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The call communicated a strongly positive operating quarter with record billings, substantial year-over-year revenue and profit growth, major vendor and hyperscaler wins, and aggressive investments to capture AI-driven demand. Offsetting risks include near-term free cash flow consumption driven by Hyve working capital and capex, inventory accumulation (partly strategic), a Hyve margin mix impact, and supply-side risks (memory/CPUs). Management provided cautious but constructive guidance and emphasized that some inventory-related margin benefits are temporary and that Hyve ramps will materialize in late FY2026/early FY2027.
For Q3 fiscal 2026 management guided non‑GAAP gross billings of approximately $27.7 billion ± $0.5 billion (about +22% at the midpoint), a gross‑to‑net adjustment of roughly 33%, revenue of ~$18.6 billion ± $0.4 billion, non‑GAAP net income of about $361 million ± $20 million, and non‑GAAP diluted EPS of ~$4.50 ± $0.25 (up ~26% at the midpoint) based on ~79.4 million diluted shares outstanding; the outlook assumes no material contribution yet from Hyve’s newly onboarded customers, which are expected to ramp in late fiscal 2026 or early fiscal 2027.
Non-GAAP gross billings of $28.9B, up 33% year-over-year (32% in constant currency), exceeding the high end of guidance. Revenue guidance for Q3 of ~$18.6B and gross billings guidance of ~$27.7B (midpoint up ~22%).
Non-GAAP operating income of $615M, up 49% year-over-year (48% cc). Non-GAAP EPS of $4.85, up 62% year-over-year and above the high end of guidance. GAAP operating income $519M (+58% YoY) and GAAP EPS $4.15 (+88% YoY).
Distribution non-GAAP gross billings $23.4B, up 22% year-over-year. Distribution non-GAAP operating income $434M, up 36% YoY, and operating margin improved to 1.9% of gross billings (+19 bps YoY). Endpoint Solutions grew 13% YoY driven by higher ASPs and unit growth; Advanced Solutions up 31% YoY.
Hyve non-GAAP gross billings $5.5B, up 117% year-over-year, ahead of expectations. Hyve non-GAAP operating income $181M, up 89% YoY. Manufacturing represented ~2/3 of Hyve, supply chain ~1/3, with manufacturing growth outpacing total Hyve.
Selected by HP as one of two global distribution partners covering networking, cloud and AI (including Juniper assets). Secured at least one program with each of the top five U.S. hyperscalers and begun early ramps; issued an equity warrant to Amazon tied to program expansion.
Announced expansion of manufacturing footprint by more than 1 million sq ft across multiple U.S. locations to support hyperscaler programs and ramps expected late FY2026/early FY2027. Investing in engineering, liquid cooling and capacity ahead of demand.
Returned $112M via repurchases and $39M via dividends in the quarter; board approved $0.48/share cash dividend. Ended the quarter with $1.1B cash and cash equivalents and net leverage of 1.6x (modestly below medium-term framework).
Highlighted growth drivers: PartnerFirst digital capabilities, AI/machine learning personalization, specialist go-to-market segmentation, and enablement investments — enabling share gains especially in EMEA and strong SMB growth.
Good morning. My name is Tracy, I will be your conference operator today. I'd like to welcome everyone to the TD SYNNEX second quarter fiscal 2026 earnings call. Today's call is being recorded. After the speaker's remarks, there will be a question and answer session. I would like to pass the call over to Nate Friedel, Head of Investor Relations at TD SYNNEX.
Good morning, everyone. Welcome to TD SYNNEX's fiscal 2026 second quarter earnings call. Joining me on today's call are Chief Executive Officer, Patrick Zammit, and Chief Financial Officer, David Jordan. Before we continue, let me remind you that today's discussion contains forward-looking statements within the meaning of the federal securities laws. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties discussed in today's earnings release, the Form 8-K we filed today, the Risk Factors section of our Form 10-K, and our other reports and filings with the SEC. During this call, we will reference certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP results are included in our earnings press release and the related Form 8-K available on our investor relations website, ir.tdsynnex.com. I will now turn the call over to Patrick.
Thank you, Nate. Good morning, everyone. We delivered a record quarter with broad-based strength across distribution and Hyve, building on the momentum we have carried out of recent quarters. Our results reflect consistent execution against our strategy and deepening relationships within a macro enviro...