Full Year 2023 Climb Global Solutions Inc Earnings Call
Unknown Attendee: www.climbglobal.com Good morning, everyone, and thank you for participating in today's conference to discuss Climb Global Solutions' financial results for the fourth quarter and full year ended December 31, 2023. Joining us today are Climb's CEO, Mr. Dale Foster, the company's CFO, Mr. Drew Clark, and the company's Investor Relations Advisor, Mr. Sean Mansouri with Elevate IR. By now, everyone should have access to the fourth quarter and full year 2023 earnings press release, which was issued yesterday afternoon at approximately 4.05 p.m. Eastern Time. The release is available in the Investor Relations section of the Climb Global Solutions website at www.climbglobalsolutions.com. This call will also be available for webcast replay on the company's website. Following management remarks, we'll open the call to your questions. I'd now like to turn the call over to Mr. Mansouri for introductory comments. Thank you.
Good morning, everyone and thank you for participating in today's conference to discuss climbed global solutions financial results for the fourth quarter and full year ended December 31st 20 twenty-three joining.
Joining us today or climb C E O. Mr. Dale Foster the company's CFO Mister drew Clark and the company's Investor Relations adviser Mister Shawn men story with LOV I R.
I know everyone should have access to the fourth quarter and full year 2023 earnings press release, which was issued yesterday afternoon at approximately 405 P. M. Eastern time, they're released it's available in the Investor Relations section of the claim global solutions website at Www Dot climb global solutions Dotcom.
This call will also be available for webcast replay on the company's website. Following management remarks will open the call for your questions I'd now like to turn the call over to Mister Man. So are you free introductory introductory comments. Please proceed.
Thank you.
Sean Mansouri: Before I introduce Dale, I'd like to remind listeners that certain comments made on this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statement.
Before I introduce bill I'd like to remind listeners that certain comments made on this conference call and webcast are considered forward looking statements under the private Securities Litigation Reform Act of 1995.
These forward looking statements are subject to certain known and unknown risks and uncertainties as well as the assumptions that could cause actual results to differ materially from those reflected in these forward looking statements.
These forward looking statements are also subject to other risks and uncertainties.
Describe from time to time in the company's filings with the S E C.
Do not place undue reliance on any forward looking statements, which are being made only as of the date of this call.
Except as required by law the company undertakes no obligation to revise for publicly released the results of any revision to any forward looking statements.
Sean Mansouri: Our presentation also includes certain non-GAAP financial measures, including Adjusted Gross Billings, Adjusted EBITDA, Adjusted Net Income and EPS, and Effective Margin, and supplemental measures of the performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation charts and other important information in the earnings press release and Form 8K we filed with the SEC yesterday. I'd now like to turn the call over to Climb's CEO, Dale Foster. Thank you, Sean. And good morning, everyone.
Presentation also include certain non-GAAP financial measures, including adjusted gross billings adjusted EBITDA, adjusted net income and EPS and effective margin.
Supplemental measures performance of our business.
All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with F. C C rules.
You'll find reconciliation sharks and other important information and the earnings press release and form 8-K, we furnished to the S. E C yesterday.
I'd now like to turn the call over to climb C E O Dale Foster.
Thank you, Sean and good morning, everyone.
Dale Richard Foster: Our fourth quarter performance capped off another exceptional year for Climb as we generated record results in all of our key financial metrics and delivered on our acquisition objective. These results were driven by continued focus on our core initiatives and the integration of data solutions, which was acquired in October of 2023, and immediately benefited our top and bottom lines. We also continue to generate organic growth in both the US and Europe as we deepen our relationships with customers along with adding strategic vendors to our line card. As a brief reminder of our acquisition of Data Solutions, a leading distributor of cloud and security solutions in Ireland and the UK, their team brings a long-standing network of relationships to grow, such as Checkpoint, Citrix, HP Aruba, to name a few. Data Solutions also has a robust recurring revenue base, with more than 90% of its fiscal 2023 revenue coming from existing reseller partners.
Our fourth quarter performance capped off another exceptional year for calling us we generated record resolve.
And all of our key financial metrics and delivered on a requisition objective.
These results were driven by continued to focus on our coordinates it is and the integration of data solutions, which was acquired in October of 2023, and immediately benefited our top and bottom line.
We also continue to generate organic growth in both of the U S and Europe every deepened our relationships with customers along with adding strategic vendors to our line card.
As a brief reminder, on Earth acquisition of data solutions are leading distributor of cloud and security solutions in Ireland and the UK 13 brings a longstanding network of relationships decline. So just check 0.8.
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Venus solutions also carries a robust recurring revenue base with more than 90 per cent of its physical 2023 revenue is coming from existing reseller partners.
Dale Richard Foster: We are actively identifying cross-selling opportunities and cost synergies and look forward to unlocking additional benefits as we further integrate data solutions into our financial and operating workflows. Throughout 2023, we evaluated a robust pipeline of emerging vendors as we were very thoughtful in selecting the right partners to add to our line card. We are focused on targeting and signing vendors that fit into our ecosystem and bring disruptive technology to the marketplace. For perspective, in Q4, we evaluated 13 vendors but signed agreements with only four of them. Quickly touching on a few of these wins, first, we launched a partnership with DNS Filter, a leading threat detection and content filtering application that redefines how organizations secure their largest threat vector, which is the internet itself. DNS Filter utilizes machine learning to protect over 26 million monthly users from phishing, malware, and advanced security threats.
We are actively then if my crossing off as soon as an Paul synergies and look forward to on logging additional benefits as me further integrate data solutions into our financial and operating workflows.
<unk> 2023, we value would need a rug robust Pope part pipeline of emerging vendors as we were very thoughtful and selecting the right partners to add a line card.
We're focused on targeting and signing vendors that fit into our ecosystem and bring disruptive technology to the marketplace for perspective in queue for we value when it 13 vendors, but signed agreements with only four of them.
Quickly touching on a few of these wins first we launched a partnership with the in this filter leading the threat detection and content filtering application that redefines how organizations take care of their largest threat vector, which is the internet itself DNS filter utilizes machine learning to protect over 26 million monthly users from fishing mauer in advance.
Security threats.
Dale Richard Foster: Next, we partner with KiteWorks, a compliance and security application that enables organizations to identify, track, control, and secure sensitive content communications under a single platform. Networks protects over 35 million end users for almost or most 4,000 global enterprise and government agencies. We are thrilled to kick off our partnership with each of these innovative technologies, and we look forward to building prosperous relationships with each of these vendors as we expand their reach throughout the channel. As we have often stated in the past, our goal is to build deep and meaningful relationships with our partners and vendors. It is the differentiator between us and our large competitors. As a testament to our commitment, in November, we were named one of CDW's 2023 Distributors of the Year for providing a customer-first relationship, as well as exemplary products, services, and solutions to support the CDW partnership and our customers.
Next we partner with tight works Ah compliance of security application that enables organizations to identify track control and Securitas ended insensitive content communications under a single platform.
<unk> protects over 35 million users for almost <unk> 4000, global enterprise and government agencies were thrilled to kick off our partnership with each of these innovative technologies and we look forward to building prosperous relationships with each of these vendors as we expand the reach the route the channel.
