SNX - Earnings call transcript Q1 2024

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Operator

Good morning. My name is Mandeep, and I'll be your conference operator today. I would like to welcome everyone to the TD SYNNEX First Quarter Fiscal 2024 Earnings Call. Today's call is being recorded. [Operator Instructions]

opening to would Investor Liz for the to Relations. time, over call Morali, this remarks, like I pass At Head of Liz, begin. you may

Liz Morali

joining With Good for Marshall Hume, Witt, you. morning, and and you Thank CFO. everyone, our CEO; today's today me for call. our are Rich thank us

about you events, let or our cash laws contains including as demand, estimates, today's projections forward-looking including the statements structure we continue, return fiscal that of securities Before within statements expectations periods. federal future about other statements me remind debt shareholder our discussion the meaning future flow, for predictions, and as well

Actual results We forward-looking and Form our filed of with today risks forward-looking of and XX-K these may uncertainties Risk filings the our SEC. and discussed Form intend in statements. update X-K in we the not earnings differ Factors the from mentioned in section other as in result any those statements and to a today's do reports materially release,

this press Also Investor conference our earnings Reconciliations or results permission. our in call, financial website, related our the X-K This is without are TD of Relations may property and not included available to be information. ir.tdsynnex.com. certain of Form on GAAP non-GAAP and call non-GAAP during SYNNEX rebroadcast the release will reference we recorded

I will now turn the call over to Rich. Rich?

Richard Hume

improving strong free year an shareholders. joining expectations, We had at our flow returns today. with us a cash EPS upper spending Liz. you, for record end to and morning, of and Good the start you Thank continued to the environment, healthy margins, fiscal thank everyone, strong capital generating IT

our environment strategic advance continuing to to our our business capitalize Across in on the to while are organization, a core areas. capabilities stabilizing expand strategy demand technology we for poised

to we components of the applications. in year-over-year to that and environment next return support we escalating believe IT and billings will believe and growth continue infrastructure, AI-enabled gross introduction throughout bolstered part to will by positive the year workloads improve the growth and spending Importantly, quarter, services

beyond We share dividends managing remain committed we billion flow via shareholders to approved our cash $X repurchases, authorization. Directors announced also And that of M&A share and additional new ratio. repurchase a today, leverage to returning excess our Board has free while

fiscal gross in with strategic our diversification our and billings backdrop first global and efforts. on quarter, the our progress ranges, and a For with revenue largely recovering expansion line line were guidance of card continued market portfolio

our quarter PCs the experienced given saw performance. markets From expected. year-over-year market Advanced in in as faced record In challenging in last year's we played we the a America. and Americas, a Europe Latin regional but in PC Solutions, comparisons trends in year-over-year perspective, had momentum similarly trends out record improving positive

Pacific, in countries, Solutions continued emerging Japan multiple growth to in markets. strength across by Asia Advanced fueled constant experience currency year-over-year including

peripherals for launches pattern. upgrades. system driven and PCs, should We software. new the half be like weighted customary drive believe This results by market and more categories Solutions, what basis several endpoint at anticipate we this also cycles and devices on operating a Endpoint We spending with PC growth XXXX with midyear other Looking of technology. the described will increased Within including seeing industry aged a second year-over-year several as as factors, in of have improvement associated in our anticipated, by refresh demand continued our aligned PC-adjacent participants AI-enabled slight OEMs some saw progresses, as a PCs.

components, devices the and in demand in down some for overall was Solutions. Endpoint by mobile market PC offset in our weighed which results softness Strength

in drawdown a the elevated we of the in solid Solutions. dynamics saw expectations, were Consistent comparisons year-over-year demand had Advanced we quarter XXXX. Solutions' with backlog Advanced half given first challenged, and Regardless,

AI of beginnings portfolio. In addition, the see we emerging offerings the in

a of successful campaign. had fast-growing positioned more Overall, we take Copilot, very are we AI than advantage our with of well example, launch to we the launch Microsoft X,XXX an where market. partners enabled As

solutions Our AI strategic helping the and Momentum as solutions vendor serve partnerships create aggregated us in is in in industry-leading for a area. enablement programs destination and channel. building are clearly to evident this

last digital were in and America, Network month, applications, our helping we week Year access twin graphics, of with to to the as announced products, Distribution in NVIDIA look expanded partnership. Partner Last collaboration and an by engineering NVIDIA their AI-augmented of including we development, full professional We and honored also forward continued training the the the model GPUs, recognized North applications. distributing be are Partner where and line Americas to users partners

