On March 27, 2025, TD Synnex Corp (SNX, Financial) released its 8-K filing for the fiscal first quarter ended February 28, 2025. TD Synnex Corp, a leading distributor and solutions aggregator for the IT ecosystem, reported a revenue of $14.5 billion, which represents a 4.0% increase from the prior fiscal first quarter. However, this figure fell short of the analyst estimate of $14.789 billion. The company's diluted earnings per share (EPS) was $1.98, which also missed the analyst estimate of $2.19. The non-GAAP diluted EPS was $2.80, surpassing the estimated EPS of $2.19.
Company Overview
TD Synnex Corp (SNX, Financial) is a prominent player in the IT distribution and solutions aggregation sector. The company specializes in aggregating and distributing IT hardware, software, and systems, including personal computing devices, peripherals, mobile phones, printers, server and data center infrastructure, hybrid cloud, security, networking, communications, storage solutions, and system components. Its operations span across the Americas, Europe, and the Asia-Pacific and Japan (APJ) regions.
Performance and Challenges
TD Synnex Corp's revenue growth of 4.0% year-over-year was driven by its Endpoint Solutions and Advanced Solutions portfolios. However, the company's performance was impacted by a greater percentage of sales being presented on a net basis, which negatively affected revenue by approximately 4%. This adjustment in revenue presentation poses a challenge as it may obscure the underlying growth in business activity.
Financial Achievements
The company reported non-GAAP gross billings of $20.7 billion, marking a 7.5% increase from the prior fiscal first quarter, and achieving the top end of its outlook. On a constant currency basis, non-GAAP gross billings increased by 9.5%. This growth underscores the strength of TD Synnex Corp's business model and its ability to capture a wide range of IT spend, as highlighted by CEO Patrick Zammit:
“The strength of our business model allowed us to grow ahead of the market in Q1. Our end-to-end strategy, global reach and specialist go to market approach continues to empower us to capture a wide range of IT spend.”
Key Financial Metrics
Despite the revenue growth, the company's gross profit decreased slightly to $998 million from $1,006 million in the prior fiscal first quarter, with a gross margin of 6.87%, down from 7.20%. Operating income was $304.5 million, a marginal increase from $302.6 million. The operating margin was 2.10%, slightly down from 2.17% in the previous year. These metrics are crucial as they reflect the company's efficiency in managing its operations and cost structure.
| Metric | Q1 FY25 | Q1 FY24 | Change |
|---|---|---|---|
| Revenue | $14.5 billion | $14.0 billion | 4.0% |
| Gross Profit | $998 million | $1,006 million | -0.8% |
| Operating Income | $304.5 million | $302.6 million | 0.6% |
| Net Income | $167.5 million | $172.1 million | -2.7% |
| Diluted EPS | $1.98 | $1.93 | 2.6% |
Regional Performance
In the Americas, revenue increased by 6.2% to $8.4 billion, while in Europe, revenue saw a modest increase of 0.4% to $5.1 billion. The APJ region experienced a 5.2% increase in revenue to $1.0 billion. These regional performances highlight the company's diverse geographical presence and its ability to adapt to varying market conditions.
Cash Flow and Shareholder Returns
TD Synnex Corp reported cash used in operations of $748 million, a significant shift from cash provided by operations of $385 million in the prior fiscal first quarter. The company returned $138 million to stockholders through share repurchases and dividends, compared to $235 million in the previous year. This reflects the company's commitment to returning value to shareholders despite the challenges in cash flow.
Conclusion
TD Synnex Corp's Q1 fiscal 2025 results demonstrate a mixed performance with revenue growth but challenges in maintaining profit margins and cash flow. The company's strategic focus on expanding its IT solutions portfolio and its global reach remains a key driver for future growth. However, the impact of revenue presentation adjustments and cash flow challenges will require careful management to sustain its competitive position in the IT distribution industry.
Explore the complete 8-K earnings release (here) from TD Synnex Corp for further details.