Cause we have often stated in the past our goal is to build deep and meaningful relationships with our partners and vendors. It has a different answer either between us and our large competitors is a testament to our commitment and November we named one of US. We were named wanted to see the W. 20, twenty-three distributors of the year for providing a customer first relationship is.
<unk> products services and solutions to support the CDW.
Partnership and our and our customers we have grown side by side with CDW for more than 20 years as partners as we look forward to building on our mutual success in the years to come.
Dale Richard Foster: We have grown side by side with CDW for more than 20 years as partners, and we look forward to building on our mutual success in the years to come. In addition to CDW's Partner of the Year award, Climb was awarded Wasabi's Technology Distributor of the Year Award in both North America and EMEA. We are honored to be recognized as Wasabi's Distributor of Choice and are excited to capitalize on the momentum for 2023 and the year ahead.
In addition to CW partner beer climb was awarded with Saudis technology.
<unk> of the year award in both North America, and a meal. We are honored to be recognized as wasabi distributor of choice and are excited to capitalize on the momentum for 2023 into the your head.
Turning to personal development in November we announced the appointment of Kim Stevens to worldwide V. P of marketing <unk> assume the global marketing responsibility for clients, including the creation and execution of comprehensive markings tragedy strategy branding and also partner marketing seems appointment as part of a longterm growth strategy to.
Dale Richard Foster: In November, we announced the appointment of Kim Stevens to worldwide VP of marketing. Kim assumed the global marketing responsibility for Climb, including the creation of and execution of a comprehensive marketing strategy, branding, and also partner marketing. Kim's appointment is part of a long-term growth strategy to expand our reseller coverage, operations, and marketing presence. We are thrilled to have Kim lead our global marketing efforts to align our branding as we further scale our footprint in the US and overseas. Looking ahead to our strategy, it remains unchanged: leverage our global fruit forecast and drive organic growth by expanding our line card to the most innovative companies in the market. We will also continue to pursue M&A opportunities in both the U.S. and overseas that can broaden our geographic footprint, expand our vendor reach, and also bolster our service and solution offerings. Between a robust balance sheet, a growing pipeline of prospective vendors, and a proven track record of accretive acquisitions, we are well positioned to continue driving shareholder value. With that, I will turn the call over to our CFO, Drew Clark, to take you through the financial results.
<unk>, a reseller coverage operations and marketing presence, we're thrilled to have him to lead our global marketing efforts to align our branding as we further scale our footprint in the U S and overseas.
Looking ahead or strategy it remains unchanged leverage our global frequent of drug and drive organic growth expanding our line card with the most innovative companies in the market.
We will also continue to pursue ebony opportunities in both the U S and overseas they can broaden or geographic footprint expand our Thunder Ridge and also bolster our services solution offerings.
Between a robust balance sheet of growing pipeline of prospective vendors and a proven track record over three of acquisitions, we're well positioned to continue driving shareholder value would that I will turn the call over to our CFO drew Clark to take you through the financial results through.
Andrew E. Clark: Thank you, Dale. Good morning, everyone. As I've noted before, Dale gets to share all the fun, exciting aspects of our business, and I'm stuck with discussing another boring record quarter in terms of our operating and financial results. Quick reminder, as we review the financial results for our fourth quarter, all comparisons and variance commentary refer to the prior year quarter, unless otherwise specified. Okay, let's jump into the results.
<unk> good morning, everyone as I've noted before they'll get to hear all about fun exciting aspects of our business and I'm stuck with discussing another boring record quarter in terms of our operating and financial results quicker.
Quick reminder, as we review the financial results for our fourth order all comparisons and variance commentary refer to the prior year quarter unless otherwise specified.
Okay, let's jump into the results.
Andrew E. Clark: As reported in our earnings press release, Adjusted Gross Billings, or AGB, which we all know is a non-GAAP measure, increased 24% to $397 million compared to $319.8 million in the year-ago quarter. Net sales in the fourth quarter of 2023 increased 20% to $106.8 million, compared to $88.9 million, which primarily reflects organic growth from new and existing vendors, as well as contributions from As we've often stated, we focus on AGB as the true metric of our top line growth, as the calculation of net sales is influenced by product mix, and respective adjustments convert AGB to net sales for financial reporting purposes under GAAP. In the fourth quarter, net sales grew at a lower rate because of the impact of data solutions, which sells HP Aruba appliances in connection with Citrix, and the aforementioned product mix quarter to quarter.
As reported in her earnings press release, adjusted gross billings or a G b, which we all know the non-GAAP measure increased 24% to 3300 $97 million compared to $319.8 million in the year ago quarter.
Net sales in the fourth quarter of 2023 increased 20 per cent to.
$106 $8 million compared to 88.9 million, which primarily reflects organic growth from new and existing vendors.
Well as contributions for acquisition of data solutions in October of 2023.
As we've often stated we focus on a G b as the true metric of our top line growth as the calculation a net sales is influenced by product mix and respect to the judges adjustment to convert a G. B to net sales for financial reporting purposes under gap.
In the fourth quarter net sales grew at a lower rate because of the impact of data solutions, which sells H P. Aruba appliances in connection with Citrix and the aforementioned product mix quarter to quarter.
Andrew E. Clark: Gross profit in the fourth quarter increased 31% to $21.1 million, compared to $16.1 million. Again, the increase was primarily driven by organic growth from new vendors and our existing top 20 vendors in North America and Europe, as well as the contribution from Data Solutions. Gross profit as a percentage of AGB increased to 5.3% compared to 5% in the prior period and was positively impacted by data solutions and our vendor mix in the quarter. SGA expenses in the fourth quarter were $12.4 million compared to $9.1 million in the same period last year. SCNA as a percentage of AGB was 3.1% compared to 2.9% in the year-ago period.
Gross profit in the fourth quarter increased 31 per cent to $21.1 million compared to $16.1 billion.
Again, the increase was primarily driven by organic growth new vendors in our existing top 20 vendors in North America, and Europe as well as the contribution from data solutions.
Gross profit as a percentage of.
Of a G b increase to 5.3% compared to 5% in the prior period and was positively impacted by data solutions and our vendor mixed in the quarter.
S T. A expenses in the fourth quarter were 12.4 million compared to 9.1 million in the same period of 2022.
S T N a as a percentage of a G b with 3.1% compared to 2.9% in the year ago period.
Andrew E. Clark: The dollar growth included $1.8 million from data solutions and expenses associated with sales performance in terms of increased commissions and our human capital-based salaries, benefits, bonuses, and stock compensation, all of which were in line with our budget and expectations. Net income in the fourth quarter of 2023 increased 10%, 5.2 million, or $1.15 per diluted share, compared to $4.8 million, or $1.06 per diluted share, for the comparable period in 2022. As mentioned in our press release, earnings for diluted shares in the fourth quarter of 2023 were negatively impacted by $0.09 in foreign exchange and $0.06 in fees associated with the acquisition of data solutions. Justin Iveda's revenue in the fourth quarter increased 24% to $9.2 million compared to $7.4 million in the prior period.
The dollar growth included 1.8 million from data solutions and expenses associated with sales performance in terms of increased commissions and our human capital base salaries benefits bonuses and stock compensation all of which were in line with our budget and expectations <unk>.
Net income in the fourth quarter of 2023 increase 10 per cent 5.2 million or $1.15 per diluted chair compared to $4.8 million or one dollar six per diluted share the comparable period in 2022.
