SNX - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Briana, and I will be your conference operator today. I would like to welcome everyone to the TD SYNNEX Second Quarter Fiscal 2024 Earnings Call. Today's call is being recorded. [Operator Instructions] At this time, for opening remarks, I would like to pass the call over to Liz Morali, Head of Investor Relations. begin. may you Liz,

Liz Morali

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

Actual expectations flow the well differ you continue, we the discussion future and statements statements. the earnings in positioning, we federal for projections predictions, may let other our demand, laws, remind or discussed risks as materially about cash results meaning Before X-K in including from that filings and other XX-K today's these statements as and Risk reports the of about and those Factors and forward-looking statements me periods. release contains as today's forward-looking in SEC. of including our Form shareholder today mentioned estimates, in section return the securities a with within fiscal future of result filed growth, Form uncertainties our events,

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

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

Richard Hume

call, we'll to Patrick from On performance comments close the and Good and by Liz. the last QX QX prior will session. and in and today's today. you, outlook morning, CEO some with Thank briefly, I Q&A followed us financial on thoughts you transition everyone, our QX, the thank planned announced our speak performance week, we commentary Marshall on the joining will provide and of drivers industry regarding for

our performance. comments X focus I my will Starting on with QX areas.

the we prospects stabilize, fiscal have the back markets our to billings of growth our half continued for and revenue in gross remain and year. confident First, improving

Second, for AI And results robust opportunity future. and returns. we financial company shareholder we the the third, foreseeable delivered meaningful believe a over strong is

The a growth transformation, well, billings which and after the IT positive gross were billings period quarter. market spending navigated end coming at market through continued up we Gross of business, to range. returned conditions our XX% guidance year-on-year challenging in X%, Solutions Endpoint in improve the to and and all business. high we total growth now of Strategic of which Solutions, of came Technologies, This Advanced including our our areas represent prolonged

security continue software, expect enter in of hyperscale by increased And both and data cycle, to billings to as half and and center gross second traditional meet expansion the workloads we spending revenue capital in further in the growth, acceleration the continued customer deployments, we year, fueled AI-enabled cloud analytics. fiscal of refresh data and investments needs PC and

XQ results with share fiscal per and strong, and expanding, robust in shareholders. in Our operating returns earnings growth margin non-GAAP were double-digit to capital growth

sequentially. in we flat end-to-end broad and holding to technology capture to and core us on strategic areas, our portfolio gross billings expense cost, both growth remain Our the disciplined enabled ratio

million in confidence year, total over nearly XX% representing through our environment already this quarters with by an coupled the market us to to fiscal return 'XX. strength, of to This $XXX improving return of allowed X shareholders first the shareholders fiscal

in remain a to Since March, framework. As announcement. of last continued AI-related balanced and services unveil capital the we our we return has our technology go multitude to industry forward, products, committed call earnings

sector. for As the next great I I've technology transformative believe era be previously, will AI the mentioned

During the and my of advent evolution and mobility career, witnessed computing. the groundbreaking several other advancements as Internet, I've such cloud

accounts, era significant. and time the of by industry TAM beginning the associated at is expansion just are potential AI analyst We the over

data devices, storage, our expect through that ecosystem, will across services. of related business and spend business partner we components, well and as networking cloud portion will center, applications software, as the come A benefit

relationships deep and customers. our participate investments in vendors positioned are and increased from we from market our capabilities, this to momentum vendor growth interest are well customer and evolves service partnerships, our seeing and long-tenured already With as the

the quarter, Gold enablement, opportunities launched to During watsonx expert business through we sales XXX the marketing, training, Program presale support. partners demand generation, for IBM AI accelerate planning, and acceleration, services

of will establish As IBM collaboration, part be where watsonx the partners able this in solutions. X of to we Excellence globe, will watsonx around locations experience Centers proof-of-concept

to Copilot the honored year. Seats successful also for launch Global are earlier testament Champion be the We Microsoft's to this quarter, a enabled named Copilot we

of future, Technology integrating and how can pleased partner to with AI become Center Excellence partners where announce learn cloud, a were modern infrastructure. to our we cybersecurity, analytics Lastly, the high-growth of data

the at like CEO the to mentioned few the comments make announced would last I a of start week. I As we transition call, about

record me me let who of TD been a Patrick September. decades of the having to our of than in CEO as becoming company my moment partner SYNNEX in more joined First, succeed me take he part to track Patrick has congratulate a excellent success since Zammit, X ago, Avnet has and will XXXX. industry, an retirement long upon in

dedication ideal driving future. TD the his industry operational the in and excellence at acumen has His lead organization. he the growth building make coupled his SYNNEX candidate world-class tenure, deep with across to him and interest expertise business cultures During excelled into and

Chief and this driving to on continuing progress Operating value and the has growth profitable coworkers. Patrick an vendors customers, Officer to greater year, fostered accelerated our has Since focus deliver increased already strategic while becoming our even our on earlier initiatives

