Climb Global Solutions Q2 2026 Earnings Report

Climb Global Solutions EPS Results

• Actual EPS: $0.30
• Consensus EPS: $0.31
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

Climb Global Solutions Revenue Results

• Actual Revenue: $174.21 million
• Expected Revenue: $174.08 million
• Beat/Miss: Beat by +$134.00 thousand
• YoY Revenue Growth: N/A

Climb Global Solutions Announcement Details

• Quarter: Q2 2026
• Date: 7/29/2026
• Time: After Market Closes
• Conference Call Date: Thursday, July 30, 2026
• Conference Call Time: 8:30AM ET

Climb Global Solutions (NASDAQ:CLMB) 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. It also resells computer software and hardware developed by others, as well as provides technical services to end user customers. In addition, the company offers a line of products from various software vendors; and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management, and other technically sophisticated domains, as well as computer hardware. It markets its products through its own web sites, local and on-line seminars, events, webinars, and social media, as well as direct email and printed materials. The company was formerly known as Wayside Technology Group, Inc. and changed its name to Climb Global Solutions Inc. in October 2022. Climb Global Solutions Inc. was incorporated in 1982 and is headquartered in Eatontown, New Jersey.

Climb Global Solutions Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Gross billings rose 17% to $587.3 million, while net sales increased 9% to $174.2 million, supported by organic growth from 19 of the company’s top 20 vendors and contributions from InterWorks.
• Negative Sentiment: Profitability was pressured by higher investments in IT infrastructure, legal and professional fees, and taxes. Adjusted EBITDA declined slightly to $11.3 million from $11.4 million, while effective margin fell to 37.5% from 43.3% and adjusted EPS dropped to $0.30 from $0.35.
• Positive Sentiment: Fortinet gross billings increased roughly tenfold from Q1 to Q2, and management expects the relationship could become a top-five vendor within about a year as customer restrictions expire and cross-selling expands.
• Neutral Sentiment: Climb is developing an internally controlled cloud marketplace, with Adobe expected to be an initial priority and some functionality targeted for Q4 2026. Management also plans to accelerate European M&A, including potentially larger deals funded partly with debt.
• Positive Sentiment: The company ended the quarter with $56.6 million in cash and no revolver borrowings, giving it flexibility to fund working capital, technology investments, and acquisitions while pursuing a goal of more than doubling 2025 adjusted EBITDA by 2030.

Presentation

[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 30th, 2026. Joining us today are Climb's CEO, Mr. Dale Foster, the company's CFO, Mr. Matthew Sullivan, the company's investor relations advisor, Mr. Sean Mansouri, with Elevate IR.

[Operator]

By now, everyone should have access to the second quarter 2026 earnings press release, which was issued yesterday afternoon at approximately 4:05 P.M. 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 a 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, Investor Relations Advisor at Elevate IR]

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.

[Sean Mansouri, Investor Relations Advisor at Elevate IR]

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 CEO, Dale Foster.

[Dale Foster, CEO at Climb Global Solutions]

Thank you, Sean, and good morning, everyone. We executed on several strategic initiatives in Q2 that are central to 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 our line card to make further investments in our systems needed 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 two of them.

[Dale Foster, CEO at Climb Global Solutions]

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 Checkmk, a German-based provider of comprehensive IT infrastructure monitoring and observability solutions. Its platform helps organizations track the health and performance, and availability of their entire technology stack, including network servers, applications, and cloud resources.

[Dale Foster, CEO at Climb Global Solutions]

Checkmk 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 two existing relationships. First, we broadened our relationship with LogicMonitor 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.

[Dale Foster, CEO at Climb Global Solutions]

Within 12 months of joining the Climb platform, Darktrace became one of our top 20 vendors and was 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 developing, we are encouraged by the progress to date and believe Fortinet can be one 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 Climb 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.

[Dale Foster, CEO at Climb Global Solutions]

Adobe will be one of the first vendor 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 align 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 through organic growth, deeper vendor relationships, partner relationships, and operating leverage in strategic M&A. Thank you again to the investors that joined us in person as well as those that joined us by webcast.

[Dale Foster, CEO at Climb Global Solutions]

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 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.

[Dale Foster, CEO at Climb Global Solutions]

With that, I will turn the call over to Matt Sullivan, our CFO, for the financial results. Matt?

[Matthew Sullivan, CFO at Climb Global Solutions]

Thank you, Dale, and good morning, everyone. A quick reminder as we review the financial results for our second 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 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 a contribution from our acquisition of InterWorks on February 24, 2026.