As mentioned in our press release earnings per diluted share in the fourth quarter of 2023 was negatively impacted by nine cents with foreign exchange currency and six cents and fees associated with the acquisition of data solutions.
Just an EBITDA in the fourth quarter increased 24% to $9.2 million compared to 4.7 minutes excuse me to 7.4 million. The prior period. The increase as previously noted was primarily driven by organic growth as well as the contribution from data solutions adjust.
Andrew E. Clark: The increase, as previously noted, was primarily driven by organic growth as well as the contribution from data solutions. Adjusted EBITDA as a percentage of gross profit, or effective margin, was 43.7 percent compared to 45.9 percent in the year-ago period. Our fourth quarter was impacted by the continued early pay discount taken by our key DMRs, which we expect to be the norm as we head into 2024, so future comparisons to the prior year will be comparable. Early pay in the quarter was 900,000, or 230 basis points, which would have generated a 46 percent effective margin on an apples-to-apples comparison. Again, as we move forward into 2024, we believe that the 2024 comparisons to 2023 will be comparable, so we will no longer have to discuss early pay discounts that were taken in excess of prior periods.
Justin EBITDA as a percentage of gross profit or affected margin was 43.7 per cent compared to 45.9% in the year ago period.
Our fourth quarter was impacted by the continued early pay discount taken by our T. D M R's, which we expect to be the norm as we head into 2024, so future comparisons.
For the prior year will be comparable early pay in the quarter was 900000 or 230 basis points, which would have generated a 46 per cent effective margin on an apples to apples comparison again as we move forward into 2024, we believe that the 2024 comparisons to 2023 will be comparable so we will no longer have to do.
<unk> early pay discounts that were taken an excess of prior periods.
Andrew E. Clark: Turning to our balance sheet, cash and cash equivalents were $36.3 million on December 31, 2023, compared to $20.2 million on December 31, 2022, while working capital decreased by $4.5 million during this period. The increase in cash was primarily attributed to the timing of receivable collections and vendor payments, partially offset by the cash paid for the acquisition of data solutions, net of cash acquired of $12.7 million. As of December 31, 2023, we had $1.3 million of outstanding debt with no borrowings outstanding under our $50 million revolving credit facility.
Turning to our balance sheet cash and cash equivalents with 336.3 million on December 31st 2023, compared to 20.2 million on December 31st 2022, while working capital decreased by 4.5 million during this period.
Increase in cash was primarily attributed to the timing of receivable collections and vendor payments, partially offset by the cash paid for the acquisition of data solutions net of cash acquired a $12.7 million.
As of December 31st 2023, we had $1.3 million outstanding debt with no borrowings outstanding under our 50 million dollar revolving credit facility.
Andrew E. Clark: Subsequent quarter end, and consistent with prior quarters, our board of directors declared on February 27th, 2024, a quarterly dividend of 17 cents per share of our common stock, payable on March 15th, 2024, to shareholders of record as of March 11th, 2024. As Dale mentioned earlier, our strong liquidity position continues to provide us with the flexibility to execute our organic and inorganic growth strategies while expanding our relationships with vendor networks and customers across the globe. We will remain active on the M&A front as we evaluate accretive targets in both domestic and international markets. We look forward to executing on our goals and delivering another year of record results in 2024. This concludes our prepared remarks. We'll now open it up for questions from those participating in the call. Operator, back to you. Thank you.
Subsequent to quarter in and consistent with prior quarters. Our board of directors declared on February 27th 2024, a quarterly dividend 17 cents per share of our common stock table on March 15th 2024 to shareholders of record as of March 11th 2024.
They all mentioned earlier, a strong liquidity position continues to provide us with the flexibility to execute our organic and inorganic growth strategies, while expanding our relationships with Bender networks and customers across the globe. We will remain active in the M&A front as we evaluate accretive targets, both domestic and international markets, we look for.
Forward to executing on our goals and delivering another year of record results in 2024.
This concludes our prepared remarks will now open it up for questions from those participating in the call operator back to Ya.
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Vincent Alexander Colicchio: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from Vincent Colicchio from Barrington Research. Please proceed.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing <unk> one moment, please while we pull for questions.
Our first question comes from Vincent <unk> from Barrington Research. Please proceed.
Dale Richard Foster: Dale, yeah, just the big picture: how are you feeling about the tech environment and the economic environment now versus a quarter ago? And also, maybe you could talk about sales cycles and pricing, how that may have changed. Yeah, thanks, Vince, and thanks for joining us.
Dale Yeah, just a big picture how are you feeling about the the tech environment in the economic environment now versus a quarter ago and also maybe you could talk about sales cycles and pricing how that may have changed.
<unk> thanks for joining.
Dale Richard Foster: You know, we often talk as an executive team as far as the macro environment. We get it from our vendors and some of our customers, and we don't—we still don't see, you know, the headroom that we have as far as the size of our company compared to some of our competitors. And the other advantage we have is that, you know, we're 90% software, so we don't have the logistical issues that a lot of different companies have in our market. But we just haven't really seen this often.
You know, we we often talk to the exact same as far as the macro environment, we get it from our vendors and some of our customers and we don't we still don't see you know you know the head room that we have as far as the size of our company compared to some of our competitors and the other advantage. We have is that you know we're 90 per cent software. So we don't have a logistical issues that a lot of the the different.
Companies have in our market, but we just haven't really seen the softening you know we we talk about the the European market, you know potentially going into a closet recession.
Dale Richard Foster: And, you know, we talk about the European market potentially going into a quasi-recession. Haven't really seen it with our teams over there because I think we have a diverse enough portfolio. And like I tell my sales teams, hey, if something's not selling, we have a lot of tools in our sales bag to sell that. You know, security is always going to be there.
I haven't really seen it whether it seems over there because I think we have a diverse portfolio and and like I felt like I was telling my <unk> with Ah Something's not feeling we have a lot of tools in our in our sales bag to sell that you know security there's always gonna be their data center is right behind that and that's R. Two leading categories and then we have enough for other.
Dale Richard Foster: Data center is right behind that, and those are our two leading categories. And then we have, you know, four other self-declared technology sectors that we sell into. So we just haven't seen it yet.
Self declared technology sectors that we fell into so we just haven't seen it I can tell you you know as.
Dale Richard Foster: I can tell you, as I mentioned, a robust pipeline of vendors still coming out of way past the startup phase where they're getting their second and third rounds of funding. And the funding levels I look at are a lot more than we've seen in the past. So, you know, we just haven't seen it.
As I mentioned robust pipeline to vendors still coming out of way past the start up phase, where they're getting their second and third rounds of funding and the funding levels I look at her a lot more than we've seen in the past so.
We we just haven't seen that will be will be open and upfront. If we see some real so often but we have not seen that our teams and we have seen.
Dale Richard Foster: We'll be open and up front if we see some real softening, but we have not seen that in our teams. And we have seen a true consolidation of some of the distribution partners. As far as vendors picking different distribution partners, they're consolidating that, which is good for us because we see it as a specialty, and a lot of these vendors want to see a broad line distributor and then a specialty, which, you know, there are not a lot of choices in North America. There are quite a few choices overseas, so we'll capitalize on both of those. The organic growth appears to have been solid in the quarter. However, was it broad-based across vendors, or were there one or two large deals driving the quarter? Yeah, there's always a couple large deals that just pop up here.
