CLMB - Earnings call 3 2023 | Climb Global Solutions, Inc.

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Operator

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, 2023.

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.

have which the at was p.m. should earnings quarter approximately everyone release, press issued now, access third to XXXX X:XX By yesterday afternoon Time. Eastern The section Investor website release www.climbgobalsolutions.com. in Global at Climb Solutions Relations is available of the webcast This company's on website. available the replay call be will also for

Following management up for your the remarks, call we'll questions. open

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

Sean Mansouri

you. Thank

the this considered Dale, listeners Act that made under on remind forward-looking Reform to I'd are certain webcast to conference Securities like statements introduce are and of could known forward-looking differ and in These I risks results Before call statements. uncertainties actual Litigation Private well statements subject materially that comments certain assumptions forward-looking and reflected those these as unknown from to XXXX. as cause

risks only results reliance date are that undertakes no made forward-looking of any the company's These company revise also publicly or uncertainties from being the to to any Do other the call. the revision release SEC. on undue the of Except required to forward-looking subject not to time law, and obligation time statements place as are of as by statements. any filings in this described are which forward-looking statements, with

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

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

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

Dale Foster

made during growth and card like DataSolutions look to to quarter DataSolutions. the grow At good in publicly and family by period us as the our market core on in acquisition Climb organic team a with new the our And our progress Sean. of working enables efficiently steady the share you, the ahead. welcome of this acquisition level, deepen high morning, alongside team reflected another everyone. line forward to profitability recent to and We Europe. I'd Thank months initiatives

mentioned, the technology commitment of vendor selecting like Out highlight the focused a brands our by in in of innovative companies signed the X of wins. we these XX As is I'd quarter, to our quickly market. them. most line third with evaluated agreements we previously have we a couple to only card that

pioneer and data This additional another in First, center operations. to we will and data line solutions. center to represents artificial high-performance the a us center collaboration product to enable partnered optimize our channel in forward with data solutions deliver GigaIO, intelligence step cutting-edge

to off leading that Next, solutions with the secure organizations software provider tools integrates Security to security and -- release DevSecOps workflows, a relationship we allowing directly cost compliant of and cybersecurity quickly market Compass, and existing with kicked a effectively.

We the collaborate are vendors a and bring mutually with relationship way. of building each to products along beneficial excited market, these to their

solutions early partnerships vendor leading including to Citrix, specialty acquisition with of cloud such a as U.K. DataSolutions Climb, sales XX in deep distributor brings security October, closed of of headquartered Check security we both of relationships to DataSolutions the -- a few. and Neustar Dublin, In Point, focused and distributor in network Ireland the a Ireland, name

coming XX% robust their DataSolutions revenue with recurring from to partners. existing revenue a carries than vendor XXXX of their relationships, fiscal addition In base strong more

as unlocking be additional to look earnings potential forward EBITDA. immediately ahead. acquisition we opportunities to this into and already expect the We the Climb adjusted months DataSolutions systems integrate cross-selling identified operating to We've in and accretive

as to divisions build How, known rebranding completed Services. Cloud to signifies commitment operating unifying announced Know truly team MSPs, technical we ManageEngine division, our migration, clients platform. services one as our for and respective resellers about arm solutions Shortly end to such This support platforms a more on management our user customer uniform Climb our expanding comprehensive and services global our after the the to and their Azure, acquisition provide growing Currently, rebrand the our base of Acronis. delivers brand to professional continued service Microsoft across a and DataSolutions, services of modernization, We're excited Global under globe.

uncertainty, positive. sentiment broader the challenges touching macro for and continues remain customer the Quickly vendor be and on next environment. our strong, Despite and pipelines acquisition year global to

economic we We particularly softening landscape evolving potential hardware the in sector. in continue where the serve, and the competitors experienced softness to monitor markets large our have

positioned future as well are to global vendors However, scale footprint. our growth our and still customers we and believe we to drive value the we in

game. As always long is focused I've team mentioned before, the on our

acquisitions a we will ahead, profile, that strong as immediately business M&A With to America our we can selective align accretive with targets, and line opportunities as culture strategic balance financial add our and sheet and further we pipeline remain as our bolster evaluate pursue that strategy be our goals. will a diligent our both and robust North overseas. we Looking of card are scale we in in can to