[Matthew Sullivan, CFO at Climb Global Solutions]

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.

[Matthew Sullivan, CFO at Climb Global Solutions]

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 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.

[Matthew Sullivan, CFO at Climb Global Solutions]

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 Climb 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]

Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question, we'll pause for a moment to allow everyone a chance to join the queue. We'll take our first question from Keith Hausman with Northcoast Research. Your line is now open.

[Keith Hausman, Analyst at Northcoast Research]

Good morning, gentlemen. Appreciate the opportunity. Hey, Matt, as we think about the results for this quarter and compare to last year, if I remember right, last year had some more one-time items related to Vast Data. How tough of comparable was that for you this quarter?

[Matthew Sullivan, CFO at Climb Global Solutions]

Yeah, Keith,

[Dale Foster, CEO at Climb Global Solutions]

Good morning. Go ahead, Matt.

[Matthew Sullivan, CFO at Climb Global Solutions]

No, you go ahead.

[Dale Foster, CEO at Climb Global Solutions]

Yeah, Keith, number one, thanks for joining us, investor day in New York. It was good to see you. We knew it was going to be a tough comp going into Q2 because we had a $30 million deal with Vast Data, another one that was going to be in Q3 got pulled into Q2, we had a really tough comp to do that. Going into the quarter, one of our bigger vendors, Sophos, had a down Q1 really came back in Q2, that helped it out. We really were thrilled by the teams, like I mentioned in the opening remarks with Darktrace really going to the next level, some of the other performers.

[Dale Foster, CEO at Climb Global Solutions]

If you remember when I first said we had 19 of our 20 vendors outperformed grew in Q2, that tough comp, good to see our top vendors taking off.

[Keith Hausman, Analyst at Northcoast Research]

No, absolutely. 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, in the next 12 months?

[Dale Foster, CEO at Climb Global Solutions]

For sure. 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. 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. It'll continue, I think I said it'll be one of our top five vendors probably this time next year. It continues to grow. If you looked at their financial results this week, for a company that's $6-7 billion in size, they grew 14% in Q1. Q2, they were up double digits as well, just a great relationship. As your teams get closer and closer, everything gets faster, right, as far as getting more of our customers on board. Fortinet's portfolio goes so wide, right?

[Dale Foster, CEO at Climb Global Solutions]

They go from firewalls all the way to access and security cameras, just a good technology company that we're going to expand on.

[Keith Hausman, Analyst at Northcoast Research]

Great. Good to hear it. As I look at your SG&A expenses, I know you guys have a lot of different fires going on right now in terms of some of the IT efficiencies and some of the restructuring legal fees. As you look at that, how much would you say was one-time or non-recurring, and how should we think about for the rest of the year?

[Dale Foster, CEO at Climb Global Solutions]

Go ahead, Matt.

[Matthew Sullivan, CFO at Climb Global Solutions]

Yeah. In the quarter, we had about $500 thousand of what I would call non-recurring type expenses. It relates to some of the legal and professional costs, and then some of the investments in our IT infrastructure. Thinking about it from an effective margin perspective, our SG&A as a percentage of gross billings declined by 20 basis points from Q1 to Q2, which was consistent with our trajectory from Q1 to Q2 of last year. 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.

[Keith Hausman, Analyst at Northcoast Research]

Great.

[Dale Foster, CEO at Climb Global Solutions]

Keith Hausman, real quick, I hate talking about one-timers because it seems like every quarter you have a one-timer, right?

[Keith Hausman, Analyst at Northcoast Research]

Right.

[Dale Foster, CEO at Climb Global Solutions]

You're like, "Hey, this is one time," but it's something different. If you look at, we know, and we have our internal budget and stuff, and we are right on track for the investments that we put in. Of course, we're very opportunistic as a company. When we say, "Hey, you know what? We should invest more in this IT piece of it, and it's going to be an expense that we didn't budget for," we're still going to do it because the efficiency that we get for the rest of our next 10 years is worth doing now. That's what we've done in both Q1 and Q2, and some of it will be in Q3.

[Keith Hausman, Analyst at Northcoast Research]

In your head, Dale, in terms of the investment in the cloud marketplace and the IT, how fast is your payback? Is that a payback you can get back in one year?

[Dale Foster, CEO at Climb Global Solutions]

From the IT side? For sure.

[Keith Hausman, Analyst at Northcoast Research]

Okay. Got it.

