Teleconferência de Resultados do 3º Trimestre Fiscal de 2026 da TD SYNNEX (SNX): Faturamento da Hyve Salta 117%

A TD SYNNEX relatou um forte crescimento no terceiro trimestre fiscal de 2026 nos segmentos de Distribuição e Hyve, impulsionado pela infraestrutura de data centers, tecnologias relacionadas à IA e novos programas de hyperscalers. O lucro cresceu mais rápido do que o faturamento bruto, mas as necessidades de capital de giro da Hyve resultaram no consumo de aproximadamente US$ 1 bilhão em fluxo de caixa livre.

Principais Destaques

• O faturamento bruto não-GAAP aumentou 40% na comparação anual, atingindo US$ 31,8 bilhões, enquanto o lucro operacional não-GAAP subiu 55%, para US$ 736 milhões, e o LPA não-GAAP avançou 59%, para US$ 5,68.
• O faturamento bruto do segmento de Distribuição cresceu 27%, para US$ 24,8 bilhões, com crescimento de dois dígitos em todas as regiões e força particular em infraestrutura de data centers.
• O faturamento bruto da Hyve saltou 117%, para US$ 7 bilhões. A área de Manufatura cresceu mais de 130% e representou aproximadamente dois terços do faturamento da Hyve.
• A margem operacional não-GAAP da Hyve caiu de 5,04% para 3,61%, principalmente devido a uma contribuição maior de programas de servidores de IA que são lucrativos, porém de menor margem.
• O consumo de fluxo de caixa livre foi de aproximadamente US$ 1 bilhão, à medida que a TD SYNNEX investiu em estoques da Hyve, novos clientes e no ganho de escala dos programas (ramps). A administração espera que a empresa gere caixa no quarto trimestre fiscal.
• Para o quarto trimestre fiscal de 2026, a administração projetou um faturamento bruto não-GAAP de US$ 31,9 bilhões, mais ou menos US$ 500 milhões, e LPA diluído não-GAAP de US$ 5,90, mais ou menos US$ 0,25.

Principais Dados Financeiros

A TD SYNNEX retornou US$ 100 milhões por meio de recompra de ações e US$ 38 milhões por meio de dividendos durante o trimestre. Seu conselho de administração aprovou um dividendo trimestral de US$ 0,48 por ação ordinária, pagável em 30 de outubro de 2026.

Desempenho Operacional e de Negócios

Distribuição

O lucro bruto do segmento de Distribuição aumentou 22%, para US$ 1,15 bilhão. O faturamento bruto de Endpoint Solutions subiu 16%, sustentado por preços médios de venda de PCs mais altos, apesar de um declínio modesto em unidades. A administração afirmou que as unidades de PCs caíram a uma porcentagem de um dígito médio a alto, enquanto a precificação de componentes e a migração para sistemas intermediários e premium sustentaram o crescimento em valor.

Os PCs com IA responderam por quase 50% da receita de PCs da TD SYNNEX. A administração também disse que o ciclo de renovação de PCs não terminou, embora os aumentos de preços estejam afetando os volumes, particularmente no mercado consumidor, onde a empresa tem exposição limitada.

O faturamento bruto de Advanced Solutions aumentou 37%, impulsionado por infraestrutura, software e tecnologias relacionadas à IA. A administração atribuiu a pressão sobre a margem bruta ao mix de produtos e transações, e não a uma precificação comparável (like-for-like) mais fraca. Vários grandes pedidos de infraestrutura apresentaram margens percentuais abaixo da média, mas permaneceram lucrativos e geraram o que a empresa descreveu como retornos atraentes sobre o capital investido.

A demanda corporativa incluiu renovações de computação geral, infraestrutura de IA e modernização de armazenamento. O segmento de redes (networking) também se manteve forte, sustentado por exigências de renovação, Wi-Fi 7, switches usados para infraestrutura de IA e aumentos modestos de preços.

A TD SYNNEX destacou um acordo para apoiar a implantação de uma grande fábrica de IA corporativa impulsionada pela NVIDIA. A IBM também expandiu seu relacionamento com a empresa para mais 20 países na Europa, Ásia-Pacífico e América Latina.

Clientes que utilizam regularmente as ofertas digitais da TD SYNNEX aumentaram seus gastos com a empresa a um ritmo quase duas vezes mais rápido do que clientes comparáveis, de acordo com a administração. Essas ofertas incluem PartnerFirst e Digital Bridge, com agentes de IA incorporados à experiência do cliente.

