Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Climb Global Solutions Inc (CLMB, Financial) achieved record levels across key financial metrics, driven by strong execution of core initiatives and successful integration of acquisitions.
- The company reported a 65% increase in adjusted gross billings to $465.2 million, attributed to both organic growth and contributions from recent acquisitions.
- Climb Global Solutions Inc (CLMB) generated double-digit organic growth in both the US and Europe, strengthening relationships with existing partners and signing new vendors.
- The company successfully launched its presence in Germany, marking a strategic expansion into a key Western European market.
- Adjusted EBITDA increased by 96% to $9.9 million, reflecting strong performance from both new and existing vendors.
Negative Points
- The company's cash and cash equivalents decreased to $22.1 million as of September 30, 2024, primarily due to acquisition-related expenses.
- Climb Global Solutions Inc (CLMB) faced a $1.2 million charge related to a change in fair value of acquisition contingent consideration.
- The company's earnings per diluted share were negatively impacted by 5 cents due to foreign exchange fluctuations.
- Operational efficiencies with the new ERP system are not yet at desired levels, impacting overall efficiency.
- The company anticipates potential challenges in fully integrating acquisitions without significant severance or facility closures.
Q & A Highlights
Q: Did the top 20 vendors grow in line with the overall business?
A: Dale Foster, CEO: Not all of them, but the core vendors are driving the organic growth. Some new entrants have joined the top 20, and growth varies depending on the sector focus, such as the public sector.
Q: Are there any technology segments performing better or worse than expected outside of security?
A: Dale Foster, CEO: Security continues to drive growth, but we also see significant contributions from vendors like Vast Data. Security remains a major focus, with many vendors offering security-related products.
Q: Is the current SG&A level sustainable, or do you plan to make investments that will change it?
A: Drew Clark, CFO: We aim to keep SG&A expenses around 3% of adjusted gross billings (AGB). While we will continue to invest in teams, the growth in SG&A dollars should remain flatter compared to AGB growth.
Q: Will the DACH region become a priority for acquisitions?
A: Dale Foster, CEO: Yes, the DACH region is a priority due to vendor requests and market analysis. We have a team on the ground in Munich and are looking to expand through potential acquisitions.
Q: Are there any macroeconomic factors affecting your business?
A: Dale Foster, CEO: The macro environment remains strong for us, particularly in software. We are not affected by logistics issues, and security remains a critical need for our clients, which supports our growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
