Climb Global Solutions (CLMB) 2 Mar 232022 Q4 Earnings call transcript

Good morning, everyone, and thank you for participating in today's conference call to discuss Climb Global Solutions financial results for the fourth quarter and full year ended December 31, 2022.

Joining us today are Climb's CEO, Mr. Dale Foster; the company's CFO, Mr. Drew Clark; and the company's Investor Relations adviser, Mr. Sean Mansouri with Elevate IR. By now, everyone should have access to the fourth quarter and full year 2022 earnings release, which was issued yesterday afternoon at approximately 4:05 p.m. Time. Eastern available at Relations www.climbglobalsolutions.com. is Global of the website Solutions in release section Investor Climb The This webcast company's replay will on call also the website. be available for

for to Following questions. I'd introductory comments. to the we'll management for call remarks, Mr. Mansouri now the turn like call over open your

Thank you.

uncertainties unknown from certain and assumptions Securities XXXX. webcast statements. Before forward-looking known the time time and the being company are described Dale, that also and on statements to in any required Litigation filings certain any undue uncertainties with are actual this this of as to other of results of statements. that call. subject on revision in statements under are as Do obligation of company's forward-looking forward-looking well remind like risks publicly the as that subject or introduce to no not made forward-looking place revise undertakes conference results Private as Reform considered forward-looking Except any These date statements release are made only Act the I listeners the to SEC. reliance risks I'd comments call these forward-looking from law, These to the those cause which are could differ by materially reflected statements, to to and

our SEC adjusted Our measures the presentation of also non-GAAP been effective accordance in rules. All and EBITDA billings, as directly including non-GAAP margin measures most financial gross includes GAAP reconciled performance business. certain measures adjusted comparable supplemental of with measures to have

the call to Foster. Form release in information I'll Climb's CEO, the turn X-K the other press over find You'll and that, reconciliation we to furnished yesterday. With charts and Dale SEC important earnings

was record good in X card Thank delivered main on notable across great XXXX initiatives: metrics. results approximate driven highlighted morning, all vendors, EBITDA. objectives. our by innovative year XX% line with for you, The acquisition net our existing both our by a new our most of to This the our financial add and increase adjusted our Climb growth on team, key was Sean, was and our income generate our focus and to everyone. vendors

In our bottom has expand acquisition Climb's our quarter. completely line in operating integrated the August the year. Spinnakar of overseas continued last presence with addition, of during strategy our been contributed both they systems, to and top we Spinnakar into to and

begun a solutions to management a media of solutions. and And differentiator professionals and As I in have is industry-leading past, IT an storage years our last vendors. we This for top and Spinnakar's each channel a important across infrastructure on first provides Climb management signed VAST simplify Spinnakar. we integration Spinnakar for vendors systems products partnership signed is full mentioned us effectively distributor as product of X; analytics framework Simply a the quarter acquisition take security than CoreView, thread only We new of and We've close data brands allows Quickly these and remains company This of and a adds to as committed operations and complex card EMEA the market. In announced of teams. IT an Their and the cloud-based full data. QX limited U.S. region. financial us. to executive enterprises. past marked experience cross-selling vendor the CYREBRO, with worldwide. XX Climb already XX the well management our EMEA finally, base team agreements contribution each. CYREBRO benefits problems built with between cloud, are most platform CoreView. of Microsoft portfolio we of see brings customer our storage, the the being new XX into Climb to one innovative cloud-based focused a as brands the operating that security long to to a our on their August XXX bottom distribution as center we for cross-sell the quarter, to look and developer Simply fruitful partners more of the forward is faced with combined touching by line. year, we line U.K.-based to to and prospective notable evaluate

only with relationships. team work previously from example, to Conversely, began vendors the work team. For and U.S. LogicGate, operations our relationship began EMEA with our Tintri our U.S. to with had EMEA who a Datadobi our

behind infancy, their in are power strategy. synergies they the growth demonstrate these our While

further scale to We businesses integrate our the continue expect cross-selling opportunities and as across globe. we