Hyve

O lucro bruto da Hyve subiu 47%, para US$ 276 milhões. O faturamento de Manufatura cresceu mais de 130%, enquanto os Serviços de Cadeia de Suprimentos (Supply Chain Services) se expandiram mais de 90%.

A unidade está acelerando três novos clientes de hyperscalers e múltiplos programas dentro de cada relacionamento. Esperava-se que as remessas sob programas de novos clientes anunciados anteriormente começassem no quarto trimestre fiscal. Os novos contratos vencidos são predominantemente programas de manufatura e redes, com a administração esperando acelerações mais rápidas no quarto trimestre fiscal e no primeiro trimestre fiscal de 2027.

A Hyve também está trabalhando com múltiplos clientes em racks de rede avançados resfriados a líquido, previstos para entrar em produção no primeiro semestre do ano fiscal de 2027. A administração afirmou que os programas conquistados recentemente apresentam margens neutras a aditivas (accretive) em relação ao desempenho atual da Hyve, sustentando uma modesta melhoria de margem à medida que os programas amadurecem.

Projeções da Administração (Guidance)

A administração espera que o faturamento bruto da Hyve aumente sequencialmente no quarto trimestre fiscal à medida que os programas de novos clientes ganham escala. A empresa também espera gerar caixa durante o trimestre, à medida que o capital de giro implantado recentemente comece a se normalizar.

Olhando para o ano fiscal de 2027, a administração espera uma melhoria adicional na conversão de caixa da Hyve à medida que os programas amadurecerem. Alguns grandes programas podem não atingir seu pleno potencial até o segundo semestre do ano fiscal de 2027.

Riscos e Pontos de Atenção

• A rápida expansão da Hyve exigiu investimentos substanciais em estoque e capital de giro, resultando em um consumo trimestral de fluxo de caixa livre de aproximadamente US$ 1 bilhão.
• A margem operacional da Hyve contraiu à medida que grandes programas de servidores de IA aumentaram sua participação no mix de negócios.
• Os programas de clientes são geralmente de longo prazo, mas a administração reconheceu que contratos podem ser cancelados e que os volumes esperados podem mudar.
• Os aumentos de preços nos PCs estão pesando sobre a demanda em unidades, embora a administração tenha afirmado que o efeito é menos pronunciado no mercado corporativo, onde a TD SYNNEX é mais ativa.
• A Hyve continua em um período de aceleração de clientes, expansão de manufatura e investimentos elevados em talentos de engenharia, expertise técnica e capacidades operacionais.

Destaques da Sessão de Perguntas e Respostas com Analistas

Margens da Hyve: A administração afirmou que as margens se estabilizaram. Os novos programas são predominantemente contratos de manufatura com margens neutras a aditivas, enquanto as eficiências devem melhorar à medida que os programas existentes amadurecerem.

Demanda por data centers: A administração permaneceu cautelosamente otimista quanto ao ano fiscal de 2027, citando investimentos corporativos em IA agêntica, demanda contínua de hyperscalers e nenhuma indicação atual de fraqueza nas previsões dos clientes ou no backlog.

Conversão de caixa: A TD SYNNEX espera que os dias do ciclo bruto de conversão de caixa melhorem em cerca de dois dias sequencialmente no quarto trimestre fiscal. A administração disse que programas maduros da Hyve geram fluxo de caixa livre, enquanto o consumo no ano fiscal de 2026 refletiu investimentos prévios à aceleração dos programas.

Margens de Distribuição: A administração descreveu as margens comparáveis (like-for-like) como estáveis. A pressão relatada resultou principalmente de transações maiores de infraestrutura e do mix de produtos de IA, que geralmente carregam margens percentuais menores.

Consolidação de canais: A administração afirmou que os clientes exigem cada vez mais suporte em ambientes complexos e multifornecedores, enquanto os fornecedores de tecnologia estão reduzindo o número de relacionamentos diretos e distribuidores. A TD SYNNEX acredita que ambas as tendências podem sustentar ganhos contínuos de participação de mercado.

Transcrição Completa da Teleconferência de Resultados

Transcrição completa da teleconferência de resultados

Comentários da administração

Operator

Good morning. My name is Rebecca, and I will be your conference operator today. I would like to welcome everyone to the TD SYNNEX Third Quarter Fiscal 2026 Earnings Call. Today's call is being recorded. [Operator Instructions]

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.

