TD SYNNEX Corporation (SNX) Earnings Call Transcript & Summary

Please welcome to the stage, David Jordan, CFO, Americas and Head of Investor Relations.

So hello, and good morning. I'm David Jordan. I'm the Americas CFO and the Head of Investor Relations. And on behalf of the entire TD SYNNEX team, I'd like to welcome you to our 2025 Investor Day. We have an excellent lineup of speakers and presentations for you today, followed by a live question-and-answer session. Let me begin by sharing an overview of today's agenda. First, we'll hear from Patrick Zammit, our Chief Executive Officer, who will discuss an overview of our business, our addressable market and outline our 5 key strategic growth initiatives. Next, Reyna Thompson, President of North America, will review our comprehensive product and vendor portfolio, the value we unlock for vendors and how that relationship is critical to our overall growth strategy. After Reyna, we'll hear from Miriam Murphy, our European President, who will outline our collection of specialist approach and customer acquisition and retention strategy. Following Miriam, we'll hear from Dennis Polk, a Board Director and Hyve Executive; and Steve Ichinaga, President of Hyve Solutions, who will share an overview of Hyve, its customers, key investments we're making and how Hyve's deep capabilities, combined with powerful secular trends position Hyve for long-term sustainable growth. Next, Sergio Farache, our Chief Strategy and Technology Officer, will present our digital journey and how we're leveraging our rich data lake and built-for-purpose digital platforms to accelerate both internal and ecosystem growth. And last but not least, Marshall Witt, our Chief Financial Officer, will share our financial priorities, medium-term outlook and value creation initiatives and commitment to further maximizing shareholder value. Once these presentations have concluded, we'll then hold an opportunity for a live question-and-answer session followed by a few closing remarks. Please note that we have also posted these accompanying materials on our Investor Relations website, ir.tdsynnex.com. Before we start, I want to remind you that as stated in the safe harbor statement behind me, during today's presentations, we will be making forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. For a full discussion of potential risks and uncertainties, please refer to the risk factors listed in our most recent SEC filings. During these presentations, we will also be referring to certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP are included in the appendix section of each of today's slide presentations. And with that, I'd like to welcome Patrick Zammit, our Chief Executive Officer, up to the stage.

Please welcome to the stage, Patrick Zammit, Chief Executive Officer.

Thank you, David. So good morning, a warm welcome, and thanks a lot for taking the time to be with us today. So obviously, we don't -- I mean, when we picked the date for this Investor Day, we were not anticipating well enough on what could happen in the last days have been quite interesting. And the level of volatility, we know is quite high. Nevertheless, we think that it's very important to have this day, I mean, so that we can share with you the fundamentals of the company, but also how we are going to continue to develop the company and create a lot of shareholder value. But I want to reflect very rapidly on what happened yesterday. So very volatile day. And I mean, yesterday -- so obviously, we -- so we closed the stock market yesterday evening. It's interesting I mean, yesterday morning, there was another company who opened the stock market. Obviously, there was a very different experience. Yesterday evening, you close, you have one of the highest hike in the stock market history. In the morning, it looked a little bit doom and gloom. And I would say you need some luck sometimes. And we had a lot of PR. And I wanted to just make the remark in distribution, as you know, we work on win margins. So we try to be frugal as much as possible I mean, yesterday, we had a lot of free PR. We were all over the place globally, TD SYNNEX globally started getting e-mails from really Asia, all over the place, oh, you're everywhere. So I just wanted to say, so that's part of the model when we can take advantage of the situation, we take it. And yesterday, it was a great day for us. So objective of today is really to show you, I mean, why we are a very good investment case for the long run. And let me start with the market. So we play in the IT market. And the IT market is a very exciting market. When you look at the history, I think there have been 2 years maybe where the market didn't grow. Otherwise, it's a market which is extremely resilient it's growing. It's driven by innovation. And anyway, we all know that the economy is going to have to digitalize, all companies need to have to digitalize their business model. And obviously, that's going to be very positive for all the players, including the distributors and TD SYNNEX. Then, and obviously, we are going to do a deeper dive today. We have a fantastic business model, very diversified, very differentiated, very scalable we are global. We have an end-to-end product portfolio. So we believe that being end-to-end gives us a major competitive advantage when customers have to deliver business outcome for then to come to us, they can find all the technologies and support they need. We are a service company, but we're also a technology company. And we strongly believe that a specialist go-to-market is absolutely critical if you want to create the right value for our vendors and for our customers. We have fantastic relationships with our vendors and our customers, which we have built over many, many, many years. When you look from a financial standpoint, I mean, we are committed to profitable growth. Our business model generates a lot of free cash flow. We are committed to return but cash flow to the shareholders, and create a lot of shareholder value. And last, all that is happening because we have a great team, very experienced team, and we have a great culture. And I would just take 2 elements of the culture or outline 2 elements of the culture. One is excellence. And second, we are absolutely the team when you talk to our coworkers, we are absolutely committed to create the right value for our vendors, for our customers and for our shareholders. So rapidly a few figures. We are now $82 billion gross billing company I mean that's the change we made. We used to report only revenue on net billings. I think it's more relevant to talk about gross billing. By the way, that's the way we manage the company. It's always on gross billing and margin. Generating $1.7 billion of EBITDA. We are present in 100 countries. We have, again, best-in-class product portfolio. We take to market roughly 200,000 products. We have a very, very large ecosystem. So today, we represent 2,500 vendors, and we serve more than 150,000 customers. So just as you -- how well diversified we are. Then as I said, at the core of our culture is excellence. So our end goal is obviously to create to deliver the right value to our customers, to our vendors and shareholders. And to do so, excellence is at the core of everything we do. And so we are constantly using this wheel of excellence to explain internally, I mean, how we are going to deliver the right outcome for our stakeholders. It starts by having the right leadership team. Why? Because with the right leaders, you're going to hire, you're going to engage and develop the right coworkers. Event 7 leadership is really at the core of our leadership attitude. And so we empower all those coworkers to deliver operational excellence and commercial excellence. And with that, the end game and the outcome is that we help our vendors and our customers win in the market. So this is the management team leadership team. Most of them are in the room, by the way, today. On the right, business units. It's important because it tells you a little bit how we go-to-market and how I'm managing the team. So we have distribution and the 4 regions report directly to me. And then we have Hyve whose business model is different than distribution, which is set up independently and run independently to match the needs of the market they serve. On the left, you have all the support functions all global 6 corporate functions. And at the beginning, I wanted to share the seniority of the team and then we decided not to do it because the figure was quite impressive. We have a very seasoned team, very experienced team, and that makes a very big difference in our success. So as I mentioned, the team is absolutely critical in our success. Distribution, it's a service industry, that's a people industry. So the people are really the very first differentiator when we deal with our customers and vendors. And most important, the culture is making a difference at TD SYNNEX. And we thought the best way to demonstrate that difference is to run a quick video where you're going to hear from our coworkers. [Presentation]

