What changed in this filing

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Item 1. Financial Statements

2026-02-05 compared with 2025-11-06 · 249 added, 167 removed, 512 unchanged (45% of the section changed)

4 unchanged sentences

(In thousands, except share information)

September 30, 2025 June 30, 2025

December 31, 2025 June 30, 2025

Current assets:

Cash and cash equivalents $ 83,466 $ 126,157

Accounts receivable, less allowance of $ 29,226 at September 30, 2025

Accounts receivable, less allowance of $ 31,534 at December 31, 2025

and $ 27,821 at June 30, 2025

1 unchanged sentence

Inventories 490,259 483,815

Prepaid income tax expense 11,208 2,821

Prepaid expenses and other current assets 112,727 122,138

23 unchanged sentences

Common stock, no par value;

45,000,000 shares authorized, 22,067,128 and 22,217,421 shares issued and outstanding at September 30, 2025 and June 30, 2025, respectively

45,000,000 shares authorized, 21,645,381 and 22,217,421 shares issued and outstanding at December 31, 2025 and June 30, 2025, respectively

Retained earnings 1,027,300 1,020,833

8 unchanged sentences

(In thousands, except per share data)

Quarter ended

September 30,

Quarter ended Six months ended

December 31, December 31,

2025 2024 2025 2024

Net sales $ 766,512 $ 747,497 $ 1,506,162 $ 1,523,077

23 unchanged sentences

(In thousands)

Quarter ended

September 30,

Quarter ended Six months ended

December 31, December 31,

2025 2024 2025 2024

Net income $ 16,493 $ 17,053 $ 36,372 $ 34,028

Unrealized loss on hedged transaction, net of tax ( 230 ) ( 1,050 )

Unrealized (loss) gain on hedged transaction, net of tax ( 161 ) 266 ( 390 ) ( 784 )

Foreign currency translation adjustment ( 5,565 ) ( 18,744 ) ( 1,600 ) ( 14,635 )

17 unchanged sentences

Balance at September 30, 2025 22,067,128 $ — $ 1,024,720 $ ( 110,688 ) $ 914,032

Net income — $ — $ 16,493 $ — $ 16,493

Unrealized loss on hedged transaction, net of tax — — — ( 161 ) ( 161 )

Foreign currency translation adjustment — — — ( 5,565 ) ( 5,565 )

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 2,025 2 — — 2

Common stock repurchased, including excise tax ( 423,772 ) ( 3,664 ) ( 13,913 ) — ( 17,577 )

Share-based compensation — 3,662 — — 3,662

Balance at December 31, 2025 21,645,381 $ — $ 1,027,300 $ ( 116,414 ) $ 910,886

See accompanying notes to these condensed consolidated financial statements.

15 unchanged sentences

Balance at September 30, 2024 24,005,107 $ 2,975 $ 1,030,712 $ ( 112,794 ) $ 920,893

Net income — $ — $ 17,053 $ — $ 17,053

Unrealized gain on hedged transaction, net of tax — — — 266 266

Foreign currency translation adjustment — — — ( 18,744 ) ( 18,744 )

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 102,489 2,508 — — 2,508

Common stock repurchased, including excise tax ( 495,053 ) ( 8,504 ) ( 15,831 ) — ( 24,335 )

Share-based compensation — 3,021 — — 3,021

Balance at December 31, 2024 23,612,543 $ — $ 1,031,934 $ ( 131,272 ) $ 900,662

See accompanying notes to these condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

Three months ended

September 30,

Six months ended

Cash flows from operating activities:

Net income $ 36,372 $ 34,028

Net income from continuing operations 19,878 16,974

Adjustments to reconcile net income to net cash provided by operating activities:

18 unchanged sentences

Cash paid for business acquisitions, net of cash acquired ( 18,358 ) ( 56,673 )

Proceeds from sale of business, net of cash transferred — 2,569

Net cash used in investing activities ( 22,728 ) ( 58,452 )

2 unchanged sentences

Repayments on revolving credit ( 141,738 ) ( 26,636 )

Borrowings on long-term debt 100,000 —

Repayments on long-term debt ( 133,486 ) ( 4,107 )

Repayments on finance lease obligation ( 523 ) ( 547 )

Debt issuance costs ( 1,417 ) —

Contingent consideration payments ( 1,375 ) —

14 unchanged sentences

ScanSource, Inc.

(together with its subsidiaries referred to as “the Company” or “ScanSource”) is a leading technology distributor connecting devices to the cloud and accelerating growth for channel sales partners across hardware, software as a service ("SaaS"), connectivity and cloud services.

ScanSource uses multiple sales models to offer technology distribution solutions from leading suppliers of specialty technologies and connectivity and cloud services.

(together with its subsidiaries referred to as “the Company” or “ScanSource”) is a leading technology distributor uniquely positioned to address complex, converging technologies and to accelerate growth for channel sales partners across hardware, software as a service ("SaaS"), connectivity and cloud services.

ScanSource uses multiple sales models to offer technology solutions from leading suppliers of specialty technologies, connectivity and cloud services.

The Company operates primarily in the United States and Brazil.

5 unchanged sentences

GAAP for annual financial statements.

The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position at September 30, 2025 and June 30, 2025, the results of operations for the quarters ended September 30, 2025 and 2024, the condensed consolidated statements of comprehensive income for the quarters ended September 30, 2025 and 2024, the condensed consolidated statements of shareholders' equity for the quarters ended September 30, 2025 and 2024 and the condensed consolidated statements of cash flows for the three months ended September 30, 2025 and 2024.

The results of operations for the quarters ended September 30, 2025 are not necessarily indicative of the results to be expected for a full year.

The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position at December 31, 2025 and June 30, 2025, the results of operations for the quarters and six months ended December 31, 2025 and 2024, the condensed consolidated statements of comprehensive income for the quarters and six months ended December 31, 2025 and 2024, the condensed consolidated statements of shareholders' equity for the quarters and six months ended December 31, 2025 and 2024 and the condensed consolidated statements of cash flows for the six months ended December 31, 2025 and 2024.

The results of operations for the quarters and six months ended December 31, 2025 are not necessarily indicative of the results to be expected for a full year.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies for the quarter ended September 30, 2025 from the policies described in the notes to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

There have been no material changes to the Company’s significant accounting policies for the six months ended December 31, 2025 from the policies described in the notes to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

For a discussion of the Company’s significant accounting policies, please see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

3 unchanged sentences

Due to the terms of the agreements governing these accounts, the Company generally does not have the right to offset outstanding checks written from these accounts against cash on hand, and the respective institutions are not legally obligated to honor the checks until sufficient funds are transferred to fund the checks.

