TD Synnex Reports Q3 2026 Results: Full Earnings Call Transcript

TD Synnex (NYSE: SNX ) reported third-quarter financial results on Thursday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

8 billion, a 40% year-over-year increase, driven by strong performance in both Distribution and Hyve sectors. 8 billion in non-GAAP gross billings, supported by increased complexity in technology environments and enterprise AI adoption. Hyve saw significant growth, with 117% increase in non-GAAP gross billings to $7 billion, driven by manufacturing and supply chain services, and new customer programs poised for future growth. The company highlighted strategic initiatives including expanding digital engagement through platforms like Partner First and Digital Bridge, and a notable agreement to support an NVIDIA AI factory.

Management expressed optimism for continued growth, supported by durable technology trends and expanding customer relationships, with expectations for cash flow improvements in fiscal 2027. Operating income and earnings per share were robust, with non-GAAP operating income up 55% and earnings per share up 59% year over year. 90. TD Synnex is focused on maintaining profitability despite increased investments in Hyve and expects modest margin improvement over time as new programs mature.

Full Transcript Rebecca, Operator Good morning. My name is Rebecca, and I will be your conference operator today. I would like to welcome everyone to the TD Synnex third quarter fiscal 2026 earnings call. Today's call is being recorded, and all lines have been placed on mute to prevent any background noise after the speaker's remarks.

There will be a question-and-answer session at this time for opening remarks. I would like to pass the call over to Nate Friedel, Head of Investor Relations at TD Synnex. Nate, you may begin. Nate Friedel, Head of Investor Relations Good morning, everyone, and welcome to TD Synnex's fiscal 2026 third quarter earnings call.

Joining me on today's call are Chief Executive Officer Patrick Zammit and Chief Financial Officer David Jordan. Before we continue, let me remind you that today's discussion contains forward-looking statements within the meaning of the federal securities laws, including predictions, estimates, projections, or other statements about future events, including statements about our strategy, demand, plans and positioning, growth, cash flow, capital allocation and stockholder return, as well as our financial expectations for future fiscal periods.

Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties discussed in today's earnings release, in the Form 8-K we filed today, in the Risk Factors section of our Form 10-K, and in our other reports and filings with the SEC. We do not intend to update any forward-looking statements. Also during this call we will reference certain non-GAAP financial information. com.

This conference call is the property of TD Synnex and may not be recorded or rebroadcast without our permission. I will now turn the call over to Patrick. Patrick Zammit, Chief Executive Officer Thank you, Nate, and good morning, everyone. We delivered another record quarter with Distribution and Hyve both performing above our expectations and growing above market within the quarter.

Results were broad based across geographies, technologies, customers and programs, with notable strength in data center infrastructure. Our success securing opportunities with new and existing customers, particularly within Hyve, required working capital investment to support these ramps. As David will discuss in more detail, both investments affected near-term cash flow during the quarter but position us to support committed customer demand and future growth. Looking beyond the quarter, we continue to see encouraging developments across the technology landscape.

Enterprise AI adoption is progressing toward broader production deployments. Data center modernization remains a priority as organizations prepare for next-generation infrastructure requirements, while AI is driving new security, governance and compliance requirements across technology environments. We believe these trends expand our opportunities across both Distribution and Hyve and reinforce our confidence in the long-term growth opportunity ahead. I will now begin with Distribution.

8 billion, up 27% year over year, exceeding our expectations and growing above market across each of our regions. Our performance reflects a broader trend across the technology ecosystem. As technology environments become more complex, customers increasingly need help integrating, deploying, securing and managing solutions across multiple vendors and technologies. Vendors are looking for partners that can not only efficiently reach customers but enable customer capabilities, activate demand and execute consistently around the world.

This is increasing the strategic importance of distribution. One area we are particularly encouraged by is the growing number of enterprises moving from AI experimentation towards production-scale, centralized AI factory deployments. This quarter TD Synnex and Mach 3 Systems signed an agreement to support an NVIDIA AI factory powered by Vera Rubin NVL72 systems.