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

Andrew Clark

And morning, Dale. you, everyone. Thank good

commentary like variance comparisons specified. remind quarter year As results, we to quarter review and prior would everyone all third our financial refer to otherwise the unless I that

in. right So jumping

AGB, in is in million quarter. press or adjusted the year non-GAAP gross which to billings, X% our release, reported As $XXX.X million $XXX.X ago to measure, earnings compared a increased

new vendors. XXXX from sales $XX.X net and of the organic increased primarily to $XX.X quarter addition, compared approximately In million X% to third growth which the existing million, in our reflects

As to in leads metric sales the a In therefore net quarter, from products, as to as GAAP. is larger maintenance of product of of third by adjustment sales, are to growth sale purposes which of had calculation true sales. influenced we of cloud increase focus the security, the we cost and AGB respective the mix under AGB net an line the before, top and convert to reporting recorded related and sales for net on AGB have financial our adjustment we communicated net

the $XX.X taking the top was organic and America profit North in vendors primarily increase growth X% driven of early from XX third in EP, existing to advantage Again, year Europe. by compared compared to offset vendors large several the $XX.X discounts, was Gross period. quarter customers our by ago new This million increased in million. partly growth to pay or

expenses with taken the gross of year compared in percentage period to in approximately increased $XX.X of sales example, as a profit the levels net as XX.X% year. XX.X% ago For consistent compared billings EP, as quarter were compared increased more adjusted had a month September, the in million third for $XXX,XXX XXXX. in of and quarter. SG&A we X.X% to Even the to remained to $X.X prior million of in at the percentage EP gross same

previously growth. we other to earnings in infrastructure stated calls, our to investments drive As the future in was increase primarily attributable

X.X% as ABG was to the ago SG&A of a in percentage So year compared period. X.X%

AGB in to diluted in or continue quarter in As scale $X.X to as million $X.X before, $X.XX period million a operations to our XXXX. diluted we've XXXX drive we committed and operating global we to X% to as share third $X.XX the compared the per per of comparable increased decline income expect for share of XXXX or SG&A percentage leverage. Net

in impacted the press the DataSolutions share exchange were customers $X.XX for earnings by and EP per $X.XX year. of third in associated per our acquisition and mentioned fees foreign compared of As in diluted $X.XX in share taken the release, to with negatively by approximately quarter XXXX prior

associated driven infrastructure was to in EBITDA in of primarily million. million of compared the XX.X% our and year-ago $X.X third period. by was with gross the or DataSolutions. partly Adjusted quarter and costs XX.X% the investments growth (sic) compared increased in EBITDA The $X.X as effective a acquisition profit, offset to Adjusted margin, the increase XX.X% X% ] [ aforementioned organic percentage to by

discounts, the and Our effective as by impacted customer drop-through margin referenced in increase pay previously. were early

payments. metric Cash equivalents increased XX Turning period. benefit to receivable December increased our which the were $XX.X in cash balance $X.X was working is during XXXX, our below of compared and million in of timely of by EP days. capital the increase vendor receivables, and The maintained to million has cash September XX, timing attributed million on DSO collection U.S. to primarily collections on the The XXXX, while sheet. $XX.X this XX, our

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

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

continuing strong in domestic solution markets. We new quarter our accelerate new game enable closing our in continue will execute we to expansion the to offerings, us plan international opportunities ahead, acquisition our a Looking expand forward customers to and into strong explore and and liquidity service fourth beyond. both markets. reach and This on will out position to and our look to note XXXX leverage

This concludes our remarks. prepared now

We from to questions up call. will for back now those in participating it you. open the Operator,

Operator

Vince Research. comes [Operator from first Colicchio question Barrington Our with Instructions]

Vincent Colicchio

categories Yes. overall couldn't curious out any comments October. I just that, balance expectations slowed and in want hear started is well versus he how until Dale, Drew's said vendor I your the the the talking call to if Having that sheet. trending very business in quarter about

Dale Foster

Yes.

