Executive Summary

Record quarter: Net sales rose 51% to $161.8M, gross billings up 52% to $605.0M, adjusted EBITDA up 75% to $16.1M, and diluted EPS increased to $1.52; adjusted diluted EPS was $2.26 .
Effective margin expanded 780 bps to 51.5% on operating leverage; GP as % of gross billings was 5.2% (vs. 5.3% LY) .
GAAP earnings were dampened by a $2.5M change in fair value of acquisition contingent consideration (Spinnakar) that is excluded from non-GAAP metrics, contributing to the large adjusted EPS beat vs GAAP EPS .
Dividend: Board declared a $0.17 quarterly dividend payable Mar 21, 2025; balance sheet ended 2024 with $29.8M cash and $0.8M debt, preserving M&A capacity .
Street estimates: S&P Global consensus data was unavailable at the time of analysis; we cannot benchmark beats/misses to consensus and will update when available (SPGI request limit reached).

What Went Well and What Went Wrong

What Went Well

Effective margin and profitability: Adjusted EBITDA rose 75% to $16.1M and effective margin improved to 51.5% (+780 bps), reflecting operating leverage on record gross profit .
Vendor curation and growth: Management evaluated >120 vendors in 2024 and signed 13, emphasizing quality; Q4 added Scality (AI-resilient storage) and Smartsheet, supporting organic growth in North America and Europe .
ERP and integration progress: ERP implementation is already improving transactional efficiency, with management expecting greater agility and leverage across global operations .

“...another year of record results across all key financial metrics.” — CEO Dale Foster
“We continue optimizing our systems... driving greater agility, visibility and operational effectiveness.” — CEO Dale Foster

What Went Wrong

GAAP headwind from fair value charge: A $2.5M change in fair value of contingent consideration (Spinnakar) reduced GAAP net income (excluded from adjusted results) .
Solutions softness: Solutions segment gross billings fell 9% YoY in Q4 to $23.0M even as Distribution grew 57% to $582.0M .
Legacy vendor churn and mix: Management cited “holes to fill” from Citrix’s exit from the channel; security remains 55–65% of the portfolio, driving mix concentration and potential lumpiness from large deals (e.g., a large VAST deal at Q4-end) .

Financial Results

Core financials vs prior year and prior quarter

Metric	Q4 2023	Q3 2024	Q4 2024
Net Sales ($M)	$106.8	$119.3	$161.8
Gross Billings/AGB ($M)	$397.0	$465.2 (AGB)	$605.0
Gross Profit ($M)	$21.1	$24.3	$31.2
Gross Profit as % of Gross Billings	5.3%	5.2%	5.2%
Adjusted EBITDA ($M)	$9.2	$9.9	$16.1
Effective Margin % (Adj. EBITDA/GP)	43.7%	41.0%	51.5%
Net Income ($M)	$5.25	$5.46	$6.99
Diluted EPS ($)	$1.15	$1.19	$1.52
Adjusted Net Income ($M)	$5.51	$7.07	$10.29
Adjusted Diluted EPS ($)	$1.21	$1.55	$2.26

Notes:

Q4 YoY highlights reported by the company: Net sales +51%, adjusted net income +87%, adjusted EBITDA +75%, gross billings +52% .

Segment gross billings

Metric	Q4 2023	Q4 2024
Distribution Gross Billings ($M)	$371.7	$582.0
Solutions Gross Billings ($M)	$25.4	$23.0
Total Gross Billings ($M)	$397.0	$605.0

KPIs and balance sheet

KPI	Q4 2023	Q3 2024	Q4 2024
SG&A ($M)	$12.40	$13.94	$17.08
SG&A as % of Gross Billings/AGB	3.1%	3.0%	2.8%
Effective Margin %	43.7%	41.0%	51.5%
Cash & Equivalents ($M)	$36.3	$22.1	$29.8
Outstanding Debt ($M)	—	$0.9	$0.8
Dividend per Share ($)	$0.17	$0.17	$0.17

Context:

