TD SYNNEX (NYSE: SNX) reported record gross billings of $31.8 billion for fiscal third quarter 2026, up 40% year-over-year and 41% in constant currency, yet its shares fell sharply as investors focused on deteriorating cash flows and compressed margins.
Revenue for the period came in at $21.6 billion, up 38%, while non-GAAP diluted earnings per share reached $5.68, representing a 59% increase from a year earlier and surpassing the Wall Street consensus estimate of $4.64. Non-GAAP operating income rose 55% to $736 million, though operating margin expanded only 22 basis points to 2.31%.
The company’s stock dropped 9.42% to $260.77 from a previous close of $287.89, and later extended losses to 10.83% at $256.71.
Gross-to-net percentage contracted by 120 basis points year-over-year to negative 32.3%, reflecting pricing pressures in the distributor business.
"This was another record quarter," CEO Patrick Zammit said, noting that enterprise AI adoption is progressing toward broader production deployments. He added that data center modernization remains a priority and that AI is creating new security, governance, and compliance needs.
Distribution, which accounts for 78% of consolidated gross billings and contributes 66% of operating income, posted gross billings of $24.8 billion, up 27% year-over-year. Advanced Solutions generated $14.5 billion (up 37%), while Endpoint Solutions reached $10.3 billion (up 16%). Segment operating income jumped 55% to $483 million.
Technology category growth within Distribution reflected strong demand for AI-related infrastructure: servers and storage including cloud IaaS grew 67%, software 23%, PCs 21%, networking 19%, peripherals and print 21%, mobile 21%, and services 16%.
Hyve Solutions, contributing 22% of consolidated gross billings and 34% of operating income, saw gross billings surge 117% year-over-year to $7.0 billion. Manufacturing grew more than 130% year-over-year, and supply chain services rose more than 90%. However, the segment’s operating margin declined to 3.61% from 5.04% in the prior-year period.
CFO David Jordan said new Hyve programs are being awarded at margins that are "neutral to accretive." He indicated the company expects positive cash flow in the fourth quarter and that all businesses should become sustainable cash generators in fiscal 2027.
Free cash flow over the trailing twelve months turned negative at $0.8 billion, down from positive $0.5 billion a year earlier. Cash and equivalents ended Q3 at $749 million, and net leverage stood at 1.9x. Return on equity improved to 17.55% from 12.76% a year earlier.
Shareholders received approximately $139 million in returns, comprising roughly $100 million in share repurchases and $38 million in dividends.
For the fourth quarter of fiscal 2026, TD SYNNEX guided for non-GAAP gross billings of approximately $31.9 billion, plus or minus $500 million, representing 31% growth; revenue of approximately $22.2 billion, plus or minus $400 million, up 28%; and non-GAAP diluted EPS of approximately $5.90, plus or minus $0.25, representing 54% growth.
The company noted that AI PCs account for close to half of total PC revenue, with 300 million to 400 million PCs still needing to transition under the Windows 11 refresh cycle.
During the quarter, the company’s distribution partners were recognized in the CRN Channel Awards: Palo Alto Networks named 2026 North America Distributor of the Year, Veeam named 2026 EMEA Distributor of the Year, Adobe named 2026 EMEA Best Retention Partner of the Year, and the company won Distributor of the Year at the CRN Channel Awards Asia 2026.
TD SYNNEX also expanded its IBM partnership footprint into 20 new countries across EMEA, Asia-Pacific Japan, and Latin America.