So very proud of the video, very proud of the testimonial. Again we didn't give them a script. It's coming from them. So that's very reassuring. So and then obviously, as a good distributor, we like to measure everything. And so being recognized for excellence is absolutely critical to us. And you can see, I mean we've been recognized, we've -- it's just an except. We are fortunately receiving globally a lot of recognitions from our vendors, our customers I mean we've been recognized as the best place to work in many, many countries. Our objective is to be there across the world. So very proud of it. But at the same time, we are not complacent. So the team is constantly challenging itself, spending time with customers, vendors, analysts to grasp what is changing in the market, what are the new needs and making sure that the model is evolving. So that concludes the first part of the presentation about us. And I'm going to spend a little bit of time on the market. I mean, why we are so excited about the IT market? And also why the channel and distribution play a critical role in that market. So if distribution or the channel -- sorry, if distribution would not exist. That's how the supply chain would look like in the industry. So think about it this way, thousands of vendors with very specific programs, dealing with hundreds of thousands of partners and so that's a very complex supply chain. That's a very costly supply chain. So obviously, that doesn't work. And the vendors very rapidly recognized it. So that's the reason they've put a distributor. They have appointed distributors. And you can see how a distributor and TD SYNNEX, in particular, can significantly simplify the whole supply chain. But we are not only a supply chain. We are not only there for supply chain management. We also play a very big role for the recruitment, the enablement and the growth of the partner base. And this is very, very complex. That requires customized support. And again, the vendors could not do it directly. And so we here play a very key role, and we're going to spend a little bit of time on it later. If I zoom up a little bit, so you have a $2.8 trillion market. That's a huge market, IT. And so the vendors basically use 3 routes to market, direct Tier 1 reseller to the end user, Tier 2 distributor reseller and the end user. So now you are talking about thousands of vendors, hundreds of thousands of resellers and millions of end users. And so our vendors are constantly reviewing their go-to-market. They are segmenting their customer base, and they are constantly looking at how best to serve at the lowest possible cost. And that's the reason for again, distribution is very resilient, plays this critical role because you can see, I mean, the number of direct customers obviously depends on how large the vendor is, the larger the vendor, the more direct customers, you can afford, but very rapidly, economically very difficult to go below a certain threshold. So then it goes to the resellers. Same thing in our industry of some resellers who are very large. But then very rapidly, again, the threshold becomes, I mean, a little bit too low. And that's where we, as distributors, we play a very big role because we absolutely with our operating model, which is extremely efficient, we can meet their expectation at the best cost and the best outcome. So $2.8 trillion for the overall market. What is interesting is 60% roughly. So Tier 1 plus Tier 2 is 60% of the market. But then distribution is only 15% of the total available market. So it's a large market, $400 billion, but it's only 15%, which again is an opportunity for us because every time we can increase the share of distribution, I mean it's a growth opportunity. And then as you can see, I mean, the last 4 years, the CAGR has been an average growth of 5%. So it's a healthy growth for our market. The chart on the left is very interesting. It tells you what is the participation of the channel by technology. And you can see that there are some large differences. Generally speaking, I would say that the more mature the technology gets, the higher the participation of the channel is. And the reason is simple because as the technology matures, our vendors get on the cost pressure or margin pressure. And again, they have to revisit how economically, how many customers they want to serve. And then the role of the channel increases and then the role of distribution increases. So you have, I would say, 2 technology segments where the participation of the channel is low. The first one is infrastructure. The second one is software. The first one is the main reason is cloud. And I should say now it's cloud and AI. Clearly, generally speaking, the channel has not been participating and especially on the AI cloud, the AI data servers. And generally speaking, again, on cloud, it has been a direct motion. But what we see is a change because, again, competition is -- especially on the, let's call it, the CPU cloud and the storage cloud. What we see as competition is increasing, and we see, I mean, the hyperscalers coming back to us for optimizing their go-to-market. And then on the software, I mean, in general, the channel plays a lower role when it comes to application software. But for everything else, we play a much larger role. So again, very confident technology matures more comes to the channel and comes to distribution. So that's again a nice tailwind for us. And then what you see on the right is the strategic technologies. I mean these are the technologies which in the last years have become, I mean mainstream, double-digit growth. And the good news is that distribution is nicely participating and taking advantage of those technologies. So you've heard us in the past talking about the investments we've made in that space. We're even disclosing what's the percent of our revenue coming from both technologies I mean it's more than 1/3 now of our revenue. And so again, we take full advantage. By the way, when -- for the new technologies, in general, we get also better margins because the upfront investments are higher also. So again, very attractive. So in summary, we play in a very attractive market. And you can see that the role of the channel and distribution is critical and will continue to be critical so that our vendors can achieve their goals. So now I'm going to focus a little bit on our business model. So distribution over the last 10 years had to evolve. I will never forget when I joined the IT distribution coming from semiconductor distribution a little bit more than 10 years ago. The first vendors I met with told me, hey, Patrick, with cloud and I mean, the role of distribution is going to collapse, no future. I mean we are 10 years later, distribution continues to do well. But the reason is because we evolved. And as I said, we are never complacent. We can't stay complacent. And our business model continuously evolve to meet the needs from the market. So what you see on the left is still valid. I mean we continue to invest there also because it's very important. But what is even more important is what we've done over the past years to develop our capabilities on the right, okay? And I mean, I start with the customers, it's true that with the new technologies. The profile of our customers has changed, okay? So our partners have to evolve their business model, they have to get more specialized. And so you have new customer types, new partner types who have emerged, CSPs, ISVs, MSPs, I mean, we have created this category of the partner of the future. We run our data every year. We look a little bit at, okay, our new segments emerging. And we found out that, there is one segment which is growing faster than the others. And that segment takes to market specific technologies. We don't want to share more than that. But I mean, it's the fastest-growing segment for us. And again, we've developed specific value propositions for them. And SMB. I mean, our vendors, as we are rationalizing their go-to-market are really counting on distributors and TD SYNNEX to grow the breadth of the partners they support. From a delivery standpoint, supply chain services has become more and more critical, especially for very large customers channel enablement. So that's a very important aspect of our value proposition, and you will hear more from that from the team. It's about growth. I mean what we are in for is making sure that our customers can grow in the market. But in order to do so, we need to support them to identify the right technologies enable them on those technologies with the vendors they are going to select, even provide them resources when need be. And that expertise we've developed over many years. And we think today, we have probably the best enablement programs in the market. Then to cope with the development of subscription and consumption, I mean, we had to invest in cloud platforms, which we have done. We've invested millions in our truck platform. We have a very competitive platform today, which is used by thousands and thousands of partners. And then from a value creation standpoint, I already alluded to it, we differentiate in this market by having a specialist approach. So I showed you the regions. If you go one level down, you will see that all our product organization is organized by technology. And why? Because, again, complex -- technologies are getting more complex. And we need to make sure that we are in a position to support the customers with the right level of expertise that only works, we believe, if you go-to-market as a collection of specialists. And we do the same, by the way, on the customer side. We've segmented our customer segments and for the various customer segments, we've customized our value proposition. Then of course, as important is the omnichannel approach. We are very strong. I mentioned it. We have a very strong relationship with our customers. But our customers more and more want self-service capabilities 24/7. And that's why again, we invested heavily in our platforms to deliver that. And we have this large database, and we want to take advantage of it. So we believe that our value proposition and our business model has many strengths, and I wanted to pick up 6. The first one again is our end-to-end portfolio. Today, when the partners come to us, they can then deliver to their end users a business outcome because of the richness of portfolio. In addition, our approach is always the same. We look at the technology, we look at how can we and can our partners win in the market, and that drives then our line card strategy. And so we want to make sure we have on our line card, the leading vendors. But also, we are constantly looking at potential vendors emerging who could disrupt the technology segment. Collection of specialists, I mean, go-to-market, I mentioned it. In terms of data, obviously, $82 billion sales, hundreds of thousands of partners, we are very fortunate to collect a lot of data. What is more -- and Sergio Farache is going to talk about it later with more figures. The most important to us is what do we do with those data. And as you know, today, that data is becoming a clear differentiator. And so we are leveraging those data permanently to create business insights, develop new digital services and digital marketing. Then IT platforms. So we are very proud that basically all the major migrations are behind us. Today, from an ERP standpoint, we're on 2 platforms, state-of-the-art platforms from a digital standpoint, same thing. We're on one platform. So that means that today, we are not wasting time for migrations and things like that. We can focus on what do the vendors and the customer need, what do we need internally to become more efficient. We can focus on the enhancements and get more efficient from an operating model standpoint and deliver the value of our customers need. We have a very nice financial profile. I mean you are familiar with our balance sheet. Why is it important? It's one very important for our vendors. We have some very large relationships, so they need to trust us. Credit can become a limitation in some parts of the world. dealing with us, obviously, is reassuring, so that gives us an advantage. But then also, our balance sheet is important because it helps us financing the growth of our partners. And then we have those ODM and contract manufacturing capabilities. So we are the only one who can really play in the hyperscales space. I mean normally, hyperscalers would go direct with our capabilities, so Hyve and again, you will hear about it later, we have this unique opportunity to serve the market, and we continue to invest to strengthen our capabilities in that space. So you have those differentiators, you have the team powering all those differentiators. So what are the outcomes we can deliver to the market. And again, we consider our vendors as customers and, of course, the partners. So for the vendors, the most important is that we are accelerating the adoption of their technologies in the market, and we do so globally. We're expanding the customer base constantly, so recruiting new partners for them. And again, even more important, we are enabling those partners so that they can win in the market. We finance the channel for them. And again, we are a very creditworthy partner. And last, we have a very efficient route to market. I mean when you think about it, average GP 5% for 5%, we do all that at scale, that's extremely, extremely efficient. On the customer side, I mean, we deliver value on 2 fronts: one, enabling growth, supporting growth, and that's what the customers really value. At the same time, we need to continue to invest so that their operating model gets more efficient, and that's where digital plays a key role. So these are the foundation of the model, okay? So I mean, we are who we are today, thanks to all those differentiators, all the investments we've made in the past. So I think we have very, very solid foundations. But of course, I mean, those foundations is an opportunity. It's an opportunity for us to grow profitably. And so we've identified 5 strategies to continue to fuel the growth, generate profitable growth, generate free cash flow and obviously create shareholder value. The first one is it's 2 things. First, we believe that globalization is an opportunity for us, and we will continue to go. So we are already in 100 countries. We'll continue to identify new countries, new regions where we think there is potential for us to grow profitably. And second, in every country, we are looking at where are we underpenetrating the market by technology and by vendor. And we have then plans to close the gaps. Second, new customers. I mean I mentioned SMB, I mentioned CSPs, MSPs, ISVs. I mentioned the partner of the future. We are constantly checking if there are new customer segments which require a specialized value proposition and making sure that we get our fair market share of those segments. Third, expansion of the DTAM. So DTAM, 15% of the TAM. Obviously, every percent gain makes a big difference. And that's why we spend a lot of time with our vendors to identify opportunities to have -- to increase our sales by transferring direct business to indirect. The fourth is Hyve. So I mentioned rapidly what we are doing there. What we see is, I mean, that market, the demand continues to grow very rapidly. And in our case, we need to continue to invest to achieve 2 things. One, we need to continue to diversify our customer base. And second, we need to continue to win new programs with new customers or with our existing customers. And last, services. I mean services today is relatively low as a percent of our total revenue. But we know that for both the vendors and the customers, this is becoming more and more critical for them to win in the market. In addition, margin is very interesting with services, and it's very accretive. So we see that as a major opportunity for growth. So let me dive in. So we have growth potential across the board, across all the regions. Obviously, I mean, in LatAm and APJ, our market share is relatively modest, okay? We have areas where we are very successful, so some technologies where we are very successful. So again, I continue to see that as a big opportunity for our future growth. But there's also growth opportunity in North America and in Europe, where, as you know, we are the market leader. So let me dive in a little bit. So first thing, services, as you can see across the board, is an opportunity. I mean we are underrepresented in that space, and you will hear a little bit more about it from Miriam. It is a clear growth priority for us. But when you look at even by technology, Europe has an opportunity in security. You take Latin America and APJ, an opportunity for growth is endpoint solutions because we believe in the end-to-end portfolio. For all the regions, we think that there will be more growth coming from cloud, from AI, from security, which is a double-digit growth market. So -- and then hyperscale across the board also. It's true that it's primarily today a U.S. business, but we see opportunities also in Europe and APJ. So growth opportunities across all the regions across most of the technologies and the customer segments is available to us. And basically, what we've done, every region has developed its own plan because we are a local business. So every region, every country has developed its own plan to take advantage of those market opportunities. Increasing the DTAM, 2 opportunities. So our approach is always the same. On the regular base at all the levels. We meet with our vendors. And we are asking them for their pain points, asking them for, okay, do you see new opportunities for collaboration, business you do direct today where you don't think you are efficient, where we could maybe take it over and deliver higher value at a lower cost. Supply chain is a good example. I mean we've now have several global programs with certain vendors where we take care of the supply chain, but it's just one example. The other nice opportunity is with the cloud marketplaces from the hyperscalers. As you know, I mean, the spent, which goes through the hyperscale cloud marketplaces is dramatically increasing. By 2027, we are speaking about roughly $80 billion of revenue. Two options for us as a distributor, we say hyperscaler, no opportunity for us. Or we say, no, it's a new go-to-market, and we need to find a value proposition so that we can play there as you can imagine, we've decided that this is a new go-to-market for us. And we want to get our share of the spend going through this both marketplaces. It's also very important for the channel in general. Because when you think about it, the resellers go to the end users do a lot of work to position the technologies of the vendors. If at the end, the end user decides to go through the hyperscaler marketplace, and there is no mechanism to reward them very rapidly our vendors are going to be in trouble because the risk becomes high not very good. The good news is that the hyperscalers are recognizing the risk. They don't want the channel not to be rewarded when they have done the job. And so the new opportunity for us is to be the, so to say, the collector of the margin on behalf of the resellers. So we are working very closely with the hyperscalers with the traditional vendors to put in place mechanisms so that when -- I mean, a reseller has done the job, we can collect the margin and give it back to the reseller. Very interesting value proposition, very well perceived by the partners and the vendors. But for us, again, we believe that it will have a positive impact on the size of the DTAM. Then Hyve, again, I'm going to go very rapidly because you will get more insight from Steve. That's an area where, I mean, one of our big advantage and obviously, lately, this advantage has even more increased. It's the fact that the vast majority of our resources are in the U.S. And the fact that the manufacturing is happening in the U.S. is very appealing to the customers in that space. So we are providing lots of services. I mean, design services, manufacturing services, deployment services. We're going to invest in SMT because, again, being able to produce the boards in North -- in the U.S. is going to be, we believe, a differentiator going forward. And so we see the size of the market. We see how well we are positioned in that market. And we believe that, again, thanks to our investments, we can get more growth, more profitable growth from that market, thanks to the investments we are making. And the last is services. So as I mentioned, services is becoming more and more critical to deliver business outcome. Our customers need to not only bring the hardware and the software, but more and more, they have to deliver services with it. Depending on the size of the partner and depending on the specialization, they may have the service resources, but not always. And as usual, they come back to the distributor and ask for, do you have resources? Do you have the expertise so that I don't need to do the upfront investment. When I scale -- and I'm confident that I will get enough revenue, then I will do the investment. And so very important for the partners that we continue to develop our service offering. Similarly, the vendors have their own services that -- which they have developed and they want us to attach their services to the products they sell. So services, again, a very nice opportunity for us. High-margin creates more intimacy with both the vendors and the customers and it's clearly a strategic priority for us because it's a segment where we are underpenetrated. We are focused on 4 service categories. But basically, in terms of how internally we want to change the picture. The first one, we need to get the sales team to attach more systematically services when they sell hardware and software, okay? So we have a whole program in place to make it happen. Second, we have this huge installed base. And again, our vendors are asking us to secure that installed base for them as much as possible, but also there's an opportunity to monetize it. And one example is upselling. I mean when the product comes to -- for renewal, I mean, with the technical expertise we have, with the people we have, we can suggest upselling opportunities for the partners, which obviously for them is very interesting, creates more growth, profitable growth, and obviously, we benefit from it. So a very important area for us for the coming years. And again, you will hear more about it from Miriam. So let me wrap it up. You are going to hear more about our strategy by the various presenters in a second. But what I want to leave you with at this stage is we are today the leading distributor in the market, and we want to remain the leading vendor going forward. We have both fantastic foundations. We have this unique team and unique culture. So we have the foundations and on those foundations, we are building this growth strategy, which is going to take us to the next height. We are committed to deliver growth above the market. We are committed to deliver profitable growth. So that means that, yes, sales growth is important, but GP growth is as important, if not more important, and obviously, we need to make sure that the cost to serve when we get this GP growth. The drop-through to the bottom line is at least 50%. Our differentiators are clearly positioning us in the market. Hopefully, I mean, you got a good overview and you are convinced that I mean we have something special here. And I want to leave you with that for the moment. I'm going to introduce Reyna Thompson. So Reyna is our new President for North America, and she's going to talk about how we want to win grow profitably with our vendors and how we can expand also our DTAM. Reyna?

Please welcome to the stage Reyna Thompson, President, North America.