As a result, checks released but not yet cleared from these accounts were approximately $ 0.1 million and are included in accounts payable on the condensed consolidated balance sheets at September 30, 2025 and June 30, 2025.

As a result, checks released but not yet cleared from these accounts were approximately $ 0.2 million and $ 0.1 million and are included in accounts payable on the condensed consolidated balance sheets at December 31, 2025 and June 30, 2025, respectively.

Long-lived Assets

The Company presents depreciation expense and intangible amortization expense on the condensed consolidated income statements.

The Company's depreciation expense related to selling, general and administrative costs totaled $ 1.6 million and $ 2.9 million for the quarters ended September 30, 2025 and September 30, 2024, respectively.

Depreciation expense reported as part of cost of goods sold on the condensed consolidated income statements totaled $ 0.2 million and $ 0.3 million for the quarters ended September 30, 2025 and September 30, 2024, respectively.

The Company's depreciation expense related to selling, general and administrative costs totaled $ 1.4 million and $ 3.0 million for the quarter and six months ended December 31, 2025, respectively, and $ 2.9 million and $ 5.8 million for the quarter and six months ended December 31, 2024, respectively.

Depreciation expense reported as part of cost of goods sold on the condensed consolidated income statements totaled $ 0.2 million and $ 0.4 million for the quarter and six months ended December 31, 2025, respectively, and $ 0.2 million and $ 0.5 million for the quarter and six months ended December 31, 2024, respectively.

The Company's intangible amortization expense reported on the condensed consolidated income statements relates to selling, general and administrative costs, not the cost of selling goods.

Intangible amortization expense totaled $ 4.4 million for the quarters ended September 30, 2025 and September 30, 2024.

Intangible amortization expense totaled $ 4.3 million and $ 8.7 million for the quarter and six months ended December 31, 2025, respectively, and $ 5.0 million and $ 9.4 million for the quarter and six months ended December 31, 2024, respectively.

Recent Accounting Pronouncements

22 unchanged sentences

Estimates of expected credit losses on trade receivables over the contractual life are recorded at inception and adjusted over the contractual life.

The changes in the allowance for doubtful accounts for the three months ended September 30, 2025 are set forth in the table below.

The changes in the allowance for doubtful accounts for the six months ended December 31, 2025 are set forth in the table below.

June 30, 2025 Amounts Charged to Expense Write-offs Other (1)

September 30, 2025

December 31, 2025

(in thousands)

Trade accounts and current notes receivable allowance $ 27,821 $ 5,580 $ ( 1,461 ) $ ( 406 ) $ 31,534

(1) "Other" amounts include recoveries and the effect of foreign currency fluctuations for the three months ended September 30, 2025.

(1) "Other" amounts include recoveries and the effect of foreign currency fluctuations for the six months ended December 31, 2025.

(3) Revenue Recognition

1 unchanged sentence

This includes hardware, related accessories and device configuration as well as software licenses, professional services and hardware support programs.

Substantially all of the Company's revenues are derived from products sold at a point-in-time.

In determining the appropriate amount of revenue to recognize, the Company applies the following five-step model in accordance with ASC 606:

28 unchanged sentences

The following tables represent the Company's disaggregation of revenue:

Quarter ended September 30, 2025

Quarter ended December 31, 2025

Specialty Technology Solutions Intelisys & Advisory Total

5 unchanged sentences

$ 741,540 $ 24,972 $ 766,512

Quarter ended September 30, 2024

Six months ended December 31, 2025

Specialty Technology Solutions Intelisys & Advisory Total

6 unchanged sentences

(a) Recurring revenue represents revenue primarily from agency commissions, managed connectivity, SaaS, subscriptions, and hardware rentals.

Quarter ended December 31, 2024

Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Revenue by product/service

Products and services $ 710,858 $ 377 $ 711,235

Recurring revenue (a)

12,419 23,843 36,262

$ 723,277 $ 24,220 $ 747,497

Six months ended December 31, 2024

Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Revenue by product/service:

Products and services $ 1,451,592 $ 1,210 $ 1,452,802

Recurring revenue (a)

23,984 46,291 70,275

$ 1,475,576 $ 47,501 $ 1,523,077

(a) Recurring revenue represents revenue primarily from agency commissions, managed connectivity, SaaS, subscriptions, and hardware rentals.

(4) Earnings Per Share

1 unchanged sentence

Diluted earnings per share are computed by dividing net income by the weighted-average number of common and potential common shares outstanding.

Quarter ended

September 30,

Quarter ended Six months ended

December 31, December 31,

2025 2024 2025 2024

(in thousands, except per share data)

5 unchanged sentences

Net income per common share, diluted $ 0.75 $ 0.70 $ 1.63 $ 1.39

For the quarters ended September 30, 2025 and 2024, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 295,562 and 109,450 , respectively.

For the quarter and six months ended December 31, 2025, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 320,233 and 435,768 , respectively.

For the quarter and six months ended December 31, 2024, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 197,803 and 210,206 , respectively.

(5) Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax are as follows:

September 30, 2025 June 30, 2025

December 31, 2025 June 30, 2025

(in thousands)

2 unchanged sentences

Accumulated other comprehensive loss $ ( 116,414 ) $ ( 114,424 )

The tax effect of amounts in comprehensive loss reflect a tax benefit as follows:

Quarter ended September 30,

The tax effect of amounts in comprehensive loss reflect a tax (benefit) expense as follows:

Quarter ended December 31, Six months ended December 31,

2025 2024 2025 2024

(in thousands)

Tax benefit $ ( 45 ) $ ( 363 )

Tax (benefit) expense $ ( 89 ) $ 157 $ ( 134 ) $ ( 206 )

(6) Goodwill and Other Identifiable Intangible Assets

The changes in the carrying amount of goodwill for the three months ended September 30, 2025, by reporting segment, are set forth in the table below.

The changes in the carrying amount of goodwill for the six months ended December 31, 2025, by reporting segment, are set forth in the table below.

Specialty Technology Solutions Intelisys & Advisory Total

1 unchanged sentence

Balance at June 30, 2025 $ 159,779 $ 71,041 $ 230,820

Additions 13,465 — 13,465

Foreign currency translation adjustment ( 101 ) ( 6 ) ( 107 )

Balance at September 30, 2025 $ 160,096 $ 71,036 $ 231,132

The following table shows changes in the amount recognized for net identifiable intangible assets for the three months ended September 30, 2025.

