TD SYNNEX Corporation (NYSE:SNX) Q4 2025 Earnings Call Transcript

TD SYNNEX Corporation (NYSE:SNX) Q4 2025 Earnings Call Transcript January 8, 2026

TD SYNNEX Corporation beats earnings expectations. Reported EPS is $3.83, expectations were $3.68.

Operator: Good morning. My name is Jeannie, and I will be your conference operator today. I would like to welcome everyone to the TD SYNNEX Fourth Quarter and Full Year Fiscal 2025 Earnings Call. Today’s call is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you would like to remove your question, press 1 again. We request that you limit yourself to one question to allow time for other participants to ask their questions. Thank you. At this time, for opening remarks, I would like to pass the call over to Nate Friedel, Head of Investor Relations at TD SYNNEX. Nate, you may begin. Thank you. Good morning, everyone, and thank you for joining us for today’s call.

Nate Friedel: With me today is Patrick Zammit, our CEO, and David Jordan, our CFO. Before we continue, let me remind you that today’s discussion contains forward-looking statements within the meaning of the federal securities laws, including predictions, estimates, projections, or other statements about future events, including statements about our strategy, demand, plans and positioning, growth, cash flow, capital allocation, stockholder return, as well as our financial expectations for future fiscal periods. 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, in the Form 8-Ks we filed today, in the risk factors section of our Form 10-K, and our other reports and filings with the SEC.

We do not intend to update any forward-looking statements. Also, 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.tdsynex.com. This conference call is the property of TD SYNNEX and may not be recorded or rebroadcast without our permission. I will now turn the call over to Patrick. Patrick?

Patrick Zammit: Thank you, Nate. Good morning, everyone, thank you for joining us today. We are pleased to report another set of record results that complete an outstanding year for our organization. Over the full year, our business excluding HIVE increased its gross billings in the high single digits year over year, while improving both its gross margin and operating margin profile. Additionally, Hive grew its gross billings double digits, and well above our expectations, and has made further progress expanding its set of offerings and diversifying its customer base. Turning to the fourth quarter, our non-GAAP gross billings of $24.3 billion represented an increase of 15% year over year, or 13% in constant currency, and non-GAAP diluted earnings per share of $3.83 represented an increase of 24% year over year.

Both of these established new records for our company, demonstrating the value of our diversified business model, the successful execution of our long-term strategy. Within TD SYNNEX, excluding HIVE, our momentum continued with gross billings increasing 10% year over year, and gross profit and operating income each also increasing by double digits. Hive experienced another strong quarter, with gross billings increasing by more than 50% year over year, and ODM Centimeters gross billings increasing 39% year over year, driven by sustained broad-based demand in cloud data center infrastructure from our hyperscaler customers. HIVE’s operating income also grew meaningfully year over year, and continues to become a larger portion of our overall mix.

Our results reflect its strength across all regions and key technologies. North America continued to grow steadily supported by demand across each of our key customer segments, prioritization of increased security requirements, and ongoing shifts towards complex, multi-cloud architectures. Europe grew faster than we anticipated, as customers prioritized infrastructure software, PC device upgrades, modernization of aging infrastructure, despite the slower macroeconomic backdrop. We’ve seen over the last few quarters, Asia Pacific and Japan remain a key growth engine, driven by rapid cloud expansion, PC device upgrades, accelerating AI development, and strong demand from fast digitizing economies across the region. Lastly, our growth story in Latin America remains encouraging, delivering double-digit top-line momentum with strong engagement across our and customer base.

Our performance is a direct outcome of executing on the strategy we outlined at investor day. As we enter 2026, we are sharpening execution around four focus areas that will define what we want to be known for. We will start with omnichannel engagement. Through disciplined investments in our partner-first digital portal, we’ve built a frictionless interface that meets customers wherever they transact, and simplifies the experience end to end. By pairing seamless digital engagement with our personalized relationship-driven support, our highly skilled teams help customers navigate complexity, and move beyond transactions, earning the role of trusted adviser and forging long-term partnerships. We enhanced our partner-first digital bridge functionality in Q4, with a new AI assistant that enables customers to transact in a self-service mode 24 by 7 in their working environment.