Directors. company I the an the as built Board am say milestones privilege of along company's look I As team a member the the way, achievements to to forward I has absolute work lead career proud and and my over back look to the of culture been accomplishments the I incredibly have on safely of that we it continuing many with that years. the can and the and

a make so I few can it over comments. pass he Patrick? will now Patrick, to

Patrick Zammit

that honored selected vibrant to your culture been Rich has leadership known Thank the we thank lead as for. I you am and established SYNNEX that leadership-based have are the along legacy Rich TD continuing in partnership CEO. forward cultivating to and with the channel you and for servant look to success across guidance of and

I has vision to fortunate values. a inherit who industry-leading challenging to value and increasing understands critical to set of mission, deliver most an ability SYNNEX helping best-in-class TD quo team, and motion, and unmatched at purpose, We our status to stakeholders. deeply to efficient our and am value the excel go-to-market capabilities proposition. technology with our constantly of broad our accelerate innovate we look adoption an

our to ensure we continuing digitalization foundation constantly shareholders. efforts on I to strategy and building delivering look established to forward accelerate partners, the and greatest coworkers, are value we and the vendors have to our

Richard Hume

to industry pace XXX,XXX IT and Thanks, Patrick. needs requires to customers. partners the pace In the channel, we constantly rapid change value anticipating emerging the accelerate, the us across our vendors across and partnerships are them. agile This necessitating and and of increasing closing, of leading solidly positioned of deliver we over the the continues industry's stay nimble, with change and to

across and solid transforming focus technologies. continue and accretive We greater our see profile growth portfolio margin to have opportunities made business strategic on in with our progress in regions geographic for

to forward. healthy, is approach structure capital Our going committed balanced allocation maintaining and we to a capital are

for Since company. of healthy in ideas future. I our of earnings to your a be and support, my and you great last will call, want wish all I personally this interest you prosperous thank all

over will Marshall? QX I for and additional now turn our commentary outlook. Marshall to it QX on

Marshall Witt

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

through leadership guidance CEO merger, the me also to for and congratulations specifically Rich his he his Let offer as to Patrick as my Rich. thanks and succeeds

had a Advanced We with Solutions IT Endpoint with with performance to and results Technologies. Now aided strong fiscal billings environment growth gross QX an improving Strategic results. Solutions, turning our in expectations, our line in in by spending

continued We both margins were growth. gross and EPS and our expansion operating pleased strong with in

accelerated Importantly, to are as the market in the back believe positioned has of to as mentioned, half from fiscal we well year spending the rebound. growth IT Rich we continued benefit

and in billings X% Advanced by guidance gross Solutions our $XX.X range, of Solutions. Endpoint and in billion, a X% end the Total upper year-over-year toward increase X% driven were a increase up

returned the mentioned, spending is following gross challenging rebounding. prolonged with an point Rich encouraging billings proof a positive as IT Importantly, market supporting market conditions, that thesis to we growth period our

have investments us this well opportunities creating. position believe dynamic that to will that market meet we the new is We made

$XX.X offerings continue improved less software-as-a-service year-over-year revenue than alone represent Net margins to negatively billion, revenue gross a basis our points. again, adjustments, basis, down X% greater but of as year-over-year was increased year-over-year. our net by impacted portion by Gross-to-net This a revenue dynamic X% on XX our business. overall

and apples-to-oranges not believe business, continued our top measure subject is gross this best in in these growth trend of the the Given comparisons. our billings, which is industry line to we

expectations from hardware, to were services. from hardware, was X% from a as which This perspective, technology with primarily quarter proportion total aligned returned is and of X, XX% greater Endpoint software in approximately represented billings gross our of a Solutions, business. our comprised and from XX% growth For

of experienced Technologies infrastructure of Technologies by hyperscale from year strength growth with accelerated the driven security center, period. gross with year-on-year at total in ago up Strategic business XX% in the cloud, Strategic billings, and robust XX% across the mid-teens Hyve. new growth AI and the now data ramping represent

gross points Non-GAAP basis gross X%, million profit margin was non-GAAP was and $XXX X year-over-year. up

the expected, QX Endpoint portion Solutions mix. represented margin level overall a from as our of gross came down greater As business

billings, as million, down or we year-over-year investments good while cost $X SG&A gross non-GAAP balancing Total $XXX exhibited areas. was strategic of million in X% expense growth discipline

percent assess Another SG&A investments is our a metric profit. of internally we as utilize SG&A to gross

prior and For was basis non-GAAP quarter in a year-over-year $XXX we improvement was representing an Non-GAAP operating XX.X% period. XX.X%, at XX X of improvement income in operating the margin points. million from X.XX%, came year

non-GAAP million EPS $XXX approximately and net range. was finance of $X.XX, charges diluted $XX approaching was XX%. the Interest Total tax were non-GAAP rate midpoint effective non-GAAP was income and our and million guidance expense

