TD SYNNEX (SNX) - 2025 Q3 - Quarterly Results

Executive Summary TD SYNNEX reported record fiscal Q3 2025 performance with significant growth in key financial metrics and strong shareholder returns, driven by effective execution and a robust portfolio Record Fiscal 2025 Third Quarter Performance Overview TD SYNNEX reported record non-GAAP gross billings and diluted earnings per share for fiscal Q3 2025, attributing the strong performance to execution, a differentiated go-to-market strategy, and a comprehensive product and services portfolio - TD SYNNEX achieved record non-GAAP gross billings and diluted EPS in fiscal Q3 2025, driven by strong execution, a differentiated go-to-market strategy, and an unrivaled global portfolio[2] Consolidated Financial Highlights (GAAP & Non-GAAP) The company reported significant year-over-year growth in both GAAP and non-GAAP financial metrics for Q3 FY25, including revenue, gross profit, operating income, net income, and diluted EPS Consolidated GAAP Financial Highlights (Q3 FY25 vs Q3 FY24) | Metric | Q3 FY25 ($ Million) | Q3 FY24 ($ Million) | Net Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 15,650.9 | 14,684.7 | 6.6 % | | Gross profit | 1,129.9 | 961.0 | 17.6 % | | Gross margin | 7.22 % | 6.54 % | 68 bps | | Operating income | 383.7 | 302.9 | 26.7 % | | Operating margin | 2.45 % | 2.06 % | 39 bps | | Net income | 226.8 | 178.6 | 27.0 % | | Diluted EPS | 2.74 | 2.08 | 31.7 % | Consolidated Non-GAAP Financial Highlights (Q3 FY25 vs Q3 FY24) | Metric | Q3 FY25 ($ Million) | Q3 FY24 ($ Million) | Net Change (%) | | :--- | :--- | :--- | :--- | | Gross billings | 22,731.2 | 20,282.5 | 12.1 % | | Gross to net % | (31.1)% | (27.6)% | (350) bps | | Revenue | 15,650.9 | 14,684.7 | 6.6 % | | Gross profit | 1,129.9 | 961.0 | 17.6 % | | Gross margin | 7.22 % | 6.54 % | 68 bps | | Operating income | 474.9 | 392.9 | 20.9 % | | Operating margin | 3.03 % | 2.68 % | 35 bps | | Net income | 296.2 | 245.4 | 20.7 % | | Diluted EPS | 3.58 | 2.86 | 25.2 % | Key Operational and Shareholder Return Highlights TD SYNNEX exceeded its outlook for revenue and non-GAAP gross billings, generated strong cash flow from operations, and significantly increased shareholder returns through share repurchases and a 10% higher quarterly dividend - Revenue of $15.7 billion, up 6.6% YoY (4.4% constant currency), exceeding outlook[5] - Non-GAAP gross billings of $22.7 billion, up 12.1% YoY (10.1% constant currency), exceeding outlook[5] - Cash provided by operations was $246 million, with free cash flow of $214 million[5] - Returned $210 million to stockholders ($174 million in share repurchases, $36 million in dividends), and announced a 10% YoY increase in quarterly cash dividend to $0.44 per share[5] Detailed Fiscal 2025 Third Quarter Performance Analysis This section provides an in-depth analysis of TD SYNNEX's Q3 FY25 consolidated and regional financial performance, highlighting revenue growth, margin improvements, and cash flow dynamics Consolidated Performance Details TD SYNNEX's consolidated performance in Q3 FY25 showed robust growth across key financial metrics, with revenue increasing by 6.6% and non-GAAP gross billings by 12.1% year-over-year, both exceeding outlooks. Gross margin improved by 68 basis points, partly due to a higher percentage of sales presented on a net basis - Revenue increased by 6.6% to $15.7 billion (4.4% constant currency), driven by growth in Advanced Solutions and Endpoint Solutions portfolios, despite a negative 5% impact from sales mix presented on a net basis[8] - Non-GAAP gross billings rose 12.1% to $22.7 billion (10.1% constant currency)[8] - Gross profit increased to $1.1 billion from $961 million, with gross margin improving to 7.2% from 6.5%, positively impacted by approximately 