public personal Kimberly Climb. Kimberly brings to over of of private acquisition Audit of and in also serve Committee She has deep announced record our executing Board will and November, to an M&A strategy, the on we Her both Directors. track extensive finance Governance appointment and and transactions. the in Boren experience were have excited finance the to an board. Committee spearheading and years and on will for for and to our asset She In companies. experience accounting development. Corporate we leading Turning of M&A Chair Nominating functions be her XX

this are we to off Looking ahead a start to year. XXXX, already great

in will line innovative companies continue progress, the card we on to our focus with expanding the market. most As we

over Drew? acquisition will I the we be strategic that will targets, evaluate our our and and a to call culture. With and targets sheet, turn to With balance CFO. that, continue continue pipeline strong business. domestically opportunities M&A scale both further and aligned internationally and to Drew, to strong with will a leverage value of to new We our accretive also operating will add goals

and everyone. Dale, morning, good you, Thank

want to of everyone review our improvements. refers year seventh QX remind consecutive commentary specified. results, results comparisons all the we profitability otherwise quarter I our variance unless As quarter, financial and that double-digit prior to marked

reflects year million from growth to existing contribution million new to As reported the XX% non-GAAP full well adjusted our billings, continued a as a increase $XXX.X vendors is organic $XXX.X in compared and gross quarter of in release, from earnings The quarter. as increased press which Spinnakar. measure, ago

million quarter XXXX XX% increased compared fourth net $XX.X million. to of addition, sales $XX.X in In to the

discounts impact of foreign increased growth increased in organic $XX.X negative X% quarter to XX% XX% million which compared Spinnakar. Gross to the sales and approximately fourth $XX.X reflects the $XX.X The XX% driven not profit exchange net from currencies, primarily Excluding new was million. Spinnakar. vendors, to did customers million, acquisition by growth utilize both top as as our certain in from early vendors of well increase organic North and the that XX contribution Europe, America from fully pay our

Net quarter in as of per ago net percentage increased remained to again XX% for X.X% income million to the percentage the the billings quarter the effective percentage in in as period sales quarter. Adjusted our impact per increase same gross year as as fourth $X.XX gross billings SG&A negative million of XX% $X.X quarter. as diluted in third share to diluted a and actually EBITDA XXXX or organic comparable a adjusted ago XX.X% X.X%, growth which existing Spinnakar. income a delivering year to point of at in XX.X% the to from $XX $X.XX contributions scalability would compared share, was increased This or FX, fourth or of to both million million the share in $X.X I to diluted to EBITDA quarter in compared effective compared the and excluding the share from was or was SG&A or period. to gross XXXX. per well $X.X of speaks the to profit XX% million was Adjusted improvements, compared diluted Our vendors reflects in the year of million out million. a $X.X and fourth increased significantly percentage adjusted driven the $X.X row year that $X.X million XX.X% margin compared of to compared $X.X The for EBITDA ago quarter $X.XX approximately adjusted flat margin like net increased $X.XX per period XX.X% XXXX. as quarter. Total to X% prior new gross of versus to a business. compared by both our in profit

higher our grew quarter. of million Excluding even this during the XX.X% FX $X.X impact, to effective margin

balance XXXX. $XX.X million $XX.X equivalents on million our XX, were Cash December compared XXXX, to in cash December to XX, Turning and sheet.

While to the $X.X due was decreased million discounts of acquisition compared by period. decrease in capital during primarily as as working cash the less to prior well period. early Spinnakar The pay the utilizing customers

XXXX. To outstanding million of borrowings end XX, had outstanding, no As X $XX or facilities. $X.XX addition echo XX, to our and million our targets, million point and enhance payable of to stock, to common abroad quarterly shareholders record quarter Directors XXXX, we credit declared of on under XX, with of Board domestically XXXX, to December will March our a evaluate XXXX, share on offerings. XX, either of of geographic March $X.X solution February our Subsequent earlier, on M&A debt dividend footprint in both per to service we continue Dale's GBP

business in think to while double-digit years, we profile business of meaningful billings, As can creating financial also a the line to accretive help that us profile the quicker on top this scale at outpaces growth line. Future the pace. bottom adjusted forward generate our going we out to we ensure growth even continue the believe be operating acquisitions drive leverage would about organic in gross in would the

inherent our prior nature years results execution these our recurring well business. delivering in the of confidence from of Our as comes as