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

recent elevated gross X.Xx to and our Xx, net prior the ratio due issuance. was leverage was timing of from Our leverage the debt quarter

would the in leverage the by of with be totaled both Accounts quarter. around hand. ratio senior notes receivable expect billion X.Xx to consistent with to pay our We prior $XXX fiscal end $X.X gross billion, million year. August on of the cash inventories maturing off the totaled I and expect $X.X

cash conversion capital million, Cash used of X quarter, business $XXX is our in the days, was Hyve, billion in due second from For days to strategic cycle strong ramping. quarter XX quarter which and experienced new was up $X.X X, X. the the as from $X.X technologies in operations net quarter was growth billion, part working up

Excluding in and repurchases share quarter $XX generation was We returned requirements, our capital payments. to million. working million in million X million these $XXX cash of $XXX $XXX approximately additional free shareholders flow with dividend

share far common on per of Board For the our record $X.X XXXX, on approved which shareholders. payable basis, July be as a of of year-over-year dividend $X.XX a will XX, quarter, this the XX% on XXXX. have of have Thus representing returned we increase to current over July year, close stockholders billion fiscal Directors of XX, business to a

for Moving fiscal now quarter. to outlook the our third

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

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

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

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

expected to rate non-GAAP expected approximately XX%. be expense to Our is million. approximately is be $XX Interest tax

the shareholders, the we expect by We year, gross to to fiscal still of generate environment. fiscal single-digit look market free allocation flow flow second to mid- billion our continued and the approximately cash range, half of $X.X for in both to dividends high to cash repurchases. target we free billings return driven continue share to to remain with expect in the and committed the of grow to capital improvement year As XX%

to growth of In ample opportunities an we and fund into our Technologies, year half sheet the a optimized Strategic core closing, in head strong with capturing we believe we while our in financial and expected the as fiscal second liquidity business. position in are investments balance

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

Operator

Goldman with [Operator Instructions] Ng Our Michael first question comes from Sachs.

Michael Ng

around just bit a customer AI and When have share interest. PCs. expect a to And on on comments expand through? do more increased general relative have any I of that your as may Do that commentary views have AI you one PCs flow of if could you on wondering AI you devices PC any PCs? I total pricing little regarding you PC? some was AI high-level to

Patrick Zammit

Mike. question, that take to going I'm Zammit, Patrick

at it's refer I digits we So mean PC for distribution and the the market AI the a for you got market that North see low both mean, America the PCs. what mean, to in is ramp-up moment, data data, market. of I I total we see you of Europe. single when

also see the with high-end PCs, more that you You so that PCs, standpoint, for these that AI PCs. remarks are X% is between a So at I'm the the price PCs moment, say when ARM-based XX% high-end again, look at delta this is, the fact from I my high-end PCs, primarily are pricing positioning would okay? and and

this But the is expectation accelerate. is going that to going forward

rate for waiting launch the manufacturers the PC are the going PCs, so for of to accelerate We and AI increase. adoption to the is sure

very on to continue of be the we confident segment the prospects so market. that And of

Michael Ng

role. new the on Congratulations Great.

Patrick Zammit

lot. a Thanks

Operator

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

Ruplu Bhattacharya

talk Rich growth, focused role, which SYNNEX and you, both for the I'll for is start assignment. areas on revenue or to question. a margins? your for on new top Patrick, have on and can Rich profitable to important new focus congrats growth going take on next to congratulate successful I'd more Patrick, For you Patrick. is his with XX the for you're it Since career; the long about you, focus Maybe like months?

Patrick Zammit

Yes.

the the going the believe our you When growth the are have mix when business. will growth. course, at okay? drive is of that to who look I profits. to I that is generate look margin, the quarters, So a And growth positive going mean, more focus, you also I of at coming that think technologies on

favorable So more the to of going that. because mix to course, is to contribute be going Hyve, growth. that forward should of continue

margin we have So quality again, from a I nice top standpoint, line very think opportunities. a some standpoint from and

would a I if to Then to few make comments side, I here. move the like cost also

means North and -- and focus we process so I accomplished America we Europe. efficiency. system major we believe IT which milestones that I X both upgraded can our now So mean mean just I in platform, on

what it it to is we redeploy to to so in on high-growth the cost standpoint, fuel cost categories. means as it in total, opportunity did And GP reduce from QX. But to continue that management our a us gives the growth the resources

for operating So in impacting and but the summary, income. growth I only prospects see very growth really of GP nice the basically the not drop-through profitable positively increase

Ruplu Bhattacharya

ask if of for things you. my Patrick, mentioned you couple Okay. a maybe follow-up, I can