Nate Friedel

Good morning, everyone, and welcome to TD SYNNEX Fiscal 2026 Third 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, including predictions, estimates, projections or other statements about future events, including statements about our strategy, demand, plans and positioning, growth, cash flow, capital allocation and 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-K 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.tdsynnex.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 Zammit

Thank you, Nate, and good morning, everyone. We delivered another record quarter with distribution in Hyve, both performing above our expectations and growing above market within the quarter.

Results were broad-based across geographies, technologies, customers and programs with notable strength in data center infrastructure. Our success securing opportunities with new and existing customers, particularly within Hyve required working capital investment to support these rounds. As David will discuss in more detail, those investments affected near-term cash flow during the quarter, but position us to support committed customer demand and future growth.

Looking beyond the quarter, we continue to see encouraging developments across the technology landscape. Enterprise AI adoption is progressing toward broader production deployments. Data center modernization remains a priority as organizations prepare for next-generation infrastructure requirements. While AI is driving new security, governance and compliance requirements across technology environments. We believe these trends expand our opportunities across both distribution and Hyve and reinforce our confidence in the long-term growth opportunity ahead.

I will now begin with distribution. Distribution delivered strong growth during the quarter with non-GAAP gross billings reaching $24.8 billion, up 27% year-over-year, exceeding our expectations and growing above market across each of all regions. Our performance reflects a broader trend across the technology ecosystem. As technology environments become more complex, Customers increasingly need help integrating, deploying, securing and managing solutions across multiple vendors and technologies. Vendors are looking for partners but cannot only efficiently reach customers but enable customer capabilities, activate demand and execute consistently around the world. This is increasing the strategic importance of distribution. One area we are particularly encouraged by is the growing number of enterprises moving from AI experimentation towards production scale centralized AI factory deployments.

This quarter, TD SYNNEX and [indiscernible] signed an agreement to support an NVIDIA AI factory powered by [indiscernible]. This is one of the largest enterprise AI factory infrastructure deployments expected to be delivered through the channel, bringing together the design, integration, deployment, day to co-admin operations, financing and supply chain capabilities needed to operationalize a sophisticated NVIDIA-based AI factory platform for a large enterprise. As enterprises evaluate next-generation platforms, we are seeing growing demand for partners but can simplify complexity and accelerate implementation through their enablement capabilities. AI factories have the potential to power transformative new products and services but realizing that potential requires far more than access to compute. Organizations that ensure AI investments are secure, govern, cost-effective and aligned with measurable business outcomes.

Similar to the evolution of cloud computing, we believe disciplines such as financial operations and security operations will become increasingly important as AI becomes embedded in business-critical processes. Organizations will need support, selecting the right models for the right workloads, deploying them on the right infrastructure and balancing performance, security and governance across edge, private, hybrid and public cloud environments. While still early in the adoption curve, deployments of this scale signal a market that is moving toward broader deployment. As AI becomes embedded across more users, workloads and business processes, we believe the requirements to secure government optimize and support these environments will continue to expand.

Customers are also seeking greater flexibility in how they engage with us, and have seen benefits from our digital strategy. Customers regularly engaging across our digital offerings have grown their spend with TD SYNNEX at nearly twice the pace of similar customers with us. Through solutions such as PartnerFirst and digital bridge, enhanced with AI agents embedded throughout the customer experience. We help customers identify opportunities, simplify purchasing decisions and engage efficiently across a broad range of technologies and vendors. We view digital engagement as an extension of our broader enablement strategy. Whether customers engage through digital platforms, technical specialists, enablement programs or a combination of all 3, our objective remains the same: helping our customers build capabilities, grow their business and better serve end users.

The same capabilities creating value for customers are also important for vendors. As technology portfolios expand and customer requirements become more specialized, vendors are seeking partners that can combine global execution with expertise across technologies, customer segments and geographies. This is expanding the addressable market served through distribution. Earlier this quarter, IBM expanded its relationship with TD SYNNEX into 20 additional countries across Europe, Asia Pacific and Latin America. We believe this expansion reflects the strength of our go-to-market model and the confidence of vendors place in our ability to activate demand, execute consistently across end markets around the world and accelerate growth.

Collectively, over the last year, we've added multiple billion dollars of incremental gross billings into the portfolio through new customer wins and an expanded vendor line card. More importantly, we believe these relationships deepen our role in the technology ecosystem and create additional opportunities for long-term profitable growth and potential earnings expansion.

