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Climb Global Solutions, Inc. (CLMB)·Q2 2025 Earnings Summary

Executive Summary

  • Net sales rose 73% year over year to $159.3M; gross billings grew 39% to $500.6M, GAAP diluted EPS was $1.30 and adjusted EPS was $1.39; adjusted EBITDA increased 64% to $11.4M, lifting effective margin to 43.3% (+600 bps) .
  • Results materially beat S&P Global Wall Street consensus: revenue $159.3M vs $113.3M*, EPS (Primary/normalized) $1.39 vs $0.90*; estimates were thin (one contributor), heightening the magnitude of the surprise .*
  • Management highlighted double-digit organic growth, vendor additions (Ignite), an exclusive IGEL distribution agreement in the U.K. & Ireland, and ERP-driven efficiency/operating leverage .
  • A large “VAST” order originally budgeted for Q3 was pulled into Q2, adding lumpiness; seasonality from DSS in education also helped .
  • Dividend maintained at $0.17 per share (declared July 29, payable August 15), signaling confidence in cash generation and balance sheet .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line and profitability: net sales +73% to $159.3M, adjusted EPS up to $1.39, adjusted EBITDA +64% to $11.4M, effective margin +600 bps to 43.3% .
  • Vendor and regional execution: exclusive IGEL distribution in U.K./Ireland, Ignite partnership, and continued growth in both U.S. and Europe; security and data center led growth .
  • Operating leverage and ERP: SG&A as % of gross billings declined to 3.3% (from 3.6%), with ERP fully implemented to unlock efficiencies and scalability .

Quotes:

  • “We generated double-digit organic growth… bolstering our line card with new, innovative vendors… growing our market share in both the U.S. and Europe.” — CEO Dale Foster .
  • “Effective margin… increased 600 basis points to 43.3%.” — CFO Matthew Sullivan .
  • “Our ERP system now fully implemented… we expect to capture operational efficiencies that will enhance scalability and drive operating leverage.” — CEO Dale Foster .

What Went Wrong

  • Lumpiness from large deals: a “VAST” order pulled forward from Q3 to Q2 boosted the quarter; management flagged the need to “make that up in Q3” .
  • Vendor loss: Citrix exited the channel in Ireland, creating a hole that the team is working to backfill with alternative offerings .
  • FX sensitivity persists: most vendor purchases in USD create realized/unrealized FX impacts; management is exploring better hedging strategies .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$92.1 $138.0 $159.3
Gross Billings ($USD Millions)$359.8 $474.6 $500.6
Gross Profit ($USD Millions)$18.6 $23.4 $26.3
Gross Profit Margin (% of gross billings)5.2% 4.9% 5.3%
SG&A ($USD Millions)$13.0 $16.8 $16.4
SG&A / Gross Billings (%)3.6% 3.5% 3.3%
Adjusted EBITDA ($USD Millions)$6.9 $7.6 $11.4
Effective Margin (% of gross profit)37.3% 32.7% 43.3%
Diluted EPS (GAAP, $)$0.75 $0.81 $1.30
Adjusted EPS (Non-GAAP, $)$0.83 $0.86 $1.39

Segment gross billings:

SegmentQ2 2024 ($M)Q1 2025 ($M)Q2 2025 ($M)
Distribution$340.1 $453.6 $477.0
Solutions$19.8 $21.0 $23.5
Total$359.8 $474.6 $500.6

KPIs and Balance Sheet:

KPIQ2 2024Q1 2025Q2 2025
Cash & Equivalents ($M)—$32.5 $28.6
Total Debt Outstanding ($M)—$0.6 $0.5
Working Capital Change vs Dec 31 2024 ($M)—+$4.4 +$12.2
Dividend per Share ($)—$0.17 (declared Apr 28; paid May 16) $0.17 (declared Jul 29; paid Aug 15)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ3 2025Not providedNot providedMaintained “no formal guidance” stance
Gross Profit Margin (% of gross billings)Forward view~5.0%-5.1% (internal target commentary) ~5.0%-5.1% expected; Q2 at 5.3% was lumpy from large deal Maintained
SG&A / Gross Billings (%)Forward view~3.5% ~3.3% expected going forward Lower (improving leverage)
Dividend per ShareQ3 2025$0.17 (Q1) $0.17 declared Jul 29, payable Aug 15 Maintained

Note: The company does not provide formal revenue/EPS guidance; management offers operating framework commentary (margins, leverage).