Hyve. mentioned You

think free you're So for how flow? should as we how customer, ramping revenues the inventory think about Hyve about revenue a as well cash that new growth? we should Since requirements business and potential

Richard Hume

the Yes, Ruplu, with maybe Hyve I'll and question. step in help

So as commented our quarter. the we remarks, growth in had very robust in we Hyve had in

look we frame, growth we tactical continue. will believe at that, the As that

well. demand about in good a now talked space, healthy hyperscaler very the we've there's and before is Obviously, #X but doing quite within ramp customer

of we're our So pleased the really performance Hyve overall. with business

as AR see a You good needs for when growth themselves working cholesterol positioning good a needs capital as here increment because there bring we capital point, generated. Those well working outsized we're manifest growth capital good in ourselves will But we that inventory. be working get occur. that as within Hyve, obviously, gets

the summary. that's so And

We're balance be the want I perspective, get cash a to growth, emphasize extent would again, think a billion. healthy But that, committed outsized that we from our still flow cholesterol. then To just for I that maybe have bit. impacted the that's to $X.X we year.

Marshall Witt

I'm apologize I is sorry, recovering cold. Ruplu, Marshall. this from a

the Just ramp. growing see We on business about in X. that from did impact to up flow Rich's quarter cash that, Hyve did new follow comment free and the

reverse we As in expect quarter prepared that commentary, I said in X. to my

the coming over established onboarding we that, upfront the Hyve do thing our get that of course the that's the headwind the cases, is does to that the and on to That of but the is set for of margins, we've with of a typically a quarters many programs, back program in there's or when as serve and that second year we bit call customers, the new make customer. we wanted returns partnership investment margin that. quite when we The other out

to what And a we the with a strength of relationship Hyve typically as customers, and this the with our grow more great businesses, start case with we Hyve one, attribute is see the that's with teams. happens sticky

the thing that with same today. customer we're this We ramping expect

Ruplu Bhattacharya

Got and in Rich, to keeping it. to to look look you. forward working touch; and forward you congrats Patrick, with

Patrick Zammit

Thanks a lot.

Richard Hume

your you, kind for words. Ruplu, Thank

Operator

comes next Our with question from Joseph JPMorgan. Cardoso

Manmohanpreet Singh

towards and This is ask Joe MP be PC how PCs the will to your that into magnitude for on side? Cardoso. second just that I half thoughts wanted the on of recovery material

Patrick Zammit

Yes.

I'm that to So going take question.

back improvement were again, So -- I quarter, we growth. market, we mean the quarter PC see are we to sequential quarter, a after this of

are improve quarter. expecting we to continue after growth so that And to quarter

So should from X half. second We continue the tailwinds. to for market confident PC we believe are the benefit

is are XX; I refresh one of PC the first mentioned second the is ramping pandemic; Windows the board the and during then, before, the as The PCs AI up.

of the that an in in We PC half market see lower and the acceleration should point, the the will second of new benefit PCs, also a second price at AI launch half.

Operator

Tindle from question next Our Adam comes Raymond James. with

Adam Tindle

I time and and My of Patrick. there's could opportunity the vision we return zoom for more allocation different So capital a allocation overall to of a of that particularly lot you philosophy. your out or the and trade-off those if been speak your some think a industry shareholder potential know congrats philosophy? around decisions? share Do you in if M&A near-term to seen and to love the as could for you sort company, would words you've see between long your few Patrick, capital Rich wonder for on I both maybe share

Patrick Zammit

Yes.

we the in of the So we the the -- mean, sectors to going positioned years, prospects, benefit I terms thanks especially And overall, big of AI, one for from most that industry. our in technology I coming AI. say, all mean technologies is of those know differentiator on to are again, I are first, critical would

advantage So future. end-to-end portfolio, for strategic that's a big, the big

position the are our various global. obviously, markets Second, in And we differ.

We share. a have countries where low have we

again, there. prospects. be we both nice continue invest would So Good where will example countries see accelerate to we India and in

obviously in services. prospects, support I but mean some accretive. to that is third are services, I believe be And again, there our which resellers, positive see we in opportunities will

capital terms In of allocation.

For -- return you cash know, of we the the is I XX% to mean, as our flow to moment, shareholders. plan

it. with moment, very So would I for the comfortable I'm say

an been okay? at In terms as diligent, we we've metrics see I of extremely financial growth So have when always M&A M&A, mean, I plans. our to opportunity M&A. accelerate looking

mean, geographies, some one see I in But or there on Latin I specific it also in can America, mean, are opportunities, to for can, some APJ And clearly, favorable those Europe in it. to some in will some M&A opportunities. again, in I we work technologies, if be and particular extent of

But a we you allocation think I today, exclude in and start. if return review is the based future situation to good M&A, XX% mean, evolves. it the And how on shareholders capital I yes, will the