This enhancement transforms how our customer sales teams access and act on information to support their end customers in real time. Our customers have already tested that the new capability has saved employees in sales and product procurement operations multiple hours per day. The industry is also recognizing our strength in this area. During the quarter, we were awarded UK iCloud Marketplace of the Year by CRN. We received this honor due to the differentiated quality of our platform, along with our leadership in customer enablement, and technical training. Helping our customers navigate what has been a transformative year in this space and ultimately accelerating growth throughout our cloud portfolio. The next strategic pillar is specialized go-to-market.

Our collection of specialist approach combines deep technical expertise with a deep understanding of our customers’ go-to-market strategy and needs. This dual competency accelerates technology adoption, and positions us as a growth catalyst for vendors and customers. It’s a differentiated capability that strengthens stickiness and expands our wallet share in high-growth segments. Our Q4 accomplishments within this pillar include winning a global security RFP, that will enable us to expand our portfolio in existing geographies with large enterprise customers, is a segment that has not historically purchased through TD SYNNEX. We have chosen due to our global presence and deep security specialization as well as for our ability to unlock substantial cost savings for the vendor while still improving customer experience.

Expect these customers will increasingly leverage our broader product and service portfolio over time, enabling them to consolidate spend, and capture additional growth in the market. Our emphasis on specialization has been recognized by our vendors as well. In Q4, Cisco named TD SYNNEX as distributor of the year globally, as well as regionally in The Americas and EMEA. These awards reflect how our specialization deep alignment with Cisco, and innovation across markets consistently deliver real business outcomes for our customers. Our next pillar is focused on delivering best-in-class enablement. We accelerate time to market by equipping our customers with advanced training certification programs, enablement tools, and precise resources and expertise tailored by technology, and customer segments.

This approach reduces ramp-up time strengthens customer capabilities, and drives faster adoption of high-value solutions. Which ultimately improves productivity and expands our share of wallet. During Q4, we announced AI game plan, a new customer-led workshop experience designed to help their sales teams translate AI opportunities into real-world business outcomes for their end customers. Are just at the beginning, and we continue turning our vast data lake and algorithms into industry-leading scalable digital services that enhance experiences lower costs, and unlock new revenue and efficiency opportunities for our existing customers. These strategies work in concert to support and substantiate our final strategic pillar, expanding our brand visibility.

Our brand promise making IT personal, describes our role as an indispensable partner in the technology channel. We aim to be visible, personal, and influential at every stage of the customer journey. Reinforcing trust and driving loyalty. This sustained presence amplifies our market relevance and underpins long-term growth. By bringing our strategy to life every day, across these four pillars, we are continuing to strengthen our competitive position as the strategic business partner that our partners can rely on to create more opportunities that deliver sustainable long-term growth. Moving to HIVE. We continue to experience sizable growth benefiting from broad-based demand for cloud data center infrastructure, across our hyperscaler customers.

And we believe that we are very well positioned to continue to get more opportunities that showcase our ability to support a wide breadth of programs for our customers. Our customers are turning to us for, among other things, our production flexibility, favorable US footprint, ability to co-develop complex solutions, and secure supply chain. These differentiators position us to continue to be a trusted partner in the assembly and deployment of complete rack-level systems across all market environments, through time. Looking ahead, I am bullish on the long-term value proposition of HIVE and IT distribution. We believe the untapped market opportunities in front of us in both businesses remain substantial as we aim to service a greater portion of the overall IT market through time.

Now I will pass it to David to go over the financial performance and outlook in more detail. David?

