CLMB

Image source: The Motley Fool. Thursday, July 30, 2026 at 8:30 a.m. ET Chief Executive Officer - Dale Foster Chief Financial Officer - Matthew Sullivan Operator: Good morning, everyone, and thank you for participating in today's conference call to discuss Climb Global Solutions financial results for the second quarter ended June 30, 2026. Joining us today are Climb's CEO, Mr. Dale Foster; the company's CFO, Mr. Matthew Sullivan; and the company's Investor Relations adviser, Mr. Sean Mansouri with Elevate IR. By now, everyone should have access to the second quarter 2026 earnings press release, which was issued yesterday afternoon at approximately 4:05 Eastern Time. The release is available in the Investor Relations section of Climb Global Solutions website at www.climbglobalsolutions.com. This call will also be available for webcast replay on the company's website. Following management's remarks, we'll open the call for your questions. I would now like to turn the call over to Mr. Mansouri for introductory comments. Sean Mansouri: Thank you. 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 statements. Our presentation also includes certain key operational metrics and non-GAAP financial measures, including gross billings, adjusted EBITDA, adjusted net income and EPS and effective margin as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. I'll now turn the call over to Climb's CEO, Dale Foster. Dale Foster: Thank you, Sean, and good morning, everyone. We executed on several strategic initiatives in Q2 that are central Climb's long-term success. We generated double-digit organic growth with 19 of our top 20 vendors, benefited from our acquisition of Interworks and bolstered line card to make further investments and our systems need to support the larger and more efficient global platform. . Our strong vendor performance is evidence of the momentum we are generating across the business. Rather than pursuing scale for its own sake, we focus on strengthening existing partnerships and identifying emerging technologies that offer a better value proposition for our reseller network and their customers. During the second quarter, we evaluated 34 new brands and signed agreements with only 2 of them. Our first agreement was with Ivanti, a Utah-based global enterprise IT and security software company with more than 1,000 employees and approximately $1 billion in annual revenue. Ivanti provides an AI-powered platform designed to help organizations manage, automate and secure complex digital workplaces with a primary focus on cases spanning endpoint management, IT service management, patch and exposure management and Zero Trust security. Through this relationship, Climb will expand channel access to Ivanti's autonomous endpoint management offering and enabling partners to help customers improve operational efficiency and strengthen security and reduce risk. We also signed a company called Check MK, a German-based provider of comprehensive IT infrastructure monitoring and observability solutions. Its platform helps organizations track and the health and performance and availability of their entire technology stack, including network servers, applications and cloud resources. Check MK combines automated discovery, customizable dashboards and enterprise-grade scalability to support a broad range of IT environments and give customers greater visibility into increasingly complex infrastructures. In addition to those new agreements, we expanded 2 existing relationships. First, we broadened our relationship with Logic monitor from a few select customers to all of North America, giving our partners more access to its AI-powered hybrid observability platform. We also launched Quantum on our primary line card. In Q2, Quantum's portfolio includes high-performance storage, AI-enabled workflow management and long-term data preservation solutions designed to help public and private sector end users manage data growth and storage constraints. These expanded relationships illustrate how we work with our vendors to build momentum over time. We begin with a focused go-to-market strategy, invest in the relationship as demand develops and expand our support as the opportunity grows. Darktrace is an example of this strategy in action. Within 12 months of joining the Climb platform, Darktrace became 1 of our top 20 vendors and with the largest growth driver among our new vendor relationships during the quarter. Fortinet also continues to ramp meaningfully with gross billings increasing materially from Q1 as we expand our internal capabilities and work closely with Fortinet's leadership team to expand the channel. While the relationship is still developed, we are encouraged by the progress to date and believe Fortinet be 1 of Climb's largest vendor relationships over time. We also are making progress on the development of our cloud platform, which is intended to create a more efficient way for customers and partners to purchase, manage and renew cloud-based software through the client platform. During the quarter, we hired an experienced platform architect who is developing the initial structure and technical blueprint, which we expect to complete soon. Adobe will be 1 of the first vendor prioritization priorities for the integration. And over time, we expect the same platform capabilities to support additional vendor lines. Alongside these organic initiatives, we continue to integrate Interworks into our broader global platform. We will preserve the local expertise and relationships that have supported Interworks' success while identifying opportunities to leverage Climb's broader infrastructure across the region. These initiatives, aligned with the strategy we outlined earlier this month at our first Investor Day at the NASDAQ market site, where we provided a deeper look at Climb's unique model and long-term priorities. We also presented our goals to more than double our FY 2025 adjusted EBITDA by 2030 to organic growth, deeper vendor relationships, partner relationships and operating leverage and strategic M&A. Thank you again to the investors that joined us in person and as well as those that joined us by webcast. As we position Climb for the next phase of growth, we strengthened our Board with the appointment of Peter Bell. Peter brings more than 35 years of experience across venture capital technology, operations and strategic advisory roles. His experience identifying disruptive technology, scaling technology business and navigating the M&A landscape is directly relevant to our long-term strategy and will be -- and will add operating investment, strategic perspective to our team as well as scale of our global platform. Looking ahead, we are focused on driving organic growth, selectively expanding our line card and evaluating accretive M&A opportunities with Europe as our key focus area. Our strong balance sheet provides the flexibility to invest in these priorities while maintaining a disciplined approach to capital allocation. We believe these initiatives, coupled with our robust balance sheet will enable us to continue driving value to our shareholders. With that, I will turn the call over to Matt Sullivan, our CFO, for the financial results. Matt? Matthew Sullivan: Thank you, Dale, and good morning, everyone. A quick reminder as we review the financial results for our second quarter, all comparisons and variants commentary refer to the prior year quarter unless otherwise specified. . As reported in our earnings press release, gross billings in the second quarter of 2026 increased 17% to $587.3 million compared to $500.6 million in the year ago quarter. Distribution segment gross billings increased 8% to $562.9 million while Solutions segment gross billings increased 4% to $24.4 million. Net sales in the second quarter of 2026 increased 9% to $174.2 million compared to $159.3 million in the prior year period. This increase reflects double-digit organic growth from new and existing vendors as well as the contribution from our acquisition of Interworks on February 24, 2026. Gross profit in the second quarter of 2026 increased 15% to $30.2 million compared to $26.3 million for the same period in 2025. The increase was driven by organic growth from new and existing vendors in both North America and Europe as well as the contribution from Interworks. Selling, general and administrative expenses in the second quarter of 2026 were $20.7 million compared to $16.4 million in the prior year period. The year-over-year increase primarily reflects SG&A associated with Interworks and variable sales compensation attributed to the growth in gross profit. SG&A in Q2 2026 was also impacted by higher legal and professional fees as well as increased investments in IT infrastructure designed to improve workflows, strengthen our operating infrastructure and drive efficiencies across our global sales organization to support future growth. SG&A as a percentage of gross billings was 3.5% for the second quarter of 2026 compared to 3.3% for the prior year period. Net income in the second quarter of 2026 was $5.5 million or $0.30 per diluted share compared to $6 million or $0.33 per diluted share for the prior year period. Adjusted net income was $5.5 million or $0.30 per diluted share compared to $6.4 million or $0.35 per diluted share for the year ago period. Both net income and adjusted net income in the second quarter of 2026 were impacted by a higher effective tax rate to the prior -- compared to the prior year period. Adjusted EBITDA in the second quarter of 2026 was $11.3 million compared to $11.4 million in the same period in 2025. The decrease was primarily driven by the aforementioned investments focusing on efficiencies to support long-term growth initiatives. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit was 37.5% compared to 43.3% for the same period in 2025. Turning to our balance sheet. Cash and cash equivalents were $56.6 million as of June 30, 2026 compared to $36.6 million on December 31, 2025. The increase in cash was primarily attributed to the timing of receivable collections and payables. As of June 30, 2026, we have no debt or outstanding borrowings under our $50 million revolving credit facility. Our strong financial position gives us flexibility to support working capital needs, invest in the business and actively pursue M&A opportunities. We will continue to deploy capital strategically and evaluate opportunities based on their fit and ability to strengthen the client platform while maintaining the discipline needed to advance our long-term objectives. This concludes our prepared remarks. Operator, please open the line for questions. Operator: [Operator Instructions] And we'll take our first question from Keith Housum with North Coast Research. Keith Housum: Appreciate the opportunity. As we kind of think about the results for this quarter, if I compare to last year, if I remember right, last year had some more onetime items related to vast data, how tough of comparable was that for you this quarter? Dale Foster: Yes, Keith -- go ahead, Matt. Matthew Sullivan: No, you go head. Dale Foster: So Keith, number one, thanks for joining us investor in New York, it was good to see you. The -- we knew it was going to be a tough comp going into Q2 because we had a $30 million deal with Vast data and then another 1 that was going to be in Q3 got pulled into Q2. So we had a really tough comp to do that. But going into the quarter, 1 of our bigger vendors had a down Q1 and really came back in Q2. So that helped it out, but we really were thrilled by the teams. And like I mentioned in the opening remarks with Darktrace, really going to the next level, some of the other performers. And when -- if you remember when I first said, we had 19 of our 20 vendors outperformed and grew in Q2. So that tough comp, but good to see our top vendors taking off. . Keith Housum: No, absolutely. And you guys mentioned Fortinet having significant growth this quarter versus the first quarter. Is there a good opportunity for them to eclipse the speed or pace that Darktrace has achieved over the past year? How are you thinking about Fortinet's ability to climb, I guess, over the next 12 months? Dale Foster: For sure. I mean, it was a 10x factor from Q1 of this year to Q2 of this year. Of course, the bigger you get, it doesn't grow as fast. But we're hosting QBRs in our locations. Our teams are so much more integrated than they were even in Q1. We started this relationship in November. So it will continue. And I think I said it be 1 of our top 5 vendors probably this time next year. It continues to grow. And if you looked at their financial results this week, for a company that's $6 billion, $7 billion in size, they grew 14% in Q1. Q2, they were up double digits as well. So just a great relationship. And as your teams get closer and closer, everything gets faster, right, as far as getting more of our customers on board. And Fortinet's portfolio goes so wide, right? They go from firewalls all the way to access and security cameras. So just a good technology company that we're going to expand on. Keith Housum: Great. Good to hear it. And as I look at your SG&A expenses, I know you guys are held a lot of different fires going on right now in terms of some of the IT efficiencies, and so we're restructuring legal fees. As you look at that, how much would you say was onetime or nonrecurring? And how should we think about for the rest of the year? . Dale Foster: Go ahead, Matt. Matthew Sullivan: Yes. So in the quarter, we had about $500,000 of what I would call nonrecurring type expenses. It relates to some of the legal and professional costs and then some of