Balance at December 31, 2025 $ 173,143 $ 71,035 $ 244,178

The following table shows changes in the amount recognized for net identifiable intangible assets for the six months ended December 31, 2025.

Net Identifiable Intangible Assets

1 unchanged sentence

Balance at June 30, 2025 $ 62,909

Additions 18,200

Amortization expense ( 8,689 )

Foreign currency translation adjustment 3

Balance at September 30, 2025 $ 58,510

Balance at December 31, 2025 $ 72,423

Additions to goodwill and intangible assets are due to the recent DataXoom acquisition.

Intangible assets include trade name, developed technology and customer relationships.

(7) Short-Term Borrowings and Long-Term Debt

The following table presents the Company’s debt at September 30, 2025 and June 30, 2025.

September 30, 2025 June 30, 2025

The following table presents the Company’s debt at December 31, 2025 and June 30, 2025.

December 31, 2025 June 30, 2025

(in thousands)

2 unchanged sentences

Senior secured term loan facility, net of current portion 97,500 125,625

Borrowings under revolving credit facility — —

Total debt $ 102,663 $ 136,149

Credit Facility

The Company has a multi-currency senior secured credit facility (as amended, the "Amended Credit Agreement") with JPMorgan Chase Bank N.A., as administrative agent (the "Administrative Agent"), and a syndicate of banks (collectively the "Lenders").

On September 28, 2022, the Company amended and restated the Amended Credit Agreement, which includes (i) a five-year , $ 350 million multicurrency senior secured revolving credit facility and (ii) a five-year $ 150 million senior secured term loan facility.

The Amended Credit Agreement extended the credit facility maturity date to September 28, 2027.

In addition, pursuant to an “accordion feature,” the Company may increase its borrowing limit by up to an additional $ 250 million, subject to obtaining additional credit commitments from the lenders participating in the increase.

The Amended Credit Agreement allows for the issuance of up to $ 50 million for letters of credit.

Borrowings under the Amended Credit Agreement are guaranteed by substantially all of the domestic subsidiaries of the Company and secured by their assets.

On December 18, 2025, the Company entered into a credit agreement (the “New Credit Agreement”) with PNC Bank, National Association, as administrative agent (“PNC”), and the other lenders party thereto (the “Lenders”), providing for (i) a five-year , $ 400 million multicurrency senior secured revolving credit facility and (ii) a five-year $ 100 million senior secured term loan facility (the “New Credit Facilities”).

In addition, pursuant to an “accordion feature,” the Company may increase its borrowings by up to the greater of $ 250 million or 150 % of the Company’s EBITDA calculated on a Pro Forma Basis (each as defined in the New Credit Agreement), subject to obtaining additional credit commitments from the Lenders participating in the increase.

The New Credit Agreement allows for issuance of up to $ 50 million for letters of credit.

Borrowings under the New Credit Agreement are secured by substantially all of the assets of the Company and its domestic subsidiaries.

Under the terms of the revolving credit facility, the payment of cash dividends is restricted.

The Company incurred debt issuance costs of $ 1.4 million in connection with the amendment and restatement of the Amended Credit Agreement.

The Company incurred debt issuance costs of $ 1.4 million in connection with the New Credit Agreement.

These costs were capitalized to other non-current assets on the Condensed Consolidated Balance Sheets and added to the unamortized debt issuance costs from the previous credit facility.

Loans denominated in U.S.

dollars, other than swingline loans, bear interest at a rate per annum equal to, at the Company’s option, (i) the adjusted term Secured Overnight Financing Rate ("SOFR") or adjusted daily simple SOFR plus an additional margin ranging from 1.00 % to 1.75 % depending upon the Company’s ratio of (A) total consolidated debt less up to $ 30 million of unrestricted domestic cash to (B) trailing four-quarter consolidated EBITDA measured as of the end of the most recent year or quarter, as applicable, for which financial statements have been delivered to the Lenders (the “leverage ratio”);

or (ii) the alternate base rate plus an additional margin ranging from 0 % to 0.75 %, depending upon the Company’s leverage ratio, plus, if applicable, certain mandatory costs.

dollars, other than swingline loans, bear interest at a rate per annum equal to, at the Company’s option, (i) the Term Secured Overnight Financing Rate ("SOFR") or daily simple SOFR plus an additional margin ranging from 1.00 % to 1.75 % depending upon the Company’s ratio of (A) total consolidated debt less its unrestricted domestic cash to (B) trailing four-quarter consolidated EBITDA measured as of the end of the most recent year or quarter, as applicable, for which financial statements have been delivered to the Lenders (the “leverage ratio”);

or (ii) the base rate plus an additional margin

ranging from 0 % to 0.75 %, depending upon the Company’s leverage ratio.

All swingline loans denominated in U.S.

dollars bear interest based upon the adjusted daily simple SOFR plus an additional margin ranging from 1.00 % to 1.75 % depending upon the Company's leverage ratio, or such other rate as the Company and the applicable swingline lender may agree.

The adjusted term SOFR and adjusted daily simple SOFR include a fixed credit adjustment of 0.10 % over the applicable SOFR reference rate.

Loans denominated in foreign currencies bear interest at a rate per annum equal to the applicable benchmark rate set forth in the Amended Credit Agreement plus an additional margin ranging from 1.00 % to 1.75 %, depending upon the Company’s leverage ratio plus, if applicable, certain mandatory costs.

During the quarter ended September 30, 2025, all of the Company's borrowings under the Amended Credit Agreement were U.S.

dollars bear interest based upon the daily simple SOFR, floating daily, plus an additional margin ranging from 1.00 % to 1.75 % depending upon the Company's leverage ratio, or such other rate as the Company and the applicable swingline lender may agree.

Loans denominated in foreign currencies bear interest at a rate per annum equal to the applicable benchmark rate set forth in the New Credit Agreement plus an additional margin ranging from 1.00 % to 1.75 %, depending upon the Company’s leverage ratio.

A commitment fee is payable on the unused amount of commitments under the revolving credit facility.

The commitment fee ranges from 0.15 % to 0.30 %, depending on the Company’s leverage ratio.

In connection with entering into the New Credit Agreement, on December 18, 2025, the Company terminated and repaid all indebtedness and other obligations outstanding under its Third Amended and Restated Credit Agreement (the “Prior Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto, which provided for (i) a five-year , $ 350 million multicurrency senior secured revolving credit facility and (ii) a five-year $ 150 million senior secured term loan facility.

