IT distribution giant TD SYNNEX (NYSE: SNX) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 6.6% year on year to $15.65 billion. On top of that, next quarter’s revenue guidance ($16.9 billion at the midpoint) was surprisingly good and 6% above what analysts were expecting. Its non-GAAP profit of $3.58 per share was 17.5% above analysts’ consensus estimates.

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“Our third quarter non-GAAP gross billings and diluted earnings per share established new records for our company” said Patrick Zammit, CEO of TD SYNNEX.

Company Overview

Serving as the crucial middleman in the technology supply chain, TD SYNNEX (NYSE: SNX) is a global technology distributor that connects thousands of IT manufacturers with resellers, helping businesses access hardware, software, and technology solutions.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $60.97 billion in revenue over the past 12 months, TD SYNNEX is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.

As you can see below, TD SYNNEX’s 24.4% annualized revenue growth over the last five years was incredible. This shows it had high demand, a useful starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. TD SYNNEX’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 1.3% over the last two years was well below its five-year trend.

This quarter, TD SYNNEX reported year-on-year revenue growth of 6.6%, and its $15.65 billion of revenue exceeded Wall Street’s estimates by 3.5%. Company management is currently guiding for a 6.7% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 2.2% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its newer products and services will not lead to better top-line performance yet.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

TD SYNNEX’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 2% over the last five years. This profitability was inadequate for a business services business and caused by its suboptimal cost structure.

Analyzing the trend in its profitability, TD SYNNEX’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, TD SYNNEX generated an operating margin profit margin of 2.5%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

TD SYNNEX’s flat EPS over the last five years was below its 24.4% annualized revenue growth. However, its operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For TD SYNNEX, its two-year annual EPS growth of 3.7% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q3, TD SYNNEX reported adjusted EPS of $3.58, up from $2.86 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects TD SYNNEX’s full-year EPS of $12.46 to grow 5.7%.

Key Takeaways from TD SYNNEX’s Q3 Results

It was good to see TD SYNNEX beat analysts’ EPS expectations this quarter. We were also excited its EPS guidance for next quarter outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 1.7% to $152.84 immediately following the results.

TD SYNNEX may have had a good quarter, but does that mean you should invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.