GREENVILLE, S.C.--(BUSINESS WIRE)--ScanSource, Inc. (NASDAQ: SCSC), a leading hybrid distributor connecting devices to the cloud, today announced financial results for the second quarter ended December 31, 2024.
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Second Quarter Summary |
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Q2 FY25 |
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Q2 FY24 |
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Change |
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(in thousands, except percentages and per share data) |
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Net sales |
$ |
747,497 |
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$ |
884,792 |
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-15.5% |
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“In a soft demand environment, our team delivered second quarter gross profit growth and a strong gross profit margin,” said Mike Baur, Chair and CEO, ScanSource, Inc. “Our recent acquisitions are expanding recurring revenue opportunities for our channel partners.”
Quarterly Results
Net sales for the second quarter of fiscal year 2025 totaled $747.5 million, down 15.5% year-over-year, or down 15.1% for non-GAAP net sales. Net sales for products and services decreased 17.0% year-over-year, while recurring revenue increased 31.2% year-over-year. Specialty Technology Solutions net sales for the second quarter decreased 16.0% year-over-year to $723.3 million primarily due to lower large deals and continued soft demand in a more cautious technology spending environment. Intelisys & Advisory net sales for the second quarter increased 4.0% year-over-year to $24.2 million reflecting the addition of an acquisition.
Gross profit for the second quarter of fiscal year 2025 increased 1.0% year-over-year to $101.7 million with a gross profit margin of 13.6% versus 11.4% in the prior-year quarter. Increased gross profit margin reflects a higher contribution of recurring revenue in our overall revenue mix, which is recorded on a net basis and therefore contributes to a higher gross profit margin. For the second quarter of fiscal year 2025, the percentage of gross profit from recurring revenue increased to 32.4% from 27.1% for the prior-year period.
For the second quarter of fiscal year 2025, operating income was $18.4 million compared to $26.8 million in the prior-year quarter. Second quarter fiscal year 2025 non-GAAP operating income decreased to $25.9 million from $30.6 million in the prior-year quarter.
On a GAAP basis, net income for the second quarter of fiscal year 2025 totaled $17.1 million, or $0.70 per diluted share, compared to net income of $32.7 million, or $1.29 per diluted share, for the prior-year quarter. Second quarter fiscal year 2025 non-GAAP net income totaled $20.7 million, or $0.85 per diluted share, compared to $21.6 million, or $0.85 per diluted share, for the prior-year quarter. On a non-GAAP basis, adjusted EBITDA for the second quarter of fiscal year 2025 decreased 8.2% to $35.3 million, or 4.72% of net sales, compared to $38.5 million, or 4.35% of net sales, for the prior-year quarter.
Balance Sheet and Cash Flow
As of December 31, 2024, ScanSource had cash and cash equivalents of $110.5 million and total debt of $139.9 million.
For the first six months of fiscal year 2025, ScanSource generated $38.6 million of operating cash flow and $34.3 million of free cash flow (non-GAAP). ScanSource also had share repurchases of $52.3 million for the first six months of fiscal year 2025.
Annual Financial Outlook for Fiscal Year 2025
ScanSource reaffirms previously provided guidance set forth below for the full fiscal year ended June 30, 2025.
| Net sales | $3.1 billion to $3.5 billion |
| Adjusted EBITDA (non-GAAP) | $140 million to $160 million |
| Free cash flow (non-GAAP) | At least $70 million |
Adjusted EBITDA is a non-GAAP measure, which excludes estimates for amortization of intangible assets, depreciation expense, and non-cash shared-based compensation expense. Free cash flow is a non-GAAP measure, which excludes the effect of estimated capital expenditures from estimated operating cash flow. These measures are forward-looking, and actual results may differ materially.