Turning to Hyve. Hyve delivered a strong quarter with non-GAAP gross billings of $7 billion, up 117% year-over-year exceeding our expectations as we saw continued increased demand from existing customers and programs. Our previously announced programs with new customers have progressed as planned. with shipments expected to begin in our fiscal fourth quarter. These programs improved visibility into future growth, including maintaining a healthy pipeline of opportunities and support a broader customer and program mix over time. We believe increasingly sophisticated infrastructure requirements are elevating the importance of expertise in engineering validation, manufacturing and supply chain execution. As a result, customers are engaging Hyve earlier in the development process, creating additional opportunities to expand our relationship with our current customer base and potential new customers.

One example is our work with multiple customers on the design of advanced liquid crude networking racks, but are expected to enter into production in the first half of fiscal year '27. At the same time, we remain focused on ensuring growth translates into attractive long-term returns. While customer demand and revenue growth remained robust during the quarter, profitability remains an important area of focus. The business is working through a period of significant customer ramps, manufacturing expansion and elevated investment activity, including engineering talent, technical expertise and operating capabilities as we support multiple large growth initiatives at the [ second ].

Several opportunities in our pipeline are being awarded at margin profiles that are neutral to accretive relative to our current operating performance. As previously awarded programs mature and new programs ramp, we expect modest margin improvement over time. even as we continue investing to support future growth. Our manufacturing investments remained aligned with awarded customer programs and our focus remains on deploying capital in ways that strengthen our competitive position and are expected to generate attractive returns over time.

In closing, we believe both distribution in Hyve continued to benefit from durable technology trends and expanding customer relationships. Within distribution, enterprise AI adoption digitally enabled experiences faired with human expertise and growing technology complexity are increasing the value we provide to customers and vendors. Within Hyve, sophisticated infrastructure architectures are driving deeper customer engagement and expanding opportunities across a broader set of customer programs. While we have deployed significant capital to support customer growth initiatives, particularly within Hyve, we believe those investments strengthen our competitive position, support future growth and increase the long-term earnings power of the company. As these programs mature, we expect free cash flow generation and conversion to improve, and we remain focused on demonstrating progress as we close fiscal year '26 and enter fiscal '27.

With that, I'll turn it over to David to discuss our financial performance and outlook in greater detail. David?

David Jordan

Thank you, Patrick, and good morning, everyone. This was another strong quarter for TD SYNNEX. Both distribution in Hyve grew above market and contributed meaningfully to earnings, while our operating income and earnings per share continue to grow faster than gross billings.

Starting with the top line. Our non-GAAP gross billings for the third quarter was $31.8 billion increasing 40% year-over-year or 41% year-over-year in constant currency and exceeding the high end of our guidance range. Non-GAAP operating income was $736 million an increase of 55% year-over-year or 56% year-over-year in constant currency. Non-GAAP earnings per share was $5.68, an increase of 59% year-over-year and above the high end of our guidance range. GAAP operating income was $643 million an increase of 68% year-over-year. GAAP earnings per share was $5.18, an increase of 89% year-over-year and above the high end of our guidance range.

Turning to our quarterly performance for each business. Distribution non-GAAP gross billings increased 27% to $24.8 million with double-digit growth across each region and most major technologies. Our end-to-end portfolio continues to position us well across technology cycles with healthy demand throughout the business in particular strength in data center infrastructure. Endpoint Solutions gross billings increased 16%, supported by continued strength in PCs, including higher average selling prices and a modest decline in units. Advanced Solutions gross billings increased 37%, driven by strength in infrastructure, software and AI-related technologies. Distribution gross profit increased 22% to $1.15 billion. Distribution gross margins were slightly impacted by customer and product mix, which was more than offset by disciplined expense management. Non-GAAP operating income increased 55% to $483 million, and non-GAAP operating margin as a percentage of gross billings expanded 35 basis points year-over-year to 1.95%.

Turning to Hyve. Hyve's gross billings increased 117% to $7 billion with growth across both manufacturing and supply chain services. Manufacturing grew in excess of 130% and represented approximately 2/3 of Hyve's gross billings, reflecting higher volumes and expanded programs with existing customers. Supply Chain Services grew in excess of 90%, supported by component demand associated with customer infrastructure deployments. Hyve's gross profit increased 47% to $276 million, and non-GAAP operating income increased 56% to $253 million. Non-GAAP operating margin as a percentage of gross billings was 3.61% compared with 5.04% in the prior year period. As a reminder, our operating margins reflect the growing contribution from large AI RAC programs that has been strategically important but dilutive to Hyve's operating margins. creating a mix headwind, which we believe has stabilized. Our objective is to build a broader, more diversified had business that combines sustainable growth with improving profitability stronger cash generation and attractive returns on invested capital.