During the quarter and six months ended December 31, 2025, all of the Company's borrowings under New Credit Agreement and Prior Credit Agreement were U.S.

dollar loans.

The spread in effect as of September 30, 2025 was 1.00 % , plus a 0.10 % credit spread adjustment for SOFR-based loans and 0.00 % for alternate base rate loans.

The commitment fee rate in effect at September 30, 2025 was 0.15 % .

The effective interest rates for the term loan were 5.26 % and 5.43 % as of September 30, 2025 and June 30, 2025, respectively.

The Amended Credit Agreement includes customary representations, warranties and affirmative and negative covenants, including financial covenants.

Specifically, the Company’s Leverage Ratio must be less than or equal to 3.50 to 1.00 at all times.

In addition, the Company’s Interest Coverage Ratio (as such term is defined in the Amended Credit Agreement) must be at least 3.00 to 1.00 at the end of each fiscal quarter.

The spread in effect as of December 31, 2025 was 1.00 % for SOFR-based loans and 0.00 % for alternate base rate loans.

The commitment fee rate in effect at December 31, 2025 was 0.15 %.

The effective interest rates for the term loan were 4.72 % and 5.43 % as of December 31, 2025 and June 30, 2025, respectively.

The New Credit Agreement includes customary representations, warranties and affirmative and negative covenants, including financial covenants.

Specifically, the Company’s leverage ratio must be less than or equal to 3.50 to 1.00.

In addition, the Company’s Interest Coverage Ratio (as such term is defined in the New Credit Agreement) must be at least 3.00 to 1.00 at the end of each fiscal quarter.

In the event of a default, customary remedies are available to the lenders, including acceleration and increased interest rates.

The Company was in compliance with all covenants under the Amended Credit Agreement at September 30, 2025.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the three month periods ended September 30, 2025 and 2024 was $ 1.1 million an d $ 0.1 million, respectively.

There was $ 350.0 million available for additional borrowings as of both September 30, 2025 and June 30, 2025.

The effective interest rates for the revolving line of credit were 5.28 % and 5.46 % as of September 30, 2025 and June 30, 2025, respectively.

There were no letters of credit issued under the multi-currency revolving credit facility at September 30, 2025 or June 30, 2025.

The Company was in compliance with all covenants under the New Credit Agreement at December 31, 2025.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, was $ 1.7 million an d $ 0.3 million during the six month periods ended December 31, 2025 and 2024, respectively.

There was $ 400.0 million and $ 350.0 million available for additional borrowings as of December 31, 2025 and June 30, 2025, respectively.

The effective interest rates for the revolving line of credit were 4.76 % and 5.46 % as of December 31, 2025 and June 30, 2025, respectively.

There were no letters of credit issued under the multi-currency revolving credit facility as of December 31, 2025 and June 30, 2025.

Mississippi Revenue Bond

3 unchanged sentences

The agreement also provides the bondholder with a put option, exercisable only within 180 days of each fifth anniversary of the agreement, requiring the Company to pay back the bonds at 100 % of the principal amount outstanding.

At September 30, 2025, the Company was in compliance with all covenants under this bond.

The interest rates at September 30, 2025 and June 30, 2025 wer e 5.27 % and 5.28 %, respectively.

At December 31, 2025, the Company was in compliance with all covenants under this bond.

The interest rates at December 31, 2025 and June 30, 2025 wer e 4.82 % and 5.28 %, respectively.

Debt Issuance Costs

At September 30, 2025, net debt issuance costs associated with the credit facility and bond totaled $ 0.8 million and are being amortized on a straight-line basis through the maturity date of each respective debt instrument.

At December 31, 2025, net debt issuance costs associated with the credit facilities, term loan and bond totaled $ 1.8 million and are being amortized on a straight-line basis through the maturity date of each respective debt instrument.

(8) Derivatives and Hedging Activities

5 unchanged sentences

Foreign Currency Derivatives – The Company conducts a portion of its business internationally in a variety of foreign currencies and is exposed to market risk for changes in foreign currency exchange rates.

The Company attempts to hedge transaction exposures with natural offsets to the fullest extent possible and once these opportunities have been exhausted the Company uses currency options and forward contracts or other hedging instruments with third parties.

The Company attempts to hedge transaction exposures with natural offsets to the fullest extent possible and once these opportunities have been exhausted the

Company uses currency options and forward contracts or other hedging instruments with third parties.

These contracts will periodically hedge the exchange of various currencies, including the U.S.

dollar, Brazilian real, euro, British pound and Canadian dollar.

The Company had contracts outstanding for purposes of managing cash flows with notional amounts of $ 22.6 million and $ 26.2 million for the exchange of foreign currencies at September 30, 2025 and June 30, 2025, respectively.

The Company had contracts outstanding for purposes of managing cash flows with notional amounts of $ 32.2 million and $ 26.2 million for the exchange of foreign currencies at December 31, 2025 and June 30, 2025, respectively.

To date, the Company has chosen not to designate these derivatives as hedging instruments, and accordingly, these instruments are adjusted to fair value through earnings in other income and expense.

Summarized financial information related to these derivative contracts and changes in the underlying value of the foreign currency exposures included in the Condensed Consolidated Income Statements for the quarters ended September 30, 2025 and 2024 are as follows:

Quarter ended

September 30,

Quarter ended Six months ended

December 31, December 31,

2025 2024 2025 2024

(in thousands)

Net foreign exchange derivative contract losses $ 655 $ 941

Net foreign currency transactional and re-measurement gains ( 307 ) ( 607 )

Net foreign currency exchange losses $ 348 $ 334

Net foreign exchange derivative contract (gains) losses $ ( 215 ) $ ( 2,418 ) $ 439 $ ( 1,477 )

Net foreign currency transactional and re-measurement losses 873 2,166 567 1,560

Net foreign currency exchange losses (gains) $ 658 $ ( 252 ) $ 1,006 $ 83

Net foreign currency exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign currency exchange contract gains and losses and are included in other income and expense.

1 unchanged sentence

dollar versus the Brazilian real and the Canadian dollar versus the U.S.

Interest Rates - The Company’s earnings are also affected by changes in interest rates due to the impact those changes have on interest expense from floating rate debt instruments.

The Company manages its exposure to changes in interest rates by using interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating rate debt.

On April 30, 2019, the Company entered into an interest rate swap agreement to lock into a fixed LIBOR interest rate, which was amended on September 28, 2022, to change the reference rate from LIBOR to SOFR.

The swap agreement has a notional amount of $ 100.0 million, with a $ 50.0 million tranche that matured on April 30, 2024 and a $ 50.0 million tranche scheduled to mature April 30, 2026.

