0001177394-25-000042
SEC filingRevenue grew 7.2% YoY in Q2 2025 driven by both portfolios, while gross margin held steady at 7.00%.
For the three months ended May 31, 2025, TD SYNNEX reported revenue of $14.95 billion, a 7.2% increase from $13.95 billion in the prior year period. On a constant currency basis, revenue grew 6.3%. Gross profit increased 7.5% to $1.05 billion, while gross margin remained relatively flat at 7.00% compared to 6.98% in the prior year. The gross margin stability reflects a positive 31-basis-point impact from a higher percentage of sales presented on a net basis due to product mix, offset by higher strategic technologies margins recorded in the prior year period. Operating income rose 24.3% to $328.1 million, driven by revenue growth and significantly lower acquisition, integration and restructuring costs ($0.7 million vs. $37.9 million). SG&A expenses increased 6.8% to $717.6 million, primarily due to higher personnel costs, though as a percentage of gross profit they decreased slightly to 68.6% from 69.0%. Net income grew 28.8% to $184.9 million, and diluted EPS increased to $2.21 from $1.66.
All three segments contributed to revenue growth. Americas revenue rose 5.3% to $9.01 billion, with operating income up 20.7% to $252.6 million and operating margin expanding to 2.80% from 2.45%. Europe posted the strongest revenue growth at 10.5% to $4.89 billion, but operating margin remained low at 1.03% (up from 0.78%). APJ revenue increased 8.7% to $1.05 billion, with operating margin improving to 2.40% from 2.11%. Across segments, growth was driven by both Endpoint and Advanced Solutions portfolios, partially offset by a greater proportion of sales presented on a net basis (reducing reported revenue by approximately $700 million at consolidated level). Higher personnel costs were a common headwind, particularly in Europe and APJ.
The MD&A does not provide specific forward guidance for future periods. Management emphasizes strategic imperatives of expanding portfolio reach, targeting new customers, and diversifying offerings, including investments in hyperscale infrastructure and services. The company expects to fund working capital needs through existing cash, cash flows, and credit facilities. Key risks noted include inflation, tariff uncertainty, and geopolitical developments that could impact IT demand. The decrease in non-GAAP operating margin year-to-date (2.76% vs. 2.91%) reflects lower strategic technologies margins; management expects continued focus on cost management and portfolio optimization.
As of May 31, 2025, TD SYNNEX reported cash and cash equivalents of $767.1 million, a decrease from $1,059.4 million at November 30, 2024. Total debt (current borrowings of $382.4 million plus long-term borrowings of $3,723.3 million) stood at $4,105.7 million. Shareholders' equity increased to $8,342.4 million from $8,035.4 million, driven primarily by comprehensive income and share repurchases. The company has a $1.5 billion senior unsecured revolving credit facility (undrawn as of November 30, 2024, with $150.0 million drawn at May 31, 2025) and maintains access to a $1.5 billion accounts receivable securitization program (no amounts outstanding).
The Notes disclose $2.8 billion in obligations outstanding under Supplier Finance Programs as of May 31, 2025, included in accounts payable. Additionally, the Company is contingently liable to repurchase inventory sold under customer financing agreements if customers default; however, this amount cannot be reasonably estimated. No other formal purchase commitments (e.g., long-term supply agreements, capacity reservations) are explicitly disclosed in the interim Notes.
Share repurchases totaled $251.5 million during the six months ended May 31, 2025, at a weighted-average price of $119.19 per share, with $1.5 billion remaining under the March 2024 $2.0 billion authorization. Dividends paid were $74.1 million ($0.44 per share quarterly), up 10% from $0.40 per share in the prior year period. Capital expenditures were $71.8 million (0.2% of sales). Net debt increased by $198.1 million, driven by $208.7 million in net borrowings on the revolving credit facility and $15.5 million in principal payments on long-term debt.
For the three months ended May 31, 2025, segment revenue was: Americas $9,009.2M (60.3% of total), Europe $4,890.0M (32.7%), and APJ $1,047.1M (7.0%). Operating income by segment: Americas $252.6M (2.8% margin), Europe $50.3M (1.0% margin), APJ $25.2M (2.4% margin). Compared to the prior year quarter, revenues grew 5.3% in Americas, 10.5% in Europe, and 8.6% in APJ. Segment profitability was mixed: Americas operating income increased 20.7%, Europe rose 46.4%, and APJ grew 24.0%.
Net income was $352.5M, but operating cash flow was -$174.8M, a significant divergence. This was driven by large working capital outflows: accounts receivable decreased $460.3M (favorable), but this was offset by inventories increasing $214.6M and accounts payable decreasing $870.1M, along with other liabilities decreasing $149.7M. The net effect was a $774M working capital usage. Capex of $71.8M was relatively stable, but combined with negative CFO, free cash flow (not explicitly stated) would be deeply negative. Capital returns (dividends + buybacks) totaled $323.4M, far exceeding any cash generated from operations and relying on financing activities, including net borrowings of $208.7M. The company is investing heavily in its own stock despite cash burn, which may raise sustainability questions.