Shifting to cash flow and capital allocation. Free cash flow consumption for the quarter was approximately $1 billion, driven by increased inventory in Hyve's supply chain business in addition to new customers and new programs with existing customers. Net working capital closed at $6.5 billion, with a gross cash conversion cycle of 22 days, an increase of 5 days sequentially and 6 days year-over-year, reflecting increment mix of Hyve. Year-to-date, we have made substantial investments in Hyve's working capital and believe we now have a significant portion of the investments to support our expected growth now in place. Our focus is now on execution, cash conversion and realizing the expected returns on our investments. We ended the quarter with $749 million of cash and cash equivalents and net leverage of 1.9x.

During the quarter, we returned $100 million through share repurchases and $38 million through dividends. Our Board also approved a cash dividend of $0.48 per common share payable on October 30, 2026, to shareholders of record as of the close of business on October 16, 2026.

Turning to our fourth quarter outlook. We expect continued momentum across both businesses, translate to non-GAAP gross billings of approximately $31.9 billion, plus or minus $500 million, up approximately 31% year-over-year at the midpoint, a gross to net adjustment of approximately 30%, revenue of approximately $22.2 billion, plus or minus $400 million, non-GAAP net income of approximately $474 million, plus or minus $20 million, non-GAAP diluted earnings per share of approximately $5.90, plus or minus $0.25, up approximately 54% at the midpoint based on approximately 79.2 million diluted shares outstanding. We expect Hyve's non-GAAP gross billings will increase sequentially quarter-over-quarter as we continue to see further benefit from ramping programs across multiple new customers. We expect we will generate cash in the quarter as recently deployed working capital begins to normalize.

Looking ahead to fiscal 2027, we expect further improvements in Hyve's cash conversion as programs mature. In summary, we're extremely proud of our teams for the results they continue to deliver. Distribution for multiple quarters has delivered above-market growth and broad-based growth, operating leverage and cash flow. Odd continues to add new customers and new programs with existing customers. We expect each of our major programs to generate attractive returns, although some will not reach their full potential until the back half of fiscal 2027. With that, we'll open the call for questions. Operator?

Operator

[Operator Instructions] Your first question comes from Joseph Cardoso with JPMorgan.

Perguntas e respostas

Manmohanpreet Singh

This is MP on for Joseph Cardoso from JPMorgan. Great results. I think my question is you stated several pipeline opportunities are being awarded at margins neutral to accretive relative to current performance. what is driving this improved margin discipline? And how sustainable is it as competition for AI infrastructure [indiscernible]?

David Jordan

So thanks for your question. So just to provide -- this is David, a little more clarity on Hyve's operating margins and how the new customer programs are coming. What we've put in the prepared remarks and if you reflect on the commentary we provided on the call last quarter, Hyve is ramping 3 new hyperscalers and multiple programs within each of those customers.

And so as we look forward, one of the comments that we made is the new programs that we've won, which are predominantly manufacturing are neutral to accretive to have Additionally, some of the programs that we're ramping this year, as those programs mature, we continue to find ways to improve the margins within there. And so as we look forward, that's what gives us confidence that Hyve's margins have stabilized and should improve as we move forward.

Operator

Your next question comes from Keith Housum with Northcoast Research.

Keith Housum

And I'll lock great quarter for you guys. We're kind of looking at the growth. Obviously, servers and storage were phenomenal for you guys this quarter, but strictly really broad-based. But I think there might be concerned with some investors that you're getting more rumors about data centers perhaps peaking here and I think there's rumors of Oracle even perhaps pulling back on data centers here. How are you guys thinking about the data center market for the next year or 2? Any concerns that you might have a pullback to your spending or any constraints out there, but how are you just thinking about the broader market?

Patrick Zammit

Yes, Keith, thanks a lot for the question. So I mean, one, as you said, we are very pleased because the growth in the quarter has been broad-based by GEO, distribution, Hyve by technology. And by the way, our Q4 guidance reflects that. If you look at next year, so we're in the process of building our budget for next year and collecting all the data. We continue to be overall positive about the market prospects and we expect to continue to grow a little bit faster than the market.

Specifically to data center, and when you look at what is driving the demand, you have, of course, I mean, with the hyperscalers, they have continued to support the frontier models with capacity for training. But I mean, what we see and that's confirmed by all the -- by our OEM is that companies are now investing more and more. Enterprises are investing more and more in agentic capabilities. And we know that agentic AI is going to be a fantastic driver for productivity gains and improving customer experience. I mean we've mentioned one of a big win this quarter from an enterprise and we see that as clearly a trend accelerating. So we continue to be positive about the prospects for next year and specifically to Hyve as David just mentioned, we've won some new customers, and we are going to benefit for the ramp up. So overall, we are cautiously optimistic.

