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01/11 15:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals mixed financial performance: a slight increase in gross profit but a decrease in net income and adjusted EBITDA. The effective margin declined, but cash reserves increased. The Q&A highlighted strong growth in cybersecurity and no significant risks, but also vague management responses on acquisitions. Overall, the sentiment is neutral with no clear catalysts for a strong stock price movement.
Gross Billings In Q3 2025, gross billings increased 8% to $504.6 million, compared to $465.2 million in the year-ago quarter. The increase was driven by organic growth and contributions from the acquisition of Douglas Stewart Software (DSS).
Distribution Segment Gross Billings Increased 9% to $481.9 million, while the Solutions segment gross billings decreased 5% to $22.7 million. The growth in the distribution segment was attributed to organic growth and vendor contributions.
Net Sales Net sales increased 35% to $161.3 million compared to $119.3 million in the year-ago quarter. This growth was primarily due to double-digit organic growth from new and existing vendors and contributions from the DSS acquisition.
Gross Profit Gross profit increased 6% to $25.7 million, compared to $24.3 million in the year-ago period. The increase was driven by organic growth from vendors in North America and Europe, as well as contributions from DSS. Gross profit as a percentage of gross billings was 5.1%, compared to 5.2% in the prior year.
SG&A Expenses SG&A expenses increased to $16.2 million from $13.9 million in Q3 2024. SG&A as a percentage of gross billings was 3.2% in Q3 2025, compared to 3% in the prior year. The increase reflects higher operational costs.
Net Income Net income was $4.7 million or $1.02 per diluted share, compared to $5.5 million or $1.19 per diluted share in Q3 2024. The decrease was not explicitly explained in the transcript.
Adjusted Net Income Adjusted net income was $6 million or $1.31 per diluted share, compared to $7.1 million or $1.55 per diluted share in the year-ago period. The decrease was attributed to a large vendor transaction in the prior year that carried a higher flow-through to adjusted EBITDA.
Adjusted EBITDA Adjusted EBITDA was $10.9 million compared to $11.1 million in the prior year quarter. The slight decrease was primarily driven by a large vendor transaction in the year-ago period that carried a higher flow-through to adjusted EBITDA.
Effective Margin Adjusted EBITDA as a percentage of gross profit (effective margin) was 42.3%, compared to 45.7% in the year-ago period. The decrease was due to the same large vendor transaction in the prior year.
Cash and Cash Equivalents Cash and cash equivalents were $49.8 million as of September 30, 2025, compared to $29.8 million on December 31, 2024. The increase was primarily attributed to the timing of receivable collections and vendor payments.
Partnership with Liongard: Climb Global Solutions partnered with Liongard, a company specializing in advanced attack surface management and intelligent automation for managed service providers (MSPs). This partnership enhances Climb's ability to support MSPs with tools for operational insight and control.
Partnership with Halcyon: Climb Global Solutions partnered with Halcyon, a company focused on anti-ransomware and cyber resilience. This partnership strengthens Climb's cybersecurity portfolio and allows co-selling opportunities with existing partners like Sophos.
European Market Expansion: Climb's European team is expanding capabilities in artificial intelligence (AI), launching the Climb AI Academy in the DACH region to provide training and certifications for AI readiness. This initiative has attracted over 700 participants and is enhancing Climb's reputation in the European market.
Financial Performance: Gross billings increased by 8% to $504.6 million in Q3 2025, driven by organic growth and the acquisition of Douglas Stewart Software. Net sales rose by 35% to $161.3 million, and gross profit increased by 6% to $25.7 million.
Cash Position: Cash and cash equivalents rose to $49.8 million as of September 30, 2025, compared to $29.8 million at the end of 2024, attributed to receivable collections and vendor payments.
Selective Vendor Expansion: Climb evaluated over 70 potential vendor partners in Q3 2025 but entered agreements with only 4, focusing on innovation, market differentiation, and strategic alignment.
Acquisition Strategy: Climb is actively evaluating acquisition opportunities to enhance offerings and expand its presence in Western Europe, aiming to close 2025 with strong results.
