[Management View]
Net sales grew nearly 9% YoY in Q4 FY2025, with full-year net sales just over $3 billion, a 6.7% decline YoY. Adjusted EBITDA increased 13% YoY in Q4 and 2.8% for the full year, reaching $144.7 million. Non-GAAP net income grew 17% YoY in Q4 and 9.6% for the full year. Specialty Technology Solutions segment saw significant growth, driven by mobility, barcode, physical security, and managed connectivity.

[Outlook]
FY2026 guidance targets net sales of $3.1 billion–$3.13 billion, adjusted EBITDA of $150 million–$160 million, and at least $80 million in free cash flow. Management projects revenue acceleration in the second half and low single-digit growth in the first half. New three-year strategic goals focus on adjusted EBITDA margin, recurring revenue contribution, ROIC, and gross profit growth.

[Financial Performance]
- Q4 FY2025 net sales: +9% YoY
- Full-year FY2025 net sales: -6.7% YoY
- Q4 FY2025 adjusted EBITDA: +13% YoY
- Full-year FY2025 adjusted EBITDA: +2.8%
- Q4 FY2025 non-GAAP net income: +17% YoY
- Full-year FY2025 non-GAAP net income: +9.6%
- Q4 FY2025 non-GAAP EPS: +27.5% YoY
- Full-year FY2025 non-GAAP EPS: +15.9%

[Q&A Highlights]
Question 1: I noticed that free cash flow as a percent of net income was included in the midterm targets. Could you expand on why this metric was included and discuss capital allocation priorities with the incremental cash?
Answer: We wanted to emphasize our cash culture and the discipline in generating free cash. This metric highlights our financial position's attractiveness. Our capital allocation framework balances expanding GP, increasing recurring revenue, and returning cash to shareholders when there are no deployment opportunities.

Question 2: The Intellisys and advisory segment has healthy margins, but adjusted EBITDA was down for the year. Could you expand on the strategic investments expected in fiscal 2026?
Answer: We are focusing on a new partner segmentation strategy, adding headcount for strategic partners, and investing in financial enablement and new suppliers. These investments aim to support growth partners and drive future opportunities, despite a disappointing growth year in FY '25.

Question 3: Can you talk about the expectations for the Intellisys business in FY '26 and quantify the strategic investments needed?
Answer: We are adding new suppliers and sales resources to drive growth. The channel exchange transaction model allows us to add suppliers like Sophos and Trustify, which will be incremental to our revenue. We expect to be back on a significant growth trajectory as we exit '26.

Question 4: What are the key factors for meeting the top and bottom end of the adjusted EBITDA guidance range for FY '26?
Answer: Growth is expected in the second half, with investments in Intellisys and other businesses. We will manage investments to maintain EBITDA margins, and mix can also impact EBITDA.

Question 5: How much of the recurring revenue growth target involves M&A versus organic growth?
Answer: Acquisitions like Advantech and ResourceV have significantly contributed to recurring revenue growth. Each business segment has a strategy to increase recurring revenue through acquisitions and organic growth.

Question 6: Were there any detractors in the technology segment during the quarter?
Answer: The communications business remains profitable but has slower growth. The specialty technology segment showed broad-based growth.

Question 7: What is the outlook for Brazil, and how does it impact the overall business?
Answer: Brazil is growing in local currency and has a profitable business model focused on recurring revenue and converged solutions. Despite FX headwinds, the business remains strong and profitable.

Question 8: What are the expectations for barcoding and mobility solutions in FY '26?
Answer: Growth in mobility and barcode technologies was strong in Q4. However, macroeconomic uncertainty may impact the timing of large deals, with growth expected in the second half.

Question 9: How does Zebra's acquisition of Elo impact ScanSource?
Answer: Consolidation of suppliers rarely helps us unless it creates new market opportunities. We hope the acquisition will drive new solutions that benefit ScanSource and our channel partners.

[Sentiment Analysis]
Analysts were generally positive, congratulating the company on a strong quarter and appreciating the detailed information provided. Management's tone was confident, emphasizing strategic investments and growth opportunities.

[Quarterly Comparison]
| Metric | Q4 FY2025 | Q4 FY2024 | YoY Change |
|----------------------------|-----------|-----------|------------|
| Net Sales | $3 billion| $3.2 billion| -6.7% |
| Adjusted EBITDA | $144.7M | $140.7M | +2.8% |
| Non-GAAP Net Income | $85.1M | $77.6M | +9.6% |
| Non-GAAP EPS | $3.57 | $3.08 | +15.9% |
| Free Cash Flow | $104M | $85M | +22.4% |

[Risks and Concerns]
- Macroeconomic uncertainty impacting deal timing and volume.
- FX headwinds in Brazil.
- Competitive pressures in the Intellisys segment from PE-backed companies.

[Final Takeaway]
ScanSource delivered strong Q4 FY2025 results, with significant growth in key segments and profitability metrics. Strategic investments in the Intellisys segment and new supplier models are expected to drive future growth. FY2026 guidance is optimistic, with revenue acceleration anticipated in the second half. The company's focus on recurring revenue and strategic acquisitions positions it well for long-term value creation.