IT Solutions Provider TD Synnex' Q3: Mixed Performance, Street-Missing Q4 Forecast & More

TD Synnex Corp SNX reported a Q3 FY23 revenue decline of 9.1% Y/Y to $13.96 billion, missing the consensus of $14.11 billion. 

The revenue was impacted by a reduction in the Endpoint Solutions portfolio as the industry continued seeing the post-pandemic demand decline for PC ecosystem products. 

Adjusted gross billings fell 6.9% Y/Y to $18.6 billion.

Adjusted gross profit rose 3.4% Y/Y to $973.7 million, with a gross margin of 6.97%, up 84 bps Y/Y, led by higher revenues from higher-margin, high-growth technologies.

Adjusted operating margin stood at 2.84%, up 25 bps Y/Y. 

Operating cash flow stood at $592 million and FCF of $552 million in the quarter.

Adjusted EPS of $2.78 (+1.5% Y/Y) surpassed the consensus of $2.48.

The company returned $103 million of share repurchases and $33 million of dividends to shareholders in Q3.

Dividend: The Board of Directors declared a quarterly cash dividend per share of $0.35, payable on October 27 to stockholders of record on October 13, 2023.

"Our third quarter results demonstrate the momentum we are seeing on our deliberate and strategic goal to expand in high growth technologies, with robust margin expansion in the Americas and strong EPS generation. Our expansive portfolio of products, solutions, and services, along with a relentless focus on execution allowed us to successfully navigate the post-COVID IT spending environment, while our resilient business model enabled us to generate over $500 million in cash from operations, equipping us to increase capital returned to shareholders via share repurchases," said Rich Hume, CEO of TD SYNNEX.

Outlook: The company expects Q4 revenue of $14.0 billion-$15.0 billion (vs. consensus of $15.21 billion), adjusted EPS of $2.40-$2.90 (vs. street view of $2.95), and adjusted gross billings in the range of $18.5 billion - $19.7 billion.

In a separate release, SNX disclosed a new strategic and distribution partnership with Spin.AI to offer SaaS security solutions to resellers and customers.

Also Read: TD SYNNEX Gearing Up For Return To Y/Y Growth With Advanced Solutions And Digital Transformation, Says Analyst

Price Action: SNX shares are trading lower by 5.02% at $96.79 on the last check Tuesday.