[Dale Foster, CEO at Climb Global Solutions]

Yeah. We've talked about our ERP went live two years ago, July, and now we're tweaking it, and we're trying to use the best tools for the job. With Vishal coming on, he's been on board a year now, we've expected a lot from him. He's delivered, getting the right team members in. You're going to continue to see that piece of it. We know, I'm going to get the comments on our SG&A side, we need to keep a very close watch on it and continue to get the efficiency we can drive it down.

[Keith Hausman, Analyst at Northcoast Research]

Right. Okay. Guys, I appreciate the opportunity. I look forward to seeing the growth going forward. Thanks.

[Dale Foster, CEO at Climb Global Solutions]

Thanks, Keith.

[Operator]

Thank you. Our next question will come from Vincent Colicchio with Barrington Research. Your line is now open.

[Vincent Colicchio, Managing Director at Barrington Research]

Yeah, Dale, I'm curious, are geopolitical factors having any impact on sentiment in Europe? Are you hitting your cross-selling objectives in Europe, setting the InterWorks side, given how recent that is?

[Dale Foster, CEO at Climb Global Solutions]

Yeah. 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 onto the platform that they're using over there. We'll see that piece of it. We're also getting the teams integrated together on just territory vendors because we both have the Microsoft agreement for all of Europe. Now we're, think about it, we're in Southern Europe with Greece, we're 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 environments. I know it sounds. We're $2 billion.

[Dale Foster, CEO at Climb Global Solutions]

We're still so extremely small in our market, the companies that we carry in the pockets that we go after our resellers, we just haven't seen it. Of course, it's going to be on the fringes, nothing really impact. We're not in the hardware business, logistics isn't an issue, just like it wasn't during COVID. We just haven't seen it, and I think I say that a lot. We're still that small.

[Vincent Colicchio, Managing Director at Barrington Research]

Vast Data was good to you, I believe, in the year ago period. Does that pipeline there remain substantial?

[Dale Foster, CEO at Climb Global Solutions]

It does. As people that have been on this call before, 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. Vast Data is known for delivering data to AI engines and LLMs very quickly. That's their claim. They have less than 100 customers worldwide, so it's going to be lumpy. We have a pretty strong pipeline with them already.

[Vincent Colicchio, Managing Director at Barrington Research]

Has the gross billings momentum you experienced in the quarter carried through in the early Q3?

[Dale Foster, CEO at Climb Global Solutions]

We're just finishing up July. We'll have a strong July, some of it falling over from the quarter, which happens. Yeah, we look at the percentage that is pretty traceable between first half and second half of the year. Our second half of the year is always stronger than our first half, and we have the same expectations for that. Fortinet's going to be a driver in Q3 and Q4. We'll talk about that again. Yeah, we have good momentum going into it.

[Vincent Colicchio, Managing Director at Barrington Research]

One for Matt. Could you remind us why the tax rate was so high this quarter?

[Matthew Sullivan, CFO at Climb Global Solutions]

Yeah. Compared to Q2 of last year, our effective rate was higher this quarter than the Q2 of last year because there was a greater adjustment for a discrete item in Q2 of last year, for when restricted stock vests. As we've had the run-up in the 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. As those much prior year awards become fully vested and the award fair value are more closer then 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.

[Vincent Colicchio, Managing Director at Barrington Research]

Okay. Thanks, gentlemen.

[Dale Foster, CEO at Climb Global Solutions]

Thanks, Vince.

[Operator]

Thank you. Our next question comes from Bill Dezellem with Tieton Capital.

[Bill Dezellem, Founder, President, and Chief Investment Officer at Tieton Capital]

Thank you. 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, CEO at Climb Global Solutions]

Yeah. We were restricted until May 4th 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, their technology stack goes extremely wide. If you look at a lot of our vendors, our vendors are extremely narrow as far as where they go in the security stack. For us, it's just a great fit. Yeah, it ended in May. Some share shift will happen, 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.

[Dale Foster, CEO at Climb Global Solutions]

We have some really cool initiatives inside teams for generating net new business, and then we're looking at. If you go to Fortinet's website and you look at their technology partnerships, there's so many that we have in common, the vendors we already had on our line card. We're just doubling down on those. We're doing more events together, and do truly cross-sellable stuff. Yeah, you figure we had April and May, we still couldn't touch the top 50. We're seeing some of the stuff come from those groups, and they'll continue the momentum.

[Bill Dezellem, Founder, President, and Chief Investment Officer at Tieton Capital]

Dale, that's I guess part of where I was going is relative to those top 50, to what degree are you seeing them making choices to move to Climb?