35 basis points due to net basis revenue presentation[8] - GAAP diluted EPS grew 31.7% to $2.74, and non-GAAP diluted EPS grew 25.2% to $3.58[8] - Cash provided by operations decreased to $246 million from $386 million, and free cash flow decreased to $214 million from $339 million[8] - Shareholder returns significantly increased to $210 million from $91 million in the prior year[8] Regional Performance Analysis TD SYNNEX reported varied regional performance, with APJ showing the strongest revenue and non-GAAP gross billings growth, followed by Europe, while Americas also contributed positively despite a negative impact from sales mix on revenue Americas Region The Americas region saw a 2.0% increase in revenue to $9.3 billion and a 9.0% increase in non-GAAP gross billings, with operating income growing by 28.4% to $284 million - Revenue increased 2.0% to $9.3 billion (2.0% constant currency), negatively impacted by approximately 7% due to sales mix presented on a net basis[8] - Non-GAAP gross billings grew 9.0% to $14.2 billion (9.0% constant currency)[8] - Operating income rose 28.4% to $284 million, with non-GAAP operating income up 23.4% to $336 million[8] - Operating margin improved to 3.1% from 2.4%, and non-GAAP operating margin to 3.6% from 3.0%[8] Europe Region Europe's revenue grew by 12.7% to $5.2 billion, and non-GAAP gross billings increased by 14.9%, with operating income rising 22.6% to $70 million - Revenue increased 12.7% to $5.2 billion (6.0% constant currency), negatively impacted by approximately 2% due to sales mix presented on a net basis[8] - Non-GAAP gross billings grew 14.9% to $6.9 billion (8.4% constant currency)[8] - Operating income rose 22.6% to $70 million, with non-GAAP operating income up 14.2% to $107 million[8] - Operating margin improved to 1.4% from 1.3%, while non-GAAP operating margin remained stable at 2.1%[8] Asia-Pacific and Japan (APJ) Region The APJ region demonstrated strong growth, with revenue increasing by 20.4% to $1.2 billion and non-GAAP gross billings surging by 29.7%, while operating income grew by 20.5% to $30 million - Revenue increased 20.4% to $1.2 billion (19.2% constant currency), negatively impacted by approximately 9% due to sales mix presented on a net basis[8] - Non-GAAP gross billings surged 29.7% to $1.7 billion (28.7% constant currency)[14] - Operating income rose 20.5% to $30 million, with non-GAAP operating income up 18.5% to $31 million[14] - Operating margin remained stable at 2.5%, while non-GAAP operating margin slightly decreased to 2.6% from 2.7%[14] Fiscal 2025 Fourth Quarter Outlook TD SYNNEX provided an outlook for the fiscal 2025 fourth quarter, projecting revenue between $16.5 billion and $17.3 billion, and non-GAAP diluted EPS between $3.45 and $3.95 Q4 FY25 Financial Outlook | Metric | Q4 2025 Outlook (Range) | | :--- | :--- | | Revenue | $16.5 - $17.3 billion | | Non-GAAP gross billings | $23.0 - $24.0 billion | | Net income | $204 - $245 million | | Non-GAAP net income | $281 - $322 million | | Diluted earnings per share | $2.50 - $3.00 | | Non-GAAP diluted earnings per share | $3.45 - $3.95 | | Estimated outstanding diluted weighted average shares | 80.7 million | Dividend Announcement TD SYNNEX's Board of Directors declared a quarterly cash dividend of $0.44 per common share, payable on October 31, 2025, to stockholders of record as of October 17, 2025 - Quarterly cash dividend declared: $0.44 per common share[10] - Payable on October 31, 2025, to stockholders of record as of October 17, 2025[10] Conference Call and Webcast Information TD SYNNEX hosted a conference call on September 25, 2025, to discuss its fiscal 2025 third-quarter results, with a live audio webcast and replay available on its investor relations website - Conference