Thank you. All right. Thank you, Patrick. All right. I thought I'd get a few more smiles this morning. I'm certainly smiling. I could have been presenting to you yesterday morning. So anyway, thank you, Patrick. So I represent proudly the North American region. And I'm really excited to speak with you today about the value that we unlock for our vendor partners and how those relationships are really so important to our overall growth strategy. All right. So as Patrick outlined in his section, we're focused on growing our reach and expanding our distribution TAM. We have an action plan, and it's to achieve this growth in 3 critical areas, and you see that on the slide here. First, we're growing our business across geographies that geographic growth goes hand-in-hand with our vendors as we help them grow their businesses in new regions and countries across the globe. Second, we're increasing the diversity and breadth of our product offerings and solutions that we bring to market. Our vendor acquisition strategy is twofold. We want to identify new vendors to 1 day become a household name. But for those who already are, we want to expand their portfolio of products across the channel. And third, are deepening relationships with vendors and how they work together in the channel. I'll discuss that a little further in the presentation, but solution selling is fundamental to bringing these new technologies to market, and we play an instrumental role in that sales motion. The bottom line is that the IT market is constantly evolving, and it's becoming more complex every day. And you hear that often. As distributors, our role is also constantly changing. And we serve now as a strategic adviser and consultant to our vendors. And we provide them critical market-based insights and help steer their investments to drive value and strategic growth. So as a strategic adviser, that means not just understanding, but anticipating the vendor needs and no one does that better than TD SYNNEX. We know that vendors are looking for a distribution partner, you can augment and help them accelerate their existing strategy. And we know they want a partner who is deeply connected with different customer types. And we can provide an efficient cost-effective pathway to reach them. And we know that when those introductions are made, the vendor wants a distribution partner, who can help them educate and train at scale to enable the customers to sell their technology into the market. Again, TD SYNNEX fulfills these needs at every turn, reinforcing the many facets of the modern IT distributor in that partnership. And we play a myriad of roles. And some are traditional and some are not, and we're proud of all the ways that we stand and service to our vendors. So now it's one thing for me to tell you the value that we offer to our vendor partners, is another thing to hear it from them directly. So we'll play a video. [Presentation]

That's a great video. I think it's always so powerful to hear vendors share how distribution is at the core of their go-to-market strategy and growth engines. And they see TD SYNNEX at forefront of serving those needs. And I'm incredibly proud of the relationships we've built and continue to build with more than 2,500 key vendors across the globe. And we help them drive value and bring compelling technology to the world. So okay. So let's get a little more granular on that front, particularly on how we help vendors reach more customers and sell more product. On the left side, you'll see the breakdown of our wide array of technologies. On the right -- well, on the left, you'll see them broken down into 2 segments: Advanced and endpoint solutions. On the right, there are key customer designations and the number and percentage that we support within each. So as I mentioned earlier, vendors are looking for an efficient and effective pathway to new customers. While we open doors across all segments, mid-market is a prime example of where we help customers or vendors serve customers at scale. And beyond the more than 100,000 SMB and MSPs that we serve, I think there's 120,000 on the slide. Enablement is crucial for these customers, especially when it comes to new technologies. An example of that enablement is training and certification programs that close that critical gap. So introduction to new industry verticals throughout those customer segments is another place where we help our vendors expand and grow. This is just one area where our specialized approach comes into play. And you heard Patrick talk about going to market with core group of specialists. Our key -- our skilled sellers are key, and they understand emerging trends and customer pain points, and they help these vendors curate industry-specific solutions and develop vertical-specific go-to-market strategies. Our deep knowledge of customers and the investments we've made in the specialized expertise is a differentiator for us and for our vendors as we help them enter new markets and create long-term relationships throughout the channel. Okay. So moving now to geographic expansion. Our robust global presence provides a foundation to take advantage of growth across geographies. Some of these opportunities are consistent across the footprint, including cloud, hyperscale infrastructure, data and AI. And programs like Destination AI, which I'll talk about a little later, an example of how we are taking advantage of this opportunity globally. And I spoke about SMB and MSP customers earlier. And in this important segment, along with CSPs presents another significant opportunity across the globe. Programs like our MSP Evolve offering, which is in America are compelling reasons for MSPs to work with TD SYNNEX. The program offers a comprehensive suite of services and solutions and training that's tailored to help them operationalize and accelerate business growth. In addition to these global areas of focus, there are also unique opportunities within each region that Patrick also touched on. In North America, we leveraged our success within services in hardware and engineering and expand those offerings in high-growth areas such as data and AI. In Europe, we'll focus on further investments in our security portfolio as well as geographic expansion of our Eastern Europe footprint. And we'll leverage our North American European expertise and endpoint solutions to expand offerings in LatAm and APJ. So from a geographic standpoint, we're looking to increase our reach in emerging markets and areas all across the globe. As distribution leaders, it's our job to be looking around corners and identifying white space opportunities as they develop and not only for our partners and our customers, but also for ourselves. And the spirit of innovation has defined us and allowed us to adapt over time. It's why we're confident not only in the runway for growth that I've outlined here, but also in the future as the industry continues to grow and evolve. So one way that the industry continues to grow and evolve is the movement towards solution selling. Today, customers don't buy products. They seek comprehensive solutions tailored to their unique business challenges. This approach delivers integrated outcome-driven solutions by bringing together these best-of-breed technologies for multiple vendors. That's where the impressive breadth of our product portfolio is as critical as our strong geographic footprint that I just reviewed. If we want to provide the right solutions to our customers, we need to have the right vendors by our side. At the beginning of my presentation, I referenced vendor acquisition strategy. On the one hand, we're focused on new and emerging vendors, which you'll see on the right side of this chart. And on the other hand, we're helping those who are core technology partners, providers, which you'll see on the left column, expand the portfolio of products they offer through the channel. We've heavily invested over the years to build long and meaningful relationships with the diverse collection of technology providers who value TD SYNNEX for our specialization, innovation and solutions-oriented approach. We're making equal investments in cultivating and growing our relationships with the next generation of vendors who come to us for our global reach and deep channel knowledge. In many cases, we're introducing a vendor to the channel who may have previously been mostly direct to end user. And we work with the vendor to develop their channel strategy and build the right sales within it. And the right sales motion may be the solution selling motion that I talked about earlier. By bundling complementary technologies into ready-to-deploy solutions, we can simplify adoption, reduce complexity for customers and partners. And we enhance that customer value when we provide fully integrated end-to-end solutions and set of fragmented products. We have custom programs like our Destination AI program, and I'll take this a step further. So let me explain Destination AI. So first, AI represents a transformative opportunity, reshaping industries across all vertical markets and also across all customer segments. Across verticals, AI is enabling businesses to automate processes, gain insights from data and innovate faster than ever before. This widespread adoption means that channel partners are uniquely positioned to capitalize on the surge in demand for AI-driven solutions. So we recognize over that many are not well prepared given the extraordinary pace of adoption in this market. Thus, we created Destination AI to accelerate the ability to capitalize on these opportunities. While Destination AI is key in training and enabling our customers, which Miriam will touch on later. It's also used to foster multi-vendor offerings that address real-world business needs. The programs like those vendors can break silos and maximize market opportunities and drive business transformation for customers worldwide. Our vendor portfolio offers the industry's most comprehensive lineup to capitalize on this AI growth. From AI infrastructure core to core AI software and platforms from AI accelerators to AI-enabled ISVs, our portfolio, it's highly diversified. It's the right mix of AI capabilities and innovations. And these logos, you see here just a tiny snapshot of the many vendors that we work with collectively to transform the AI landscape. With this truly diversified and differentiated product and solution mix and one that's continuously growing. Vendors see the value of increasing their investment distribution channel for their business and ultimately leading to distribution TAM expansion and mutual growth. And this goes hand-in-hand with our vendor value proposition. So we've covered several strategic areas of value we offer our vendor community. But I wanted to take this opportunity to kind of recap those that our vendors tell us our most compelling reasons for them to work with TD SYNNEX. So in addition to what we've already covered in terms of customer expansion, technology adoption as well as development and training, there are a few other key support areas. So it goes without saying that refresh and renewals are key for our vendors. It provides sustained revenue, predictable growth, customer retention and upsell. And we help streamline those renewals. Boost refresh sales and retain customers effectively, all while reducing operational burdens. Another area of vendors say we add values through marketplace and digital sales effort. And Sergio will touch on that a little more later as B2B buying shifts to more digital-first experiences, we all need to meet customers where they are. And through programs like Digital Bridge, we do just that. Additionally, our immense data late, combined with AI provides rich set of data in the industry. And we can be a digital growth engine for our vendors by helping them find tune and identify digital sales strategies and market growth opportunities based on those data and analytics. Our engineering and technical support capabilities help shorten time to market, reduce costs and improve customer retention without vendors having to build that in-house. And our presales expertise and solution design, deployment, support, post-sale services are especially valuable in helping our new and emerging vendors accelerate growth. We have flexible payment options, subscription-based models and financial services to help vendors close more deals and expand their market reach, drive recurring revenue without taking on the financial burden themselves. And our service -- as-a-service solutions help accelerate sales reduce risk and evolving buying preferences. Finally, through best-in-class logistics and capacity, we're optimizing the supply chain in the channel and increasing access to inventory for our customers. When we do all of this right, it allows us to do 3 things very well. Recruit and retain new vendors, increase the investments in the channel with our existing vendors and identify opportunities to expand the ecosystem even further. Before I pass it on to Miriam, I want to close where I began. Again, IT market is changing. It's evolving. It's complex. Distributors have a role and their role is constantly evolving and changing, and we serve as a strategic partner to our vendors. And we play a myriad of roles in this partnership. Again, some traditional, many are not. And we're very proud of all the ways that we stand in service with our 2,500 vendors across the globe. As a distributor, we simplify the complexity. As a distributor, we help them accelerate the adoption of new technologies with informed data insights. As a distributor, we train and enable customers to bring these new technologies to market. As a distributor, we connect innovators from around the world when it comes to understanding and anticipating vendor needs, no one is better positioned than TD SYNNEX. Thank you. Now I'll now hand the microphone over to Miriam Murphy, our European President, who'll talk about customer go-to-market strategy.

Please welcome to the stage Miriam Murphy, President Europe.

Thanks, Reyna, and thank you, everyone, for joining us this morning. As the President of Europe at TD SYNNEX, I have the privilege of leading over 7,000 talented coworkers across 24 countries in that region. And it's an honor to share the stage today with my colleagues, and I really look forward to sharing more with you about our unique specialized go-to-market customer acquisition and retention strategies. To start with, I'd like to briefly revisit a slide that Patrick introduced earlier. As understanding our position in the market is critical to our go-to-market strategy. TD SYNNEX services a complex ecosystem of vendors and customers serving a breadth of end users globally. As you heard, the breadth of the portfolio from our vendors spans from devices such as mobiles, PCs, printers and AV equipment to the cloud and everything from servers, storage and networking that connects and runs applications between servicing on and off-premise infrastructure bills and software licensing, subscriptions and consumption. The customers that we serve in this 2 Tier channel are equally varied. From large enterprise resellers and system integrators that operate on a global and national basis to mid-market and SMB resellers that serve a breadth of local customers. Additionally, we have public service specialists -- the public sector specialists that focus on serving government and education clients and managed service providers, where clients outsource their IT environment to their care. The end users that are served by this partner ecosystem range from household names in the Fortune 1000, large hyperscalers, governments and small and medium businesses that are local and regional in their reach. The complexity and breadth of this ecosystem necessitates a customer growth strategy that is equipped to service even the most niche technical and specific of customer needs. And we do just that, to profitably serve this ecosystem and the portfolio that we offer, we focus our customer engagement and value across 4 fundamental pillars. Firstly, we thoughtfully segment our customers based on market opportunity and their go-to-market motion, ensuring we understand their unique needs and align our resources and our go-to-market to serve those. To complement our go-to-market segmentation, we also offer deep technical specialization and expertise. And we harness this to differentiate ourselves in the market and engage with our customers in a highly effective and customized manner, ensuring our customers get to work with both technical and commercial specialists under a single umbrella rather than collaborating with various suppliers who specialize in discrete parts of the portfolio. Next, as part of our growth strategy, we are highly focused on expanding and enhancing our value-added services business to ensure we engage with our customers in a meaningful and impactful way. The combination of these pillars enables us to deliver a differentiated engagement and customer experience. We ensure that our sales teams and technical specialists speak the language of the customers they serve, whether they're addressing complex government tenders are supporting the digital transformation of a small regional business. By offering digital and in-person solutions, we can address a wide range of customer needs in an efficient manner. And when expanding into new markets geographically or technically, we leverage our market expertise and vast data lake, which Sergio will discuss further later to anticipate customer needs and to enable customer growth. So let's dive into these pillars a little bit deeper. By having dedicated teams who specialize in different customer segments, we are able to build targeted campaigns at a segment level. This improves our ROI in our go-to-market strategy. But for our customers, we unlock value by enhancing their technical capabilities and by anticipating emerging technology needs to capitalize on market shifts ultimately allowing them to achieve scale and accelerate growth as markets evolve. The benefit of our technology specialization means that customers can leverage not just technical resources in the form of solutions architects, where they have gaps, but also they can access commercial expertise in technology or vendor to optimize their terms and increase their win ratio. Our ability to tailor at scale and keep in step with the massive acceleration of change in the technology ecosystem, is only possible by ensuring we have a deep connection with each technology segment, building relationships with new entrants and early adopters and leveraging advances in investments made by the giants of the ecosystem. Our ability to accelerate our customers' reach and scale is recognized globally. And to illustrate this point, I'd like to share with you a perspective of a solutions provider in Italy, talking about the seamless nature of our partnership in their growth strategy in the short video. [Presentation]