AI Additionally, include the These design showcased of GTC our from Hyve the deployments NVIDIA's are week. demands Jose AI San hybrid edge Conference data at solutions last next-generation centers, servers cloud we and AI products of racks. tailored in and cycle and to life liquid-cooled

goals the our data, technology expand represented increase the our of total areas, to and technologies Beyond technology in strategic solid we in experienced In to strategic growth these our on IoT, year-over-year XX% security. cloud bring and these value continue in Hyve, areas our we we gross accomplishments, AI, to billings QX. partners. execute Including

we proof-of-concept designed to accelerating first, aimed strong as the that effectively. to Labs a virtualized partners. more our environment go-to-market TD solutions market faster highlight flexible, bring of This these vendors demonstrations vendors. are at our Cloud and cost our results to a help facilitates Underpinning programs multitude process This and launched scalable efficient. for SYNNEX solution To a couple, helps offerings are and

is or application by used or which The strength year of platform, ease We and and professional services core of Second, portfolios. over market order an than well believe we technology PSA synchronization our an us provide increased that opportunity business automation, in to the and adding showcase organization continue positioned and portfolio has new environment both now new connectors, StreamOne the resilience invest particularly capabilities. interfaces, products, across to our managed more strategic launched ever and providers challenged service several and APIs, our and programming customers past our changes. provided model,

our to towards free also from have shareholders. earnings pivoted strategic shareholders. which stronger driving volatility increased this majority significant forward the IT We to capitalizing flow period believe strong share of of the market business of believe environment, improving to we revenue returns in even and to and we headwinds we generated have improved an mix flow, and areas for deliver allow on generation, growth we've returned have which us free look growth, spending significant our and technologies emerged cash margin the market, and Despite cash per will

now that can and he details additional to on so over our financial I Marshall provide pass performance it will outlook. Marshall?

Marshall Witt

good call. on to and morning Rich, today's Thanks, everyone

with As see guided revenue gross Rich line mentioned, with improving our market and an to we environment billings in ranges. were encouraged

Additionally, our further upper portfolio progress at profitability to flow, cash expanding strategic and our broad end strong our the and returns improve margins, free healthy EPS allowed us of on shareholders. in with to technologies, growth robust expectations

impacted Moving year-over-year. Solutions revenue in Fiscal to in down was line QX gross $XX.X of down $XX first by Endpoint fiscal X.X% business net-revenue adjustments year-over-year Hyve's on basis a Gross-to shift a margins X% total our our revenue Advanced in driven basis to decline gross a migration but increased and the a billion, were billings X% in This with X% year-over-year portion net Solutions. decline mix consignment by business X% and our performance. Net a improved of to quarter our negatively by ongoing expectations, billion, XX year-over-year and due model. points.

disclosures enhanced quarter, announced, starting are this we data some we As in providing investor presentation. previously our

categories technology printers via we storage, includes hyperscale for Hyve First, providing includes our Endpoint and infrastructure are mobile which Advanced net revenue billings, gross the business. PCs, of and Solutions, gross which software and Solutions, peripherals; servers, networking, and profit cloud, devices,

billings primarily addition, strategic cloud, In gross which Endpoint security, and categories Strategic data, in are found into but technologies Solutions, some technologies, infrastructure. for IoT we Advanced are providing split are and Advanced are both hyperscale Solutions. AI, our

hardware, from For billings were QX and XX% from perspective, software of gross QX, from a XX% technology from approximately services. X%

the XX to Rich more stabilize. product strategic also to billion adjustments. have areas, PCs market points expansion which gross-to-net we gross higher gross X.X%, due was were mix profit basis encouraged continues growth a in see and year-over-year As profitable to technology was Non-GAAP continued as mentioned, and up margin year-over-year in non-GAAP $X

Total $X.XX, make rate adjusted to The non-GAAP basis investments non-GAAP was Interest SG&A the rest we worse and of were our and expense than improvement due Total $XX improved non-GAAP outperformance primarily was was was upper expected quarter-over-quarter. higher-than-expected expense mix. at finance margin effective a operating year-over-year for with expense growth million as driven points. our balanced income $XXX XX end and million, line by EPS continue charges strategic million, forecast. and $XX outlook was $XXX down million million million non-GAAP was XX% the was in to X.XX%, range, diluted Non-GAAP approximately tax up 'XX. $XXX fiscal year-over-year margins million SG&A borrowings. of operating income on due net representing $XX our $XX supporting guidance of to

sheet. the debt billion. $X cash billion equivalents $X approximately turning of Now to and of with We the ended balance quarter and cash

was investment-grade our ratio rating. in Our credit and was gross X.Xx leverage with line net leverage X.Xx,

or receivable totaled prior current structure down We quarter. refinance $XXX that August are down $X.X intention from prior the all in its our maturity our of in ahead prior and the debt this debt Accounts and currently from slightly billion, totaled quarter; maturity. note to our senior of million of billion some upcoming inventories assessing $X.X year, billion, to $XX.X is