David Jordan: Thanks, Patrick, and good morning, everyone. We’re pleased to report a strong close to our fiscal year with fourth quarter results that exceeded the midpoint of our guidance across all key metrics. Gross billings increased 15% year over year reflecting broad-based strength across both distribution and highs. Our gross operating margins expanded year over year driven by a combination of operational efficiencies favorable mix, and disciplined margin management. Non-GAAP earnings per share increased 24% year over year delivering meaningful value for shareholders and underscoring the strength and value of our business model. Moving into the details. Our endpoint solutions portfolio increased gross billings 12% year over year due to continued demand for PCs driven by the ongoing Windows 11 refresh and sustained demand for premium devices.

Which has continued to be a tailwind. Globally, PCs have now increased double digits for four consecutive quarters, and we expect continued momentum heading into the initial months of 2026. Our advanced solutions portfolio increased gross billings by 17% year over year and 8% year over year when excluding the impact of HIVE. Driven by meaningful growth in cloud, security, software, and other strategic technologies. Hive, which is reported within the advanced solutions portfolio, increased more than 50% year over year primarily due to strength in programs associated with server and networking rack builds. In the quarter, there was approximately 29% reduction from gross billings to net revenue, which was in line with expectations. Our net treatment as a percentage of billings continues to remain elevated versus the prior year, primarily driven by a higher mix of software within distribution and increases in certain hive programs.

As a result, net revenue was $17.4 billion up 10% year over year and above the high end of our guidance range. Gross profit increased 15% year over year to $1.2 billion. Gross margin as a percentage of gross billings was 5%. Which was flat year over year. Non-GAAP SG and A expense was $698 million or 3% of gross billings, Our cost to gross profit percentage, which we define as the ratio of non-GAAP SG and A expense to gross profit was 58% in Q4. An improvement of approximately 100 basis points year over year, demonstrating our progress toward managing costs as a percentage of gross profit down over time. Non-GAAP operating income increased 18% year over year to $497 million Non-GAAP operating margin as a percentage of gross billings was 2.04%, representing a five basis point improvement year over year.

Interest expense and finance charges was $88 million, an increase of $1 million year over year. Our non-GAAP effective tax rate was approximately 24% compared to 21% in the prior year. Total non-GAAP net income was $313 million and non-GAAP diluted earnings per share was $3.83. An increase of 24% year over year and another all-time high. For TD SYNNEX. Free cash flow was $1.4 billion driven by strong earnings growth and meaningful improvements in our cash conversion cycle quarter over quarter. This also brings our annual free cash flow to $1.4 billion which was well ahead of our expectations. FY ’25 marks the third consecutive year that we have generated annual free cash flow of over $1 billion demonstrating our commitment to sustainable cash generation.

Within the quarter, we returned $209 million to shareholders with $173 million in share repurchases and $36 million in dividend payments. In total, we returned $742 million to shareholders this fiscal year bringing our cumulative return to shareholders over the last three years to over $2.2 billion This is approximately 61% of our free cash flow during that same time period within the medium-term range of 50% to 75% outlined at our Investor Day. Underscoring our belief in the strength of our business and the commitment to creating long-term shareholder value. As of November 30, we have $1.2 billion remaining on our share repurchase authorization. Net working capital was $2.9 billion down approximately $300 million from the prior year. Our gross cash days were twelve days, a two-day improvement from the prior year which I’ll talk more about shortly.

We ended the quarter with $2.4 billion in cash and cash equivalents and debt of $4.6 billion Our gross leverage ratio was 2.4 times and our net leverage ratio was 1.1 times. You’ll note that our cash position was elevated at year-end. This is the result of two primary factors. First, we successfully completed a new debt issuance during the quarter which will be used to pay off $700 million of debt that matures in August 2026. Additionally, as you’ll see in our working capital, our teams across both distribution and Hive did an outstanding job driving cash flow and made meaningful improvements toward optimizing the return on capital for both businesses. At the same time, it’s important to remember that the balance sheet is a snapshot at a single point in time.

