended on June 30, 2025, the total net sales came in at $3.04 billion, which was a decrease of 6.72% compared to the prior year. It's important to note that the company had trimmed its full-year sales guidance to approximately $3.0 billion back in May 2025. Still, the focus on recurring revenue is clear: recurring revenue, including acquisitions, grew by a solid 31.8% year-over-year for the full fiscal year 2025. This shift is reflected in the gross profit, which rose 2.4% to $408.6 million, pushing the gross profit margin up to 13.4% from 12.2% the year before, largely due to that higher contribution from recurring revenue.

As of the end of fiscal year 2025, ScanSource, Inc. generated $104.1 million in free cash flow (non-GAAP) and executed share repurchases totaling $106.5 million. By November 3, 2025, the stock price was sitting at $42.28, giving the company a market capitalization of $933 million based on 21.9 million shares outstanding. For context on its standing, ScanSource, Inc. ranked #875 on the Fortune 1000 list for 2025, and they also made FORTUNE magazine's 2025 List of World's Most Admired Companies.

To get a feel for the very latest performance, the first quarter of fiscal year 2026, ending September 30, 2025, showed net sales of $739.7 million, down 4.6% from the first quarter of fiscal year 2025. However, profitability metrics looked much better; GAAP operating income jumped 46.9% to $25.9 million, and non-GAAP diluted Earnings Per Share (EPS) grew 26.2% to $1.06. The Specialty Technology Solutions segment saw its sales dip by 4.9% to $715.4 million, while the Intelisys & Advisory segment actually saw its net sales increase by 4.0% in that same quarter. As of September 30, 2025, the balance sheet held $124.9 million in cash and cash equivalents against $133.9 million in total debt. That's the picture you're working with right now.

ScanSource, Inc. (SCSC) - BCG Matrix: Stars

You're looking at the engines that are currently defining ScanSource, Inc.'s future growth trajectory, the business units that command a strong position in markets that are still expanding rapidly. These are the Stars in the Boston Consulting Group framework, demanding significant investment to maintain their lead.

The most compelling evidence for a Star category at ScanSource, Inc. is the performance of its recurring revenue streams. For the fiscal year ended June 30, 2025, recurring revenue increased by 31.8% year-over-year, including the impact of acquisitions. This massive growth rate, coupled with its impact on profitability, signals a high-growth market where ScanSource, Inc. is gaining traction. This shift is directly driving margin expansion; for fiscal year 2025, the percentage of gross profit derived from recurring revenue climbed to 32.8%, up from 27.5% the prior year. That's a clear indicator of success in a growing area.

The Modern Communications & Cloud solutions segment embodies this high-growth potential. While the broader Specialty Technology Solutions segment saw a net sales decrease of 7.1% for the full fiscal year 2025 to $2.94 billion, the momentum in specific areas is undeniable, evidenced by the fourth quarter of fiscal year 2025 where STS net sales actually increased 9.2% year-over-year. This suggests that the cloud and modern communications components within STS are outperforming the segment average, acting as the growth leaders.

Within the Intelisys & Advisory business, you see the high-margin component that supports the Star classification. For the full fiscal year 2025, Intelisys & Advisory net sales grew 6.3% year-over-year to $98.1 million, helped by an acquisition. To be fair, the growth rate varies; for the third quarter of fiscal year 2025, net sales and gross profits for this segment were up 16% year-over-year. The high-margin nature of the Software as a Service (SaaS) and Connectivity billings here is key to funding the growth elsewhere.

Here's a quick look at the financial metrics supporting this high-growth, margin-accretive focus for fiscal year 2025:

Stars consume cash to fuel their market share gains, but the goal is for that cash burn to be offset by their high revenue generation, keeping them near breakeven in terms of net cash flow contribution, while the company invests heavily for future dominance. ScanSource, Inc. generated $104.1 million in free cash flow (non-GAAP) for fiscal year 2025, suggesting the high-growth areas are not yet fully self-funding the required investment, or that other areas are providing the necessary cash.

The strategy confirms this cash-intensive focus. Management has explicitly stated plans to make strategic investments in fiscal year 2026 to accelerate growth and expand margins, which is the classic BCG mandate for Stars. You should watch for continued heavy investment in areas that support this trajectory, such as:

• Expanding the cloud services portfolio, like the new Zoom resale agreement announced in September 2025.
• Integrating high-margin services from recent acquisitions, such as multi-carrier smart SIM solutions.
• Executing on the overall strategy to address complex, converging technologies.

