TD SYNNEX Corporation

Good morning. My name is Kate and I will be your conference operator today. I would like to welcome everyone to the TD Cinex first quarter fiscal 2025 earnings call. Today's call is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. At this time for opening remarks, I would like to pass the call over to David Jordan, America's CFO and Head of Investor Relations at TD Synapse. David, you may begin.

Thank you. Good morning, everyone, and thank you for joining us for today's call. With me today is Patrick Zamet, CEO, and Marshall Witt, CFO. Before we continue, let me remind you that today's discussions contain forward-looking statements within the meanings of the federal securities laws, including predictions, estimates, projections, or other statements about future events, including statements about our strategy, demand, plans and positioning, growth, cash flow, capital allocation, and stockholder return, as well as our financial expectations for future fiscal periods. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risk and uncertainties discussed in today's earnings release. In the Form 8K we filed today, in the risk factors 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. Reconciliations of GAAP to non-GAAP results are included in our earnings press release and the related Form 8-K available on our investor relations website, ir.tdsinex.com. This conference call is the property of TD Cinex and may not be recorded or rebroadcast without our permission. I will now turn the call over to Patrick. Patrick? Thank you, David.

Good morning, everyone. Thank you for joining us today. I'm excited to report a strong start to fiscal year 2025. Let me begin by highlighting two key themes from this quarter. First, our Q1 results demonstrate strong momentum across the business, with all regions and major technologies contributing. Gross billings grew by 7.5% year-over-year in Q1 and 9.5% in constant currency. Advanced solutions grew by 7% year-over-year, reflecting continued demand for integrated IT solutions. Endpoint solutions grew by 8% year-over-year, with growth across PCs and mobile. In an evolving macroeconomic environment, we are executing with discipline and focus. Within distribution, we saw solid growth in gross profit and operating income, reflecting our focus on profitable growth and operating efficiencies. As Marshall will discuss further, in Q1, Hive was below our expectations due to a component shipment delayed from Q1 to Q2 and demand shortfalls which may last a few quarters. While the business is temporarily soft, we are confident the situation will normalize as the market conditions continue to be favorable. Finally, the strength of our business model allowed us to grow ahead of the market in Q1. Our end-to-end strategy, global reach, and specialist go-to-market approach continues to allow us to capture a wide range of IT spend. For example, within strategic technologies, all portfolios, including cloud, cybersecurity, data and analytics, and Hive, once again grew by double digits in Q1 and across all our geographic segments. In Q1, we expanded our reach to 30,000 active partners and 500,000 end users transacting through our cloud marketplace. Our ability to deliver local expertise with a global reach makes us a go-to partner for vendors looking to expand in higher growth markets. Latin America and APJ once again grew by double digits in Q1 in constant currency. In these regions, we continue to build margin-accretive partnerships with leading innovative vendors helping grow their business by vastly simplifying market complexity at the country level for both vendors and customers. The expansion of our line cart also drives expansion of our partner base as we continue to enrich our value proposition and product offering in those markets. These results demonstrate our position as the vital link in the global IT ecosystem. As IT solutions become more complex, driven by trends such as the convergence of hardware and software, and the proliferation of technologies such as cloud, cybersecurity, and AI, our collection of specialists go to market, combined with our market-leading depth of capabilities, position us to be the partner of choice for our customers and vendors. Because of our specialized units and local knowledge, we solved some of their most challenging business problems, accelerate growth, and reduce cost. For example, building on our past success with a major cybersecurity vendor, we recently won their US business with a large customer. Leveraging our best-in-class cybersecurity practice, we are helping this vendor deliver platform-wide solutions that integrate hardware, software, and AI. We are also providing enablement and support services offerings that expand our value proposition to our partners. Our broad range of specialist approach also positions us to be a natural extension of our vendors go-to-market across multiple specialties in IT, creating opportunities for us to add value with services and solutions. For example, this quarter we significantly expanded our business with a leading infrastructure software provider across multiple countries around the world. By partnering with TD Cinex, they rationalized their distribution footprint and leveraged us for a variety of pre- and post-sale services. Our broad geographic reach and in-country experts and knowledge were differentiators and gave them confidence to lean in with TD Cinex. As this win demonstrates, new and existing partners are looking to us for assistance in delivering the next generation of technology solutions, all while helping them broaden their partner and end-user reach in a cost-efficient way. Meanwhile, as more B2B buyers become digital first, our purpose-built digital capabilities are making it easier than ever to transact with us. For example, this quarter we launched our Digital Bridge Microsoft Teams app, the first of many connectors in development within the platform. Both connectors will enable our partners' coworkers to connect to our platforms directly from the applications they are using in their daily work. Our vision with Digital Bridge is to provide our partner community with a marketplace of pre-built integrations, which provide real-time information and enable faster automated workflows for quoting, backlog management, and more that reduce costs and increase efficiency. Another example is our PACE platform, which is a fully digital customer lifecycle tool that leverages our unique data lake and powers our digital go-to-market channel. Already gaining significant traction in Europe with over 50,000 partners, PACE delivers personalized customer insights that enables us to expand our reach and drive demand across the long tail of SMB. With growth and profitability significantly above the overall company average, we are now expanding the platform into the Americas. We continue to receive industry recognitions for these capabilities and expertise. This quarter, We were honored to be named Distribution Partner of the Year for multiple industry leaders like AWS, Palo Alto Networks, Insight Enterprises, and NVIDIA. In North America, we were awarded Best Distributor of the Year by ChannelPro, a recognition of our contributions to the MSP community. These are just a few examples, but all move TD Cinex in one direction. from traditional IT distribution to accelerating adoption of the next generation of technology solutions, capitalizing on conversion trends in IT, and driving our long-term sustainable leadership. We remain resilient in the face of uncertainty, and we lean on our broad technology and product portfolio and ecosystem to adapt to the continuously changing economic environment. Throughout all of this, our North Star continues to be profitable growth and free cash flow. We will thoughtfully and carefully allocate excess cash to the highest return opportunities to ensure sustainable value creation for our customers and shareholders. We look forward to sharing more about our long-term vision and how we'll get there at our investor day on April 10th in New York City. Now, I will pass it to Marshall for financial performance and outlook. Marshall? Thanks, Patrick, and good morning, everyone.