On March 31, 2023, the Company entered into an interest rate swap agreement to lock into a fixed SOFR interest rate with a notional amount of $ 25.0 million and a maturity date of March 31, 2028.

Interest Rates - The Company’s earnings are affected by changes in interest rates due to the impact such changes have on interest expense associated with its floating-rate debt.

To manage this exposure, the Company entered into separate interest rate swap agreements with a swap counterparty.

These swaps include a notional amount of $ 50.0 million maturing on April 30, 2026, and a notional amount of $ 25.0 million maturing on March 31, 2028.

The agreements are intended to mitigate interest risk by effectively converting a portion of the Company's borrowings from floating-rate to fixed-rate.

These interest rate swap agreements are designated as cash flow hedges to hedge the variable rate interest payments on the revolving credit facility.

1 unchanged sentence

To the extent the swaps are effective in offsetting the variability of the hedged cash flows, changes in the fair value of the swaps are not included in current earnings, but are reported as other comprehensive income (loss).

There was no ineffective portion to be recorded as an adjustment to earnings for the quarters ended September 30, 2025 and 2024.

The components of the cash flow hedge included in the Condensed Consolidated Statement of Comprehensive Income for the quarters ended September 30, 2025 and 2024, are as follows:

Quarter ended

September 30,

There was no ineffective portion to be recorded as an adjustment to earnings for the quarters ended December 31, 2025 and 2024.

The components of the cash flow hedge included in the Condensed Consolidated Statement of Comprehensive Income for the quarters and six months ended December 31, 2025 and 2024, are as follows:

Quarter ended Six months ended

December 31, December 31,

2025 2024 2025 2024

(in thousands)

1 unchanged sentence

Unrealized gain (loss) in fair value of interest rate swap 46 745 60 ( 139 )

Net decrease in accumulated other comprehensive income ( 307 ) ( 1,393 )

Net (decrease) increase in accumulated other comprehensive income ( 214 ) 354 ( 521 ) ( 1,039 )

Income tax effect ( 53 ) 87 ( 131 ) ( 256 )

Net decrease in accumulated other comprehensive income, net of tax $ ( 230 ) $ ( 1,050 )

The Company used the following derivative instruments at September 30, 2025 and June 30, 2025, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

September 30, 2025 June 30, 2025

Net (decrease) increase in accumulated other comprehensive income, net of tax $ ( 161 ) $ 267 $ ( 390 ) $ ( 783 )

The Company used the following derivative instruments at December 31, 2025 and June 30, 2025, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

December 31, 2025 June 30, 2025

Balance Sheet Location Fair Value of

8 unchanged sentences

Derivative liabilities:

Forward foreign currency exchange contracts Accrued expenses and other current liabilities $ — $ 6 $ — $ —

Foreign currency hedge Accrued expenses and other current liabilities $ 206 $ — $ 290 $ —

5 unchanged sentences

• Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The assets and liabilities maintained by the Company that are required to be measured at fair value on a recurring basis include deferred compensation plan investments, forward foreign currency exchange contracts, foreign currency hedge agreements, interest rate swap agreements and contingent consideration owed to the sellers of Advantix Solutions Group, Inc ("Advantix") and Secure Path Networks, LLC dba Resourcive ("Resourcive").

The assets and liabilities maintained by the Company that are required to be measured at fair value on a recurring basis include deferred compensation plan investments, forward foreign currency exchange contracts, foreign currency hedge agreements, interest rate swap agreements and contingent consideration owed to the sellers of Advantix Solutions Group, Inc ("Advantix"), Secure Path Networks, LLC dba Resourcive ("Resourcive") and DataXoom Corp.

("DataXoom").

The carrying value of debt is considered to approximate fair value, as the Company’s debt instruments are indexed to a variable rate using the market approach (Level 2).

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at September 30, 2025:

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at December 31, 2025:

(Level 1) Significant

5 unchanged sentences

Deferred compensation plan investments, current and non-current $ 35,843 $ 35,843 $ — $ —

Forward foreign currency exchange contracts 6 — 6 —

Foreign currency hedge 206 — 206 —

19 unchanged sentences

See Note 8 - Derivatives and Hedging Activities .

The Company recorded a contingent consideration liability at the acquisition date of both Advantix and Resourcive.

These liabilities represent the amounts payable to sellers, as outlined under the terms of the asset purchase agreements, based upon the achievement of a projected earnings before interest expense, taxes, depreciation and amortization, net of specific pro forma adjustments.

The following tables summarizes the fair value of the Company's contingent consideration liabilities at September 30, 2025 and September 30, 2024:

Contingent consideration for the quarter ended

September 30, 2025

Specialty Technology Solutions Intelisys & Advisory Total

The Company recorded contingent consideration liabilities for Advantix, Resourcive, and DataXoom.

These liabilities represent the amounts payable to sellers, as outlined under the terms of the individual purchase agreements, based upon the achievement of projected earnings before interest expense, taxes, depreciation and amortization, net of specific pro forma adjustments.

The following tables summarizes the fair value of the Company's contingent consideration liabilities at December 31, 2025 and December 31, 2024:

Contingent consideration for the quarter ended Contingent consideration for the six months ended

December 31, 2025

Specialty Technology Solutions Intelisys & Advisory Total Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Fair value at beginning of period $ 5,430 $ 12,609 $ 18,039 $ 6,660 $ 12,440 $ 19,100

Issuance of contingent consideration 9,352 — 9,352 9,352 — 9,352

Payments — — — ( 1,375 ) — ( 1,375 )

1 unchanged sentence

Fair value at end of period $ 15,910 $ 12,690 $ 28,600 $ 15,910 $ 12,690 $ 28,600

Contingent consideration for the quarter ended

September 30, 2024

Specialty Technology Solutions Intelisys & Advisory Total

Contingent consideration for the quarter ended Contingent consideration for the six months ended

December 31, 2024 December 31, 2024

Specialty Technology Solutions Intelisys & Advisory Total Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

1 unchanged sentence

Issuance of contingent consideration — — — 7,500 9,700 17,200

Change in fair value of contingent consideration 473 670 1,143 473 670 1,143

Fair value at end of period $ 7,973 $ 10,370 $ 18,343 $ 7,973 $ 10,370 $ 18,343

4 unchanged sentences

• a risk premium reflective of the Company’s creditworthiness and market risk premium associated with the United States markets.

Advantix is part of the Specialty Technology Solutions segment.