If ScanSource, Inc. successfully maintains this high market share in these growing areas until the market growth inevitably slows, these units are positioned to transition into Cash Cows, providing substantial, stable returns later on. Finance: draft the FY2026 investment allocation breakdown by Friday.

ScanSource, Inc. (SCSC) - BCG Matrix: Cash Cows

Cash Cows are business units or products with a high market share but low growth prospects, generating more cash than they consume. For ScanSource, Inc., the established distribution business, heavily represented by the Specialty Technology Solutions (STS) segment, fits this profile, providing the necessary capital for other strategic areas.

The Specialty Technology Solutions (STS) segment, which you can view as the core, mature business, generated $2.94 billion in net sales for the fiscal year ended June 30, 2025. This figure represents the vast majority of the company's total reported net sales of $3.04 billion for the same period, confirming its role as the primary revenue base, consistent with a traditional hardware distribution business. Despite a year-over-year decrease in STS net sales of 7.1% for FY2025, the segment's underlying profitability remained supported.

The financial strength derived from this mature segment is evident in the cash generation metrics. ScanSource, Inc. generated $104.1 million of non-GAAP Free Cash Flow for fiscal year 2025. This strong cash flow is exactly what a Cash Cow is expected to deliver, funding strategic investments elsewhere in the portfolio. Furthermore, the overall gross profit margin for fiscal year 2025 improved to 13.4%, up from 12.2% in the prior year, despite soft sales environments.

This margin stability, even with declining top-line sales in the core segment, is directly linked to favorable supplier economics. The higher gross profit margin reflects a higher contribution of recurring revenue and, importantly, higher vendor program recognition. This recognition, along with supplier rebates, helps maintain high gross profits.

Here's a quick look at the key financial figures supporting the Cash Cow status for the fiscal year 2025:

The strategy for these Cash Cows is to 'milk' the gains passively while investing just enough to maintain productivity. You see this reflected in the focus on efficiency drivers:

• Vendor program recognition and supplier rebates help maintain high gross profits.
• The percentage of gross profit from recurring revenue increased to 32.8% from 27.5% year-over-year.
• The company used the strong cash position to fund share repurchases totaling $106.5 million for fiscal year 2025.
• The STS segment net sales decreased by 7.1% year-over-year, indicating a mature or slow-growth market environment for that core business.

The other segment, Intelisys & Advisory, with net sales of $98.1 million for FY2025, is growing at 6.3%, suggesting it might be a Star or a Question Mark, which relies on the cash generated by the STS Cash Cow. Finance: draft the Q2 FY26 cash flow forecast by next Tuesday.

ScanSource, Inc. (SCSC) - BCG Matrix: Dogs

You're looking at the parts of ScanSource, Inc. (SCSC) that aren't pulling their weight in terms of growth, the classic Dogs in the portfolio. These are the areas where market share is low in a slow-moving space, and frankly, they tie up capital that could go elsewhere. Expensive fixes rarely work here, so divestiture is often the cleaner path.

The overall picture for fiscal year 2025 showed a contraction in the core business, which points to where these Dogs reside. Full Year Net Sales for ScanSource, Inc. totaled $3.04 billion, marking a 6.7% decrease year-over-year. This top-line pressure in a cautious spending environment sets the stage for identifying the laggards.

Here's a quick look at the financial context where these low-growth, low-share units operate:

Legacy hardware product lines with low-to-no growth in a cautious spending environment.

The overall decline in the STS segment, which is the bulk of the business, suggests that legacy hardware sales, which are inherently transactional and lower margin, are struggling. For the full fiscal year 2025, STS net sales were $2.94 billion, down 7.1% year-over-year. This decline happened even as the company pushed for higher-margin recurring revenue.

The pressure on margins in the best quarter of the year confirms this. In Q4 FY2025, the consolidated gross profit margin compressed to 12.9%, down 11 basis points from the prior year. Management explicitly tied this compression to a higher hardware mix in the sales mix.

Specific regional operations, like the Brazil business, which saw lower net sales in FY2025.

