ScanSource (SCSC) Raymond James TMT and Consumer Conference summary

Company evolution and strategic transformation

• Transitioned from a traditional hardware distributor to a focus on specialized channels and recurring revenue since 2016.

• Entered the agent channel with a 2016 acquisition, adding a recurring revenue model with high EBITDA margins and low working capital.

• Pursuing convergence of hardware, software, and services to offer integrated solutions to end users.

• Educating partners to sell both hardware and recurring revenue products, aiming for a unified sales approach.

• Unique in offering both hardware and recurring revenue streams, unlike most competitors.

Competitive landscape and partner enablement

• Faces competition from both hardware distributors and Intelisys-type recurring revenue providers.

• Developing tools for partners to assess end user technology environments and identify cross-sell opportunities.

• Providing advanced technology support engineers to assist partners in delivering comprehensive solutions.

• Shifting terminology from "agent" to "trusted advisor" and now "technology architect" to reflect evolving roles.

• Aims to increase partner productivity and revenue by enabling sales teams to offer both hardware and services.

Financial profile and segment performance

• Business now reported in two segments: specialty hardware/technologies and Intelisys Advisory.

• Specialty hardware segment has 3%-4% EBITDA margins; Intelisys Advisory segment has 30%-40% EBITDA margins and is 25% of gross profit.

• Intelisys model features predictable, commission-based recurring revenue with minimal working capital needs.

• Gross profit dollar growth and EBITDA margin expansion are key financial targets.

• Return on invested capital (ROIC) and cash flow generation are emphasized in three-year goals.