The fair value of the contingent consideration is determined using a static discounted cash flow model.

The fair value of the liability for the contingent consideration related to Advantix recognized at September 30, 2025 was $ 5.4 million, of which $ 1.8 million is classified as current.

The change in fair value for the quarter ended September 30, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount.

Specialty Technology Solutions

The fair value of the contingent consideration related to Advantix is determined using a static discounted cash flow model.

The liability recognized at December 31, 2025 was $ 6.4 million, of which $ 1.8 million is classified as current.

The change in fair value for the quarter and six months ended December 31, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount and an increase in forecasts.

The first earnout payment totaling $ 1.4 million was paid to the sellers of Advantix during the quarter ended September 30, 2025.

Future earnout payments to the sellers of Advantix are payable based on results through fiscal year 2028.

Resourcive is part of the Intelisys & Advisory segment.

The fair value of the contingent consideration for Resourcive is determined using a Monte Carlo simulation.

The fair value of the liability for the contingent consideration related to Resourcive recognized at September 30, 2025 was $ 12.6 million, all of which is classified as non-current and is due to the sellers of Resourcive during fiscal year 2027.

The change in fair value for the quarter ended September 30, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount.

Valuation techniques and significant observable inputs used in recurring Level 3 fair value measurements for the Company's contingent consideration liabilities related to Advantix and Resourcive at September 30, 2025 were as follows.

Acquisition Reporting Period Valuation Technique Significant Unobservable Inputs Weighted Average Rates

Advantix September 30, 2025 Discounted cash flow Adjusted EBITDA risk premium 15.3 %

Adjusted EBITDA growth rate 22.0 %

Resourcive September 30, 2025 Monte Carlo Adjusted EBITDA risk premium 12.7 %

Simulated commission growth percentage 24.2 %

The fair value of the contingent consideration related to DataXoom is determined using the Monte Carlo method.

The liability recognized at December 31, 2025 was $ 9.4 million, of which $ 1.9 million is classified as current.

The change in fair value for the quarter ended December 31, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount.

Earnout payments to the sellers of DataXoom are payable based on results from fiscal years 2026 through 2028.

Intelisys & Advisory

The fair value of the contingent consideration related to Resourcive is determined using the Monte Carlo method.

The liability recognized at December 31, 2025 was $ 12.7 million, all of which is classified as current and is due to the sellers of Resourcive during fiscal year 2027.

The change in fair value for the quarter and six months ended December 31, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount.

Significant observable inputs used in recurring Level 3 fair value measurements for the Company's contingent consideration liabilities by segment related to acquisitions at December 31, 2025 and December 31, 2024 were as follows.

Significant observable inputs Significant observable inputs

December 31, 2025 December 31, 2024

Acquisition Specialty Technology Solutions Intelisys & Advisory Specialty Technology Solutions Intelisys & Advisory

Weighted-average payor credit spread 1.75 % 1.60 % 1.80 % 1.80 %

Weighted-average adjusted EBITDA risk premium 12.10 % 12.70 % 15.75 % 13.70 %

Adjusted EBITDA volatility 60.00 % 40.00 % — 40.00 %

(10) Segment Information

22 unchanged sentences

The Intelisys & Advisory segment operates in the United States and consists of sales and services to both channel sales partners (Intelisys) and end users (Advisory).

As a technology services distributor, or TSD, Intelisys distributes connectivity, cloud and next-generation technologies through an agency sales model.

As a technology services distributor, or TSD, Intelisys distributes connectivity, cloud and

next-generation technologies through an agency sales model.

Channel sales partners also have access to SaaS and subscription-based services through the company’s proprietary tools, platforms and flexible routes to market.

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• Wireless & IoT

By offering flexible routes to market and a robust solutions portfolio, this segment helps advisors service a wide range of end users including businesses of all sizes from VSB (“Very Small Business”) to Enterprise size businesses.

Selected financial information about the Company's segments for the quarters ended September 30, 2025 and 2024 are presented below:

By offering flexible routes to market and a robust solutions portfolio, this segment helps advisors service a wide range of end users including businesses of all sizes.

Selected financial information about the Company's segments for the quarters and six months ended December 31, 2025 and 2024 are presented below:

Specialty Technology Solutions Intelisys & Advisory Corporate (a)

Quarter ended September 30, 2025:

Quarter ended December 31, 2025:

Net Sales $ 741,540 $ 24,972 $ — $ 766,512

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Capital expenditures $ ( 1,764 ) $ ( 211 ) $ — $ ( 1,975 )

Quarter ended September 30, 2024:

Quarter ended December 31, 2024:

Net Sales $ 723,277 $ 24,220 $ — $ 747,497

7 unchanged sentences

$ 5,116 $ 2,296 $ 719 $ 8,131

Change in fair value of contingent consideration (d)

$ 473 $ 670 $ — $ 1,143

Capital expenditures $ ( 1,865 ) $ ( 109 ) $ — $ ( 1,974 )

(a) For the quarter ended September 30, 2025, the amount in Other operating expenses unallocated to the segments include restructuring expense, acquisition and divestiture, cyberattack restoration costs, as well as legal settlement.

For the quarter ended September 30, 2024, the amount in Other operating expenses unallocated to the segments includes acquisition and divestiture costs, as well as cyberattack restoration costs.

(a) For the quarter ended December 31, 2025, the amount in Other operating expenses unallocated to the segments include acquisition costs, cyberattack restoration costs.

For the quarter ended December 31, 2024, the amount in Other operating expenses unallocated to the segments includes acquisition costs, cyberattack restoration costs, restructuring costs, and a legal settlement.

