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01/10 04:26
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call revealed mixed results. While there was growth in gross billings and net revenue, issues like component delays and a decline in profit margins were concerning. The Q&A highlighted management's vague responses about Hyve's demand challenges, adding uncertainty. However, the dividend increase and share repurchases provide some positive sentiment. Overall, the combination of positive and negative factors suggests a neutral stock price movement in the short term.
Gross Billings $20.7 billion, up 7.5% year-over-year, 9.5% in constant currency. Growth driven by strong performance across all major geographies and product categories.
Net Revenue $14.5 billion, up 4% year-over-year. Higher than expected reduction from gross billings to net revenue due to a higher mix of infrastructure software business.
Gross Profit $1 billion, or 4.82% of gross billings, representing a 40 basis point decline year-over-year. Decline primarily due to tough comparisons in Hyve and investments in design and assembly.
Non-GAAP SG&A Expense $599 million, or 2.89% of gross billings, representing a 13 basis point improvement year-over-year.
Non-GAAP Operating Income $399 million, or 1.92% of gross billings, representing a 28 basis point decline year-over-year, primarily driven by Hyve.
Interest Expense and Finance Charges $88 million, higher than expected due to increased working capital to support Hyve's largest customers.
Non-GAAP Net Income $237 million, within guidance range.
Non-GAAP Diluted Earnings Per Share $2.80, within guidance range.
Free Cash Flow Usage Approximately $800 million, primarily due to Hyve working capital.
Cash and Cash Equivalents $542 million.
Debt $4.3 billion.
Gross Leverage Ratio 2.5 times.
Net Leverage Ratio 2.2 times.
New Product Launches: Launched Digital Bridge Microsoft Teams app, enabling partners to connect to platforms directly from their daily applications.
Expansion of Existing Products: Expanded PACE platform into the Americas, gaining traction in Europe with over 50,000 partners.
Market Expansion: Expanded reach to 30,000 active partners and 500,000 end users transacting through the cloud marketplace.
Geographic Growth: Latin America and APJ regions grew by double digits in Q1 in constant currency.
Operational Efficiencies: Achieved solid growth in gross profit and operating income, reflecting focus on profitable growth.
Cost Management: Non-GAAP SG&A expense improved to 2.89% of gross billings.
Strategic Partnerships: Built margin accretive partnerships with leading innovative vendors in higher growth markets.
Shift in Business Model: Transitioning from traditional IT distribution to accelerating adoption of next-generation technology solutions.
Component Shipment Delays: Hyve's performance was below expectations due to a component shipment delay from Q1 to Q2, which may result in demand shortfalls lasting a few quarters.
Economic Environment: The company is navigating an evolving macroeconomic environment, which presents uncertainties that could impact performance.
Profit Margin Decline: Gross profit margin declined year-over-year, primarily due to tough comparisons in Hyve and investments in design and assembly.
Increased Working Capital: Interest expense and finance charges were higher than expected due to increased working capital to support Hyve's largest customers.
Tariffs: The company continues to assess the macroeconomic environment, including potential impacts from tariffs.
Inventory Increase: Net working capital increased significantly due to the rise in Hyve inventory, which could pose liquidity risks.
Growth in Strategic Technologies: All portfolios, including cloud, cybersecurity, data and analytics, and Hyve grew by double digits in Q1.
Expansion of Partner Base: Expanded reach to 30,000 active partners and 500,000 end users transacting through the cloud marketplace.
Digital Capabilities: Launched Digital Bridge Microsoft Teams app to enhance partner transactions and workflows.
PACE Platform Expansion: Expanding the PACE platform into the Americas after gaining traction in Europe with over 50,000 partners.
Recognition and Awards: Named Distribution Partner of the Year by multiple industry leaders, reflecting strong market position.
Q2 Gross Billings Outlook: Expected in the range of $19.7 billion to $20.7 billion, representing approximately 5% growth at midpoint.
Q2 Net Revenue Outlook: Projected in the range of $13.9 billion to $14.7 billion, with a gross to net adjustment of approximately 29%.
Q2 Non-GAAP Net Income: Expected in the range of $205 million to $247 million.
Diluted Earnings Per Share: Projected in the range of $2.45 to $2.95 per diluted share.
Fiscal 2025 Free Cash Flow: Committed to generating $1.1 billion of free cash flow.
Long-term Outlook: Confident in long-term growth despite temporary shortfalls in Hyve.
Cash Dividend: The Board of Directors has approved a cash dividend of $0.44 per common share, payable on April 25, 2025, to stockholders of record as of the close of business on April 11, 2025.
Share Repurchases: Returned $138 million to stockholders in Q1, which included $101 million of share repurchases.
The earnings call summary highlights strong financial performance, significant market share gains in APJ and Europe, and robust growth in Hyve and AI investments. Despite concerns about component costs, no demand destruction was observed, and optimistic guidance was provided. The Q&A session revealed sustainable growth strategies and positive market sentiment, with Hyve's strong margin profile and strategic technology growth as key factors. Overall, the positive elements outweigh the concerns, suggesting a positive stock price movement.
The earnings call summary highlights strong financial performance, with record high revenue and earnings growth, exceeding guidance. The Q&A section confirms sustained demand and growth in key areas, such as Hyve and PCs, with positive expectations for Q4. Shareholder returns through dividends and buybacks further support a positive outlook. Despite some uncertainty in management's responses, overall sentiment is positive, indicating a likely stock price increase of 2% to 8%.
The earnings call summary indicates strong growth in strategic technologies and partner expansion, with a positive outlook for Q2 net revenue and non-GAAP net income. Shareholder returns are robust, with significant share repurchases and dividends. The Q&A section reveals cautious optimism due to macro uncertainties but highlights strong demand and growth in key areas. Despite some uncertainties, the overall sentiment is positive, with expectations of continued growth and financial health improvements. The commitment to a $1.1 billion free cash flow target and strong performance in APJ further support a positive outlook.
The earnings call revealed mixed results. While there was growth in gross billings and net revenue, issues like component delays and a decline in profit margins were concerning. The Q&A highlighted management's vague responses about Hyve's demand challenges, adding uncertainty. However, the dividend increase and share repurchases provide some positive sentiment. Overall, the combination of positive and negative factors suggests a neutral stock price movement in the short term.
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