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.
Management highlights: vendor additions, platform focus, and Interworks integration
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.
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.”
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.
Q1 financial results: higher billings and net sales, margin impact from investments
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.
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.
Fortinet investments and expectations for payback
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.
Mix, demand environment, and vendor performance
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.
Balance sheet, stock split, and operating efficiency goals
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.
About Climb Global Solutions NASDAQ: CLMB
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.
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