call held on September 25, 2025, at 6:00 AM (PT)/9:00 AM (ET)[11] - Live audio webcast and replay available at ir.tdsynnex.com[11] About TD SYNNEX TD SYNNEX is a global IT ecosystem distributor and solutions aggregator, serving over 150,000 customers in 100+ countries with a comprehensive edge-to-cloud portfolio focused on high-growth technology segments like cloud, cybersecurity, AI, and IoT. The company emphasizes its commitment to corporate citizenship, diversity, and inclusion - Leading global distributor and solutions aggregator for the IT ecosystem, serving over 150,000 customers in 100+ countries[12] - Portfolio anchored in high-growth technology segments including cloud, cybersecurity, big data/analytics, AI, IoT, mobility, and everything as a service[12] - Committed to corporate citizenship, diversity, and inclusion[13] Use of Non-GAAP Financial Information This section clarifies the definitions and rationale behind TD SYNNEX's use of non-GAAP financial measures, explaining their exclusion of certain costs to provide a clearer view of operational performance Non-GAAP Metrics Definitions This section defines various non-GAAP financial measures used by TD SYNNEX, including non-GAAP gross billings, constant currency adjustments, gross to net percentage, adjusted selling, general and administrative expenses, non-GAAP operating income and margin, EBITDA and Adjusted EBITDA, non-GAAP net income and diluted EPS, free cash flow, and trailing fiscal four quarters return on invested capital (ROIC) - Non-GAAP gross billings represent amounts billed to customers before ASC Topic 606 adjustments, useful for understanding business volume[16] - Constant currency adjustments remove foreign currency translation effects to facilitate period-to-period performance comparisons[16] - Non-GAAP operating income and margin, net income, and diluted EPS exclude acquisition, integration, and restructuring costs, amortization of intangible assets, and share-based compensation expense[16] - Free cash flow is cash from operating activities minus property and equipment purchases, providing an additional liquidity measure[16] Rationale for Non-GAAP Measures TD SYNNEX uses non-GAAP financial measures to provide investors with a clearer understanding of its operational results and underlying business performance by excluding certain non-recurring or non-cash expenses like acquisition costs, intangible asset amortization, and share-based compensation - Acquisition, integration, and restructuring costs are excluded as they are primarily professional services, severance, and debt extinguishment fees not related to ordinary operations[17] - Amortization of intangible assets is excluded because it does not directly relate to product sales and fluctuates with acquisition activity, not underlying business performance[18] - Share-based compensation expense is excluded due to its non-cash nature, variability, and subjective assumptions, allowing for better period-to-period comparisons of operating results[19] - Management uses non-GAAP measures internally for business understanding, goal setting, and performance evaluation, believing they offer greater transparency for investors[20] Safe Harbor Statement This section contains a safe harbor statement, cautioning that forward-looking statements in the news release are subject to inherent uncertainties and various risks, which may cause actual results to differ materially from expectations - Forward-looking statements are subject to inherent uncertainties and risks, which may cause actual results to differ materially from expectations[21] - Risks include legal proceedings, key personnel retention, economic conditions, IT spending weakness, seasonality, customer buying patterns, supplier/customer