Marshall Witt

And allocation capital is add things Adam, our of Marshall, couple framework. this around just a to

year, around had of For return participation secondaries When half, in that shareholders. in add elevated repurchases the the our a the quite $XXX about the you million first the half in came bit to million. to Apollo a for we of half we dividends first first $XXX share

the cash flow match overall to expected year for the of $X.X expect billion. We

repurchases million to quarter million second million for between half, in dividends to putting the range that full there share $XX $XXX will $XXX million about million and the by around us So $XX be -- year. right probably $XX

Adam Tindle

the use pick But helpful to situation That's it good Hyve quarter. the cash I'm helpful, very not you're hate the here, for that was in it. of you. I to sorry feeling on right Got outline now. you Marshall. on

million driver factor your to if it's forward could if I revenue think from swing ratio, did the Hyve. to be revenue here, meaningful that that like $XXX math related I a capital typical working seems investment. that about to compare a And I it pretty going

made making I based timing and the the that Hyve in if you might it future It's the you're QX financial on or have wonder guide. the But evident investment us in now right the benefit some quarter? magnitude speak not quite to as to of of from

Marshall Witt

Sure.

do back about, for bit know, as to made onboarding have our you with this accounts of significantly go comments is bit many the us. meaningful We that my the expand I'll create little get a profile a the second year. opportunity of we to that So into but and make I ago in partnerships we little that expect headwind as a do margin of investments business, we on

quite of about If I terms positive the thought a think Hyve, way for overall surprised we for the growth attributes what quarter. in initially in

be north XX%, had and back said to is think it was our revenue of Hyve that thought I of year-on-year Hyve we technology down, up. portfolio would that. was Referencing we growth strategic

We about quite bit. of So enter If into it do the the margin like or momentum. year. second as move profit momentum we really of a see the attributions continuing half I overall Hyve, that around does the we profile think

As stickiness we ] quite relationship. the DFD you know, to have like what call meaningful but I Hyve, to of attributes [ the

We've design build our got and our attributes.

Then the advance bit we in do essence, us our quite build. in is, needs opportunity We our hyperscale of customer have have of demand. fulfill to great And to of a strategic fairs we there's finally, and a in customers. that the purchases leads which supply, design

us buy quarter to opportunities. in is into things hyperscale past been QX. see much we'll for One the continue needs, X I and quarter to with into this beyond of seen forward we growth there associated have a requirement that X has think Historically, the and future on when

that I to overall returns. So would accretion say Hyve still margin an the is there benefit

customer base. the with There of cash invest we a customers. could our then in partnership And be our as flows our still diversification we finally, bit some see of continue in quite to delays

it's sell an but know, we're where slow about as heading it's As quite a process, that's on-ramp, positive a you slow organization.

Adam Tindle

this? trend to flat to based into we means think continue QX your QX Do based QX kind year-over-year and guidance, are of going earnings on in be that flat sort that year-over-year on you expect should of

Marshall Witt

Yes.

think a I fair that's assessment.

evenly 'XX, position we fiscal inventory incremental kind paid when what had a with and lot of we that of know, that of cost. exited get 'XX, throughout care unwound behalf carrying a customers, As Hyve, for our on itself we we large you margin

And as from compare in just through, the it about a actual of margin that Hyve quality with it's that if sell fiscal little attributes, I as an we more I profit and quite overall think QX. margins and make a richness will tough the positive bit we get QX perspective there's think associated growth into 'XX. But

Operator

next Wang Barclays. question George Our comes with from

Dong Wang

Patrick, working have congrats. with And you. also a looking just to for congrats I'm forward Rich quick as the just well. margin. I on question

and guys of about kind second ES half. you revenue Just also grow impact for coming from bigger talked mix down in net as the then potentially a PC

operating model we the -- kind how second should about also versus from half? for gross XQ of second margin half? sequentially of margin the from a come to sequential kind in overall expense Just down kind how the of XQ? margin do kind basis you billings versus Gross think So gross margin, of the

Marshall Witt

Yes. Sure.

level endpoint fairly getting of the we more consistent of gross revenue in we next half of quarter-to-quarter. They whether second from know, year, of that this you as down tilted will But on we both think profiles, and profile. kind and on on provided First, X, our an were a or the 'XX, AS, around ES of what a we're outcomes could look basis. quarter as about increasing towards like for commented mix and still volatility that solutions, and we do our which gross of basis ES margin sense we range full or it's AS in proportion last transparency margin see expect has of kind first lower a the net billings quarter, and

billings margins, whether that XX compared decline gross or or that just net expect whether it would is margin, it's points gross should we And to mix around shift. growth operating revenue net basis given

more I way quite healthy a It's provides it to that and flow outcomes that that normal the want structural themselves quite disclose now in and seeing. little we're that within a within bit X ebb those emphasize a those just margins optimism bit of the portfolios. portfolios we transparency But can of

the tend I an business than is technology at important analytics, is it's cloud, thing That's over faster Underneath, have the all-time and last longer at those high. strategic grow now our you billings. of emphasize, overall components, XX% the again, core tend to to data which And say, term, look attributes. is IoT, would hyperscale, higher portfolio security, the growing margin gross to when

Operator

question comes Vogt David next from with Our UBS.