As you just heard, our collaboration with Almac has been integral to their success and expansion. And we take great pride in the strong relationships that we have built and continue to build with customers worldwide, just like that with Alessandro and his team in Italy. Now I'd like to take a few minutes to talk a bit more about our services business and the road map ahead. As end users look to our customers for solutions rather than products, services have become an increasingly more important element of our value proposition and for deepening our strategic engagement with our partners. We have invested cautiously over the last few years, but see great traction in the market as services are gaining an increasingly relevant share of our profit pool. We're accelerating the investment in services to drive increased opportunity across the partner base. And given the momentum that we have seen in the 4 service offerings on the left-hand side of this slide, we believe that our ability to provide scalable services to our customers will greatly enhance our value proposition. Many vendors are looking to us to provide services on their behalf. And the experience that we've had to date in providing those services has been highly enriching. We see significant expansion opportunities through increasing the coverage of the vendors that we provide services for and we intend to do just that. Additionally, by investing in our own programs and tools. We've clearly identified a compelling growth opportunity by increasing the utilization rate of the services we provide today as well as the expanded portfolio we're investing in. As it stands today, we are not offering our full portfolio of services in all of our markets. So as we continue to roll out services and grow this offering, we recognize the tremendous runway for growth globally as we expand into new geographies and segments around the world. We are excited by the incremental value and increased entanglement that our growing services portfolio offers to our customers. And having seen firsthand from my previous experience leading a global services provider in Europe, how scale can play positively into services delivery where even the largest service providers need third-party support to complement their own offerings. The opportunity in the SMB and mid-market segments to offer deep value at scale is very compelling for us and we're excited by the opportunity that it presents. So through the matrix model of segmented sales expertise, specialized technical and delivery and investment in digital platforms. We're able to truly simplify the complex, customize at scale to serve different needs and navigate deeply the ecosystem that we connect. When we talk about making IT personal, this is what we mean. Our customers can connect with us digitally or in person from anywhere in the world to accelerate their time to market improve their profitability and expand their reach. The investments that we've made in our global specialized skills organization, our data practice and our connections with research partners, has given us a unique ability to understand the current needs of our customers as well as anticipate future needs. And as they move from providing on-premise data center solutions to hybrid cloud, as they transition from the data era to the AI era. And as they shift from office to hybrid workplaces, we are ahead of the trends, allowing us to be a strategic partner that offers a differentiated and tailored experience to our customers. A great example of how we engage with customers on a new technology trend to accelerate their advancement is actually Destination AI. As you heard from Reyna, AI is transforming industries across markets and customer segments, creating a unique opportunity for channel partners to capitalize on the growing demand for AI solutions. Recognizing that many of our partners need support to prepare for the rapid adoption of AI technologies, we created destination AI to help them seize this market opportunity. Our customers today face challenges in that landscape. They have difficulty in identifying immediate opportunities due to the vast complexity of AI's potential. The rapid pace of innovation in AI makes it tough to stay ahead and building an AI ecosystem that meets end user needs is something that not all partners have the infrastructure or vendor relationships to achieve independently. So to address the complexities and opportunities in this evolving AI landscape, we structured our approach around 4 key pillars. These pillars are designed to guide partners through every stage of their AI journey depending on their level of maturity. First, we ensure our partners stay informed about the rapid pace of AI advancements by curating industry reports, vendor value propositions and real-world AI use cases, bridging this gap of awareness. Partners often struggle with the skills gap required to sell and deploy AI solutions effectively. So our AI foundational training, practice building tools and business transformation resources empower our partners to gain confidence and competence in AI integration, ensuring readiness to meet market demands. The complexity of the AI sales process can be overwhelming for many partners. So by providing hands-on demonstrations, proofs of concept and access to experts, we support our customers in making AI adoption less intimidating. And lastly, the journey doesn't end with the sale, maximizing the ROI from AI investments is a challenge for many customers, especially when it comes to maintaining and optimizing the deployed solutions. We provide ongoing support, whether through consulting, deployment, monitoring services or training to ensure that customers continue to drive meaningful value. Destination AI ensures our partners have access to the largest AI vendor ecosystem available, giving them flexibility to choose the right solutions and adapt to their customers' needs and build an AI strategy that is both scalable and future proof. To better illustrate this point, I'll like to play another short clip from our customer Mark III Systems in the U.S. discussing how our partnership accelerated their transformation in the AI era. [Presentation]

As you can see, we believe in making IT personal for our customers. One size does not fit all. Our relationship with Stan and his team is just one great example of that. We are through toward fully segmenting our customers, driving greater value through tailored expertise, which allows them to accelerate their success. Our technology specialization allows our customers to access deep skills across our portfolio from device to cloud. And this, combined with their access to our suite of value-added services elevates our partnerships to a more strategic level and allows them to scale across verticals and geographies more easily. Thank you. And now I'd like to invite Dennis Polk to the stage.

Please welcome to the stage Dennis Polk, Board Director and Hyve Executive; and Steve Ichinaga, President of Hyve Solutions.

Good morning. I'm very happy to be here today with Steve presenting the Hyve business. Steve will be providing a very good breakdown of our business and our opportunities. Before he does, I just want to provide some context on the history of Hyve and address a few of the items that came up in our recent earnings announcement. From a historical standpoint, Hyve is entering its 15th year as a business unit within TD SYNNEX. And has grown purely organically to the level of the results of our latest quarter. I am happy to share that Marshall will be sharing some additional detail on our high revenue during his section. Over the 15 years that Hyve has operated more than 95% of our revenue has been with customers in the CSP space. And as a result, Hyve has enjoyed a very solid long-term growth rate. During this time, Hyve has experienced dynamic periods where spikes and declines in growth rates have occurred due to the unique aspects of the customer set and our concentration with a subset of the major U.S. participants. In fact, since 2018, our business has more than doubled but has had a year of negative growth and multiple years of 25% plus growth. One of the many reasons we're successful in this business is our willingness to be flexible at times, this may involve taking on projects with undefined durations or those that are subject to short-term changes. However, our customers appreciate our ability to be agile and adaptive and also our willingness to invest with them for their needs. On the topic of investment, Marshall mentioned in our Q1 earnings call that we recently increased our investment in Hyve. This has been a must as our customers have increasing demand for our engineering and infrastructure capabilities. Key as always is to drive return from these investments, and I believe we are on the right path to do so. It's also important to remember that historically, the more we invest in our business, including short-term working capital investments, we benefit in the subsequent periods from a return standpoint. As well, we have very good contractual and overall relationships with our customers in this area. As I pass over the podium to Steve, I want to emphasize we are excited about the opportunities we have at Hyve with our existing customers, which has been stable for some time and our pipeline of new customers as well. Thank you very much. Steve?

All right. Thank you, Dennis. All right. Good morning. My name is Steve Ichinaga, and I am President of Hyve Solutions. I joined SYNNEX back in 1984. SYNNEX and now TD SYNNEX was and continues to be a high energy company that encourages innovation. So back in 2009, a small team and I started to focus on direct sales to a new category of customers known as cloud service providers and partnering with these innovative customers has been an amazing experience, and I'm very excited to join my colleagues here today to share more about Hyve Solutions. So I'd like to start with where we are today, where we are going and why we are well positioned for the future. So to put it simply, we deliver design, manufacturing and supply chain services to support hyperscale infrastructure. And we do this through both ODM and CM capabilities and are supporting services. So starting with some key data points and facts. Currently, we have 2,000 employees full time, including more than 400 design engineers. And additionally, we work with over 1,000 contingent workers is a model that provides flexibility to grow operations efficiently. In total, over 70% of our workforce is based in the United States, which we believe is a key differentiator. Our global team is spread across 8 locations in 4 countries, the United States, U.K., Taiwan and China. In the United States, we have facilities in California, Washington, Nevada, Mississippi and South Carolina. Our manufacturing capabilities are spread across 4 locations with the largest 2 in the U.S. We have design centers in California and Taiwan. And collectively, we have approximately 2 million square feet of space and growing. And the vast majority of the space is split between production and warehouse facilities. Our global reach enables us to support and deliver products and services to customers efficiently around the world. We have 15 years of experience delivering custom solutions to our hyperscale customers, which we do through an end-to-end business model that includes design, manufacturing, assembly, deployment and support. And finally, we're very proud of the fact that we've made and continue to make investments in liquid cooling and U.S.-based service bunk technology. We've also invested in more engineering talent and facility power to drive innovation and value for our customers. So there's a lot of reasons why we're excited about our growth prospects and the demand drivers for our business, but I want to call a few out in particular. So first, as you can see in the chart on the left, we've seen pronounced growth in CapEx spend among hyperscalers. So to put it simply, our customers are spending more money on technology. And as we look to forecast growth are strong expectations for continued growth, which we don't expect to change in the near term. In a 10-year period, forecasted CapEx spend will grow by nearly 5x. And in the near term, we're seeing promising growth. On the right-hand side, you'll see for fiscal '25, all hyperscalers are projected to grow CapEx spend by at least double digits year-over-year. So ultimately, spend is growing. And with much of the investment in the U.S. Hyve stands to benefit significantly from this as we are the only publicly traded U.S. hyperscale ODM infrastructure provider. We offer a secure supply chain with vertical integration, and we do it within the United States. And as we all know, tariffs are driving the headlines right now. Our customers are highly focused on these new far-reaching tariffs. And our focus is now leveraging what we have built over the past several years. a U.S. vertically integrated and secure supply chain. And this is a key differentiator that sets us apart from our peers and gives our customers a supply chain optimized for today's realities. So now let's talk about how our capabilities come together for our customers. As it pertains to racks, we provide distinct offerings through original design manufacturing, which we call ODM and contract manufacturing or CM. So ODM is when we design a custom solution to meet the specific needs of our largest customers. And this would include custom motherboards, chassis and rack solutions. Most customers have unique requirements often around security, which require customization. Now CM is what we build a product for a customer that has largely been designed upfront by the customer or another ODM and we provide additional improvements to the design or assembly of the product. In addition, we provide software tools that validate bombs, load drivers and provide test automation and asset file transfer. Data center support, including spare part shipments, directed data centers globally, along with data center infrastructure required to expand compute and network footprints. Supply chain continuity has strategic procurement of key components, which provides both supply and price stability. And outsourced supply chain services acting on behalf of our customers. So typically, these services are unique to Hyve Solutions, and they're not replicated by other CMs, ODM partners within the accounts we service. Each of these offerings are supported and enabled by our end-to-end capabilities across manufacturing, testing, QC and beyond. So this ensures we can provide comprehensive value-add support for our customers to meet their evolving needs. Customer focus is at the center of everything we do. The needs of our customers evolve quickly, and we must be agile and forward-looking to anticipate and serve their needs. When people think about Hyve Solutions, they think about hyperscalers, which is correct. Our business is built and designed for the hyperscale customer. However, we are also focused on delivering our capabilities to the next wave CSPs. When we build hyperscale capabilities for hyperscalers, we did cover the needs of that next wave. And while hyperscalers are poised to dominate the AI landscape, we do believe there's an opportunity for a handful of disruptors that combined could represent a meaningful share of the market. We are well positioned to capture this opportunity alongside the hyperscale volume. When we talk about building our business to serve hyperscalers people asking what that means, and it's what you see on the right side of the page. In this industry, the single most important thing we can be is dynamic, and we have that embedded agility in our DNA. We have grown up with our customers. We understand what they need. Speed, quality and the ability to adapt quickly to the revolving needs. Our customer base is constantly innovating in all areas: design, supply chain, manufacturing, delivery and support. And we are confident that no matter where our customers go, we will meet their needs. And part of our ability to meet customers where they are is dependent upon continued investments that we're making. And that's why we are hyper focused on investments and strategies that will help us win. First, we're going to do what we do well, maintain best-in-class collaboration early engagement and partnership with both our customers and our technology partners. We're going to expand our breadth of services to deliver -- to ensure we can deliver comprehensive solutions and we will invest in new innovative customers and silicon vendors who focus on inference, which we believe to be the growth engine for AI. And we'll expand our U.S.-based SMT production capacity through additional sites and production lines. As we prepare for the heightened AI infrastructure build-out, we're expanding into next-generation AI network switch design Today, we have a solid share of turnkey networking rack deliveries to our customers. Adding our own switch further demonstrates our full vertical integration of products. Finally, we're in the process of expanding our mass production facilities to accommodate higher powered AI racks that require liquid cooling. This, along with our liquid cooled enabled lab and NPI environments, allows us to stay ahead of the growing requirements around AI. Collectively, these strategies and investments will allow us to further enhance our value proposition to our customers and set our business up for long-term growth. To summarize, we're at a very critical moment with extraordinary opportunity. The AI revolution is fundamentally reshaping the physical infrastructure that powers our digital world. Our vision is to be the leader in this space, driving above-market growth. We are confident in our strategy to grow our capabilities, reach new customers and deliver meaningful outcomes for hyperscalers and NextWave CSPs. We are differentiated through our experience model, U.S. vertical integration and secure supply chain, making us the preferred hyperscale infrastructure partner, especially in today's environment. Combined, I am confident that these factors will enable our business to achieve meaningful growth and provide lasting value for shareholders. And now with that, I will now pass the mic to Sergio Farache to talk about our digital journey. Thank you.