This is one of the largest enterprise AI factory infrastructure deployments expected to be delivered through the channel, bringing together the design, integration, deployment, day-two co-admin operations, financing and supply chain capabilities needed to operationalize a sophisticated NVIDIA-based AI factory platform for a large enterprise. As enterprises evaluate next-generation platforms, we are seeing growing demand for partners that can simplify complexity and accelerate implementation through their enablement capabilities.

AI factories have the potential to power transformative new products and services, but realizing that potential requires far more than access to compute—organizations that ensure AI investments are secure, governed, cost effective and align with measurable business outcomes. Similar to the evolution of cloud computing, we believe disciplines such as financial operations and security operations will become increasingly important.

As AI becomes embedded in business-critical processes, organizations will need support selecting the right models for the right workloads, deploying them on the right infrastructure and balancing performance, security and governance across edge, private, hybrid and public cloud environments. While still early in the adoption curve, deployments of this scale signal a market that is moving towards broader deployment. As AI becomes embedded across more users, workloads and business processes, we believe the requirements to secure, govern, optimize and support these environments will continue to expand.

Customers are also seeking greater flexibility in how they engage with us and have seen benefits from our digital strategy. Customers regularly engaging across our digital offerings have grown their spend with TD Synnex at nearly twice the pace of similar customers with us. Through solutions such as Partner First and Digital Bridge, enhanced with AI agents embedded throughout the customer experience, we help customers identify opportunities, simplify purchasing decisions and engage efficiently across a broad range of technologies and vendors. We view digital engagement as an extension of our broader enablement strategy.

Whether customers engage through digital platforms, technical specialists, enablement programs, or a combination of all three, our objective remains the same—helping our customers build capabilities, grow their business and better serve their end users. The same capabilities creating value for customers are also important for vendors. As technology portfolios expand and customer requirements become more specialized, vendors are seeking partners that can combine global execution with expertise across technologies, customer segments and geographies. This is expanding the addressable market served through distribution.

Earlier this quarter, IBM expanded its relationship with TD Synnex into 20 additional countries across Europe, Asia Pacific and Latin America. We believe this expansion reflects the strength of our go-to-market model and the confidence our vendors place in our ability to activate demand, execute consistently across end markets around the world and accelerate growth. Collectively, over the last year we've added multiple billion dollars of incremental gross billings into the portfolio through new customer wins and an expanded vendor line card.

More importantly, we believe these relationships deepen our role in the technology ecosystem and create additional opportunities for long-term profitable growth and potential earnings expansion. Turning to Hyve, Hyve delivered a strong quarter with non-GAAP gross billings of $7 billion, up 117% year over year, exceeding our expectations as we saw continued increased demand from existing customers and programs. Our previously announced programs with new customers have progressed as planned, with shipments expected to begin in our fiscal fourth quarter.

These programs improve visibility into future growth, including maintaining a healthy pipeline of opportunities, and support a broader customer and program mix over time. We believe increasingly sophisticated infrastructure requirements are elevating the importance of expertise in engineering, validation, manufacturing and supply chain execution. As a result, customers are engaging Hyve earlier in the development process, creating additional opportunities to expand our relationship with our current customer base and potential new customers.

One example is our work with multiple customers on the design of advanced liquid-cooled networking racks that are expected to enter into production in the first half of fiscal year 27. At the same time, we remain focused on ensuring growth translates into attractive long-term returns. While customer demand and revenue growth remained robust during the quarter, profitability remains an important area of focus. The business is working through a period of significant customer ramps, manufacturing expansion and elevated investment activity, including engineering talent, technical expertise and operating capabilities, as we support multiple large growth initiatives.

At the same time, several opportunities in our pipeline are being awarded at margin profiles that are neutral to accretive relative to our current operating performance. As previously awarded programs mature and newer programs ramp, we expect modest margin improvement over time. Even as we continue investing to support future growth, our manufacturing investments remain aligned with awarded customer programs, and our focus remains on deploying capital in ways that strengthen our competitive position and are expected to generate attractive returns over time.

