TD Synnex’s new CEO is eying an increase in its services mix after returning to top-line growth.
The world’s largest distributor saw revenues rise 5.2% to $14.7bn in its Q3 ending 31 August (at the high end of expectations), with gross billings hiking 9% to $20.3bn (topping expectations). It returned to gross billings but not revenue growth in its previous quarter.
CEO Patrick Zammit characterised Q3 as a “strong quarter, reinforcing our optimism regarding IT market recovery”.
“Based on our Q3 results and Q4 expectations, we believe the market is returning to growth,” he said in his first earnings call (a transcript of which can be found here) since taking the reins from Rich Hume.
The NYSE-listed distributor, which claims to serve 150,000 IT solutions providers globally, said it saw “significant growth” in both its Endpoint and Advanced Solutions businesses.
Its European business set the pace during the quarter, growing revenues 8.6% to $4.6bn. Americas revenues totalled $9.1bn, up a more modest 2.4%.
Responding to a question about why gross margins were down during the quarter (from 7.0% to 6.5%), Zammit said the distributor will look to services to boost profits longer term.
“If we want to improve our GM percent and make it sustainable, we need to increase our mix of services, which is going to be at the core of the strategy,” he said.
“If you look at my track record [in the components business], I always focused, not only on the growth, but also growth at the right margin quality. And I intend to do the same here.”