A true consolidation of some of the distribution partners as far as the vendors picking different distribution partners. There are consolidating that which is good for us because we're we're seeing is a specialty and a lot of these vendors Wanna see abroad line distributor and then a specialty which you know there's not a lot of choices in North America, there's quite a few choices overseas. So.
Capitalize on on both of those.
The the organic growth appears to have been solid in the quarter was it was it broad based across vendors are there's one or whether one or two large deals driving the quarter.
Yeah, there's always a couple of large deals digit did pop in there and we've had you know and you look at quarter by quarter. When something goes down you know vast as can be lumpy. We had some nice stuff going on with them. In Q4, two four is always our largest corner because you know companies are things their budgets. So kind of flows the channel. It really depends on you know what happens.
Dale Richard Foster: And we've had, you know, you look at quarter by quarter when something goes down, you know, Vast is going to be lumpy, we had some nice stuff going on with them in Q4. Q4 is always our largest quarter because, you know, companies are extinguishing their budgets. So it kind of flows to the channel; it really depends on, you know, what happens in Q3 and falls over, you know, if it's a federal buying season, and then, of course, what we can capture in Q4 before it goes into Q1. But there's some lumpiness in that.
In Q3 and falls over you know if it's a federal buying season, and then of course, you know what we can capture in queue for before it goes into Q1, but you know there there's some logging isn't that but the over overall if I look at my territory's in we track by territory's in the U S and we tried by customers in the in the U K and Ireland you know just so we haven't seen any way.
Dale Richard Foster: But overall, if I look at my territories, and we track by territories in the US, we track by customers in the UK and Ireland, you know, just we haven't seen any weakness in any of that. And the top 20 vendors, was there any notable weakness among them? Or was it fairly strong across that metric, that group of vendors? Yeah, well, you know, we totally talk about our top two, which we make up, you know, a couple hundred million are SolarWinds and Sophos.
Missing any of them.
And that business.
And the top 20 vendors was there any notable weakness among them or was it a fairly strong crushed though that that metrics that the group of vendors.
Yeah, well you know, we we told to talk about her job to which would be make up a you know a couple of hundred million is so solar wind and sofas, you know solar wind or sofa went through an earpiece change there was some delays in some of that they finish up their quarter, Oh I'm sorry, the finish up their fiscal year at the end of March. So we'll see some of that picked up but I think there was some hiccups in the new number timeframe, but other than that.
Dale Richard Foster: You know, SolarWinds or Sophos went through an ERP change; there were some delays, and some of that; they finished up their quarter, I'm sorry, they finished up their fiscal year at the end of March. So we'll see some of that picked up, but I think there were some hiccups in the November timeframe.
Dale Richard Foster: But other than that, we haven't seen any of that. We've seen growth. I looked at my top 20 vendors, we are FKO last week, Vincent, 18 of them grew in 2020. Of the 20 top vendors, which make up, you know, 70-80% worth of, And Dale, one question for you. How sustainable are the really nice level of adjusted gross margin relative to AGB and adjusted SG&A relative to AGB?
We haven't seen any of that we've seen growth I looked at my top 20 vendors. We R. F. K O last week Vinson 18 of them grew in 2020.
Of the 20 top vendors, which make up you know 70 80 per cent of our business.
And they'll one question for you how how sustainable other it's a really nice level of adjusted gross margin relative to a G. B and just a <expletive> <expletive> a relatives eight GB.
Dale Richard Foster: Yeah, so a couple of things on the, you know, the solutions piece of our business overseas really helps out and maintains more of a stable margin profile. And that's the key, you know; the rest is all on us, you know, as far as what the actual drop through is. And also, you know, the European market, the pressures or the competitiveness, and what the two things together, the competitiveness is not nearly what we have in the States with some of the big three.
Yeah. So a couple of things on on the you know the solutions piece of our business overseas really helps out and and maintains more of a stable margin profile and that's the key you know the rest of it's all on US you know as far as what the actual drop through his and also you know the European market, you know the pressures or the.
<unk> two things the competitiveness is not not nearly what we have in the states with some of the big three and then the other side of that the you know, there's just a higher margin profile because of the service here as to what you're delivering over there. So that's why you know you know we have you know still targeting some acquisitions in the U S, but really it's overseas, we'd like the margin profile.
Vincent Alexander Colicchio: And then on the other side of that, there's just a higher margin profile because of the service you're delivering over there. So that's why, you know, we are still targeting some acquisitions in the US, but really, it's overseas. We like the margin profile. We think that we can, you know, maintain that even as we scale the business. Okay, I'll go in the queue. Thanks. Exit.
Phil we think that we can maintain that even as we scale the business.
Okay I'll go in the queue. Thanks.
Makes sense.
William J. Dezellem: Our next question comes from Bill Dezellem from Titan Capital. Please proceed. Thank you. I appreciate that. So would you please discuss the vendors that you believe have the opportunity to have some real legs and potentially drive the business, essentially the potential home run vendors. Yeah, I'll pick three of them, Bill. We talk about Vast Data quite a bit, and then we acquired Spinnaker, you know, in August of 2022. We talk about it being lumpy because the deal sides are very large, right?
Our next question comes from <unk>.
<unk> from tightened capital. Please proceed.
Alright. Thank you I I appreciate that would you. Please discuss the the vendors that you believe had the opportunity to.
To have some real legs and potentially drive the business essentially the <unk> potential homerun vendors.
Yeah, I don't think they'll take three of them Bill we talk about that date of quite a bit and then we acquired spinnaker you know in August of 2022, we were talking about being lumpy cause the deal sides are very large right. So we see them in Q1 of 2023, we saw some large deals in Q4 of 2023 as well.
Dale Richard Foster: So we see, you know, them in Q1 of 2023; we saw some large deals in Q4 of 2023 as well. So that's one of them, and it continues to grow. We're now officially on board with them in the U.S., and we have got some, you know, good opportunities as they're rolling out. Three of our execs are in Vancouver with Vast, and their sales kickoff in Canada this week. The next one I'll pick is SUSE, which is in the, you know, the Linux operating system space.
So so that's one of them and there's continue to grow we're now officially onboard with them in the U S and we have got some good opportunities as a rolling out three of our exacts are in Vancouver with that then their sales kickoff in Canada. This week.
The next one I'll pick is suzie, which is in you know the Linux operating system system space, We're just doubling with those guys and they're taking advantage and working advantage with them of you know I'd be in buying Red hat. There was only two competitors in that space right Hatton to Sue say and so you said it was about 20 per cent of the mortgage or I B M is you know it's only.
Dale Richard Foster: We are just doubling with those guys, and they're taking advantage, and we're taking advantage with them of, you know, IBM buying Red Hat. There were only two competitors in that space, Red Hat and SUSE, and SUSE had about 20% of the market share.
Dale Richard Foster: IBM is, you know, only going after their top customers, so there's a lot of greenfield that they're picking up, and we're right in that mix. And then the last one that I'll talk about is the group of security vendors that are just getting larger and larger in our portfolio. We used to say, hey, you know what? If we can do $1 million, $2 million in the first year, and now we have five that are down the card security vendors that we're starting at the $5 million range. So, you know, we just see a lot of upside from what we're signing. We're being more selective, like I mentioned, on who we sign. And, you know, we had our SKO last week, and we talked about the three pillars of the company, right? First, the employees, as far as the team that we have, what they're doing every day really matters.
