• Gross Billings: Increased 34% to $474.6 million compared to $355.3 million in the prior year quarter.
• Distribution Segment Gross Billings: Increased 36% to $453.6 million.
• Solution Segment Gross Billings: Increased 2% to $21 million.
• Net Sales: Increased 49% to $138 million compared to $92.4 million.
• Gross Profit: Increased 37% to $23.4 million compared to $17 million.
• Gross Profit Margin: Increased to 4.9% from 4.8% in the prior year quarter.
• SG&A Expenses: $16.8 million compared to $12.5 million, with DSS accounting for $1.1 million of the increase.
• Net Income: Increased 35% to $3.7 million or $0.81 per diluted share compared to $2.7 million or $0.60 per diluted share.
• Income Tax Expense: Decreased 37% to $600,000 with an effective tax rate of 13.3%.
• Adjusted Net Income: Increased 39% to $3.9 million or $0.86 per diluted share.
• Adjusted EBITDA: Increased 38% to $7.6 million compared to $5.5 million.
• Adjusted EBITDA Margin: Increased to 32.7% from 32.5%.
• Cash and Cash Equivalents: $32.5 million as of March 31, 2025.
• Outstanding Debt: $600,000 with no borrowings under the $50 million revolving credit facility.
• Quarterly Dividend: $0.17 per share declared, payable on May 16, 2025.

• Warning! GuruFocus has detected 3 Warning Sign with CLMB.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Climb Global Solutions Inc (NASDAQ:CLMB) reported a 34% increase in gross billings for Q1 2025, reaching $474.6 million compared to the previous year.
• Net sales increased by 49% to $138 million, driven by organic growth and contributions from the acquisition of DSS.
• The company signed a significant contract with Darktrace, a cybersecurity firm, which has already generated a $30 million pipeline in potential gross bills.
• Climb Global Solutions Inc (NASDAQ:CLMB) is making progress with its new ERP system, improving efficiency and transactional speed across global operations.
• The company declared a quarterly dividend of $0.17 per share, reflecting confidence in its financial health and commitment to returning value to shareholders.

Negative Points

• SG&A expenses increased to $16.8 million from $12.5 million, with DSS accounting for $1.1 million of the increase.
• The company faces challenges in filling the gap left by the loss of Citrix as a vendor, although mitigations are underway.
• Despite growth, the company acknowledges that some vendor relationships, like with Darktrace, take a long time to develop and execute.
• The economic environment remains uncertain, and while tariffs have not significantly impacted the company yet, they remain a potential risk.
• The integration of acquired companies into the ERP system has been a complex process, though it is now largely complete.

Q & A Highlights

Q: Were there any large deals in the quarter that you may want to call out, or was it broad-based demand? A: It was pretty much broad-based. We did have the additional advantage of DSS, but nothing specific stood out for Q1. Our bigger brands are growing at a higher rate, and some emerging brands are also performing well. - Dale Foster, CEO

Q: Has there been any change in sentiment given the uncertain economic environment, and how might tariffs impact your business? A: We haven't seen a significant impact from tariffs as over 80% of our business is in the US, and we deal in US dollars. Overseas, most of our business is in the UK and Ireland, so the impact is minimal. - Dale Foster, CEO

Q: Are you starting to see some of the synergies you were hoping for in Europe? A: Yes, we are seeing synergies. We have reorganized our team in Europe, and all divisions are now on one ERP system, which is positive for our operations. - Dale Foster, CEO

Q: Did organic growth in April trend as it did in Q1? A: We don't typically discuss future specifics, but we are excited about our relationship with Darktrace, which officially launched on April 1st. This partnership is expected to significantly contribute to our growth. - Dale Foster, CEO

Q: Are there any additional remarks or updates? A: A big shout-out to the Climb team for their efforts with the ERP system. We are now focused on fine-tuning our operations, and everything is moving in the right direction. - Dale Foster, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.