REVENUEBeat +21.7%
EPSBeat +14.1%
Actuals vs. estimates
| Metric | Actual | Consensus | Surprise |
|---|---|---|---|
| RevenueNet sales | $220.3M | $181.0M | ▲ Beat +21.7% |
| EPS(non-GAAP diluted) | $0.43 | $0.38 | ▲ Beat +14.1% |
Highlights & what matters
- Net sales of $220,306 thousand beat the $180,976 thousand estimate by 21.7%; adjusted diluted EPS of $0.43 beat the $0.38 estimate by 14.1%.
- No guidance is given.
- Gross billings rose 40% to $706.4 million, with Distribution up 41% to $680.5 million and Solutions up 14% to $25.9 million; effective margin rose 230 basis points to 44.6%.
- Net income rose 69% to $7.9 million while adjusted net income rose 34% to $8.0 million — the two growth rates are not telling the same story.
- The one thing that matters: the 69% net income growth is largely a prior-year comparison artifact. Adjusted net income rose 34% because the year-ago quarter carried an $860 thousand contingent-consideration charge and $594 thousand of acquisition costs. The real read is effective margin at 44.6% from 42.3%.
Key metrics
| Metric | Reported | Prior year | Change |
|---|---|---|---|
| Gross billings | $706.4 million | $504.6 million | increased 40% |
| Gross profit | $33.0 million | $25.7 million | increased 28% |
| Net income | $7.9 million | $4.7 million | increased 69% |
| Adjusted net income | $8.0 million | $6.0 million | increased 34% |
| Effective margin (adjusted EBITDA as a percentage of gross profit) | 44.6% | 42.3% | increased 230 basis points |
| SG&A as a percentage of gross billings | 3.0% | 3.2% | — |
Guidance changes
No financial guidance change disclosed.
Quality of earnings
- Reported earnings growth outruns the business. Net income rose 69% to $7,937 thousand while adjusted net income rose 34% to $8,026 thousand; the gap is the year-ago $860 thousand contingent-consideration charge and $594 thousand of acquisition costs, not current-quarter improvement.
- Part of the growth is bought, and the release says so without sizing it. Gross profit rose 28% to $33,010 thousand with contribution from the Interworks acquisition cited, and goodwill rose to $41,930 thousand from $36,838 thousand at year-end; no organic-versus-acquired split is given.
- Conversion improved on the measure management uses. Effective margin, adjusted EBITDA over gross profit, rose 230 basis points to 44.6%, and SG&A fell to 3.0% of gross billings from 3.2%.
Gotchas & watch items
- Take rate is compressing: gross profit grew 28% to $33,010 thousand against 37% net sales growth and 40% gross billings growth, so the mix is shifting toward lower-margin volume.
- Cash is stronger than the P&L shows, but not for earnings reasons: cash of $66,949 thousand against $36,563 thousand at year-end with no outstanding debt, which the release attributes to the timing of receivable collections and payables.
- A fourth deal lands after the quarter with nothing quantified: the NeoVAD acquisition in France closed subsequent to quarter end with no price, revenue or margin contribution disclosed.
- Concentration cuts both ways: 19 of the top 20 vendors grew sequentially, which is the strength cited, and also the measure of how narrow the line card is.