Going after top customers. So there's a lot of greenfield it they're picking up and we're right in that mix and then the the the last one they don't talk about is you know the the group of security vendors that are just getting larger and larger in our portfolio. We we used to say hey, you know what if we could do a million $2 million in the first year.
And now we have five that are down the card security vendors that we starting at the 5 million dollar range. So you know we we just see a lot of upside from what we're signing or being more selective like I mentioned on who we sign and you know we had rescued it'll last week and we talk about the the three.
<unk> pillars of the company right first the employees as far as the team that we have what they're doing everyday that really matters second as the vendors. So we don't have the vendors you know we we don't have anything to sell so that is one of the things we've transformed the company as far as really focusing on the vendors we bring in focusing on the vendors, we keep and then push.
Dale Richard Foster: Second, are the vendors. If we don't have the vendors, you know, we don't have anything to sell. So that is, you know, one of the things we've transformed the company as far as really focusing on the vendors we bring in, focusing on the vendors we keep, and then pushing the other vendors to our ClimbElevate team so they don't clutter our line card. And then lastly, our customers. And you could say that's kind of strange.
<unk> the other vendors to our appointment letter it seems so it doesn't clutter online card and then lastly, our customers and you said it has kind of strange me you're talking about your customers last if we have the vendors we will get the customers just by our service and support to them.
Dale Richard Foster: I mean, you're talking about your customers last. If we have the vendors, we will get the customers just through our service and support to them. Great. That's very helpful. Thank you.
Great. That's that's very helpful. Thank you and and then.
William J. Dezellem: And then there was a question about one-off or one-time revenue and that the fourth quarter is typically the largest quarter in that way. What is Q1 through Q3? What is the typical level of one-time or non-recurring revenue? And then how does that number generally look in the fourth quarter or this quarter specifically, if you would like to answer that question? It could pop up tomorrow. I mean, you know, if I looked at my pipeline, you know, we've got a couple large opportunities with some newer vendors in the, you know, the $10 to $20 to $30 million range per order. But I mean, those, we can't predict those.
It was a question about one off or one time revenue in the fourth quarter is typically the largest quarter that way.
What is it at Q1 or Q3, what is a typical level of one time or nonrecurring revenue and then how does that.
Number generally look in the fourth quarter or this quarter, specifically, however, you would like the answer.
You know <unk> <unk>.
It could pop up tomorrow I mean, you know we if I looked at my pipeline you know we've got a couple of large opportunities with some newer vendors in the you know the 10 to 20 to 30 million dollar range for order, but I mean, those we can't predict those the queue for we can predict just because you know we have a history of the.
Dale Richard Foster: The Q4 we can predict just because, you know, we have a history of the cyclical nature of that. And we also know our data solutions team in Ireland, and what strong quarters they have. But other than that, you know, we're diverse enough where we don't have, you know, these big ups and downs, you know, and, you know, I don't know if you want to add to that, Drew, I don't, there's nothing that we see there other than a couple that we have in the pipeline.
Cyclical nature of that and we also know more data solutions team in Ireland, what strong quarters, they have but other than that and you know we're we're diverse enough that we don't have you know he was picked up and up and downs.
You know and you know I don't know if you want to add to that <unk>. There's nothing that we see there other than a couple that we have in the <unk>.
Andrew E. Clark: You know, in addition to Dale's comments, it's not necessarily one-off, non-recurring transactions. We've talked about, and Dale referenced, VAS, which is an up-and-coming, super strong vendor and partner of ours. Very large transaction sizes, they tend to have longer sales cycles, to Vince's question earlier, because you're talking about significant seven-digit investments by their customers at the end of the day into the data center space.
Yeah, No I think in addition to Dallas comments, and it's not necessarily want off non-recurring transactions we've talked about.
They'll reference bass, which is a up and coming super.
Super strong vendor and partner of ours, very large transaction sizes. They tend to have longer sales cycles to vince's question earlier, because you're talking about giving a seven digit investments by their customers at the end of the end of the data center space <unk>.
Andrew E. Clark: And so we did have a very nice transaction with VAS in Q4 of this year. We also had a similar transaction in Q4 of last year, and we have VAS activity that goes on throughout the year. We think as they continue to grow and refine their market channel strategy, we'll have a little more consistency with that, Bill, but again, those transactions can take 18 months, six months, somewhere in between. We think we'll get to a more steady state and a run rate with VAS as we continue to grow with them over the next several quarters. But that's a significant variance to our average sales price of our normal vendors, so that's just one that does have a meaningful impact, and it's just not consistent right now until we get more traction with them in the marketplace around the globe. Bill, real quick. Bill, let me add to that.
And so we did have a very nice transaction with asked in Q4 of this year. We also had a similar transaction in Q4 of last year and we have vast activity that goes on throughout the year, we think as they continue to grow and refine their market channel strategy that will have a little more consistent.
See what that bill, but again those transactions can take 18 months six months somewhere in between we think will get you a more steady state and run rate with that as we continue to grow with them over the next several quarters, but that's you know.
That's a significant variance to our average sales price of our normal vendors. So that is one that does have a meaningful impact and it's just not consistent right now until we get more traction with them in the marketplace around the globe.
And also bill <unk>.
Real quick, but let me to add to that you know as far as the.
Dale Richard Foster: You know, as far as we have, you know, three, four big DMR customers; we call them direct resellers, like we mentioned C2W and SHI in the past. But, you know, they have bid cycles that come up. They typically start at the beginning of the year.
We we have you know three four big DMR customers, calling drug resellers like you mentioned the C. O W. A S H I in the past, but you know they they have been cycles that come up they typically start at the beginning of the year. You know we we were we we start bidding in October November time frame. If there was anything significant we would let the shareholders knowing that but you know we've won.
Dale Richard Foster: You know, we start bidding in the October, November timeframe. If there was anything significant, we would let the shareholders know about that. But, you know, we've won pretty much all the bids that we've had in the past. We've picked up some smaller ones, but nothing that's earth-shattering, both on the positive or the negative side.
Pretty much all the bits and we've had in the past we picked up some smaller ones, but nothing that service reading both in the positive and negative sides. So we will have those for six months. It typically put him on a cycle for every six months and they come up with a new group of of vendors for us to <unk>.
William J. Dezellem: So we'll have those for six months. They typically put them on a cycle every six months, and they come up with a new group of vendors for us to bid out. Thank you both.
Dale Richard Foster: I'm going to ask one follow-up question to that, and then I'll step back into the queue. In this day and age, when many companies prefer to go down the SAS route so they don't have a large capital outlay and instead pay by the quarter, what are the dynamics or reasons that these larger orders take place as opposed to the software simply being purchased in the SAS model? Well, when we're talking about vast data, they have a hardware component to go with that. And, you know, if you look at Google, they're talking about AI every day. So it's going into data centers. These are large, you know, appliances that go in, and then they run all their software on that.
Thank you both I'm Gonna ask one follow up to that and then I'll step back in the queue Uhm in in this day and age where many companies prefer to go down the <unk> route. So they don't have that large.
