Intelisys Has Doubled Net Sales Since 2018

ScanSource-owned tech services distributor Intelisys recorded $84.7 million in net sales in its last fiscal year, double what it drove six years prior.

Hybrid distributor ScanSource recently published its annual report, revealing precious information about Intelisys, the channel's only publicly traded TSD. And the numbers show that Intelisys continues to anchor the ScanSource portfolio.

Net sales for ScanSource's fiscal year 2024 (which ended June 30) totaled $3.26 billion, nearly a 149% decline from the previous year. ScanSource's main two segments – Specialty Technology Solutions ($2 billion) and Modern Communications & Cloud ($1.3 billion) – declined at a similar pace. "Softer demand" contributed to declines in the specialty segment, and the modern communications unit saw fewer sales for communications hardware and Cisco solutions.

Historical View of Intelisys Revenue, Net Sales

Tucked inside the Modern Communications & Cloud unit, Intelisys and its sales partners tallied $2.67 billion in end user billings, up from $2.47 billion in 2023. End user billings, otherwise known as gross merchandising value, are what Intelisys suppliers invoice to business customers. Intelisys operates in the advisor/agent model, in which its vendors directly invoice customers and provide a commission to the referring partner. Intelisys earned $84.7 million in net sales, which is the remaining commission the TSD retained after passing the majority of the commission to the selling agent. That's a 6.6% year-over-year increase from $79.5 million in 2023.

Related:'More to Come' in ScanSource M&A as Execs Detail Acquisitions

Moreover, Intelisys has doubled the net sales it made in 2018, when it collected $42.3 million.

Source: ScanSource Annual Reports, 2018-2024

Restructuring

ScanSource notes in its annual report that the company in January initiated a cost reduction and restructuring program. Specifically, the program appears to have targeted a realignment in the distributor's hardware business. Analysts across the industry have pointed to challenges in hardware sales, and ScanSource's on-premises communications hardware have seen declines in recent years. On the other hand, cloud-based unified communications as a service (UCaaS) sold through Intelisys has continued to grow.

ScanSource's program reportedly is saving $10 million annually.

At the 2024 MSP Summit in Atlanta, Channel Futures TV's Craig Galbraith talks with ScanSource's Katherine White about advanced solutions sales at the distributor.

ScanSource also in December 2023 sold intY, the U.K.-based cloud distributor that it bought in 2019. ScanSource has, however, kept the Cascade cloud marketplace that was party of intY. According to ScanSource, Cascade has driven Cisco and Microsoft subscriptions for ScanSource in the U.S. and Brazil.

Related:ScanSource Acquires Resourcive, Names Advisory Business President

Competition and Margins

It is traditional in annual reports for companies to lay out risk factors their investors should consider. One such factor is "intense price competition" in the distribution landscape. ScanSource states that it expects its historically narrow profit margins to stay narrow. Gross profit for ScanSource declined more than 11%, to $399 million, in fiscal year 2024.