At year-end, we had a few large receipts come in just before period end that would have normally fallen into the next quarter. We estimate Q4 benefited a few $100 million, which will normalize in FY 2026. Going forward, we continue to be laser-focused on generating sustainable free cash flow and improving our return on invested capital. For the current quarter, our Board of Directors has approved a cash dividend of $0.48 per common share. Will be payable on 01/30/2026. To shareholders of record as of the close of business on 01/16/2026. Moving on to our outlook. For the ‘6, we expect non-GAAP gross billings in the range of $22.7 billion to $23.7 billion representing an increase of approximately 12% at the midpoint. Our outlook is based on a euro to dollar exchange rate of 1.16.

Net revenue in the range of $15.1 billion to $15.9 billion which translates to an anticipated gross to net adjustment of 33%. Non-GAAP net income in the range of 243 to $283 million non-GAAP diluted earnings per share in the range of $3 to $3.5 per diluted share based on a weighted average shares outstanding of approximately 80.1 million. We are anticipating a cash outflow in Q1 in part due to typical seasonality of the business and due to the timing impact that benefited Q4, which we described earlier. We expect that our cumulative free cash flow over fiscal ’25 and fiscal ’26 will be in line with our medium-term framework, of 95% non-GAAP net income to free cash flow conversion. While we are not providing full-year guidance today, our long-term outlook remains consistent with the multiyear compounded annual growth rates that we outlined at our Investor Day earlier this year.

We’ll remain focused on delivering against that financial framework we’ve shared with you which includes stable growth, margin expansion over time, consistent cash generation, and deploying capital where it maximizes long-term value creation within our capital allocation framework. To close, we’re proud of what we’ve achieved this year, strong financial performance, disciplined execution, and continued progress against our strategy. We’re entering fiscal twenty-six with solid momentum, a healthy balance sheet, and a clear set of priorities that support durable growth. We’ll remain focused on operational excellence and delivering long-term value to shareholders. With that, we’ll open up the call for questions. Operator?

Q&A Session

Operator: Press star, then the number one on your telephone keypad. We request that you limit yourself to one question to allow time for other participants to ask their questions. If there is remaining time, you are welcome to re-queue with additional questions. Your first question comes from the line of Keith Housum with Northcoast Research. Please go ahead.

Keith Housum: Good morning, gentlemen, and thanks for the opportunity here. Obviously, outstanding growth in Europe and Asia Pacific, especially Asia Pacific and Japan there. As we think about that growth here that’s happening, guess, you talk about perhaps how much of it is market growth versus your ability to take market share and then second, how sustainable are some of these growth rates that we’re seeing going forward?

Patrick Zammit: Okay. Thanks, and good morning. So in FPGA, we for sure, we’ve experienced very nice, high double-digit growth. As you know, our share in the region is relatively low. So we are investing significantly in the region to gain share and grow of a market. So when you look at, the results, for sure, we gained significant share. We’re also positioned in countries, especially India, where, as you know, the growth of the market is significantly above the average of the region. And the team is focused on product segments, vendors, and customer segments which should make the growth sustainable for the long run. So very, very pleased, very proud of the team. And very confident for the future. The only thing I would add is that it’s not only the growth in sales. We’re also experiencing an over-proportional growth in operating income in the region as the team is investing, but also keeping a good cost discipline.

David Jordan: Great. And how about for Europe? Because Europe, obviously, was better than we would expect. You can say the macro conditions you have there.

Patrick Zammit: So just, so we got some market data. Europe, the European market grew let’s say, mid, mid-single digit, slightly better even than North America. But for sure, we had, our outstanding performance. We continue to gain significant share in the region. Have a strategy which is very well executed. Again, we are going after technologies, vendors, and customer segments. Where we can enjoy higher growth in the market. And that’s what you are seeing in the results.

David Jordan: Great. Thank you. I’ll get back in queue.

Nate Friedel: Good luck.

Keith Housum: Bye. Your next question comes from the line of Ruplu Bhattacharya with Bank of America. Please go ahead.

