TD SYNNEX CORP (SNX) Q4 2024 Earnings Summary

Executive Summary

• Q4 FY2024 revenue was $15.8B, above the high end of company outlook ($14.9–$15.7B), with GAAP EPS $2.29 and non-GAAP EPS $3.09; gross billings rose 7.4% YoY while gross margin fell 50 bps YoY on mix and tough Hyve compare .
• Distribution (Endpoint and Advanced Solutions) grew across geographies; Hyve delivered double-digit revenue growth, but margins faced lapping headwinds from prior-year one-offs; management expects these headwinds to largely lap by the end of Q1 FY2025 .
• Q1 FY2025 guidance: revenue $14.4–$15.2B, non-GAAP EPS $2.65–$3.15; tax rate ~23%, gross-to-net adjustment ~27%; dividend raised 10% to $0.44/share, signaling confidence and capital return discipline .
• Free cash flow was $513M in Q4 (>$1.0B for FY2024); CCC improved to 18 days; management targets ~$1.1B FCF in FY2025 and mid-single-digit billings growth with PC/server refresh, networking recovery and AI-driven portfolios (cloud, security, data/analytics) as tailwinds .

What Went Well and What Went Wrong

• What Went Well

  • Revenue and gross billings exceeded outlook with broad-based growth in Endpoint and Advanced Solutions; cloud, cybersecurity, and data/analytics grew double digits across all geographies. “We delivered strong results this quarter…we’re well-positioned for the year ahead” — CEO Patrick Zammit .
  • Hyve posted double-digit revenue growth and remains accretive over time; management is expanding engineering/manufacturing capacity to address AI-era needs like liquid cooling and power management .
  • Cash generation and working capital efficiency: Q4 operating cash flow $562M and FCF $513M; CCC improved to 18 days vs. 23 a year ago .

• What Went Wrong

  • Gross margin compressed 50 bps YoY to 6.57% (non-GAAP operating margin down 30 bps YoY) on mix and lapping Hyve one-offs; cost-to-GP ticked up to 59.5% .
  • Interest expense/finance charges were higher than expected ($86M) due to higher average borrowings in Q4, pressuring net income/ EPS flow-through .
  • Europe margin softness: GAAP operating margin fell from 1.5% to 1.2% YoY; management cited macro/political uncertainty and FX volatility, despite outgrowing the local distribution market (~2% growth) .

Financial Results

Segment/Regional Breakdown (Q4)

Selected KPIs (Q4)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered strong results this quarter, driven by our end-to-end portfolio, global reach and differentiated value proposition…we believe we’re well-positioned for the year ahead as we anticipate the IT spending environment will continue to improve.” — CEO Patrick Zammit .
• “Gross billings were $21.2B, up 7.4% YoY…gross profit was $1B…non-GAAP diluted EPS was $3.09, above the midpoint of guidance.” — CFO Marshall Witt .
• On Hyve: “Hyve had elevated margins last year due to cost recoveries and aged inventory sell-through; headwinds should substantially lap by end of Q1 FY2025. We are increasing investments in engineering and manufacturing footprint for liquid cooling and power.” — CFO Marshall Witt .
• Strategic positioning: “We are a global leader at the center of many of IT’s most powerful tailwinds…customers and vendors increasingly rely on us to deliver turnkey solutions integrating software, hardware, cybersecurity, AI.” — CEO Patrick Zammit .

Q&A Highlights

• Profitability vs growth: Management emphasized “profitable growth” and stable margins in distribution; Hyve’s YoY margin pressure is due to lapping one-offs, with investments justified by accretive returns and strategic opportunity .
• Europe macro: Distribution market grew ~2%; SNX outperformed but macro/political uncertainty persists; FX incorporated in guidance (EUR/USD 1.05) .
• PC/peripherals: Commercial-led PC recovery (Windows 10 refresh, aging pandemic fleet); peripherals growth low single-digit; cautious on attributing demand to tariffs .
• FY2025 FCF and efficiency: Target ~$1.1B FCF; cost-to-GP ~59% in 1H, modest improvement expected in 2H as efficiency initiatives scale .
• Networking/storage: Networking positioned to grow (Wi-Fi 7, AI data center switching); storage expected to follow compute recovery in coming quarters .

Estimates Context

• We attempted to retrieve Wall Street consensus (S&P Global) for Q4 FY2024 EPS and revenue; consensus data was unavailable due to SPGI daily limit errors, so we cannot compare results to external consensus at this time. Company-reported performance vs its outlook: revenue beat the high end ($15.8B vs $14.9–$15.7B) and non-GAAP EPS was above the midpoint ($3.09) .
• Where estimates may need to adjust: Given billings and revenue strength and improved CCC, sell-side models may raise FY2025 billings/FCF assumptions, but near-term margin trajectories should embed the Hyve lapping in Q1 and interest expense run-rate (~$78M) .

Key Takeaways for Investors

• Revenue and billings outperformed company outlook; distribution margins stable and Hyve growth robust, but near-term margin optics reflect lapping one-offs; expect normalization post-Q1 FY2025 — a potential setup for margin stabilization later in FY2025 .
• Cash generation and working capital discipline are improving (CCC 18 days); FY2025 FCF guide (~$1.1B) supports continued buybacks and dividend growth; $1.8B buyback capacity is a lever for EPS accretion .
• Portfolio tailwinds (cloud/security/data analytics, PC refresh, networking upgrades, Tier-2 CSP AI demand) should sustain mid-single-digit billings growth; watch storage recovery lagging compute .
• Europe remains a watch item (macro/political uncertainty, margin softness), though SNX continues to outgrow the local distribution market .
• Interest expense surprised higher in Q4; models should reflect guidance run-rate and leverage ratios; operational efficiency projects targeted to reduce cost-to-GP over time .
• Capital return cadence and a 10% dividend raise signal confidence; Investor Day (Apr 10) is an upcoming catalyst for medium-term targets and services strategy detail .
• Near-term trading: positive revenue/billings surprise and dividend raise are supportive; monitor Q1 guide execution (gross-to-net ~27%, Hyve margin lap) and macro in Europe for sentiment inflections .