repurchases working days, and capital shareholders million flow of in approximately returned quarter the million, flow in from free and Cash quarter For X down $XXX was through X. dividend in days $XXX $XXX was from cycle million from $XX $X.X the was billion, of conversion cash and XX XX% $X.X was net to quarter, share payments. quarter the the first X; cash million. operations in free cash quarter down We billion

we authorized of for $X.X As our with now announced billion repurchases. Rich billion, further share repurchase share have newly authorization mentioned, $X

dividend close quarter, a per current April April of XXXX, year-over-year basis, common business increase XX, which of has stockholders the the of XX% on XX, on representing approved of payable share, Directors For on our a will $X.XX Board XXXX. a record be of as to

to Now for second our moving quarter. outlook fiscal

of the billion, X.X% of billings $XX.X expect basis a to a growth at We non-GAAP midpoint. on billion representing year-over-year $XX.X

expect $XX.X basis a revenue the at We flat billion, of midpoint. to billion the range $XX.X to total be on year-over-year in

$X.XX. on exchange is guidance a Our of based rate euro-to-dollar

per Non-GAAP XX.X approximately be million. EPS expected net expected outstanding range non-GAAP of of the to is $XXX and in the share $X.XX income based to on $X is to million $XXX range diluted to diluted million, in shares be weighted of

includes approximately expected is tax million interest expected expense debt non-GAAP be associated Our costs our $XX of is and onetime Interest $X deferred rate accelerated XX%. with approximately to million and to approximately expense anticipated refinancing. be

expect would expected growth improvement and Looking third working requirements. the million quarters further $XX we of in the From expense continue anticipated forward the quarter impact and second in estimates capital the million the to driven of $XX year, quarter billings XXXX, fourth X. perspective, gross expect include debt a our half fiscal refinancing we environment. by These high of in in interest X to and single-digit to fiscal mid- market of

on repurchases, year generate medium-term conditions. $X.X flow of while approximately via XX% allocation to and capital cash depending shareholders opportunistic free both fiscal returning flow the share cash expect to our of remain remaining to billion committed on target free market dividends for We buybacks and of

flow In to our business generate several the resilient past while is returns to volatile model strong conditions robust strong continuing has enabled weather shareholders. our quarters, and financial to us the cash over closing, and free profile market

solutions both We our areas emerging positioning and closely next improving quarters. customers, vendors market us to demand efforts growth and our OEMs to are the are benefits deliver capitalize working enhanced to several the on with technology well seeing over across traditional our and of

We are begin ready the now to of call. Operator? the portion Q&A

Operator

Tindle first with from Adam line Raymond Our the James. [Operator comes of question Instructions]

Adam Tindle

year. the comments would in to start for results. manifest on itself the maybe And back half the wanted PC the question optimism I be might how that of on

of be in the that bit second So I first half to in look from that years, commentary second think half. if like little north at the be weighting the I optimization. an might to to year XX% secondly, this XX% just the past update tend XX% then first half, half, PCs. And of the earnings back was couple if Wondering given the cost on a half

I you couple $XX think a identified ago. of had million quarters

results an the Just what's update and reflected on timing in now.

Marshall Witt

half, first question. In you it's relation half half of second being think forecasting historical and Adam, little the that's the fairly on XX%, growth for half may for this second regards still the in ES bit Thank related we're to reasonable year. XX%, and Marshall. of observation in heavier and your be of how a based the to year. the AS It second I acceleration

of cost optimization, take $XX that care the quarter itself on 'XX. On through translate and X million, of did

the would capture, and going $XX our run forward. embedded where So in million, it's that rates

Adam Tindle

it. Got

Okay. repurchase authorization. the share Maybe just on a follow-up

You it. that, congratulations knew and on I would ask on one

that billion, think $X I double authorization. my was I notes, through if last went about the it

So the think opportunistic. deployment? to framework, about if just that allows repurchase on the speak timing discussion a could the you Realized wonder you of to little of the to more and bit but how be long-term size I

Marshall Witt

in our cash anticipate form returns, billion about cash billion at about XX% Yes. shareholders to of back capital returning repurchases our and our of dividends. free terms then $X.X cash or strategy flow of the $X.X medium-term objective flow and flow, we in looking Thinking in reaching of free --

you what year, if looks like Adam, think per it's about that $XXX to million. So $XXX million around

$X So the thinking billion us reauthorization that about adequate gives coverage. the authorization,

mindfulness discretionary in we it did -- our do after Rich's back X remarks, free and and we our of repurchases, back and dividends in choose And years, our put did into he flow allow have the to if find may reinvestment we mention our to opportunistic. cash that, so. prepared our to business in leverage, that that and M&A For X us does to flow the next we addition cash to free be