[Dale Foster, CEO at Climb Global Solutions]

In region, in territory, this goes back to what we are known for as a company, right? We are a show-up type of sales force with all of our. 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. 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. 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. The bigger resellers out there, those are bid opportunities that'll come up over the next couple of years.

[Dale Foster, CEO at Climb Global Solutions]

Really it's hand-to-hand combat in all the regions.

[Bill Dezellem, Founder, President, and Chief Investment Officer at Tieton Capital]

Great. 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, it's just going to be a natural progression where they're going to give more business to the people that they see and like that are showing up every day.

[Dale Foster, CEO at Climb Global Solutions]

It's the buying experience, right? 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 differentiator or they can build more of the technology, and we're mostly security in that stack, that's another positive. 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 four or five distributor partners. It's a 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.

[Bill Dezellem, Founder, President, and Chief Investment Officer at Tieton Capital]

Thank you. 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, just ultimately, the size that you think this could be for Climb?

[Dale Foster, CEO at Climb Global Solutions]

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. Let me just back up to when I talk about onboarding vendors and how Charles and his team go through picking vendors, and we're just continue 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 five to 10 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. Ivanti, $950 plus million, great team. We get to meet the C-level guys a couple of weeks ago in New York with their refresh program.

[Dale Foster, CEO at Climb Global Solutions]

I only see good things from that. We're getting more and more at bats with bigger vendors. We have another one we'll announce in a couple of weeks that is a $650 million vendor in the security stack space. 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. It might be an overlap of 20%, but not more than 50%. You'll see that relationship grow and grow. Ivanti came to us and said, "Okay, you guys are out in the field.

[Dale Foster, CEO at Climb Global Solutions]

We're not getting that from our other channel players. We're going to see more of that move over as well as they've moved to, how do I want to put it nicely, cancel contracts with some of our competitors because they're just not getting out of what they want.

[Bill Dezellem, Founder, President, and Chief Investment Officer at Tieton Capital]

Ultimately, with Ivanti, do you see this as a top 20, a top 10, top five? Where do you see them ultimately falling?

[Dale Foster, CEO at Climb Global Solutions]

A top 20. Definitely a top 20 vendor. Like I said in the opening remarks, 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. In 2022, we had 48 vendors that made up about 90% of our adjusted gross billings, and today, 84 vendors make up 90%. 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. We're very diversified. We have 45 vendors that do more than $10 million in sales. In 2022, we had only 22 vendors in 2022 that did $10 million or more.

[Dale Foster, CEO at Climb Global Solutions]

Better vendor portfolio that we're delivering and working on more focused vendors.

[Bill Dezellem, Founder, President, and Chief Investment Officer at Tieton Capital]

Great. Then one 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, CEO at Climb Global Solutions]

Yeah. We've had a platform all along, the issue with having a platform that you don't control is you don't control the roadmap of when you want a vendor added. 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 roadmap of whoever I use as a platform and wait for that to come up. Even if we do some of the devs on ourselves, it still takes longer. We're going to have kind of a hybrid. We're developing with the architecture's already been pretty much set, 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?

[Dale Foster, CEO at Climb Global Solutions]

How much of an online experience they can determine, how much of an individual in-person relationship they can determine. We want to have both of those. Right now they have the personal experience, but we need one that's more online that they can get answers a lot faster than waiting for their teams. It'll 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 he's worked for. We'll announce this and continue as we go. We'll have some of our stuff done in Q4 of this year.

[Bill Dezellem, Founder, President, and Chief Investment Officer at Tieton Capital]

Great. Thank you, congratulations on the forward progress.

[Dale Foster, CEO at Climb Global Solutions]

Thanks, Bill.

[Operator]

Thank you. We'll take our next question from Howard Root with Fairhope Capital. Your line is now open.

[Howard Root, Analyst at Fairhope Capital]

Good morning, guys, and thanks for taking my questions. First, congratulations once again on the great growth in billings. You guys continue to do excellent work there. I have two questions. One, just a little follow-up on the SG&A line. Going up 26% year-over-year looks kind of troubling, but obviously you talked about that at Q1 because that was where the jump was. In Q1 to Q2, you actually took it down from 3.7% to 3.5% of your gross billings. The target was always at 3% level, and it's kind of sticky here and going up a little bit Q1 to Q2. What do you see as a percentage of gross billings, the SG&A? 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, CEO at Climb Global Solutions]

I want to say yes, Howard, but a couple of things will happen, and we'll call them out. If we have some bigger VAST deals, and if I look, and Matt and I went through the last eight quarters, and we had a couple of times where we dipped below three, and some of the times, a couple of quarters were just above three. Of course, that is the goal. 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. That is some of what's being churned up in my SG&A.