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/Technology vendor addsScality (cyber-resilient storage), Smartsheet; 13 vendors signed in FY’24 Ignite partnership; exclusive IGEL distribution in U.K./Ireland; Darktrace pipeline highlighted earlier continues Expanding partnerships; execution improving
Security & Data CenterSecurity and data center leading; vendor mix focusing on high-growth segments Security remains strongest; data center tools driving growth Strengthening
ERP/Operating leverageERP in early optimization phase, efficiency gains beginning ERP fully implemented; expected scalability and operating leverage Advancing, benefits accruing
Macro/Tariffs/FXNo major tariff impacts; working on FX strategies No tariff impact; pursuing better FX hedging as USD exposure persists Stable tariffs; FX management focus
Large deal timing (lumpiness)Lumpy transactions part of model “VAST” order pulled into Q2 from Q3; contributes to higher margins Ongoing lumpiness
Vendor portfolio changesCitrix exit noted; backfilling planned Citrix Ireland exit created a Q2 hole; teams selling substitutes Portfolio rotation continues
M&A pipeline/valuationActive, disciplined; DSS accretive Smaller cash deals in 2025; larger targets eyed for 2026–27; valuation starting points ~7x–9x Active; disciplined on multiples

Management Commentary

  • Strategic priorities: “We continued to execute on our core initiatives… double-digit organic growth… bolstering our line card with new, innovative vendors… growing our market share in both the U.S. and Europe.” — CEO Dale Foster .
  • Operating leverage: “With our ERP system now fully implemented, we expect to capture operational efficiencies that will enhance scalability and drive operating leverage.” — CEO Dale Foster .
  • Segment performance: “Gross billings in Q2 increased 39% to $500.6 million… Distribution $477 million, Solutions $23.5 million.” — CFO Matthew Sullivan .
  • Margin framing: “Gross profit as a percentage of gross billings increased to 5.3%… internally, we project it to be in that 5–5.1% range; the higher percentage this quarter was timing of lumpy transactions.” — CFO Matthew Sullivan .
  • SG&A leverage: “3.3% range is more consistent with what we expect going forward.” — CFO Matthew Sullivan .
  • Growth runway: “Our headroom between $2 billion and $20–30 billion… a lot of headroom to grow before we’d be disruptive to big players.” — CEO Dale Foster .

Q&A Highlights

  • Growth drivers and vendor mix: Security and data center continue to lead; top-10 vendors stable, increasing contribution from vendors ranked 10–20 (e.g., Darktrace) .
  • Deal timing and margin: A “VAST” order pulled forward from Q3 to Q2 increased gross margin and net sales; management still saw strong organic growth excluding the order .
  • Integration and synergies: DSS fully on ERP, lines moved into common portfolio; seasonal strength in education ahead of school year .
  • Margin and SG&A outlook: Gross margin (as % of gross billings) expected at 5–5.1% on average; SG&A as % of gross billings around 3.3% going forward .
  • Tariffs/FX: No material tariff impacts; active FX risk management given USD-based purchasing .
  • Portfolio change: Citrix’s exit in Ireland created a gap, but teams are backfilling with alternatives without changing budget assumptions .
  • M&A and multiples: 2025 deals likely cash-funded and strategic (services), larger moves targeted in 2026–27; starting valuation points ~7x–9x .

Estimates Context

MetricConsensus (S&P Global)Actual# of Estimates
Revenue ($USD)$113.3M*$159.3M 1*
EPS (Primary/normalized, $)$0.90*$1.39 1*
  • Result: Bold beat on both revenue and EPS vs consensus; very limited analyst coverage magnified the surprise. Adjusted EPS (non-GAAP) aligns with Primary/normalized EPS used in consensus; GAAP diluted EPS was $1.30 .*
  • Disclaimer: Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Broad-based strength with organic growth and vendor additions drove outsized beats; limited coverage increases potential for post-print re-rating on surprise magnitude .*
  • Operating leverage is improving: SG&A down to 3.3% of gross billings with ERP benefits positioning for scalability and margin resilience .
  • Expect near-term lumpiness: large deal timing (e.g., “VAST”) and education seasonality (DSS) can skew quarterly margins and billings .
  • Security and data center momentum should underpin H2, with Darktrace and other new vendors ramping; lost Citrix is being backfilled in EMEA .
  • Balance sheet remains robust (cash $28.6M, minimal debt) supporting continued dividends and tuck-in M&A in 2025; larger deals targeted for 2026–27 .
  • Margin guardrails: gross profit margin expected around 5–5.1% of gross billings; effective margin benefited this quarter from mix and lumpiness .
  • Watch FX and coverage: FX remains a variable, and low estimate counts can increase volatility around prints; sustained beats could attract incremental sell-side attention .*

Additional notes:

  • No standalone Q2 2025 press releases beyond the 8-K Exhibit 99.1 were found via the document tool for July 2025; dividend details are embedded in the press release .