Operator

Our comes Wang Barclays. the of George from next with question line

Dong Wang

AI. I'd about be remiss to ask questions not

two So parts.

quarters talk maybe can forward hyperscalers, going that's the more center-related the little AI data of you a on what outlook how the Hyve Firstly, segment. Hyve double-click of can bit few and the for kind progressing Maybe the build-out with next specifically you segment. on sort

Richard Hume

little go This more is Sure. a going to bit Rich. I'm broadly.

obviously, we to we think So anticipate the our positive capabilities, then as an a would the which AI an it's to segment Microsoft every seeing certainly, opportunity portfolio, with infused as that when AI about going example. our Hyve today as of with organization And infrastructure software a we're well. deployments Copilot from for already to PC in business, AI within be traditional

you As we've know, shift, deployments, do towards AI-oriented had but data you traditional mighty will, center if we see build-out. a

AI forward. good shift will moving part that of mix sort the Hyve classification. of anticipate would we So A in into that

X-plus organizational we're and capabilities see great with really confident we as move So to a our as it regards opportunity years. through the next

Dong Wang

Great. Okay.

Just PC. follow-up quick a on AI the

to shipment You from midyear. alluded kind of starting

little can shipments Just PC give envision of Also, uplift of shipment portfolio? do those on maybe kind color as of ASP with expectations associated the grow for your AI color AI just some can percentage the of you of give ]. how [ Maybe total PC. you a bit a within in the your you to potential terms of kind

Richard Hume

sure. Yes,

that, emerging with would this vendors the of into year So be Certainly, AI-enabled be of think We the as will the it that will this relates a as back perspective. their year. at an offerings PC expensive the mid from sort be PC marketplace, ASPs AI we to half more element for alone in net up ASP the understand segment. to the we anticipate offering of

of percentage the 'XX. back 'XX PC a total the quarter, versus I And this the mightily we last of had talked maybe market in the single-digit quite PC growing as through AI being is PC total but of -- year then about and move then in market half

Operator

the next JPMorgan. line Joseph Cardoso from question of Our comes with

Joseph Cardoso

of expansion, from impressive. really one just first another just margin guess gross quarter me, I

on for year? particularly as that's that of? maybe now pressures potential potential of what Can not like for be were are little side outperformance, despite to seven about the the expected expectations margin then maybe quarter? in around forward, like further we the a look sequential margin headwind. remainder the And this the into And recover, it's PCs thinking a row think we there should dig surprise like on what of with basis, bit that you mix offsets we just a think the was to and a I how the bit particularly a

we last then in a new an a large Can quick maybe follow-up. I And was update I'll in Hyve? just quarter. the think there throw customer just around get delay

how ramp terms should in curious Just fiscal in the of that course how tracking is ramp we and about the magnitude think through of 'XX?

Richard Hume

for question questions. Thanks or the

margin to one them think Let time, I'd couple a improving we When try of profile about a as sort at we and like me thoughts. our of moved unbundle offer have time. through

have think organization on our the one first aligned profitability. we system, of sellers we management delivering when about the So across sort the really is

we is So sure what's our we in whole incentives that place focusing that -- the afford the make have systems that have on sales us to in opportunity the place, really the organization important.

The second been moving thought products will we've that towards so this fact, there, which through we're be you, to and more are give I time we transparent would move and as on continue netting.

in natural get we So uplift a margin profile. the

I remarks, basis XX this past quarter. worth think prepared Marshall, said his was it in points

So that want move because reason through be something we to netting that, is the time as going that on And another gross everybody that's because why exist it's of forward. we anticipate continue would situation. we moving to focused billings accounting

on portfolio just strategic As you of technologies netted. know, we've share got a good and lion's big focus a that

missed question customer overall I one. Then me on -- you the let or had that back up.

the On attractive and see in more margin. a a pro we've Advanced information financial results we segmented had results -- we forward, had the gross Solutions, can Solutions should in heavier we the profit that the forma the yes, benefit had what going you of has -- anticipate included that that Advanced

that almost And relative is are see expectation time an the portfolio the trade have just and that things say math, in towards ramping So and going we'll off remixing the some moving the it portfolio we lastly, to heavier have we and the up a of customer anticipated. new would as margin what forward will through Solutions. And by as then weight that a we Hyve guidance provide at executing obviously, would be. mix Endpoint

Marshall Witt

saw their add you'll news of where of quarter, down a on in little in OI regional this had bit basis. profile see press release our bit just some we break we Europe to strength the color non-GAAP I'd and a in and the where Joe, quite a results. OI margin good

both You was perspective on margin Europe profile but billing a about can and gross Americas down strong. X%, see were the quite