Large cap the capital outlay and instead pay by the quarter, what are the dynamics or reasons that that these larger.
Orders take place as opposed to the software simply being purchased and can assess model.
We'll do it when we're talking to my best day to day or a hardware component to do to go with that and you'll give you look into that they're talking about AI everyday. So it's going into data centres. These are these are large you know appliances that go in and then they run other software on that day.
Dale Richard Foster: They announced their relationship with Supermicro, which is a good thing. Supermicro has been taking off lately, if anybody's watched that, because they're going to use that as their underlying platform. But it's really, you know; they work every day on their teams of software. But, you know, we're in the middle. The middle ground where, you know, there's vendors that are trying to sell yearly licenses and act like it's a service, and then you're buying a three-year license.
[noise] announced their relationship with Supermicro, which is a good thing Super Micros, you've been taking off lately, if anybody's watched that because they're gonna use that as the underlying platform, but it's really you know they work everyday on their teams of software, but it's we're in the middle the middle ground, where you know there's vendors that they're trying to see.
<unk> Hughley licenses and act like it's a as a service and then you know you're buying a three year license. So of course, they want to get into more of a recurring monthly or quarterly revenue pieces and some of them are getting there. It's gonna take awhile because they don't have the platforms of their marketplaces in place to really service that so part of that is.
Dale Richard Foster: Of course, they want to get to more of a recurring, you know, monthly or quarterly revenue piece. And some of them are getting there. It's going to take a while, because they don't have the platforms or the marketplaces in place to really service that. So part of that is, You know, we're seeing that transformation with some of our software vendors, but I don't know if that's really going to affect a lot of what we're doing on a monthly or quarterly basis.
We're seeing that transformation.
With some of our software vendors, but not.
Not you know that's really gonna affect a lot of you know what we're doing on a monthly or quarterly basis.
William J. Dezellem: Thank you, folks, for your time. Congratulations on a great quarter. Thank you. Thank you. Our next question is from Howard Root, who is a private investor. Please proceed.
Alright, Thank you both for the time.
Congratulations on a great card <unk> <unk>.
Our next question is from Howard <unk>, who is a private investor <unk>.
Howard Root: Thanks, guys, and congratulations on an outstanding quarter. Drew, I do have to correct you on one thing. You call this a boring quarter.
Thanks, guys and congratulations on that outstanding quarter drew I do have to correct. You on one thing you called this a boring quarter and I know I always say I'm I'm into your boring quarters. This is not a boring quarter. When you increase sales by 20 per cent and attach it to you it's the whole quarantine uhm.
Andrew E. Clark: And I know I always say I love your boring quarters. This is not a boring quarter when you increase sales by 20%. And it's not just you; it's the whole client team. So I have two questions.
So I have two questions. One is is on this girl within adjusted gross billings Uhm.
Howard Root: One is, is on this growth and adjusted growth billings, you know, 397 million in Q4, up 78 million, 24% up from the year ago. If you could kind of, Dale, talk a little bit about the breakdown of, maybe on a percentage basis. I don't want you to get into talking about vendors specifically, but what part of that was acquisitions that would be data solutions, I guess, what part would be new products, and what part would be growth of existing products in new markets? And then the fourth bucket would be growth of existing products in existing markets, if you look at it on a year over year basis. Yeah, so if you look at, we closed Data Solutions on October 6th, so we took advantage of their sales. They had a good quarter. They were down a little bit year over year because they had some lumpiness that fell in and, you know, fell out, whether it was coming into the quarter or out of the quarter from the year before.
397 million in queue for up 78 million 24 per cent up from the year ago fourth quarter. If if you could kind of day I'll talk a little bit about the breakdown of maybe on a percentage basis I don't want to get into talking about vendor, specifically, but what part of that was acquisitions that would be data solutions I guess, what part would be new products.
What part would be growth of existing products and new markets and then a fourth bucket would be growth of existing products in existing markets. If you look at it in a euro year over year basis.
Yeah. So if you look at you know, we we <unk>, we close the data solutions October 6th. So we we got the took advantage of their sales they had a good quarter they were down a little bit year over year, because they had some lumpiness. It fell in and you know fill out whether it's coming into the quarter out of the corner from the year before but you know and and you can correct me, but I think it's.
Dale Richard Foster: But, you know, and Drew can correct me, but I think it's, you know, if we're talking, say, you know, we're up 80 million, I think about half of that was Data Solutions. So we still had organically grown for the quarter on our teams. On the vendor side, you know, it's hard, you know, to hold back some of the positives we have from the vendors coming at us, either reducing their go-to-market and Climb being one of the, you know, the leftover channel plays that they have. So we're seeing a lot of that. We had that happen at the end of Q3, started seeing helping in Q4, and we'll see it in 2024 pretty heavily. And we're talking about four vendors that I can just think of right off the bat that are saying, you know what? We're going to use a broad liner and a specialty distributor. Or in the case of SolarWinds, and we haven't made it totally public, but we're the sole distributor of SolarWinds, which is our number two brand. SolarWinds, you know, has had difficulties in the past but has recovered from that. They've got a great team.
If we're talking to <unk> you were up 80 million I think about half of that was data solutions. So we're still had or organically up for the corner on our teams on the vendor side you know there. There's <unk>. It's hard you know the hold back some of the the positives we have from the vendors coming at us either <unk>.
<unk> there go to market and coin being one of the <unk> you know the leftover channel place that they have so we're seeing a lot of that we we had that happen at the end of Q3 started seeing helping them in queue for and we will see in 2024 pretty heavily and we're talking about four vendors that I.
Can just think of right off the bat that are so you know what we're gonna use abroad liner, especially distributor or in the case of solar wins and we we haven't made it totally public and and the <unk> worthy or sole distributor of solar wind or was there a number two brand solar ones. You know it had the difficulties in the past, but it has recovered from that they've got a great team we have them globally.
Dale Richard Foster: We have them globally now with our, you know, both our UK and Ireland teams. So there's a lot of energy going into that for 2024. Yeah, Howard, I would just add to Dale's comments just in terms of, and these are fairly accurate percentages of the data solutions cut. We counted for about 40-45% of that gross growth in the quarter, and then obviously, the rest of it was our organic growth with existing vendors. Not a big movement in terms of geography in revenue growth or in the vendor mix. It was fairly consistent with the prior quarter.
Now with or you know or both or UK and Ireland teams. So just that there's a lot of energy coming into that for 2024.
Yeah, I would I would just.
<unk> got it just in terms of and these are fairly accurate percentages that the data solutions.
Accounted for about 40 45 per cent of that gross growth in the quarter and then obviously the rest of it was our organic growth with existing vendors not a big movement in terms of geography in revenue growth or in the vendor mix. It was fairly consistent with you know the prior quarter fairly consistent obviously are <unk>.
Andrew E. Clark: Obviously, our line card does adjust quarter to quarter, but pretty consistent vendor representation in the growth, as Vince was asking earlier. No real meaningful shifts in either the vendor mix or the geography mix, but data solutions around 40-plus percent, and the balance of that growth was all organic. Great, that's really helpful.