the investments in our IT infrastructure. So looking -- thinking about it from an effective margin perspective, we declined from -- our SG&A as a percentage of gross billings was declined by 20 basis points from Q1 to Q2, which was consistent with our trajectory from Q1 to Q2 of last year. So that's kind of how we're thinking about it that the consistent effective margin flow that we've historically experienced is what we expect to see in the future. Dale Foster: Great. And if you take up -- and Keith real quick, I mean, I hate talking about onetimers because it seems like every quarter, you have a 1 timer, right? Like it is 1 time, but it's something different. But if you look at -- we know we have our internal budget and stuff, and we are right on track for the investments that we put in. And then, of course, we're very opportunistic as a company. So when we say, "Hey, you know what, we should invest more in this piece of it, and it's going to be an expense that we didn't budget for it". We're still going to do it because the efficiency that we get for the rest of our next 10 years is what's doing now. So we're -- that's what we've done in both Q1 and Q2 and some of it will be in Q3. . Keith Housum: So in your head, Dale, in terms of like the investment in the cloud marketplace and the IT, how fast is your payback? Is that a payback you can get back in a year? Dale Foster: From the IT side, for sure. Yes. And we're doing -- so we've talked about our ERP went live 2 years ago, July. And now we're tweaking it, and we're trying to use the best tools for the job. So with Vishal coming on, he's been on board a year now. We have expected a lot from him. He's delivered getting the right team members in. So you're going to continue to see that piece of it. And we know -- I'm going to get the comments, I mean, on our SG&A side, we need to keep a very close watch on and continue to get the efficiency we can drive it down. . Keith Housum: Right. Okay. Guys, I appreciate the opportunity to look forward to seeing the growth going forward. Operator: Our next question will come from Vincent Colicchio with Barrington Research. Vincent Colicchio: Yes, Dale. I'm curious, are geopolitical factors have any impact on sentiment in Europe? And also, are you hitting your cross-selling objectives in Europe setting Interworks side given how recent that is? Dale Foster: Yes. On the cross-selling side, I'll take that first, not that big of an impact other than the teams are getting to know each other, and we're going to start seeing vendors getting loaded on to the platform that they're using over there. So we'll see that piece of it. But we're also getting the teams integrated together on just territory vendors because we both have the Microsoft agreement for all of Europe. So we now think about it we're in Southern Europe with Greece or in U.K., Ireland and we're going to just keep going to the middle of Europe on that side. On the macro side, we had a Board meeting this week. It came up. We talked about macro environment. With -- I know it sounds -- we're $2 billion, we're still so extremely small in our market. And the companies that we carry in the pockets of -- that we go after resellers, we just haven't seen it. I mean, of course, it's going to be on the fringes, but nothing really impact. We're not in the hardware business. So logistics isn't an issue, just like it wasn't during COVID. So we just haven't seen it. And I think I say that a lot, we're still that small. Vincent Colicchio: VAS data was good to you, I believe, in the year ago period. Does that pipeline there remains substantial? Dale Foster: It does. And as the people that have been on this call before, I mean, it's just going to remain lumpy because the deals are so large in size. A lot of it is a waiting game with data centers being built. That data is known for delivering data to AI engines and LLMs very quickly. That's their claim. And they have less than 100 customers worldwide. So it's going to be lumpy, and we have a pretty strong pipeline with them already. Vincent Colicchio: And has the gross billings momentum you experienced in the quarter carry through in the early Q3? Dale Foster: We're just finishing up July. We'll have a strong July, some of it falling over from the quarter, which happens. But yes, we look at the percentage that is pretty traceable between first half and second half of the year. In our second half of the year is always stronger than our first half, and we have the same expectations for that. Fortinet is going to be a driver in Q3 and Q4. We'll talk about that again. But yes, we have good momentum going into it. . Vincent Colicchio: And 1 for Matt. Could you remind us what the tax rate was so high in this quarter? . Matthew Sullivan: Yes. So compared to Q2 of last year, our effective rate was higher this quarter than the Q2 of last year because there was a discrete item related to -- or there was a greater adjustment for a discrete item in Q2 of last year, for when restricted stock vests. So as we've had the run-up in the stock over the -- or stock value over the years, as awards vest from many years prior when the fair value was much lower the company receives a tax benefit. Now, as those much prior year rewards become fully vested and the awards are more closer -- the award fair value or more closer than to our value of the stock today, we have less of a discrete favorable impact on our taxes, which is, therefore, driving our tax rate to be more consistent with where we would expect it going forward. Operator: Our next question comes from Bill Dezellem with Tieton Capital. William Dezellem: I have a group of questions. First of all, Fortinet initially had restricted you from certain opportunities, and you referenced that at the analyst meeting. Would you update on where we sit today and what success you are seeing with Fortinet specific to that issue now? Dale Foster: Yes. So we were restricted until May 4 of this year. I think it was the top 50 customers. They didn't want disruption. The goal with Fortinet has always been for net new business. And if you look at -- like I mentioned, our technology stack goes extremely wide. And if you look at a lot of our vendors, our vendors are extremely narrow as far as where they go into security stack. So for us, it's just a great fit. . So yes, it ended May, some share shift will happen. But it's -- and it's some of the customers, and what we like to say is let the customers choose where they want to acquire product from, some of it helped there. We have some really cool initiatives inside teams for generating net new business. And then, we're looking at where -- if you look at -- if you go to Fortinet's website and you look at their technology partnerships, there are so many that we have in common, the vendors we already had on our line card. So we're just doubling down on those. We're doing more events together and do truly cross-sellable stuff. So -- yes, you figure we had April and May, we still go touch the top 50. We're seeing some of the stuff come from those groups, and they'll continue the momentum. William Dezellem: And Dale, that's, I guess, part of where I was going is relative to those top 50, are you seeing -- to what degree are you seeing them making choices to move to Climb? Dale Foster: Yes. In region, in territory, and this goes back to what we are known for the company, right? We are a show up type of sales force with all of our -- and you got to meet a lot of them in New York, these sellers are in region in territory visiting their customers. They do not get that experience from any of our competitors, right? We don't do overlays in the company. So when you go and you talk to our field rep, that's the person that's going to deal with everything to do with Climb and what you're acquiring. So we're going to see more of it. As we get more in line with their field sellers as well, that's when good things happen. There's -- the bigger resellers out there, those are bid opportunities that will come up over the next couple of years. But really, it's hand-to-hand combat in all the regions. William Dezellem: Great. So essentially, we should not think about this as a light switch turning on with these top 50 and more so that as the relationship with the Climb team builds, they're simply going to be -- it's just going to be a natural progression where they're going to get more business to the people that they see and like that are showing up every day. Dale Foster: For sure. And it's the buying experience, right? I mean, if we can make it more streamlined, we're going to get more customers. If we are giving them products that they can take to their end users that show a differentiator or they can build more of the technology, and we're mostly security in that stack, that's another positive. But if you look at just the North American sales for Fortinet, and they put it out there, it's about $2.5 billion, and that all goes through 4 or 5 distributor partners. So it's a big, big pond. We're trying to focus on our resellers what they want in that stack and then try to grow it to buy more Fortinet products. . William Dezellem: And speaking of a big pond, Dale, the Ivanti relationship -- we didn't talk a lot about that at the Analyst Meeting. Would you dive into that and go into some more detail how fast that it will ramp? And -- I mean to just ultimately, the size that you think this could be for line. Dale Foster: Yes. And the reason we didn't get into it too much because we're just getting launched. We just had our launch plan with them in all the territories. But let me just back up to -- when I talk about onboarding vendors and how Charles and his team go through picking vendors, and we are just continuing to look upstream at larger vendors because if we're going to move the needle, we can't sign a vendor that we're going to get to $5 million to $10 million to $15 million in a couple of years, right? It's not going to matter. If it's cross-sellable and it's easy, part of adding to a purchase order, hey, that's great. And we'll look at that. But Ivanti, $950 plus million, great team. We get to meet the sea level guys a couple of weeks ago in New York with the Refresh program. So I only see good things, and we're getting more and more at bats with bigger vendors. We have another 1 we'll announce in a couple of weeks that is a $650 million vendor in the security stack space. So that we're going to continue to look at the bigger vendors that make sense for us that don't have the same go-to-market or technology that is -- it might be an overlap at 20%, but not more than 50%. But you'll see that relationship grow and grow, and Ivanti came to us and said, okay, you guys are out in the field. We're not getting that from our other channel players. And we're going to see more of that move over as well. As they've moved to, I don't know, how to put it nicely, cancel contracts with some of our competitors because they're just not getting out of what they want. William Dezellem: And ultimately, with Ivanti, do you see this as a top 20, top 10, top 5, where do you see them ultimately falling? Dale Foster: Top 20, definitely a top 20 vendor. And we -- like I said in the opening remarks, the Board meeting this week, went through some of the stuff, and we pulled some of the data, and I'll give the shareholders some of it. So in 2022, we had 48 vendors that made up about 90% of our of our adjusted gross billings. And today, 84 vendors make up 98%. So you can see we're much more diversified. Of course, I would like that number to be a little less because we're trying to continue to trim off vendors that are burning too much time of my core team and put them into our Climb Elevate group. But we're very diversified and then what makes up our -- we have 45 vendors that make -- that do more than $10 million in sales. And in 2022, we had only 22 vendors in 2022 that did $10 million or more. So better vendor portfolio that we're delivering and working on more focused vendors. William Dezellem: Great. And then 1 additional question, please. What additional details do you have on the marketplace? I think you mentioned that Adobe will be first and additional details beyond what you had earlier this month in New York. Dale Foster: So we've had a platform all along. And we've -- the issue with having a platform that you don't control is you don't control the road map of when you want a vendor added. So if I look at just back to the efficiency play, and I want a vendor added because it's going to save us so much time and money internally just transacting that vendor. I have to go into a road map of whoever I use as a platform and wait for that to come up. And even if we do some of the devs on ourselves, it still takes longer. So we're going to have kind of a hybrid. We're developing with the architecture that has already been pretty much set, and then, we'll have a committee as far as what we really need to that because we want the experience to be what the customer wants, right, how much of an online experience they can determine how much an individual in-person relationship they can determine we want to have both of those. And right now, they have the personal experience but we need 1 that's more online that they can get answers a lot faster than waiting for their teams. So it will be a continued investment that we have. This is the first step bringing somebody that Vishal has had a history with. I've known the companies the work for. So we'll announce this and continue as we go. But we'll have some of our stuff done in Q4 of this year. Operator: We'll take our next question from Howard Group with Far Hope Capital. Unknown