Climb Global Solutions Q1 2025 Earnings Report

Climb Global Solutions EPS Results

• Actual EPS: $0.86
• Consensus EPS: $0.89
• Beat/Miss: Missed by -$0.03
• One Year Ago EPS: N/A

Climb Global Solutions Revenue Results

• Actual Revenue: $138.04 million
• Expected Revenue: $96.86 million
• Beat/Miss: Beat by +$41.19 million
• YoY Revenue Growth: N/A

Climb Global Solutions Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 8:30AM ET

Climb Global Solutions (NASDAQ:CLMB) Inc. operates as a value-added information technology (IT) distribution and solutions company in the United States, Canada, Europe, the United Kingdom, and internationally. It operates in two segments, Distribution and Solutions. The company distributes technical software to corporate and value-added resellers, consultants, and systems integrators under the name Climb Channel Solutions; and provides cloud solutions and resells software, hardware, and services under the name Grey Matter. It also resells computer software and hardware developed by others, as well as provides technical services to end user customers. In addition, the company offers a line of products from various software vendors; and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management, and other technically sophisticated domains, as well as computer hardware. It markets its products through its own web sites, local and on-line seminars, events, webinars, and social media, as well as direct email and printed materials. The company was formerly known as Wayside Technology Group, Inc. and changed its name to Climb Global Solutions Inc. in October 2022. Climb Global Solutions Inc. was incorporated in 1982 and is headquartered in Eatontown, New Jersey.

Climb Global Solutions Q1 2025 Earnings Call Transcript

Key Takeaways

• Q1 2025 financial results showed gross billings up 34% to $474.6 M, net sales up 49% to $138 M, net income up 35% to $3.7 M, and adjusted EBITDA up 38% to $7.6 M.
• The company maintained a selective vendor strategy, signing 4 of 50 evaluated partners, including Darktrace, which has already generated a $30 M pipeline.
• Implementation of a new ERP system is improving transaction speed, process accuracy, and data visibility across global operations.
• At its annual client partner conference in Miami, Climb aligned on 2025 priorities and named Freshworks as Strategic Partner of the Year.
• Paul Giovacchini, with over 30 years of private equity and board leadership experience, was appointed to Climb’s Board of Directors to support scaling efforts.

Presentation

[Operator]

Good morning, everyone, and thank you for participating in today's conference call to discuss Klim Global Solutions' financial results for the first quarter ended 03/31/2025. Joining us today are Climb's CEO, Mr. Dale Foster the company's CFO, Mr. Matthew Sullivan and the company's Investor Relations Adviser, Mr. Sean Mansoury with Elevate By now, everyone should have access to the first quarter twenty twenty five earnings press release, which was issued yesterday afternoon at approximately 04:05 p.

[Operator]

M. Eastern Time. The release is available in the Investor Relations section of Klim Global Solutions website at www.klimglobalsolutions.com. This call will also be available for webcast replay on the company's website. Following management's remarks, we'll open the call for your questions.

[Operator]

I'd now like to turn the call over to Mr. Mansouri for introductory comments.

[Sean Mansouri, Founder & CEO at Elevate IR]

Thank you, operator. Before I introduce Dale, I'd like to remind listeners that certain comments made on this conference call and webcast are considered forward looking statements under the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward looking statements. These forward looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward looking statements, which are being made only as of the date of this call.

[Sean Mansouri, Founder & CEO at Elevate IR]

Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward looking statement. Our presentation also includes certain key operational metrics and non GAAP financial measures, including gross billings, adjusted EBITDA, adjusted net income and EPS, and effective margin as supplemental measures of performance of our business. All non GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation charts and other important information in the earnings press release and Form eight ks we furnished to the SEC yesterday. I'll now turn the call over to Clyme's CEO, Dale Foster.

[Dale Foster, CEO at Climb Global Solutions]

Thank you, Sean, and good morning, everyone. The momentum from our record twenty twenty four is carried into the first quarter, leading us to exceptional growth across all key financial metrics. Our performance was driven by the execution of our core initiatives. Additionally, we generated solid organic growth in both The U. S.

