Climb Global Solutions (CLMB) 31 Oct 242024 Q3 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 third quarter ended September 30, 2024.

Joining us today are Climb's CEO, Mr. Dale Foster; the company's CFO, Mr. Drew Clark; and the company's Investor Relation Adviser, Mr. Sean Mansouri with Elevate IR. By now, everyone should have access to the third quarter 2024 earnings press 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 for the webcast will replay call also on company's be website. made available

floor remarks, For will management following management remarks open -- the for questions. we

over I'd for Mr. introductory now Mansouri to the like turn to call comments.

Thank you.

certain Securities XXXX. webcast introduce forward-looking are Dale, that statements to Litigation this of on under remind like I made conference Private Reform considered Act Before listeners the I'd comments call and

known certain actual and risks These company's the materially time forward-looking are to statements to risks assumptions the forward-looking cause with subject as filings also uncertainties could from these other from as to statements and results unknown time well These in are SEC. and differ forward-looking uncertainties in statements. subject described those that that reflected to are

undue being are any or this law, any place statements. to no statements, not date made forward-looking revision Except obligation only reliance the as on forward-looking of results of of required release by the the undertakes call. any which to Do company publicly as revise

also our includes billings, margin income supplemental including effective adjusted performance EPS, non-GAAP EBITDA, adjusted Our presentation net financial adjusted and of measures as business. and certain of measures, gross

to All accordance with comparable the non-GAAP SEC been measures GAAP have reconciled rules. directly most measures in

we charts other X-K SEC reconciliation to furnished earnings Form important and and the find press You'll information in release the yesterday.

Dale Climb's With that, I'll CEO, Foster. turn to over call the

Sean, you, Thank good morning, and everyone.

our acquisition levels QX while on financial all key profitability Climb of metrics, another for as we marked period across generated record of exceptional and growth delivering objectives. our

Solutions and of the DataSolutions Stewart initiatives our a the we great on sharing and our by platforms. Also Ireland X Software, team DataSolutions in Climb and continued September evening or was customers. the performance with our strong Channel Climb vendors Dublin and to Our core Ireland to execution rebranded in operating launch with QX, onto -- DSS, driven Douglas integration of

we as new both in with U.S. the Europe Line while double-digit Additionally, vendors signing Card. generated disruptive our relationships and strengthened partners, we to organic growth existing

the As new to DSS, Climb, is vendor acquisition, recent a a Guardian proven both IQ, provides than a Incident few. Wisconsin-based education over brings to XX XXX to that in including higher education America technology leader DSS and brief reminder IT Adobe, and K-XX of name North XXX services and in distributor and retailer products Go stores channel value-added across our markets. partners more campus a and

benefits look integrate our cross-selling operating and synergies exploring to identifying additional we actively forward -- are opportunities as DSS cost further and workflows. We look into to forward and sales

we quarter, emerging a the of robust Throughout vendors. pipeline through worked

align to with IT partner most solve challenges. identify most our the vendor in that innovative with We and market difficult technologies continue the today's that ecosystems

to more combines signed evaluated expertise we quickly but QX, leading to in mitigate innovative provider example, of -- requirements. agreements For with audit signed XX one cybersecurity trusted security September, highlight compliance A-LIGN In only than by is them. announced technology with organizations. while X,XXX only solution compliance a regulatory a A-LIGN, agreements X management we of deep that complex and navigating risks, partnership global wins. vendors, like I'd these and

needed beneficial businesses our look forward A-LIGN, our relationship We building partners compliance. ensuring continue audit scale with to channel globally. have move mutually we resources are partnering as By with we from strategic A-LIGN that the efficiently to to to a

a our Europe. scaling topic first in overseas, On in toward steps Western Germany, market our key presence the took recently of we building

we many connections. As in Europe local Western deals trust stated are times, have on and built

a kickoff, more the team We ground these be building recently -- branding a history, on and have company's a approach the to we For completed relationships. committed competed start and comprehensive Climb the first time in on this in of region. focused the dedicated nurturing signaling

are thrilled DACH in the building to Germany We Climb's presence forward launch initiative and look region. out and this to

went we As with new we the quarter. before, mentioned our during live ERP system

While systems, expect time, significantly by operations and to both platform while data to new functions. with North real-time other finance, overseas, in sales we has is across better our enhance our early this -- it America operating over it access and providing

We growth footprint. global anticipate continue support decision-making realizing our capability scale we operational efficiencies to our and improved as to

Looking that our drive broaden culture. service offerings while most leveraging and, geographic global footprint, to organic remain infrastructure targets actively exploring focused our and enhance our align ahead, on solution growth, we high-performance our importantly, with M&A

execute and improving additional our unlocking we anticipate global further synergies platform. as operating our leverage We across acquisitions from