So partners there performed and or expectation and well in that are performed our strategic some outperformed the technologies in quarter. suppliers then general

Operator

the of comes Our Sheerin line from Stifel. with next Matt question

Matthew Sheerin

wanted I to I'm on public lagging, Rich, sector year-over-year that you help the markets follow which hoping instance, playing can to see see enterprise how you you versus -- and just seeing which commentary. up are understand versus that out? starting ones strength end PC are and SMB for us

domain up quarter, And tough Advanced second on against know front, the last part Solutions, this comps you're on the the quarter. I

backlog digestion this for next concern the a period, couple and the or And quarters a is lot that had tougher to You that down. in so. comps you worked of we're be year-over-year of going

out see you that well? do how So as playing

Marshall Witt

as going was there bit. X through. a the question for to called first. on was about X, lighten the see backlog specifically that Matt. This side in demand quite we up you're to is things. a that bit of out demand, going to right. it about tough But I'm Thanks did comparison, We be PC Rich play of Europe the little Quarter go talk second a quarter I'll and let questions. Marshall, handle start year-over-year

some and going March May, compares. last think see be think big month. might the better April to I we're I But

backlog So profile. think is at that I the

few maybe I think of even quarters for it's a there been a couple now. months,

I So backlog. say will QX is the probably by the how and themselves digestion beyond, impacted be forward, would through and going they rates growth that. And less manifest in

need that some we growth, see taking of all the in and front working of get the to we're the to that we With are expect going to our needs see be vendors some customers capital said, I ensure as that year. start buys care we surprised think in to I our that of second of as wouldn't half

Richard Hume

we the on very modest remember, PC Yes, in question, had a Matt, QX. growth

I different about that rising the As of dimensions of sort said in in retail. about other it SMB, think dialogue. one all portfolio. quarters but kind we I outpacing right X, now an rather way, of when tide There sort X, boats across see had is see of growth our and area as we we expanding rising the X a no think as previous a the significant sector, commercial, is public that And

of change forward, Now what now. right but that's obviously, moving we're kind that seeing might

Operator

from David comes next Our with question the Vogt line of UBS.

David Vogt

a lot we the PCs. to AI-centric context double-digit pivot lot How and we Obviously, going results. a second the to as server, of product storage digits well, that in you today? of forward environment the do of companies about billings demand spent sort relatively can You have more And networking? commentary seeing mid-single soft time are regarding posted categories on half Maybe growth? of think how your

follow-up I just have then question. And a

we On a perspective products AI are of should where spread dynamic AI-enabled of expect on perspective? today from the versus model, if of a the footprint data more center they traditional are from margin products, sort or centric these sort same we legacy

Richard Hume

sure. Yes,

back maybe in emerging. I'll obviously, see where AI, but on on some So we comments early days things double

engaged. had -- of And than doubled. Copilot, has day, forward if first on all, on current more So dramatically Microsoft I week, partners than the launch more X,XXX we fast our that more

particular. in call a great AI that, running. off excitement had -- We've So category the it, Copilot, launch. of is I'll software a lot around got software and There's market a and

of were the talked NVIDIA, about and distribution named distributor full-service for fortunate being the year Americas. we their be to The of in second, a we sort partner

emerge there that also quite is So a aspect to interesting. is component beginning is that

see more the the world. than all category, the of emergence markets some from deployments, throughout normal the OEMs of the larger server of larger Third, that we in the traditional focus some within

oversized be who might an with them. servers end-user an demand of in customer GPUs has this So

beginning that to So see we emerge.

course, of content, we to there's then, And going which transition AI configured that be traditional systems. towards more hyperscalers, earlier, natural data the serves the Hyve said sort in as of less in our business center, a

sort So all building. is of of this

time, how about to clear definitions be and provide same think counts the for cetera. making we et think that we articulate I very particular At numbers, AI focused we going what we're on when sure sales

to So do the quarter we'll X, make that's coming we or provide. work in which sure

terms experienced Typically, a Then higher-margin because help the more profile And last is technologies lead the or we've average. than new part in general strategically to they that's -- the of what statement a where of come in think channel is important. they past to technologies. us with with want new the largely the our into what vendors OEMs

So there, profile. recognize be with building expenses services, to which skills we're they within have also enhance have that and associated They typically the incremental capabilities and margin them. costs going to some and

And kind can seen about we've past the on about the point, innings it's what that's talk only So I AI. new at it. think in of technologies. early with this we way

Operator

Our comes line Research. from next question Barrington of with Colicchio Vincent the

Vincent Colicchio

most answered. questions been there? expectation synergies for been my year. about have Yes. acquisition there for Rich, any your change Has revenue the of Curious

