One of the themes in the release of recent financial results from major channel players has been how the UK and Europe have underperformed compared with other territories.
It could be seen in Computacenter’s recent results, where a strong US performance cheered investors and drove share price increases, and again in Q1 numbers shared by TD Synnex.
The distributor released numbers for the three months ending 28 February, with European revenues almost flat and lagging the growth the channel player enjoyed in the Americas and Asia-Pacific.
Across Europe, the distie reported a 0.4% increase in revenues to $5.1bn for the first quarter. This compared with improvements of 5.2% in Asia-Pacific and Japan, and 6.2% in the Americas. Operating income in Europe was $86m, compared with $108m in the same period a year earlier.
Overall revenues for the company improved by 4% to reach $14.5bn in Q1. Non-GAAP gross billings of $20.7bn were up by 7.5% and at the top end of the firm’s outlook.
In terms of operational units, the Advanced Solutions business grew by 7% year over year (YoY), with demand for integrated IT solutions continuing to drive growth. The Endpoint Solutions side of things also improved by 8%, with PC and mobile sales contributing to that increase.
As well as dealing with challenging macroeconomic conditions, there were specific issues on the Hyve side of the business that TD Synnex CEO Patrick Zammit addressed on an analyst call.
“Hyve was below our expectations due to a component shipment delayed from Q1 to Q2 and demand shortfalls, which may last a few quarters,” said Zammit. “While the business is temporarily soft, we are confident the situation will normalize as the market conditions continue to be favourable.”
He said that the company had overall delivered a decent set of Q1 numbers, and it had grown ahead of the market thanks to a business model that focused on tapping into higher margin areas and was able to take advantage of a global reach.
“In Q1, we expanded our reach to 30,000 active partners and 500,000 end users transacting through our cloud marketplace,” he said. “Our ability to deliver local expertise with a global reach makes us a go-to partner for vendors looking to expand in higher growth markets.
“The expansion of our line card also drives expansion of our partner base as we continue to enrich our value proposition and product offering in those markets. These results demonstrate our position as the vital link in the global IT ecosystem.
“IT solutions become more complex, driven by trends such as the convergence of hardware and software, and the proliferation of technologies such as cloud, cyber security and AI. Our collection of specialist go-to-market, combined with our market-leading depth of capabilities, position us to be the partner of choice for our customers and vendors.”
Zammit said that the foundation of the business meant it was able to weather-changing market conditions, with it unclear how traffic would affect IT prices, and the comapny felt it could maintain momentum through the rest of its fiscal year.
“We remain resilient in the face of uncertainty, and we lean on our broad technology and product portfolio and ecosystem to adapt to the continuously changing economic environment,” he said. “Throughout all of this, our North Star continues to be profitable growth and free cash flow. We will thoughtfully and carefully allocate excess cash to the highest return opportunities to ensure sustainable value creation for our customers and shareholders.”
Marshall Witt, CFO at TD Synnex, also indicated on the analyst call that it was still expecting growth despite tariffs and short-term issues around its Hyve operation.
“We continue to assess the macroeconomic environment, including tariffs,” he said. “And as of today, we are positioned to outperform the IT distribution market. In fiscal ’25, we continue to be committed to mid-single-digit gross billings growth and generating $1.1bn of free cash flow. Our outlook is adjusted to reflect temporary shortfalls in Hyve. However, we remain highly confident in the long-term outlook.”