These M&A, achieve another initiatives, performance. and a accretive to record coupled on note us enable out with our of of will strong proven close year track XXXX record

With will financial the to I Drew will and CFO, the Drew? turn Clark, our call take through he that, over results. you

commentary A morning, we of reminder comparisons variance specified. Thank financial everyone. quick as otherwise our refer quarter, unless prior you, the All to Dale. Good year and review third quarter. the results

performance start mentioned Furthermore, as operating measures Sean of as and the of call, we business. our supplemental various discuss of the metrics the financial non-GAAP at

the billings, As XXXX to Net million XX% in quarter third recognized year-ago our to $XXX.X AGB, lower press to reported the which basis earnings $XXX.X compared on a increased in a $XXX.X sales million, million sales net million the of compared greater quarter. release, or adjusted XX% to percentage than of grew gross at rate in increased quarter. in a due to AGB $XX.X

X year. AGB new to and the organic of and existing of growth Growth on acquisitions as from from our as vendors last on XX contribution attributed well July DSS in was DataSolutions October

growth combined quarter. $XXX the XX%, of year-over-year of by XX% orders representing DSS the increase and AGB, positively grew was in VAST by $XX.X growth million, business XX% impacted core -- the of while or our XX% DataSolutions which several in and for million

adjusted in representing or and Gross North profit, increased compared the Again, X.X% million and represented million from $XX.X DSS both vendors increased as driven percentage in GP, gross profit and growth billings quarter $XX.X $X third to existing million. Europe, of increase, was or $XX X.X%. which compared the the DataSolutions, from to organic or XX% Gross as million the -- to XX% the to America of growth. increase million by contributions new XX% well $X a of as

$XX.X $XX.X SG&A accounted quarter million $X.X of expenses with variable the period of were X.X% sales period. the growth from million decreased for percentage for in compensation growth and DataSolutions overall a to compared in attributed the in year-ago operations. as along AGB SG&A in the to X% to to increase, same and million third XXXX. compared SG&A DSS AGB the the our of

increased third or million than diluted $X.XX million diluted Xx to to XXXX or in $X.X the more per share the for Net comparable income in XXXX. $X.X period share per quarter compared of $X.XX

press with net income more related also to the $X.X $X.XX was or our in consideration DataSolutions. to per to As share income million in fair million change contingent $X.XX net impacted a increased than referenced million diluted Adjusted for share $X.X acquisition by a associated value or compared release, $X.X year-ago charge Xx diluted of per period.

earnings by in company's year third to diluted $X.XX quarter the impacted XXXX was negatively of The the compared prior FX quarter. per in share

well driven DSS in increase core business, million year DataSolutions. increase in increased growth EBITDA both organic the gross million increased contribution and $X.X represented or as the was XX% a EBITDA XX% percentage as by Adjusted new from points and to effective XXX the Adjusted a profit XX% prior period. which compared as $X.X or $X ago margin to basis the million from million XX% quarter our to quarter. the year of aforementioned $X.X existing third compared in The vendors of to in

Turning cash capital million to sheet. Cash the decreased and million by $XX.X XXXX, our $XX.X $XX.X during the of period. our to of million to at primarily XXXX, and The cash working cash the equivalents as was timing XX, in collections as were receivable compared closing paid vendor XX, while million decrease September payments. of December on of as balance $XX.X acquisition DSS normal attributed for well

XXXX, facility under $XX no XX, $XXX,XXX of borrowings JPMorgan revolving we Chase. with September debt had of credit with outstanding outstanding our million As

of prior with dividend Directors Board XXXX, our a and our per quarterly quarters, XXXX. XX, payable stockholders of $X.XX November as November share XX, October to declared record on On of common XX, stock consistent of of

Dale's expanding global presence Card remain to plans while Line comments, the our our in drive our organic earlier growth market. unchanged, companies To leverage with echo most innovative

continue drive M&A will to we targets strategy in our sheet balance new and strong Europe as evaluate Our beyond. Western

of through the our achieving maintaining results XXXX hard proud and of these year into close in dedication ahead. and momentum We're the forward team's look record this work to and

our keep I let's Dale team, reinforce As and continually to climbing.

from This to We'll those open concludes now prepared our to Operator, participating up back it you. questions in the call. remarks.

