TD SYNNEX CORP - 10-Q Summary (Q1 FY2026)
Business Context and Reporting Period
Company: TD SYNNEX Corporation (SNX)
Reporting Period: Three months ended February 28, 2026 (Q1 Fiscal 2026)
Business Overview: A leading global distributor, solutions aggregator, and original design and contract manufacturer connecting the IT ecosystem. The company operates through four reportable segments: Americas Distribution, Europe Distribution, APJ Distribution, and Hyve Solutions.
Segment Revision: In Q1 FY2026, the company revised its reportable segments to align with the Chief Operating Decision Maker's management structure. Prior periods were recast.
Key Financial Metrics
| Metric | Q1 FY2026 | Q1 FY2025 | Change |
|---|---|---|---|
| Revenue | $17.16 Billion | $14.53 Billion | +18.1% |
| Gross Profit | $1.25 Billion | $998.0 Million | +25.5% |
| Gross Margin | 7.30% | 6.87% | +43 bps |
| Operating Income | $489.4 Million | $304.5 Million | +60.7% |
| Operating Margin | 2.85% | 2.10% | +75 bps |
| Net Income | $326.9 Million | $167.5 Million | +95.1% |
| Diluted EPS | $4.04 | $1.98 | +104.0% |
| Cash & Equivalents | $1.56 Billion | $2.44 Billion (Nov 2025) | -35.8% (QoQ) |
| Total Debt (Current + Long-term) | $4.72 Billion | $4.61 Billion (Nov 2025) | +2.4% (QoQ) |
| Free Cash Flow Proxy (Operating Cash Flow) | ($895.9 Million) Used | ($748.0 Million) Used | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Consolidated revenue increased 18.1% year-over-year. Revenue in constant currency grew 13.2%, indicating organic growth was partially offset by foreign currency impacts (primarily a strengthening Euro).
- Europe Distribution: Revenue surged 25.8% (12.3% constant currency), driven by growth in Advanced and Endpoint Solutions.
- Hyve Solutions: Revenue grew 24.2%, driven by manufacturing, assembly, and supply chain services.
- APJ Distribution: Revenue increased 29.8% (30.8% constant currency).
- Margin Expansion: Gross margin improved to 7.30% from 6.87%. This was driven by a higher mix of net-basis revenue recognition and margin expansion in distribution portfolios.
- Operating Leverage: Operating income grew 60.7% to $489.4 million, outpacing revenue growth due to margin expansion and operating leverage.
- One-Time Gain: Other income included a $22.4 million gain from the sale of equity securities, contributing to the significant increase in net income.
- Working Capital: Net cash used in operating activities increased to $895.9 million (from $748.0 million) due to higher inventory builds and accounts receivable growth to support sales volume.
Guidance, Outlook, and Risks
- Outlook: Management expects to meet working capital and investment needs through existing cash, cash flows from operations, and borrowing facilities. No specific forward-looking revenue or earnings guidance was provided in this text.
- Capital Allocation:
- Dividends: Declared a quarterly cash dividend of $0.48 per share (up from $0.44 in the prior year).
- Share Repurchases: Repurchased 512,000 shares for $79.7 million. $1.1 billion remains available under the $2.0 billion authorization.
- Risks & Contingencies:
- Legal: Ongoing appeal regarding a French Competition Authority fine (reduced to €24.9 million, paid in FY2022). A related civil lawsuit was dismissed in November 2024, though an appeal is pending.
- Market: Risks include geopolitical instability, tariff uncertainty, supply chain constraints, and concentration of sales to large OEMs (Apple and HP each represented >10% of revenue).
- Liquidity: $700 million in Senior Notes due in August 2026. Management believes current resources are sufficient to repay this and meet obligations.
Investor Verification Checklist
- Constant Currency Growth: Verify the 13.2% constant currency revenue growth to isolate organic performance from FX fluctuations.
- Working Capital Efficiency: Monitor the Cash Conversion Cycle (CCC), which increased to 23 days from 16 days (QoQ) due to inventory buildup.
- Debt Maturity: Confirm the repayment strategy for the $700 million Senior Notes maturing in August 2026.
- Non-GAAP Adjustments: Review the reconciliation of Non-GAAP Net Income ($382.6M) vs. GAAP Net Income ($326.9M), specifically the impact of the $22.4M investment gain and amortization of intangibles ($75.7M).
- Segment Mix: Analyze the shift toward net-basis revenue recognition and its impact on reported gross margins versus underlying profitability.