TD SYNNEX Corporation ((SNX)) has held its Q3 earnings call. Read on for the main highlights of the call.
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TD SYNNEX Corporation’s recent earnings call painted a picture of robust growth and strategic success, despite facing some challenges. The company reported significant increases in non-GAAP gross billings and earnings per share, driven by strong performances in their Hive segment and advanced solutions. While there were hurdles in the federal sector and increased interest and tax expenses, the overall sentiment was positive, reflecting a strong performance across multiple regions.
Record Non-GAAP Gross Billings and EPS
The third quarter saw TD SYNNEX achieve record non-GAAP gross billings of $22.7 billion, marking a 12% growth in constant currency. Non-GAAP diluted earnings per share reached $3.58, a 25% increase year over year, surpassing the high end of their guidance.
Strong Performance in Hive
Hive demonstrated impressive growth with a mid-thirties percentage increase in gross billings year over year. This was largely driven by a 57% increase in ODM Centimeters gross billings, fueled by significant investments in cloud infrastructure by hyperscalers.
Advanced Solutions Growth
The advanced solutions portfolio saw a 13% increase in gross billings year over year. This growth was driven by strong demand in cloud, security, software, and other high-growth technologies, highlighting the company’s strategic focus on these areas.
Significant Growth Across Geographies
TD SYNNEX experienced dynamic performance in Latin America and the Asia Pacific and Japan regions, each reporting strong double-digit growth in gross billings, underscoring the company’s successful expansion strategies.
Successful Go-to-Market Strategy
The introduction of new vendors and leveraging partner networks accelerated growth. A notable example is a cybersecurity vendor in North America that grew to generate hundreds of millions in revenue, showcasing the effectiveness of TD SYNNEX’s go-to-market strategy.
Launch of TD SYNNEX Partner First
The company launched the TD SYNNEX Partner First portal, a unified platform designed to optimize the partner experience through AI automation and advanced analytics, further enhancing their strategic initiatives.
Federal Sector Softness
While the US public sector business saw low single-digit growth in gross billings, the federal sector experienced softness due to budget reevaluations and changes in federal funding programs.
Interest and Tax Rate Increases
The company faced a rise in interest expenses by $11 million year over year, and the non-GAAP effective tax rate increased to approximately 23% from 21% the previous year, impacting overall financial performance.
Higher Cash Conversion Cycle
TD SYNNEX’s working capital requirements increased due to higher-than-expected growth, leading to a longer cash conversion cycle, particularly affecting the Hive segment.
Forward-Looking Guidance
Looking ahead, TD SYNNEX expects fourth-quarter gross billings to range between $23 billion and $24 billion, with net revenue projected between $16.5 billion and $17.3 billion. Non-GAAP diluted earnings per share are anticipated to be between $3.45 and $3.95, indicating continued confidence in their growth trajectory.
In summary, TD SYNNEX Corporation’s earnings call highlighted a strong performance with record growth in key areas, despite some challenges. The company’s strategic initiatives and regional expansions have positioned them well for future success, with positive forward-looking guidance reinforcing their optimistic outlook.