[Dale Foster, CEO at Climb Global Solutions]

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. Yeah, that's our goal. We know that our Q3s and Q4s are very strong. Our Adobe relationship really kicks off because it's the buying season, so we'll see 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, CFO at Climb Global Solutions]

Howard-

[Matthew Sullivan, CFO at Climb Global Solutions]

Just-

[Dale Foster, CEO at Climb Global Solutions]

Okay, go ahead.

[Matthew Sullivan, CFO at Climb Global Solutions]

Just to reiterate what Dale was saying there. Historically, our effective margin grows from Q1 to Q4 of every year, or ramps up from Q1 to Q4 of every year. There are fluctuations in it from given quarter to quarter. We've talked quite a bit about the large non-reoccurring, at this point, VAST transactions from Q2 of last year. 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. Yeah, there's a couple of things to peel back there and a couple of things to continue to tweak. Still a strong quarter when you take those pieces out of it.

[Howard Root, Analyst at Fairhope Capital]

I guess the flip side to that, though, is from where you were three, four years ago when I first started covering you guys, you're adding so much more service to your offering. It's not just, here's a product, buy it. You're personal hands-on. If it does take 3.5% SG&A, is there a way of getting your gross margin on billings up from that 5%-6% and capture it that way? Is that something you're looking at or something you think is possible, or the market just doesn't allow that?

[Dale Foster, CEO at Climb Global Solutions]

Yeah, Howard, I would say North America, the market doesn't allow it. That's the big piece of it, I talked about it in New York, that is some of the acquisition plans that we have overseas, they have double digits to triple what we are. If we're doing 5%, they're doing 10%-15% because the competition is less. If you look at the territory we're selling in the U.S., we're looking at that as in Europe as territory we're selling, but it's typically in-country. Their margins are higher, less competition. Like I said in New York, if we can mimic our size in the U.S., in Europe, and beyond, we can move that. If we look at the margins, just the contribution of my solutions team is 11%, 12%. It makes a big impact.

[Dale Foster, CEO at Climb Global Solutions]

It makes them look double the size. The issue has always been, can we do it as efficiently in Europe and beyond as we do in the U.S.? 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. If you asked me this a couple of years ago without the acquisitions and where we're targeting, I would've said it's really tough to do, now I'm going to change that and say we can do that. 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, that's why we need to grow that. I think we can move that number.

[Howard Root, Analyst at Fairhope Capital]

Great. Thanks. My second question is on the M&A environment. At the investor day, what I heard was you guys 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, CEO at Climb Global Solutions]

You were spot on, Howard. This meeting that we had with the board this week was really just for me to lay out the strategy for the next three to five years and making sure that the board and I are in align in where we're going, and we're not afraid if we want to take on some debt. Yeah, those two 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. What's the relationship with our vendors? What's the relationship with our customers? How well are they liked in the market? Do they have a lot of the same philosophy as go-to-market and culture that we do?

[Dale Foster, CEO at Climb Global Solutions]

It takes some time, I've been working on them for the last two to three years, now we are at the point where we've got some really good targets, ones that we want to get accomplished, we got two that are very large that we can do. We're not going to be able to do them with cash, we'll use the best form of capital to do that's probably in the form of debt.

[Howard Root, Analyst at Fairhope Capital]

Great. Thanks, congrats again on the quarter.

[Dale Foster, CEO at Climb Global Solutions]

Thanks, Howard. Appreciate it.

[Operator]

Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to Dale Foster.

[Dale Foster, CEO at Climb Global Solutions]

Thank you, operator. Appreciate it. Thanks again for everybody joining the call. I want to thank the greater Climb team. When we talk about relationships, we have to talk about it in the form of going to customers and going to our vendors. 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.

Participants

Executives

• Dale Foster, CEO
• Matthew Sullivan, CFO

Analysts

• Sean Mansouri, Investor Relations Advisor at Elevate IR
• Keith Hausman, Analyst at Northcoast Research
• Vincent Colicchio, Managing Director at Barrington Research
• Bill Dezellem, Founder, President, and Chief Investment Officer at Tieton Capital
• Howard Root, Analyst at Fairhope Capital