Distribution non-GAAP operating income $431M, +42% YoY; operating margin 2.0%, +34 bps YoY (CFO).
Distribution gross margin benefit ~10–15 bps from strategic inventory purchasing; ~2 ppts of billings growth from higher ASPs and modest pull-forward (CFO).
Hive non-GAAP operating income $159M, +66% YoY; operating margin 4.2%, -72 bps YoY due to mix (CFO).
Free cash flow usage $929M in Q1; trailing twelve-month FCF $1.2B; returned $723M to shareholders over TTM (CFO).
Gross cash conversion cycle 16 days, improvement of 4 days YoY; leverage ratio 1.5x (CFO).
New hyperscale customer wins: signed programs with two new hyperscale customers in 2026; now at least one program with each of top five U.S. hyperscalers (CEO).
Board approved dividend of $0.48/share, payable 04/29/2026 (CFO).
Official Guidance (Q2 2026):
Non-GAAP gross billings ~$25.1B ±$500M (+16% YoY at midpoint)
Share repurchases expected to increase from Q1 level
Mgmt Quotes:
"We are very pleased with how we started fiscal year 2026. In the first quarter, we delivered record non-GAAP gross billings and non-GAAP earnings per share while continuing to expand profitability." (CEO)
"Our results reflect strong performance across both our distribution and Hive businesses, as well as the continued alignment between our strategy and the needs of our partners." (CEO)
"We have already started to ramp our third U.S.-based hyperscaler, and with these two wins, we now have at least one program secured with each of the top five U.S.-based hyperscalers." (CEO)
"We are pleased to report a strong start to our fiscal year with first-quarter results that exceeded our expectations across all key metrics." (CFO)
"We are in a period of accelerated growth; however, we continue to remain disciplined in our cost management approach." (CFO)
Topic: Price increase impact on Q2 guidance and demand destruction risk
Key points:
Q2 guidance built via bottoms-up roll-up; demand remains strong in both Distribution and Hive.
Back-to-back revenue (billed, in backlog for 2–5 months) means price increases won't hit P&L immediately; expected to become more meaningful in later quarters.
Across hardware categories: PC refresh not over, AI PC weight increasing; general server refresh cycle a tailwind; AI-enabled server demand accelerating as end users build AI factories; storage data center modernization may pick up; networking returning to single-to-double-digit growth.
Mgmt stance: Neutral — management acknowledges potential demand disruption later in year but states no demand destruction seen in Q1; ASP increases expected to positively impact revenue even if unit volume declines.
Q7 — David Vogt
Topic: Hive business mix evolution and general compute demand ex price increases
Key points:
Historically Hive driven by general compute and networking; accelerated compute wins will start appearing in mix in coming quarters.
Hive strategy: diversify customer base and target general compute, accelerated compute, networking, and storage; investments in engineering and manufacturing made.
For general compute, price increases are double-digit on some infrastructure products; demand remains strong with less elasticity than initially thought; price increases expected to more than offset any unit elasticity.
Mgmt stance: Bullish — mix diversification and strong demand support growth, despite price hikes.
Q8 — Ruplu Bhattacharya
Topic: Hive hyperscaler program details, CapEx needs, and operating margin pressure
Key points:
Hive secured at least one program in top five U.S. hyperscalers; Q1 operating margin was 7.4% (revenue basis), 4.2% (billings basis).
Management notes capacity investments ongoing; CapEx required but considered "very reasonable."
Both Distribution and Hive reducing cash days and improving working capital velocity to finance growth and CapEx without issues.
Mgmt stance: Neutral — acknowledges early ramp of new programs may cause slight headwind in operating margins, but confident in current Hive margins; accelerated compute not majority of portfolio, so margin pressure seen elsewhere should not play out to same degree.
Q9 — Ruplu Bhattacharya
Topic: CapEx capacity and initial margin pressure from new Hive programs
Key points:
Constant capacity review; investing in increasing capacity to serve customers.
Initial margin pressure possible as investments made to get programs up to speed; each program ramps on different timeline.
Management feels "pretty good" about current Hive operating margins and how they will play out.
Mgmt stance: Bullish — confident in current margins and ability to manage ramp; working capital improvement supports financing growth and CapEx.
Q10 — Vincent Colicchio
Topic: European Distribution strength and M&A strategy
Key points:
European Distribution market grew mid-single digits in Q1; full-year forecast low- to mid-single-digit growth; SNX growing double digits in Europe.
Outperformance driven by end-to-end portfolio, pan-European presence, and favorable country mix (e.g., Poland, Spain growing faster than average).
M&A core to strategy; targeting geographies, technologies, or vendor gaps; strict valuation discipline requiring two-year return on investment after integration.
Mgmt stance: Bullish — confident in continued double-digit growth in Europe; disciplined M&A approach with several opportunities under review.
Q&A Batch (11-11 of 11)
Q11 — Ananda Baruah
Topic: Data center modernization demand, AI/Hive mix, and Arm partnership potential
Key points:
Data center modernization demand seen in enterprise and higher-end mid-segment, on-prem; Patrick Zammit noted "very solid demand" this quarter but is "a little bit cautious" as it was not seen in prior quarters.
For Hive mix, customers require support across all four technologies: general compute, accelerated compute, storage, and networking; accelerated compute wins will increase, but general compute, networking, and storage will represent the majority of total business going forward.
Regarding Arm: no disclosure today, but in principle, if there is an opportunity to partner, distribution is a fantastic partner to accelerate go-to-market.
Mgmt stance: Neutral on data center demand (cautious due to lack of prior-quarter consistency); neutral on Hive mix (accelerated compute grows but majority remains traditional); neutral on Arm (no commitment, only principle-based openness).