Why This Matters to Distributors: ScanSource is pairing renewed demand for its core hardware business with a $220.5 million acquisition that will push the distributor further into cloud, cybersecurity, data centers, and artificial intelligence services. CEO Mike Baur says the strategy is designed to help channel partners sell capabilities many cannot deliver themselves — and to take market share rather than simply defend it.
ScanSource Inc. ended its fiscal year with fourth-quarter sales up 17.3% as stronger hardware demand and the return of large customer deals helped accelerate growth across the technology distributor’s North American business.
Sales increased to $953.1 million for the quarter ending June 30 from $812.9 million a year earlier. Net income increased 27.5% to $25.6 million from $20.1 million.
For the full fiscal year, sales increased 6.1% to $3.23 billion from $3.04 billion. Net income increased 10.2% to $78.9 million from $71.5 million.
But the bigger development for the Greenville, South Carolina-based distributor is where it intends to go next.
ScanSource on Aug. 20 also announced an agreement to acquire MicroAge for $220.5 million in cash, a deal that would expand the distributor beyond its traditional technology products into cloud, cybersecurity, data center, and AI services. MicroAge has about 2,400 U.S. customers and more than 200 employees. The transaction is expected to close during the quarter ending Sept. 30.
CEO Mike Baur said on the company’s earnings call that the acquisition will bring ScanSource technologies and services it does not currently offer.
MicroAge will add capabilities including cloud migration and management, cybersecurity services, AI data center implementation, and AI solutions development.
The strategy is to make those capabilities available to the resellers, technology advisers and other channel partners that already buy through ScanSource.
Baur said many of those partners want to sell technologies such as cybersecurity but lack the employees and technical infrastructure required to implement and support them after the sale.
“If you’re trying to sell cybersecurity today as a solution provider or an agent trusted advisor, they don’t have the resources to follow a sale of cybersecurity products with implementation, deployment, and then follow-on support,” Baur said.
ScanSource sees MicroAge as a way to fill that gap without requiring its channel partners to build those capabilities themselves.
Baur said the company has been looking for a way to provide those services to partners “on a wholesale model” and believes MicroAge can give ScanSource a service offering that many competitors cannot provide.
Hardware Demand Returns
The acquisition comes as ScanSource’s core distribution business is gaining momentum.
Baur said demand strengthened during the second half of fiscal 2026 across physical security, mobility, networking, customer experience technology, cloud, computing, and connectivity.
“Our business has returned to growth, and we believe we’re at the beginning of a stronger growth trajectory,” Baur said.
ScanSource’s Specialty Technology Solutions business generated fourth-quarter sales of $927.2 million, up 17.6% from $788.7 million a year earlier. Intelisys & Advisory sales increased 7.2% to $25.9 million.
Growth was particularly strong in the U.S., where quarterly sales increased 20.8% to $899.6 million from $744.6 million. Brazil sales fell 21.6% to $53.5 million.
Chief Financial Officer Steve Jones said the second half of the year brought both stronger demand and the return of large deals that ScanSource had been tracking.
Physical security performed well throughout the year, Jones said, but the improvement broadened during the second half across the distributor’s technology portfolio.
ScanSource Shifts from Defense to Offense
ScanSource is also changing how its sales organization approaches the market.
Asked whether fourth-quarter growth came from specific customer wins or broader demand, Baur pointed to changes in the company’s leadership and sales structure.
“We’ve got a different mindset right now about winning instead of defending,” Baur said. “We need to take market share and not just defend market share.”
That strategy extends to Intelisys, ScanSource’s technology services distribution business.
The company has been directing more resources toward faster-growing technologies including cloud, computing, connectivity and customer experience products and services. Baur said data center development is also creating additional connectivity demand as businesses require more bandwidth between data centers and corporate networks.
ScanSource’s broader goal is to combine its traditional hardware distribution business with cloud and recurring services and then use MicroAge to add implementation and technical capabilities.
Baur described the approach as helping solution providers generate more recurring cloud business while giving Intelisys advisers opportunities to sell additional devices and related technologies.
MicroAge could accelerate that shift.
Baur said ScanSource had spent a year searching for a company that had successfully moved from traditional hardware resale into managed and professional services — and whose capabilities could be extended across ScanSource’s existing channel.
MicroAge, which is celebrating its 50th anniversary, fit that profile.
“This company for sure comes out of the legacy hardware model, moved into services, and now have been very successful at the blend of selling hardware and providing services,” Baur said.
AI and Data Centers Become Part of the Distribution Play
AI is part of the acquisition strategy, but ScanSource is targeting the infrastructure and services surrounding the technology rather than treating AI as a stand-alone product.
MicroAge brings capabilities in AI data center implementation and AI solutions development, along with cybersecurity, cloud migration, and managed services.
For ScanSource, that creates an opportunity to connect hardware distribution with the services required to deploy increasingly complex technology.
The company sees a similar opportunity in data centers. Baur said increased data center activity is creating demand for more bandwidth and connectivity back to corporate customers, contributing to stronger results in ScanSource’s connectivity business.
ScanSource also recently added Juniper networking products from Hewlett Packard Enterprise to its line card, although supply constraints are expected to limit availability during the first half of fiscal 2027.
Baur said ScanSource expects to be in “full swing” selling and delivering Juniper products during the second half of the fiscal year.
More Growth Expected in Fiscal 2027
ScanSource expects its underlying sales to increase 6% to 10% in fiscal 2027, excluding the pending MicroAge acquisition.
The company expects demand to remain strong across its technology categories and does not currently anticipate significant supply disruptions, although individual product lines such as Juniper remain constrained.
The MicroAge deal could give ScanSource another source of growth once it closes, but management has not yet incorporated the acquisition into its fiscal 2027 sales forecast.
More importantly for ScanSource’s longer-term strategy, the transaction represents another step away from relying primarily on moving technology products through the channel.
The distributor is betting that its next stage of growth will come from combining those products with cybersecurity, cloud, data center, and AI expertise that its reseller and adviser customers can take directly to their end users.
For Baur, the objective is straightforward: give ScanSource’s partners more capabilities to sell — and use those capabilities to win more business.
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