TD SYNNEX Reports Strong Q3 Growth and Optimistic Outlook

TD SYNNEX Reports Strong Q3 Performance for Fiscal 2024

TD SYNNEX, a prominent IT distributor, has announced a strong third-quarter fiscal 2024 performance. CFO David Jordan and CEO Patrick Zammit revealed a 9% year-over-year growth in gross billings, totaling $20.3 billion. The company’s non-GAAP diluted earnings per share (EPS) was reported at $2.86, slightly exceeding expectations.

The company highlighted its significance within the IT ecosystem and reiterated its commitment to revenue growth through geographic expansion, pricing enhancements, and efficient margin management. For the fourth quarter, TD SYNNEX anticipates gross billings between $20.5 billion and $21.5 billion, with non-GAAP diluted EPS projected to fall between $2.80 and $3.30. The firm aims to generate around $1 billion in free cash flow for the fiscal year while prioritizing returns to shareholders.

Key Takeaways

• Gross Billings: Increased by 9% year-over-year to $20.3 billion.
• EPS: Non-GAAP diluted EPS for Q3 was $2.86, slightly above guidance.
• Q4 Projections: Anticipated gross billings of $20.5 billion to $21.5 billion; projected EPS of $2.80 to $3.30.
• Free Cash Flow Target: Approximately $1 billion for the fiscal year.
• Growth Drivers: Investments in Strategic Technologies such as cloud, security, and AI; significant investments from hyperscalers projected at $250 billion this year.
• Market Conditions: Signs of recovery in the PC market; AI PCs expected to gain traction in the near future.

Company Outlook

• Increased IT spending anticipated in Q4, expected to influence working capital positively for fiscal 2025.
• Maintained a strong balance sheet, positioned to benefit from the recovering IT market.
• Hyve’s growth anticipated to positively impact margins.
• The "Destination AI" initiative aims to enhance value across various technology categories.

Bearish Highlights

• Concerns regarding working capital requirements, particularly tied to the Hyve business.
• Slower-than-expected recovery in the PC market, with actual growth in low single digits.
• Cautious enterprise interest in generative AI, contributing to a slower-than-expected adoption of AI PCs.

Bullish Highlights

• Sustained growth in Strategic Technologies, particularly in cloud, security, and AI sectors.
• Significant anticipated investments from hyperscale data centers poised to drive further growth.
• Confidence remains high regarding IT spending recovery, particularly in Europe and the Asia-Pacific region.

Misses

• PC market growth did not meet previous expectations.
• AI PC adoption has ramped up more slowly than anticipated, with enterprise interest remaining cautious.

During the earnings call, CEO Patrick Zammit expressed optimism about AI PCs, anticipating increased adoption as new products are launched. He noted that while AI PCs are beginning to enter the market, their overall impact on sales has been modest thus far, but a significant acceleration is expected moving forward.

As TD SYNNEX focuses on its strategic growth initiatives and navigates the evolving IT landscape, the company remains committed to maximizing shareholder value through disciplined capital allocation and returning cash to shareholders. The third-quarter results demonstrate their approach to leveraging market opportunities while addressing current challenges.

In summary, TD SYNNEX’s performance in Q3 reflects a resilient strategy focused on growth and shareholder value amidst a complex and recovering IT market.