Keith Housum

Great. And just as a follow-up to that, like the business you win with Hyve, is that cancelable if the market did go south by those customers? Or are these not call agreements that you guys enter into?

David Jordan

The way the programs work are similar to distribution, you could cancel contracts. But these are longer-term agreements. Both sides have financial cancellation rights that people would all perform. But when you go into one of these programs, it can take you a year to get up to be and what we're working on is we won a category within a hyperscale where we support in a multiyear [indiscernible]. So in many cases, these programs can last a few years, but there is always the potential that on volumes [indiscernible], but we feel really good about where [indiscernible] the customers that supports the value that it has and how we start to relative to the competition. And so all of those items will provide a level of installation.

Patrick Zammit

I just want to add 2 things. So one, when you look at the forecast we've received or the backlog we have, I don't see any sign of concern today, point number one. Point number two is it was interesting to watch the results of Q3. And clearly, everybody referring to the fact that there is not enough capacity today in the data center to meet the demand. And so again, the completion of the 2 makes me feel I mean, cautiously optimistic for next year.

Operator

Your next question comes from Ruplu Bhattacharya with Bank of America.

Ruplu Bhattacharya

You've reported good results and guidance. It looks like gross margin overall declined 60 bps year-on-year. Can you elaborate more on what was that mix that impacted margins? And was there anything unique about the advanced solution side of the Americas distribution business because it looks like that region had gross margins down the most, about 120 bps. So any further color on what impacted margins?

David Jordan

Sure. Thanks, Ruplu. When you look at the overall margins, if we just focus on distribution for a second, the mix that we're referring to is largely product related. So within North America, there was a few larger transactions, specifically around infrastructure build-outs and some of those categories have slightly lower gross margin is relative to the average.

Within Hyve, it's the same impact that we had commented on last quarter, which was we have ramped a large AI server program that's profitable, but at margins that are slightly below the average Hyve margin, and that's what's caused the year-over-year decline for Hyve. But net-net, when you take a huge step back, our teams, both in distribution and Hyve have done a really nice job managing margin, managing pricing and making sure that within distribution, when volume shifts between categories that they prudently manage their cost to continue to drive operating levers. So we feel very good about the performance that the team has put out for the quarter.

Operator

Your next question comes from Erik Woodring with Morgan Stanley.

Erik Woodring

I'm going to ask something kind of similar to Ruplu there, maybe try to be a little more specific, which is on that advanced solutions side, you're talking about mix. I just want to make sure and clarify for everyone here. I think there's probably some concern there could be issues with the cost-plus model just because of where pricing is going. Can you just clarify for us the Advanced Solutions margin -- gross margin pressure that you saw was really just a function of mix in those deals and that any like-for-like margins, we're not seeing pressure year-over-year this quarter?

David Jordan

Sure. No, Erik. Thanks for the question. And you've read it correctly. When you look at the overall margins, if you really start to double click them, they're relatively stable. And so as we've shared previously, our business, we make a percentage of the average selling price. And so what impacted the quarter is we had a couple of large transactions and larger orders continue to be slightly lower margin. And so the mix of that is what caused some of the margin impact in addition to us selling a decent amount of AI infrastructure. It's all profitable business. It's all good ROIC business, but that is what impacted the margins, specifically in Advanced Solutions year-over-year. Structurally, there's -- the margins remain highly resilient when you look at it from a category perspective. So we feel pretty good about that.

Patrick Zammit

And I just want to add one thing. So talking a little bit about our management system. So every month, we are reviewing our margins, of course, by geography, but most important, by technology and by vendor and customer segment. And so we are monitoring that, indeed, I mean, like-for-like margins are stable or evolving and then we look for the why and take corrective measures. So it's a very disciplined approach. And that's the reason when we talk about mix, it's either customer segment who grew faster and has a lower margin or higher margin or a geo who grew faster and has a higher margin or lower margins.

So it's really mixed. Otherwise, very, very strong discipline on margin reviews. I mean, to, I mean, anticipate any issues and take corrective actions very, very rapidly. But again, as David mentioned today, we have no issues. And the other thing I would add just is -- and that's very important. I mean we talked about, I mean, taking to the bottom line, at least 50% of the GP growth. And you can see that today, that ratio is significantly better than that. Again, the teams are doing a fabulous job managing cost. We are also obviously starting to leverage AI which, I mean, basically is improving the productivity of the overall team. So I mean, operating margins have been consistently improving over the past quarters, and it was true again in Q3.

