TD SYNNEX (NYSE:SNX) reported record fiscal third-quarter 2026 results, with growth in both its Distribution and Hyve businesses exceeding management’s expectations. The company cited broad-based demand across geographies, technologies, customers and programs, led by data center infrastructure and expanding AI-related deployments.
Chief Executive Officer Patrick Zammit said enterprise AI adoption is moving beyond experimentation toward broader production deployments, while data center modernization, security, governance and compliance requirements are creating additional opportunities for the company. He said TD SYNNEX is investing working capital to support customer ramps, particularly at Hyve, which weighed on near-term cash flow but is intended to support committed demand and future growth.
Third-Quarter Financial Results
On a GAAP basis, operating income rose 68% year over year to $643 million, and diluted earnings per share increased 89% to $5.18.
- Distribution non-GAAP gross billings rose 27% to $24.8 billion.
- Hyve gross billings climbed 117% to $7 billion.
- Distribution non-GAAP operating income rose 55% to $483 million.
- Hyve non-GAAP operating income increased 56% to $253 million.
Chief Financial Officer David Jordan said operating income and earnings per share grew faster than gross billings during the period.
Distribution Growth Led by Infrastructure and AI
Distribution recorded double-digit growth across every region and most major technology categories. Advanced Solutions gross billings increased 37%, driven by infrastructure, software and AI-related technologies. Endpoint Solutions gross billings grew 16%, supported by PC demand, higher average selling prices and a modest decline in unit volumes.
Distribution gross profit increased 22% to $1.15 billion. Gross margins were slightly affected by customer and product mix, although expense discipline more than offset that effect. The segment’s non-GAAP operating margin expanded 35 basis points year over year to 1.95% of gross billings.
Jordan said several larger North American infrastructure transactions carried somewhat lower gross margins than the company average, but described the impact as a mix issue rather than broad pricing pressure. He said the company’s margins remain resilient by category and that the business continues to generate profitable returns on invested capital.
Zammit highlighted an agreement with Mach3 Systems to support an NVIDIA AI factory using Vera Rubin NVL72 systems. He described the deployment as one of the largest enterprise AI factory infrastructure deployments expected to move through the channel. TD SYNNEX will provide capabilities including design, integration, deployment, co-administration operations, financing and supply-chain support.
The company also said IBM expanded its TD SYNNEX relationship to 20 additional countries across Europe, Asia-Pacific and Latin America. Zammit said the company has added multiple billions of dollars in incremental gross billings to its portfolios over the past year through customer wins and additions to its vendor line card.
Hyve Ramps Programs, Faces Margin Mix Effect
Hyve’s manufacturing revenue grew more than 130% and represented about two-thirds of the segment’s gross billings, reflecting higher volumes and expanded programs with existing customers. Supply-chain services grew more than 90%, supported by component demand related to customer infrastructure deployments.
Hyve gross profit rose 47% to $276 million. Its non-GAAP operating margin declined to 3.61% of gross billings from 5.04% in the prior-year period. Jordan said the decline reflected the growing contribution of a large AI server program that is profitable but carries margins below Hyve’s historical average.
Management said the margin headwind has stabilized. Jordan said Hyve is ramping three new hyperscale customers and multiple programs within those customers, with newer manufacturing programs awarded at margins that are neutral to accretive relative to Hyve’s current performance. Management expects margins to improve modestly as programs mature, though some major programs will not reach their full potential until the second half of fiscal 2027.
Zammit said networking remained strong and that newly won Hyve programs are primarily networking programs. He said the company began seeing some contribution from those ramps during the third quarter and expects acceleration in the fourth quarter and first quarter.
Cash Flow Investment and Fourth-Quarter Outlook
Free cash flow consumption was approximately $1 billion in the third quarter, primarily reflecting increased inventory in Hyve’s supply-chain business as well as investments for new customers and expanded programs. Net working capital ended the quarter at $6.5 billion, while the gross cash conversion cycle increased to 22 days, up five days sequentially and six days from a year earlier.
Jordan said the company believes a significant portion of the working-capital investment needed to support its expected growth is now in place. TD SYNNEX ended the quarter with $749 million in cash and cash equivalents and net leverage of 1.9 times. The company repurchased $100 million of shares and paid $38 million in dividends during the quarter.
The board approved a quarterly cash dividend of $0.48 per common share, payable Oct. 30, 2026, to shareholders of record as of Oct. 16, 2026.
For the fiscal fourth quarter, TD SYNNEX expects non-GAAP gross billings of approximately $31.9 billion, plus or minus $500 million, representing about 31% year-over-year growth at the midpoint. It forecast revenue of approximately $22.2 billion, plus or minus $400 million, and non-GAAP diluted earnings per share of approximately $5.90, plus or minus $0.25.
The company expects Hyve gross billings to rise sequentially as programs for multiple new customers ramp. Management also expects to generate cash in the fourth quarter as recently deployed working capital begins to normalize, with further improvement in Hyve cash conversion expected in fiscal 2027.
About TD SYNNEX (NYSE:SNX)
TD SYNNEX Corporation (NYSE: SNX) is a global technology distributor and solutions aggregator that connects technology manufacturers with resellers, systems integrators, managed service providers and other business partners. The company helps its partners design, procure, configure and deliver technology solutions to organizations across a range of industries.
Its portfolio includes personal computing devices, peripherals, networking equipment, data-center infrastructure, cybersecurity products, software and cloud services.