[Dale Foster, CEO at Climb Global Solutions]

And Europe, demonstrating our ability to deepen relationships with our existing partners while signing new cutting edge technologies to our line card. Throughout the first quarter, we evaluated 50 potential vendor partners and signed agreements with only four of them, underscoring our commitment to partnering exclusively with the most innovative strategically aligned technologies in the market. This selective process ensures we continue to deliver differentiated solutions to our customers while maintaining the high standards that drive long term value across our platform. I'd like to quickly highlight one of these wins. Climb signed a contract with Darktrace mid quarter.

[Dale Foster, CEO at Climb Global Solutions]

Darktrace is a cybersecurity company that utilizes artificial intelligence to detect and respond to cyber threats. Their AI powered technology allows them to identify threats that traditional systems may miss, such as insider attacks, latent vulnerabilities, and cloud based threats. While their technology is excellent, I'm even more encouraged by the initial interaction between our sales teams and a quickly growing pipeline that is already top $30,000,000 in potential gross billings. As part of our ongoing effort to evaluate and optimize our business, we're making steady progress in the implementation of our new ERP system, which is increasingly contributing to improved efficiency across our global operations. We are seeing meaningful gains in transactional speed and process accuracy.

[Dale Foster, CEO at Climb Global Solutions]

We believe with further optimization, the system will enable us to operate more seamlessly at scale, unlock deeper data insights, and enhance agility and visibility across the organization. In early April, we hosted our annual client partner conference in Miami, where we gathered top vendor partners and channel partners to align on our strategic priorities for 2025 and spotlight the latest in emerging technologies. As part of the event, we were proud to recognize Freshworks as our strategic partner of

[Dale Foster, CEO at Climb Global Solutions]

the year.

[Dale Foster, CEO at Climb Global Solutions]

Freshworks continues its focus on being a channel first organization, agile, collaborative, and deeply committed to our partner success. Our partnership is built on trust and shared momentum, and we look forward to continuing to drive meaningful growth together. Last week, we announced the appointment of Paul Giovacchini to our Board of Directors. Paul brings over thirty years of experience in private equity, corporate governance, and board leadership across public and private companies. He currently serves as a lead independent director for TPI Composites, where he previously served as chairman and helped lead the company's transformation into the global public enterprise.

[Dale Foster, CEO at Climb Global Solutions]

Paul also serves as an independent consulting advisor to Advantage Capital Management, supporting private equity and debt investment strategies. I'm pleased to welcome Paul to the Klein family and look forward to his contributions as we continue to scale our footprint both domestically and abroad. Looking ahead, we believe we are well positioned to sustain our momentum, continue driving organic growth, and further enhance our operating leverage. On the M and A front, we will continue to remain active and disciplined, evaluating accretive opportunities that can strengthen our offerings and expand our reach in North America and overseas. These initiatives, coupled with our healthy balance sheet, will enable us to continue executing on our goals ahead.

[Dale Foster, CEO at Climb Global Solutions]

With that, I will turn the call over to our CFO, Matt Sullivan, and he will take you through the financial results. Matt?

[Matthew Sullivan, CFO at Climb Global Solutions]

Thank you, Dale, and good morning, everyone. A quick reminder as we review the financial results for our first quarter, all comparisons and variance commentary refer to the prior year quarter unless otherwise specified. As reported in our earnings press release, gross billings in Q1 twenty twenty five increased 34% to 474,600,000.0 compared to $355,300,000 in the year ago quarter. Distribution segment gross billings increased 36% to $453,600,000 and Solutions segment gross billings increased 2% to 21,000,000 Net sales in the first quarter of twenty twenty five increased 49% to $138,000,000 compared to $92,400,000 which primarily reflects organic growth from new and existing vendors as well as contribution from our acquisition of DSS in July of last year. Gross profit in the first quarter increased 37% to $23,400,000 compared to $17,000,000 in the prior year quarter.