Operator

Your next question comes from David Vogt with UBS.

David Vogt

Great. I'll just squeeze in one and just a little bit multipart question for David. So David, you touched on seeing free cash flow getting better in Q4 and seasonally, Q4 is your better period of conversion, better conversion of working capital. Can you kind of help us think through kind of where you think the company's cash flow needs look like as we stretch out into '27 because the business is structurally 50% bigger than it was effectively a year ago. Just trying to get a sense for where your cash needs are today, what you feel comfortable with, with cash on your balance sheet and how you're thinking about all the different vectors and for mutations, particularly as Hyve should continue to grow pretty nicely next year.

David Jordan

It's a good question. So thanks, David. When you think about what we put in our prepared remarks is we expect to generate cash in Q4, you're right, that seasonally, we tend to generate more cash in the back half of the year. Here's the way we think about it. So we would expect a couple of days of improvement in gross cash days quarter-over-quarter. That is largely driven by 2 things: continued momentum across both distribution and Hyve. And knowing that a lot of the cash consumption year-to-date has come from Hyve and we have to make investments in programs ahead of the ramp. And so as those programs ramp, we expect them to be cash generative.

As you think about 2027 or more on the long -- or more beyond, we expect all of our businesses to be sustainable cash generators. And so we recognize that FY '26 was a period of hyper growth. But we also front-loaded a lot of working capital investments to enable that. And so as we move forward, we would expect those -- all of our businesses to become cash generative, and we feel pretty good about where we are.

Patrick Zammit

I just add one remark. When we look at our more mature programs at Hyve, I mean, indeed, we see that when they reach maturity, they are generating free cash flow, okay? So no concerns from that standpoint. But the reality is that the team has done a very good job winning some new programs expanding the customer base. And yes, we are in an investment phase to ramp up all those programs. But again, when the program matures, it is -- it generates free cash flow.

Operator

Your next question comes from Katherine Murphy with Goldman Sachs.

Katherine Campagna

Maybe to stick on the Hyve manufacturing piece. Can you talk more about the mix of programs in the quarter? You mentioned that the AI server business that you highlighted last quarter remains largely stable. And as these new programs layer in, mix should improve. But maybe talk more to the outlook for the traditional server networking storage programs. And the new engagements as well as the timing of when some of these legacy engagements may start to roll off or be less significant.

Patrick Zammit

Yes. So if you look at the quarter, Q3, so we had this large GPU program. and networking continued to be very strong. If you look at the new programs we've won, there are primarily networking programs, okay? So again, at a good margin. We started seeing some of the ramp this quarter and we are going to see an acceleration in Q4 and Q1.

Operator

Your next question comes from Guy Hardwick with Barclays.

Guy Drummond Hardwick

I wonder if you could guys could update us on the agreement with Amazon, whether that's had an impact on revenues in the quarter and also whether it's also some of the revenues, the unvested portion [indiscernible] has been netted off the revenues? And then a follow-up question on Hyve. Given there's more manufacturing growth and supply chain growth, I know you've kind of already answered the question, you would expect a positive mix on that, but you're saying within manufacturing, there's a negative mix. Is that -- am I understanding that correctly?

David Jordan

Thanks for the question. So we'll try to cover both of them. When you -- as you know, we announced a warrant agreement with Amazon. And what we shared at that time is we expect this to be mutually beneficial to both of us. And so this is an agreement that's 7 years long. So we would expect over the course of the agreement that both sides to benefit. I think it's too soon to get into exact specifics on how things played out in the quarter. But what I can tell you is our relationships across all of our customers within Hyve are very good, and we continue to invest in capabilities that add value to all of our partners.

When you think about the mix within margins as it relates to Hyve, you are correct that the AI server program that we've referenced, which has caused some of the margin decline year-over-year is a manufacturing program. And then a lot of the new programs that we are also manufacturing. And so this has been a year where we've had somewhat of a headwind to gross margins. But as we look forward, and as these new programs ramp, we feel very good about the trajectory of the margins as a lot of these new programs are neutral to accretive to Hyve in total.

Operator

Your next question comes from David Paige with RBC Capital Markets.

David Paige Papadogonas

I want to add on distribution and endpoint. One of your closest competitors have noted that there's still $300 million to $400 million on refresh to Windows 11. So it looks like you had good growth in PC in the quarter. So I just wanted to get your thoughts on, I guess, the demand environment the refresh cycle and what you see going forward?

