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Earnings call · Aug 2026 (Q3 FY26)

TD SYNNEX Q3 FY26 earnings call SNX

Sep 24, 2026 Source

Executive summary

TD SYNNEX Q3 FY26 — Record Quarter Driven by Broad-Based Growth and AI Demand

TD SYNNEX delivered a record quarter with broad-based growth across distribution and Hyve, driven by strong demand in data center infrastructure and enterprise AI adoption. The company is strategically investing in working capital to support new Hyve programs and customer demand, which impacted near-term cash flow but is expected to improve cash conversion in future periods. Management remains optimistic about long-term growth opportunities, leveraging its digital strategy and expanding vendor relationships.

Highlights

5

  • Non-GAAP gross billings reached $31.8 billion, up 40% year-over-year, exceeding guidance.

  • Non-GAAP EPS was $5.68, up 59% year-over-year, above guidance range.

  • Distribution non-GAAP gross billings increased 27% to $24.8 billion with double-digit growth across all regions.

  • Hyve non-GAAP gross billings increased 117% to $7 billion, exceeding expectations.

  • Non-GAAP operating income grew 55% year-over-year to $736 million, with operating margin expanding 35 basis points in Distribution.

Concerns

2

  • Free cash flow consumption for the quarter was approximately $1 billion, driven by increased inventory in Hyve's supply chain business and new customer programs.

  • Hyve's non-GAAP operating margin as a percentage of gross billings was 3.61%, down from 5.04% in the prior year period, due to mix headwinds from large AI rack programs.

Guidance & targets

CategoryTargetConfidence
Q4 FY26 Non-GAAP Gross Billings
$31.9 billion, plus or minus $500 million
high materiality
High
Q4 FY26 Revenue
$22.2 billion, plus or minus $400 million
high materiality
High
Q4 FY26 Non-GAAP Net Income
$474 million, plus or minus $20 million
high materiality
High
Q4 FY26 Non-GAAP Diluted EPS
$5.90, plus or minus $0.25
high materiality
High
Hyve Non-GAAP Gross Billings
increase sequentially quarter-over-quarter
medium materiality
High
Cash Generation
generate cash in the quarter
high materiality
High
Hyve Cash Conversion
further improvements
high materiality
High
Hyve Program Potential
not reach their full potential until the back half of fiscal 2027
medium materiality
Medium
Hyve Margin Improvement
modest margin improvement over time
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Distribution
Delivered strong growth across all regions and most major technologies, with particular strength in data center infrastructure. Gross margins were slightly impacted by customer and product mix, but offset by disciplined expense management. Non-GAAP operating margin expanded 35 basis points year-over-year.
Non-GAAP gross billings: $24.8 billionGross profit: $1.15 billionNon-GAAP operating margin as % of gross billings: 1.95%
—27%—$483 million
Hyve
Experienced growth across both manufacturing (in excess of 130%) and supply chain services (in excess of 90%). Operating margins were impacted by the growing contribution from large AI rack programs, which are dilutive to Hyve's average operating margins, but this mix headwind is believed to have stabilized.
Non-GAAP gross billings: $7 billionGross profit: $276 millionNon-GAAP operating margin as % of gross billings: 3.61%
—117%—$253 million
Endpoint Solutions
Supported by continued strength in PCs, including higher average selling prices and a modest decline in units.
Gross billings: increased 16%
—16%——
Advanced Solutions
Driven by strength in infrastructure, software, and AI-related technologies. Gross margin was impacted by mix from a few larger transactions and AI infrastructure sales, which are profitable but at slightly lower margins.
Gross billings: increased 37%
—37%——

Deals & partnerships

NVIDIA Agreement to support an NVIDIA AI factory powered by [indiscernible] for a large enterprise.

One of the largest enterprise AI factory infrastructure deployments expected to be delivered through the channel, bringing together design, integration, deployment, day-to-day operations, financing, and supply chain capabilities.

IBM Expanded relationship into 20 additional countries.

Expansion across Europe, Asia Pacific, and Latin America, reflecting confidence in TD SYNNEX's go-to-market model and ability to activate demand and accelerate growth.