Research. Vincent from come will question first Our Colicchio Barrington Instructions] with [Operator

line with in XX Yes. Curious if top overall Nice your vendors grew quarter. business. the

really Yes. them, driving but I the XX organic say all core what's the on them, growth Vince. side, of wouldn't of that's

some So new into XX. the it is entrants have -- we still top

you through more If at go them Line XX, look the they -- Card. XX as you the down of there's

up. jump they'll depends. And So it

you historically space. If into public QX, the sector look at heavily

that the out the increase are area, that on ordinary. focused vendors of we'll that see nothing So in but

And to better any that curious your if that. of I'm segments than technology security technology assume lead there's segments. I'm continues or performed curious. I worse drive outside expected amongst growth

Yes.

that As the the Spinnakar, we It's brought vendor acquisition U.K. Data, and on about it. that VAST with Drew to the mentioned, signed side we U.S. talked a of us

We're Canada. in to with of out a starting the come pickup order first our States. see had America and sizable in North So

that's to So be going lumpy.

in. So talk you'll we'll the that orders as see come that, about and

is is name, a security retention some But their still they're of driving going do of it. outside to of data, lot kind swath security it's backup, that, big now play. security And of whether such it's everybody in having of whether security a

spent come we XX that And amount still But some have us type too of of because security evaluated, is also product. in already the just and is cybersecurity with them -- launching the on we or toward the vendors -- we in platform were pass and security and much it's of us in our we've out those of the -- ones portfolio. that to overlap, probably we flair the onboarding X/X that ones have time just

more And levels were do AGB adjusted SG&A level? that Or sustainable to Is to to plan that you relatively levels? efficient. normal investments Drew, relative will your make bring that a

percentage that stated level Vince, which we've from to that DataSolutions comes Douglas our a from of and would of SG&A with here really Stewart that Part AGB like be we from, expense benefited scale as X% to is we as both in Software. from time range. that Well, and goal, leverage, time

flatter to continue rate. growth continue invest particular to in growth should it's teams, markets. But we'll AGB dollars the So in a be it's supporting vendor, renewal additional in salespeople whether than again, teams, that the

it time, in growth that incremental a over to range. continue as So but be dollar there'll be percentage, X% should hopefully

an for priority And a acquisition? Dale, DACH will the region become

about talked team from probably operations. I've X couple Gerard It based on where And runs Brophy Europe are competitors that vendors of is. of X are where and our the based GDP not. last -- Yes. quarters. to it's things, it looking just asking for market some on the analysis our a or go of us

to an that going actually that sell void we're fill with So tech to. emerging we

So been on GDP we're DACH have the potential big ground we'll through got Martin ground and with acquisitions expanding region, in keep guy the in the great vet market And at of at. the also help just the looking a he we've will us Munich, on there. looking and some Bichler

And acquisition here? pause another do a should of somewhat before expect you we

of We've over we've on the we've look size. if it's Yes. all really we're always doing, years. said the used you to or No, per X X year. at it's doing cash acquisitions. same been depends on on planning the XXXX, X X But last much what our that pretty It

will from Instructions] [Operator question Bill Capital. come with next Our Tieton Dezellem

super start with small just me Let a question.

You this severance? that of What lease acquisition-related please? those quarter, activities, be $XXX,XXX In costs. happen to did were had termination,

costs? M&A the of terms In

actually those the Yes, $XXX,XXX, costs for? what were

Bill, services the with professional transaction. associated Predominantly,

opportunities. had we XX. we expenses then July as as we And explore we some some associated had & So which the to investments earn-out. DataSolutions closed up related Software ongoing continue some expense with on carryover Services, their to We wrap Stewart Douglas

Great. future be just or choose would much there acquisitions, efficient under you anticipate really -- you And umbrella and closing you think about that they generally, as would and as is That's them helpful. terms your of run facilities, there in Or as them to be? bringing cetera? et letting be severance are

little Bill. The a we of at question, is Yes, and look a every good -- -- that's every course, if acquisition different.

the Sometimes, geographic vendors at what we're board, where focus staying take then you their and culture fit territory into. and then you that on go, to on reach sellers have like look first their a they're the going a a like within strategic to look Climb, maybe not

going moved have on a DataSolutions that execs the So at in some have if acquisitions, with we're on play." of last one top but in operators Ireland, had the board, X and for X we never we stayed big gone tier on of I we've the and saying, it's our that look -- "Okay, then stayed to Michael with as severance deal he retired. months The if

on that Germany. don't expand different, want can it. because fit business wouldn't We to go are for big to core we're I the that that not going but and It the take, that going cultural with continue I be a company part culture ours a see severance have just in to Because be we're all we running a what to good play a of they're guess, a us, the But just have to doing. people be right? wouldn't if in we want and don't run fits

And they acquiring original see and starts North expanding our rest moves the as think from and can of globe. technology the America plan of in through we

So able the of resources company launch it we be use there and we just to very the to quickly acquired. want

end in just helpful. a the knowledge part ends mindset process or be you likes Dale, the opposed that your that, to up you fear people approach organization? up a being that and that the advantage because that's Do as of will very deals an there seller closing gutting find a of more acquisition that