concentration, competitive conditions, and changes in tax laws, among others[22] Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated balance sheets, statements of operations, and cash flows, providing a comprehensive overview of the company's financial position and performance Consolidated Balance Sheets The consolidated balance sheets present TD SYNNEX's financial position as of August 31, 2025, and November 30, 2024, showing total assets, liabilities, and stockholders' equity Consolidated Balance Sheet Highlights (August 31, 2025 vs November 30, 2024) | Metric | August 31, 2025 ($ Thousand) | November 30, 2024 ($ Thousand) | | :--- | :--- | :--- | | Total assets | 31,683,202 | 30,274,479 | | Total liabilities | 23,229,401 | 22,239,045 | | Total stockholders' equity | 8,453,801 | 8,035,434 | | Cash and cash equivalents | 874,350 | 1,059,378 | | Accounts receivable, net | 10,925,068 | 10,341,625 | | Inventories | 9,137,505 | 8,287,048 | | Current borrowings | 1,194,794 | 171,092 | | Accounts payable | 15,651,286 | 15,084,107 | Consolidated Statements of Operations The consolidated statements of operations detail the company's revenues, expenses, and net income for the three and nine months ended August 31, 2025, and 2024, reflecting growth in revenue and profitability Consolidated Statements of Operations Highlights (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Revenue | 15,650,924 | 14,684,712 | | Gross profit | 1,129,853 | 961,048 | | Operating income | 383,657 | 302,879 | | Net income | 226,795 | 178,556 | | Diluted EPS | 2.74 | 2.08 | Consolidated Statements of Operations Highlights (Nine Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Revenue | 45,128,946 | 42,607,873 | | Gross profit | 3,174,232 | 2,940,361 | | Operating income | 1,016,255 | 869,399 | | Net income | 579,253 | 494,289 | | Diluted EPS | 6.92 | 5.67 | Consolidated Statements of Cash Flows The consolidated statements of cash flows show the cash generated from operating, investing, and financing activities for the three and nine months ended August 31, 2025, and 2024, indicating a decrease in cash from operating activities but an overall net increase in cash and cash equivalents for the quarter Consolidated Statements of Cash Flows Highlights (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Net cash provided by operating activities | 246,141 | 385,782 | | Net cash used in investing activities | (105,679) | (80,776) | | Net cash used in financing activities | (59,366) | (637,952) | | Net increase (decrease) in cash and cash equivalents | 107,251 | (319,725) | | Cash and cash equivalents at end of period | 874,350 | 853,923 | Consolidated Statements of Cash Flows Highlights (Nine Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Net cash provided by operating activities | 71,326 | 655,783 | | Net cash used in investing activities | (176,757) | (181,573) | | Net cash used in financing activities | (185,964) | (655,436) | | Net increase (decrease) in cash and cash equivalents | (185,028) | (179,853) | | Cash and cash equivalents at end of period | 874,350 | 853,923 | Regional Financial Highlights (Supplemental Table) This supplemental table provides a detailed breakdown of revenue, non-GAAP gross billings, operating income, and operating margins for the Americas, Europe, and APJ regions for Q3 FY25 compared to Q3 FY24 Regional Financial Highlights (Q3 FY25 vs Q3 FY24) | Region | Metric | Q3 FY25 ($ Million) | Q3 FY24 ($ Million) | Net Change (%) | | :--- | :--- | :--- | :--- | :--- | | Americas | Revenue | 9,267.9 | 9,090.0 | 2.0 % | | | Non-GAAP gross billings | 14,200.7 | 13,025.9 | 9.0 % | | | Operating income | 283.6 | 220.9 | 28.4 % | | | Non-GAAP operating income | 336.1 | 272.3 | 23.4 % | | | Operating margin | 3.06 % | 2.43 % | 