And the a and at -- year by product a had categories. we -- territories government pockets we we tough we pockets. from at year were soft, they I by XX. looked looking Q, of some but the the mean, Just before. couple had really some September have -- Typically, just had not But that fiscal were comparable ends we

just had turn of is it to can that -- we on the we look the and quote teams, going that DataSolutions QX. because kind Vince, So of we're We those I good order does what things volume both mostly into of looks we're quote -- besides the over sales into. you, and years the tell X like standpoint. QX the our marketing vendors from we've measure, integrating a pushed some ones that and track can signed some what

haven't them. noticed But we

coming our timing at new vendors we're amount able looking that big of us. at the many launch X us are the and at XX. X to number are evaluating pipe Like one biggest think yet not it's that It's signing still that to in pipeline. We due coming vendors them. have at of quarters just a We of I of of

And is of What limited mention the push card. about last vendors publicly thing some we to keep I'll these is we about are talk don't talked trying nonperforming vendors we flat division really in vendor a I to our and that think line our a at signing called they transacted, more Climb our sales access or but teams portfolio. get level. core they go Elevate. like get They to don't And of marketing performing a that and

money put our territories. them team the really Elevate So to that, they are Then going can other market we or that into fold. to hire But Climb when the team. into we into stay cover still transact they're ready members than bring back

Vincent Colicchio

XX vendors And did the perform in your the line top rest with business? of

Dale Foster

had same Those of some They had We board. as already did our ones across quarter we our larger that in about And orders little driving we Spinnakar talk just are QX that with and flat the we the our got customers. some are can side well. a that. of stuff that the the And September. customers give last in have them on week in those didn't pushed into

Vincent Colicchio

help of maybe 'XX? contribution any you DataSolutions, on then QX expect and what type in revenue And on

Dale Foster

Drew?

Andrew Clark

info we'll point, QX call. Yes. some into we're not try that At Vince. But to and we the provide earnings this share information, as going get

Vincent Colicchio

growth Okay. so your that the assume quarter, for the Is organic And from correct? little I acquisition. came then very -- Spinnakar

Andrew Clark

August a the have The in did in Correct, little a yes. year them contribution very big not prior and very this quarter. We minor contributed quarter. -- Spinnakar in had acquired

Operator

comes question Individual from Rue next ], Howard Investor. Our an [

Unknown Attendee

another Can you me hear on Congratulations quarter. okay? solid

Dale Foster

can. Sure [ ]. Howard Thanks,

Unknown Attendee

questions ask acquisition could I the get of more DataSolutions the If couple numbers. to bit just Sure. a on detail just little on kind of a

Or And for acquisition? is and see is there's I amount a the that you over of without like around paid amount, post-closing a it, for that million potential earn-out earn-out. more XX% So then a substantial as that giving $XX it, potential? a little

Andrew Clark

the XX% [ XXX% to of Yes, range, earn-out would a Howard ]. the has EBITDA That number. be

consideration XX%. the going So in it's of filings, the XX% be we've about it's going to terms to disclosed be probably -- in to that

Unknown Attendee

Okay.

acquisitions million around fiscal you Is EBITDA going paying you're So the -- year at XX in normal a for with $X.X of for that March Is the of pricing that that, Xx kind kind way EBITDA. of you? forward? look and

Andrew Clark

premium in from We Europe, likes we Germans bit that, due were get the fortunate probably to on buy over as the little of multiple. Germans, discount the the say, to French. from the will French a the buy a have Dale before, transactions But said EBITDA to the as fact

expect a a Europe, the would be for So and thought Western higher slightly we fair basis we to on but actually both transaction us. in than that go-forward multiples sellers it was

Dale Foster

], And [ in just might at when at the get bit And we so and it's know trading a course, it's North of look where, little we're we to -- we acquisitions, little America, more. Howard if pay more we detail, at. typical a look that's

We This at the not were attractive, looking into look vendors. the vendors only book the And and them in they came a that profile. some lot pushed Irish there's of to There's were they they're but concentration it. also that customers. market, look at multiple that for margin as out basically go on, if because the discount of a being distributors concentration, we for at a their then out things from and also, one have running company was

bolster one of we out the Citrix should ones the the that's go well, a and want as X categories. same take the page, And Microsoft have in go our efficient it delivering we one Citrix. effective to and the -- U.K. very out with base. a jumps with in product the an X multiple distributor as And jump that And those be vendor combined, of Tier that to do that can almost to to we and way companies products customer

Unknown Attendee

a of that. one kind on just then And Okay. final

they've adjusted on looking but not forward their give I you been increase in if in, a revenue? the billings the as QX quarter? But realized them for have $X kind in billings, QX, perspective in of any us gross what for -- DataSolutions And that QX? of QX? increase Is for that $XX added or million that a had your didn't your gross if million is you can you net amount number. fold adjusted a So that in