Cash was lower YoY primarily due to $20.4M cash paid for DSS at closing and working capital timing; revolver remained undrawn ($50M facility) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue/EPS guidance	FY 2025	None	None provided	Maintained “no formal guidance”; management reiterated organic growth, ERP leverage, and M&A focus .
Dividend per share	Mar 2025 payout	$0.17/quarter (ongoing)	$0.17 per share payable Mar 21, 2025 (record Mar 17, 2025)	Maintained .
Operating leverage/ERP	2025	N/A	Expect continued operating leverage as ERP benefits scale	Narrative only (no numeric target) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2’24 and Q3’24)	Current Period (Q4’24)	Trend
AI/data growth and vendor adds	Q2: Added Automox, Flashpoint; expanded GSA with Wasabi; emphasized curated line card (31 evaluated, 3 signed) . Q3: Added A-LIGN; double-digit organic growth US/Europe; building Germany/DACH presence .	Added Scality (AI-resilient storage) and Smartsheet; curated approach (evaluated 34, partnered with 2) .	Continued pipeline, targeted adds; AI/storage tailwinds building.
ERP implementation	Q2: Went live NA; staged rollouts to UK/Ireland/DSS by year-end . Q3: Still working through early inefficiencies; full integration timeline reiterated .	“Already seeing improvements in transactional efficiency,” expected to drive agility/operating leverage .	Transitioning from rollout to leverage capture.
Security mix and demand	Q2: Security and data center leading; broad-based growth across regions/vendors . Q3: Security remains core driver; VAST-related lumpiness .	Security ~55–65% of portfolio; continued investment by vendors including AI features .	End-market resilience; mix concentration persists.
Macro/supply chain	Q3: Software focus insulated from hardware logistics; macro “reasonably strong” in their niche .	No change; cadence driven more by vendor performance and large deals .	Stable macro for software/security.
M&A strategy	Q2: Acquired DSS; accretive; synergy plan; robust pipeline . Q3: Targeting DACH acquisitions; 1–2 per year typical .	Continue to evaluate accretive targets in NA and overseas; DSS accretive; cash/debt capacity intact .	Ongoing, disciplined cadence.
Legacy vendor churn	—	Addressing Citrix exit “holes” by diversifying mix .	Mix realignment underway.

Management Commentary

Strategy and execution: “Our fourth quarter performance capped off an exceptional 2024... record results across all key financial metrics.”
Vendor curation: “We evaluated over 120 vendors and signed agreements with only 13 of them... focusing on the most innovative technologies.”
ERP leverage: “We are already seeing improvements in transactional efficiency... anticipate unlocking additional benefits, driving greater agility, visibility and operational effectiveness.”
Capital allocation/M&A: “We will continue to evaluate M&A opportunities... expand our geographic footprint in the U.S. and overseas... well-positioned to deliver another year of growth and enhanced profitability in 2025.”
Portfolio mix: “Security... still making up between 55% and 65% of our portfolio,” with vendors adding AI components to products .

Q&A Highlights

Deal lumpiness and large orders: Management cited a large VAST-related deal late in Q4 helping the quarter, while emphasizing broad-based strength across divisions and typical Q4 seasonal strength .
Security leadership and portfolio mix: Security continues to lead growth and represent 55–65% of the portfolio; vendors increasingly layer AI features, expected to benefit 2025 .
DSS performance/seasonality: DSS was up YoY but Q4 is typically not its strongest due to K-12/Higher Ed seasonality; strongest months are mid-year into fall .
Vendor productivity: Of 13 vendors added in 2024, management pushes underperformers to “Elevate” for remediation; Scality launch already contributed ~$2–3M .
Citrix exit: Management acknowledged channel “holes to fill” from Citrix’s public exit, viewing it as an opportunity to diversify the mix .

Estimates Context

S&P Global (Capital IQ) consensus estimates for Q4 2024 EPS/Revenue/EBITDA were unavailable at the time of analysis due to an SPGI request limit; therefore, we cannot quantify beats/misses vs Street in this report. We will update when SPGI data access is restored.

Key Takeaways for Investors

Margin story intact: Record GP and a 780 bps jump in effective margin to 51.5% underscore operating leverage from scale and ERP progress—sustained margin expansion is a key driver of multiple and FCF trajectory .
Quality growth over breadth: Highly selective vendor additions (e.g., Scality, Smartsheet) and double-digit organic growth in US/Europe suggest durability; watch for AI-tied storage/security tailwinds .
Non-GAAP normalization: The $2.5M contingent consideration charge masked underlying profitability; adjusted EPS/EBITDA better capture core run-rate as integration synergies ramp .
Mix and lumpiness: Security concentration (55–65%) and large-deal timing (e.g., VAST) can drive quarterly volatility; sustained GP and effective margin are better indicators of the trend .
Balance sheet optionality: $29.8M cash, minimal debt, and undrawn $50M revolver support continued M&A (1–2/year cadence implied) while maintaining the $0.17 dividend .
Watch list for 1H’25: ERP leverage realization, Solutions segment stabilization, progress filling the Citrix gap, and evidence of cross-sell/scale synergies from DSS .
Update needed on Street context: Reassess beats/misses and estimate revisions once S&P Global consensus data is accessible to gauge sentiment and potential re-rating drivers.

Citations

Q4’24 press release/8-K and financial tables:
Q4’24 earnings call (prepared remarks/Q&A):
Q3’24 8-K and call for sequential comparisons:

Climb Global Solutions, Inc. (CLMB)·Q4 2024 Earnings Summary