Ruplu Bhattacharya: Hi. Thanks for taking my questions. Patrick, you reported strong 15% growth in billings for 4Q and are guiding 12% billings growth for 1Q. How are you handicapping any end market demand destruction from higher component costs like DRAM and NAND And one for David, can you just update us on the CapEx spend for year as well as any investments planned for HIVE for 2026? Thank you.

Patrick Zammit: Yes. So good morning. Thanks a lot for the question. So again, the guidance for Q1 reflects what we see from the regions, from the BUs, I can confirm that the memory price have increased dramatically, and what we are seeing already is an increase in ASP on a series of product families, especially PCs, servers, storage, So the ASP increase is on one hand, the tailwind in the short term. What would be interesting to see is what will be the impact on the volume going forward But again, specifically for Q1, the guidance reflects the result of the bottom-up exercise with the regions and the forecast is done by technology by country. So

David Jordan: And, Ruplu, the only thing I would add is when you think about total CapEx, for TD SYNNEX, we’re probably planning for a similar level of CapEx in ’26 relative to ’25. And that would include the investments needed to support Hive’s continued growth.

Ruplu Bhattacharya: Can I just clarify, have you actually seen any demand destruction from higher component cost and is that factored into your guidance?

Patrick Zammit: So specifically, I haven’t seen it. And, again, what is reflected in the guidance is the outcome of our bottom-up exercise.

Ruplu Bhattacharya: Okay. Thank you for the details.

Operator: Your next question comes from the line of Eric Woodring with Morgan Stanley. Please go ahead.

Eric Woodring: Hey, guys. Good morning. Thank you very much for taking my question. And Patrick, I’m going to stay on the same line questioning there as Ruplu, which is just, can you maybe ask it a different way? Can you maybe help us understand what you’re seeing in terms of any potential pull forward in either the November or the January just with customers wanting to get ahead of future pricing increases for any of those kind of memory exposed products you just mentioned, PC servers, storage, smartphones, and just how you might think more broadly. I know you’re not guiding to fiscal twenty-six, but just how you think that this dynamic could have an impact on either revenue or profit seasonality for the year? Thanks so much.

Patrick Zammit: Okay. So let me start with the broad forwards. So it’s difficult to assess, but very pretty confident that we haven’t had any I would say, material brought forward in the last quarter. Now, again, what’s going so the Q1 guidance reflects the what the countries are seeing in the read in their region, and, again, for PC servers, and storage, If I look at the overall year, so the tailwind for us is clearly the increase. As you know, I mean, when, the vendors increase, their prices, we usually pass it through to the market. So no concerns, on the margin quality. On the demand, tailwind related to the ASP increase, And then what’s going to be interesting to watch is what will be the impact on the volume. And, as you know, the elasticity will be different by product category.

And probably the category which is going to be the most sensitive is PCs, But we have a very, very low position on consumer PCs. We primarily focus on commercial PC So I’m relatively confident that here, the elasticity should be, relatively low So I continue to be relatively optimistic about the prospects of the PC market. Let’s not forget that the refresh is not over. There is I mean, it started a little bit later than expected, so we should continue to benefit from it. In the next quarter. And then when you look at storage and server, I think here, again, the elasticity related to the price increase should be relatively low. So again, on the demand, I think the demand is going to be driven by other considerations, the need for customers to, embrace AI, upgrade their servers.

I mean, there’s a server refresh happening as we speak, and it’s not over. Again, I think on the demand, relatively, I should say, cautiously optimistic. And then the ASP increase should, should help.

Operator: Your next question comes from the line of David Voigt with UBS. Please go ahead.

David Voigt: Great. Thanks, guys. Maybe 1.5 for David. So David, you mentioned in your prepared remarks free cash flow cumulatively for 2025 and 2026 is going to be consistent with the long-term framework. Of 95% of net income. Given kind of the mix of business going into fiscal twenty twenty-six, it sounds like netted down is going to be a bigger portion of that based on the guide at least for Q1. Can you talk through kind of the mix of the revenue that drives that netted down effect? And then what sounds like a decline in free cash flow, even million of payments in Q4 that was pulled forward in ’20 versus ’25.