David Vogt

Patrick, and think working with you've question is one, know to around the some particularly Advanced but may, tough. first Can if you. demand I congratulations; Look flesh the of Rich, out forward being kind Two, congratulations. out I drivers? said Solutions. commentary the I of since you on you called networking

storage? Just a backlog think you of to like you relative where like normalization year. a sense want to perspective get sounded And flush categories comments last from what are any other on other any

the like to versus on think basically Marshall. down, year-over-year commentary. And Solutions digging XX looks gross I quarter-to-quarter consistent you gross relatively your markets margin little contributed a bps Endpoint deeper It netted then Advanced one Maybe you, bit were for margin. mentioned, and

is think like only the through it up points. basis surface margin kind to Just what trying went gross looks on because X of under

color of be some get the kind profile would any categories. of sense a helpful there So trajectory to for in margin

Marshall Witt

Do you first, Sure. me Patrick that can demand Rich, want then to take answer the and and drivers? you

Richard Hume

Sure.

Marshall Witt

first overall outcomes. or the portfolio me Let range address

and margin drivers it about bps. profile, X percentage I'm profit describing I again, XX probably the As it as said, down to came gross billings, a gross of the biggest as

course we that about pressure investments few but significant the and quarters in of won as year should saw made increase. significant new in the of customers up X, ramp some our over I The that quarter next made benefit first some some comment that the ramping out building margin we partnership the is and next and that had

Rich has And Patrick Networking to which and is margin networking I'll a general. the second, remains higher soft, profile. speak in let gross that

call kind it wouldn't but contributor, big margins in for it softness of I to certainly quarter. a contributor So second the was of gross the some

David Vogt

it. the trends? on And Got then

Richard Hume

across the When the about we networking. growth category. been just if the with Rich, look seeing a when pleased only The to of we look I entirety business, is exception actually, every is our across This we've or flat in pretty solutions, that take could.

Now the previously, talked I that was this recover. and networking, the comment chain area perspective, on to would last about -- it we've that is a make supply from

which further So server growth example, last their year good backlog went in quarter. had versus, storage for the runoff into

well. anything just it category, think don't networking, around major the get Advanced I they pretty Technologies So to that for rest wrap. systemic rather there's through of But performed the but have each

David Vogt

it Rich, it can backlog? ramps? remind this might And if you quarter next just be where Is us that excess again

Richard Hume

at the probably board, the Throwing November. dart October,

Patrick Zammit

again, Just continue a basically we in mean, started having when was very more into the we billings. to QX I -- networking is situation. because very normalized converting year backlog rapidly, see I last the mean, QX strong

So I easier comparables QX. in will the be guess,

I back, wanted coming the thing mention see is to that bookings, we which is a Second nevertheless, positive.

Operator

Matt Stifel. Our from with comes Sheerin next question

Matthew Sheerin

I'd consensus you sequentially. commentary Yes. echo to outlook, congratulations $XXX and my Patrick relatively of top like and Rich than more And did to your ask guiding I question. roles. on come yet new line, and below and X% hearing I'm demand by in just below bigger you're up in guiding picture positive kind about a consensus a million

side, to up, it and given suppliers we're Hyve like from peers And be seems that overall just sluggish the that well. more demand on expecting hearing you're as some

modestly half. plays how we in just a you're to and quarter stronger in out? with November the that commentary how or So reconcile the and that flat that second August, given seasonality expectations think I'm And trying about guiding of should

Richard Hume

everybody focus thank back the Yes, business the when away on A would really that we you performance, thank relative the Again, couple netting sales get you for performance we the encourage think things. and when about for to to from we of gross place kind takes billing to of to net revenue. down the question, comments. get

look about When you at QX overall. growth growth about midpoint in actual QX, was billings guiding overall the at and a we're billings the X% X% gross at

quarter So the quarter, this move of we line. do improvements, on we chronology see quarter, top improvements as improvements,

in anticipated. -- slower X% midpoint X? But or QX, little there. and like than could solid a kind be call candid, see be back building being the might a of on Yes, started bit it little year the think higher we in midpoint, of the kind trajectory To pretty be of were January, think X I maybe so probably. and instead at and as we X the we way we at from it did when But bit originally

So don't anything Marshall, know have if you I to add.