Analyst: First, congratulations once again on a great growth in billings. I mean, you guys continue to do excellent work there. I just -- I have 2 questions. One, just a little follow-up on the SG&A line. Going up 26% year-over-year, looks kind of troubling, but obviously, we talked about that in Q1 because that was where the jump was and Q1 to Q2, you just -- you actually took it down from 3.7% to 3.5% of your gross billing. But kind of the target was always that 3% level, and it's kind of sticky here and going up a little bit Q1 to Q2. What do you see kind of as a percentage of gross billings, the SG&A? And what's your target over the rest of this year and into 2027? Can you get that down to 3%? Is that a reasonable target near term? Dale Foster: So I want to say yes, but a couple of things will happen, and we'll call them out, right? If we have some bigger bad deals. And if I look -- and that went through the last 8 quarters, and we had a couple of times we dipped below 3%. And some of the times, a couple of quarters are just above 3%. So of course, that is the goal. But it's the catch 22 part of it is if I invest in some of the technology that will make me efficient for years to come, I want to do that now and not wait. So that is some of what's being turned up in my SG&A. So I'm trying to be a good steward of it now because I know that we focus quarterly, but I don't want to sacrifice something that if I could do and put in place now for an efficiency that's going to give me 2027 at a much better rate, and I don't have to pay those dollars then, I'll do that. So yes, that's our goal. And we know that our Q3 and Q4 are very strong. Our Adobe relationship really kicks off because it's the buying season. So we'll see if those numbers go up without putting extra resources on. We're making some cost-cutting measures inside. We'll talk about that in Q3 as well. Matthew Sullivan: Just to reiterate what Dale was saying there. Historically, our effective margin grows from Q1 to Q4 of every year, ramps up from Q1 to Q4 of every year. There are fluctuations in it from given quarter-to-quarter. But if you -- and we've talked quite a bit about the large non-reoccurring at this point, vast transactions from Q2 of last year. And if you take the impact of that out, and take the impact of Interworks' contribution from Q2 of this year, who obviously wasn't in Q2 of last year, we still grew adjusted EBITDA at the strong double-digit organic growth or strong double-digit growth levels of gross billings and gross profit. So yes, there's a couple of things to peel back there and a couple of things to continue to tweak, but still a strong quarter when you take those pieces out of it. William Dezellem: Right. So I guess the other -- the flip side of that, though, is from where you were like 3, 4 years ago, when I first started covering you guys, it you're adding so much more service to your offering. It's not just here's a product buy, your personal hands on. And if it does take 3.5% SG&A, is there a way of getting your gross margin on billings up from that 5% to 6% and capture it that way? Is that something you're looking at or something you think is possible? Or is this market just doesn't allow that? Dale Foster: Yes, Howard. And I would say North America, the market doesn't allow it, right? And that's the big piece of it, and I talked about it in New York. And that is some of the acquisition plans that we have overseas, they have double digits to triple what we are, right? So if we're doing 5%, they're doing 10% to 15% because the competition is less. And if you look at the territory of selling in the U.S., we're looking at that as in Europe as territory selling, but it's typically in country. So the margins are higher, less competition. And like I said, in New York, if we can mimic our size in the U.S., in Europe and beyond, we can move that because if we look at the margins, it's the contribution of my solutions team is 11%, 12%. It makes a big impact. It makes them look double the size. But the issue has always been, can we do it as efficiently in Europe and beyond as we do in the U.S., and that is what we're working on with our systems and platform, where we're cutting some of the costs out because we have been becoming more efficient. So -- can we -- if you asked me this a couple of years ago without the acquisitions and where we're targeting, I would have said, it's really tough to do. And now I'm going to change that and say, we can do that. And you'll see us on some of our acquisitions, look at the Greek side of things, the margin profile is much better. They're small, so that's why we need to grow that. But we'll -- I think we can move that number. Unknown Analyst: Great. And my second question is on the M&A environment. And at the Investor Day, what I heard was you guys kind of are picking up the pace maybe on at least the evaluations and the targets and obviously increasing the size that you could do in an M&A. Can you comment on -- is that a correct interpretation? Or what do you see looking forward the rest of this year on your M&A target list and your ability to do bigger deals than you've done before? Dale Foster: You were spot on, Howard. And then -- and this was -- this meeting that we had with the Board this week was really just for me to lay out the strategy for the next 3 to 5 years and making sure that the Board and I are aligned on where we're going. And we're not afraid if we want to take on some debt. But yes, those 2 things you said, we're accelerating the targets. We've had them all along, and like I've said in the past, I've got to get comfortable with that target because our business is a relationship business. And what's the relationship with their vendors, what's the relationship with their customers, how well are they like in the market, do they have a lot of the same philosophy as go-to-market and culture that we do. So it takes some time, but I've been working on them for the last 2 to 3 years. And now, we are at the point where we've got some really good targets, ones that we want to get accomplished. And we've got 2 that are very large that we can do. We're not going to be able to do them with cash, but we'll use the best form of capital to do that, and that's probably in the form of debt. . Operator: At this time, there are no further questions in queue. I will now turn the meeting back to Dale Foster. Dale Foster: Thank you, operator. Appreciate it, and thanks again for joining the call. I want to thank the Greater Climb team. And when we talk about relationships, we have to talk about it in the form of going to customers and going to our vendors. We're -- they're both our customers. Our teams are just doing a great job on both sides of that. We're halfway through 2026, a lot of momentum going into the second half, and we look to have a great year for 2026. So I appreciate it. Thank you, operator. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect. Before you buy stock in Climb Global Solutions, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Climb Global Solutions wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* Now, it’s worth noting Stock Advisor’s total average return is 953% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 7, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Climb Global Solutions (CLMB) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved double-digit organic growth with 19 of the top 20 vendors, demonstrating strong momentum across the core business despite a difficult year-over-year comparison involving a large prior-year deal. Maintained a highly selective vendor onboarding process, evaluating 34 new brands but signing only two (Ivanti and Check MK) to ensure a high-value proposition for the reseller network. Successfully transitioned Fortinet from a new relationship to a material growth driver, with gross billings increasing 10x from Q1 to Q2 as internal capabilities expanded. Prioritized 'show up' sales engagement in local territories as a key differentiator against larger competitors, fostering deeper trust with regional resellers. Integrated the Interworks acquisition to preserve local expertise while leveraging Climb's broader global infrastructure for scale. Diversified the vendor portfolio significantly, increasing the number of vendors generating over $10 million in sales from 22 in 2022 to 45 currently. Invested in a new cloud platform architect to develop a technical blueprint for more efficient cloud-based software management, with Adobe as the initial integration priority. Management aims to more than double FY 2025 adjusted EBITDA by 2030 through a combination of organic growth, operating leverage, and strategic M&A. The second half of the year is expected to be seasonally stronger than the first, driven by the Adobe buying season and continued ramp-up of the Fortinet relationship. Strategic M&A focus is shifting toward larger targets in Europe, where higher margin profiles and less competition offer significant accretion potential. Ongoing IT infrastructure investments are expected to yield long-term efficiency gains and drive down SG&A as a percentage of gross billings over the next several years. The company is prepared to utilize debt to fund larger, high-quality acquisition targets that align with its global platform strategy. Q2 results faced a 'tough comp' due to a $30 million deal with Vast Data in the prior year period that did not recur at the same scale. SG&A expenses included approximately $500,000 in nonrecurring costs related to legal fees, professional fees, and IT infrastructure investments. The effective tax rate was higher year-over-year due to a diminishing discrete tax benefit from older restricted stock awards that have now fully vested. Gross billings from the Vast Data relationship are expected to remain 'lumpy' due to the large-scale nature of data center and AI engine projects. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed that restrictions on the top 50 Fortinet customers ended on May 4, allowing Climb to compete for larger share shifts. Fortinet is projected to become a top 5 vendor by next year as Climb leverages its wide security stack and regional sales presence. Management acknowledged the goal of reaching 3% SG&A as a percentage of gross billings but prioritized current investments in technology to ensure 2027 efficiency. Effective margins typically ramp from Q1 to Q4 annually, and management expects this trend to continue as seasonal volumes increase. Climb is accelerating its evaluation of targets and is now considering 'very large' acquisitions that would require moving beyond cash-on-hand to utilizing debt. The focus remains on targets with strong vendor/customer relationships and cultural alignment, particularly in the European market. Ivanti is expected to become a top 20 vendor for Climb, filling a gap for larger, upstream security and IT management solutions. Management noted that larger vendors like Ivanti are increasingly seeking Climb's 'field-based' sales model over larger, less personal competitors.

Interested in Climb Global Solutions, Inc.? Here are five stocks we like better. Q2 growth remained solid: Gross billings rose 17% year over year to $587.3 million, while net sales increased 9% to $174.2 million and gross profit climbed 15% to $30.2 million, helped by organic growth and the InterWorks acquisition. Profitability declined amid higher costs: Net income fell to $5.5 million from $6 million, and adjusted EBITDA edged down to $11.3 million as Climb absorbed acquisition-related expenses, higher legal and professional fees, technology investments, and a higher tax rate. Expansion initiatives are accelerating: Fortinet billings surged sequentially after customer restrictions ended, while Climb added Ivanti and Checkmk, developed a cloud platform, and evaluated larger European acquisitions that could require debt financing. Climb Global Solutions (NASDAQ:CLMB) reported second-quarter results marked by higher gross billings, sales and gross profit, while net income and adjusted EBITDA declined as the company absorbed acquisition-related costs and increased investments in technology infrastructure. For the quarter ended June 30, 2026, gross billings rose 17% year over year to $587.3 million. Distribution segment gross billings increased 8% to $562.9 million, while solutions segment billings rose 4% to $24.4 million. Net sales increased 9% to $174.2 million, supported by double-digit organic growth from new and existing vendors as well as a contribution from the February acquisition of InterWorks. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Gross profit increased 15% to $30.2 million, driven by organic growth across North America and Europe and the InterWorks contribution. However, selling, general and administrative expenses climbed to $20.7 million from $16.4 million a year earlier. CFO Matthew Sullivan said the higher expense base reflected InterWorks-related SG&A, variable sales compensation tied to gross-profit growth, higher legal and professional fees, and investments in IT infrastructure. SG&A represented 3.5% of gross billings, compared with 3.3% in the year-earlier period. → 3 Value ETFs to Consider as Growth Stocks Lag Behind Net income declined to $5.5 million, or $0.30 per diluted share, from $6 million, or $0.33 per diluted share, a year earlier. Adjusted net income was also $5.5 million, or $0.30 per diluted share, compared with $6.4 million, or $0.35 per diluted share, in the prior-year quarter. Adjusted EBITDA was $11.3 million, compared with $11.4 million in the second quarter of 2025. Effective margin, defined by the company as adjusted EBITDA divided by gross profit, declined to 37.5% from 43.3%. → 5 AI Stocks Are Pulling Back—Which Growth Catalysts Still Look Strongest? Sullivan said quarterly income results were affected by a higher effective tax rate. The prior-year quarter benefited more substantially from a discrete tax item related to restricted stock vesting, he said. The company had approximately $500,000 of nonrecurring legal, professional and IT-related expenses in the latest quarter, according to Sullivan. CEO Dale Foster said 19 of Climb’s top 20 vendors posted growth during the quarter. The company evaluated 34 new brands and signed distribution agreements with two: Ivanti, an enterprise IT and security software provider, and Checkmk, a provider of IT infrastructure monitoring and observability software. Climb also broadened its LogicMonitor relationship from selected customers to all of North America and added Quantum to its primary line card. Foster said Darktrace became a top-20 vendor within 12 months of joining Climb’s platform and was the largest growth driver among its newer vendor relationships in the quarter. Fortinet’s gross billings increased by a factor of 10 sequentially from the first quarter, Foster said. Restrictions preventing Climb from serving Fortinet’s top 50 customers ended May 4. Foster said the company is expanding its internal capabilities, conducting joint events and pursuing opportunities with technology partners shared by Fortinet and Climb. He said he expects Fortinet could become one of Climb’s top five vendors within roughly a year, though the relationship remains in development. Foster characterized Ivanti as a potential top-20 vendor over time. He also said Climb has broadened its vendor base: 84 vendors accounted for about 90% of adjusted gross billings, compared with 48 vendors in 2022. The company now has 45 vendors generating more than $10 million in sales, compared with 22 in 2022. Climb is developing a cloud platform intended to streamline purchases, management and renewals of cloud-based software for customers and partners. The company hired a platform architect during the quarter to develop the initial structure and technical blueprint. Adobe is expected to be among the first vendors prioritized for integration, and Foster said certain platform work is expected to be completed in the fourth quarter. The company is also integrating InterWorks, while seeking to preserve its local expertise and customer relationships. Foster said Climb expects to begin adding vendors to the platform used by InterWorks and sees opportunities to coordinate European operations, including around their Microsoft agreements. On the macroeconomic environment in Europe, Foster said Climb has not experienced a material impact from geopolitical conditions. He noted the company remains relatively small in its markets and does not operate in hardware distribution, reducing exposure to logistics disruptions. Climb ended the quarter with $56.6 million in cash and cash equivalents, up from $36.6 million at year-end. The company had no debt and no borrowings under its $50 million revolving credit facility. Sullivan said the cash increase was primarily related to the timing of receivables collections and payables. Management said Europe remains a key focus for acquisition activity. Foster told analysts that Climb has accelerated its review of targets and is evaluating larger opportunities that may require debt financing rather than cash alone. The company reiterated a goal presented at its investor day of more than doubling fiscal 2025 adjusted EBITDA by 2030 through organic growth, deeper vendor and partner relationships, operating leverage and strategic acquisitions. Looking into the second half, Foster said July was expected to be strong and that Climb historically generates a stronger second half than first half. He cited Fortinet and Adobe’s buying season as potential contributors to momentum in the third and fourth quarters. Climb Global Solutions Inc operates as a value-added information technology (IT) distribution and solutions company in the United States, Canada, Europe, the United Kingdom, and internationally. It operates in two segments, Distribution and Solutions. The company distributes technical software to corporate and value-added resellers, consultants, and systems integrators under the name Climb Channel Solutions; and provides cloud solutions and resells software, hardware, and services under the name Grey Matter. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Climb Global Solutions Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Gross Billings: $587.3 million, a 17% increase from $500.6 million in the prior year quarter. Net Sales: $174.2 million, a 9% increase from $159.3 million in the prior year period. Gross Profit: $30.2 million, a 15% increase from $26.3 million in the same period in 2025. SG&A Expenses: $20.7 million, compared to $16.4 million in the prior year period. Net Income: $5.5 million, or $0.30 per diluted share, compared to $6.0 million, or $0.33 per diluted share, in the prior year period. Adjusted Net Income: $5.5 million, or $0.30 per diluted share, compared to $6.4 million, or $0.35 per diluted share, in the year-ago period. Adjusted EBITDA: $11.3 million, compared to $11.4 million in the same period in 2025. Effective Margin: 37.5%, compared to 43.3% for the same period in 2025. Cash and Cash Equivalents: $56.6 million as of June 30, 2026, compared to $36.6 million on December 31, 2025. Distribution Segment Gross Billings: Increased 8% to $562.9 million. Solutions Segment Gross Billings: Increased 4% to $24.4 million. Warning! GuruFocus has detected 2 Warning Sign with CLMB. Is CLMB fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Climb Global Solutions Inc (NASDAQ:CLMB) generated double-digit organic growth with 19 of its TOP20 vendors in Q2 2026. The company signed strategic new vendor agreements with Ivanti and CheckMK, and expanded relationships with Logic Monitor and Quantum. Darktrace became a TOP20 vendor within 12 months of joining the platform, and Fortinet gross billings increased materially from Q1. Climb Global Solutions Inc (NASDAQ:CLMB) is making progress on its cloud platform development, hiring an experienced architect and expecting to complete the initial blueprint soon. The company has a strong balance sheet with $56.6 million in cash and no debt, providing flexibility for M&A and investments. Adjusted EBITDA in Q2 2026 was $11.3 million, slightly down from $11.4 million in the prior year period. Effective margin (adjusted EBITDA as a percentage of gross profit) decreased to 37.5% from 43.3% year-over-year. SG&A expenses increased 26% year-over-year due to investments in IT infrastructure, legal fees, and variable compensation. Net income declined to $5.5 million from $6.0 million in the prior year quarter, impacted by a higher effective tax rate. The company faced a tough year-over-year comparison due to large one-time VAST data deals in Q2 2025. Q: How tough of a comparable was the Q2 2025 quarter due to large one-time deals with VAST Data? A: CEO Dale Foster acknowledged it was a tough comp due to a $30 million deal with VAST Data and another deal pulled into Q2 2025. However, strong performance from 19 of the top 20 vendors, including a rebound from Sophos and growth from Darktrace, offset the difficult comparison. Q: Can you provide an update on the Fortinet relationship, specifically regarding the restriction from certain opportunities and the growth trajectory? A: CEO Dale Foster noted that the restriction on the top 50 customers ended on May 4, 2026. Fortinet gross billings grew 10x from Q1 to Q2. The company is focusing on net new business and cross-selling with common technology partners. Foster expects Fortinet to become a top-five vendor within the next year. Q: What additional details can you provide on the development of the cloud marketplace platform? A: CEO Dale Foster stated that the company hired an experienced platform architect who has set the initial structure and technical blueprint. The goal is to create a hybrid experience, combining an efficient online platform with the company's strong in-person relationship model. Adobe will be one of the first vendors prioritized for integration, with some capabilities expected to be ready in Q4 2026. Q: How much of the SG&A increase was non-recurring, and how should we think about the effective margin for the rest of the year? A: CFO Matthew Sullivan stated that about $500,000 of SG&A in Q2 was non-recurring, related to legal, professional, and IT infrastructure investments. He noted that the effective margin trajectory from Q1 to Q2 was consistent with historical patterns. CEO Dale Foster added that the company is making opportunistic investments for long-term efficiency, which may cause quarterly fluctuations. Q: Are geopolitical factors impacting sentiment in Europe, and are you hitting your cross-selling objectives there? A: CEO Dale Foster said that geopolitical factors have not had a significant impact on the business, as Climb is not in the hardware business and remains a small player in a large market. Regarding cross-selling, the teams are getting to know each other, and the company is working on loading vendors onto the platform for the European region, leveraging the Microsoft agreement across Europe. Q: Does the pipeline for VAST Data remain substantial despite the lumpy nature of the business? A: CEO Dale Foster confirmed that the pipeline remains strong, but the business will continue to be lumpy due to the large size of the deals and the fact that VAST Data has fewer than 100 customers worldwide. The company is playing a waiting game as data centers are built. Q: Can you provide more detail on the new Ivanti relationship and its potential size for Climb? A: CEO Dale Foster described Ivanti as a $950+ million vendor that fits the strategy of signing larger vendors to move the needle. The company is just launching the relationship and expects it to become a top-20 vendor. Foster highlighted that Climb's field sales approach is a key differentiator that attracted Ivanti. Q: What is the target for SG&A as a percentage of gross billings, and can you get it back down to 3%? A: CEO Dale Foster stated that 3% is the goal, but the company is making investments in technology for long-term efficiency. He noted that Q3 and Q4 are typically stronger, which should help improve the ratio. CFO Matthew Sullivan added that when adjusting for the large VAST Data deal in Q2 2025 and the Interworks acquisition, the company still grew adjusted EBITDA at a strong double-digit rate. Q: Is there a way to increase gross margin on billings from the 5% to 6% range to offset the higher SG&A? A: CEO Dale Foster explained that the North American market is competitive and does not easily allow for margin expansion. However, the company's M&A strategy in Europe, where margins are 10% to 15% due to less competition, is a key part of the plan to improve overall margins. The Solutions segment also contributes higher margins of 11% to 12%. Q: Can you comment on the M&A environment and your ability to do larger deals? A: CEO Dale Foster confirmed that the company is accelerating its M&A efforts and has been working on targets for the last two to three years. He noted that the board is aligned with the strategy and is open to taking on debt to finance larger acquisitions. The company has two very large targets that it could pursue. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Net Sales up 9% to $174.2 Million; Gross Billings up 17% to $587.3 Million; Gross Profit up 15% to $30.2 Million EATONTOWN, N.J., July 29, 2026 (GLOBE NEWSWIRE) -- Climb Global Solutions, Inc. (NASDAQ:CLMB) (“Climb” or the “Company”), a value-added global IT channel company providing unique sales and distribution solutions for innovative technology vendors, is reporting results for the second quarter ended June 30, 2026. Second Quarter 2026 Summary vs. Same Year-Ago Quarter Net sales increased 9% to $174.2 million. Gross billings (a key operational metric defined below) increased 17% to $587.3 million. Distribution segment gross billings increased 18% to $562.9 million, and Solutions segment gross billings increased 4% to $24.4 million. Net income was $5.5 million or $0.30 per diluted share, compared to $6.0 million or $0.33 per diluted share. Adjusted net income (a non-GAAP financial measure defined below) was $5.5 million or $0.30 per diluted share, compared to $6.4 million or $0.35 per diluted share. Adjusted EBITDA (a non-GAAP financial measure defined below) was $11.3 million compared to $11.4 million. Management Commentary “We executed on our core initiatives in the second quarter as we generated strong, double-digit organic growth with our top 20 vendors, benefitted from our acquisition of interworks.cloud (“Interworks”), and bolstered our line card with innovative vendors,” said CEO Dale Foster. “A key differentiator of our model is our highly selective approach to building the line card. Rather than pursuing scale for its own sake, we focus on strengthening our current partnerships and identifying emerging technologies that provide a unique value proposition for our reseller network and their end customers. Darktrace is a strong example of this strategy in action, having grown into one of our top 20 vendors within approximately 12 months of joining the Climb platform.” “Earlier this month, we hosted our first Investor Day at the Nasdaq MarketSite, where our leadership team provided a deeper look into Climb’s differentiated business model, strategic priorities and long-term growth opportunities. The event gave us an opportunity to