[Matthew Sullivan, CFO at Climb Global Solutions]

Again, the increase was driven by organic growth from new and existing vendors in both North America and Europe as well as contribution from DSS. Gross profit as a percentage of gross billings increased to 4.9% compared to 4.8% in the year ago quarter. SG and A expenses in the first quarter were $16,800,000 compared to $12,500,000 for the same period in 2024. SG and A from DSS accounted for $1,100,000 of the increase. SG and A as a percentage of gross billings remained flat at 3.5% compared to the year ago period.

[Matthew Sullivan, CFO at Climb Global Solutions]

Net income in the first quarter of twenty twenty five increased 35% to $3,700,000 or $0.81 per diluted share compared to $2,700,000 or $0.60 per diluted share for the comparable period in 2024. Income tax expense in the first quarter of twenty twenty five decreased 37 to $600,000 or an effective tax rate of 13.3% compared to 900,000 or an effective tax rate of 24.6% for the comparable period in 2024. This decrease in tax expense was driven by a discrete item recognized for the permanent book to tax difference associated with the rise in stock price when equity awards vest as compared to the book stock compensation expense recognized, which is based on the grant date fair value. Adjusted net income increased 39% to 3,900,000 or $0.86 per diluted share compared to $2,800,000 or $0.62 per diluted share for the year ago period. Adjusted EBITDA in the first quarter increased 38% to $7,600,000 compared to $5,500,000 in the prior year quarter.

[Matthew Sullivan, CFO at Climb Global Solutions]

The increase was driven by the aforementioned organic growth from both new and existing vendors as well as contribution from DSS. Adjusted EBITDA as a percentage of gross profit or effective margin increased 20 basis points to 32.7% compared to 32.5% in the year ago period. Turning to our balance sheet, cash and cash equivalents were $32,500,000 as of 03/31/2025, compared to $29,800,000 on 12/31/2024, while working capital increased by $4,400,000 during the period. The increase in cash was primarily attributed to the timing of receivable collections and vendor payments. As of 03/31/2025, we had $600,000 of outstanding debt with no borrowings outstanding under our $50,000,000 revolving credit facility with JPMorgan Chase.

[Matthew Sullivan, CFO at Climb Global Solutions]

On 04/28/2025, our Board of Directors declared a quarterly dividend of $0.17 per share of our common stock payable on 05/16/2025 to shareholders of record on 05/12/2025. As Dale mentioned earlier, we will continue to leverage our robust liquidity position to evaluate accretive M and A opportunities to enhance our service and solutions offerings across existing and future markets. We're incredibly proud of our global team for delivering another quarter of strong performance and we look forward to building on this momentum as we execute against our organic and inorganic growth initiatives throughout 2025. This concludes our prepared remarks. We will now open it up for questions from those participating in the call.

[Matthew Sullivan, CFO at Climb Global Solutions]

Operator, back to you.

[Operator]

And we'll go first to Vincent Colicchio with Barrington Research.

[Vincent Colicchio, Managing Director at Barrington Research Associates]

Good morning, Dale.

[Dale Foster, CEO at Climb Global Solutions]

Hey, Vince.

[Vincent Colicchio, Managing Director at Barrington Research Associates]

Do you the organic growth, there any large deals in the quarter that you may want to call out or was it broad based demand?

[Dale Foster, CEO at Climb Global Solutions]

It was pretty much broad based. We called the one out in Q4 of last year when we had our vest. We still have, like we said, probably for two point five years now, they'll be lumpy, but nothing that stood out for Q1. We had the additional advantage of DSS, just like we did in Q4, but Q1 is not their strongest as we start moving into DSS's I'm sorry, DSS, not DS into their strongest quarters coming into the education space and the end of the state budgets that end in June. So we'll see those pick up.

[Dale Foster, CEO at Climb Global Solutions]

But no, just a good overall quarter. A lot of our bigger brands are growing at a little higher rate than they have before, and then some of our emerging brands are doubling down and we're just getting more out of those guys.

[Vincent Colicchio, Managing Director at Barrington Research Associates]

Has there been any change in sentiment given the uncertain economic environment? And also can you talk about how tariffs may impact your business?