Richard Hume

Yes.

talk here talk me let the and I'll in about moment. about Let a revenue acquisition, the Marshall synergies

allow to us our a work are focus interested or perspective, Ideally, accelerate areas enhance that that we So will wide we we of pipeline in. robust to from areas. look for and continue acquisition strategic opportunities an

bit Pacific, our Europe fact Asia about North market Japan, the is talked particular. We've a than that it past within lighter and in position is within in little America, the

attractive areas to So as those us are well.

form acquisitions. see -- opportunities the We're could do look patient. it for come We sometimes the we calls we market tuck-in improve forward. going to what portfolio match, the what in right of our But and

to over you. Marshall, So

Marshall Witt

On the revenue to things synergies, Vince, think a few about.

cross-selling So is certainly, underway.

customers regarding vendors the know, the in completed, to or were to with traction. quantify associated TAM us in cycle. so platform very helpful. and this emerge, seeing early It's in predominantly you who Americas North begin the to America that's certainly, for show difficult we're and But CIS benefit is gain complementary common As

these call lot a complementary out. it's to we're that vendors, isolate and So seeing early in of somewhat but still expansion

excuse as is do that see will we'll or in those vendors, market we it meaningful. -- where to What margin me, we expansion speak that grow it's can

in and I to organizations, mind, expand is had think starting to with the are footprint vendors entities. the to the thing footprint, currently keep both across beyond vendors global we that what utilize our other were see too, with they global separate complementary coming

Vincent Colicchio

And then you expanded one NVIDIA with maybe more. expect do ramp? How to rapidly relationship the

Richard Hume

that really market. It's Obviously, hard very in robust it's the to an tell. area is

foreseeable that So We within really to we if have optimistic spaces. share, our fair we And our as the future. capabilities what terms get always do, and to about would intend, in more. feel of offer not specialization good is we're we this to for a those our going be great market

Operator

Goldman the Sachs. comes Our from of line with Ng Michael next question

Michael Ng

Just two me. for

out around on good respective Are you disclosures margins endpoint the advanced. gross those new the question And on the color X% I call any have follow-up. a and profit? the would on for to deviate? performance for margins. thank way then to margin And you think that that gross qualitative about you a that things year-over-year My certain gross and the might First, Are gross was do X% categories? have quick there cause

Marshall Witt

Mike, Certainly, net Keep these a this happy basis. to that's is mind that, disclosures. provide we're Marshall. Yes. on in

it it's of We netting AS relationships gross basis, in around and it the because a ignores removes happened bit a X%. on the in think netting more for perspective from and a margin just quite portfolio. little bit to gross X% that So There's certainly show When the gross tried about ES. you billing there's AS a down.

X, we and why a the the strength the margins on And billings specific quarter into the of reasons case. about think about portfolio we our As talked about quite of some we were perspective. gross that's surprised

gross forward, as acceleration should that, talked in compare on continues ES maybe area remarks, have in headwinds QX op XX margin it, of, you bps, in show go and is some when to reductions margin or continue about billings. margin that and some beyond, to prepared signs of we gross that and gross XX our we As and also it this expectation on the that call bps should

we're there a and lot. So throwing know net I gross around

we is look in They know, support margin takeaway quarter at that both our I'd return healthy. look we about also some our is make Mike, that, The working just that returns margin the thing that, has capital AS you we when say are have dampen investments shift on should attributes. as bit and and gross X probably Solutions quite our Endpoint last in profile, But attributes. of of a a little mix ES different at

about it's that does QX of to it our a a little are of you Endpoint dropshipped both make our Net-net, touch the out lot margin little the sure bit a that. makes of we year. inventory If dynamics because on customer sense into profile shelf, a to site. into capital lighter so play supportive as into a it the is decline a heavier bit we bit of think half have in working AS, but is head little the second

Michael Ng

of the thoughts in Great. through category. quick product Or billings around kind of category? other really well? That's services? And as fit as follow-up, of point around also categories clear. billings Any very or a does And of I by high-level does kind just as it and disclosures midterm long-term mix clarification, mix then a come appreciate solely software by netting the

Marshall Witt

Yes, I'll start.

has to little portfolio even netting but netting some a it. of bit more across of than course, stating ES, So everything ES has broadly AS, circle, has the

is we're we've decline attribute. If growing software in call seeing show, those of of the called the you year-on-year. is at call supporting say I'll think about Services rest the categories than decent that or growth out, and revenue it better it, the reduction continued the decline, where certainly I'd growth. in the categories to year-on-year

Operator

Our next from line Bhattacharya the question comes Bank Ruplu America. of with of

Ruplu Bhattacharya

per year-on-year. Thank X% you first in product improved, on Endpoint additional margins and question like items expectations? for PCs on this this If down for were looks down Solutions, billings. the were Was billings other by billings from It meaningfully billings a as is standpoint? category your category. My disclosures

flat be to of first year-on-year. had it's Looks like you half think I be year-on-year. to Marshall, going billings And to expected down X% 'XX X.X%

for is, to full XX%, has for we the changed year? anything So netted expect full And should XX% on items the down billings? still year expectation your question impact

Marshall Witt

AS second and the the and I'll billings the features. then address first Rich about let question talk

So within for close. of We quarter you're outcomes lower our of right, X, still towards range but end pretty the were that's that.

