TD SYNNEX is a global distributor and solutions aggregator for the IT ecosystem, serving more than 150,000 customers across over 100 countries. The company provides various technology products and services, focusing on areas such as cloud, cybersecurity, and data analytics. Following its first quarter fiscal 2025 earnings report, TD SYNNEX is showing stable growth, though recent difficulties have surfaced predominantly due to challenges within its Hyve business unit.

For Q1 FY2025, TD SYNNEX reported total gross billings of $20.7 billion, representing a 7.5% year-over-year increase and a 9.5% increase when adjusted for constant currency. Net revenue for the same quarter was $14.5 billion, an increase of 4.0% year-over-year. The gross profit decreased from $1.006 billion in Q1 FY2024 to $998 million in Q1 FY2025, resulting in a gross margin of 6.87%, down from 7.20%.

Operating income was reported at $304.5 million, slightly up from $302.6 million year-over-year. However, non-GAAP operating income declined by 6.1% to $399 million. Non-GAAP diluted earnings per share were $2.80, a decrease of 6.4% from $2.99 in the previous year. The decrease in operating margin was primarily attributed to underperformance in the Hyve segment, which faced a delay in component shipments and temporary demand shortfalls.

Additionally, TD SYNNEX’s non-GAAP SG&A expenses were reported at $599 million, representing 2.89% of gross billings and showing a year-over-year improvement of 13 basis points. Free cash flow for Q1 FY2025 was a negative $790 million, compared with a positive free cash flow of $344 million in the prior year. Despite these challenges, TD SYNNEX returned $138 million to stockholders through share repurchases and dividends, with a quarterly cash dividend of $0.44 per common share.

Looking ahead, TD SYNNEX provided guidance for Q2 FY2025, expecting gross billings in the range of $19.7 billion to $20.7 billion, which indicates a growth rate of about 5% at the midpoint. Net revenue is forecasted to be between $13.9 billion and $14.7 billion. The anticipated non-GAAP net income ranges from $205 million to $247 million, with diluted earnings per share projected between $2.45 and $2.95.

In summary, TD SYNNEX’s financial performance for Q1 shows notable growth in gross billings and revenue, but challenges in the Hyve segment have resulted in declines in profitability measures. The company’s operational focus remains on profitable growth and managing its expenses despite recent headwinds.