<unk> does it just quarter to quarter, but pretty consistent vendor representation in the growth is a bitch was asking earlier, so no real shifts and meaningful shifts in either the vendor mix, where the geography mixed but data solutions about 40 plus per cent and the balance of that growth was all organic.
Great. That's really helpful. So the second thing kind of I'm kind of a bleeding on from that I always like to ask about future guidance and I'd Love for you guys to talk more about it and you're you're prepared remarks, and and to give guidance going forward, but if you look at where we are today and go forward can you talk about what stage of market.
Howard Root: So the second thing kind of leading on from that, I always like to ask about future guidance. And I'd love for you guys to talk more about it in your prepared remarks and give guidance going forward. But if we look at where we are today and go forward, can you talk about what stage of market penetration you are in kind of general terms, and then more in specific terms? You know, 2022, you did a, we crossed the billion dollar mark in market adjusted gross billings. In 2023, you did 1.3 billion. Is it, you know, are you on a linear ramp?
Penetration you are and kind of general terms and then and then more in specific terms. You know 2022, you did on the cross the billion dollar market tested gross billings 20, twenty-three did 1.3 billion.
Is it you know are you on an <unk> linear ramp you know taking out all the bumps you go up and down within the quarters, but 1.01 0.31 0.6. This quarter 1.7, I don't want to tie you to a number but I just want to get a feel for where you are in the market penetration of the overall market and how how how long you.
Dale Richard Foster: You know, taking out all the bumps, you go up and down within the quarters, but 1.0, 1.3, 1.6, this quarter, 1.7. I don't want to tie you to a number, but I just want to get a feel for where you are in the market penetration of the overall market and how long you can continue to have these 20% growth year over year, or if it's going to accelerate or taper. So Howard, you know, and we talked about, you know, taking a look at some of the distributors that I would, you know, we don't compete with them. And I'm going to jump around a little bit. We had our SKO last week, and we barely mentioned each other on stage, and this is me all the way through anybody that had a microphone, our competitors.
Can continue to have these 20 per cent growth year over year, or if it's going to accelerate our taper from that.
So Howard you know and we we talk about you know take a look at some of the distributors that I I would you know, we we don't compete with them and I'm Gonna I'm gonna jump around a little bit we enter S. K O last week and we barely mentioned on stage and this is me all the way through anybody that had a microphone our competitors and in the past.
Dale Richard Foster: And in the past, we talked about them a lot. So when we talk about, you know, we've mentioned on some calls, Red Ocean, Green Ocean, Blue Ocean, where we really are, we're going to Blue Ocean, where we are creating our own market, we don't see as much competition, as much competition, we're not, you know, fighting it out every day over margin. So just the fact that our sales kickoff, you know, 188 employees in the US, 60 vendor reps that showed up to support us, making up 25 vendors, you know, it was just a lot of energy about what we're actually doing to the company and where we're going to go. So, you know, gross billings at one point were up to $6 billion.
We talked about them a lot. So when we talk about you know we've mentioned on some calls Red Ocean Green Blue Ocean, where we really are we're going to a blue Ocean, where we are creating our own market. We don't see as many many competition as much competition or not you know fighting it out the everyday over margin. So just the fact that our sales kick off you know 188 employees in the U S.
60 vendor reps that showed up to support us, making a twenty-five vendors.
Just a lot of energy of what we're actually doing it the company whenever we're gonna go. So you know with a gross gross billings and $1.26 billion and you look at a lot of the dispute Dow saying in their earnings released the public ones at least just telling you what their gross billings our tech data came out and said hey, they're $80 billion in gross billings before the netting.
Dale Richard Foster: And you look at a lot of the Disney's now saying in their earnings release, the public ones, at least there's telling you what their gross billings are, tech data came out and said, hey, they're $80 billion in gross billings before the netting, you know, how much headroom we have, we can double, triple the size of the business, and not really run into them and not being seen because we're competing inside such a small fraction, the vision inside of some of these big, Charles, our CMO, was saying to our teams last week, saying there could be two or three competitors like Climb in our marketplace and we still would have so much opportunity. So so I'll leave that there and then Andrew can can, can tone me down a little bit.
You know how much headroom, we have we can double triple besides a business and and not really run into them and not being seen because we're competing inside such a small fraction division inside of some of these big disease Uhm.
Uhm.
Charles our CMO sing to our teams last week thing there can be two or three competitors like climb in our marketplace and we still would have so much opportunity. So so I'll leave that there and then and drew can can.
Can telling me down a little bit, but here's what our goal isn't that is our goal is to double the the business in by 2026 and can we do that yeah. We can do that through some acquisitions and organic growth like we're doing currently it's going to be the combination, but if you want to know what we're doing just look what we've done in the last two years, we're gonna do this much.
Dale Richard Foster: But here's what our goal is, and that is to double the business by 2026. And can we do that? Yeah, we can do that.
Dale Richard Foster: Through some acquisitions and organic growth like we're doing currently, it's gonna be that combination. But if you wanna know what we're doing, just look at what we did in the last two years. We're gonna do much of the same thing. There are still a lot of targets, there are still a lot of vendors, and there are still the vendors that are really great. They look like they're part of Climb when you come to our meetings and stuff. They just act like they're strategizing with my team.
The same thing there's still a lot of targets, there's still a lot of vendors and they're still you know the vendors that are really crying vendors like they they look like they're part of of climb when you come to our meetings and stuff and like they just act like they're strategizing with my team. So it's a it's a very different look and feel that it was three years ago.
Andrew E. Clark: So it has a very different look and feel than it did three years ago. Yeah, I think Dale, as we've said, Howard, we believe that between organic growth and our acquisition strategy, we can double the size of this business and, in theory, continue to be more effective with leverage and then have an increased drop through that gross profit that we grow ourselves or we acquire and then continue to augment and grow. Ireland and the data solutions acquisition will be a really great case study for us to be able to share with the investors as we move forward throughout 2024 about how well we've integrated the sales teams, and the cross-selling vendors, Citrix and Microsoft, pair up really nicely. So we think, look, organically, again, you're correct, we're not providing guidance, and we're not really even providing guardrails on sort of trends, but we think if you look at our historical results, we think we can continue to perform at those historical levels in terms of organic growth.
Yeah, and I think <unk>.
<unk> said Howard we believe that between the organic growth and our acquisition strategy. We can double besides this business and in theory continue to be more effective with leverage and then have increased drop through with that gross profit that we grow ourselves or we acquire and then continue to augment grow.
Ireland and the data solutions acquisition will be really great pay study for us to be able to share with the investors as we move forward throughout 2024 about how well we integrated the sales teams the vent cross selling vendors citrix and Microsoft tear up really nicely uhm. So we think look organically.
Again, you're you're correct, we're not providing guidance and we're not really even providing guard rails on sort of trends, but we think if you look at a historical results. We think we can continue to perform at those historical levels in terms of organic growth on an annual basis, we're going to have some cyclicality in orders of data solutions typically <unk>.
Andrew E. Clark: On an annual basis, we are going to have some cyclicality in quarters. Data solutions, typically Q2 of the calendar year is their weakest quarter, so we'll expect that. We'll see some pullback on a consolidated basis in Q2. Growth over the prior year in Q2 most likely, but there's a little bit of cyclicality in the business based on geographies and vendors and partners.
Two of the calendar year is their weakest quarter. So we'll expect that we'll see some pullback on a consolidated basis in queue to.