demonstrate how our specialized approach, global infrastructure and high-touch sales and technical capabilities create value for our vendors and channel partners. We appreciated the opportunity to engage directly with the investment community and provide greater visibility into the foundation we have built to support Climb’s next phase of growth, where we expect to more than double FY 2025 adjusted EBITDA by 2030.” “Looking ahead, we remain focused on executing our strategic initiatives, including driving organic growth across our vendor portfolio, selectively expanding our line card and continuing to scale our global platform, with Europe remaining a key area of focus. We believe these initiatives, coupled with our robust balance sheet and disciplined approach to capital allocation, will enable us to continue driving value for our shareholders.” Second Quarter 2026 Financial Results Net sales in the second quarter of 2026 increased 9% to $174.2 million, compared to $159.3 million for the same period in 2025. This reflects double-digit organic growth from new and existing vendors, as well as contributions from the Company’s acquisition of Interworks on February 24, 2026. In addition, gross billings in the second quarter of 2026 increased 17% to $587.3 million, compared to $500.6 million in the year-ago period. Gross profit in the second quarter of 2026 increased 15% to $30.2 million, compared to $26.3 million for the same period in 2025. The increase was driven by organic growth from new and existing vendors in both North America and Europe. Selling, general, and administrative (“SG&A”) expenses in the second quarter of 2026 were $20.7 million, compared to $16.4 million in the year-ago period. The increase was primarily attributable to SG&A associated with Interworks and variable sales compensation attributed to the growth in gross profit. SG&A in Q2 2026 was also impacted by higher legal and professional fees, in addition to increased investments in IT infrastructure designed to drive future efficiencies. SG&A as a percentage of gross billings was 3.5% for the second quarter of 2026 compared to 3.3% in the year-ago period. Net income in the second quarter of 2026 was $5.5 million or $0.30 per diluted share, compared to $6.0 million or $0.33 per diluted share in the prior year period. Adjusted net income was $5.5 million or $0.30 per diluted share, compared to $6.4 million or $0.35 per diluted share for the year-ago period. Both net income and adjusted net income in the second quarter of 2026 were impacted by a higher effective tax rate compared to the prior year period. Adjusted EBITDA in the second quarter of 2026 was $11.3 million compared to $11.4 million in the same period in 2025. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit, was 37.5%, compared to 43.3% for the same period in 2025. On June 30, 2026, cash and cash equivalents were $56.6 million, compared to $36.6 million on December 31, 2025. The increase in cash was primarily attributed to the timing of receivable collections and payables. Climb had no outstanding debt on June 30, 2026, with no borrowings outstanding under its $50 million revolving credit facility. For more information on the non-GAAP financial measures discussed in this press release, please see the section titled, “Non-GAAP Financial Measures,” and the reconciliations of non-GAAP financial measures to their nearest comparable GAAP financial measures at the end of this press release. Conference Call The Company will conduct a conference call tomorrow, July 30, 2026, at 8:30 a.m. Eastern time to discuss its results for the second quarter ended June 30, 2026. Climb management will host the conference call, followed by a question-and-answer period. Date: Thursday, July 30, 2026Time: 8:30 a.m. Eastern timeToll-free dial-in number: (800) 245-3047International dial-in number: (203) 518-9765Conference ID: CLIMBWebcast: Climb’s Q2 2026 Conference Call If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829. The conference call will also be available for replay on the investor relations section of the Company’s website at www.climbglobalsolutions.com. About Climb Global Solutions Climb Global Solutions, Inc. (NASDAQ:CLMB) is a value-added global IT distribution and solutions company specializing in emerging and innovative technologies. Climb operates across the US, Canada and Europe through multiple business units, including Climb Channel Solutions, Grey Matter and Climb Global Services. The Company provides IT distribution and solutions for companies in the Security, Data Management, Connectivity, Storage & HCI, Virtualization & Cloud, and Software & ALM industries. Additional information can be found by visiting www.climbglobalsolutions.com. Non-GAAP Financial Measures Climb Global Solutions uses non-GAAP financial measures, including adjusted net income and adjusted EBITDA, as supplemental measures of the performance of the Company’s business. Use of these financial measures has limitations, and you should not consider them in isolation or use them as substitutes for analysis of Climb’s financial results under generally accepted accounting principles in the United States of America (“U.S. GAAP”). The attached tables provide definitions of these measures and a reconciliation of each non-GAAP financial measure to the most nearly comparable measure under U.S. GAAP. Key Operational Metric Gross Billings Gross billings are the total dollar value of customer purchases of goods and services during the period, net of customer returns and credit memos, sales, or other taxes. Gross billings include the transaction values for certain sales transactions that are recognized on a net basis, and, therefore, includes amounts that will not be recognized as revenue. We use gross billings as an operational metric to assess the volume of transactions or market share for our business as well as to understand changes in our accounts receivable and accounts payable. We believe gross billings will aid investors in the same manner. Forward-Looking Statements The statements in this release, other than statements of historical fact, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to come within the safe harbor protection provided by those sections. These forward-looking statements are subject to certain risks and uncertainties. Many of the forward-looking statements may be identified by words such as “looking ahead,” “believes,” “expects,” “intends,” “anticipates,” “plans,” “estimates,” “projects,” “forecasts,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “in process,” “under construction,” “in development,” “opportunity,” “target,” “outlook,” “maintain,” “continue,” “goal,” “aim,” “commit,” or similar expressions, or when we discuss our priorities, strategy, goals, vision, mission, opportunities, projections, intentions or expectations. In this press release, the forward-looking statements relate to, among other things, declaring and reaffirming our strategic goals, future operating results, and the effects and potential benefits of strategic acquisitions on our business, payments of dividends and the Company’s capital allocation objectives. Adjusted EBITDA is a non-GAAP financial measure. The Company has not provided a target for net income, the most directly comparable GAAP financial measure, or a quantitative reconciliation of the 2030 adjusted EBITDA goal to net income because the amounts of future income taxes, interest expense, depreciation and amortization, share-based compensation, acquisition-related costs and changes in the fair value of acquisition contingent consideration cannot be reasonably predicted without unreasonable efforts. These items could be material, and actual net income could differ materially from the amount implied by the adjusted EBITDA goal. Factors, among others, that could cause actual results and events to differ materially from those described in any forward-looking statements include, without limitation, our ability to recognize the anticipated benefits of the acquisition of Interworks, our ability to sustain organic growth; identify, finance, complete and integrate acquisitions on acceptable terms; realize anticipated benefits and synergies; manage changes in product mix and gross margins; and execute planned investments in systems, personnel and infrastructure; the continued acceptance of the Company’s distribution channel by vendors and customers, the timely availability and acceptance of new products, product mix, market conditions, competitive pricing pressures, , contribution of key vendor relationships and support programs, inflation, import and export tariffs, the successful integration of artificial intelligence tools, interest rate risk and impact thereof, as well as factors that affect the software industry in general. The forward-looking statements contained herein speak only as of the date of this release and are subject generally to other risks and uncertainties that are described in the section entitled “Risk Factors” contained in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and from time to time in the Company’s filings with the Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of this release, except as required by law. Company Contact Matthew SullivanChief Financial Officer(732) [email protected] Investor Relations Contact Sean Mansouri, CFA or Aaron D’SouzaElevate IR(720) [email protected] (1) We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation, interest, acquisition related costs and change in fair value of acquisition contingent consideration. We define effective margin as adjusted EBITDA as a percentage of gross profit. We provided a reconciliation of adjusted EBITDA to net income, which is the most directly comparable US GAAP measure. We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our businesses profitability, operating performance and performance trends, and to provide management and investors a useful measure for period-to-period comparisons by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results. Adjusted EBITDA is also a component to our financial covenants in our credit facility. Our use of adjusted EBITDA has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures. (2) We define adjusted net income as net income excluding acquisition related costs, net of income taxes and the change in fair value of acquisition contingent consideration. We provided a reconciliation of adjusted net income to net income, which is the most directly comparable U.S. GAAP measure. We use adjusted net income and adjusted net income per common share as supplemental measures of our performance to gain insight into our businesses profitability, operating performance and performance trends, and to provide management and investors a useful measure for period-to-period comparisons by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that adjusted net income and adjust net income per common share provide useful information to investors and others in understanding and evaluating our operating results. Our use of adjusted net income has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. In addition, other companies, including companies in our industry, might calculate adjusted net income, or similarly titled measures differently, which may reduce their usefulness as comparative measures. (3) Gross billings are the total dollar value of customer purchases of goods and services during the period, net of customer returns and credit memos, sales, or other taxes. Gross billings include the transaction values for certain sales transactions that are recognized on a net basis, and, therefore, include amounts that will not be recognized as revenue. We use gross billings as an operational metric to assess the volume of transactions or market share for our business as well as to understand changes in our accounts receivable and accounts payable. We believe gross billings will aid investors in the same manner.

