Scansource, Inc. (NASDAQ: SCSC)

ScanSource Inc is a technology distributor that connects devices to the cloud and supports channel sales partners across hardware software as a service connectivity and cloud services. The company was incorporated in South Carolina in 1992 and serves approximately 25000 channel sales partners. It offers technology solutions from more than 500 leading suppliers in categories such as mobility and barcode point of sale payment terminals physical security networking communications and connectivity. It operates in the United States Canada and Brazil.

ScanSource generates revenue by selling products and services to its channel sales partners who then resell to end users. Revenue comes from the distribution of hardware including mobility devices barcode scanners point of sale terminals payment terminals physical security equipment networking gear and communications equipment. The company also earns income from software as a service subscriptions and related cloud services that are delivered through its digital platforms. Additional revenue is derived from value added services such as configuration technical support logistics and financial solutions that help partners manage inventory and credit. Sales are made under various models including wholesale resale and agency arrangements that allow flexibility to meet partner needs.

The company operates through the following segments: Specialty Technology Solutions and Intelisys & Advisory.

• Specialty Technology Solutions distributes hardware software and subscription services through a wholesale resale model in the United States Canada and Brazil. This segment includes mobility and barcode products point of sale systems payment terminals physical security solutions networking equipment communications platforms and connectivity offerings. It serves partners who require a broad range of technology products to build solutions for end users across many industries.

• Intelisys & Advisory provides technology services distribution through an agency model in the United States. It focuses on connectivity software defined networking unified communications as a service contact center as a service cloud data center security managed artificial intelligence and wireless internet of things solutions. The segment also offers advisory services that help partners design sell and manage technology solutions for end users ranging from very small businesses to large enterprises.

ScanSource holds a strong position as a leading technology distributor in the markets it serves. It competes with broad line distributors such as Ingram Micro and TD Synnex as well as specialized players like ADI Wesco and BlueStar in the specialty technology space. In the technology services distribution arena it faces competition from firms such as Avant and Telarus. The company’s competitive advantages include its deep relationships with more than 500 suppliers its extensive network of approximately 25000 channel partners and its ability to provide value added services that reduce complexity for partners. Its expertise in configuring integrating and supporting solutions allows it to differentiate itself from pure play distributors.

The company’s customer base consists of channel sales partners that include value added resellers advisors independent software vendors independent sales organizations and managed service providers. These partners serve end users in sectors such as manufacturing warehouse and distribution retail hospitality transportation logistics government education and healthcare. No single channel partner accounted for more than ten percent of total net sales in the most recent fiscal year. While the filing does not list specific end user customers it notes that partners operate across a wide range of vertical markets and that the company’s solutions are used by businesses of all sizes.