ScanSource Q1 2027: Sales Surge 30% but Margins Tell a Harder Story

ScanSource posted fiscal first-quarter net sales of $962.3 million, beating expectations against a $861.3 million consensus, with year-over-year growth of 30.1% driven by broad-based North American demand and the September 1 close of the MicroAge acquisition. The revenue strength did not reach the bottom line.

Gross margin compressed sharply to 12.2% from 14.5% a year earlier, the result of a heavier mix of lower-margin hardware and large deals. That squeeze, combined with roughly $4.5 million in higher bad debt expense tied to specific customer credit exposures in Brazil, left adjusted EPS at $0.86, missing expectations against the $1.12 analyst estimate.

The MicroAge deal, which closed September 1, served as both a revenue driver and a source of pressure in the quarter. Acquisition and restructuring costs weighed on GAAP results, and funding the transaction pushed total debt to $332.4 million. Brazil net sales fell 15.9% year over year, adding another headwind that the North American business had to absorb.

Despite the profit miss, management raised its fiscal 2027 adjusted EBITDA guidance to $175 million to $185 million, up from the prior range of $158 million to $165 million, incorporating MicroAge's contribution. The company also set a full-year net sales outlook of $3.8 billion to $4.0 billion and kept its free cash flow target at at least $85 million.

Looking at the EPS history, ScanSource has had an uneven relationship with analyst estimates over the past several quarters, beating in Q3 and Q4 of 2025, Q1 and Q4 of 2026, and Q3 of 2026, but missing in Q2 2025, Q2 2026, and now Q1 2027. The pattern underscores how sensitive earnings are to deal mix and credit conditions, factors that investors will want to monitor as MicroAge integration continues through the rest of fiscal 2027.