Climb Global Solutions (CLMB) came out with quarterly earnings of $0.3 per share, beating the Zacks Consensus Estimate of $0.29 per share. This compares to earnings of $0.35 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +3.45%. A quarter ago, it was expected that this computer software reseller would post earnings of $0.23 per share when it actually produced earnings of $0.19, delivering a surprise of -17.39%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Climb Global, which belongs to the Zacks Technology Services industry, posted revenues of $174.21 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.3%. This compares to year-ago revenues of $159.28 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Climb Global shares have added about 9.7% since the beginning of the year versus the S&P 500's gain of 8.5%. While Climb Global has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Climb Global was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.37 on $179.37 million in revenues for the coming quarter and $1.32 on $734.46 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Technology Services is currently in the bottom 39% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Viant Technology (DSP), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This advertising software company is expected to post quarterly earnings of $0.13 per share in its upcoming report, which represents a year-over-year change of +44.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Viant Technology's revenues are expected to be $99.9 million, up 28.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Climb Global Solutions, Inc. (CLMB) : Free Stock Analysis Report Viant Technology Inc. (DSP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Climb Global Solutions is in focus after its fair value estimate was revised from US$31.50 to about US$32.33, a modest upward move that reframes how some investors might think about upside in the stock. Bullish analysts link this shift to a Q4 earnings beat and a supportive set of ratings, while more cautious voices highlight ongoing adjustments to forward earnings and margin forecasts in the context of a lower US$120 price target. As you read on, you will see how these competing views shape the evolving analyst narrative and what it could mean for your own research. Analyst Price Targets don't always capture the full story. Head over to our Company Report to find new ways to value Climb Global Solutions. Northcoast recently initiated coverage on Climb Global Solutions with a positive stance, signaling confidence in the company’s setup at current levels. Barrington keeps an Outperform rating in place, which indicates that, despite revisions, the firm still sees the stock as attractive relative to its coverage universe. Both firms frame Q4 as an earnings beat, which supports the view that recent execution has compared favorably with their prior expectations. Barrington reduced its price target on Climb Global Solutions to US$120 from US$136, which shows a more cautious stance on upside than before. The same Barrington report trims the 2026 EPS forecast, driven in part by a 30 basis point cut to the adjusted EBITDA margin forecast. This flags some concern around future profitability assumptions. Do your thoughts align with the Bull or Bear Analysts? Perhaps you think there's more to the story. Head to the Simply Wall St Community to discover more perspectives! We've flagged 1 risk for Climb Global Solutions. See which could impact your investment. Climb launched Climb SLED, a dedicated State, Local, and Education division that centralizes leadership, operational support, and partner resources to help technology vendors and resellers serve public sector markets, with a focus on strengthening SLED operational support and reseller enablement in 2026. Climb SLED is aligning vendors such as Wasabi Technologies, OpenText, and Jamf with resellers experienced in SLED procurement and compliance to support clearer pipeline development, account coverage, and coordinated execution in public sector channels. The company announced a four-for-one forward stock split, with shareholders of record on March 16, 2026, set to receive three additional shares for each share held and trading expected to begin on a split-adjusted basis on March 23, 2026. The Board of Directors decided to suspend quarterly cash dividends on common stock beginning with the first quarter of 2026 to preserve financial flexibility, with plans to reinvest capital into organic growth initiatives and potential strategic opportunities. The fair value estimate increased from US$31.50 to about US$32.33 as the central point in the model. The revenue growth assumption moved from roughly 5.08% to about 7.36% for future years. The net profit margin assumption shifted from about 4.55% to roughly 4.36%. The future P/E multiple remained broadly stable, moving from about 21.0x to around 21.0x. The discount rate moved from 8.41% to about 8.77% in the updated model. Narratives connect a company’s business story to the assumptions behind its forecasts and fair value, so you can see what needs to go right or wrong. They refresh as new data, guidance, or research comes through, keeping the thesis current. Head over to the Simply Wall St Community and follow the Narrative on Climb Global Solutions to stay up to date on: How a focus on high growth cybersecurity and cloud vendors, plus international expansion and acquisitions, is shaping Climb Global Solutions' growth ambitions. The role of automation, digital transformation, and value added services in supporting recurring revenue and potential efficiency gains. Key risks around vendor concentration, low margins, acquisition integration, scale versus larger distributors, and currency exposure. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CLMB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Strong top-line growth but margin pressure: Gross billings rose 14% YoY to $542.8M and net sales increased 32% to $182.4M, while adjusted EBITDA climbed 4% to $7.9M but effective margin fell to 29.9% due to higher SG&A from vendor and infrastructure investments. Interworks acquisition and vendor wins fuel expansion: The Feb. acquisition of Interworks (600+ cloud resellers) and additions like Checkmk and LogicMonitor supported "double-digit organic growth" and create cross-selling and EMEA expansion opportunities. Targeted Fortinet investment and efficiency push: Q1 included roughly $0.5M of Fortinet-related costs that management expects to reverse by Q3 as Fortinet ramps, while Climb pursues automation/AI projects and a "5-3-2" margin framework to double revenue without doubling headcount. Interested in Climb Global Solutions, Inc.? Here are five stocks we like better. Climb Global Solutions (NASDAQ:CLMB) reported first-quarter 2026 results showing double-digit organic growth in its core business, contributions from its Interworks.cloud acquisition, and increased spending tied to vendor and infrastructure investments that pressured margins in the period. CEO Dale Foster said Climb generated “double-digit organic growth” in the quarter, aided by the February acquisition of Interworks, a Greece-based cloud distributor. Foster also emphasized ongoing selectivity in vendor onboarding, noting the company evaluated 39 net new brands during the quarter and selected two. → Palantir Is Down 30%: Noise? Or a Signal to Accumulate? Those additions included Checkmk, which Foster described as “an industry-recognized innovator in comprehensive enterprise-grade monitoring and observability,” and LogicMonitor, which Climb launched following a pilot with a large customer in the fourth quarter of 2025. Foster said LogicMonitor is “an AI-powered hybrid observability platform” providing visibility across cloud and on-prem environments. On the M&A front, Foster said Interworks brings “over 600 cloud resellers and managed service provider relationships,” and that while integration is early, Climb is already seeing opportunities to expand in Southeastern Europe and drive cross-selling across the platform. He also pointed to operational learnings Climb hopes to adopt from Interworks, particularly that the Greek business “transact[s] all of their business through a cloud platform.” → Corning Beats Q1 Estimates but Drops 9% on Guidance Miss To support expansion in EMEA, Foster said Climb promoted Sarah Peters to Senior Director of Alliances for the region, with a mandate to replicate the “process, discipline, and execution framework” that has worked in North America. CFO Matthew Sullivan said gross billings rose 14% year over year to $542.8 million, up from $474.6 million in the prior-year quarter. By segment, distribution gross billings increased 15% to $520.9 million, while solutions gross billings increased 4% to $21.9 million. → Did Qualcomm Just Put Apple in Check? Net sales increased 32% to $182.4 million from $138.0 million, which Sullivan attributed to “double-digit organic growth from new and existing vendors” and the Interworks acquisition, which closed Feb. 24, 2026. Gross profit increased 13% to $26.5 million, compared to $23.4 million in the year-ago period. Sullivan said the increase was driven by organic growth in North America and Europe along with Interworks’ contribution. Selling, general, and administrative expenses rose to $20.3 million from $16.8 million. Sullivan said the increase was “primarily driven by one-time investments” aimed at organic growth from new vendors and infrastructure for long-term initiatives, including expanded IT capabilities, sales organization alignment across teams and geographies, and building out Fortinet-focused sales resources. SG&A also included higher legal and professional fees related to strategic initiatives, including the company’s stock split. SG&A was 3.7% of gross billings, up from 3.5% in the prior-year quarter. Net income was $3.3 million, or $0.18 per diluted share, compared to $3.7 million, or $0.20 per diluted share, a year earlier. Adjusted net income was $3.6 million, or $0.19 per diluted share, compared to $3.9 million, or $0.22 per diluted share. Sullivan said both net income and adjusted net income were impacted by a higher effective tax rate compared with the prior-year period. Adjusted EBITDA increased 4% to $7.9 million from $7.6 million, with Sullivan citing organic growth partially offset by infrastructure investments. Effective margin—defined as adjusted EBITDA as a percentage of gross profit—was 29.9%, down from 32.7% a year earlier. Sullivan added that excluding one-time investments and costs, effective margin in Q1 2026 was higher than the prior-year quarter. During the Q&A, Northcoast Research analyst Keith Housum asked for more detail on the quarter’s incremental SG&A. Sullivan said the “largest driver” was the company’s investment tied to the Fortinet relationship, describing it as “slightly different than the investment in a typical onboarding of a new vendor.” Sullivan quantified about $0.5 million of costs in Q1 that reduced adjusted EBITDA, and said management expects that to “turn the other direction” through the remainder of 2026. Foster said the company viewed Fortinet as an “anchor” relationship and emphasized that Fortinet is “one of the top four cybersecurity vendors in the world.” On timing, Foster said Q2 was “already ramping up pretty quickly,” but added the company expects to see a return on that investment in Q3, with some Fortinet-related SG&A continuing in Q2 and “covered in Q3.” Asked by Tieton Capital’s Bill Dezellem whether the Fortinet win had helped with other large vendors, Foster said it had led to inbound interest. He said some large vendors have reached out after realizing Climb’s targeted market reach, and he indicated discussions were underway with other potentially meaningful vendors, adding that some could be signed during the calendar year, while noting he would not provide names until announced. Housum also asked about the quarter’s mix between gross billings and net sales. Sullivan said it was not driven by new vendors, but rather “the product mix of our existing vendors,” which can fluctuate by quarter. On end-market conditions, Housum asked whether hardware memory constraints were shifting demand toward software. Foster said Climb has not seen a meaningful impact, though he acknowledged “some delays” tied to installs or hybrid/cloud moves. Foster emphasized the company’s recurring profile, saying “80%-90% of ours are reoccurring revenue and renewals,” and noted Climb is “60-some percent in the cybersecurity world,” which he characterized as more resilient given customer priorities around protecting infrastructure. Barrington Research’s Vincent Colicchio asked whether organic growth was broad-based. Foster said performance was driven by the company’s top 20 vendors and described it as “just a good quarter” with “decent performance” across vendors, while noting some seasonality related to vendors with fiscal years ending in March. Colicchio also asked about VAST Data, and Foster said results there remain “lumpy,” with deal timing difficult to predict. Foster added that VAST is tied to “high-speed data pull for AI engines,” and said data-center-related businesses can be affected by “chip stuff,” referencing earlier commentary about memory constraints. Sullivan said cash and cash equivalents were $41.8 million at March 31, 2026, up from $36.6 million at Dec. 31, 2025, driven largely by working-capital timing. He added that the company had no outstanding debt under its $50 million revolving credit facility. Sullivan also discussed the company’s 4-for-1 forward stock split, which was approved by the board and became effective in March. He said the move was intended to “enhance liquidity and broaden access” while maintaining proportional ownership. On efficiency and scaling, Foster described an internal push to expand automation and AI-enabled tools, noting Climb has “over 41 IT projects in the works” aimed at streamlining workflows. He said the goal is to support higher volumes without a commensurate increase in headcount, adding that management’s aim is to “double” the business over the next three years “but not double our headcount.” Fairhope Capital’s Howard Root asked about the company’s longer-term margin framework. Foster and Sullivan referenced the company’s “5-3-2” model—5% gross profit off gross billings, 3% SG&A, and roughly 2% operating income—while also describing an internal target to reach a “50/50” split of the 5%, or roughly 2.5% SG&A and 2.5% drop-through. In closing remarks, Foster said Climb plans to host an investor day on July 7 in New York City and welcomed new team members from Interworks in Thessaloniki and Athens, saying the acquisition reinforced Climb’s cultural alignment around serving customers and vendors. Climb Global Solutions Inc operates as a value-added information technology (IT) distribution and solutions company in the United States, Canada, Europe, the United Kingdom, and internationally. It operates in two segments, Distribution and Solutions. The company distributes technical software to corporate and value-added resellers, consultants, and systems integrators under the name Climb Channel Solutions; and provides cloud solutions and resells software, hardware, and services under the name Grey Matter. The article "Climb Global Solutions Q1 Earnings Call Highlights" was originally published by MarketBeat.

