Climb Global Solutions (CLMB) Q2 2024 earnings summary

Executive summary

• Achieved strong year-over-year growth in adjusted gross billings, net income, and adjusted EBITDA for Q2 2024, driven by organic expansion and recent acquisitions, including DataSolutions and Douglas Stewart Software (DSS).

• Net sales rose 13% to $92.1 million, with gross profit up 36% to $18.6 million and net income more than doubled to $3.4 million ($0.75 per diluted share).

• Adjusted EBITDA increased 48% to $6.9 million, with effective margin up to 37.3%.

• Closed the $20.3 million acquisition of DSS, expanding North American education sector reach and adding over 20 new vendor partners.

• Launched a new ERP system in North America and the UK, with global rollout expected by November 2024.

Financial highlights

• Adjusted Gross Billings (AGB) rose 31% year-over-year to $359.8 million; organic AGB up 19.5% excluding DataSolutions.

• Net sales increased 13% to $92.1 million; gross profit grew 36% to $18.6 million; net income up 148% to $3.4 million.

• Adjusted EBITDA for Q2 2024: $6.9 million (+48% YoY); effective margin: 37.3%.

• SG&A expenses were $13 million, up from $11.6 million; as a percentage of AGB, SG&A decreased to 3.6% from 4.2%.

• Cash and cash equivalents stood at $48.4 million as of June 30, 2024; working capital increased by $2.8 million.

Outlook and guidance

• Anticipates continued organic growth and improved operating leverage in the second half of 2024 and into 2025, supported by ERP efficiencies and recent acquisitions.

• Expects increased ERP amortization expense in 2025 to be offset by operating synergies.

• Maintains a robust pipeline of M&A targets, focusing on accretive, strategically aligned acquisitions and ongoing evaluation of opportunities.

• Management expects SG&A as a percentage of adjusted gross billings to fluctuate with sales volume and investment levels.

• Working capital needs anticipated to rise as the business grows; current liquidity deemed sufficient for at least 12 months.