Climb Global Solutions (CLMB) has enjoyed a strong uptrend, with its shares climbing 149% over the past year. Recently, the company partnered with Scality, a leader in cyber-resilient storage software, to deliver advanced data storage solutions and expand its reach across North America. Climb reported impressive figures for the third quarter of 2024, with a 52% increase in net sales and more than doubled its net income compared to the same period in the previous year.
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The company’s remarkable growth is attributed to strategic acquisitions, organic growth, and forging new vendor relationships. Climb aims to continue its growth trajectory through strategic initiatives and potential acquisitions.
Partnership and Acquisitions
Climb Global Solutions is a technology company that distributes advanced software to corporate and value-added resellers, consultants, and system integrators via its Climb Channel Solutions branch. It also provides cloud solutions and resells software, hardware, and services under the Grey Matter name.
Climb Channel Solutions, a subsidiary of Climb Global, has recently entered into a partnership with Scality, a prominent player in the cyber-resilient storage software field. The strategic alliance aims to increase Scality’s customer base across North America by providing organizations with safe, scalable, and efficient storage solutions to cater to their ever-increasing data requirements. Climb Channel Solutions will distribute Scality’s comprehensive range of enterprise-quality storage and backup solutions as part of the partnership.
Finally, Climb Global’s acquisitions of Douglas Stewart Software & Services in July 2024 and DataSolutions in October 2023 have significantly contributed to the company’s revenue growth.
Top-and-Bottom-line Growth
In the third quarter of 2024, Climb demonstrated significant growth in key financial areas. Net sales jumped year-over-year by 52% to $119.3 million, and adjusted gross billings witnessed a 65% increase, rising to $465.2 million. An increase of 96% resulted in an adjusted EBITDA of $9.9 million. The company more than doubled its adjusted net income to $7.1 million or $1.55 per diluted share.
As of the quarter’s end, the company reported a decrease in cash and cash equivalents to $22.1 million from $36.3 million due to the acquisition of DSS and the timing of receivable collections and payables. Working capital also decreased by $12.3 million during this period. Despite this, Climb had minimal outstanding debt, with nothing outstanding under its $50 million revolving credit facility.
The company declared a quarterly dividend of $0.17 per share of common stock.
Moving forward, management plans to continue the firm’s growth trajectory by leveraging global infrastructure and actively scouting for M&A targets.
Positive Momentum and Value
The stock has been on an extended upward trajectory, climbing over 776% in the past five years. It trades in the upper quartile of its 52-week price range of $48.71 – $142.50 and shows ongoing positive momentum by trading above most moving averages. At a P/S ratio of 1.38x, it appears to be relatively undervalued compared to peers in the Information Technology sector, where the average P/S ratio sits at 3.32x.
The company is thinly followed by Wall Street. However, Barrington’s Vincent Colicchio, a five-star analyst according to Tipranks’ ratings, has recently increased the price target for the shares from $90 to $136 and maintained an Outperform rating, noting the jump in net sales and adjusted gross billings from the previous year can be attributed to both organic growth and revenue generated from recent acquisitions.
Climb Global Solutions is rated a Moderate Buy with a price target on CLMB stock of $136, which represents a potential upside of 6.68% from current levels.
CLMB in Review
Climb Global Solutions has had an impressive year with strategic initiatives like the partnership with Scality, propelling it to extend its reach across North America and offer advanced data storage solutions. The company’s robust results, including a 52% surge in net sales and over a 2x increase in net income, further reinforce its growth story. Acquisitions like Douglas Stewart Software & Services and DataSolutions have significantly fueled this revenue growth, with CLMB’s management planning to continue growth through further strategic acquisitions are confidence boosters for the future.
The stock shows positive momentum and value, making it an attractive option for investors.
