Executive Summary

Strong top-line with 49% YoY net sales growth to $138.0M and 34% YoY gross billings growth to $474.6M; broad-based organic growth plus DSS acquisition contribution drove the beat vs consensus revenue ($96.9M*) while S&P’s Primary EPS came in slightly below consensus ($0.86 vs $0.89, 1 estimate*) .
Profitability expanded YoY: gross profit +37% to $23.4M and adjusted EBITDA +38% to $7.6M; effective margin improved 20 bps to 32.7% as operating leverage held despite mix and integration activity .
Management highlighted new AI/security vendor wins (e.g., Darktrace; ~$30M pipeline) and ERP rollout progress that is beginning to improve efficiency; reiterated active-but-disciplined M&A posture and declared a $0.17 dividend (payable May 16) .
Near-term stock catalysts: significant revenue beat vs consensus, emerging vendor traction (Darktrace), and ERP efficiency narrative; watch for Q2 education-seasonality tailwinds at DSS and replacement of the Citrix EMEA gap referenced last quarter .

What Went Well and What Went Wrong

What Went Well
- Material top-line surprise: net sales $138.0M vs S&P Global consensus $96.9M*; growth driven by organic momentum in U.S. and Europe plus DSS contribution .
- New vendor traction in AI/security: “Climb signed a contract with Darktrace mid-quarter… pipeline… already topped $30 million in potential gross billings” (CEO) .
- Operating leverage intact: adjusted EBITDA +38% to $7.6M and effective margin +20 bps to 32.7%; SG&A as % of gross billings flat at 3.5% despite integration .
What Went Wrong
- EPS slightly below S&P consensus (Primary EPS $0.86 vs $0.89, 1 estimate*), despite lower effective tax rate (13.3% due to discrete item) and strong revenue; foreign currency loss of $(0.58)M was a headwind .
- Sequential moderation from seasonally strong Q4: net sales fell from $161.8M (Q4) to $138.0M (Q1), consistent with typical seasonality .
- EMEA product hole from Citrix exit remains a watch item (management expects mitigations to ramp from Q2), though legacy tail still aided Q1 .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Net Sales ($USD Millions)	$92.4	$161.8	$138.0
Gross Profit ($USD Millions)	$17.0	$31.2	$23.4
Gross Margin %	18.4% (=$17.0/$92.4)	19.3% (=$31.2/$161.8)	17.0% (=$23.4/$138.0)
Net Income ($USD Millions)	$2.7	$7.0	$3.7
Diluted EPS ($)	$0.60	$1.52	$0.81
Adjusted Net Income ($USD Millions)	$2.823	$10.289	$3.915
Adjusted Diluted EPS ($)	$0.62	$2.26	$0.86
Adjusted EBITDA ($USD Millions)	$5.538	$16.078	$7.639
Effective Margin (% of Gross Profit)	32.5%	51.5%	32.7%
Gross Billings ($USD Millions)	$355.3	$605.0	$474.6

Segment gross billings (KPI)

Segment KPI ($USD Millions)	Q4 2024	Q1 2025
Distribution Gross Billings	$582.0	$453.6
Solutions Gross Billings	$23.0	$21.0
Total Gross Billings	$605.0	$474.6

Balance sheet and cash flow KPIs

KPI	Q4 2024	Q1 2025
Cash & Cash Equivalents ($USD Millions)	$29.8	$32.5
Debt Outstanding ($USD Millions)	$0.8	$0.6
Revolver Borrowings	$0	$0
Working Capital Change (seq) ($USD Millions)	—	+$4.4
Dividend per share (declared)	$0.17 (2/28/25)	$0.17 (4/28/25; payable 5/16/25)

Actual vs S&P Global consensus (Q1 2025)

Metric	Actual	Consensus	Surprise
Revenue	$138.0M	$96.9M*	+$41.2M / +42.6%*
Primary EPS	$0.86*	$0.89*	-$0.03*
GAAP Diluted EPS (for context)	$0.81	—	—

Note: Asterisked values are from S&P Global consensus/actuals; “Primary EPS” as reported by S&P Global aligns with company’s adjusted diluted EPS. Values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal quantitative revenue/EPS guidance	FY/Quarter	None	None	Maintained (no formal guidance)
Dividend per share	Q2 2025 payment	$0.17 declared 2/28/25	$0.17 declared 4/28/25 (payable 5/16/25)	Maintained

Management reiterated ERP-driven efficiency opportunity and active M&A posture but did not provide specific financial targets .

