SYNNEX Corporation (NYSE: SNX) stock lost over 8.8% in the after-hours session on March 29th, 2018 (Source: Google finance) after a disappointing first quarter of 2018 performance. The group’s Westcon-Comstor business witnessed a modest decrease from Q1 to Q2. Moreover, the group sees their near-term profit margin to be challenging this quarter on the back of high volume business of a few customers. Their gross margin during the quarter fell to 9.1% from 9.7% in the prior year period hurt by the higher mix of Technology Solutions business from the Weston-Comstor acquisition and customer and product mix within their system design and integration business solutions.
Meanwhile, the total revenue rose over 30% to $4.6 billion, during the first quarter of 2018 on a consolidated basis, from $3.5 billion in the same quarter of the prior year. The Technology Solutions revenue rose 33% yoy to $4 billion. Concentrix revenue rose 6% yoy to $508 million, against $478 million in the prior-year quarter. Adjusting for FX, the revenue rose 3% driven by volume and the expansion of services to the current customers and the impact of the Tigerspike acquisition. The group’s first quarter gross profit dollars reached $414 million, which is a rise of 21% or $72 million as compared to the prior corresponding period.
The group is seeing several clients in the banking, insurance and healthcare spaces and witnessing the most benefit from RPA. Their platforms offer a better efficiency for their clients and then boosted end-user experience and reduce cycle times. This integration and investment might pressure their short-term revenue, while forecasts this would support their longer-term stickiness with their clients and are aggressively implementing the technology across our client base.
For the second quarter of fiscal 2018, the group forecasts revenue to be in the range of 4.58 billion to 4.78 billion. The Non-GAAP net income is expected to be in the range of 91.1 million to 94.9 million while Non-GAAP diluted EPS is forecasted to be in the range of $2.25 to $2.35 per share
The trailing 4 quarters ROIC was 8%; and trailing 4 quarters adjusted ROIC was 11%. They also approved a regular quarterly cash dividend of $0.35 per common share to be paid on April 27, 2018, to stockholders of record as of the close of business on April 13, 2018.