Marshall Witt

little No, things. below that its couple about rate of that to X%. of see I bit X%, a being a that a little ES you X at just if and think said. we growth One, reaffirm and above in Matt, what just bit year-on-year being terms AS quarter

the to I attributes I to to speaking speaking sure to I'm QX profit not for said QX, was want Hyve or SYNNEX. to Hyve. for a portfolio OI regards And that just the back on clear worldwide TD the portfolio I in response, or and make Adam overall for attributes

just I make So want to that clear.

a reason margin is point XX experienced between close profile to that those see sequential we improvement. respond seasonality that anywhere we'll see point to basis expectation basis behavior back wouldn't that of from on that of to quarters. margin out. and that typically Usually, any terms improvement what we to To X QX fall XX into We a improvement in QX don't terms in why

Matthew Sheerin

just could a you customer, about Hyve, can it I about been there? and there that If talk Okay. existing customer like you growing talked quick about And large ramping haven't that? relationship Just you regarding and I the follow-up? ask talk you seems know could second your much,

Richard Hume

in having comment. Clearly, get no to customer Yes. #X, #X, could clearly opportunities a Maybe relationship with customer really healthy I'll relationship, technology, with regard need Marshall design and started we then our new be servicing seeing and take this We advantage winning continue that new of as move a we we'll wouldn't it's at and -- good forward. customer concerned business quite to point. think to growth

Marshall Witt

Nothing else to Rich. to add that,

Operator

Keith next Our comes Northcoast. with Housum question from

Keith Housum

a the and working Once echo here. and going Rich, to pleasure again, it's on looking you, forward everybody with to working what said else with you. retirement; I'm been congratulations Patrick,

to But ask gross did you impacted hear this customer points in I the I by before question. just that #X Hyve quarter? XX clarification Marshall, the were say basis margins that due investment Maybe a

Marshall Witt

That the drivers. was one of

demand compare The be other the and would we network continue the to soft. a be knew backlog, themselves from softer there but was portfolio, tough

rest it's in margin. softness the terms just of So profile the network. growth the margin above gross customer; or secondarily, of of it's really, the portfolio, lines, the And in the in ramping and new of of first, we're the and said, Rich product the at as terms

Keith Housum

All right. That's helpful. I appreciate that.

Richard Hume

Yes, and confident Keith, to will pretty the margin that end it's get is We're uncommon front not have some time. because everything and new optimized. on a efficient when you have ramp inefficiencies on big

a not just it's sort but thing thing. a So rather ramping systemic of

Keith Housum

still here, off a that. my perhaps looking the Yes. take Rich out there's PCs so to think will eyes. whoever start need they and AI go? Patrick is they in AI about or wants new to a put All and the at we appreciate reasonable way PC, there I of which as or question, I PC customers deciding purchase refresh risk guess that coming relatively

Richard Hume

Patrick?

Patrick Zammit

yes, it. Yes, will take I

I available, low-end say, again, have -- or so, customers would high aren't at in there launched PCs going as, unblock the at half. I have products the So think of replacing purchases choice will going see existing the end. mean, what they market, many to to the accelerate the would to I I choice I least with, come that's offering PCs the But more PCs or that's the to be the going waiting normal second mean, AI between, moment, so enough customers the say, the being the

at workloads which run AI enabled I at be will software mean, the is the from very one I that's by a that and edge. many will add are standpoint Copilot more look at and which Yes, good thing, when I way is the going increase, would look it. to example, you a

consideration say, end PC they the for really about AI So think today ago. replacing, is would years a bought I users as X X, the they PCs

look So it. way that's at the I

Richard Hume

risk here. Yes, repetitive the of at being

of on OEMs with half are anecdotally, word, until there back folks there that a that the now a said, more as of believe right the the underline which So bit gate based purchase market, waiting year. is we in Patrick to I their of in products

there is QX would calendar I'll anticipate in constraints now we portfolio purchased until say, larger So probably some available, time right on which frame. becomes likely a

Keith Housum

we're you're investment, X, that Yes, here. saying customers out kind relatively what We're but short months, that of guess, be their should there restating I just talking there's pausing probably correct? So X are term, pause term. some perhaps not longer

Patrick Zammit

Agreed.

Richard Hume

the project That's way we would it. correct. That's

Operator

Our Barrington next from comes Colicchio Research. question with Vincent

Vincent Colicchio

Yes. Congrats, and and better. feel Rich Patrick; Marshall,

terms demand did should in how think vertical the the And in performance In the quarter, vertical? how half? was about we PC of second by by how -- demand

Richard Hume

has bit I Maybe saw, can particular, vertical a Yes. I'll the overall. believe it, can they work of a be budget cetera. cleared little call Certainly, being that et a then start bit from now to that up, through as sort an of Patrick that do We and slower we approvals, federal, comment. there'll perspective, in catch sector opportunity been public that, up

with I consistent little to made. sector was other the digestion and for Patrick, the their to a one only And short, story that relative the purchase it comments. And that bit overall. verticals you the would that I'll out public over long are say of fairly uniform I've or any turn stuck comments PCs