Image source: The Motley Fool. Thursday, April 30, 2026 at 8:30 a.m. ET Chief Executive Officer — Dale Foster Chief Financial Officer — Matthew Sullivan Senior Director of Alliances, EMEA — Cera Peters Sean Mansouri: Thank you. 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 statements. Our presentation also includes certain key operational metrics and non-GAAP financial measures, including gross billings, adjusted EBITDA, adjusted net income and EPS and effective margin as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. I'd now like to turn the call over to Climb's CEO, Dale Foster. Dale Foster: Thank you, Sean, and good morning, everyone. In the first quarter, we generated double-digit organic growth in our core business and also had some benefit from our acquisition of Interwork cloud. We remained disciplined in our signing high-quality vendors to our line card, while moving slower performing vendors to our Climb division. Our performance underscores the momentum across the business, driven by the strength of our global platform and the depth of both vendors and partners. During the quarter, we evaluated 39 net new brands and selected only 2 consistent with our strategy of cultivating strong high-impact vendor relationships across our platform. Notably, we signed Czech MK, an industry recognized innovator in comprehensive enterprise-grade monitoring and observability. As a strategic distributor, we provide channel partners with streamlined access to Czech MK's unified monitoring and servability platforms. Delivering deep visibility across hybrid environments and key domains, including infrastructure, networks and applications from a single solution. Combined with enterprise-grade scalability, high automation and open core architecture, Czech MK enables partners to confidently position and sell and deploy unified monitoring platform at scale seamlessly across diverse customer environments and use cases. We also launched a company called Logic Monitor during the quarter, following the successful pilot with a large customer in the fourth quarter of 2025. Logic Monitor is an AI-powered hybrid observability platform that provides unified visibility across cloud, on-prem and multi-cloud environments, enabling organizations to proactively identify and resolve issues. Through this partnership, we are bringing Logic Monitors capabilities to our partner ecosystem, equipping VARs and MSPs with a differentiated solution, enhanced visibility, improves operational resilience and drives long-term customer value. We look forward to building our relationship with both Czech MK and Logic Monitor as we take their products to market. Alongside expanding our vendor portfolio in February, we acquired Interwork a Greek distributor that brings over 600 cloud resellers and managed service provider relationships as well as strong vendor to our existing strong line card. While early in the integration process, we are seeing meaningful opportunities to deepen our presence in Southeastern Europe by leveraging Interwork's established network as well as expanding cross-sell opportunities across our broader platform. Overall, we are encouraged by this early progress we're seeing and look forward to generating additional synergies as we fully integrate the teams in the months ahead. As we continue to scale our global platform, we are focused on driving greater alignment and efficiency across the organization. To support this effort, we promoted Cera Peters to Senior Director of Alliances to our EMEA team. there is working closely with regional leadership to replicate the process discipline and execution framework that we have produced -- that have produced strong results in North America. Importantly, our underlying alliance strategy remains unchanged. We continue to take a highly selective approach to onboarding new vendors while prioritizing deep engagement with existing partners. As our pipeline of opportunities expand, -- we are also seeing increased activity across both new valuations and reevaluations, which require a similar level of effort and reflect the deep growth and maturity of our vendor portfolio. Looking ahead, we remain focused on driving organic growth while maintaining a disciplined approach to capital allocation. As we continue to scale the business, we are investing in infrastructure need to support that growth. including advanced automation and AI-enabled tools that enhance visibility, streamline our workflows and improve overall operating efficiencies. We currently have over 41 IT projects in the works that have streamlined and will continue to stream line our workflows. We're using AI tools and agents to connect our partners that will help our team be more efficient as we grow. These initiatives are designed to increase throughput across the platform and enable us to support higher volumes of activity without the commensurate increase in head count. At the same time, we continue to view M&A as a strategic lever to complement our organic growth. We are actively evaluating opportunities that align with our high-performance culture as well as our service offerings and in our geographic reach. We believe these initiatives will enable us to execute on our 2026 plan and deliver yet another year of strong results. With that, I will turn the call over to our CFO, Matt Sullivan. Matt? Matthew Sullivan: Thank you, Dale, and good morning, everyone. A quick reminder as we review the financial results for our first quarter, all comparisons and variance commentary refer to the prior year quarter unless otherwise specified. As reported in our earnings press release, gross billings in Q1 2026 increased 14% to $542.8 million compared to $474.6 million in the year ago quarter. Distribution segment gross billings increased 15% to $520.9 million and Solutions segment gross billings increased 4% to $21.9 million. Net sales in the first quarter of 2026 increased 32% to $182.4 million compared to $138 million in the year ago period. This reflects double-digit organic growth from new and existing vendors as well as contributions from our acquisition of Interwork on February 24, 2026. Gross profit in the first quarter of 2026 increased 13% to $26.5 million compared to $23.4 million for the same period in 2025. The increase was driven by organic growth from new and existing vendors in both North America and Europe as well as the contribution from interworks. Selling, general and administrative expenses in the first quarter of 2026 were $20.3 million compared to $16.8 million in the year ago period. The increase in SG&A expenses was primarily driven by onetime investments to drive organic growth from new vendors and in our infrastructure to support long-term growth initiatives. More specifically, we expanded our IT capabilities to enhance system efficiencies and further aligned our sales organization across teams and geographies and continue to build out our Fortinet focused sales resources. In addition, SG&A reflects higher legal and professional fees associated with strategic initiatives, including our stock split. SG&A as a percentage of gross billings was 3.7% for the first quarter of 2026 compared to 3.5% for the prior year period. Net income in the first quarter of 2026 was $3.3 million or $0.18 per diluted share compared to $3.7 million or $0.20 per diluted share for the prior year period. Adjusted net income was $3.6 million or $0.19 per diluted share compared to $3.9 million or $0.22 per diluted share for the year ago period. Both net income and adjusted net income in the first quarter of 2026 were impacted by a higher effective tax rate compared to the prior year period. Adjusted EBITDA in the first quarter of 2026 increased 4% to $7.9 million compared to $7.6 million for the same period in 2025. The increase was primarily driven by organic growth from both new and existing vendors partially offset by the aforementioned investments in our infrastructure to support long-term growth initiatives. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit was 29.9% compared to 32.7% in for the same period in 2025. Excluding the previously mentioned onetime investments and costs, effective margin for the first quarter of 2026 was higher compared to the prior year period. Turning to our balance sheet. Cash and cash equivalents were $41.8 million as of March 31, 2026, compared to $36.6 million on December 31, 2025. The increase in cash was primarily attributed to the timing of receivable collections and payables. As of March 31, 2026, we had no outstanding debt or borrowings outstanding under our $50 million revolving credit facility. As previously mentioned, our Board approved a 4-for-1 forward stock split effective in March to enhance liquidity and broaden access to our shares, while maintaining each stockholders' proportionate ownership. We believe this action improves the accessibility of our stock and supports a more efficient trading environment for a broader base of investors. Looking ahead, our balance sheet remains a strategic asset with over $41 million of cash and no outstanding debt, we have ample liquidity and flexibility to execute on our growth initiatives in 2026. We remain active in evaluating accretive M&A opportunities that can deepen our vendor portfolio, broaden our geographic footprint and enhance our operating platform. We believe these initiatives, coupled with our demonstrated track record of success will enable us to continue driving value creation for our shareholders. This concludes our prepared remarks. We will now open up the line for questions. Operator? Operator: [Operator Instructions]. We'll move first to Keith Housum with North Coast Research. Keith Housum: And thanks for the opportunity here. In terms of the extra spending here on the SG&A for the quarter, I noticed you guys had a number of onetime items, including IT and legal costs and investments like before in that. Can you perhaps bifurcate that a little bit more so we understand like I'm assuming increased costs before net will continue going forward, some of your onetime IT costs probably onetime in nature. Any way to bifurcate some that growth in SG&A to understand a little bit more going forward? Matthew Sullivan: Keith, the buses go ahead, Matt. I'll fill in. I was going to say the largest driver there or a big piece of the driver there was the Ford net investment. And the investment in that relationship has been -- is slightly different than the investment in the typical onboarding of a new vendor where we had increased cost, building out teams and additional onetime costs as we start that relationship here in Q1 of 2026. So that really was about $0.5 million worth of costs that were in the first quarter that it was a driver -- negative reduction to adjusted EBITDA that we expect to turn the other direction as we move into the remainder of 2026. Dale Foster: Keith, this is 1 of the -- Keith, real quick. This is 1 of the things. We typically -- when we sign vendors, we'll do some small investments and a lot of times, it's paid by the vendors. If you take a look at Fortinet, it's a market cap $60 billion company, I think, $6 billion in annual sales. And the relationship was just a little different. We agreed and didn't have it in all of our budget to put this investment out there because we see it such an opportunity. It's an anchor for us as we go forward. And it's 1 of the top 4 cybersecurity vendors in the world. So that's why we put this investment in there. the sales are coming along, and we'll be able to report those better in Q2 as we have been ramping those up along with the team that we've born on board. Keith Housum: Yes. That was my follow-up question. What's kind of the breakeven point for that? And how fast does it take to ramp up some like Fortinet. Will you see the return on investment here before the end of the year on that? Dale Foster: We will. I mean Q2 is already ramping up pretty quickly, but it will be Q3 when we'll see that return on investment. So yes, there'll be some of those SG&A costs in Q2 of that team and then covered in Q3. Keith Housum: Okay. Got you. And then the -- it looks like the mix between gross and net revenue here despite really on the gross side. I think the highest has been several quarters if not several years. Is that attributable to some of the new vendors? Or is there anything you can point to as we think about going forward, the split between gross and net revenue. Matthew Sullivan: It's not an impact of the new vendors. It's really just the product mix of our existing vendors. And that can fluctuate from a given quarter, you're right, it is the highest this quarter of any quarter in recent time. But that's really driven by our existing vendors and what specific products we are selling to them. Keith Housum: Okay. Got you. And then the memory issue is wreaking havoc in the hardware world, in your realm in the software space, are you guys seeing a benefit as people prioritize some of their spending away from hardware with increased prices towards software? Is it too early to tell? What's your thoughts on that? Dale Foster: We did not see the impact, Keith. I mean some of the delays on potential people doing installs or if they're doing a hybrid cloud or going into a data center, we see some of that. But remember, 80% to 90% of ours are reoccurring revenue and renewal, so we just haven't seen that slow down. We haven't seen the seed licenses decrease like everybody got crazy in Q1 to talk about, I think, the adults are coming back and saying, "Hey, this is sophisticated software that people are selling where we've got 2 things going for us. Number one, we have a strong renewal stream, and number two, we're 60-some percent in the cybersecurity world, which people are always going to protect their infrastructure first. Keith Housum: Got you. And maybe the last question for you. In terms of the targeted onetime investments that IT in the first quarter, what's your expected ROI on that? And I guess, are you satisfied with some of the progress you've made with those initiatives? Dale Foster: Yes. So our new CIO that's done on board to be coming up on a year in Q2. Just I wanted to point out, the first time I'd pointed out how many projects we have going because the list continues to grow. We went to our ERP over 1.5 years ago, and we've been streamlining it. But now we're using so many of the AI tools to just make our systems faster. And that is not only the ERP place of it, but all of the associated applications that we can use agents to do a lot of the work that we've had to do before manually. So here's our goal that I have said, and that is we're throwing technology at it, so we don't have to increase headcount, as I mentioned in my remarks, and that is we need to be able to scale this business. our goal is to double it in the next 3 years but not double our head count because we would just be running on a treadmill at that point. So that's -- our goal is using the technology, and it's out there to use we just keep putting the projects on the list to make it more efficient. Operator: We'll move next to Vincent Colicchio with Barrington Research. Vincent Colicchio: Yes, Dale, was the organic growth broad-based in the quarter across your -- and were there any lumpy deals that impacted the period. Dale Foster: Yes. It is our top 20 that happened. We had some fallover typically happens that from Q4, they come in, the deals didn't get closed on that side. But no, it was just a good quarter for us. when you look at just the vendor performances, we had some vendors that finished their fiscal year at the end of March. So there's going to be and some of our new members -- or new vendors that did that. But other than that, it's just across all of our vendors and decent performance. Vincent Colicchio: And as gross billings momentum carried through April? Dale Foster: Yes. I mean we're closing in April. We don't want to talk too much about that. But Yes, we are not seeing a slowdown definitely in our workloads. So that's where our focus is right is how would it become more efficient with those workloads. But if you look at our adjusted gross billings, so the whole talk about AI, and it's going to take over this and it's going to take our