TD SYNNEX Corporation

within the meaning of the federal securities laws, including predictions, estimates, projections, or other statements about future events, including statements about demand, positioning, growth, cash flow, and shareholder return, as well as our expectations for future fiscal periods. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties discussed in today's earnings release, in the Form 8-K we filed today, and in the Risk Factor section of our Form 10-K and our other reports and filings with the SEC. We do not intend to update any forward-looking statements. Also during this call, we will reference certain non-GAAP financial information, including gross billings. Reconciliations of GAAP to non-GAAP results are included in our earnings press release and the related form 8K available on our investor relations website, ir.tdsynx.com. This conference call is the property of TD SYNX and may not be recorded or rebroadcast without our permission. I will now turn the call over to Rich. Rich?

Thank you, Liz. Good morning, everyone, and thank you for joining us today. On today's call, I will provide some thoughts regarding the industry and the drivers of our performance in Q2, followed by comments on the planned CEO transition we announced last week. Then Patrick will speak briefly and we'll close with commentary on our Q2 financial performance and Q3 outlook from Marshall prior to the Q&A session. Starting with our Q2 performance, I will focus my comments on three areas. First, Our markets have continued to stabilize, and we remain confident in our improving revenue and gross billings growth prospects for the back half of the fiscal year. Second, we delivered strong financial results and robust shareholder returns. And third, we believe AI is a meaningful opportunity for the company over the foreseeable future. The IT spending market continued to improve, And after a prolonged period of challenging market conditions and transformation, which we navigated well, we returned to positive year-on-year gross billings growth in the quarter. Gross billings were up 3%, coming in at the high end of our guidance range. This growth came through all areas of our business, including endpoint solutions, advanced solutions, and strategic technologies. which now represent 25% of our total business. And as we enter the second half of the fiscal year, we continue to expect further acceleration in gross billings and revenue growth, fueled by PC refresh cycle, customer investments in data center and cloud deployment, increased hyperscale capital spending to meet the needs of both traditional and AI-enabled workloads, and continued expansion in software, security, and data analytics. Our fiscal results in 2Q were strong, with growth and operating margin expanding, double-digit growth in non-GAAP earnings per share, and robust capital returns to shareholders. Our broad end-to-end technology portfolio enabled us to capture growth in both the core and strategic areas, and we remained disciplined on cost, holding our expense to gross billings ratio flat sequentially. This strength, coupled by our confidence with an improving market environment, allowed us to return over $520 million to shareholders through the first two quarters of this fiscal year, already representing nearly 70% of the total return to shareholders in fiscal 23. As we go forward, we remain committed to our balanced capital return framework, Since our last earnings call in March, the technology industry has continued to unveil a multitude of AI-related products, services, and announcements. As I've mentioned previously, I believe AI will be the next great transformative era for the technology sector. During my career, I've witnessed the advent and evolution of several other groundbreaking advancements, such as the internet, mobility, and cloud computing. We are just at the beginning of the AI era, and by industry analyst accounts, the potential associated TAM expansion over time is significant. A portion of that spend will come through business partner ecosystem, and we expect our business will benefit across components, devices, data center, cloud storage, and networking, as well as the related software applications and services. With our deep vendor partnership, long-tenured customer relationships, and service capabilities, we are well positioned to participate in this growth as the market evolves and are already seeing momentum and investments from our vendors and increased interest from our customers. During the quarter, we launched the IBM Watson X Gold 100 program to accelerate AI opportunities for partners through enablement, training, business planning, sales acceleration, marketing, demand generation, expert services, and pre-sale support. As part of this collaboration, we will establish IBM Watson X Centers of Excellence in four locations around the globe where partners will be able to experience Watson X proof of concept solutions. We are also honored to be named Microsoft's Global Copilot Seats Champion for the quarter, a testament to the successful copilot launch we enabled earlier this year. Lastly, we were pleased to announce our high-growth technology center of excellence where partners can learn how to become a partner of the future, integrating AI with cloud, cybersecurity, data analytics, and modern infrastructure. As I mentioned at the start of the call, I would like to make a few comments about the CEO transition we announced last week. let me take a moment to congratulate Patrick Samet, who will succeed me as CEO of TD Cynics upon my retirement in September. Patrick has a long track record of success in our industry, having joined Avnet more than three decades ago, and he has been an excellent partner to me since becoming part of the company in 2017. During his tenure, he has excelled at driving growth and operational excellence across the organization. His business acumen and deep industry expertise, coupled with his interest and dedication in building world-class cultures, make him the ideal candidate to lead TD Cinex into the future. Since becoming our Chief Operating Officer earlier this year, Patrick has already accelerated the progress on our strategic initiatives and has fostered an even greater focus on driving profitable growth while continuing to deliver increased value to our customers, vendors, and coworkers. As I look back on my career and the many accomplishments and milestones along the way, I can safely say that it has been an absolute privilege to lead the company, and I look forward to continuing to work with the team as a member of the board of directors. I am incredibly proud of the company's achievements and the culture that we have built over the years. I will now pass it over to Patrick so he can make a few comments. Patrick?

Thank you, Rich, and thank you for your leadership and guidance as CEO. I am honored to have been selected to lead TDCnext and look forward to continuing the legacy of success and partnership across the channel that Rich has established, along with cultivating the vibrant and servant leadership-based culture that we are known for. I am fortunate to inherit a best-in-class team who deeply understands our purpose, mission, vision, and values. TDCnext has an industry-leading set of capabilities and an unmatched ability to deliver value to our most critical stakeholders. We excel at helping to accelerate broad adoption of technology with our efficient go-to-market motion and we constantly look to innovate, challenging the status quo, and increasing our value proposition. I look forward to building on the foundation we have established and continuing to accelerate our strategy and digitalization efforts to ensure we are constantly delivering the greatest value to our coworkers, partners, vendors, and shareholders.