Please welcome to the stage Sergio Farache, Chief Strategy and Technology Officer.

Good morning. Thank you, Steve for the introduction, and good morning, everyone. My name is Sergio Farache. I'm the Chief Strategy and Technology Officer at TD SYNNEX. It is a pleasure to be here with you all today to present our digital journey and how we are capitalizing on the latest technology trends to drive growth, innovation, both here at TD SYNNEX and for our partners across the IT ecosystem. Let's dive into our strategic initiatives and the impact they are having in our business. Our digital journey is focused on leveraging cutting-edge technologies such as AI automation and advanced analytics to enhance our operation and customer engagement. We are also capitalizing in the race of B2B marketplaces, e-commerce and digital sales as well as strengthening our cybersecurity measures and optimizing our supply chain and logistics. These elements are aligned with broader market trends and are designated to accelerate growth and drive critical business outcomes. Our digital initiatives are driving critical outcomes that ultimately accelerate growth across the IT ecosystem. And we are hyper focused on 3 key specific areas. First, we are capitalizing on a unified, personalized digital channel customer experience through the implementation of a 24/7 self-service unified portal and connectors, resulting in increased customer satisfaction. Next, we are embedding specialized modules and services to optimize workflows with a seamless integration. Our win for purpose digital services are designed to meet a diverse range of customer needs, enabling us to maximize outcomes as well as improved customer service response time through our digital journey automation. And third, we are leveraging data and AI to deliver personalized digital services and marketing. Our AI-driven marketing campaign have significantly increased our conversion rates and drive improved customer experience, increased productivity, better sales efficiency and enhance our value creation. At the core of our strategy is our differentiation approach, which is powered by our unique data lake. As Patrick mentioned before, this allow us to unify, personalize our platform experience and embed and specialized modules and services to optimize user workflows. On the right-hand of the slide, you can see real numbers to showcase the impact of our data lake has today. Our data lake aggregate information from over 250 sources, generating 30 billion data points. This rich data will allow us to deliver AI-driven actionable insights, optimize offering and pricing, enable data-as-a-service capabilities and enhance our customer loyalty. While our data lake is reached and expansive today, our data lake of tomorrow will be even more vast and powerful leading to enhance our platforms and optimize the user experience. Let's expand on these topics a little more. To illustrate the impact of our digital strategy, let's compare the antiquate simplistic model with a TD SYNNEX innovative model. The simplistic model is characterized by a one-size fit all approach, disaggregate applications, asynchronous updates and fragment ecosystem delivery. In contrast, the TD SYNNEX model offers a unified digital channel experience, real-time data synchronization and personalization via APIs and connectors with a cross-channel integration. As you hear in Miriam's presentation early this morning, personalization is critical to our enterprise growth strategy. And our model is uniquely designed to deliver differentiated engagement and customer user experience, enable us to unlock value and productivity, acquire new customers and grow existing relationships through seamless and personalized digital learning. For example, our real-time data synchronization has reduced operational costs across the ecosystem that we serve. Let's move to the next slide. The second digital initiative is related to how we optimize and improve customer experience. At the heart of our strategy is the customer centricity feedback loop, which is driven by 4 key components that create a complete virtual cycle. Starting with our large customer base, which generates substantial volumes of data and insights. This data is invaluable as is provided with a deep understanding of customer behavior, preference and needs. By analyzing this data, we can identify trends, predict future demand and make informed decisions that enhance our service offerings. We use this risk data and these insights to tailor the platform experience to meet and serve our customer needs. The personalization of our platform is key to deliver superior customer experience. And by customizing our interactions and offerings, we ensure that each customer feel value and understood, leading to increased satisfaction, loyalty and stickiness. The effectiveness and impact of our platform drive customer growth and increased utilization. Our data-driven approach not only help us to retain existing customers, but it also attracts new ones, showcasing the value of our digitalization efforts and productivity gains enabled us to expand our customer base and grow our market position. Lastly, personalization allow our customers to achieve new levels of productivity and value creation. By providing tailored solutions and insights, we empower our customers to optimize their operations, reduce cost and drive innovation in turn, leading to a more effective and efficient IT ecosystem. These 4 components create a virtuous cycle that continuously enhance our platform and customer experience. As we generate more unique data and insights, we are able to enhance the personalization of our platform enable us to attract and gain more customers who, in turn, unlock more value and productivity. The increase of this customer base generate even more data and insights, repeating this cycle and driving continuous improvement in our execution. We offer tailored digital services that address the best customer needs and on example, include training and enablement to address the skill gaps finding solutions that are tailored to our customers, unique requirements, high-impact marketing service that drive customer engagement and growth, streamlined buying and managing processes make it easier for customers to procure and manage their IT assets offering seamless digital integration, meeting our customers where they are, providing value analytics that help customers to take informed decisions and optimize their operation and providing key post-sale support services. Our retail services allow us to support the customer needs, enhancing skills through digital again or a practice builder, identify and test solutions through services like Cloud Labs, optimizing the delivery and execution in marketing campaigns with programs like PACE, and enhance our detailed transactional and delivery services through our e-commerce and as-a-service platform capabilities. Serve our customers through our digital breach and API connections and enhance the insights that we serve through our cloud data platform; and finally, support the life cycle of business with renewals and services. We meet the customers where they are solving for and navigating complex programs in a streamlined and effective manner, driving increased engagement, enablement, sales and predictive analytics. To further double click on this point, there are some numbers that are effective and impact of our digital journey. As an example, in training and enabling more than 30,000 courses has been delivered. Our PACE program has been successfully deployed with over 50,000 partners, and we experienced 25% year-over-year revenue growth due to the program. Our marketing campaigns have 40% open ratio in targeting campaigns that is significantly better than industry standards. The transactional comers serve more than 150,000 partners and 75% of the SMB resellers transacting our platform today. 85% of our partners transact through digital vehicles today. And we delivered more than 1.3 million personalized quotes across the world with more than 15,000 partners transacting per month in our renewal engine. You have heard from a handful of key vendors in Reyna's presentation that highlight how TD SYNNEX at large unlocks value for them. Now let's see from a few more that will specifically highlight the value of our digital capabilities, deliver and specifically the impact of our PACE program. [Presentation]

Well, great examples. As you hear from our vendors, our build-for-purpose digital services are critical to enhancing customer engagement, improve efficiency and unlocking greater value and driving growth. PACE, as an example, provide vendors with significant reach at a low cost for the enabling the TAM expansion. Then to conclude, our platform and digital services are designed to unlock value and accelerate both customer and vendor growth. By utilizing omnichannel capabilities, we delivered seamless experience that address different customer needs, meets the customers where they are and drive efficiencies. Our insights from the unique data lake and AI capabilities help increase demand and adoption accelerate sales opportunities and improve conversion rates. I will give you with this. Our digital journey is empowering the ecosystem with actionable insights for sustainable growth. We are committed to driven innovation and delivering value to our vendors and our customers through our digital initiatives. Our data-driven approach and AI capabilities are setting us apart in the industry, driving significant business outcomes that are essential for continued success. Thank you for your attention. And I will now invite Marshall Witt to walk through our financial model of the day, our financial priorities and value creation.

Please welcome to the stage, Marshall Witt, Chief Financial Officer.