Yes.

super just target. the open I and potential -- my I'm Here's -- with

acquired with first Carlos our acquisition, the us acquisition. that Interwork we XXXX management American North are from of And vendor runs and our still part team them some of team members

is of said, them let be X call. the you. my companies, us I you Can "Listen, X people still out just reach don't and start to that little want or tell higher sign pretty these is #X vendors to was and to to to look acquired with that #X get challenge?" And the I acquired on you really of the and ask, you happened?" But what America, build "Okay, targeting, with come are for state local experience them ed the explain vendors what wherever different actually getting it team Europe, you? members? of North I'll because the the if experience and a challenge much your located. of relationships that we because when ones in because Climb was you K-XX wanted your take out the What's What we're States, have are a and But into practice. rest and your to DSS market

are and most course, lot of in of Northeast. Of them the Silicon Valley the them -- a

and have build actually your beyond. sell that You can Europe to region in and them into then them you convince

#X that's challenge. So the

their can They North a What in If into that's sell. have to we contract, already fit #X it take America challenge, business a with more the we things launched and we because want? salespeople sales global does teams. want

much the Europe. pretty that's acquired So that the of we've in across board companies

reasonable been make other that quarter the stronger has the quarter think would helpful. this year that would be larger fourth quarter than meaningfully very it about be Is will the so quarter you quarter your there of largest anything year. historically, to this this guess, will then than meaningfully is -- That's fourth Great. different? the And Or it any of since I year be far? assume

budgets, extinguishing licenses right? people year. quarter fourth -- will It because history, the are new people the company, In into going their renewing is just Yes. are

XX Douglas June is which states -- and of of as lighter their see market, up at, building fiscal their the You'll year look education they're XX. Stewart, quarters to the QX one their usually you if is

people best months, building X or or November that -- will through to see pick are and up July their going buy, you June October. they're up then So what that

to to on a So yes, or SaaS to be well. stream We coming is like or going that strong be are QX, the licensing. it's model get our renewed. most say, reoccurring up whether it's as we us, that are of annuity And it's going see renewals for the renewals not

anything that. QX. don't than of lot see We have we different momentum going just So into a

be still I'll with we're struggling honest you, ERP. our with

and them and on XXXX We the has the end we'll probably by same get a be, Our want not rolls almost efficiency think "Yes, been our this to operational to quarter that." eyes everybody their and done are team to job. say, go there of efficiencies done where we've Our page. we great into

The our by of good thing is they'll of all on outside companies Stewart, the of ERP and year. are on Douglas end the be

please. question, additional one then And Great.

general et quarters, some be steady, et question continues to For just whether quite market there the time cetera, several is now, improving, cetera. softening, macro holding

quarter you through characterize what seeing please? third here and in were So would October, you the

beginning the need of right? from to and ever different, to vendors. it strong to look when And us vendors another we they because as pipeline just us. That coming take stagnant they coming. they're route as been try of vendors at the I'll So Are has onboarding come kind market something

that's vendor And on us as as ready not channel that says, attractive my "Hey, getting I'm build to a practice. just to

the go-to are guys You distributor. emerging

still we're seeing So that." do of that part Let's it.

the we're it QX laptops We to The have endpoint, happen we're side XXXX. logistic this don't have other refresh is and of with goes tablets not of don't It software, supposed about has It's talking this we in stuff been all -- it. Bill, other -- that didn't and issues. the happen. in so market

protecting without will their in say, hurt going bit talking they're famously can't Picked I Canalys help us They in their about, their without go but Drew us, because hasn't up was recovery a QX. go have protecting without some event It to They the that's "People endpoints." can't can't hey, securities. last little it to at and week go QX. loves systems.

workflow all they have their as workflow. they it's have an able whether on-prem in hybrid be And to the the that protect it's a workflows, to or even stuff cloud,

macro characterize you as being reasonably then environment just the would strong your perspective from alone? so And

got From and don't our it we it's you what? with I [indiscernible] a look in say results, product will because strong help a "Okay, know just still some where them?" is us [indiscernible] in to we laptops sit that I supposedly very I've all the And everybody on right comes, have deployed. and saw see downturn. coming only it you it, do as if take will it's really QX refresh of new protection that say, should my [indiscernible]

now over I'll back have this appears further program additional Dale the no remarks. we or any Foster It closing time. at questions turn for to

to all well. to as our forward, we of and we're beyond Thank Climb still as I and the you, want on that's that and America expanding North in to just ever focus thank as And is core, company stakeholders continued really emerging operator. premier technologies, launch new continue drive looking which Europe our

thank it. So you all. Appreciate

and gentlemen, this today's concludes Ladies event.

disconnect. may You now