Patrick Zammit

Yes. Thanks a lot. So PC did overall well and grew double digit. Now if you peel the onion, units were down. I mean we had forecasted the PC units to go down mid- to high single digit, which is what happened this quarter and more than offset by price increases and mix. So let me just provide some color here.

So indeed, the component price increase has driven an increase of average selling prices. But another phenomenon, which is very interesting is the fact that the market is buying more the mid-range and higher range type PCs rather than the low range. Why? Because also when our manufacturers get their allocations they allocate them to the midrange and the higher range of their portfolio. So some of the ASP increase is really due to components, but some of it is due to a change in mix. The refresh is not over. So -- and so we should still see some tailwinds because of that.

Now the price increase, as expected, is having some impact on the volume. It has less impact on B2B where we play. It will have -- it has more impact on B2C, where we don't place -- we have a very small play in the market. So PC continues to be overall in value, a very good category. And I just add that AI PCs continue to grow and represent now close to 50% of the total revenue for us and AI PC is potentially becoming an important part of the infrastructure to run AI workloads.

Operator

Your next question comes from Vincent Colicchio with Barrington Research.

Vincent Colicchio

Yes. Are you seeing customers consolidate their distribution relationships as technology becomes more complex? And is the company gaining wallet share as a result?

Patrick Zammit

So thanks a lot for the question. I mean as you have noticed, we grew faster than market, and we've done that consistently for many quarters. I think it's due to 2 things. So one, from a customer side, indeed, I mean, we have this collection of specialist approach, which means that we have a very appealing value-added value proposition by technology. And that puts our teams in a very good position to support customers who have to deliver business outcomes, which are more and more complex to deliver. So yes, I believe that our approach has makes us, I would say, probably very well differentiated to help our customers win the deals and grow.

But we see, at the same time, in the vendor community, a trend accelerating in terms of rationalizing the go-to-market. So reducing the number of direct customers, direct resellers and number of distributors. And because of our value prop because of the relationships we've built over the years, I think we are going to continue to benefit from that trend.

Operator

Your next question comes from Alex Valero with Loop Capital.

Alek Valero

My first question is on enterprise. So you've mentioned that you're seeing more growth in enterprise. It sounds like -- is this something that's going to continue. Can you talk to the kinds of things that enterprise customers are prioritizing? And where are you best positioned to capture that spend?

Patrick Zammit

Okay. So I'm going to distinguish between compute and storage. On compute, 2 things. So you still have the refresh of the general compute server base. And as you know, the new generation has more cores and can replace several subs from the old generation. So what you see is a decline in unit but an average value which is significantly higher. So we see very nice growth in general compute. And we also see, obviously, I mean, an increased demand when it comes to AI compute driven by the fact that companies are absolutely building their factories to take advantage of agentic AI. And what we see is some very large deals coming from large enterprises, but we are starting to see also midsized companies investing in that space.

On storage, what we see is a modernization and acceleration of the modernization of the data center, I think AI will continue to play a key role. The important aspect, if you want to get the full benefit of your language models, you need to have the data in a good shape, and that means investing in storage. So I mean, that's something we are seeing, too. And here for storage, we see an increase in units and of course, in value.

Alek Valero

Got it. That's super helpful. And just a quick follow-up on networking actually. So I see networking grew 19% year-over-year, although it was the slowest growing hardware cloud, what are the puts and takes there? Any color you can provide on networking.

Patrick Zammit

Yes. So networking, again, I just want to put some context. If you just go back last year was a little bit challenged category. Things have completely changed now. I mean you have a need for massive refresh I mean, WiFi 7 switches to support AI. So you have a series of tailwinds in networking, which are driving a nice increase in units. And on top of it, so the magnitude is not comparable to what we see in compute or PCs, but we start seeing some price increases also. And so the combination of the 2 makes the category very strong and I think it's going to continue for some time. So it's another category where we are very optimistic for the coming quarters.

Operator

We have reached the end of the Q&A session. I will now turn the call back to Patrick for closing remarks.

Patrick Zammit

Thank you all for joining us this morning. As we conclude, I'd like to express my gratitude to our coworkers around the world whose hard work, dedication and commitment to make our success possible as well as to our partners for their continued trust and support. To everyone on today's call, thank you for your ongoing interest in TD SYNNEX, and I'm wishing you a great day.

Operator

This concludes today's conference call. You may now disconnect. Have a great day.