Climb Global Solutions Q2 Earnings Call Highlights

Key Points

• 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.

Profit Growth Offset by Investments and Tax Rate

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.

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%.

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.

Vendor Additions and Fortinet Expansion

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.

Cloud Platform, Europe and M&A Priorities

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.

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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