So you we outcome, of if that we quarter the below through about that X% X, roughly And playing with below about midpoint about to think guided, what originally X% we're what we're thought. expectations.

decline first still but in out where played X% had you the overall half, So it's pretty for about we revenue, X% to expected. to that close yes,

meaningful So I wouldn't any shift. it call

But the quite Now the we recovery it's of matter still a ES end just expectation certainly, that. to confident feel up how out. half we for attributes could for possible and AS, plays catching the up Quite growth about. second

Richard Hume

the midpoint of So softness the and our segments and would down. within the Ruplu, relative itself I the were some to other they be mobile peripherals, versus you components. manifested expectation, category, would And components in mobile, tell that

Ruplu Bhattacharya

Okay.

starting spending mean do AI on servers, items could category AI-related talked the AI-related some be, mean think non-AI-related think on you to you that? products? that is a my the on cannibalizes would demand. guess the also Have I like have and I I your overall a remains question You do a what's impact other? cannibalizing about to spend AI -- you see one separate spend? think same and thought you you separate do Or the of

Richard Hume

AI is characterize that category. it this is new to to the new be don't opinion, a are immediately handle increment I Budgets made are just that there this not increment when believe personal trade-offs TAM. on emerge. technologies up So total I will need IT the and that

to be their that infrastructure. it need up-to-date infrastructure support between of can AI that there leave business. is needs to components think I'd and Everybody they other strong but very that logical and so Ruplu, trade-off, and enterprises, Cannibalization an trade-offs. I make some at wouldn't state that, solid infrastructure I a have to they sure word, run

addition that, And think way value associated AI And then that's in within props productivity. their at a it. for to I about enterprises would look taking the new

Operator

line Our Capital. with comes next question of Ananda Baruah from Loop the

Ananda Baruah

you GenAI ASP I potential the meaningfully here speak revenue of like more But TAM or I impact for servers have can foundational the see the guess a uplift AI-enabled a can I be in it even, growth also. participation the a Rich, hearing pretty that those your to servers. working as context, the angles would you expensive well. part since you're than from to And But GPU coming handful the is did NVIDIA for just what's tremendous cases, potential mix-up do also of as AI traditional cloud ASP enthusiasm years? view sort in I thought of your maybe PC, guys. the impact as I what you relationship, around company's for think Hyve rate mean sounds of NVIDIA guess, lot

So love your thoughts just would there.

Richard Hume

Yes.

it's again, start IT, because AI going we it this to you're think traditional Ananda. that By the richer. think in the the to and it is fairly are on it's are So When of about but -- this think market personal material. definition, superimpose which I some segments to a configurations the at judgment are fair innings, be of I point, GPUs, conclude, category, it's cost we at least early right, of

think about generally And so an is an way, market and AI support a configuration in example, as that by when the it richer today. to -- therefore we use server to

look, So you. I agree with

an for some the I true ASP of increment period would for infrastructure within AI be of And AI will think the software. same the provide the PC, time. categories all

word that higher. traditional If AI-enabled market, was now versions, ASP, software a you is for if software, use we take in look the that at the

AI been things that that growth market, I legacy the to they'll it some category with they've to clearly ASPs. say fair that higher-level as in whole that where characterized help So provides relative is think

Operator

of Our Housum Keith comes from the next line question with Research. Northcoast

Keith Housum

appreciate with I as endpoint Solutions. devices the detail well Advanced and

historically look it Is the we business? is how we're has usually where about think trend now? split, year been as a expect trending to this billing Or it more can more I over XX-XX of the quarter, of historical the at how you X? or guess, mix? next a we that of then roughly can And this XX-XX give kind little gross does that As range, us perspective, at bit we

Richard Hume

going his to in is your thought a question. while Marshall calculating Yes. respond offer in background to to I'm mind the how

balanced at segments, year ago, portfolio we portfolio. So if talking show when different being look XX%, of our were you we a were where about end-to-end our PCs take we on low call our right, about a this

XX%. sits it Now at

this the what the sure, move we back talks and in half time. of there for why Marshall as of recovery of particular year. that of to about sort So through the And as some portfolio move bit be remixing will margin is category, a a the we

going at own personal category. recovery speculation it's increment is sit within that It on based to is not XX%. going that My the to probably

there that. And so some total. and of be But endpoint provide advanced in therefore, can will rebalancing Marshall, maybe the you

Marshall Witt

Yes. Keith, was I sure, and going forward? to ES just question how want mix the AS does make

Richard Hume

Total. Yes.

