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Climb Global Solutions, Inc. (CLMB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue and normalized EPS beat materially: $161.3M net sales vs $125.3M S&P Global consensus*, and $1.31 normalized EPS vs $1.10*; GAAP diluted EPS was $1.02. The top-line beat was driven by double‑digit organic growth and the contribution of Douglas Stewart Software & Services (DSS). Adjusted EBITDA dipped slightly YoY due to a high‑flow‑through vendor transaction in the prior year that did not repeat .
  • Mix and comps drove profitability optics: Effective margin was 42.3% vs 45.7% a year ago due to the non‑recurring lumpy deal in Q3’24, while gross billings rose 8% and gross profit rose 6% YoY .
  • Strategic progress: Continued vendor curation (4 added from 70+ evaluated) and partnerships (e.g., Halcyon anti‑ransomware), plus European AI enablement via Climb AI Academy (>700 participants) underpin medium‑term growth vectors .
  • Capital and capital returns: Cash increased to $49.8M with minimal debt ($0.3M) and a $0.17 dividend declared for Nov 17, 2025; management reiterated a robust M&A pipeline targeting larger, often European, assets .

Values retrieved from S&P Global for consensus estimates.*

What Went Well and What Went Wrong

  • What Went Well
    • Strong top-line growth: Net sales +35% YoY to $161.3M on double‑digit organic growth and DSS contribution; gross billings +8% YoY to $504.6M, and gross profit +6% YoY to $25.7M .
    • Vendor strategy and line card curation: Evaluated 70+ potential partners and signed 4, highlighting selective onboarding (e.g., Liongard, Halcyon) to enhance security and MSP capability. “This reflects our ongoing selective approach to vendor expansion” – Charles Bass .
    • AI and Europe execution: CEO highlighted Climb AI Academy in DACH with >700 participants and certifications, positioning partners for AI demand; management cited strong European execution and expanding capabilities .
  • What Went Wrong
    • Profitability optics vs tough comp: Adjusted EBITDA down slightly YoY to $10.9M; effective margin 42.3% vs 45.7% last year due to a large, high‑flow‑through vendor transaction in Q3’24 that did not repeat .
    • Solutions segment softness: Solutions gross billings -5% YoY, with management attributing it to US customer renewal timing; noted as a blip rather than trend .
    • Vendor concentration dynamics: Sophos was “a little flat” in Q3; while SolarWinds is improving post acquisition by Turn River. Exposure to large transactions (e.g., Vast Data) can create lumpiness, though none were cited in Q3’25 .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Net Sales ($M)$138.0 $159.3 $161.3
Gross Billings ($M)$474.6 $500.6 $504.6
Gross Profit ($M)$23.4 $26.3 $25.7
GAAP Diluted EPS ($)$0.81 $1.30 $1.02
Adjusted EPS ($)$0.86 $1.39 $1.31
Adjusted EBITDA ($M)$7.6 $11.4 $10.9
Effective Margin (%)32.7% 43.3% 42.3%
SG&A ($M)$16.8 $16.4 $16.2
SG&A as % of Gross Billings3.5% 3.3% 3.2%

Segment gross billings

Segment ($M)Q1 2025Q2 2025Q3 2025
Distribution$453.6 $477.0 $481.9
Solutions$21.0 $23.5 $22.7
Total$474.6 $500.6 $504.6

Q3 vs S&P Global consensus (normalized EPS)

MetricQ3 2025 ActualQ3 2025 Consensus Mean*# of Estimates*
Revenue ($M)$161.3 $125.3*2*
Primary EPS (Normalized) ($)$1.31 $1.10*2*

Values retrieved from S&P Global for consensus estimates.*

Balance sheet and capital returns snapshots

MetricQ1 2025Q2 2025Q3 2025
Cash & Cash Equivalents ($M)$32.5 $28.6 $49.8
Debt Outstanding ($M)~$0.6 ~$0.5 ~$0.3
Dividend per Share ($)$0.17 declared for May 16, 2025 $0.17 declared for Aug 15, 2025 $0.17 declared for Nov 17, 2025

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q4 2025Not providedNot providedMaintained (no formal guidance)
Profitability (Adj. EBITDA/Margins)FY/Q4 2025Not providedNot providedMaintained (no formal guidance)
DividendQ4 2025$0.17/quarter$0.17 declared, payable Nov 17, 2025Maintained

