TD SYNNEX Corporation

Good morning, my name is Tiffany and I will be your conference operator today. I would like to welcome everyone to the TD Cinex third 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 Cenex. David, you may begin.

Thank you. Good morning, everyone, and thank you for joining us on today's call. With me today is Patrick Zamet, our CEO, and Marshall Witt, our CFO. Before we continue, let me remind you that today's discussion contains forward-looking statements within the meaning 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 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, and thank you for joining us today. I'm excited to report that our third quarter non-GAAP gross billings and diluted earnings per share established new records for our company. 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. Beginning with our financial performance for the quarter, consolidated gross billings were $22.7 billion, growing 12%, 10% in constant currency. And non-GAAP diluted earnings per share of $3.58 exceeded the high end of our guidance, representing a 25% increase year-over-year. Within TDC-NEXT, excluding HIVE, gross billings increased 9% year-over-year, with gross profit and operating income each increasing by double digits. HIVE had a strong quarter. with gross billings increasing in the mid-30s year-over-year, and ODM CM gross billings increasing 57% year-over-year, fueled by continued strength in hyperscaler investments in cloud infrastructure. High total gross margins returned to historical levels, and operating profit exceeded expectations. The majority of our technology products and services in Endpoints and advanced solutions experience an increase in gross billings year over year. Highlighting a few key areas, software continues to be a standout, experiencing a 26% increase in gross billings, fueled by cybersecurity and infrastructure software. Additionally, we are still experiencing strong demand in PCs, driven by a higher mix of AI PCs and the Windows 11 refresh cycle. We experienced healthy momentum across each of our regions with exceptionally dynamic performance in Latin America and Asia Pacific and Japan, each increasing strong double digits in gross billings in the quarter and exceeding expectations. Broad-based adoption of IT products and services continues to build in these geographies, validating the strength of our go-to-market strategy and positioning us to continue to capture profitable growth. Moving to our diversified customer and markets, we're experiencing broad-based strength in SMB and MSPs, which grew substantially above the company average in most of our geographies. 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. Enterprise demand remains largely stable with balanced revenue growth throughout the majority of this customer base. Our U.S. public sector business increased its gross billings low single digits in the quarter. Strength in state and local was offset by anticipated softness in federal as our customers navigate a dynamic environment led by the revaluation of budgets and expected changes to federal funding programs. As a reminder, federal is a small portion of our total portfolio, but one we will continue to invest in growing. Next, our differentiated and highly specialized go-to-market strategy that we outlined during Investor Day strengthens our competitive position and drives our business forwards every day. A great example of this strategy in action is expanding our addressable market by introducing new vendors to the channel and leveraging our network of partners to accelerate growth. Last year, we onboarded a cybersecurity vendor in North America who was attracted by our specialist go-to-market and partner enablement capabilities. Within 18 to 24 months, we have grown that business from zero to hundreds of millions of dollars by expanding the customer base and improving their net revenue retention rates with existing clients. We have many more examples like this, and we are continuing to onboard cutting edge vendors and help accelerate the adoption of new technologies in the market. 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. 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. Within Hive, 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 build-ups. We are continuing to invest in new capabilities, taking a holistic approach to data center requirements that anticipates our customers' needs, and provides 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 accelerates, and we have seen robust growth throughout the majority of our programs. Additionally, our customer mix is also shifting favorably, and we have seen substantial growth beyond our top customer. Moreover, our second largest customer grew faster than expected within the quarter, and we anticipate similar strength in Q4. At our investor day, we outlined a digital strategy including the creation of a unified experience, seamless workflows, and actionable insights to drive customers' growth. Today, we are taking the next step of that journey with the launch of TDCnext Partner First in North America, a unified portal that optimizes the partner experience by combining commerce, services, education, and community in a single digital environment. Partner First marks an important milestone in TDCnext's omnichannel strategy, using AI, automation, and advanced analytics to enhance our operations and streamline the buying journey. Part of us will be rolled out globally in the coming quarters. In summary, our team's strong execution, our differentiated and highly specialized go-to-market strategy, and our unrivaled global end-to-end portfolio of products and services are enabling us to continue to deliver a superior level of service and customer experience. Now, I will pass it to Marshall to go over the financial performance and Q4 outlook in more detail. Marshall?