TD Synnex operates within two business segments to its reseller and retail customer:

  • Endpoint Solutions (ES): personal computing, printers, mobile phones, endpoint technology software…
  • Advanced Solutions (AS): hybrid cloud, security, storage, servers, hyperscale infrastructure…

TD Synnex is expanding its presence in AI through its “Destination AI” program, supported by a portfolio of software, servers, networking, and PCs. Partnerships with industry leaders like Nvidia, Microsoft, Intel, IBM, and AMD play a critical role in this strategy. Apple, its largest supplier, contributed 11% of 2023 revenue, alongside key partners such as Cisco, Dell, HP, and Samsung. With a reach extending to over 150,000 customers, including value-added resellers, corporate resellers, government contractors, system integrators, and managed service providers, the group maintains a broad and diverse client base.

The company operates on thin margins, influenced by declining IT product prices, short product life cycles, and pricing pressures from OEMs and resellers. Revenue concentration on select products or customers amplifies this pressure. Demand depends heavily on factors such as new product launches, hardware replacement cycles, growing cloud adoption, and overall economic trends.

TD Synnex operates in an exciting industry where The IT Services market is projected to reach $1,420 billion in 2024, with IT Outsourcing leading the way at $541.1 billion. Growth is expected to continue at an annual rate of 5.76% through 2029, pushing the market to $1,879 billion. The US dominates globally, driven by its focus on cloud computing and digital transformation, with revenues expected to hit $522 billion in 2024.

The group must face competition from regional distributors to global players. In the Americas, key competitors include Arrow Electronics, Ingram Micro, and ScanSource. Europe’s market is fragmented, with competitors such as ALSO Holding, Esprinet, and international players like Westcon-Comstor (acquired in 2017). In APJ, competition spans global distributors like Ingram Micro and regional players like VSTECS and Redington Group.

It maintains balanced revenue across its segments. In Q3 2024, ES generated $6.9B (+3% YoY), driven by growth in PCs, components, mobile, and services, while AS reached $7.8B (+8% YoY), boosted by a 12% increase in Hyve, Hybrid Cloud, Software, and Services. TD’s strategic technologies contributed $5.3B in non-GAAP gross billings (+23%), fueled by strong growth in cloud, hyperscale infrastructure, and security.

Over the past decade, TD Synnex's revenue surged from $13.84B in 2013 to $57.56B in 2023, marking a 315% increase. Analysts expect steady growth, forecasting $63.9B by 2026. EBITDA and EBIT followed a similar upward trend, rising from $443M and $406M to $1.75B and $1.64B, respectively, during the same period. Net income grew from $180M to $626M, with projections reaching $930M by 2026.

Despite this growth, the industry’s low-margin nature is evident. Net margin declined from 2.14% in 2020 to 1.09% in 2023, while EBITDA margin fell from 4.94% to 3.04%. ROA and ROE have remained relatively stable, ranging between 3-4% and 12-14% from 2022 to 2026.

TD Synnex is well-positioned to benefit from the AI boom, thanks to its diverse product portfolio, extensive customer base, and strategic positioning. However, operating in a highly competitive, low-margin industry leaves little room for error. Despite a 2023 P/E ratio of 14.7, challenges like limited innovation or overly high prices could hinder future growth.