Growth over the prior to your cue to most likely but there's a little bit of cyclicality in the business based on geography, and vendors and partners but.
Andrew E. Clark: As we look forward, as Dale said, there is lots of activity in the pipeline for us to continue to grow through the acquisition strategy and also organically. And at some point, we may provide a little bit more detail as we move into the quarters ahead, but hopefully, that gives you a little bit of perspective and some level of indication of where we think the business will go. And just real quick, to add to Howard, you know, we've all talked about in the past, we haven't brought up on this call yet, and it's probably being overused inside the company, but our ERP is going to go live in Q2. We've talked about it for a couple years now, and we are ready to do that. Our teams have been working double time because they've had to do their regular jobs every day and then do all the testing. So if you're a sales rep, or you're sitting in finance, you're going to do all your stuff on our existing ERP. And then, you know, you have to spend hours doing it in the new system.
As we look forward <unk> lots of activity in the pipeline for us to continue to grow through the acquisition strategy in it also organically and at some point, we may provide a little bit more detail as we move into the the quarters ahead, but hopefully that gives you a little bit of perspective, and and some level of indication of where we think the business will bill.
And you just <unk>.
<unk> you know, we we talked about in the past we haven't broke up on this call yet and it's probably being overused inside the company, but are the Europeans Gonna go live in Q2, we've talked about it for a couple of years now we are ready to do that our teams have been working double time, because I've had to do the regular you know jobs everyday and then do all the testing so if you're a <unk> or a sales rep or your <unk>.
You can find that you're gonna you're gonna do all your stuff on our existing European then you know you gotta spend the hours doing in the new system, we're comfortable with that we know we can platform companies a lot faster data solutions team you know when we acquired them October 6th we restructured all sales and marketing together as I mentioned Kim's onboard and she did that on the marketing side on the <unk>.
Dale Richard Foster: We're comfortable with that; we know we can platform companies a lot faster. The data solutions team, you know, when we acquired them on October 6, we restructured all sales and marketing together. As I mentioned, Kim's on board, and she did that on the marketing side. On the sales team, I just came back from Europe two weeks ago. We've got all the sales structures fully integrated with each other. And then phase two is when we go ERP live, all the inside teams will be integrated together as well. So, you know, look at us at the end of June; we'll have everybody on the ERP, the same ERP system speaking the same language, no matter where you live. Great, that's very helpful, and congratulations again on the very exciting quarter that you had. Again, thank you.
Can't you feel seem I just came back from Europe, two weeks ago, We got all the sales structures fully integrated with each other and then phase two was when we go European life. All the inside teams will be integrated together as well. So you know look at us and the end of June will have everybody on the European Sami or if your system speaking the same language no matter, where you live.
Great. That's that's very helpful and congrats again on a very exciting quarter that you can get into your thanks.
Dale Richard Foster: Thanks, Howard. Our next question comes from Vincent Colicchio from Barrington Research. Please proceed. Yeah, just one last one for me, Dale. I'm curious, security has obviously been the key driver here for your business for some time. Has it been proven in any other segments this quarter? You know, the reason I'm going to, you know, the security, of course, it's there, it's strong, it's very diverse if you look at the top vendors. And this is something I didn't mention, Vince, that kind of triggered me, and that is as far as what I want to put out there.
Thanks.
Our next question comes from the <unk> <unk> <unk>.
Barrington research prescription.
Yeah, just one last one for me they'll I'm curious security <unk>, obviously, the the key driver here for your business for some time has it been.
Proving in any other segments in in the corridor.
You know the.
The reason I'm Gonna you know the security of course, but it's there is strong is very diverse if you look at the top vendors and this is something I didn't mentioned Vince that kind of triggered me that is as far as what I'm Gonna put out there you know so when we look back three years. We've we've you know if you look at our top 70 vendors they make of 96 per.
Vincent Alexander Colicchio: You know, so we look back three years. We've, you know, if you look at our top 70 vendors, they make up 96% of our overall sales. Of those top 70 vendors, 36 of them have been brought on since 2020. So, you can see we have a very robust way to bring vendors in. They get into our top group.
Senator overall sales dose of those top 70 vendors 36 of them have been brought on since 2020. So you know you can see we have a very robust way to bring vendors in they get into our top group. The 70 vendor with us to transact about $4 million. So that's kind of our limited threshold, because we'd love to be able to.
Dale Richard Foster: The 70th vendor with us transacts about $4 million. So that's kind of our limited threshold because we'd love to be able to, I'd love to have 50 vendors doing, you know, 90% and really have more of a focus on our team and have our Climb Elevate team do the rest of it as far as the clutter piece of it goes. But, you know, so that's just one segment.
<unk> I'd love to have 50 vendors doing you know 90 per cent and really have more of a focus on our team and have an appointment with 18 do the the rest of it as far as the clutter piece of it goes but you know so that that's the one segment. The other segment that we're seeing more of course, everybody, saying the word a but what are <unk>. What are what are vendors are doing it they're building a I enter their products. So.
Dale Richard Foster: The other segment that we're seeing more of, of course, everybody's saying the word AI. But what our vendors are doing is they're building AI into their products. So there's two or three that we're looking at that I think will probably start an AI division. If their true application is going to be more than 50% of what they do, right?
So there's two or three that we're looking at that I think will probably starting to add division if they're if they're true application is gonna be more than 50 per cent of what they do right. They can't just be a you know where a backup that using I to do some kind of horrible storage management of software or of of your backups. So that'll be another pillar that we.
Dale Richard Foster: It can't just be, hey, you know, we're a backup that uses AI to do some kind of hierarchical storage management of software or of your backups. So that'll be another pillar that we probably add or add to our group. Outside of that, it's really the Linux, the SUSE business, the data movement, data management with Adobe, things like that.
Probably add or mountain, we had to our our group outside of that it's really the it's really the Linux the sushi business the data moving data management with Adobe things like that but it's always around security data Center and then it's everybody that supports that.
Dale Richard Foster: But it's always around security, data center, and then it's everybody that supports that. Thanks, guys. This concludes our question and answer session. I would like to turn the floor back over to Dale Foster for closing comments. Thank you, everyone.
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It concludes that question and answer session.
Like to turn the floor back of Richard Foster for closing comments.
Thank you all for you and thank you for everybody for joining today just wanted to have a big. Thank you for 2023, all the stakeholders that are watching climb supporting climb.
Dale Richard Foster: Thank you everybody for joining today; we have a big thank you for 2023. All the stakeholders that are watching climb, supporting climb, and all the teams that we have internally, just a lot of energy going into 2024. Like I said, we're coming off for our sales kickoff. It's one of the best ones because we do our surveys with our teams and our vendors that we think Climb has ever had. And like I said, opportunity to go into that, and we appreciate and keep everybody on an eye on what we're doing. And, you know, q1 q2. Thank you, Unknown Attendee, Climb Global. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. www.climbglobal.com
And all the teams that we have internally just a lot of energy going into 2024 like I said, we're coming off for our sales kick off it's one of the best ones as we do our surveys with our teams are vendors that we think coin has ever had and like I said the opportunity to go into that and we appreciate and keep the everybody keep an eye on what we're doing and you know Q1 two two.
<unk>. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your appointment technician.
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