Shares of Distribution Solutions Group, Inc. (NASDAQ: DSGR) plummeted 5.30% in pre-market trading on Thursday, despite the company reporting mixed first-quarter results that included an earnings beat but a revenue miss.

The specialty distribution company announced Q1 2025 adjusted earnings per share of $0.31, surpassing analyst estimates of $0.29. This represents a 24% increase from the $0.25 per share reported in the same period last year. However, quarterly revenue of $478.03 million fell short of the expected $497.17 million, despite showing a 14.89% year-over-year increase.

While Distribution Solutions Group highlighted positive aspects of its performance, including organic growth and contributions from recent acquisitions, investors appear to be focused on the revenue miss and potential concerns about future growth. The company's cautiously optimistic outlook for 2025, mentioning macro uncertainties affecting U.S. companies, may have also contributed to the stock's decline.

Despite the overall negative market reaction, the company reported some encouraging developments, including margin expansion in its key business segments. Lawson's net margins improved from 11.4% to 11.9% year-over-year, Gexpro Services expanded from 11.0% to 12.6%, and TestEquity increased from 6.2% to 6.8%. However, the recent acquisition of Source Atlantic compressed overall margins, an issue the company plans to address in the coming quarters.