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01/10 04:25
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Non-GAAP Gross Billings (Q4) $24.3 billion, an increase of 15% year-over-year (13% in constant currency). Reasons: Broad-based strength across distribution and Hyve.
Non-GAAP Diluted Earnings Per Share (Q4) $3.83, an increase of 24% year-over-year. Reasons: Operational efficiencies, favorable mix, and disciplined margin management.
Gross Billings (Excluding Hyve, Q4) Increased 10% year-over-year. Reasons: Broad-based demand and improved gross profit and operating income.
Hyve Gross Billings (Q4) Increased more than 50% year-over-year. Reasons: Sustained demand in cloud data center infrastructure from hyperscaler customers.
ODM/CM Gross Billings (Q4) Increased 39% year-over-year. Reasons: Broad-based demand in cloud data center infrastructure.
Net Revenue (Q4) $17.4 billion, up 10% year-over-year. Reasons: Higher mix of software within distribution and increases in certain Hyve programs.
Gross Profit (Q4) $1.2 billion, an increase of 15% year-over-year. Reasons: Operational efficiencies and favorable mix.
Non-GAAP SG&A Expense (Q4) $698 million, representing 3% of gross billings. Reasons: Improved cost management.
Non-GAAP Operating Income (Q4) $497 million, an increase of 18% year-over-year. Reasons: Operational efficiencies and favorable mix.
Non-GAAP Net Income (Q4) $313 million. Reasons: Strong earnings growth.
Free Cash Flow (FY 2025) $1.4 billion, well ahead of expectations. Reasons: Strong earnings growth and improvements in cash conversion cycle.
Endpoint Solutions Gross Billings (Q4) Increased 12% year-over-year. Reasons: Continued demand for PCs driven by Windows 11 refresh and premium devices.
Advanced Solutions Gross Billings (Q4) Increased 17% year-over-year (8% excluding Hyve). Reasons: Growth in cloud, security, software, and strategic technologies.
Hyve Gross Billings (Advanced Solutions Portfolio, Q4) Increased more than 50% year-over-year. Reasons: Strength in server and networking rack builds.
Gross Cash Days (Q4) 12 days, a 2-day improvement from the prior year. Reasons: Improved cash flow management.
Net Working Capital (Q4) $2.9 billion, down approximately $300 million from the prior year. Reasons: Optimized return on capital.
Cash and Cash Equivalents (Q4) $2.4 billion. Reasons: Debt issuance and improved cash flow.
Debt (Q4) $4.6 billion. Reasons: New debt issuance to pay off maturing debt.
Gross Leverage Ratio (Q4) 2.4x. Reasons: Debt management.
Net Leverage Ratio (Q4) 1.1x. Reasons: Strong cash position.
Hyve's offerings expansion: Hyve has expanded its set of offerings and diversified its customer base, contributing to double-digit growth in gross billings.
AI assistant in PartnerFirst digital portal: Introduced a new AI assistant in the PartnerFirst digital portal, enabling 24/7 self-service transactions and saving employees multiple hours per day.
AI game plan workshop: Launched a customer-led workshop experience to help sales teams translate AI opportunities into real-world business outcomes.
Regional growth: North America showed steady growth, Europe grew faster than anticipated despite a slower macroeconomic backdrop, Asia Pacific and Japan were driven by rapid cloud expansion and AI development, and Latin America delivered double-digit top-line momentum.
Global security RFP win: Won a global security RFP, enabling portfolio expansion in existing geographies with large enterprise customers.
Operational efficiencies: Gross operating margins expanded year-over-year due to operational efficiencies, favorable mix, and disciplined margin management.
Cash flow improvements: Generated $1.4 billion in free cash flow for the year, marking the third consecutive year of over $1 billion in annual free cash flow.
Omnichannel engagement: Enhanced PartnerFirst digital bridge functionality with AI, improving customer experience and operational efficiency.
Specialized go-to-market approach: Focused on deep technical expertise and understanding of customer needs, strengthening market position and wallet share.
Brand visibility: Efforts to expand brand visibility through strategic initiatives and customer engagement.
Macroeconomic Backdrop in Europe: Slower macroeconomic conditions in Europe could impact customer prioritization of infrastructure software, PC device upgrades, and modernization of aging infrastructure.
Asia Pacific and Japan Growth Dependency: Rapid cloud expansion, PC device upgrades, and accelerating AI development in Asia Pacific and Japan are key growth drivers, but reliance on these factors could pose risks if demand slows.
Latin America Growth Sustainability: While Latin America shows double-digit growth, maintaining this momentum could be challenging due to potential economic or market fluctuations.
Hyve Business Dependency: Hyve's growth is heavily reliant on broad-based demand for cloud data center infrastructure and hyperscaler customers, which could be impacted by market or technological shifts.
Debt and Leverage: The company has a gross leverage ratio of 2.4x and net leverage ratio of 1.1x, which could pose financial risks if cash flow generation or debt servicing capabilities are disrupted.
Seasonal Cash Flow Variability: The company anticipates cash outflows in Q1 due to seasonality and timing impacts, which could affect liquidity management.
Regulatory and Compliance Risks: Potential risks related to compliance with federal securities laws and other regulatory requirements, as highlighted in the forward-looking statements disclaimer.
Revenue Expectations: For the first quarter of fiscal '26, non-GAAP gross billings are expected to range from $22.7 billion to $23.7 billion, representing an increase of approximately 12% at the midpoint. Net revenue is projected to range from $15.1 billion to $15.9 billion.
Earnings Projections: Non-GAAP net income is expected to range from $243 million to $283 million. Non-GAAP diluted earnings per share is projected to range from $3 to $3.50 per diluted share, based on a weighted average shares outstanding of approximately 80.1 million.
Cash Flow Outlook: A cash outflow is anticipated in Q1 due to typical seasonality and timing impacts that benefited Q4. However, cumulative free cash flow over fiscal '25 and fiscal '26 is expected to align with the medium-term framework of 95% non-GAAP net income to free cash flow conversion.
Market Trends and Growth: Globally, PCs have increased double digits for 4 consecutive quarters, with continued momentum expected into early 2026. Advanced Solutions portfolio is projected to grow, driven by cloud, security, software, and strategic technologies. Hyve is expected to continue benefiting from strong demand for cloud data center infrastructure and server/networking rack builds.
Long-Term Financial Framework: The company remains committed to the multiyear compounded annual growth rates outlined at Investor Day, focusing on stable growth, margin expansion, consistent cash generation, and capital deployment to maximize long-term value creation.
Dividend Payments: $36 million in dividend payments were made in the fourth quarter of fiscal 2025.
Quarterly Dividend: The Board of Directors approved a cash dividend of $0.48 per common share, payable on January 30, 2026, to shareholders of record as of January 16, 2026.
Share Repurchases: $173 million was spent on share repurchases in the fourth quarter of fiscal 2025.
Cumulative Shareholder Return: Over the last three years, $2.2 billion has been returned to shareholders, representing approximately 61% of free cash flow during that period.
Remaining Share Repurchase Authorization: As of November 30, 2025, $1.2 billion remains authorized for 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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