Andrew Clark

Yes.

bit So [ QX, the be us terms if in of for of cyclicality and but good an They'll exact line. front as terms little a said Howard in they EBITDA, necessarily accretive calculation. I and very, in there's us about business. the ], accretive, very they'll for And at top moment, their at accretive it's again, looked want -- to have be numbers be be obviously, of you will the going at wouldn't in of EPS to I don't to a talk me, transaction those ultimately. we've

Dale Foster

with a not have some because I being billings, think $XXX it's some core fair them gross netting number, $XX over month, adjusted go million they business net sales their but around also they But bringing cyclicality. a we'll to million [ Howard the then of have -- process. on ], have the vendors. some top in throughout But

in you Board talked vendors market, early to the that the we presenting to for they have and they that And they and the for some moved XX were it side, there. When approval, the they we percentage the and they of gaining in this U.K., Irish about there. the and is market -- start Irish percentile. the at look But share then the in have of share very are in X.X last market releases, years that quickly the strong wallet

fix -- in to be product product space their of where So tend they one leaders of that go, the they mix.

Unknown Attendee

having is you And that it the outside kind see Or for... do of that where legs of stops U.K.?

Dale Foster

of can Of we found top this contract contracts say, take they're ship into a brands, at we the take -- to expand a in country, EU and XX Europe? look since They EU that course, And we easy their X states. other rest Western look at their okay, really is the some -- the it's already company. and unique an they selling we into things are and

for easy So it it makes the happened. after Brexit us

that first common. If we I do for it other for I a yes, acquired. expand, was we already to to our Cato Orca. that's Citrix of just contracts and some a potential, we top So big of of contracts. we'll the one our us were and Like vendors to some this is our and and their in think on would conversations, to we've look that. that team existing But of be think But them had some looked places, able added

Unknown Attendee

huge Dare for I a Yes. say you. ] win [

So environment. million, broader that about you a are the big my for thing. which your year's second and terms from QX, And words QX question about quarter. of macro QX, DataSolutions billings which gross uncertainty, you strong the kind above billings, $XXX global generally the of obviously, is exceeding in so adjusted of step-up, knocked looking your other just cover in I'm that billings? in the in at million gross posting your the gross off last there's with last in press strongest year, But release maybe number challenges it's had confident $XX adding adjusted you obviously But a or seasonally is issues, number kind adjusted with exceptionally in ball

Dale Foster

You're talking marketing to a sales guy.

I'm performing. yes, report. a out the ], We have already confident, his as team very in what is [ put October Drew flash So and team numbers, Howard

a we we for because how many target on a on if that I'm -- takes quote it there's manufacturers. order get can one going I I obstacles QX. couple as our don't in know as So in Like we'll volumes getting But there on dip the everybody things -- track do track stuff to depending waits. be these the And vendors track. certain quotes some to push far know to that our just we we That's be see -- lot to be said, we're so goal we could data. of of We that. yes, days comfortable wait -- because last in. coming

Unknown Attendee

congrats I another Well, execution. on the Great. solid focus on continued performance and Great. again love quarter.

Andrew Clark

Operator, can you us okay? hear

Operator

Yes.

my the working clear know of for side. coming end You're back some I our on few are listeners. people a on

Our next question Management. Tieton Capital comes from Bill Dezellem with

William Dezellem

surprised just Drew, questioner's pay last garble question, was early they prior the indecipherable not question, relation rates discounts, early your more pay of say, I to the this are that additional you I'll my difficult question, side. Relative interest in to on doing am that higher answering year. than customers year pay came and as there to or decipher a lot discounts this like early your were discounts with did last but was only through

raised behind the pay there, early what's scenes incentive for you have Or your discounts? So please? the dynamic the

Andrew Clark

you me? Sure. Bill, hear can

William Dezellem

Yes.

Andrew Clark

Okay.