Vendor Selection Challenges: The company evaluated over 70 potential vendor partners but only entered into agreements with 4, reflecting a highly selective approach. This could limit the speed of expansion and the ability to quickly adapt to market demands.
Cybersecurity Threats: The company is addressing increasingly sophisticated cyber threats through partnerships like Halcyon. However, the growing complexity of cyber risks poses ongoing challenges to maintaining robust security measures.
European Market Expansion: While expanding in Europe, particularly in AI, the company faces challenges in helping partners define practical strategies and align with the right manufacturers in a rapidly evolving market.
SG&A Expense Increase: SG&A expenses increased to $16.2 million from $13.9 million, representing a higher percentage of gross billings. This could impact profitability if not managed effectively.
Decline in Solutions Segment: Gross billings in the Solutions segment decreased by 5%, which could indicate challenges in this area of the business.
Adjusted EBITDA Decline: Adjusted EBITDA decreased slightly due to a large vendor transaction in the prior year that carried a higher flow-through. This indicates potential challenges in maintaining consistent profitability.
Future partnerships and vendor expansion: The company plans to continue its selective approach to vendor expansion, focusing on innovation, market differentiation, and long-term alignment with strategic objectives. This includes partnerships with companies like Liongard and Halcyon, which enhance capabilities in IT ecosystem management and cybersecurity, respectively.
European market and AI initiatives: Climb Global Solutions aims to expand its presence in Western Europe, leveraging its growing reputation as a trusted distribution partner. The company is focusing on artificial intelligence (AI) as a key growth area, supported by initiatives like the Climb AI Academy, which provides training and certifications to partners in the AI space.
Strategic acquisitions: The company is actively evaluating a healthy pipeline of strategic acquisition opportunities to enhance offerings and expand its market presence, particularly in Europe.
2025 financial outlook: Management expects to close out 2025 with strong performance, driven by operational momentum, strategic acquisitions, and growth in key markets. The company anticipates delivering another year of record results.
Quarterly Dividend: On October 28, 2025, the Board of Directors declared a quarterly dividend of $0.17 per share of common stock, payable on November 17, 2025, to shareholders of record on November 10, 2025.
The earnings call reveals mixed financial performance: a slight increase in gross profit but a decrease in net income and adjusted EBITDA. The effective margin declined, but cash reserves increased. The Q&A highlighted strong growth in cybersecurity and no significant risks, but also vague management responses on acquisitions. Overall, the sentiment is neutral with no clear catalysts for a strong stock price movement.
The earnings call revealed strong financial performance with significant growth in net income, adjusted EBITDA, and gross profit. The company is also expanding its vendor partnerships and acquisitions, which is contributing to growth. Despite some concerns about the sustainability of gross margin improvements and SG&A expenses, the overall financial health and growth potential are positive. The Q&A session provided reassurance about growth drivers and acquisition strategies, further supporting a positive outlook. However, the absence of a market cap limits the prediction's precision, but the overall sentiment remains positive.
The earnings call highlights strong financial performance with significant revenue and profit growth, alongside an optimistic outlook for organic growth and strategic initiatives. Despite some risks like ERP implementation and reliance on a single cybersecurity partner, the company's robust financial health, increased dividends, and successful M&A activities contribute to a positive sentiment. While management's vague responses in the Q&A might raise slight concerns, they don't overshadow the overall positive indicators. The lack of market cap data suggests a cautious approach, but the positive elements indicate a likely stock price increase of 2% to 8%.
The earnings call reveals strong financial performance with a 52% increase in gross billings and 87% rise in adjusted net income, despite slight margin decline. The company is expanding partnerships and pursuing M&A, indicating growth potential. The announcement of a quarterly dividend and strong liquidity also supports a positive outlook. The Q&A indicates successful deals and growth in the security segment, further boosting sentiment. While there are some risks, such as acquisition charges and competitive pressures, the overall sentiment is positive, likely leading to a stock price increase of 2% to 8%.
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