TD Synnex (SNX) risk factors, FY2025 10-K

Risks Related to Our Business and Operations

1. 01We anticipate that our revenue and operating results will fluctuate, which could adversely affect the enterprise value of our Company and our securities
2. 02Although we attempt to control our expense levels, these levels are based, in part, on anticipated revenue. Therefore, we may not be able to control spending in a timely manner to compensate for any unexpected revenue shortfall
3. 03We are subject to uncertainties and variability in demand by our customers, which could decrease revenue and adversely affect our operating results, and we have customer contracts with provisions that could cause fluctuations in our revenue
4. 04We depend on a limited number of OEMs to supply the IT products and services that we sell and the loss of, or a material change in, our business relationship with a major OEM supplier could adversely affect our business, financial position and operating results
5. 05Our gross margins are low, which magnifies the impact of variations in gross margin, operating costs and our operating results
6. 06We are subject to the risk that our inventory value may decline, and protective terms under our OEM supplier agreements may not adequately cover the decline in value, which in turn may harm our business, financial position and operating results
7. 07We depend on OEM suppliers to maintain an adequate supply of products to fulfill customer orders on a timely basis, and any supply shortages or delays could cause us to be unable to timely fulfill orders, which in turn could harm our business, financial position and operating results
8. 08We experience customer concentration and intense competition which could adversely impact our revenue
9. 09We have pursued and intend to continue to pursue strategic acquisitions or investments in new markets and may encounter risks associated with these activities, which could harm our business and operating results
10. 10Our goodwill and identifiable intangible assets could become impaired, which could have a material non-cash adverse effect on our results of operations
11. 11Because of the capital-intensive nature of our business, we need continued access to capital, which if not available to us or if not available on favorable terms, could harm our ability to operate or expand our business
12. 12We have significant credit exposure to our customers, and negative trends in their businesses could cause us significant credit loss and negatively impact our cash flow and liquidity position
13. 13We depend on IT and telecommunications systems and the Internet for our operations. These systems support a variety of functions including inventory management, order processing, shipping, shipment tracking, and billing26% rewritten
14. 14Issues related to the development and use of AI could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our businessNew
15. 15Because of the experience of our key personnel in the IT industry and their technological and industry expertise, if we were to lose any of our key personnel, it could inhibit our ability to operate and grow our business successfully
16. 16We may experience theft of product from our warehouses, water damage to our properties and other casualty events which could harm our operating results
17. 17We may become involved in intellectual property or other disputes that could cause us to incur substantial costs, divert the efforts of our management, and require us to pay substantial damages or require us to obtain a license, which may not be available on commercially reasonable terms, if at all
18. 18We have significant operations globally and any disruption in the operations of our facilities could harm our business and operating results

Risks Related to our Indebtedness

1. 19The terms of our debt arrangements impose restrictions on our ability to operate which in turn could negatively affect our ability to respond to business and market conditions and therefore could have an adverse effect on our business and operating results
2. 20We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations, which could adversely affect our business
3. 21Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks to our financial condition
4. 22Changes in our credit rating may increase our interest expense or other costs of capital
5. 23Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly

Risks Related to Our Industry

1. 24Volatility in the IT industry could have a material adverse effect on our business and operating results
2. 25We are subject to intense competition, both in the United States and internationally, and if we fail to compete successfully, we will be unable to gain or retain market share
3. 26Our business may be adversely affected by some OEM suppliers’ strategies to consolidate business or increase their direct sales, which in turn could cause our business and operating results to suffer
4. 27The IT industry is subject to rapidly changing technologies and process developments, and we may not be able to adequately adjust our business to these changes, which in turn would harm our business and operating results

Risks Related to the Macro-Economic and Regulatory Environment

1. 28Changes in foreign currency exchange rates and limitations on the convertibility of foreign currencies could adversely affect our business and operating results
2. 29As a general rule, we do not use financial instruments to hedge local currency denominated operating expenses in countries where a natural hedge exists. For example, in many countries, revenue in the local currency substantially offsets the local currency denominated operating expenses21% rewritten
3. 30We rely on independent shipping companies for delivery of products, and price increases or service interruptions from these carriers could adversely affect our business and operating results
4. 31Because a significant portion of our IT systems support and software development activities are located in China, risks associated with economic, political and social events in China could negatively affect our business and operating results74% rewritten
5. 32We may have higher than anticipated tax liabilities47% rewritten
6. 33Cyberattacks or the improper disclosure or control of confidential information could result in liability and harm our reputation, which could adversely affect our business40% rewritten
7. 34We could also face legal, regulatory, reputational and financial risks if we fail to protect customer and internal data from security breaches or cyberattacks
8. 35Global health and economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price
9. 36The widespread outbreak of an illness or any other communicable disease, or any other public health crisis, could adversely affect our business, results of operations and financial condition
10. 37Part of our business is conducted outside of the United States, exposing us to additional risks that may not exist in the United States, which in turn could cause our business and operating results to suffer
11. 38Increasing attention to corporate citizenship matters may have a negative impact on our business, impose additional costs on us, and expose us to additional risks29% rewritten
12. 39If we are unable to maintain effective internal control over financial reporting, our ability to report our financial results on a timely and accurate basis may be adversely affected, which in turn could cause the market price of our common stock to decline
13. 40Changes to financial accounting standards may affect our results of operations and cause us to change our business practices