David Jordan: Sure. So good morning, David. When we in our prepared remarks, we said we expect cumulative free cash flow across ’25 and ’26 to be within the 95% Got it. Historically, our business consumes cash in the first half and generates cash in the second half. What you saw in Q4 is we had a really, really strong cash flow quarter. And so some of that will normalize as we go into Q1. So we still feel really good about generating cash for the full year, but we do expect an outflow in Q1 that will ultimately, be recouped as we work through the balance of the year. And it’s not it’s not as much mix driven per se as it’s just the additional cash that we generated in Q1 that will be Normalized or sorry, that we generated in Q4 that will be normalized in Q1.

Operator: Your next question comes from the line of Adam Tindle with Raymond James. Please go ahead.

Adam Tindle: Okay, thanks. Good morning. I wanna just acknowledge, Patrick, the strong return on capital, primarily great working capital management. But if I looked at the margin side of things, it does look like some of that is being a little bit suppressed, and you talk about investments in Hive. I wanted to ask about that. This has been an ongoing theme. I wonder if you could maybe just recap some of the prior investment decisions that you made in Hive and the outcomes that lead you to invest further, in Hive including, you know, any potential further new customers, for example. And for David, as we kind of, you know, look at this in the model, if you could maybe help us quantify or break out the investments in Hive. Is it you know, gonna increase throughout the year? Are we sort of at the right run rate? You know, what does this look like, you know, throughout, fiscal twenty-six? Thanks.

David Jordan: So maybe I can start, and Patrick, chime in. So in the prepared remarks, we talked about HIVE grew meaningfully both billings and profit. And so I wouldn’t impute that there’s a margin issue. In terms of investments in we continue to invest in HIVE. So Patrick talked about we’ve invested in leadership. We’ve invested in the engineering team. We’ve invested in some additional capabilities within the site. We have enough capacity to support our current demand. And we’ll continue to make investments to ensure Hive can truly be an end-to-end go-to player for tier one hyperscalers and others. And so we feel very good about how the business is performing, the investments we’ve made, and the prospects going forward.

Operator: Your next question comes from the line of David Paige with RBC Capital Markets. Please go ahead.

David Paige: Congrats on some really nice results here. Just a quick follow-up on Hive. The 50% growth. Is that come evenly split between ODM and Centimeters or both the customers? Or maybe just a little bit more details around the growth there? Thank you.

Patrick Zammit: Yes. So good morning. So we had so as you know, we have our ODM Centimeters business. That one, grew very nicely. In line, if not slightly better than the pace of the market. And then we had a very strong, also quarter with, let’s call it, supply chain, cut by division. As you know, this is a more lumpy opportunistic business. It’s a service we render, so it highly dependent on what the customers are asking for. And in Q4, we had a very strong quarter. And, better than expected. So that’s how I would summarize the sales growth for the quarter for Hive. Thank you.

Operator: Your next question comes from the line of Joseph Cardoso with JPMorgan. Please go ahead.

Joseph Cardoso: Maybe another follow-up on the Hive business. I just wanted to touch on, like, the progress that you’re making with Hive relative to capturing additional share with your existing large customers there and perhaps what you’re seeing from a portfolio or kind of the products that you’re shipping there towards mix moving more towards AI servers networking racks, storage racks, and the opportunity to onboard potentially a new large customer beyond the two that you have today. Thank you.

Patrick Zammit: Yes. Good morning. So again, I mean, we mentioned it at, in the prior calls. We continue to invest to expand the capabilities and capacity of Hive. And so we are very active in bidding on new programs, with our existing customers and potential new customers. I would say that, thanks to the investments we’ve made, especially in engineering, and some of the differentiators of HIVE in the market. Mean, we are seeing, we are making very good progress on, on winning some new programs and potentially new customers. I would say that, those programs take some time to ramp. So, again, when you look back at the our Q1 guidance, it reflects what we have as forecast for the next quarter. But going forward, yes, I would say we continue to make good progress and are confident about the prospects.