International operations, specifically Brazil, stand out as a clear drag. This regional business is a prime example of a Dog, facing local currency dynamics and supplier shifts. In the fourth quarter of fiscal year 2025, Q4 Brazil net sales were reported down 17.4% year-over-year. This weakness was also noted earlier, as Q3 FY2025 STS net sales fell 7.0% year-over-year, primarily due to lower net sales in Brazil.

Low-margin, high-volume transactional sales that lack a recurring service component.

These are the units that consume cash or break even without offering future revenue visibility. The split in gross profit clearly shows the weight of these units. For fiscal year 2025, the percentage of gross profit from recurring revenue was 32.8%. This means the low-margin, transactional component-the Dog territory-made up the remaining 67.2% of the consolidated gross profit base.

The Q4 figures show a similar reliance on the transactional side:

• Recurring revenue accounted for 31.6% of Q4 gross profit.
• The non-recurring, transactional portion therefore represented 68.4% of Q4 gross profit.
• The Intelisys & Advisory segment, which houses much of the recurring revenue, saw its adjusted EBITDA decline 4% year-over-year in Q4 due to increased SG&A investment.

Older technology offerings within STS that management noted are not growing.

Within the Specialty Technology Solutions segment, older technology offerings are the low-growth component. Management acknowledged this situation during Q2 FY2025 discussions. They stated that older technologies, while not growing, still represent a significant portion of the business. These units are likely contributing to the overall 7.1% year-over-year decline in STS net sales for the full fiscal year 2025.

The company's stated strategy to accelerate growth in FY2026 with low single-digit growth expected in the first half suggests these older, non-growing areas are not expected to suddenly become Stars. Finance: draft 13-week cash view by Friday.

ScanSource, Inc. (SCSC) - BCG Matrix: Question Marks

You're looking at business units operating in high-growth areas but where ScanSource, Inc. currently holds a small slice of the overall market. These are the areas where you need to decide: pour in serious capital to win big, or cut bait before they drain too much cash.

The Intelisys & Advisory segment fits this profile. For the fiscal year 2025, this segment generated net sales of $98.1 million, which represented a 6.3% year-over-year increase, partly due to an acquisition. For the fourth quarter of fiscal year 2025, the reported net sales were $24 million, with a gross profit margin of 98.9%. Still, the segment's Q2 FY2025 performance showed net sales growth of only 4.0% year-over-year, indicating that while the segment is growing, its market share capture might still be nascent relative to the market's overall potential growth rate.

The strategy here involves aggressive investment to rapidly build share, especially given the high-margin nature of the advisory business, which saw its Q2 FY2025 adjusted EBITDA margin reach 41.1%.

Recent acquisitions, specifically Advantix and Resourcive, fall squarely into this category, demanding immediate capital for integration. The combined initial purchase price for these two entities, net of cash acquired, was approximately $56.7 million. The Resourcive acquisition is placed within the Intelisys & Advisory segment, while Advantix is in Specialty Technology Solutions, both requiring investment to scale their specialized offerings. Furthermore, Selling, General & Administrative (SG&A) expenses in Q2 FY2025 were noted as being up 10.5% year-over-year, which reflects some of the initial integration and scaling costs associated with these new ventures.

Revenue volatility is a real concern stemming from the reliance on large, non-recurring hardware deals. In the second quarter of fiscal year 2025, total net sales dropped by 15.5% year-over-year to $747.5 million. The Specialty Technology Solutions net sales specifically decreased by 16.0% to $723.3 million, which management attributed primarily to a double-digit decline in large deals and general soft demand. This volatility is the classic symptom of a Question Mark that hasn't secured enough recurring revenue to smooth out lumpy, project-based sales.

ScanSource, Inc. is actively expanding into new converged technology markets, which inherently require high capital allocation before market share is secured. These areas of focus for the Intelisys & Advisory segment include:

• Wireless & IoT
• Security
• Cloud/Data Center
• CX (UCaaS/CCaaS)
• Connectivity & SDN

The company's stated plan for fiscal year 2026 includes making strategic investments to accelerate growth, which directly addresses the need to fund these high-growth, low-share businesses. The overall company generated $104.1 million in free cash flow (non-GAAP) for fiscal year 2025, which must now be strategically deployed to convert these Question Marks into Stars.

Finance: draft 13-week cash view by Friday.