Thank you, Sergio. And good morning, everyone, and I'm Marshall Witt, CFO of TD SYNNEX. First, I'd like to thank you all for being here today. I want to start by addressing the fact that we're in a volatile environment given the ongoing developments with respect to global trade. As we look at the coming months, quarters and even years, there's an inherent uncertainty regarding how the broader macro environment will shape up. As I walk you through our financial targets and expectations for the medium term, I want to acknowledge that this is our best view based on what we know today of the market and our performance across over the next few years. As we provide guidance in the future, we will continue to take current events into account. Our commitment to transparency and communication is unchanged. And we'd rather give you our view today, which could change then give you no view at all. So with that, let's turn our focus to what lies ahead. As you've heard from the team today, we are in an exciting period at TD SYNNEX, and our vision is clear. We aim to be the market leader in the IT distribution space. We want to grow our addressable market. We want to penetrate new segments and geographies and provide unrivaled breadth and quality of service, all while driving above-market growth and attractive shareholder returns. Today, I'm going to share with you our financial priorities and value creation initiatives in place to achieve this as well as look at our medium-term outlook. Earlier, Patrick shared why we believe TD SYNNEX is a compelling investment opportunity. I want to double-click on 4 key messages that make TD SYNNEX truly unique. First, we are a global leader serving a large addressable market with sustainable competitive advantages. As you heard from Reyna, we are at the intersection of an increasingly complex ecosystem in a market that is constantly innovating, growing and evolving. As technology advances, white space continues to appear providing an ongoing path of opportunity. Next, we have a diversified business model with unparalleled relationships, vendor and customer centricity is at the cornerstone of everything we do. The depth and breadth of these relationships are fundamental for success. Next, we generate a significant amount of free cash flow given our disciplined approach to managing ROIC. In fiscal 2024, we returned 72% of our free cash flow to shareholders in the form of dividends and share repurchases. Returning capital to our shareholders is a core element of our capital allocation strategy which I will expand on in more detail shortly. And lastly, TD SYNNEX has led by seasoned executives with extensive experience in the IT distribution industry, who are committed to fostering a best-in-class culture for our employees with a focus on excellence and driving results for shareholders. To summarize, we often -- we offer unrivaled capabilities with significant runway for growth, serving over 2,500 vendors and 150,000 customers globally. Before we talk about our financial priorities moving forward, I'd like to reflect on the great progress our business has made. Our team has a proven track record of high performance, demonstrating consistent execution. Annual gross billings have climbed to roughly $80 billion in fiscal 2024 from $77 billion in fiscal 2021. Gross profit as a percentage of gross billings remains consistent at around 5%, and free cash flow has continued to show more consistency over the last 2 years. Lastly, diluted non-GAAP EPS experienced a dip in 2023 due to the soft IT spend environment, but experienced a modest recovery in fiscal 2024. Though we are proud of our historical financial results under Patrick's leadership, we expect to drive incremental growth, operating leverage and disciplined cash flow management will be keys as we focus on driving double-digit shareholder returns. With that, we are focused on continuing to execute at a high level, accelerating profitable growth and free cash flow. As you can see highlighted on this slide, we strive to create attractive shareholder returns through disciplined execution. Our medium-term aspirations outlined on the left side of the slide are all driven by a pursuit for excellence. Stated clearly, we intend to grow faster than the market by extending our reach and capabilities, further strengthening our partnerships, continuously focusing on efficiencies and productivity and pricing and expand our services offerings to improve our gross margins. We will benefit from improved business mix and thoughtful cost management to ensure we grow non-GAAP EPS substantially faster than gross billings. And lastly, we are targeting a non-GAAP net income to free cash flow conversion of 95%-plus with a target to return 50% to 75% of excess cash flow to shareholders. So let's dive into the financials just a little bit more. We are aiming to grow gross profit dollars at or above the market rate by extending our reach and simultaneously capturing market share. For us, this means aspiring to reach a medium-term billings CAGR of approximately 5% and gross margin CAGR of 5-plus percent or more with a clear strategy to expand our capabilities across the world. We are highly confident in our team's ability to exceed market growth while maintaining our disciplined approach to ensure profitable growth. In Advanced Solutions, we intend to build on our position of leading -- being a leading distributor while expanding our AI, security and hybrid cloud portfolio and again, leveraging our specialist model for higher-margin growth, enhancing and expanding services, increasing renewals and scaling demand generation will strengthen recurring revenue and drive long-term momentum. Now keep in mind that Hyve sits within the AS product categories and maintains a margin profile that is consistent with the AS segment as a whole. Our expectation is that hyperscale CapEx growth will continue to accelerate, as Steve has already discussed. We have modeled high single-digit to low double-digit growth for high over the next 3 years. In Endpoint Solutions, we aim to achieve GDP-plus growth by strengthening our competitive position and expanding into high-potential regions like Latin America and APJ. Additionally, we are leveraging our specialist go-to-market approach to accelerate growth in higher-margin segments, ensuring a strong and more profitable revenue mix. We also see a significant opportunity to increase customer value by attaching services like PACE, which will fuel growth across the long tail of SMB at accretive margins. You've heard the concept of excellence through this presentation, and our commitment to operational excellence is no different. We have 4 key levers outlined to improve our cost to serve. First, we will augment our workforce and optimize our processes through the use of automation and AI. As you just heard from Sergio, our AI capabilities, coupled with our expansive unique data lake offers critical insights that propel our business forward and help drive key decisions. We will continue to tap into AI and automation technology to enhance the productivity of our workforce and increase the value of our teams. Second, our organizational structure is critical. We spent a lot of time today talking about segmentation and specialization, but we also want to ensure our enterprise is streamlined. Doing this not only helps to remove bureaucracy throughout the enterprise, it also enables agility and decision-making as we place accountability into fewer hands. Third, we plan to drive continued process automation and optimization across our organization. This is a constant effort with no finish line. We're always working diligently to find new creative ways to get things done more quickly and easily. And last but not least, we have consolidated our ERP platforms in the Americas and Europe but can still improve on optimizing functionalities to ensure streamlined, efficient and standardized processes enterprise-wide. We believe all of these actions position us to reduce our SG&A as a percentage of gross profit over the medium term to approximately 56%. In quarter 1 of 2025, we were able to drop 50% of our incremental gross profit to the bottom line in our distribution business. Before we discuss the key assumptions for our medium-term outlook, as you likely saw in our press release issued this morning, we've updated our outlook for the second half of 2025, and I wanted to provide some additional color regarding these changes. We have adjusted our second half 2025 expectations to reflect the status of the business, including known risks and opportunities. This resulted in a reduction in revenue and operating margins for quarter 3 and quarter 4, consistent with the headwinds we commented on for quarter 2, which includes the potential for a temporary pause in IT spend as vendors and customers digest the recent news. Now moving on to our third focus area. We're focused on driving non-GAAP EPS growth to achieve a 10% to 12% growth over the medium term. Our ability to achieve this target will be influenced by the aspect I touched on a moment ago. which are again approximate 5% billings growth through capturing incremental opportunities in new geographies, expanding our portfolio of offerings and deepening existing relationships. Growing our higher-margin products and services by leveraging our specialist go-to-market strategy, increasing our attach rates and expanding service offerings and focusing on growing our demand generation services. All while reducing SG&A as a percentage of gross profit through operational excellence initiatives I just described, which are workforce optimization, process simplification, shared service enablement and incremental ERP efficiencies. This will all be bolstered by plans to increase share repurchases as we continue our target to dedicate 50% to 75% of our free cash flow to repurchases and dividends, driving value back to our shareholders. And finally, as we will remain committed to returning significant value to our shareholders, we must continue to effectively convert net income to cash. While our free cash flow will inherently grow as we increase billings and effectively improve margins, in order to achieve our targeted 95% conversion of net income to free cash flow, we will execute the following. We'll improve our working capital by streamlining our cash days through our business mix evolution and delivering continued efficiencies in Hyve, manage our CapEx spend with discipline with a strong focus on investing in areas that provide appropriate long-term ROI. Overall, these items along with our initiatives to further expand bottom line results will ultimately drive our ability to return value to shareholders and drive the business forward. Now shifting gears to our capital allocation framework. Like I mentioned in my opening remarks, we have a strong commitment to maximizing shareholder value and returning excess capital to our shareholders, which remains a key priority for us moving forward. Specifically, as you see here, we are targeting 50% to 75% return of free cash flow to shareholders through repurchases and dividends. Now part of ensuring we are maximizing value is by designing a framework that is opportunistic where we can evaluate where excess cash would be most effectively deployed. This allows us to pull appropriate levers such as additional buybacks or M&A to ensure we are optimizing value for TD SYNNEX and our shareholders. When it comes to our M&A strategy, simply put, we plan to pursue deals that follow 3 guidelines: First, we will pursue investments where we can model medium-term returns that are above the return of share repurchases. These deals must accelerate the strategic objectives that Patrick and the rest of the team have outlined today. And lastly, they must align with TD SYNNEX's growth strategy, culture and values. We believe a disciplined M&A strategy is key to TD SYNNEX's long-term success, and we are diligently monitoring opportunities that may fit within this framework, which is a nice segue into our gross leverage target. As you see here, we are referring to a gross leverage floor as opposed to a range meaning we do not intend to proactively fall below 2x leverage. As a reminder, historically, we have remained in the 2 to 3x leverage range in alignment with our flexible and opportunistic capital allocation strategy. If an opportunity arises, that fits into the 3 key M&A guidelines I just outlined, we could go above our historic leverage range to pursue a value-accretive deal and accelerate our profit growth initiatives. I'd be remiss not to call out our historical proven ability to lower our leverage ratio by 1 to 1.5 turns over a 12- to 18-month time frame. Through EBITDA growth, paying down debt our target of maintaining healthy leverage and investment-grade rating remains unchanged. In an effort to provide added transparency and predictability around key metrics that drive our business, I'm sharing the metrics you see here. And particularly, you notice, we've broken out gross billings and gross profit by 2 areas: advanced solutions and endpoint solutions. What you'll notice is that between 2023 and 2024, Advanced Solutions drove an outsized portion of billings and profit growth. This was driven by a higher mix of security, cloud, AI and other high-growth categories. Hyve also grew substantially, driven by the successful onboarding of a second large hyperscale customer. To help further explain our results, we have also expanded our product category breakout as well. What you can see here is we have highly diversified portfolio of products with a favorable mix of highly complex technologies. We've also added a breakout for high ODM, original design manufacturing and CM contract manufacturing, which Steve discussed and represents approximately 5% of our gross billings. Now I'll leave you with this. While we are the #1 IT distributor globally by revenue, we still have great aspirations. We are hyper focused on driving accretive returns for shareholders and our experienced management team remains committed to increasing free cash flow per share over the long term. We intend to grow faster than the market by extending our reach and capturing market share. We intend to drive non-GAAP EPS growth through margin expansion and disciplined cost management. And we intend to maximize shareholder returns through dividends and share repurchases. And aiming for over 95% of non-GAAP net income to free cash flow conversion. It is truly an exciting time for TD SYNNEX as we continue to create meaningful value for all of our stakeholders. As we move forward into our next phase of growth, we are confident that our strategic initiatives, strong financial discipline and commitment to excellence will drive sustainable growth and create long-term value. We look forward to continuing the journey together. With that, we will now have a brief 15-minute break, and then my colleagues will join me back on stage for Q&A. Thank you. [Break]

Please return to your seats. We will now begin the Q&A section of our program.

Thanks for staying with us. If you have a question, raise your hand and then we've got 2 mics, we'll pass around. All right.

Adam Tindle, Raymond James. I appreciate the perspectives from the various business leaders today. It was a really helpful presentation. And I think we don't get a lot of exposure to the Hyve leadership. So I wanted to start there with a question for Steve and then Dennis and Patrick can weigh in on the second one. So Steve, investors in this industry see maybe the biggest structural change ever happening for Hyve with builds moving to new AI architectures. And I just wonder if you could maybe touch on the competitive landscape, what it looks like in sort of the traditional builds versus an AI type of a build and then broadly speak to Hyve's core competitive differentiation as builds shift to that. And then as a follow-up for Dennis. I appreciate the efficiency of your presentation. I am going to make speak a little bit more than that.

Maybe...

The question for you would be -- would love to just get general business observations as you've gotten more involved in Hyve, it's harder for us with limited disclosures, and I know it can be volatile on a 90-day shot clock. So if you could maybe just give investors a better understanding of how you analyze the quality of the business, any KPIs that you could mention? And how Hyve made the case for further investment from the overall corporate level.

Okay. Great. Should I set up? Yes. Okay. So I think you asked about the competitors and how competitive it is. So it's pretty much what you would expect. It's typically the kind of known ODMs. Those are the major ones because they're the ones that are doing the design work. And in terms of what we're working on, I think, was the other question, which was basically, yes, AI is -- it's all really being covered at the moment. Obviously, AI is being covered quite a bit. Switching actually is an important new area for us because we've seen the switch business obviously get very busy in a positive way because of all the switching that's required for this. So I would say those are pretty much -- so that's pretty much, yes, the competitive outlook. And in terms of the products, -- that's what we're looking at. And I'm not sure if I got all the rest of it.

And just kind of the changes as new builds shift to AI and GPUs over CPUs, sort of the structural change that, that brings to the industry and the competitive landscape for Hyve that shift happens.

Yes. There's definitely structural changes. And so we're an SPX partner with NVIDIA. So that allows us to go and we work with them on their reference design. So we design our products, we're able to get those out into the marketplace. And in terms of some of the structural changes, some of the biggest ones are just additional power. So power is a big thing that we've got to be able to get in place. So you look at racks, maybe there 20 kVA, now they're going to 60, now they're going to 120 kVA and then there'll be even more down the road. So a lot of the structural changes once you get past like about 100 kVA, right, you're going to need liquid cooling. And so we've had to make those structural changes, and we've got those built up in our labs today and in our MPI labs and in mass production. Those are getting built up right now, all of those areas. And yes, it's an important investment. Power and cooling are probably the biggest structural changes.

Great. And on the topic of how do I monitor the business, it's 2 key things that I pay a lot of attention to. One is on the existing business. The day-to-day is very important, the month-to-month, the quarter-to-quarter. But what I watch for our largest customers because they provide it to us is the rolling 52-week forecast they provide us. So those go up and down month-to-month, day-to-day, if you will. But over 6-month and 12-month periods, if they're stable or increasing, then the health of the business is very good. And so it's very good to get that visibility from our customers. So it provides a lot of confidence as we look forward. Second most important thing is how many times are we participating in new bids, new opportunities with customers, either new customers or with existing customers. And due to a lot of the investments that Steve went through in his presentation, and as I think I alluded to, I'm happy to say we're in more bids and see more opportunities now than at any time before. And as far as competing for investment, if you will, with the overall TD SYNNEX, first of all, it's not really competition. We make the best investments where possible. And the most important thing is that there's going to be return generated from that. And I think as Patrick talked about and Marshall, Hyve has done a very good job in generating returns from the investments that have been made.

I just want to add one thing. So as you can imagine, so a more distribution background. I'm learning fast on this business, and I had in my component time, some background there, too. But when you look at Hyve, it's -- so first thing, the market it serves, I mean, the growth rates are showing it. There's still huge potential for growth. Second, when you look at the financial profile of Hyve, it's very accretive. So from the margin standpoint, as Marshall mentioned, it's a little bit higher than AES. But what is very interesting is the operating margin because the cost to GP of that business is relatively low. So the financial profile of Hyve is extremely interesting, and we have enjoyed the last 2 years, some fantastic returns from that standpoint, where distribution was struggling a little bit. Strategically, again, when you look at where we are today, we have primarily 2 customers. I mean it's very important that we can continue to win new programs. And in order to win those new programs and hopefully, in some cases, also some new customers, we need to make some of the investments we are making. At the end, those investments, when you look at, I mean, the size of TD SYNNEX, it's not going to destabilize our financial profile, okay? And I'm not talking about the working capital. This is a different story, but I'm talking really investments in fixed assets and in people. But especially when you think about engineering or you think about the SMT where, again, probably going forward, having that capability in the U.S. is going to be an important competitive advantage. I think it's really worth it. So just to put things a little bit in perspective, on the distribution side, I mean, again, we are growing, very good cost management, cash days. So we can absorb some of it. No problem.

Maybe just a quick clarification as a follow-up for Marshall. Helpful to get a fiscal '25 look on EPS. And I think if I back into the implied EBIT, it's kind of flattish for the year. You started, I think, down around 6% in Q1. So it's going to imply some acceleration to get there, if I'm right on that. Wonder if you could just maybe talk to the moving parts that drive that acceleration to hit those? And specifically, if you could touch on any visibility into Hyve coming back throughout that period of time.

Thanks, Adam. So thinking about our medium-term guide and some of the elements underneath that assumption. As we said, 5% is our expected CAGR growth over the medium-term outlook with AS being above that growth rate, ES being slightly below. Hyve having a high single-digit to low double-digit growth rate. Those attributes are expected to generate about a gross profit growth of 6-plus percent, 5-plus, 6-plus percent. What Patrick said is important, is cost to serve, and we achieved in distribution that fall-through of 50% of the incremental profit fell through to the bottom line. That's super important as we move forward so that as we go from GP to OI, we do see that lever and that, we'll call it, that multiple effect that hopes and holds us to that EPS growth of 10% to 12%. So we want to be prudent in our overall assumptions, but certainly believe that as we move forward, that cost to serve with the higher service categories that lead to margin improvement should support that.

Joe Cardoso from JPMorgan. I guess maybe just starting off with a bigger question, and then I'll have a follow-up on Hyve. But today, you presented your new medium-term targets that aren't too dissimilar from what you presented in 2022. The volatile macro obviously made that difficult to achieve in terms of the prior targets, but not too dissimilar to what we're seeing today. So if we were to put the macro aside, what are the 1 to 2, 3 key aspects that you would highlight to investors today around the strategy, go-to-market, operational changes relative to 2022 that you think positions or you guys have evolved or positioned you guys differently than kind of a couple of years ago? And then I have a follow-up on Hyve.

