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    Earnings call· May 2026(Q2 FY26)

    TD SYNNEX Q2 FY26 earnings call SNX

    Jun 25, 2026 Source

    Executive summary

    TD SYNNEX Q2 FY26 — Record Growth Driven by Distribution Strength and Hyve Hyperscaler Ramps

    TD SYNNEX delivered a record quarter, exceeding guidance with strong performance across both Distribution and Hyve segments. The company is actively investing in working capital and capacity expansion to support accelerated growth, particularly within Hyve's hyperscaler programs. Management remains focused on converting top-line growth into margin expansion and shareholder value, while navigating increasing component costs and supply constraints.

    Highlights

    5

    • Non-GAAP gross billings reached $28.9 billion, an increase of 33% year-over-year.

    • Non-GAAP diluted earnings per share was $4.85, up 62% year-over-year.

    • Distribution non-GAAP gross billings grew 22% year-over-year to $23.4 billion.

    • Hyve non-GAAP gross billings surged 117% year-over-year to $5.5 billion.

    • HPE selected TD SYNNEX as one of two global distribution partners across its full portfolio.

    Concerns

    3

    • Free cash flow consumption was approximately $330 million for the quarter, driven by working capital investments for Hyve's growth.

    • Hyve's non-GAAP operating margin decreased 50 basis points year-over-year to 3.3%, primarily due to mix.

    • Inventory increased, contributing to a flat gross cash conversion cycle year-over-year, reflecting increased Hyve mix and strategic purchases.

    Guidance & targets

    7
    CategoryTargetConfidence
    Non-GAAP gross billings
    $27.7 billion +/- $500 million
    high materiality
    High
    Revenue
    $18.6 billion +/- $400 million
    medium materiality
    High
    Non-GAAP net income
    $361 million +/- $20 million
    medium materiality
    High
    Non-GAAP diluted earnings per share
    $4.50 +/- $0.25
    high materiality
    High
    Hyve new customer ramp contribution
    No material contribution
    medium materiality
    High
    Hyve new customer ramp timing
    Late fiscal 2026 or early fiscal 2027
    medium materiality
    High
    Free cash flow conversion
    95% of non-GAAP net income
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Distribution
    Excellent quarter with broad-based strength across every region and the portfolio, with international growth and operating margin expansion. HPE selected TD SYNNEX as one of two global distribution partners.
    Non-GAAP gross billings: $23.4BNon-GAAP gross billings growth YoY: 22%Non-GAAP operating margin as % of gross billings: 1.9%Non-GAAP operating margin improvement YoY: 19 bps
    		———$434M
    Distribution - Endpoint Solutions
    Supported by strong growth in PCs driven by higher ASPs, coupled with mid-single-digit growth in units.
    Gross billings growth YoY: 13%
    		—13%——
    Distribution - Advanced Solutions
    Driven by continued strength in infrastructure and security.
    Gross billings growth YoY: 31%
    		—31%——
    Hyve
    Excellent quarter driven by new programs with existing customers. Manufacturing and supply chain services contributed to growth.
    Non-GAAP gross billings: $5.5BNon-GAAP gross billings growth YoY: 117%Non-GAAP gross billings growth YoY (constant currency): 117%Non-GAAP operating margin as % of gross billings: 3.3%Non-GAAP operating margin decrease YoY: 50 bps
    		———$181M
    Hyve - Manufacturing
    Gross billings growth increased more than the total business, primarily driven by increased volumes with existing customer base.
    Share of Hyve gross billings: ~2/3
    		————
    Hyve - Supply Chain Services
    Growth driven by component demand, supporting customers' infrastructure deployments. Margins and overall mix can vary quarter-to-quarter.
    Share of Hyve gross billings: ~1/3
    		————

    Operational metrics

    16
    Non-GAAP gross billings
    $28.9B+33% YoY
    Q2 FY26

    Exceeded the high end of guidance range.

    Non-GAAP operating income
    $615M+49% YoY
    Q2 FY26

    Focus on creating operating leverage so earnings grow faster than top line.

    Non-GAAP diluted EPS
    $4.85+62% YoY
    Q2 FY26

    Above the high end of guidance range.

    GAAP operating income
    $519M+58% YoY
    Q2 FY26

    Reported GAAP operating income.

    GAAP diluted EPS
    $4.15+88% YoY
    Q2 FY26

    Above the high end of guidance range.

    Distribution gross margins benefit from strategic inventory purchasing
    5-10
    Q2 FY26

    Estimated benefit from incremental profit due to strategic inventory purchasing.

    Net working capital
    $4.9B
    Q2 FY26

    Closed at this amount.

    Gross cash conversion cycle
    17+1 day sequentially, flat YoY
    Q2 FY26

    Reflecting an increased mix of Hyve. Expect additional efficiencies as new programs mature.

    Cash and cash equivalents
    $1.1B
    Q2 FY26

    Ending balance.

    Net leverage
    1.6xmodestly below medium-term framework
    Q2 FY26

    Provides ample capacity for investment and capital returns.

    Share repurchases
    $112M
    Q2 FY26

    Amount returned to shareholders through repurchases.

    Dividends paid
    $39M
    Q2 FY26

    Amount returned to shareholders through dividends.

    Cash dividend per common share
    $0.48
    Q2 FY26

    Approved by Board of Directors, payable on July 31, 2026, to shareholders of record as of July 17, 2026.

    Diluted shares outstanding (Q3 guidance)
    79.4M
    Q3 FY26

    Assumed for Q3 FY26 non-GAAP diluted EPS guidance.

    PC unit growth
    mid-single-digit
    Q2 FY26

    Supported Endpoint Solutions gross billings growth, coupled with higher ASPs.

