01—Abstract
Summary
Summary of the 10-Q filed April 2, 2025. Cited figures are marked; the original filing is the authoritative source.
TD SYNNEX Corporation's 10-Q for the quarter ended February 28, 2025 shows revenue of $14.53 billiona, up from $13.98 billion a year earlier, with net income of $167.5 million versus $172.1 million.
Gross profit was $998.0 millionb, roughly flat against $1.01 billion in the prior-year quarter, as gross margin fell to 6.87% from 7.20%. The filing attributes the margin decline mainly to lower strategic technologies gross margins and a less profitable product mix. Operating income was $304.5 million, and non-GAAP operating income declined to $398.8 million from $424.6 million.
Diluted EPS was $1.98c, compared with $1.93 a year earlier. Cash flow moved sharply negative in the quarter. Net cash used in operating activities was $748.0 million, driven mainly by a $1.97 billion decrease in accounts payable.
The company funded this with $421.4 milliond of net revolving borrowings, and cash fell to $541.9 million from $1.06 billion at November 30, 2024. Total borrowings rose to approximately $4.3 billion from $3.9 billion. The cash conversion cycle lengthened to 27 days from 18 days at fiscal year-end.
Share repurchases totaled $100.5 million, leaving $1.7 billion available under the March 2024 program, and a $0.44 quarterly dividend was declared. The company states it is in compliance with all material financial covenants and believes its liquidity is sufficient for at least the next twelve months. Management reports no material changes to its risk factors from the 2024 Form 10-K.
The filing also discloses a French competition matter, where the Company's fine was reduced to €24.9 million on appeal and further appeal is pending, along with an eBizcuss civil lawsuit that the Paris Commercial Court dismissed in the Company's favor. Management believes the likelihood of a material loss from that lawsuit is remote.
02—Key points
Key Highlights
- Revenue rose 4.0% to $14.53 billion, or 6.0% in constant currency, with growth in both Endpoint Solutions and Advanced Solutions.
- Gross margin declined to 6.87% from 7.20%, mainly due to lower strategic technologies gross margins and a less profitable product mix.
- Operating income was $304.5 million, roughly flat year over year, while non-GAAP operating income fell 6.1% to $398.8 million.
- Diluted EPS was $1.98 versus $1.93; non-GAAP diluted EPS was $2.80 versus $2.99 in the prior-year quarter.
- Operating cash flow was negative $748.0 million, driven by a $1.97 billion decrease in accounts payable, and the cash conversion cycle lengthened to 27 days.
- Total borrowings increased to approximately $4.3 billion from $3.9 billion, including $421.4 million of net revolver borrowings to fund working capital.
- The Board declared a $0.44 quarterly dividend, and $1.7 billion remained available under the March 2024 share repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, TD Synnex kept $0.01.
- Revenue$14.53B100.0%
- Cost of revenue−$13.53B93.1%
- Gross profit$998.0M6.9%
- Operating costs−$693.5M4.8%
- Operating income$304.5M2.1%
- Interest, other & tax−$136.9M0.9%
- Net income$167.5M1.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed April 2, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $14.53B$13.98B | +4.0% |
| Cost of Revenue | $13.53B$12.97B | +4.4% |
| Gross Profit | $998.01M$1.01B | −0.8% |
| SG&A Expenses | $693.55M$671.54M | +3.3% |
| Operating Income | $304.46M$302.57M | +0.6% |
| Net Income | $167.54M$172.13M | −2.7% |
| EPS (Basic) | $1.98$1.94 | +2.1% |
| EPS (Diluted) | $1.98$1.93 | +2.6% |
| Shares Outstanding (Basic) | 83.61M87.89M | −4.9% |
| Shares Outstanding (Diluted) | 83.97M88.20M | −4.8% |
05—Questions
Frequently Asked Questions
Why did operating cash flow turn negative this quarter?
Net cash used in operating activities was $748.0 million, compared with $384.7 million provided in the prior-year quarter. The filing attributes the decrease primarily to a larger decline in accounts payable, related to the timing of cash payments.
How is the company funding its working capital needs?
The company borrowed a net $421.4 million under its revolving credit loans, and $390.0 million was outstanding under the U.S. accounts receivable securitization arrangement at February 28, 2025. Cash and cash equivalents declined to $541.9 million from $1.06 billion at November 30, 2024.
What drove the decline in gross margin?
Management attributes the decline from 7.20% to 6.87% primarily to higher strategic technologies margins in the prior-year period and a less profitable product mix in the current period. The shift toward net-basis revenue presentation positively affected gross margin by approximately 23 basis points.
Are there any significant legal matters disclosed?
The filing discloses a French Competition Authority fine against the Company related to Apple products, which the appeals court reduced from €76.1 million to €24.9 million. The Company has further appealed. A related eBizcuss civil lawsuit was dismissed by the Paris Commercial Court on November 25, 2024, and an appeal has been filed. Management believes a material loss from the lawsuit is remote.
Is the company meeting its debt covenants?
Yes. The filing states that as of February 28, 2025, the Company was in compliance with all material financial covenants under its credit facilities, which include a maximum debt to EBITDA ratio and a minimum interest coverage ratio.
06—Continue