Earnings Call Themes & Trends

Topic	Q3 2024 (Q-2)	Q4 2024 (Q-1)	Q1 2025 (Current)	Trend
AI/security vendor expansion	Ongoing vendor adds; security-led growth; VAST orders boosted results	New vendor adds (Scality, Smartsheet)	Darktrace signed; ~$30M pipeline building	Strengthening
ERP implementation	Went live; efficiencies expected over time	Still working through ERP; efficiencies not yet at target	“Steady progress,” improving speed/accuracy; DSS now live on ERP (post-Q1)	Improving
EMEA/Citrix exposure	—	“Holes to fill” after Citrix exit	Legacy Citrix tail aided Q1; mitigations filling from Q2	Stabilizing
Macro/tariffs	Software focus insulated from hardware cycles	—	Minimal tariff impact (80%+ U.S., USD-based), Europe mostly software	Benign
DSS seasonality (education)	—	—	Q1 is lighter; strongest months June–Nov as budgets conclude by June	Seasonal tailwind into Q2/Q3
M&A strategy	Active pipeline; focus on Western Europe/DACH	“1–2 per year,” disciplined, cash-funded	Remains active and disciplined	Ongoing

Management Commentary

“The momentum from our record 2024 was carried into the first quarter, leading us to exceptional growth across all key financial metrics… [and] the integration of DSS into our operating platform.” (CEO) .
“Climb signed a contract with Darktrace mid-quarter… pipeline… already topped $30 million in potential gross billings.” (CEO) .
“Adjusted EBITDA… increased 38% to $7.6 million… Effective margin increased 20 basis points to 32.7%.” (CFO) .
“Income tax expense… decreased… to an effective tax rate of 13.3%… driven by a discrete item…” (CFO) .
“As of March 31, 2025, we had $600,000 of outstanding debt with no borrowings outstanding under our $50 million revolving credit facility.” (CFO) .

Q&A Highlights

Growth breadth and deal mix: Demand was broad-based; no single outsized deal in Q1; DSS contribution helped; larger brands accelerating; emerging vendors “doubling down” .
Tariffs and macro: Minimal tariff exposure given >80% U.S., USD purchasing; European business predominantly software; Canada handled via short-dated quotes .
EMEA transition: Citrix exit created a hole; legacy still aided Q1; mitigations (new vendors, team reorg) underway; DSS went live on ERP post-Q1, unifying systems .
DSS seasonality: Education calendar implies stronger quarters as state budgets roll toward June; Q1 typically lighter for DSS .
Darktrace ramp: Relationship in development for ~2 years; signed April 1; pipeline building quickly .

Estimates Context

Q1 2025 results vs S&P Global consensus: Revenue beat by ~$41M (+43%); Primary EPS slightly missed by $0.03 (one estimate). The consensus base was thin (n=1), limiting signal strength. Values retrieved from S&P Global.
- Revenue: Actual $138.0M vs $96.9M* (n=1)* .
- Primary EPS: Actual $0.86* vs $0.89* (n=1)*.
- GAAP Diluted EPS context: $0.81 (company-reported) .
Potential estimate revisions: Street likely raises revenue/EBITDA on organic momentum, Darktrace addition, and ERP efficiencies; EPS may see mixed adjustments given FX loss in Q1 and tax-rate discretes that may not repeat .

Note: Asterisked values are from S&P Global consensus/actuals; “Primary EPS” corresponds to company’s adjusted EPS. Values retrieved from S&P Global.

Key Takeaways for Investors

Revenue momentum is robust and diversified, beating consensus materially on organic strength (U.S./Europe) plus DSS contribution; watch for sustained execution into seasonally stronger education months .
Profitability levers intact: adjusted EBITDA grew 38% with effective margin modestly higher; ERP progress supports medium-term operating leverage .
Vendor engine is working: Darktrace adds a high-quality AI/security brand with a ~$30M pipeline; management aims to scale a set of “large” vendors to expand margin efficiency over time .
EMEA transition risk manageable: Citrix hole acknowledged but being backfilled; legacy tail aided Q1 with mitigations expected to build through Q2 .
Balance sheet remains a strategic asset: net cash position (low debt) and undrawn $50M revolver underpin continued M&A optionality and dividend maintenance .
Trading setup: Large revenue beat vs consensus is a positive narrative catalyst; small EPS miss vs S&P’s Primary EPS (n=1) likely less meaningful—focus on pipeline conversion (Darktrace), ERP efficiency milestones, and education seasonality in Q2/Q3 .
Monitor FX and one-time tax effects: Q1 benefited from a discrete tax item but faced FX losses; normalize these when modeling EPS cadence .

Appendix: Additional Context and Sources

Q1 2025 8-K earnings press release and exhibits (financials, non-GAAP reconciliations, dividend declaration) .
Q1 2025 earnings call transcript (prepared remarks and Q&A) .
Prior quarters for trend analysis: Q4 2024 8-K and call ; Q3 2024 8-K and call .

Footnote on estimates: Asterisked estimate and “Primary EPS” values are from S&P Global; “Primary EPS” aligns with company’s adjusted diluted EPS. Values retrieved from S&P Global.

Climb Global Solutions, Inc. (CLMB)·Q1 2025 Earnings Summary