    Inventory days increase
    ~8YoY
    Q2 FY26

    Ballpark increase, largely driven by additional inventory in Hyve to fund new/existing programs and ensure supply.

    Industry KPIs

    9
    MetricValueDetails
    Segment revenue growthDistribution: $23.4B; Hyve: $5.5BUSD
    Ai data center content revenue—
    Design wins product cycle ramps3hyperscalers
    Order visibility backlog policy—
    Recurring software services mix—
    Supply demand imbalance lead times—
    Capacity expansion internal sourcing>1 million square feetsquare feet
    End market revenue mix organic growth—
    Operating margin incremental leverageDistribution: 1.9%; Hyve: 3.3%%

    Orderbook & backlog

    1
    Hyve new hyperscaler programs rampOn trackQ2 FY26

    Ramp expected in late fiscal year '26 or early fiscal year '27 for programs with additional 2 hyperscalers.

    Deals & partnerships

    2
    HPEGlobal distribution partnership

    HPE selected TD SYNNEX as one of just two global distribution partners across its full networking, cloud, and AI portfolio, including assets from the Juniper acquisition. The global reach of TD SYNNEX was a key reason for the win.

    AmazonEquity warrant

    Issued an equity warrant to Amazon, a long-standing customer (AWS), structured to grow value as programs expand. This agreement is seen as mutually beneficial.

    Capital programs

    1
    Hyve manufacturing facilities expansionunderway
    Period spend: $100M

    Benefit: >1 million square feet

    Expanding manufacturing facilities in several locations throughout the U.S. with current plans to add more, to support future growth and needs of customers. This year's investment for Hyve is roughly $100 million, amortized over 5-6 years.

    Risks & headwinds

    4
    Rising component costsQ3 FY26 and beyond

    Price increases are starting to kick in and are expected to accelerate in Q3. Most significant in storage, servers, and PCs, with new price increases expected in July.

    Mitigation: Strategic inventory purchasing to smooth impact for customers; cost-plus business model allows passing costs to customers.

    Supply constraintsQ3 FY26

    Q3 guidance took into account some risk with component availability, specifically memory and some CPUs.

    Mitigation: Hyve customers primarily secure their own supply; Distribution vendors have managed their supply chains well so far.

    Potential for PC unit elasticity due to ASP increasesOngoing

    Consumer PCs are expected to have relatively high elasticity, and some impact of ASP increase on PC consumption is anticipated.

    Mitigation: Focus on the B2B market where refresh cycles are ongoing; gaining market share.

    Working capital consumption due to Hyve's accelerated growthOngoing during periods of accelerated growth

    Free cash flow consumption of approximately $330 million in Q2 FY26.

    Mitigation: Viewed as a good investment with strong return on invested capital; working capital is elastic and adjusts rapidly in downturns; efficiencies expected as Hyve programs mature.

    Q&A highlights

    8

    Has the company observed any demand destruction or weakening due to component cost increases, particularly in Endpoint or Advanced Solutions? Have channel incentives from vendors changed?

    Management stated they have not seen demand destruction in Q2, with underlying demand remaining healthy despite rising prices. No material changes in channel incentives from vendors were noted, and Distribution's margin quality remained strong.

    “very transparently, we haven't seen, for the moment, any distraction of demand because of the price increases. The price increases are really starting to kick in and it's probably going to accelerate in Q3.”

    asked by Ruplu Bhattacharya · answered by Patrick Zammit

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Growth Pillars

    TD SYNNEX's growth is driven by three strategic pillars: an omnichannel engagement model, segmented commercial teams, and investment in enablement. The omnichannel approach leverages digital platforms like Partner First for speed and human expertise for complex needs. Commercial teams are specialized and resources are reallocated monthly based on customer tier needs. Enablement focuses on advanced training, certifications, and technical expertise, accelerating customer time to market and fostering long-term partnerships.

    02

    Hyve Hyperscaler Expansion and Strategy

    Hyve's triple-digit growth is fueled by new programs with existing customers and securing programs with all top 5 U.S.-based hyperscalers. The company has begun early-stage ramps with its third hyperscaler, with additional ramps expected in late FY26 or early FY27. To support this growth, Hyve is expanding its manufacturing facilities by over 1 million square feet in the U.S., investing in engineering capabilities, and aiming to be the partner of choice for hyperscalers' data center infrastructure design, build, and deployment.

    03

    AI Impact and Demand Trends

    AI is a growing portion of TD SYNNEX's business, driving demand across hyperscale infrastructure, enterprise data center modernization, and AI-capable devices. While component costs are rising, underlying demand signals remain solid, with a positive net revenue impact from higher average selling prices (ASPs). The company anticipates continued healthy demand in infrastructure, networking, and storage, driven by refresh cycles and AI-related investments, with PCs being the most watched category for price elasticity.

    04

    Inventory Management and Pricing Environment

    TD SYNNEX has strategically managed inventory levels, purchasing ahead of anticipated price increases to smooth the impact for customers and ensure supply. This approach contributed 5 to 10 basis points to Distribution gross margins in Q2. Pricing is increasing, particularly for storage, servers, and PCs, with further increases expected in July. The company operates on a cost-plus model, enabling it to pass increased costs to customers.

    05

    Operating Leverage and Capital Allocation

    A key focus for TD SYNNEX is creating operating leverage, ensuring earnings grow faster than the top line. While the company experienced free cash flow consumption in Q2 due to significant working capital investments in Hyve's accelerated growth, these investments are considered accretive to margins and return on equity. The company returned $112 million to shareholders through repurchases and $39 million through dividends in Q2, maintaining a net leverage of 1.6x.

    AI-generated summary of the company’s earnings call. Not investment advice.