Climb Global Solutions Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Segment Information

Segment Information

3 Months Ended

Mar. 31, 2024

16. Segment Information:

The Company distributes software developed by others through resellers indirectly to customers worldwide. We also resell computer software and hardware developed by others and provide technical services directly to customers worldwide.

FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the public company’s Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s Chief Executive Officer, who has been identified as the Company’s CODM, primarily uses operating income as the measure of profit or loss to assess segment performance and allocate resources. Operating income represents net sales less costs of sales, excluding depreciation and amortization expense and operating expenses. Net sales and cost of sales, excluding depreciation and amortization expense are directly attributed to each segment. The majority of operating expenses are also directly attributed to each segment, while certain other operating expenses are allocated to the segments in a reasonable manner considering the specific facts and circumstances of the expenses being allocated.

The Company is organized into two reportable operating segments. The “Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “Solutions” segment is a provider of cloud solutions and value-added reseller of software, hardware and services to customers worldwide.

As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada, Europe and the United Kingdom with the domestic segments as the international operations provide

the same products and services to similar clients and are considered together when the Company’s CODM decides how to allocate resources.

Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit. The Company only identifies accounts receivable, vendor prepayments, inventory, goodwill and intangible assets by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided:


	Three months ended
	March 31,
	2024		2023
Net Sales:
Distribution	$	86,822	$	78,550
Solutions		5,600		6,490
		92,422		85,040
Gross Profit:
Distribution	$	14,215	$	12,728
Solutions		2,805		2,481
		17,020		15,209
Direct Costs:
Distribution	$	7,376	$	4,777
Solutions		1,381		1,301
		8,757		6,078
Segment Income Before Taxes: (1)
Distribution	$	6,839	$	7,951
Solutions		1,424		1,180
Segment Income Before Taxes		8,263		9,131

General and administrative	$	3,766	$	4,163
Acquisition related costs		123		22
Depreciation and amortization expense		871		713
Interest, net		203		112
Foreign currency transaction loss		(85)		44
Income before taxes	$	3,621	$	4,389

(1)	Excludes general corporate expenses including interest and foreign currency transaction loss



	As of		As of
	March 31,		December 31,
Selected Assets by Segment:	2024		2023

Distribution	$	196,893	$	242,927
Solutions		39,137		37,992
Segment Select Assets		236,030		280,919
Corporate Assets		62,292		54,179
Total Assets	$	298,322	$	335,098

Geographic areas and net sales mix related to operations for the three months ended March 31, 2024 and 2023 were as follows. Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.


	Three months ended
	March 31, 2024
	Distribution		Solutions		Total
Geography
USA	$	62,364	$	1,908	$	64,272
Europe and United Kingdom		18,285		3,406		21,691
Canada		6,173		286		6,459
Total net sales	$	86,822	$	5,600	$	92,422

Timing of Revenue Recognition
Transferred at a point in time where the Company is principal (1)	$	75,733	$	3,558	$	79,291
Transferred at a point in time where the Company is agent (2)		11,089		2,042		13,131
Total net sales	$	86,822	$	5,600	$	92,422

	Three months ended
	March 31, 2023
	Distribution		Solutions		Total
Geography
USA	$	56,743	$	3,666	$	60,409
Europe and United Kingdom		15,416		2,501		17,917
Canada		6,391		323		6,714
Total net sales	$	78,550	$	6,490	$	85,040

Timing of Revenue Recognition
Transferred at a point in time where the Company is principal (1)	$	68,568	$	4,833	$	73,401
Transferred at a point in time where the Company is agent (2)		9,982		1,657		11,639
Total net sales	$	78,550	$	6,490	$	85,040

(1)	Includes net sales from third-party hardware and software products.

(2)	Includes net sales from third-party maintenance, software support and services.

Geographic identifiable assets related to operations as of March 31, 2024 and December 31, 2023 were as follows.


	March 31,		December 31,
Identifiable Assets by Geographic Areas	2024		2023
USA	$	143,693	$	171,080
Canada		30,151		23,994
Europe and United Kingdom		124,478		140,024
Total	$	298,322	$	335,098

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-15

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
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-Paragraph 31
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-31

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Section 50
-Paragraph 32
-Subparagraph (d)
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
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-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-26

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
-Section 50
-Paragraph 34
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-34

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
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-Paragraph 41
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-21

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

+ Details