TD SYNNEX (SNX) Q3 2024 earnings summary

Executive summary

• Non-GAAP gross billings grew 9% year-over-year to $20.3 billion in Q3/FQ3'24, exceeding guidance and reflecting optimism about IT market recovery, with revenue reaching $14.7 billion, up 5.2% year-over-year.

• Both Endpoint and Advanced Solutions segments contributed to growth, with significant geographic expansion and strategic technologies accounting for 26% of non-GAAP gross billings.

• Margin declines were noted, primarily due to product mix and Hyve, but operating income and EPS improved year-over-year, with non-GAAP diluted EPS at $2.86 and GAAP diluted EPS at $2.08.

• Leadership emphasized disciplined capital allocation, returning $91 million to stockholders in Q3 and $614 million year-to-date, and continued investment in strategic technologies and platforms.

• Major integration activities related to the Tech Data merger were completed, with no material related expenses expected in future periods.

Financial highlights

• Gross billings reached $20.3 billion, up 9% year-over-year; GAAP revenue was $14.7 billion, up 5.2% year-over-year.

• Non-GAAP gross profit was $961 million (4.7% of gross billings), down 1% year-over-year; gross margin was 6.54%, down from 6.96%.

• Non-GAAP operating income was $393 million; GAAP operating income was $303 million (2.06% margin), up 26% year-over-year.

• Non-GAAP net income was $245 million; non-GAAP diluted EPS was $2.86; GAAP net income was $179 million, with GAAP diluted EPS at $2.08.

• Free cash flow for Q3 was $339 million; year-to-date free cash flow was $530 million; cash and cash equivalents stood at $854 million as of August 31, 2024.

Outlook and guidance

• Q4 non-GAAP gross billings expected between $20.5 billion and $21.5 billion; revenue guidance of $14.9–$15.7 billion.

• Q4 non-GAAP net income expected between $239 million and $282 million; EPS guidance $2.80–$3.30 (non-GAAP), $1.90–$2.40 (GAAP).

• Full-year free cash flow expected to reach approximately $1 billion.

• Quarterly dividend of $0.40 per share, up 14% year-over-year, payable October 25, 2024.

• IT spend demand anticipated to expand into fiscal 2025, increasing working capital needs but expected to yield accretive returns.