So we the a And that the time just team, dynamic his and to large frame know inconsistent. understanding a that's very Don't number why, to now historically they for a They're they to traded adhering initiatives. brought different new whatever the They're in pay not or focused is motivation, him that his to DMRs years our early ago, on a we from discount. have mandate but on pay been early one are real discount. CFO have about as X.X of reorganizing team. private, who's of not was publicly forgo

again, XX% their time. have it. was were it balance but rhyme XX% taking reason, inconsistent. So very probably full or I what of We didn't now taking sheet any to don't maybe know, but They now. look pay of financing early they're they're advantage or the taking terms like, It

William Dezellem

least XX of be behavior in terms comparables the months, looking assuming next early discounts. that Is of increase, same course -- at you bit will kind are the have from we've in a how won't continues that even. that, -- them, it? pay more at the And So of we then over

Andrew Clark

were we've taken to on of of Correct. able pay the despite billings were of as a level very our profit at DMRs. level early And fact consistent percentage positive maintain stated, a adjusted couple gross by increased gross key we we the as a that

William Dezellem

the Great. door in Congratulations getting money early.

Operator

[Operator next Capital question Bob Our is Management. from with Instructions] Sales LMK

Robert Sales

quarter the you you respect through broke as the And questions. the Two my you walking in with for dynamics quarter connection, end to of really up the really of macro. were --

time hear, my and, the So what billings? dynamic, has a growth little out, of just you bit saw talk resulting gross us the growth the X% just you one for can played that those and it didn't more in question and organic is, adjusted about

Andrew Clark

quarters, before, didn't due experienced you growth So many the over of Bob, the dynamic, despite a hardware. adjusted it that hear our nice predominantly in billings distributors had past we gross to larger "headwinds" if mid-single-digit several

XXXX, earlier, the impacted Our the going meet at early in of by Obviously, mentioned fairly the at we we'll pay be is fact line. gross profit to quarter continued taken as quarter by what outlook Dale fourth confident the discount several and -- from previous that kind DMRs. be remains, top at expect least results

security the seeing execute and hardware? And to into that but economic long a confident space continue We're again, we're little right, deliver to that, the Will maybe trickle bit, we have that term. we're not some of lot and data we on a surely. can starting headwinds down get from but center see slowly

we've getting we're next the game past had that still bullish opportunities XX Some execute quarter, the we'll are to continue plan to pretty over fact but quarters. on pushed that the the

Dale Foster

track we that are we quite And hardware Bob, earnings their they've CDW. a -- bigger sell They and few that like already component. have put out, releases public, customers a to we have

piece moving last of of years, of the went the the some and couple when everybody hardware to center through we And remote play. data times, the a

side lot say the What sales is we're software. a on things. there's of of we still XX% So hardware

is mix on we're and portfolio. having that So on security of vendors we on a vendors ebb our already us One always have different coming lot depending quarter-by-quarter from a standpoint, that we see count we different so the at a product thing and many flow. security

security little that way. continues is And be a So to strong. everybody doing different in

that marketing their that some about potential products, already in products. the built machine kind Most starting with help AI on off learning our have really their to comes products. that's of or into to side going already really strong them but or kick division are it then CTO acquisition element that's of in they're a a talking us push to going now vendors the With of DataSolutions, focus

data lot just center the software, IT things space, So security, of good our X top a that's and categories. in

Robert Sales

second Great. It Irish And standing. and company run of the DataSolutions in that of the an, whether situation understand my I I of the to that on terms a because Irish-domiciled any wanted accretion. acquisition. given advantages then presents home the it's is tax assume, question there looks like

Dale Foster

at look that ago. to did we're -- We -- acquired potential for they looking getting that now, years ready because have we'll when right Yes. and we entity Brexit had -- CDF X we were an a

look savings. at So we'll believe. where I that. Irish look at on is The at We'll we XX.X%, can deal tax with tax the business

that, we're the yes, we'll from of that where So at orders they the continue take the back countries and -- start of look advantage transacted where then U.K. to into to where get can and actually EU team. we rest and

Operator

At showing like to it remarks. further back questions. Dale no to I time, for Thank Foster would I'm this closing you. turn

Dale Foster

operator. spending the time today. our with luxury the you, welcome the And DataSolutions Thank thanks, over months of Dublin We've last everyone, Again, some team. for teams. in want joining had to X I

teams Our integrated. getting are

of sales you. and U.K. really for the talking a shareholders, combined look our of the XXXX. team getting XXXX. support, last were going couple off, kicked have in to into your we'll we start Thank Some you things to over days, and Thank the as and a strong marketing team

Operator

does This today's participation the your Thank you for program. conference. in conclude

You may disconnect. now

Climb Global Solutions (CLMB) 2 Nov 232023 Q3 Earnings call transcript