I'll go first and then Patrick, please. I think a lot of it is spent on Patrick's guidance and leadership. So -- the things that we certainly expressed in 2022 was the high-growth strat technology portfolio that we believe would be a growth engine for us, both for revenue and margins that took place. We also believe the correlation between GDP, IT and our ability to outgrow IT spend took place. Joe, as you saw, we saw softening in 2023, a recovery in 2024. Now thinking about where Patrick wants to head back to this cost to serve and that being a very important aspect to keeping in mind of how we incent and drive growth for our organization with that profit aspect in mind. And then the other aspect is that efficient return of capital and being able to generate consistent free cash flow and then the goal of being able to turn that back into a net income to free cash flow conversion of 95-plus percent. I think those things, even though those always have been important to us, I think they become more focal under Patrick's leadership. And Patrick, anything else you want to share there?

Yes. I'm going to focus on the top line. I'm going to put Hyve aside for the moment, just focus on distribution because I guess that's where you -- your question was heading to. So when you -- so we have this global strategy. And so I want to start with that one. We really have 2 regions where we have, I mean, clearly a leadership position in North America, Europe. And then you have LatAm and APJ. And honestly, we are putting -- we're going to continue to make investments because those 2 regions offer very attractive growth opportunities at good margins. okay? So that's point number one. Then if I think about by technology and by customer segment. So now we are very clear. We've identified in every region which technologies we need to continue to target where we are underrepresented, which customer segments we are underrepresented and which franchises we need to add to be more competitive. So you have a whole dynamic which is being established in every region and country to create or to accelerate the growth. I will add 2 more things. The first one is we have this global presence. We have those global relationships. And to recruit the franchises we don't have in some of the countries, I would say that helps. And we have some very nice successes. I'm going to take India as an example. I mean, in just the last 5 months, we added Adobe, NVIDIA, HP and Cisco. And we have obviously the right value proposition locally. But I would say probably the power of TD SYNNEX played a role. And then I want to refer to services. So services is really a big bet. It is small for us today. We know that with a lot of focus and some investments, we can rapidly grow it. And because it's accretive from a margin standpoint, it should have a very positive impact on GP and operating income.

I appreciate the responses there. And then for Hyve, obviously, one of the big key items that you guys highlighted today was the investments that you're making in both existing capabilities as well as some of the new capabilities. However, if we compare that to some of the peers that you kind of compete with in this space, they're also making those same investments on network switching, power, cooling, et cetera. So how should we interpret these investments? Are these really you guys investing and these are the table stakes of the market and where it's going? Or do you actually think these are some of the capabilities that will help you either gain a greater share of wallet with existing customers as well as expand to new customers?

Steve, do you want to start?

Yes. We do feel like it's going to help us get additional share. So our key focus is the hyperscalers today. And just being vertically integrated, have all these together, they want actually a certain number of suppliers. And if we're able to do and show the full breadth of vertical integration and networking, it helps us across the board. And certainly, there's a lot of crossover now actually happening between networking and AI and so on anyway. So it just makes sense. So for us, yes, 100% puts us in a much stronger position being able to do that. And in terms of where we're located, we are in the U.S., we're on the West Coast, all the critical hyperscalers are on the West Coast. So that kind of engagement is very important for us as well. So those investments, I think, just helps us get more accretive business. That's my thought.

David Vogt, UBS. Thanks again for doing this guys in this tough market. Not to believe with a point on Hyve, but can we dig in on some of the details that you guys talked about? So it looks like the Hyve business from a CM, ODM perspective is about 5% of billings, which would imply that's about a $4 billion run rate business today. Can you kind of help us understand kind of the profile of that business from a margin perspective within AS? I know you mentioned -- Marshall mentioned it's comparable gross margins to the AS business. But I would imagine that it has maybe slightly less OpEx dollars attributable to that segment, so it's margin accretive. A, is that the right way to think about the business? And then also, when we think about the other parts of the business, the spare parts business, how do we think about that in terms of the growth framework that you laid out from high single digits to low double-digit growth in that business? Does it grow as fast as sort of the ODM, CM piece? Or is it more volatile? Just kind of give us a sense for how to think about that part of the business.

Patrick, do you want to go first?

Yes.

So on the ODM aspects and our commentary, David, around that being more AS-like and call that 5% to 6% in terms of the margin profile. That's where the Hyve ODM CM margin ends up falling. If you think about your -- responding to your comment about gross margin versus SG&A and the unassigned labor, we did mention in quarter 1 earnings that there was some headwind around project profile mix. And so based on the programs that we have in place within Hyve also kind of dictates the outcome of that GM variability. But roughly said, it does fall within that kind of that 5% to 6% category. On the loose and the supply chain and spare parts and strat, that tends to be quite volatile from quarter-to-quarter, depending on the need and the demand and how much we carry. That margin profile can be disti-like on one end, and it also could be AS-like depending on the profile of the SKUs we're purchasing in terms of the margin uplift. As you know, we also hold on the behalf of our customers as we hold, we get aging recovered for that. So that could extend and improve that. So there's more volatility around the supply chain and the data center support programs and the margins and also some bumpiness in terms of working capital.

And maybe just a follow-up on kind of the macro backdrop that we're seeing today. Historically, you've been able to pass through price. I think that's a feature of the disti model. Early days, I understand that. But how are you thinking about the ability to, one, pass through price and sort of the offset demand, what that means if price does move across the industry higher to offset some of these tariffs? Any kind of color maybe historically or an analog in the past that you might want to share with us, whether it's Trump 1.0 or some other point in the cycle?

I'll start and then maybe you can give the perspective on the history.

Sure.

Because -- so as you said, so we don't know today what the vendors are going to do. So we are not the importer of records, okay. In the U.S. We have a very, very small amount where we import directly. The vast majority of our business, it's going to be delivered by our vendors. So what are our vendors going to do? For the moment, we don't know. I mean we -- and on top of it, things are fluid. So one day, it's this way, the other day. So I guess everybody is waiting a little bit. So when we have that information, then indeed, we're going to -- if there are significant price increases or price increases, we'll pass it through. In general, that's what we will do. I'm sure there will be some negotiations, but that's what we will do. Short term, it's going to be a tailwind because it's an ASP increase. Then I think depending on the product category, the price elasticity is going to play a role. So there will be some categories where, yes, that's going to be an issue. In the consumer space, that could be, for example, an issue. In the B2B, so let's take the example of PCs and let's say, they are impacted 15%, 20%, let's assume. I mean, still the refresh requirements are there. When you think the end users will amortize the -- I mean, their investment over 4 to 5 years, 20%, it's a must-have technology speaking. Maybe we will have a good surprise. So we'll see. Again, it's going to be -- according to me, it's going to be very technology specific, but it's very, very, very early stage.

And your commentary is historically aligned to our experience in Trump 1.0.

David Paige from RBC. Maybe for Sergio in terms of your digital initiatives. Can you tell us where you are in your journey from creating the 24/7 self-service unified portal experience, integrating into workflows? And I guess, just longer term, where do you see the benefits from that platform?

Yes. We are very comfortable with the position that we have today. We are evolving, obviously, to improving our capabilities. And what we are using is, as I explained in the presentation, our data as a footprint for inform us what are the requirements from the specific customer segments and what we serve to them. Something that we are taking as part of our definition in digital is that this concept of one size fits all is not necessarily what the customers are looking for. In many cases, they want deep capabilities in some specific technology areas or services. Then our approach is to guarantee a seamless experience in terms of how you access to our services, but at the same time, provide a deep capability in terms of what they need and serve for what they need. And in addition to that, we are using, again, our data lake to improve constantly what they are looking for and how we present that information. The other element that we are taking in consideration is that this assumption that you will force the customer to go at one place is not necessarily the right assumption because customers have, again, different ways to connect, and we want to meet the customers where they are. Then we are expanding our capabilities in terms of this concept of the portal, but at the same time, doing significant investments in an API economy in connectors and giving access to an omnichannel capability and the customers will meet us where they are without forcing them to take a decision that they don't want to.

George Wang here from Barclays. Just thanks for all the details. Really appreciate that. So 2 quick ones. Firstly, kind of stay on the Hyve, maybe to Marshall and Steve. Just in terms of how to look at kind of the fulfillment part of the business. You guys laid out kind of 5% on the gross billings in terms of CM and OEM. But like when you include the fulfillment strategic buys, how should we think about percentage versus the gross billings and also for the revenue? And maybe the kind of consigned accounting would come into play. So can you kind of talk about in which part you are doing the buy and sell and in which part is consent based and how that would influence the margin profile?

Sure. I'll take that. So our supply chain and strat procurement programs in quarter one were about 4% of gross billings. As I said previously, that has some volatility to it. It can move anywhere from 2% to 4% just to give you a perspective on that. Then the question on consignment, we have consignment within Hyve. It has run around $200 million a quarter. We think that's probably the right thought about the next 4 quarters in terms of that relationship. And then just to define what that means is gross revenue is going to be $100. We're taking off $20 for that is equivalent to the $200 million to get to the net revenue of $80 million.

And Marshall, just to clarify, that part of the business is more on the CM ODM side versus the supply continuity and data center -- services side.

Just a quick follow-up for Marshall in terms of financials. Just kind of honing on the operating expense. You guys talked about kind of trying to achieve efficiency in terms of SG&A versus gross profit. And you guys laid out kind of the pathway from 59%, 60% to 56% in the future. Just curious how to think about the cadence and how fast you think you can achieve this 56% ratio versus the gross profit?

Yes. So I kind of put this into 2 categories. One is TD SYNNEX's DNA to always be nimble and to live in a highly variable cost model program. In addition to that is where we think we can continue to be more optimized in the 4 categories I spoke to just in terms of process efficiencies, organ structure and efficiencies and then overall decision-making nimbleness. Those will probably be somewhat spread throughout the next 3 years. I call them hundreds of little things that add up to significance. So I think about it in those 2 capacities.

Can you clarify how much M&A is in the 5% billings growth, 6% EBIT growth and 10% to 12% EPS growth forecast?

None.

So your plan is to devote 25% to 50% of cash flow to acquisitions. Do you expect to get a return on those?

Could you say that question one more time?

The 25% to 50% of cash flow that you're planning to devote to acquisitions, do you expect to get a return on that?

So great question. We've intentionally tried to be broader in our overall deployment of free cash flow and the highest return for that. Historically, as I said in my prepared remarks, 72% of our free cash flow went in the form of buybacks and dividends. Thinking through where we're at now, we announced that we're going to have share repurchase of about $100 million in quarter 2. We are going to go north of that, just given where we're at in terms of our overall position in the market, the price of our stock. But as we think about M&A, we have not allocated a set proportion to that, but more assessment of the value it brings to our strategy, our overall returns and value for the organization.

I just want to add one thing about our M&A strategy. So we talked about the 5 growth opportunities. And in many cases, you have acquisition of capabilities behind. So today, we are planning to acquire those capabilities organically. If tomorrow, we find an acquisition opportunity where we can accelerate the acquisition of those capabilities, we are very much interested. The caveat is, of course, that the return on the investment is going to meet the criteria Marshall described in his presentation. So that's very important. We have a very disciplined approach. We get many opportunities. We have lots of projects coming on our table. We are very, very selective. And again, if we can't get to the right return, I mean, we will not do the acquisition and continue on our organic path.

Keith Housum from Northcoast Research. Two questions for you, one on Hyve, one on the services. In terms of the Hyve business, I know there's a lot of concerns after the last earnings call regarding Hyve's competitive stance and what has been happening perhaps with the guidance for the second quarter. Can you talk a little bit about the competitive marketplace? I know you guys are going after like a second or a third, fourth, fifth large Hyve customer. What gives you guys confidence that you guys can step up the plate and be able to get those guys in the door? And second part of Hyve there is, in terms of the carrying cost for the quarter, are you guys being compensated in real time for that? Or will you guys be compensated at the end of the project? And then in terms of services, how do you guys plan on monetizing that? Is that part of the cost of the hardware that your customers will ultimately end up buying? Or will that be a separate line item down the road?

Do you want to talk about competition first?

Yes, Dennis.

Sure. From a competitive standpoint, yes, we do think we can compete in the marketplace. obviously, we talk about this customer # 2 quite a bit. Winning that recently is an example of how we can compete in the marketplace very well. We've also recently taken on what I call a next wave or Tier 2 customer. Again, another example of our ability to compete. And all the things that Steve talked about that we've invested in, that we deliver services to our customers today are resonating with potential customers out there. And I mentioned earlier that our pipeline is very good. So I do think we can compete quite well in the marketplace. And I think you had a financial second question.

Yes, I'll do the second and third was services. So I'll do the second one, Keith. The recoupment of those carrying costs are within the quarter.

Miriam, do you want to take the service question?

No, do you not want to take then -- given it was about how we would report on services moving forward?

Yes, I would just do more of the services investments.

Yes. So the focus, of course, on our services is on increasing the entanglement and the accretive value of what we're doing today. So it's part of a solution sale in its entirety rather than an entirely independent sales motion. It's integrated in our existing sales motion and as shown by the services that we're already delivering today.