63 bps | | | Non-GAAP operating margin | 3.63 % | 3.00 % | 63 bps | | Europe | Revenue | 5,174.8 | 4,591.2 | 12.7 % | | | Non-GAAP gross billings | 6,863.5 | 5,971.2 | 14.9 % | | | Operating income | 70.4 | 57.4 | 22.6 % | | | Non-GAAP operating income | 107.3 | 94.0 | 14.2 % | | | Operating margin | 1.36 % | 1.25 % | 11 bps | | | Non-GAAP operating margin | 2.07 % | 2.05 % | 2 bps | | APJ | Revenue | 1,208.2 | 1,003.5 | 20.4 % | | | Non-GAAP gross billings | 1,667.0 | 1,285.4 | 29.7 % | | | Operating income | 29.6 | 24.6 | 20.5 % | | | Non-GAAP operating income | 31.5 | 26.6 | 18.5 % | | | Operating margin | 2.45 % | 2.45 % | 0 bps | | | Non-GAAP operating margin | 2.60 % | 2.65 % | (5) bps | Reconciliation of GAAP to Non-GAAP Financial Measures This section provides detailed reconciliations between GAAP and non-GAAP financial measures, including revenue, gross billings, operating income, net income, diluted EPS, EBITDA, and free cash flow Revenue in Constant Currency Reconciliation This section reconciles GAAP revenue to revenue in constant currency for consolidated and regional results, showing the impact of foreign currency fluctuations on reported revenue for the three and nine months ended August 31, 2025 Consolidated Revenue in Constant Currency (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Revenue | 15,650,924 | 14,684,712 | | Impact of changes in foreign currencies | (315,675) | — | | Revenue in constant currency | 15,335,249 | 14,684,712 | Regional Revenue in Constant Currency (Three Months Ended August 31, FY25) | Region | Revenue ($ Thousand) | Impact of FX ($ Thousand) | Constant Currency Revenue ($ Thousand) | | :--- | :--- | :--- | :--- | | Americas | 9,267,939 | 2,093 | 9,270,032 | | Europe | 5,174,835 | (306,316) | 4,868,519 | | APJ | 1,208,150 | (11,452) | 1,196,698 | Non-GAAP Gross Billings Reconciliation This section reconciles GAAP revenue to non-GAAP gross billings for consolidated and regional results, including the impact of costs netted against revenue for third-party supplier service contracts and SaaS arrangements, and also presents non-GAAP gross billings in constant currency Consolidated Non-GAAP Gross Billings (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Revenue | 15,650,924 | 14,684,712 | | Costs netted against revenue | 7,080,243 | 5,597,768 | | Non-GAAP gross billings | 22,731,167 | 20,282,480 | | Impact of changes in foreign currencies | (401,400) | — | | Non-GAAP gross billings in constant currency | 22,329,767 | 20,282,480 | Regional Non-GAAP Gross Billings (Three Months Ended August 31, FY25) | Region | Revenue ($ Thousand) | Costs Netted Against Revenue ($ Thousand) | Non-GAAP Gross Billings ($ Thousand) | Constant Currency Non-GAAP Gross Billings ($ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Americas | 9,267,939 | 4,932,726 | 14,200,665 | 14,203,734 | | Europe | 5,174,835 | 1,688,636 | 6,863,471 | 6,471,141 | | APJ | 1,208,150 | 458,881 | 1,667,031 | 1,654,892 | Adjusted Selling, General and Administrative Expenses Reconciliation This section reconciles GAAP selling, general and administrative (SG&A) expenses to adjusted SG&A expenses by excluding amortization of intangibles and share-based compensation, and presents these as percentages of revenue, non-GAAP gross billings, and gross profit Adjusted SG&A Expenses Reconciliation (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Selling, general and administrative expenses | 743,892 | 657,513 | | Amortization of intangibles | (76,541) | (73,173) | | Share-based compensation | (12,427) | (16,176) | | Adjusted selling, general and administrative expenses | 654,924 | 568,164 | - Adjusted SG&A expenses as a percentage of non-GAAP gross billings were 2.88% in Q3 FY25, up from 2.80% in Q3 FY24[38] - Adjusted SG&A expenses as a percentage of gross profit were 58.0% in Q3 FY25, down from 59.1% in Q3 FY24[38] Non-GAAP Operating Income & Margin Reconciliation This section provides a detailed reconciliation of GAAP operating income and margin to non-GAAP operating income and margin for consolidated results and each geographical region, by adjusting for acquisition, integration, and restructuring costs, amortization of intangibles, and share-based compensation Consolidated Operating Income & Margin Consolidated non-GAAP operating income for Q3 FY25 was $474.9 million, up 20.9% YoY, with non-GAAP operating margin improving to 3.03% from 2.68% Consolidated Non-GAAP Operating Income & Margin (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Operating income | 383,657 | 302,879 | | Acquisition, integration and restructuring costs | 2,304 | 656 | | Amortization of intangibles | 76,541 | 73,173 | | Share-based compensation | 12,427 | 16,176 | | Non-GAAP operating income | 474,929 | 392,884 | | Operating margin | 2.45 % | 2.06 % | | Non-GAAP operating margin | 3.03 % | 2.68 % | Americas Operating Income & Margin Americas non-GAAP operating income for Q3 FY25 increased to $336.1 million, up 23.4% YoY, with non-GAAP operating margin improving to 3.63% from 3.00% Americas Non-GAAP Operating Income & Margin (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Operating income | 283,647 | 220,900 | | Acquisition, integration and restructuring costs | 1,526 | 259 | | Amortization of intangibles | 42,429 | 41,459 | | Share-based compensation | 8,512 | 9,703 | | Non-GAAP operating income | 336,114 | 272,321 | | Operating margin | 3.06 % | 2.43 % | | Non-GAAP operating margin | 3.63 % | 3.00 % | Europe Operating Income & Margin Europe's non-GAAP operating income for Q3 FY25 was $107.3 million, up 14.2% YoY, with non-GAAP operating margin slightly increasing to 2.07% from 2.05% Europe Non-GAAP Operating Income & Margin (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Operating income | 70,419 | 57,415 | | Acquisition, integration and restructuring costs | 375 | 224 | | Amortization of intangibles | 33,299 | 30,896 | | Share-based compensation | 3,251 | 5,459 | | Non-GAAP operating income | 107,344 | 93,994 | | Operating margin | 1.36 % | 1.25 % | | Non-GAAP operating margin | 2.07 % | 2.05 % | APJ Operating Income & Margin APJ's non-GAAP operating income for Q3 FY25 reached $31.5 million, up 18.5% YoY, with non-GAAP operating margin slightly decreasing to 2.60% from 2.65% APJ Non-GAAP Operating Income & Margin (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Operating income | 29,591 | 24,564 | | Acquisition, integration and restructuring costs | 403 | 173 | | Amortization of intangibles | 813 | 818 | | Share-based compensation | 664 | 1,014 | | Non-GAAP operating income | 31,471 | 26,569 | | Operating margin | 2.45 % | 2.45 % | | Non-GAAP operating margin | 2.60 % | 2.65 % | EBITDA & Adjusted EBITDA Reconciliation This section reconciles net income to EBITDA and Adjusted EBITDA by adding back interest, taxes, depreciation, amortization, other income/expense, acquisition/restructuring costs, and share-based compensation EBITDA & Adjusted EBITDA Reconciliation (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Net income | 226,795 | 178,556 | | Interest expense and finance charges, net | 91,188 | 80,447 | | Provision for income taxes | 66,466 | 42,358 | | Depreciation | 29,295 | 25,015 | | Amortization of intangibles | 76,541 | 73,173 | | EBITDA | 490,285 | 399,549 | | Other (income) expense, net | (792) | 1,518 | | Acquisition, integration and restructuring costs | 2,304 | 656 | | Share-based compensation | 12,427 | 16,176 | | Adjusted EBITDA | 504,224 | 417,899 | Non-GAAP Net Income & Diluted EPS Reconciliation This section