TD Synnex CEO: ‘We Are Experiencing Broad-Based Strength In SMB And MSPs’

‘By developing bespoke value propositions and deploying dedicated commercial teams with deep industry knowledge, we have successfully positioned ourselves as a trusted partner for this strategic customer segment,’ says TD Synnex CEO Patrick Zammit.

TD Synnex’s business during its third fiscal quarter enjoyed healthy all-around growth, giving the IT distributor one of its best quarters.

TD Synnex Thursday reported growth across all product lines and all geographies along with revenue and earnings that solidly beat expectations.

“Our performance is a clear result of our team’s strong execution, a differentiated go-to-market strategy and a global end-to-end portfolio of products and services that is unrivaled,” said Patrick Zammitt, CEO of the distributor, which has dual headquarters in Fremont, Calif., and Clearwater, Fla.

TD Synnex saw a sharp drop in share prices early Thursday, but recovered as investors studied the company’s quarterly results to close up for the day by $9.35 per share, or 6.22 percent, to $159.69 per share.

Zammitt, who discussed TD Synnex’s third fiscal quarter 2025 results with financial analysts on the quarterly financial conference call even as the distributor held its largest-ever annual TD Synnex Inspire partner conference, said in his prepared remarks that the majority of the company’s technology products and services in endpoint and advanced solutions experienced an increase in gross billings year over year.

“Software continued to be a standout, experiencing a 26 percent increase in gross billings, fueled by cybersecurity and infrastructure software,” he said. “Additionally, we are still experiencing strong demand in PCs, driven by a higher mix of AI PCs and the Windows 11 refresh cycle.”

Meanwhile, TD Synnex’s hyperscaler Hyve Solutions subsidiary did exceptionally well after recent disappointments on the financial side.

“Within TD Synnex, excluding Hyve, gross billings increased 9 percent year over year with gross profit and operating income each increasing by double digits,” Zammit said. “Hyve had a strong quarter with gross billings increasing in the mid-30s [percent] year over year and ODM/CM [original design manufacturing and custom manufacturing] gross billings increasing 57 percent year over year, fueled by continued strength in hyperscaler investments in cloud infrastructure. Hyve total gross margins returned to historical levels, and operating profit exceeded expectations.”

Hyve’s hyperscaler success shows increasing promise for TD Synnex’s cloud and AI data center business growth, Zammit said.

“Within Hyve, we are extremely proud of our performance during the quarter and remain confident in our ability to be a leading partner for data center infrastructure buildouts,” he said. “We are continuing to invest in new capabilities, taking a holistic approach to data center requirements that anticipate our customers’ needs and provide an end-to-end solution for the world’s leading hyperscalers and cloud service providers. As a result, our portfolio is becoming more diversified. We are participating in more compute, networking and storage rack builds as the deployment of GPU and AI integrated racks accelerate. And we have seen robust growth throughout the majority of our programs.”

It was a good quarter for TD Synnex’s diversified customer end markets, Zammit said.

“We are experiencing broad-based strength in SMB and MSPs, which grew substantially above the company average in most of our geographies,” he said. “By developing bespoke value propositions and deploying dedicated commercial teams with deep industry knowledge, we have successfully positioned ourselves as a trusted partner for this strategic customer segment. [And] enterprise demand remains largely stable with balanced revenue growth throughout the majority of this customer base.”

TD Synnex at the same time saw healthy momentum across each of its regions, especially in Latin America and Asia-Pacific and Japan, which each enjoyed strong double-digit gross billings, Zammit said. The only relatively soft market was the U.S. public sector business, which suffered from a softness in its federal customers.

“As a reminder, federal is a small portion of our total portfolio, but one we will continue to invest in growing,” he said.

On the product side, TD Synnex is seeing a big boost in its AI business, Zammit said.

“As the adoption of AI technologies evolves, we are enhancing our Destination AI enablement program to include three strategic focus areas that are designed to help our partners adopt, scale and secure AI solutions: agentic AI, security for AI and AI Factory,” he said. “Launching next week, these programs will deliver comprehensive solution support such as designing modern architectures that blend multiple AI technologies and enable hybrid deployment models that deliver flexible, intelligent threat detection, prevention and responses.”

When asked by an analyst whether TD Synnex experienced any pull-forward sales of PCs during the quarter similar to what it saw in the prior quarter, Zammit said the company continues to see very good momentum on PCs across the world.

“It’s driven really by the refresh related to Windows 11, the refresh of the base, which was built during the pandemic,” he said. “And we also see the start of some momentum on AI PC. So some customers are coming to us because they want an AI PC. Again, the vast majority is related to the refresh.”

TD Synnex By The Numbers

For its third fiscal quarter 2025, which ended Aug. 31, TD Synnex reported total revenue of $15.65 billion, up 6.6 percent over the $14.68 billion the company reported for its third fiscal quarter 2024.

That include Americas revenue of $9.27 billion, up 2.0 percent over last year; European revenue of $5.17 billion, up 12.7 percent; and Asia-Pacific-Japan revenue of $1.21 billion, up 20.4 percent.

Total revenue beat analyst expectations by $540 million, according to Seeking Alpha.

TD Synnex also reported GAAP net income of $226.8 million, or $2.74 per share, up significantly from last year’s $178.6 million, or $2.08 per share. On a non-GAAP basis, the company reported net income of $296.2 million, or $3.58 per share, up from last year’s $245.4 million, or $2.86 per share.

Non-GAAP earnings beat analyst expectations by 53 cents per share, according to Seeking Alpha.

Looking ahead, TD Synnex expects fiscal fourth quarter 2025 revenue to be between $16.5 billion and $17.3 billion; GAAP net income of $204 million to $245 million, and non-GAAP net income of $281 million to $322 million.

That compared with fiscal fourth quarter 2024 revenue of $15.8 billion, GAAP net income of $194.8 million and non-GAAP net income of $264.3 million.