[Dale Foster, CEO at Climb Global Solutions]

Yeah, we haven't seen it. We kind of feel it adjacent to us. I'll talk about the tariffs first, and that is, you know, we're over 80% in The US, we buy in US dollars, our vendors are US, so you take a look at 80% of it, it doesn't affect us. Then we look at overseas, we're still selling a lot of software. Most of our business overseas is in The UK and Ireland, but not a real impact.

[Dale Foster, CEO at Climb Global Solutions]

We don't see that right now just because of the lion's share is in The US. We deal with the Canadian side of things. We deal with our quoting. We put our new language on there as far as tariffs. So we don't quote at any distance like we do in The US, where we have a quote that's good for thirty days and Canada's good for five days, so we track it pretty close.

[Vincent Colicchio, Managing Director at Barrington Research Associates]

And are you starting to see some of the synergies you were hoping for in Europe?

[Dale Foster, CEO at Climb Global Solutions]

We are. We announced at the last call that we knew Citrix, we were losing Citrix, we still took advantage of it in Q1 because we had legacy, we still have a little bit that's going to drag on for a couple years. So the big hole for Citrix is starting to fill in Q2. We already have some mitigations that we're doing on new vendors. We've reorgged our team over there, they're all in our systems like we talked about.

[Dale Foster, CEO at Climb Global Solutions]

We didn't mention, because it wasn't a Q1 event, but just as of this past Monday, DSS Douglas Stewart went on our ERP system live, so that's a good thing. So now every division, every company that we've acquired is all on one ERP, all looking at the same numbers, and we'll just keep enhancing that. But yeah, overall everything's positive.

[Vincent Colicchio, Managing Director at Barrington Research Associates]

So in the month of April, did you see organic growth trend as it did in the Q1?

[Dale Foster, CEO at Climb Global Solutions]

Yeah, I mean, as far as we just don't talk about the future stuff as far as April goes. We're just finishing up. But still, I mentioned Dartrace, and we kicked off April 1 with them. And it's a relationship and I'll kind of share with the entire group, and that is some of these relationships take a long time to develop to get to the place where you do a contract, and then once you get to a contract to actually start executing. I was talking to Charles, our alliance chief, and we looked at our first time we talked to them was over two years ago.

[Dale Foster, CEO at Climb Global Solutions]

We got serious with them in June of last year, and here we're just launching April one of this year. So the bigger vendor, the more opportunity, the longer it takes. We want to make sure we get it right. During that time, Dartridge got bought by comma Bravo, so delayed some things. But we're super excited about our pipeline is growing very quickly with them.

[Dale Foster, CEO at Climb Global Solutions]

And I mentioned, I think in one of the questions we had, and maybe it was your question last time, Vince, as far what really gets you guys to the next, next level, and it's really adding. We have three large vendors. We want to get 10 large vendors that really will help us in our effective margin as they drop through and get more efficient with them, and Darktrace, we believe, is going be one of the they'll probably be a strong number three or four by this time next year.

[Vincent Colicchio, Managing Director at Barrington Research Associates]

Okay. I'll go into the queue. Thanks. Nice quarter.

[Dale Foster, CEO at Climb Global Solutions]

Thanks, Vince. Thanks.

[Operator]

It appears we have no further questions at this time. I will now turn the program back over to our presenters for any additional remarks.

[Dale Foster, CEO at Climb Global Solutions]

Yes, thank you, operator. Just in closing, real quick, a big shout out to the CLIMB team. We've gone through a lot with our ERP over the last nine months. We're on the other side of it, so there's a lot more smiles in the building, but appreciate everybody's time and commitment to get that done. Now it's really fine tuning all the things that we've been working on, and you'll see that over the next couple of quarters.

[Dale Foster, CEO at Climb Global Solutions]

So again, appreciate to whole Climb team, and that includes even our shareholders and our board. Everything's going in the right direction, so I appreciate that. With that, I'll just say thank you and end the call.

[Operator]

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Participants

Executives

• Dale Foster, CEO
• Matthew Sullivan, CFO

Analysts

• Sean Mansouri, Founder & CEO at Elevate IR
• Vincent Colicchio, Managing Director at Barrington Research Associates