(b) Primarily includes payroll and other employee expenses and other selling and general administrative expenses

1 unchanged sentence

(d) Change in fair value of contingent consideration is included within Other operating expenses

Quarter ended

September 30,

Specialty Technology Solutions Intelisys & Advisory Corporate (a)

Six months ended December 31, 2025:

Net Sales $ 1,456,987 $ 49,175 $ — $ 1,506,162

Cost of sales $ 1,294,856 $ 923 $ — $ 1,295,779

Gross profit $ 162,131 $ 48,252 $ — $ 210,383

Other operating expenses (b)

$ 130,755 $ 34,921 $ 935 $ 166,611

Operating income (loss) $ 31,376 $ 13,331 $ ( 935 ) $ 43,772

Other Segment Information

Depreciation and amortization (c)

$ 7,672 $ 4,466 $ — $ 12,138

Change in fair value of contingent consideration (d)

$ 1,273 $ 250 $ — $ 1,523

Capital expenditures $ ( 3,938 ) $ ( 432 ) $ — $ ( 4,370 )

Six months ended December 31, 2024:

Net Sales $ 1,475,576 $ 47,501 $ — $ 1,523,077

Cost of sales $ 1,319,355 $ 380 $ — $ 1,319,735

Gross profit $ 156,221 $ 47,121 $ — $ 203,342

Other operating expenses (b)

$ 125,405 $ 34,268 $ 7,595 $ 167,268

Operating income (loss) $ 30,816 $ 12,853 $ ( 7,595 ) $ 36,074

Other Segment Information

Depreciation and amortization (c)

$ 9,742 $ 4,423 $ 1,438 $ 15,603

Change in fair value of contingent consideration (d)

$ 473 $ 670 $ — $ 1,143

Capital expenditures $ ( 4,093 ) $ ( 255 ) $ — $ ( 4,348 )

(a) For the six months ended December 31, 2025, the amounts in Other operating expenses shown above include acquisition costs and cyberattack restoration costs.

For the six months ended December 31, 2024, the amounts in Other operating expenses above include acquisition costs, cyberattack restoration costs, restructuring costs, and a legal settlement.

(b) Primarily includes payroll and other employee expenses and other selling and general administrative expenses.

(d) Change in fair value of contingent consideration is included within Other operating expenses.

Quarter ended Six months ended

December 31, December 31,

2025 2024 2025 2024

(in thousands)

5 unchanged sentences

$ 766,512 $ 747,497 $ 1,506,162 $ 1,523,077

(a) Countries outside of the United States and Brazil represent less than 5.0% of net sales for the quarters ended September 30, 2025 and 2024.

September 30, 2025 June 30, 2025

(a) Countries outside of the United States and Brazil represent less than 5.0% of net sales for the quarters ended December 31, 2025 and 2024.

December 31, 2025 June 30, 2025

(in thousands)

13 unchanged sentences

Finance leases are recorded as property and equipment, net, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets.

The gross amount of the balances recorded related to finance leases is immaterial to the condensed consolidated financial statements at September 30, 2025 and the consolidated financial statements at June 30, 2025.

The gross amount of the balances recorded related to finance leases is immaterial to the condensed consolidated financial statements at December 31, 2025 and the consolidated financial statements at June 30, 2025.

Operating lease right-of-use assets and lease liabilities are recognized at the commencement date based on the net present value of future minimum lease payments over the lease term.

5 unchanged sentences

Further, the Company has elected the practical expedient under ASC 842 to recognize all lease and non-lease components as a single lease component, where applicable.

The following table presents amounts recorded on the Condensed Consolidated Balance Sheets related to operating leases at September 30, 2025 and June 30, 2025:

September 30, 2025 June 30, 2025

The following table presents amounts recorded on the Condensed Consolidated Balance Sheets related to operating leases at December 31, 2025 and June 30, 2025:

December 31, 2025 June 30, 2025

Operating leases Balance Sheet location (in thousands)

2 unchanged sentences

Long-term operating lease liabilities Other long-term liabilities $ 6,715 $ 6,972

The following table presents amounts recorded in operating lease expense as part of selling general and administrative expenses on the Condensed Consolidated Income Statements during the quarters ended September 30, 2025 and 2024.

Operating lease costs contain immaterial amounts of short-term lease costs for leases with an initial term of 12 months or less.

Quarter ended September 30,

Quarter ended December 31, Six months ended December 31,

2025 2024 2025 2024

(in thousands)

2 unchanged sentences

$ 1,665 $ 1,437 $ 3,255 $ 2,889

Supplemental cash flow information related to the Company's operating leases for the three months ended September 30, 2025 and 2024 are presented in the table below:

Quarter ended September 30,

Supplemental cash flow information related to the Company's operating leases for the six months ended December 31, 2025 and 2024 are presented in the table below:

Six months ended December 31,

(in thousands)

1 unchanged sentence

Right-of-use assets obtained in exchange for lease obligations 1,232 499

The weighted-average remaining lease term and discount rate at September 30, 2025 are presented in the table below:

September 30, 2025

The weighted-average remaining lease term and discount rate at December 31, 2025 are presented in the table below:

December 31, 2025

Weighted-average remaining lease term 2.87 years

Weighted-average discount rate 6.39 %

The following table presents the maturities of the Company's operating lease liabilities at September 30, 2025:

The following table presents the maturities of the Company's operating lease liabilities at December 31, 2025:

Operating leases

8 unchanged sentences

The Company recorded indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as the funds were escrowed as part of the acquisition.

There were no deposits or releases from the escrow account during the quarter ended September 30, 2025.

There were no deposits into the escrow account;

however, $ 0.4 million was released from the escrow account during the quarter ended December 31, 2025.

During the fiscal year ended June 30, 2025, there were no deposits into the escrow account;

however, $ 0.2 million was released from the escrow account.

The amount available after the impact of foreign currency translation, as of September 30, 2025 and June 30, 2025, for future pre-acquisition contingency settlements or to be released to the sellers was $ 3.6 million and $ 3.4 million, respectively.

The Company has recorded pre-acquisition contingencies and corresponding indemnification receivables related to Network1 of $ 3.8 million and $ 3.7 million at September 30, 2025 and June 30, 2025 , respectively.

The amount available after the impact of foreign currency translation, as of December 31, 2025 and June 30, 2025, for future pre-acquisition contingency settlements or to be released to the sellers was $ 3.2 million and $ 3.4 million, respectively.

The Company has recorded pre-acquisition contingencies and corresponding indemnification receivables related to Network1 of $ 3.6 million and $ 3.7 million at December 31, 2025 and June 30, 2025 , respectively.

These balances are presented as other non-current liabilities and other non-current assets in the Consolidated Balance Sheets.

The amount of reasonably possible undiscounted pre-acquisition contingencies as of September 30, 2025 is estimated to range from $ 3.8 million to $ 15.3 million at this time, of which all exposures are indemnifiable under the share purchase agreement.

The amount of reasonably possible undiscounted pre-acquisition contingencies as of December 31, 2025 is estimated to range from $ 3.6 million to $ 14.8 million at this time, of which all exposures are indemnifiable under the share purchase agreement.

(13) Income Taxes

Income taxes for the quarters ended September 30, 2025 and 2024 have been included in the accompanying condensed consolidated financial statements using an estimated annual effective tax rate.

Income taxes for the quarters ended December 31, 2025 and 2024 have been included in the accompanying condensed consolidated financial statements using an estimated annual effective tax rate.