Amazon Warrant agreement. 7 years

An agreement that is 7 years long, with both sides expected to benefit.

Risks & headwinds

Working capital investment impact on near-term cash flow Q3 FY26

Free cash flow consumption of approximately $1 billion

Mitigation:Investments position the company to support committed customer demand and future growth; focus is now on execution, cash conversion, and realizing expected returns; expect cash generation in Q4 FY26 and further improvements in Hyve's cash conversion in FY27.

Mix headwind on Hyve operating margins Q3 FY26

Non-GAAP operating margin as a percentage of gross billings was 3.61% compared with 5.04% in the prior year period

Mitigation:Caused by growing contribution from large AI rack programs; mix headwind is believed to have stabilized; new programs are being awarded at margin profiles neutral to accretive; expect modest margin improvement over time as programs mature.

What to watch in Q4 FY26

Hyve cash conversion

Q4 FY26 and FY27
Current Free cash flow consumption of ~$1B in Q3 FY26
Target Cash generation in Q4 FY26 and further improvements in FY27

Why it matters

Indicates the effectiveness of working capital investments and the maturity of Hyve programs, impacting overall company liquidity and financial health.

We expect we will generate cash in the quarter as recently deployed working capital begins to normalize. Looking ahead to fiscal 2027, we expect further improvements in Hyve's cash conversion as programs mature.

Q&A highlights

What is driving the improved margin discipline in Hyve, with new programs being neutral to accretive, and how sustainable is it given AI infrastructure competition?

Hyve is ramping three new hyperscalers and multiple programs. New programs, predominantly manufacturing, are neutral to accretive. As existing programs mature, margins are expected to improve, giving confidence that Hyve's margins have stabilized and should improve moving forward.

“As we look forward, one of the comments that we made is the new programs that we've won, which are predominantly manufacturing are neutral to accretive to have Additionally, some of the programs that we're ramping this year, as those programs mature, we continue to find ways to improve the margins within there.”

asked by Manmohanpreet Singh · answered by David Jordan

2 min read 5 chapters

Detailed narrative

Broad-Based Growth and Strategic Investments

TD SYNNEX achieved a record quarter with both Distribution and Hyve performing above expectations and growing above market. This broad-based growth was observed across geographies, technologies, customers, and programs, with particular strength in data center infrastructure. The company made significant working capital investments, especially within Hyve, to support committed customer demand and future growth, which impacted near-term cash flow but is expected to yield future returns.

Enterprise AI Adoption and Data Center Modernization

The company is seeing encouraging developments in enterprise AI adoption, moving towards broader production deployments and centralized AI factory infrastructure. Data center modernization remains a priority, driven by next-generation infrastructure requirements. These trends are expanding opportunities across both Distribution and Hyve, reinforcing confidence in long-term growth. An agreement to support an NVIDIA AI factory for a large enterprise was highlighted as a significant win.

Digital Strategy and Vendor Expansion

TD SYNNEX's digital strategy, including solutions like PartnerFirst and Digital Bridge, is enhancing customer engagement, with digitally engaged customers growing their spend at nearly twice the pace. This strategy, combined with global execution and expertise, is also attracting vendors. IBM expanded its relationship with TD SYNNEX into 20 additional countries across Europe, Asia Pacific, and Latin America, reflecting confidence in the company's go-to-market model.

Hyve's Growth and Margin Trajectory

Hyve delivered strong growth, with gross billings up 117% year-over-year, driven by increased demand from existing customers and new program progression. While profitability was impacted by significant customer ramps, manufacturing expansion, and elevated investment in engineering talent, new programs are being awarded at margins neutral to accretive. Management expects modest margin improvement over time as programs mature and new ones ramp, aiming for sustainable growth with improving profitability and cash generation.

PC and Networking Market Dynamics

The PC market performed well, with double-digit growth in value, despite a mid-to-high single-digit decline in units. This was offset by higher average selling prices due to component price increases and a mix shift towards mid-range and higher-end PCs. AI PCs now represent close to 50% of revenue. The networking category is also experiencing strong tailwinds from massive refresh needs, WiFi 7 switches, and AI support, leading to increased units and some price increases, with optimism for continued strength.

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