Although we challenging the revenue future reoccurring we customers in the year. recent roughly we as generate traditional environment with in has sense renewal quarters recognize do been our SaaS average companies, generate uncertain. and of macro the revenue We don't rate remains recurring of XX% every

up to now However, it and and We'll an expect our prepared year for impact point results delivering questions up those you we to thank from participating have you. of our in solid another open business seen remarks. in XXXX. This call. back Operator, this to the continue not concludes to

Instructions] Howard from [ [Operator comes question first Root ]. Our

me, you can Drew, And okay? hear Dale

Yes, you. hear we can

Okay. All

Okay.

Okay. Great. That's

of quarter XXXX. keep before, of how just I doing because great model and focused straight your not and how So And it what $X first that you internet, the billion a get it's is you're and kind phenomenal, it's as middle right grabbing hard in wheel I doing on like billings, especially you're simple it simple. I gross working. to off, over is love adjusted the and what paraphrase really year whole the and you're in the Dale amazing part congrats road the to now down said make look is that to love,

more have I of kind and, questions, X X. I So guess, maybe X simple

so First what one, hedge are hedging currency the simple is dollar risk? almost you know it quarter. for hedging for on to I you hedging. But We idea in is now. Is your on forward last thinking there don't anything XXXX? talked strong, this about foreign want going

to with this will, meaning probably Board, discussed I just example, paying status have I quo, dollars. meaning may currencies, all, different every we're think going look as in of the will the month, but in to we're Howard, every our think week, we we for XXXX, be customers, and going many that we at stay transactions period, Canada every be if settling an not Canadian where us

We vendor have significant pay that in USD. we a

a clients is from are there days a XX customers normally in the there with and our funds gap So days. because that pay minus until relationship we'll we receive don't XX we or vendor have plus

themselves trying cetera, a may and going with where regular mitigate to we're perhaps make going et into at this I putting at we're we the sure business monitor reasonable we've spot think sheet. But that into transactions hedge that But undue this risk. But that on translation significant but this close spot point, nothing may we to strategy look perhaps going So got we're risk any any very hedging closely. monitor to sophisticated don't a to that FX at for to wash again, contracts very on minimize some the we're balance enter premiums the not it contracts, out. to or can't basis risk definitive point,

Okay. Great.

of do on each on question early the been last, in got I anything mean, terms And guys I a flawless but X you I what there doing? as second you but inside, out just than the got scale just you acquisition results, you Spinnakar the outperform on looking acquisitions, environment, you've there? bigger Are in outstanding out -- guess, on how from would finance that? pipeline what's the for the you've done of see bigger? thoughts what mean and any expected. generation in your QX them mean flow see you Or scale. pipeline the was what cash XXXX? issues Dale, performed I take, of X% appears to always have contribution one On the there's that great on know I small what do and at outside. you acquisitions

[ ], Can Howard. it repeat you Yes.

sorry. I'm that? What's

you can Howard, hear me?

a you. little getting I'm echo, I hear can Yes, but

So am Drew... I.

got background... Yes, the I echo you've in that can hear you, Dale,

I'm And going in. call to I'm call back. Go back right to ahead, going Drew.

okay, No. fine, All working It's now.

Is that Okay?

good. That's Yes.

Yes.

Okay.

yes, we're at them. Howard, looking So

We some to out the have same size we in of you'll see the a us, great over. bringing he's is fit as quarter-after-quarter. be that the actual some Spinnakar long for for But as vendors of the Spinnakar potentials turned list reporting Spinnakar. team keep and as best

So time you'll fit, be a see so pull actually on make me don't upfront mistake have before make cultural that's we and sure spend going the more to targets we a we to trigger.