In addition to applying the estimated annual effective tax rate to pre-tax income, the Company includes certain items treated as discrete events to arrive at an estimated overall tax provision.

There were no material discrete items recorded during the quarter ended September 30, 2025.

A discrete net tax benefit of $ 0.8 million related to stock compensation was recorded during the quarter ended September 30, 2024.

The Company’s effective tax rate of 26.4 % for the quarter ended September 30, 2025, differs from the current federal statutory rate of 21% primarily as a result of income derived from tax jurisdictions with varying income tax rates, nondeductible expenses and state income taxes.

The Company's effective tax rate was 26.1 % for the quarter ended September 30, 2024.

As of September 30, 2025, the Company is not permanently reinvested with respect to all earnings generated by foreign operations.

During the quarter ended December 31, 2025, a discrete net tax benefit of $ 2.4 million was recorded, which is attributable to a prior period provision to return adjustment in Brazil.

During the quarter ended December 31, 2024, a discrete net tax benefit of $ 3.0 million was recorded, which is attributable to a reduction in the Company's prior year transition tax liability, a notional interest deduction on the net equity of the Company's Brazilian subsidiary, and stock compensation.

The Company’s effective tax rate of 15.1 % for the quarter ended December 31, 2025 differs from the current federal statutory rate of 21% primarily as a result of discrete items recognized during the quarter.

The Company’s effective tax rate of 21.6 % for the six months ended December 31, 2025 differs from the current federal statutory rate primarily as a result income derived from tax jurisdictions with varying income tax rates, nondeductible expenses, and state income taxes.

The Company's effective tax rate was 13.5 % and 20.3 % for the quarter and six months ended December 31, 2024.

As of December 31, 2025, the Company is not permanently reinvested with respect to all earnings generated by foreign operations.

The Company has determined that there is no material deferred tax liability for federal, state and withholding tax related to undistributed earnings.

During the quarter ended September 30, 2025, foreign subsidiaries did not repatriate cash to the United States.

During the quarter ended December 31, 2025, foreign subsidiaries repatriated cash of $ 13.4 million to the United States.

There is no certainty to the timing of any future distributions of such earnings to the U.S.

in whole or in part.

The Company had approximately $ 0.7 million of total gross unrecognized tax benefits at September 30, 2025 and June 30, 2025, respectively.

Of this total at September 30, 2025, approximately $ 0.6 million represents the amount of unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate.

The Company had approximately $ 0.7 million of total gross unrecognized tax benefits at December 31, 2025 and June 30, 2025, respectively.

At December 31, 2025, approximately $ 0.6 million of this total represents the amount of unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate.

The Company does not believe that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.

At September 30, 2025 and June 30, 2025, the Company had approximately $ 1.0 million accrued for interest and penalties.

At December 31, 2025 and June 30, 2025, the Company had approximately $ 1.0 million accrued for interest and penalties.

The Company conducts business internationally and one or more of its subsidiaries files income tax returns in the U.S.

3 unchanged sentences

income tax examinations by tax authorities for the years before June 30, 2020.

(14) Restructurings

In January 2024 and September 2024, as part of a strategic review of organizational structure and operations, the Company executed cost reduction and restructuring programs to align our cost structure with demand expectations in our business.

Accrued restructuring costs are included in accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets.

The following table represents activity for the three months ended September 30, 2025:

Accrued Expenses

(in thousands)

Balance at June 30, 2025

Cash payments ( 404 )

Balance at September 30, 2025

The remaining balance as of September 30, 2025 of $ 0.2 million is expected to be paid through the third quarter of fiscal year 2026.

(14) Business Acquisitions

4 unchanged sentences

The Advantix acquisition is included in the Specialty Technology Solutions segment, and the Resourcive acquisition is included in the Intelisys & Advisory segment.

Both acquisitions included future earnout payments, and the Company recorded contingent consideration liabilities at the acquisition dates representing the fair value of estimated amounts payable to sellers.

See Note 9 - Fair Value of Financial Instruments for the related disclosures regarding the contingent consideration liabilities recognized in connection with these acquisitions.

The purchase prices were allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction dates.

On October 20, 2025, ScanSource completed the acquisition of DataXoom, a connectivity provider dedicated to supporting purpose-built mobile deployments across our current supplier line card and beyond.

The initial cash purchase price totaled $ 18.4 million, in addition, the initial contingent consideration is valued at $ 13.4 million.

DataXoom complements our Advantix investment and is included in the Specialty Technology Solutions segment.

The allocation of the purchase prices to the assets and liabilities acquired, including the final valuation of the identifiable intangible assets and associated tax adjustments, have not been concluded as of the reporting date.

All acquisitions include future earnout payments, and the Company recorded contingent consideration liabilities at the acquisition dates representing the fair value of estimated amounts payable to sellers.

See Note 9 - Fair Value of Financial Instruments for the related disclosures regarding the contingent consideration liabilities recognized in connection with these acquisitions.

Intangible assets acquired include trade names, customer relationships, and developed technology.

See Note 6 - Goodwill and Other Identifiable Intangible Assets for the amounts of goodwill and intangible assets recognized in connection with these acquisitions.

The allocation of the purchase prices to the assets and liabilities acquired, including the valuation of the identifiable intangible assets, has not been concluded as of the reporting date.

Goodwill acquired through the Resourcive and Advantix acquisitions is deductible for tax purposes based on the asset purchase agreements executed.

Goodwill acquired through the DataXoom acquisition is non-deductible for tax purposes based on the stock purchase agreement executed.

The impact of these acquisitions was not material to the consolidated financial statements.

The Company continues to evaluate acquisitions on an on-going basis and has recognized $ 0.3 million and $ 0.4 million in acquisition-related costs for the quarters ended September 30, 2025 and September 30, 2024, respectively.

The Company continues to evaluate acquisitions on an on-going basis and has recognized $ 0.5 million and $ 0.8 million in acquisition-related costs for the quarter and six months ended December 31, 2025, respectively, and $ 0.2 million and $ 0.6 million for the quarter and six months ended December 31, 2024, respectively.

Acquisition-related costs are included in selling, general and administrative expenses on the Condensed Consolidated Income Statements.

(16) Subsequent Events

On October 20, 2025, ScanSource completed the acquisition of DataXoom, a leading connectivity provider dedicated to supporting purpose-built mobile deployments across our current supplier line card and beyond.

DataXoom complements our Advantix investment and adds 17 employees through the acquisition.

This acquisition will be included in the Specialty Technology Solutions segment in future periods.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements