TD SYNNEX (SNX) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Gross billings increased by 7.5% year over year in Q1, and 9.5% in constant currency, reaching $20.7 billion [7][22] - Net revenue was$ 14.5 billion, up 4% year over year, with a gross to net adjustment of approximately 30% [23][30] - Gross profit was $1 billion, representing 4.82% of gross billings, with a year-over-year decline of 40 basis points [24] - Non-GAAP net income was$ 237 million, with diluted earnings per share at $2.80, both within guidance range [27][30] Business Line Data and Key Metrics Changes - Advanced Solutions grew by 7% year over year, driven by demand for integrated IT solutions [7][23] - Endpoint solutions grew by 8% year over year, with growth across PCs and mobile [7][23] - Hive experienced double-digit growth year over year but was below expectations due to component shipment delays and demand shortfalls [8][39] Market Data and Key Metrics Changes - Latin America and APJ regions grew by double digits in Q1 in constant currency, indicating strong market performance [11][12] - The company expanded its reach to 30,000 active partners and 500,000 end users through its cloud marketplace [10] Company Strategy and Development Direction - The company focuses on profitable growth and free cash flow, with a commitment to mid-single-digit gross billings growth for fiscal 2025 [21][33] - The strategy includes enhancing digital capabilities and expanding partnerships in high-growth markets [10][16] - The company aims to adapt to the evolving IT landscape, driven by trends such as cloud, cybersecurity, and AI [12][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the normalization of business conditions despite temporary softness in Hive [9][40] - The company remains optimistic about the demand environment and its ability to grow, particularly in strategic technologies [42][78] - Management highlighted the importance of maintaining specialized resources to support future demand [61][68] Other Important Information - The company returned$ 138 million to stockholders in Q1, including $101 million in share repurchases and$ 37 million in dividends [28] - The Board of Directors approved a cash dividend of $0.44 per common share, payable on April 25, 2025 [29] Q&A Session Summary Question: Can you provide more details on Hive and the reasons for the softer demand? - Management acknowledged that Hive experienced double-digit growth but faced temporary demand pauses and shipment delays, which are expected to normalize in Q2 [39][40] Question: Did you see any pre-buying by customers to avoid tariff increases? - Management indicated that the impact of tariffs has been limited, with growth driven by PC refresh cycles rather than pre-buying [46][48] Question: What are the expectations regarding price increases from vendors? - Management noted that while some vendors are increasing prices, it is not widespread and is being monitored closely [54] Question: Can you clarify the impact of Hive on cash flow and capital allocation? - Management explained that elevated inventory and payables impacted cash flow, but they expect recovery in cash conversion days moving forward [63][67] Question: How does the company view its geographic exposure relative to competitors? - Management highlighted strong market positions in North America and Europe, with opportunities for growth in Latin America and APJ [99][100]