It's Ruplu Bhattacharya from Bank of America. Thanks for all the details on Hyve. My question would be twofold. One, can you break out how much is contract manufacturing versus how much is ODM? And maybe a higher-level question for Marshall or for Patrick or even for Dennis. Do you really think that this business can reach its full valuation under TD SYNNEX? Or is this -- because it's a manufacturing business, is more value to be created for shareholders outside the company? So if you can talk about that? And I have a follow-up.

I'll do the ODM CM piece, and then you can take the second. So thanks for the questions, Ruplu. If we think about ODM CM, I want to expand that to a broader lens of the various programs we have with our customers. Within our 2 largest, we have over 10 programs. ODM CM, if you look at our overall customer set, we have 15 to 20 programs. They all have different time lines, life cycles, durations. And so it depends. It's my long way of telling you that it just depends on how those are ebbing and flowing. But I wanted to give you the appreciation for the breadth and depth of the programs that we have underway.

So I want to start by saying that we are not dogmatic, very pragmatic. And today, we think that Hyve fits very well on the TD SYNNEX for many reasons. I mentioned some of them accretive. We have some synergies we should not underestimate. And one of them which may not be so obvious is we are leveraging the relationship with the component manufacturers between distribution and Hyve. And that's a competitive advantage, okay? So today, happy with Hyve, but Hyve today is 2 customers. We still need to make some investments. If tomorrow, we see that both for Hyve and for TD SYNNEX and its shareholders, it makes sense to do something different. We will do it. And if you go back to the SYNNEX times, that's what SYNNEX did with Concentrix. That was the right moment to do it. It has been a successful operation. So again, in our case, with Hyve, maybe one day, we come up -- we will arrive at the same situation. And then we will be very pragmatic. We are very shareholder value oriented. If Hyve thinks that their future is going to be more successful on their own for whatever reason, and it's good for TD SYNNEX, we will do it. But today, it is not on the table.

Okay. And maybe as a follow-up, Marshall, you talked about weakness in the second half of the year. Is that all with the Hyve business and with that second customer? Or is it more broad than that? And depending upon your answer, my question would be, you've had a focus on more services, more software. How should we think about that over the next 12 months in terms of how much of your revenue is netted down and the difference between billings and revenue, that ratio, how should we think about that progressing in this environment?

Thanks for the question. So as I said in my prepared remarks, Ruplu, it's as of today, as we think about the second half of the year. Remember back in our quarter one, which was 2 weeks ago, we thought that we'd see mid-single-digit growth rate in the second half of the year. Now thinking about what that looks like and assessing what we believe to be a temporary pause in IT demand across the spectrum, distribution and Hyve, we're lowering our revenue expectation growth to around 3% to 4%. So no one specific aspect, attribute customer, vendor or Hyve specific versus disti, but just a broader overall assessment of that. If you click into that, we still believe that distribution will continue its momentum. If we're successful, this would be the fifth quarter where we have that profitable growth fall through, but just in a more muted pace. Question around gross versus net, we were around 30% in quarter 1. We guided to around 29% in quarter 2. Thinking through that this IT decline from 5% to 3% or 3% to 4% has kind of an equal balance between our portfolios. My expectation is we'd probably see that same 29% to 30% be the reduction for quarter 3 and quarter 4. And then as you know, ES tends to have less netting than AS. If we find that AS in the future does grow, then that relationship and that gross to net goes up.

Erik Woodring from Morgan Stanley, and thanks for inviting us here. So I'll maybe ask both my questions at once because they're both for you, Patrick. The first one is, I know you don't necessarily manage your business through this kind of user-based times ARPU model, so to speak. But if we're to think about the drivers of your growth rate kind of above and beyond the market, how much should we be thinking comes from new customer acquisition and the ability to onboard new customers? And how much comes from effectively gaining wallet share from the existing customer base? And then the second question is just, obviously, distribution very competitive. When we think about your opportunities in Asia Pac and LatAm, what can you provide to those markets that don't already exist in those markets that would allow you to take share as we look forward?

I'm going to start with the second, easier. So we have this -- so we've insisted a lot about our specialist go-to-market and how we want to create value for the customers and the vendors, thanks to our enablement programs. I would say today, this is not in LatAm or in APJ. This is also differentiating, okay? And the reason for I mentioned some of the franchises we just won in India, and we have other examples in other countries. Clearly, that approach is resonating extremely well, first, of course, with the vendors. But then when we interact with the customers, I mean, the fact that we can help them to grow is extremely powerful. So yes, I mean -- so that's in our value proposition, we have some differentiators which are going to help us gain share. On top of it, those regions are going to grow faster than the West. And so obviously, the accretion to the overall growth of TD SYNNEX is going to come from there. On the first one, so transparently, I don't have all the figures on top of my head. What I can say is that every region has developed its growth plan using this model or this framework. If I, for example, take North America, a lot of the growth is going to come from the customer acquisition, not so much from a new technology or new vendor because in North America, we are so well positioned already. I mean, less opportunities. You go to Europe, security is one very big opportunity. And in many cases, it's going to be net new business. About what will come from new customers and what will come from existing customers. Again, we haven't looked at it this way. I would say that today, especially in the West, I think we are already very active with basically all the larger customers. So in many cases, it's going to be more a share of wallet gain, okay? In APJ and LatAm, customer acquisition is going to play a very big role.

Any additional questions?

This will be a question for Patrick. Just coming back to M&A for a bit. I might be reading a little bit too much between the lines, but I think it got a little bit less airtime this Investor Day than it might have got in 2022. Is that accurate? I mean is this reflecting of an M&A environment that's perhaps not as conducive as deploying capital along those lines? Is it perhaps a strategic pivot away from M&A on the margin towards organic growth? Or am I just reading too much into perhaps a little bit less airtime than it was in the past?

Yes. So it doesn't change. So I am -- I have always been in favor of M&A. So when I look at my -- what I used to do even during my Avnet times, I always saw M&A as an opportunity, but not at any condition. And what I can share is that we have looked at some opportunities, okay, which would again fit into the strategic plan to accelerate acquisition of some capabilities in some specific countries, but the return was not there. So in that case, we stay very disciplined. Again, organically, so it will take a little bit longer. But organically, we have today, I want to speak like that, a machine to grow faster than the market. With the team, our value proposition, our differentiators, we are very confident. I mean, if I look at the last 6 quarters, I mean, we've consistently grown faster than the market. Acquisitions, absolutely positive and open to it with the right return.

Is that just a reflection of valuations being less interesting than they were.

In some of the areas, the valuations are still according to us, a little bit too high. So we prefer not to pause and not do the deal. It's not -- again, it depends a lot on the technologies. It depends on the capabilities you are looking at. Some countries are very expensive because they enjoy hyper growth. So again, we -- I mean, we have some flexibility, but -- so -- and on some technologies, same story. Take security, for example, Security today, still the valuations are quite high. I'm not sure it's always justified from our viewpoint.

Keith Housum again here. Again, I have 2 questions here, one for Hyve and one for services, I'll be consistent. In terms of the Hyve business, is it -- is it realistic? Or is it likely that your customers have multiple CMs, so you're competing with the other CMs with your existing customers? And then second, on the services business, one of the things you guys have navigated for -- since your creation really is channel conflict. And to the extent that you guys are providing services and want to expand your capabilities there, do you risk alienating some of your largest service providers who, in theory, probably the most complex and capable of doing some of the things that you're aiming to do?

Steve, do you want to take the first one?

Yes. So the first one, I think, was around CMs. And what I would say is that there are certain partners that use CMs. But for the most part, most of the hyperscalers do need ODMs because they need help with design. They don't have full design organizations that are set up. So generally, I'd say is there are some few that do that. They have specific programs. They also don't design the products themselves, but there are some arrangements with certain ODMs. So I'd say basically, really, it's -- the competition is probably more ODM is what I see today.

So I'll take the question on services, yes. So look, we see the requirement for services is really evolving. As I talked earlier about the requirement for solutions rather than just product sell. What we're seeing is that our vendor partners are coming to us to look at us providing services that they provide today because we are able to achieve scale and we're able to achieve the geographical breadth. So we see that as a transition and an evolution of the opportunity for us. We're also very focused on delivering services to the demand of our partners, not in conflict with our partners. It is a 2-tier model that is focused very heavily on driving breadth and opportunity for our partners, and we navigate that very carefully. And we see that, that is a really very important part of the value proposition that we bring to the ecosystem, both on the demand and request to the partners, the vendor side and on the customer side.

Steve, if I just follow up on that one.

I'm going to add one thing here because -- so you remember maybe the Avnet times where Avnet bought reseller, and I had to fix the issue later on when I took responsibility for TS. So it's very clear that we will do nothing which could compete or give the perception that we compete with our customers. No way. And the whole theme of services, in fact, so today, when you look at what we -- so the majority of the services we bring to market are either resold services from the vendors or services we resold from certified service providers. And then we have also our own services. But I would say the common denominator is we are here to augment the capabilities of the reseller. And again, it will always go through a reseller. But competing with our reseller on services, it will not happen.

Steve, just want to follow up on the question there. Is it common for the -- your customers to have multiple ODMs? Or you're usually loyal to just one solution provider like such as yourself?

They usually have multiples, and it's in their best interest. One is that the ecosystem is just getting more complicated, right? If you look at the players that are out there in terms of GPUs and so on. But generally speaking, yes, they do need to have more than one. You don't want to be single source. There's usually anywhere from 3 to 5 or something in that range, though.

This is Victor Santiago from Evercore. I was hoping to get more color on what you're seeing in regards to the PC refresh cycle. When you reported 2 weeks ago, you talked about high single-digit growth in PCs. But obviously, since then, we've had a slew of announcements. Can you talk about how your customer conversations have shifted? And have you seen any acceleration of purchases from current inventory?

So I'll start with that when we're talking about PCs. So there's a great opportunity just when you consider a refresh in PCs. So right now, we're very focused on renewals. We feel like we can gain a better renewal rate than our vendors. At that time of renewal, there's a great opportunity for upsell, cross-sell. That's a great moment for us. So right now, our concentration is in driving that refresh, driving that renewal opportunity for our manufacturers. And that also allows us to sort of take sort of that operational burden off of our vendor partners, and they're leaning on us to do that.

So I think that concludes our Q&A session. We'll turn it over to Patrick for some brief closing remarks before we conclude.

Thank you. So it was a lot of material to digest. And I'm going to try to wrap it up. Yes. So -- so I'm going to stay here not to be rude. So a lot of content. So again, I go back to the question or the remark we made at the very beginning, why do we believe that TD SYNNEX is a very good case for investment. And so this slide is trying to wrap up a little bit the key messages which have been conveyed today. The first one, we really play in an attractive market. The IT market is a huge market, $2.8 trillion. But most important, the underlying trends, the need for digitalizing the economy and the companies is going to drive a lot of demand. Plus, I mean, innovations like AI are even going to create new requirements, new demand on this huge market. Second, when you look at the share of distribution, I mean, $400 billion, so 15%, that's another opportunity for distribution over time or the distribution market to grow maybe a little bit faster than the total available market. And anyway, what we see is that this is a market which has been growing mid-single digits. And we believe that based on those megatrends, that's probably a market and referring to IDC anticipation for the next 4 years, where this mid-single-digit growth is going to continue. So we're in a great market. And obviously, I mean, we are committed to grow faster than that market. So that's point number one. The point number two is really our business model. It's differentiated, it's diversified, it's scalable. And again, I just want to insist on what I think is making us very different. One, it's the specialized go-to-market by customer, by technology. It drives all the decisions we are making. It drives how we innovate internally for our vendors and our customers. And second, it's really all about making sure that we create the maximum value for the customers and the vendors in terms of growth, but also in terms of cost so that they can optimize their business model and their operating model. Third, great team, okay? So in distribution, again, the first differentiator before the go-to-market or the business model is really the quality of your people, starts with management and the overall team. And -- in addition, when you look at TD SYNNEX, we have a culture which is very unique in the market. It's a culture of innovation. It's a culture of execution, okay? Make things happen is absolutely critical to us. It's a culture of excellence. And at the end, it's making sure that our stakeholders, vendors, customers, shareholders, I mean, get the maximum value out of us. And last, we have an attractive financial model. It starts with the commitment to grow profitably faster than the market. It's about free cash flow generation. It's about capital allocation to maximize the returns for our shareholders. We have a fantastic track record. If you go back in history, we've done it consistently. Our strategy, our growth strategy, in particular, we believe, is going to make sure or ensure that we continue on our momentum, very solid foundations, plus the growth strategy, very excited about the future of this company. So again, thanks a lot. Thanks for spending your morning with us. Thanks for all the good questions. Thanks for all your support. And I think now we have lunch, correct? And I'm sure there will be some other questions coming from you. Thank you.