Management reiterated confidence to “close out 2025 on a strong note,” but did not issue quantified guidance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI initiativesERP efficiencies and growth focus; no specific AI program cited in PRs Launched Climb AI Academy in DACH; >700 participants; certifications; manufacturer‑neutral enablement Accelerating enablement in Europe
Cybersecurity/product portfolioContinued vendor additions; DSS seasonality in education Vendor curation: 70+ evaluated, 4 signed; Halcyon anti‑ransomware distribution; Liongard MSP automation Broadening, security-led expansion
Macro/tariffs/FXNot highlighted in PRsTariffs immaterial; FX managed via short quote windows; environment “healthy,” Q4 seasonal strength expected Stable macro; operational discipline
Vendor performance—Sophos flat; SolarWinds improving post Turn River; large Vast Data orders cause lumpiness (none in Q3) Mixed vendor dynamics; less lumpiness
Europe executionGrowing market share in Europe (PRs) Strong execution overseas; AI capability expansion; potential European M&A Strengthening
M&AActive pipeline; DSS contribution (PRs) Evaluating larger ($10–$40M) targets, often Europe; expensing diligence costs; focusing on higher‑margin profiles Pipeline deepening

Management Commentary

  • “We generated double digit organic growth, benefitted from the acquisition of DSS, and deepened existing partnerships while signing new, cutting‑edge vendors” – CEO Dale Foster .
  • “With more than 700 participants to date... our [AI Academy] initiative is proving to be a powerful differentiator” – CEO Dale Foster .
  • “Adjusted EBITDA... slight decrease was primarily driven by a large vendor transaction in the year‑ago period that carried a higher flow‑through” – CFO Matt Sullivan .
  • “We evaluated more than 70 potential vendor partners and entered into agreements with only four” – Chief Alliances Officer Charles Bass .
  • “As of September 30, 2025, we had $300,000 outstanding debt with no borrowings under our $50 million revolver” – CFO Matt Sullivan .

Q&A Highlights

  • Demand and order mix: No lumpy deals in Q3; noted historical lumpiness from Vast Data; organic growth broad‑based across vendors; security remains >60% of mix .
  • Vendor updates: Sophos “a little flat”; SolarWinds trending positively after Turn River acquisition .
  • Margins and terms: Early‑pay discounts consistent; effective margin declined YoY due to a non‑recurring high‑flow‑through deal in Q3’24 .
  • Working capital swings: Large AR/AP swings tied to timing of large transactions and seasonal Q4 collection/payment patterns; $30M‑type orders can drive quarter‑to‑quarter volatility .
  • Segment color: Solutions weakness due to US renewal timing; seen as a blip .
  • M&A pipeline and strategy: Diligence spend this quarter; targeting $10–$40M deals, with some technical capability tuck‑ins and higher‑margin European distributors; watching lower European multiples .

Estimates Context

  • Q3 results vs S&P Global consensus: Revenue $161.3M vs $125.3M* and Primary EPS (normalized) $1.31 vs $1.10* – both beats; GAAP diluted EPS was $1.02. Management attributes strength to organic growth, vendor adds, and DSS, while YoY margin optics reflect a non‑recurring high‑flow‑through deal in Q3’24 .

Values retrieved from S&P Global for consensus estimates.*

Key Takeaways for Investors

  • Strong top-line momentum with execution across geographies and vendors drove a sizable revenue and normalized EPS beat vs consensus*, supporting near‑term positive estimate revisions .
  • Profitability normalization vs tough comps (absence of last year’s high‑flow‑through deal) masks underlying operating leverage; effective margin remains >40% .
  • Security remains the growth engine (>60% mix) with targeted vendor additions (e.g., Halcyon) and AI enablement (AI Academy) creating differentiated positioning, especially in Europe .
  • Expect quarter‑to‑quarter working capital and billings variability due to large orders and seasonal DSS education demand; fundamental trend remains upward .
  • Balance sheet optionality (cash $49.8M, minimal debt) plus an active pipeline targets larger, often European, assets to enhance margin profile and territory coverage .
  • Dividend maintained at $0.17, signaling confidence in cash generation while evaluating inorganic opportunities .
  • Near‑term trading lens: beats on revenue and normalized EPS*, expanding security/AI narratives, and visible M&A optionality are supportive; monitor vendor concentration dynamics and Solutions segment recovery into Q4 seasonality .

Values retrieved from S&P Global for consensus estimates.*