In closing, we believe both Distribution and Hyve continue to benefit from durable technology trends and expanding customer relationships. Within Distribution, enterprise AI adoption, digitally enabled experiences paired with human expertise, and growing technology complexity are increasing the value we provide to customers and vendors. Within Hyve, sophisticated infrastructure architectures are driving deeper customer engagement and expanding opportunities across a broader set of customers and programs.

While we have deployed significant capital to support customer growth initiatives, particularly within Hyve, we believe those investments strengthen our competitive position, support future growth and increase the long-term earnings power of the company. As these programs mature, we expect free cash flow generation and conversion to improve, and we remain focused on demonstrating progress as we close fiscal year 26 and enter fiscal 27. With that, I'll turn it over to David to discuss our financial performance and outlook in greater detail. David Jordan, Chief Financial Officer, Americas Thank you, Patrick, and good morning, everyone.

This was another strong quarter for TD Synnex. Both Distribution and Hyve grew above market and contributed meaningfully to earnings, while our operating income and earnings per share continued to grow faster than gross billings. 8 billion, increasing 40% year over year, or 41% year over year in constant currency, and exceeding the high end of our guidance range. Non-GAAP operating income was $736 million, an increase of 55% year over year, or 56% year over year in constant currency.

68, an increase of 59% year over year and above the high end of our guidance range. GAAP operating income was $643 million, an increase of 68% year over year. 18, an increase of 89% year over year and above the high end of our guidance range. 8 billion, with double-digit growth across each region and most major technologies.

Our end-to-end portfolio continues to position us well across technology cycles, with healthy demand throughout the business. In particular, strength in data center infrastructure. Endpoint Solutions gross billings increased 16%, supported by continued strength in PCs, including higher average selling prices and a modest decline in units. Advanced Solutions gross billings increased 37%, driven by strength in infrastructure, software, and AI-related technologies.

15 billion. Distribution gross margins were slightly impacted by customer and product mix, which was more than offset by disciplined expense management. 95%. Turning to Hyve, Hyve's gross billings increased 117% to $7 billion, with growth across both manufacturing and supply chain services.

Manufacturing grew in excess of 130% and represented approximately two-thirds of Hyve's gross billings, reflecting higher volumes and expanded programs with existing customers. Supply chain services grew in excess of 90%, supported by component demand associated with customer infrastructure deployments. Hyve's gross profit increased 47% to $276 million and non-GAAP operating income increased 56% to $253 million. 04% in the prior-year period.

As a reminder, our operating margins reflect the growing contribution from large AI rack programs that has been strategically important but dilutive to Hyve's operating margins, creating a mix headwind which we believe has stabilized. Our objective is to build a broader, more diversified Hyve business that combines sustainable growth with improving profitability, stronger cash generation, and attractive returns on invested capital.

Shifting to cash flow and capital allocation, free cash flow consumption for the quarter was approximately $1 billion, driven by increased inventory in Hyve's supply chain business in addition to new customers and new programs with existing customers. 5 billion, with a gross cash conversion cycle of 22 days, an increase of five days sequentially and six days year over year, reflecting incremental mix of Hyve year to date. We have made substantial investments in Hyve's working capital and believe we now have a significant portion of the investments to support our expected growth now in place.

Our focus is now on execution, cash conversion, and realizing the expected returns on our investments. 9 times. During the quarter, we returned $100 million through share repurchases and $38 million through dividends. 48 per common share payable on October 30, 2026, to shareholders of record as of the close of business on October 16, 2026.

2 million diluted shares outstanding. We expect Hyve's non-GAAP gross billings will increase sequentially quarter over quarter as we continue to see further benefit from ramping programs across multiple new customers. We expect we will generate cash in the quarter as recently deployed working capital begins to normalize.