Howard Root's questions to Climb Global Solutions (CLMB) leadership • Q2 2025
Question
The analyst inquired about the sustainability of the gross margin percentage, the future trend for SG&A expenses, the impact of international tariffs and currency, the company's market position and growth potential after crossing $2 billion in billings, and details on their acquisition strategy and market valuations.
Answer
The company stated that the higher gross margin was due to a lumpy, high-margin deal and is not a new trend; the target remains 5.0-5.1%. The current SG&A as a percentage of gross billings (3.3%) is expected to be the norm going forward. Tariffs are not an issue, but they are working on better currency hedging strategies. Management emphasized they are still a very small player in a massive market with significant headroom for growth. Regarding acquisitions, they are looking at smaller, strategic, cash-based deals this year (especially in services), with larger deals being a 2026-2027 consideration. Valuations start in the 7-9x multiple range but are deal-dependent.