receipts. Here's my comment on that, and I've commented before on it. is that we're going to use AI more than we're going to sell it this year, including our vendors are going to use it more internally, to develop the products faster. That's the thing that gets talked about the most when we have all of our QBRs with our vendors. -- is how much faster they're being able to develop products. AI does a great job with repetitive process, and that's how we're using it inside of con. But when it comes to sophisticated, somebody that's going to go and attack your network. We're seeing the tools that we're selling as important as ever, and we haven't seen that slow down. Vincent Colicchio: And curious about VAST data. Does the pipeline remain substantial there? Dale Foster: Yes, it's still going to be lumpy with VAS, but it's still I mean if you look at best as a company, how much money they've raised, they only -- they appeal to the high-speed data pull for AI engines, and that's where they're claim to fame is, they're still on a good job. So you'll see throughout this year, some more lumpy deals that are coming in. But it's just hard to predict because they're all based in back to Keith's comment about memory. They're going to be affected by that. Anybody that's going into data centers going to be affected by some of the chip stuff. Vincent Colicchio: Is it -- are you able to give us some help in terms of when Interwork will provide meaningful cross-selling synergies -- or is that tough to talk about in terms of timing? Dale Foster: It's the cross-sell that we have, and this is our strategic plan when we acquire companies in various regions and the opportunities that typically start with vendors in the U.S. and move there. They have a big Microsoft practice, which goes right in line with our Microsoft practice in the U.K. And I mentioned that before that we meet the threshold to stay as a distributor. We're working on becoming a frontier distributor, which is a new designator by Microsoft. We think that -- and here's the uniqueness about Interwork. They transact all of their business through a cloud platform, which we have a small portion of our business. So we want some of that DNA to come to our newly dedicated MSP team in the U.S. and then to the greater company in Europe as well that we can transact on a platform as we keep getting better and better with our systems. So it's going to be going both ways. Then on -- from the Greek team to us on how they actually transact and from vendors to the great team that they're looking to add more vendors. So you'll see the cross-selling and really the onboarding of new vendors in Southern Europe with -- and as I mentioned, there Peter has taken that role and that was 1 of the reasons for it. Operator: Move next to Howard Root with Fairhome Capital. Unknown Analyst: I want to follow up a little bit more on the SG&A line. So that -- if you look sequentially, I think it went up about $2 million and year-over-year, about a $3.5 million increase -- you kind of pointed out that Fortinet was about $500,000 of that. And then you called it primarily onetime investments. Can you -- the other like $1.5 million sequentially. Can you kind of give us a little bit more detail on what that was and quantified. And then when you say 1 time, does that mean 1 quarter? Or is that going to continue into Q2 and for the rest of the year? Dale Foster: Yes. yes. So when we refer to that as onetime, I mean, specifically with the Fortinet relationship, that was a net cost of about $0.5 million to Climb as a company. We expect that to begin to turn to a positive contribution in the later part of 2026. And we start to see that in Q2 here and really see that ramp up in Q3 and beyond. And like I said earlier, that was a different type of investment than our usual investment cycle. And then we had other onetime professional and legal type costs associated with the stock split and some other initiatives there. So like I mentioned in the prepared remarks, our -- if you exclude those items, our effective margin from Q1 of 2026 compared to Q1 of 2025, increased. And typically, Q1 is our lowest effective margin quarter of the fiscal year. So even if you look back at 2025 that 32.5% or so, that continued to climb as the year progressed, and we expect no changes to that trajectory as we move forward here in 2026. Unknown Executive: So just looking forward on Go ahead, Dale. -- sorry. Dale Foster: Yes, real quick, Howard. -- when Matt and I look at it as we're going through the quarter, we just have some mess, we say onetime things, but we had some legal stuff that we typically didn't have in the past for those quarters. So it was unfortunate, but a lot of those are onetime things as the quarter, as we pointed out. If you look at the actual SG&A, I think it went from 3.5% to 3.7%. But yes, we got to get that in the other direction. And as you often point out, can we get to the and I talked about it now with some of our investors and of course, our Board how do we get our 5% to more of a 50-50 on our SG&A and our effective margin. So that is the goal that we have. And we do not see -- and our vision has not changed on that. Unknown Analyst: Okay. So the -- I wish you guys would start giving a little bit of guidance. But just looking at this line, generally, it's around a little $20 million, $20.5 million for the quarter. Do you see Q2 on a dollar basis being I've decreased from that, an increase from that are relatively the same? Dale Foster: Well, it all depends -- we'd have to go by percentages, Howard, because it all depends on our Q2 is going to be typically higher than Q1. We're going in with our education that's where all the buying starts happening and all the quoting starts happening. So -- and that's how our gross profit is affected by the commissions that we put out there. So I can't give you a hard number that way. But percentage-wise, we're going to see that drop. Unknown Analyst: Okay. So then you mentioned the 532, which we talked about before, I mean, 5% gross profit off of your gross billings, which is kind of the way to look at your business, I think, then 3% for SG&A, leaving 2% roughly for income from operations via depreciation as well. And you said that's still kind of your target, but is that a goal? Is that an expectation? Or is that just kind of -- what is that an. Dale Foster: Yes, our gold, Howard, and we -- and our executive meetings, we kicked off this year, including presenting to the Board is to get that to a 50-50. And this -- we had our sales kickoff both in the U.S. and overseas, and it's to get the 5 to 2.5%, 2.5%. I mean, we know where our competitors are. We know we can get there, but it's an efficiency play for us to get to split that 5% in half and drop that through. So that is our hard target to get to. that we have set for ourselves as a management team. Matthew Sullivan: And our expectation is that 532 doesn't change? Unknown Analyst: Okay. 532, but 2.5% would be what your real goal is here, not just to better than that. Dale Foster: That's where we have our site set is to take the $5 and just put it in half and half of it is going to our SG&A, the other Hasco dropping through. Unknown Analyst: Okay. All right. Then just bigger picture, and I don't want to get too nitty I mean, congrats on the revenue growth, you guys are still doing a great job. On the M&A environment, though, the Interwork, it was kind of 1 of these new things where it was kind of acquire or go out because of the Microsoft vendor that you talked about before and they had to get bigger or they just weren't going to have that card. Do you see that continuing in the environment? Or how do you see more generally the M&A environment in terms of the opportunities and the valuations today? Dale Foster: Yes. So the valuations are still stayed and this is targeting mostly in Europe, a little bit in the Middle East that we're looking at we'll prospect 2 years out into some territories. But yes, it was opportunistic that we did it with this company because we already had a relationship with them from the cloud platform piece of it. So yes, we're doing it that way. But -- right now, there's still a lot of opportunities on my list, a lot that I've met with when I was -- Matt and I were over in Greece with the team. and did a stop by to talk to some other potential targets out there. So it's good -- it all depends, and everything is depends on what that company internally does -- are they reliant on 1 vendor, 1 territory. There's some different factors that go into the valuation piece of it. From a where we acquired Douglas Stewart at 4.5% up to paying close to 8.5% for other companies, and it just depends on what their makeup is and where we see that we can effectively grow them and how quickly we can grow them is what we pay. Unknown Analyst: Great. All right. Congrats on the progress. Operator: We move next to Bill Dezellem with Titan Capital. William Dezellem: After signing the Fortinet agreement, given the size of that organization, has that led to any follow-on effects with other large vendors that basically raise their eyes to what climb may be able to accomplish? Dale Foster: Thanks for the question, Bill. It actually has -- we've had this -- our talk track is we're going after emerging vendors. And if you look at our line card, and even our top vendors that we talk about solar wins and so forth have been great partners for us and continue to be that. But as far as looking at like a Tier 1 vendor like a Juniper, Fortinet, that are out there, we typically don't market toward that environment. So when this 1 came up, it was not an immediate -- oh my gosh, this is going to be great. It's going to change Climb. -- for the better. I -- my first reaction to was, I don't want to change our culture where we become like a broad line distributor, right? Because I think there's so much value in what we do and what we take to market. But to your point, after that happened, Charles Bass, which runs our alliances team, we've had some pretty large companies reach out to us say, "Hey, I didn't realize you guys did this. I didn't realize you win is wide in some of the markets that you do. And if you look at the North American market, you have the 3 large distributors, now all public with Ingram going public last year. And then it's all the way down to where we see climb we're very small compared to these $50 billion, $60 billion companies. We don't want to be them, but we're having vendors that are coming to us and saying, "Hey, either we want to keep them honest or we want to do a targeted approach to a group of resellers that we think you touch much better than the broadliners do. So -- the answer is yes. I won't give you names, of course, until we announce them. But yes, it's nice to have them coming to us instead of us going and trying to knock on every door. William Dezellem: So Dale, the implication then of what you just said is that there are other meaningful potentially needle-moving vendors that you are in discussions with now? Dale Foster: I'll leave it at that, yes. William Dezellem: And I'll try to not let you leave it at that. Would you anticipate that if these -- if any 1 of these come to fruition that it would happen this calendar year? Or are these discussions much more drawn out than that? Dale Foster: No, that would happen in this calendar year on the ones we're looking at. But I mean, it's just like -- we expected Fortinet to have a little faster start than we have. It always is you're putting energy and as we showed in Q1, we're putting resources and expenses into getting it going. But as I told my field sales team that I'm putting tons of pressure on, right, to launch this and getting into net new customers, and that's where we're really going after. -- is that is, hey, we're going to take advantage of this vendor line for the next 5, 10, 15 years, right? Because I think we're just a better go-to-market play than our competitors. So that's why we're putting the energy in right now. I mean everybody has their day jobs to do, but we're pushing to our field teams to say, "Hey, this is important to us. It's going to drag along a lot of cross-sell opportunities. If you take a look at Fortinet's technology partner page on their website, you'll see all the vendors that they work with. There's quite a few on the list. One number one, there are 7 or 8 that we already work with. So there's cross-selling and we do marketing programs together with them. But if you look at that list, it is big on the solar security side and associated platform side, even on the monitoring piece of it. So yes, more new targets for us, but Yes, it's -- I see more and more of that coming our way. William Dezellem: And if you were to sign 1 more of them, the onetime investments that you've discussed here relative to Fortinet, would those scale to, let's just call them, vendor B -- or are these resources really dedicated to Fortinet and you would then have the same scaling that you would do for vendor B. Would you help us understand behind the scenes how that would work? Dale Foster: Yes. I'll give you an example that's real time. So when we acquired Douglas Stewart, Adobe was a big part of that relationship, and they had a separate team and that team being maintained separate until we put them to our ERP. Now the Adobe platform, the Adobe marketing, all that stuff is part of climb, right? We want a 1 climb approach to how we go to market. Same thing for net, it will eventually morph into our overall team and become part of the climb ecosystem. But right now, we kept it separate so we can track it so we can show our progress. But every everybody -- we have 80 some sellers in North America. They're all selling for net products just like they're all selling Adobe. It wasn't that way to start with. So it depends on the -- you're not going to like the sense, but it depends on the opportunity, right? If the vendor, if it already is in our same work stream like most of the vendors we sign are. It just goes right in. And as I mentioned in my remarks, we are pushing vendors that are not in our top 70 or that are drifting or don't have the investment to our Climb Elevate team, which is really a transactional team. It doesn't get marketing, it doesn't get sales support, but just transactional. And I'm trying to continue to move vendors off so we can focus on our core. I would like -- we started 100 vendors, we're down to 70 in our core. I would like that number to go down to 50 because -- if you look at our top 20, they represent 90-some percent of our business, we want to keep doing that focus, and that's what our vendors want on the top side, and that's what our customers expect to be able to deliver the message. How many sales -- I mean how many vendors can a sales rep really represent, so we want to limit that. So we're really extension of the vendor sales force. William Dezellem: Great. Thank you for the additional perspective. Dale Foster: Thanks, Bill. Operator: And there are no further questions at this time. I would now like to hand back to Dale Foster for any additional or closing remarks. Dale Foster: Thank you, operator. Again, thanks to the entire client team. Hard work this year. A lot of things going on, a lot of moving parts Also, I want to welcome the team members from our new acquired Greek team in both Semanie and Afton. Matt and I had a chance to go over and spend time with them. And it was just a doubling down on the culture that we produce that we have at Climb. It's the same thing that same strand goes right through our team in Greece and just a great time. So they fit with not only our go-to-market, but they have the same type of values that we have as far as taking care of our customers and our vendors. Last thing I want to mention is we will be doing an Investor Day on July 7 in New York City. And for our shareholders, we'll be sending out invoice for that I'd love to see you in New York. Thank you,operator. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect. Before you buy stock in Climb Global Solutions, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Climb Global Solutions wasn’t one of them. 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