Patrick Zammit

just demand and by we would add to SMB. driven I the Yes, that being see like enterprise so

are demand X So which customer public the plus sector, we these driving are the speak. segments, as

Operator

comes Ashish Our from Capital with RBC Sabadra Markets. question next

Ashish Sabadra

Rich Congrats, and Patrick. to again, both

year? be you're in the for trend, debt Europe clarifying if then I the discuss still by particularly wondering and one Americas, trend you And quick could Should what Just XX% question. APAC? geos, to seeing to XX% we expect net on was full the down the

Marshall Witt

XX.X Yes, came XX.X. with We the for I'll start that. It about quarter at net. versus in forecasted had growth

the a So I debt point we down deterioration basis increase my had net year-on-year. or remarks, that continue of expansion noted about the see netting XXX down of In to prepared in revenues. it was

remains quite If what I little about a XX.X QX meaningful. a think should would lower about that down netting bit look also would QX. I like, So expect and I put be it to in

XX QX, from a in seeing resurgence year we Solutions Endpoint to Endpoint normal expansion in XX more see continue this to performance, respond netting tend the leads way down, a just that prior exactly rebound would XX.X. year because probably I that we're little that to to of it with we for times me and see the sounds, Solutions the to of Seasonality-wise, XX.X but as go of

for movements. turn just I'll around it over Now Patrick or to the Rich geo commentary

Patrick Zammit

with When service more important more and we like sales trends, our you market software-as-a-service so I net. to the to just those continue -- Yes, trends, would look to be add at just gross on aligned market perfectly mix. will in the and are

to increase adjustment, the continue So think, of because the trend. that gross-to-net years I would over

geography. the to Back

later North to America less growth. a performed slight interesting is I moment North with, trends but aligned fact, America. North in mean, more America, correction a bit in so entered because So basically say, was Europe Europe less more or into or way little and the the same Europe at than the, the with

in say, X regions. -- single I So low to it's those should digit flat

investments at mean, driven Lots which Tier benefit the say, center. us double-digit in data by CSPs, you particular in are I I call would experiencing If we I the APJ, them of here, look growth data would in centers X region. in,

Operator

Alek with question comes from Valero Loop Our Capital. final

Alek Valero

Alek to on good the impact impact next a Ananda. quickly the over as for way about Hyve SYNNEX's on to touch additionally, its the think And This revenue is other what growth could cash years to well. is, and phones, PCs, GenAI cycle offerings? margins from is My if few question conversion you and

Patrick Zammit

start. I maybe So

lot So I mean, GenAI lot of requires a your compute of and optimization infrastructure. a of

their I have their mean, So of benefits, in will upgrade we to to but their switches, only servers, see not storage. software, going the companies basically, are course,

our of to across obviously nice impact which the prospect of technologies, see going very future. we being GenAI very for the is be So a pervasive most

GenAI, is in in for us, particular. a positive course, very very general and, again, yes, of industry So nice the opportunity think, -- I for IT

Richard Hume

Yes. Alek, question. thanks for the

by across or big a the robust think, AI I what seen quarter will more -- people And because the likely opportunity are now the terms As is for going much there. Patrick as as that, and acceleration will legacy of will to we sort demand it and have. working dynamics technology said, believe lead in what relates that an a said, board want be made of for X to ago, conditions the AI. I pretty had the us capital configurations call and that products get would bit continuum I intelligent out more to to a newest current we the play cause over to with continue how could it that for

say that say to this not there's visible immediately that So is which in that in won't there's model. going to anything paradigm but business be us, the would future, change to a not change

would it's that thumb. comment a of make, last I The general rule

here. X we'll new move forward generally, But technologies, vendors So see there it are phenomenon. to usually if as carries

there's their legacy more prepared as they get those first generally the move and existed that skill they for things new some sales, of the have people them -- is, into channel. The might

of technologies So we've you legacy channel. broadly if by historically a seen be more to will, the more shift, served

are business the second early motivate partner making is that order then ecosystem the sure right to enabling to now. ecosystem properly, tell premium to business the entire entire in generally, partner incentives and ecosystem phenomenon generally for to there focused move And really the that we're Too there. get

look the happens, around what like. be Let's comments those might but the would see what future

Operator

turn the This call question-and-answer for closing remarks. back now I the over Rich will to session. concludes

Richard Hume

And and I'd thank with have and appreciate shareholders. thanks TD vendors our in and ones the all interest been make it really again, of that that to coworkers and they're world SYNNEX. us, like the the on to you themselves around out. TD all who your SYNNEX in of customers journey for they to engagement do dedicating Obviously, day and we happen in day all continued our

great that, And very wish day. I a all you you much. Thank with

Operator

today's This call. concludes conference

nice disconnect. day. a may now Have You

TD SYNNEX (SNX) 25 Jun 242024 Q2 Earnings call transcript