Operator: Your next question comes from the line of Austin Baker with Loop Capital. Please go ahead.

Austin Baker: Hey, guys. Thanks for taking the question. Just really quick, I guess, would love to understand how margins you view margins for Hive kind of going forward. Are they improving, normalizing as volume scales? And then lastly, how do you feel about the visibility for high programs today versus maybe this time last year?

David Jordan: So I can take that one. We feel pretty good about the overall margin profile of TD SYNNEX. When you think about what we laid out at Investor Day was a couple of things. We want to grow operating profit faster than billings, and so we’re constantly looking for ways both within Hive and within our distribution business to focus where we can make additional margin. And so, again, we feel very good about that business. Patrick?

Patrick Zammit: Yeah. I would just add that, when I look at the pipeline and I compare it to where we were last year, I think we are in very healthy position. And, again, that’s what is reflected in, in our Q1 guidance.

Operator: Your next question comes from the line of Vincent Colicchio with Barrington Research. Please go ahead.

Vincent Colicchio: Yeah, Patrick. Another good quarter on PCs. Just could you give us an update on your thinking in terms of what inning we’re in here?

Patrick Zammit: Yeah. So good morning. Thanks a lot. Yes. So as far as the game Q4, for PCs, broad-based, primarily driven, from commercial, So going forward, as I mentioned, I think that the refresh is not over. So, that tailwind should continue again in 2026. And we have also the weight of AIPCs who have a slightly higher ASP that should continue to be so there’s still a lot of potential for upgrading the PCs and make them AI compatible in the market. So that should be a tailwind. We talked about the memory price increase impacting the ASP of the PCs, that should be gained a tailwind. And then you have the uncertainty related to the price on the demand. But, again, the fact that we are primarily focused on the commercial PCs, I mean, I think we are in a slightly better position than we would have a high weight of consumer PCs. So I would say for next year, I’m continuing to be confident about the prospects of the PC market.

again, back to the guidance for Q1, I mean, the various assumptions have been taken into account. And are reflected in the guidance.

Vincent Colicchio: And did AIPCs perform incrementally better this quarter?

Patrick Zammit: to nicely increase. Yeah. It continues to the weight of AIPC continues So that’s a positive.

Vincent Colicchio: Thank you.

Operator: Your next question comes from the line of David Voigt with UBS. Please go ahead.

David Voigt: Hey guys, I just wanted to ask a follow-up, David. On the netted down impact, it looks like there’s a big tick up in Q1. That’s what I was trying to understand also. Is it mix driven? That’s gonna be a bigger headwind to your revenue conversion, kind of can you talk about what’s going on there from a netted down effect in the guide?

David Jordan: Yep. And sorry. I missed that part of your question. That’s my fault. No worries. So all good. Gross to net gross to net increased in Q4, and we’ve got an increase in to Q1. There’s a couple of dynamics. One, strategic technologies continues to become a bigger portion of our business. A lot of that business is software, which, as you know, is netted. Additionally, within Hive, there are a number of programs that are also net. And as the mix changes, that does influence that metric. And so if you think about how we set Q1, that’s probably an assumption of kind of the run rate gross to net that we expect for FY ’26. Hopefully, that helps.

David Voigt: And that would suggest that software and Hive continues to grow as a portion the overall billings pie. That a reasonable takeaway?

David Jordan: Exactly right. You’re right.

David Voigt: Great. Thank you.

Operator: There are no further questions at this time. I will now turn the call back over to Patrick for closing remarks.

Patrick Zammit: So thank you, everyone, for joining us. I want to close by emphasizing that we’ll remain committed to profitable growth and free cash flow generation. Our strategy is designed to ensure that every step forward strengthens our business and supports greater long-term value creation. With our reach, our people, our unique capabilities, and our momentum, we are confident in our ability to continue to succeed. Thank you, and have a great day.

Operator: That concludes today’s conference call. You may now disconnect. Have a nice day.