TD SYNNEX Corporation (SNX) Earnings & Analysis

Latest quarter

TD SYNNEX reported Q3 FY2026 revenue of $21.6 billion, above the $18.8 billion consensus and up from $15.7 billion a year earlier. Adjusted earnings per share of $5.68 also exceeded the $4.64 consensus. Diluted earnings per share rose to $5.18 from $2.74 a year earlier.

The company’s filing attributed revenue growth to its Advanced Solutions and Endpoint Solutions distribution portfolios and Hyve Solutions. It said a greater share of sales recorded on a net basis, primarily at Hyve because of program mix, partly offset the increase.

TD SYNNEX reported gross margin of 6.61%, down from 7.22%, while operating margin rose to 2.98% from 2.45%. The filing attributed the gross-margin decline primarily to product mix in Hyve and Advanced Solutions; it attributed the operating-margin increase primarily to increased operating leverage as revenue grew.

Free cash flow was −$975.6 million, compared with $213.9 million a year earlier. CFO David Jordan said increased inventory in Hyve’s supply chain business, new customers and new programs with existing customers drove the quarter’s cash consumption.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Patrick Zammit said results were broad-based across geographies, technologies, customers and programs, with particular demand for data center infrastructure. He said enterprises are moving from AI experimentation toward production deployments, while customers increasingly need help integrating, deploying and securing technologies from multiple vendors.

Zammit said Hyve’s existing customers and programs drove increased demand, and previously announced programs with new customers remained on plan to begin shipments in Q4. CFO David Jordan said Hyve was ramping three new hyperscaler customers, with multiple programs at each. He expects Hyve gross billings to increase sequentially in Q4 as those programs ramp.

Asked about margins, Jordan said larger infrastructure transactions carried lower gross margins within distribution. At Hyve, he said a large AI server program had margins below the business’s average, contributing to the year-over-year decline. Jordan said new programs were predominantly manufacturing and had margins neutral to accretive to Hyve; as programs mature, he expects margins to improve.

On PC pricing, Zammit said component costs had lifted average selling prices, while a shift toward mid-range and higher-range PCs also affected the mix. He said higher prices had affected unit volumes, with less impact on business customers than consumers.

Jordan said the company had made substantial working-capital investments in Hyve and believed much of the investment needed for expected growth was in place. Asked about cash generation, he said the company expects to generate cash in Q4 as programs ramp. Zammit added that mature Hyve programs generate free cash flow.

Discussing competition for vendor business, Zammit said vendors were reducing the number of direct customers, resellers and distributors, a trend he expects TD SYNNEX to benefit from. Asked about the warrant agreement with Amazon, Jordan said it was too soon to discuss exactly how it played out in the quarter.

Guidance

For Q4 FY2026, TD SYNNEX expects revenue of $21.8 billion to $22.6 billion and non-GAAP diluted earnings per share of $5.65 to $6.15. On the call, CFO David Jordan said he expects Hyve’s gross billings to increase sequentially as programs with new customers ramp.