ScanSource acquired the largest master agency at the time, Intelysis, in 2016 for $84M plus earn out. (Revenue then was $120M.) All the principals are now gone. Many of the familiar faces have moved on. HQ is now Greenville SC, home of the VAD.
Intelisys master agency business, net sales increased 11% year-over-year for Q1 of fiscal year 2021.
Net sales increased 15% year-over-year for 2Q2021.
Net sales increased 12% year-over-year for 3Q2021. In an earnings call, ScanSource notes: “Intelisys continues to be a key recurring revenue growth opportunity for us. Our Intelisys business grew 12% year-over-year with even faster growth for unified communications as a service at 36% and contact center as a service at 67%. We see strength in our Intelisys business as our customers continue with their workload migrations to the cloud. We are encouraged by the accelerated adoption of the agency model by the VAR community since our 2016 acquisition as witnessed by the 69% year-over-year growth in new supplier billings through VARs.”
That seems low to me – 15% or less. Consider that Vonage VCP service revenues increased 23% YoY. RNG 40% YoY. Cablecos crushed it in 2020 (see HERE). By their own account CCaaS revenue is up 67%! But overall revenue for the master agency is only up 11-15%. Indeed several businesses closed/failed in the last year – and partners took a hit on that.
There are other factors going on in the channel that Intelysis might be seeing.
With all the personnel changes, partners are doing more with other master agencies – like Telarus, PlanetOne, Sandler and AppSmart. At least 2 of those masters are actively “investing” financially in partners. Some of the big producers were likely merged/acquired by Upstack, AppSmart, private money or other agency. TCG and others are picking up partners who want out – or are looking at retirement.
Master agents let other agencies buy off their vendor agreements. Some of that might have stopped.
Mostly, the channel is a relationship business. Some of those relationships likely left ScanSource with the personnel that moved on.
The pandemic saw a LOT of musical chairs. There were many RIFs throughout the last 18 months. We have always had musical chairs but not like 2020. That certainly affected the relationships.
ScanSource is the only publicly traded company that breaks out its master agency revenue. CDW is public, has a telecom agency, but does not disclose that figure.
Fun Fact: CDW sells $76.8 million per day.