ScanSource Reports 15.4% Revenue Decline in Q2 Fiscal 2025

ScanSource, Inc. reported a significant decline in financial performance for the second quarter of fiscal year 2025, ending December 31, 2024. The company recorded net sales of $747.5 million, a decrease of 15.4% compared to $884.8 million in the same quarter of the previous year. For the six months ended December 31, 2024, net sales totaled $1.5 billion, down 12.9% from $1.8 billion in the prior year. The company's gross profit for the quarter was $101.7 million, slightly up from $100.7 million year-over-year, while net income fell to $17.1 million, down from $32.7 million in the prior year, resulting in a diluted earnings per share of $0.70 compared to $1.29.

The decline in revenue was attributed to lower demand in a cautious technology spending environment, particularly affecting the Specialty Technology Solutions segment, which saw a 16.0% drop in sales. The Intelisys & Advisory segment, however, experienced a modest increase in sales, reflecting the impact of recent acquisitions. The company also noted a restructuring initiative aimed at aligning its cost structure with demand expectations, which is expected to yield approximately $10.5 million in annualized savings.

Operationally, ScanSource's customer base and engagement metrics showed mixed results. The company reported a decrease in accounts receivable and inventory, indicating improved working capital efficiency. The number of shares outstanding as of January 27, 2025, was 23,463,543, reflecting a reduction in share count due to ongoing stock repurchase activities. The company’s cash and cash equivalents stood at $110.5 million, down from $185.5 million at the end of the previous fiscal year, primarily due to cash used in acquisitions and capital expenditures.

In terms of strategic developments, ScanSource completed two acquisitions in August 2024, acquiring Resourcive and Advantix, which are expected to enhance its service offerings in technology advisory and managed connectivity solutions. The company also executed a restructuring program that resulted in $5.4 million in costs for the six months ended December 31, 2024. Looking ahead, ScanSource anticipates continued challenges in the market but remains focused on leveraging its acquisitions and improving operational efficiencies to drive future growth. The company expects to maintain compliance with its financial covenants and aims to enhance its liquidity position through operational cash flows and available credit facilities.