kebox - stock.adobe.com
TD Synnex expects improving market through 2024
Distributor shares Q1 numbers, but looks to PC growth and impact of AI to help drive business forward
TD Synnex has shared its Q1 numbers, with tough market conditions taking a toll on its performance.
Revenues of $14bn were within the firm’s expected range, but year-on-year declined by 7.6%. Gross profits held firm, and net income of $172m represented a 3.1% improvement.
From a European perspective, the three months ended 29 February saw the distributor deliver revenues of $5.1bn, a 7.3% decline from $5.5bn. Operating income was $108m, compared with $88m in the prior Q1.
“We generated strong results in our fiscal first quarter, driven by our expansive portfolio and an improving IT demand environment,” said Rich Hume, CEO of TD Synnex. “This resulted in record margins, EPS at the upper end of our expectations, healthy free cash flow and robust capital returned to shareholders.
“We are leveraging our strong relationships across the business partner ecosystem along with our robust core and strategic technology portfolios to accelerate growth for our partners, while continuing to produce strong returns for our shareholders,” he added.
In a results webcast, Hume provided more details to analysts of how the quarter had gone, and indicated that the channel player was looking to take advantage of improving market conditions. “Across the organisation, we are poised to capitalise on a stabilising demand environment for our core business while continuing to advance our strategy to expand our capabilities in strategic technology areas,” he said.
“Importantly, we believe that the IT spending environment will continue to improve throughout the year, and believe we will return to positive year-over-year gross billings growth next quarter, bolstered in part by the introduction and growth of infrastructure, components and services to support escalating AI [artificial intelligence]-enabled workloads and applications.”
Regional performance
Hume made some comments about regional performance, with improving demand for PCs across Europe one of the highlights of the period, although softer demand year-on-year for advanced solutions was a disappointing feature.
TD Synnex is expecting the PC market to recover throughout 2024, and as a result improve the performance of its Endpoint Solutions arm.
“We anticipate seeing continued improvement in the PC market as 2024 progresses, aligned with what several OEMs [original equipment manufacturers] and industry participants have described as a second-half weighted spending pattern,” he said. “We believe this will be driven by several factors, including the new mid-year launches of AI-enabled PCs, more customary refresh cycles associated with aged devices and operating system upgrades.”
It was always going to be difficult to compare the Advanced Solutions side of the business with a strong Q1 in the prior year. Hume claimed there were also signs that the market dynamics were improving as it moved deeper into 2024. “We see the beginnings of AI offerings emerging in the portfolio,” he said. “As an example, we had a very successful launch of Microsoft Copilot, where we enabled more than 2,000 partners with our launch campaign.”
Under Hume’s leadership, TD Synnex has been keen to line up behind higher-margin technologies that will enhance its long-term position.
He said those efforts continue, and that it’s because of that strategy the future is looking good.
“We are well-positioned to take advantage of the fast-growing AI market,” said Hume. “Our strategic vendor partnerships and enablement programmes are helping us to create industry-leading aggregated solutions and serve as a destination for AI solutions in the channel. Momentum is clearly evident in building in this area.”