Keith Housum

It's it been Yes. Or it XX-XX. XX-XX? at pretty go XX-XX? it usually Historically, has And is up bound? range can

Marshall Witt

Yes.

dependent. region So definitely it's

commentary. heavier weighted down ES. a they're more tends they kind be think weighted tend a be to AS. you bit bit sometimes little heavily AS. APJ kind that's to little historical Americas, the a more to of toward little Again, middle, a more of about toward If bit Europe, weighted

in So AS the today. depend the on depend is the it does it But and little of region, currently, does a mix trend. favor on bit more

Keith Housum

XX%, right? ES at get But even higher like to we expect shouldn't PCs, to the

Marshall Witt

tell, and lot acceleration half -- it play. think how will the of how Really on Keith. is hard dependent we A second just to

Our all we in need take our we different customer both, and that base. and like our customers know ways both we vendors both have many to solutions is and

kind of So matters. it all

Keith Housum

more question. ask I If Okay. can follow-up just one

I the referring want you when what but it's kind I too that market truly the closely, words sort at give stable demand, improving So or demand. the kind really and market as word X of confidence the talk you used guys of improving? don't do, parse rest look You you of IT to right? that year about of well X what guess, as the is to as we factors improving

Richard Hume

last sort through we've moved is if I quarters. the a That at declines, Well, they've take you of first as sequential of narrowing number been look would couple think one. be year-on-year our

to are compares lap was the of wrap tough going propped Number we backlog get year, that two and there those is a AS lot up PC category. start last on rundown to to obviously, we on where

opportunity provide So I of catch up. would or just say that the an cycles sort

demand in forward. hopefully is of that moving Third would advantage take be market talked be we able the as AI, offer we'll earlier, new going to to

are those some so thoughts. the And of

a our I thought categories. we some midpoint. when expectations. would look end the bit was take to And that expectations tell there softer our it of still volatility you Obviously, relative QX, we gross revenue the towards billings than came in little at is and lower a at

to feel I comfortable continue the that So moving is market going to forward. improve

some way. sure So there'll be the shorts -- but I'm and along longs

Operator

Capital with final from line Sabadra Our question of Ashish comes Markets. RBC the

Ashish Sabadra

how the on growth billing is gross Just demand. of spending company-specific headwind before around spending the contingent to possibly spend IT to in some year a the out a from environment, year? but that single-digit upon response those the in coming the from I more questions like dynamics, you the was about the is quarter the wallet winning versus how as share by back which much few improving it a we thinking IT versus of high of laid through to the earlier you off half asked year? IT also increasing greater the get much third some potentially of were of model this So follow actually consignment spend up the mid- of earlier of questions,

Richard Hume

Yes.

earlier. I had a So first, I'm again, to stated going that repeat comment

percentage our cetera. and et future or netted, gross are As we portfolio think having we and about larger which we potentially productivity, what are our about track when things of about think a think billings

important an that's So feature.

a to than greater Second grow little is always strategy market. our bit stated been the has

we So maintain that we can it. forward, would that and sort of anticipate successful we executing objective as hopefully move against be that

the question So hope of to the is we're market of we year. outgrow degree half -- back the net some to in the the

Marshall Witt

your gross strategic and billings us which to to really probably we point important continue. data Advanced comment a just Ashish, that our Solutions will add correlated portfolio Rich's versus about for and to comment And consignment, expect net, I about would highly being that, is gross

it's that, accurately with may revenue to play where so difficult out. very net And gauge

but a for point GAAP in to why both to meaningful its is us number, of rate continue op terms report to growth the SG&A that a relationships gross its We billings certainly et income, and cetera. it, focus we make and

Operator

now like over the call for remarks. closing management turn would to I to

Richard Hume

Yes.

appreciate service of made just really really SYNNEX. the on reality. We today. say joining to focused in our executing the we the coworkers and everyone they your delivered, had for customers TD day that of best I the are thanks primary you proud provide sure who on are interest across that world quarter our to stakeholders and and First, We're ground want to every it making They a vendors. thank

a So And thanks I great all all to day. of coworkers. you. wish you Thank our

Operator

concludes conference call. today's That

You a may day. Have disconnect. now nice

TD SYNNEX (SNX) 26 Mar 242024 Q1 Earnings call transcript