year, as the careful to some and year. looking through talked by U.S., we halfway at have and ERP were is about But this being before, yes, it beyond. we've can. But Europe the in at We is we're our as implemented going be looking we're some the

a Howard, to the it's like sales had But you things the up years. So kickoff break X kind middle of down our we into I road, focus inward. just lot of last like said week. of

going the and lot look from of clearly, lot where So X idea XXXX. what accomplished acquisition And years, X we in same we're target the at a can see lot next A years, go last very good a us. vendors to of you take XXXX a pretty there's of target possibilities. the a we've

thing. same So

future-looking always guidance. ask, And news start encourage the The which model is X%. is Okay. to XX% growth news And in margin with X%, bad QX. more at your is of Great. and business easy pretty giving billings at mean, is adjusted SG&A good last it's right? outside do kind gross I the the then I really for straightforward. to us, model, your growth question, you you I in sticking for XXXX, XX% right And in gross always

a that's bracket. X% before net So XX% income tax you taxes, got and

at do my not of it going out that of back encourage are endorse see to you give here. -- back the bottom hitting things sweet what looking again, $X.X growth, it envelope So billion after-tax the that? mean. -- ask at simple I'd see or but the this do in type it XX% whack kind to about the something just I'm derogatory XXXX? if adjusted do just I billings XXXX income, good? missing a guidance to is I GAAP you right a $X.XX you you you for that you share stuff, same that do I'm net of for there about million way of net at I'm of else it's some that Or cover business. which, of more. looking spot that way, what don't income XX%, to a on line mean I that Is But want say $XX at when just envelope for Is know looking it? Or if risks I is of XX%, in the you're gross

anything lot analysis saying, as is Because in of You're this your and the far same not we're page." as of things. doing the just back "Hey, the a missing

software. If market the as you XX-some-percent we in look right, the the as at logistics and thing economic scale, our software, actual have we're good far so don't IT issues, we're

to even on affected in any emerging is So have do vendors launch signed, not the to -- have the us we and the to layoffs on stuff that they the that somebody taking rely it's of and we've pieces we already ones do different them and the they anything, channel out to some side. vendor it's -- up easy. that with up see that's delivery longer slow because is sales more all announced sizable If coming got really got marketing the the pick on side much. And a have if us it

But don't So pretty think some lumpy we view can't to as, we pretty it's let's it good that months have road, X status say, macro optimistically as have pretty see that far the now, market. looking that. at I kind look the we Not of along just quarters. next the at much X And a way. bumps quo, for some we right

Go Great. ahead. -- Congrats

just Obviously, I in terms add very also we're economic interest conscientious expect comments to could Howard, environment rate Dale's watching globally team. I to of speed investments going would would to of making briefly to continue make which the be any rise, kind just of in and VARs activity impact -- customers. end the continuing to that level indicators. We're of some our their and our we from --

to advance we're support actually for in in deliver So Level of certain and ability Level headcount services X our solutions our business, on bringing vendors. implementation X

So not et GP, cetera. that's making investment an that have adjusted may that an -- we're will to that in contribution EBITDA, immediate people

again, and is Dale do se, of we've the have to the per improvements and the made analysis compensation for in levels well, programs benefit So some back said, some as investments our in your envelope not plans people retain inaccurate significant things business. people XXXX also but in grow we

see would may slightly impact from back-of-the-envelope you your that calculations. modify some So

that So gross a SG&A you the that increase really much, to any without say. in growth very to do without freedom changing present gives dollars adjusted X% the may the but I bit, little -- would the billings fluctuate

that Yes, correct.

Yes, it's correct.

Yes.

just not what you for Okay. Great. shareholders guys outstanding on year and to Well, the from guys, doing. an client again, the but everyone you congratulate thanks team, are

time, turn from I of the Foster this Dale like to back further I comes question to the show calls. for conference Bloomberg. remarks. company next closing no Our Instructions] At now [Operator would

-- our things the saw customers of by on and in together. and call you, all heard and our focused releases, shareholders, forward. see great year. And vendors, to you operator, side, our going the our you on year like thank we a question you really this this positive in XXXX all the it's same, just XXXX. in We employees much we're stakeholders, team Thank Like as

ERP out Our still to market. to and execute to sales going implementation go we're is we teams along our build and front with continue on that center, initiative as

thank So appreciate it. you, and I

This concludes call. conference today's participating. for Thank you

may now disconnect. You