reconciles GAAP net income and diluted EPS to their non-GAAP counterparts by adjusting for acquisition/restructuring costs, amortization of intangibles, share-based compensation, and their related tax effects Non-GAAP Net Income & Diluted EPS Reconciliation (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Net income | 226,795 | 178,556 | | Acquisition, integration and restructuring costs | 2,304 | 656 | | Amortization of intangibles | 76,541 | 73,173 | | Share-based compensation | 12,427 | 16,176 | | Income taxes related to the above | (21,823) | (23,122) | | Non-GAAP net income | 296,244 | 245,439 | | Diluted EPS | 2.74 | 2.08 | | Non-GAAP Diluted EPS | 3.58 | 2.86 | Free Cash Flow Reconciliation This section reconciles net cash provided by operating activities to free cash flow by deducting purchases of property and equipment Free Cash Flow Reconciliation (Three Months Ended August 31) | Metric | FY25 ($ Thousand) | FY24 ($ Thousand) | | :--- | :--- | :--- | | Net cash provided by operating activities | 246,141 | 385,782 | | Purchases of property and equipment | (32,221) | (47,142) | | Free cash flow | 213,920 | 338,640 | Non-GAAP Outlook Reconciliation This section provides a reconciliation of the fiscal Q4 2025 outlook for GAAP net income and diluted EPS to their non-GAAP equivalents, adjusting for estimated amortization of intangibles, share-based compensation, and related tax effects. It also reconciles revenue to non-GAAP gross billings for the outlook period Q4 FY25 Non-GAAP Net Income & Diluted EPS Outlook Reconciliation (Range) | Metric | Low ($ Million) | High ($ Million) | | :--- | :--- | :--- | | Net income | 204 | 245 | | Amortization of intangibles | 75 | 75 | | Share-based compensation | 25 | 25 | | Income taxes related to the above | (23) | (23) | | Non-GAAP net income | 281 | 322 | | Diluted EPS | 2.50 | 3.00 | | Non-GAAP Diluted EPS | 3.45 | 3.95 | Q4 FY25 Non-GAAP Gross Billings Outlook Reconciliation (Range) | Metric | Low ($ Billion) | High ($ Billion) | | :--- | :--- | :--- | | Revenue | 16.5 | 17.3 | | Costs incurred and netted against revenue | 6.5 | 6.7 | | Non-GAAP gross billings | 23.0 | 24.0 | Calculation of Financial Metrics This section details the calculation of key financial metrics, including Return on Invested Capital (ROIC) and the Cash Conversion Cycle, providing insights into the company's efficiency and liquidity Return on Invested Capital (ROIC) This section details the calculation of both GAAP ROIC and Adjusted ROIC, showing the company's efficiency in generating returns from its invested capital over the trailing fiscal four quarters ROIC Calculation (Trailing Fiscal Four Quarters) | Metric | August 31, 2025 ($ Thousand) | August 31, 2024 ($ Thousand) | | :--- | :--- | :--- | | Operating income after taxes | 1,055,734 | 921,183 | | Total invested capital (last five quarters average) | 11,515,934 | 11,249,490 | | ROIC | 9.2 % | 8.2 % | Adjusted ROIC Calculation (Trailing Fiscal Four Quarters) | Metric | August 31, 2025 ($ Thousand) | August 31, 2024 ($ Thousand) | | :--- | :--- | :--- | | Non-GAAP operating income after taxes | 1,324,702 | 1,266,719 | | Total non-GAAP invested capital (last five quarters average) | 13,186,982 | 12,616,916 | | Adjusted ROIC | 10.0 % | 10.0 % | Cash Conversion Cycle This section calculates the cash conversion cycle, a key liquidity metric, by combining days sales outstanding, days inventory outstanding, and days payable outstanding for the three months ended August 31, 2025, and 2024 Cash Conversion Cycle (Three Months Ended August 31) | Metric | FY25 (Days) | FY24 (Days) | | :--- | :--- | :--- | | Days sales outstanding | 64 | 63 | | Days inventory outstanding | 58 | 51 | | Days payable outstanding | 99 | 93 | | Cash conversion cycle | 23 | 21 |