TD SYNNEX (SNX) Q2 2024 earnings summary

Executive summary

• Q2 FY24 non-GAAP gross billings reached $19.3B, up 3% year-over-year, at the high end of guidance, with margin expansion and strong capital returns; revenue was $13.9B, down 0.8% year-over-year, but within guidance.

• Non-GAAP diluted EPS was $2.73, up 12% year-over-year; net income was $144M, up 7.9%; robust capital returns included $288M to shareholders in Q2 and over $520M in the first half.

• Strategic Technologies accounted for 25% of gross billings, growing in the mid-teens year-over-year, driven by cloud, data center, AI, and security.

• AI initiatives advanced with the IBM watsonx Gold 100 Program, Microsoft Global Copilot Sales Champion recognition, and NVIDIA/Intel partnerships.

• CEO transition announced: Patrick Zammit to succeed Rich Hume in September, focusing on strategy acceleration and digitalization.

Financial highlights

• Gross billings were $19.3B, up 3% year-over-year; net revenue was $13.9B, down less than 1%; non-GAAP gross profit was $974M (7% margin); non-GAAP operating income $388M (2.78% margin); non-GAAP net income $237M.

• Non-GAAP diluted EPS was $2.73; adjusted EBITDA for the quarter was $416M, up from $402M a year ago.

• Returned $288M to shareholders in Q2 ($254M in share repurchases, $34M in dividends), a 210% increase year-over-year.

• Free cash flow year-to-date was $191M, with a full-year target of $1.2B.

• Gross margin improved to 6.98% from 6.85% year-over-year.

Outlook and guidance

• Q3 FY24 revenue expected between $13.3B and $14.9B; non-GAAP gross billings between $18.9B and $20.1B.

• Q3 non-GAAP net income expected at $219M–$261M; non-GAAP diluted EPS $2.55–$3.05.

• Gross billings for the second half expected to grow mid- to high-single digits; free cash flow target for FY at $1.2B.

• Plan to return 50% of free cash flow to shareholders via dividends and buybacks.

• Estimated Q3 tax rate of 23% and $75M in net interest expense.