管理層發言
Good morning, everyone, and thank you for participating in today's conference call to discuss Climb Global Solutions' financial results for the first quarter ended March 31, 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 first 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 webcast replay on the company's website. Following management remarks, we'll open the call for your questions. I'd now like to turn the call over to Mr. Mansouri for introductory comments.
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.
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 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 serviceability 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, sell and deploy a unified monitoring platform at scale seamlessly across diverse customer environments and use cases. We also launched a company called LogicMonitor during the quarter, following the successful pilot with a large customer in the fourth quarter of 2025. LogicMonitor 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 LogicMonitor's capabilities to our partner ecosystem, equipping VARs and MSPs with a differentiated solution that provides enhanced visibility, improved operational resilience and drives long-term customer value. We look forward to building our relationship with both Czech MK and LogicMonitor 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 vendors 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 for our EMEA team. She is working closely with regional leadership to replicate the process discipline and execution framework 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 expands, we are also seeing increased activity across both new evaluations 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 needed 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 streamline our workflows. We're using AI tools and agents to connect our partners and 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 headcount. 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 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?
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 Interwork. 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 one-time 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 continued 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% for the same period in 2025. Excluding the previously mentioned one-time 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 stockholder's 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?
分析師問答
The operator will now provide instructions for how to ask questions. We'll move first to Keith Housum with North Coast Research.
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 one-time items, including IT and legal costs and investments. Can you perhaps bifurcate that a little bit more so we understand — like, I'm assuming increased costs that will continue going forward — some of your one-time IT costs are probably one-time in nature. Any way to bifurcate some of that growth in SG&A to understand a little bit more going forward?
Keith, this is Matt. I'll fill in. I was going to say the largest driver there, or a big piece of the driver, was the Fortinet investment. And the investment in that relationship has been slightly different than the investment in the typical onboarding of a new vendor where we had increased cost building out teams and additional one-time 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 was a negative reduction to adjusted EBITDA that we expect to turn the other direction as we move into the remainder of 2026.
Keith, real quick. This is one 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 as such an opportunity. It's an anchor for us as we go forward. And it's one of the top four 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 brought on board.
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 something like Fortinet? Will you see the return on investment here before the end of the year on that?
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 for that team and then covered in Q3.
Okay. Got you. And then the — it looks like the mix between gross and net revenue here despite really strong performance 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?
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 for them.
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?
We did not see the impact, Keith. I mean some of the delays are 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 recurring revenue and renewals, so we just haven't seen that slow down. We haven't seen the seed licenses decrease. I think the adults are coming back and saying, 'Hey, this is sophisticated software that people are buying.' We've got two 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 prioritize to protect their infrastructure first.
Got you. And maybe the last question for you. In terms of the targeted one-time investments in 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?
Yes. So our new CIO will be coming up on a year in Q2. I just wanted to point out the number of 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 many AI tools to just make our systems faster. And that is not only in the ERP but all of the associated applications where we can use agents to do a lot of the work that we've had to do manually before. 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, because we need to be able to scale this business. Our goal is to double it in the next three years but not double our head count because we would just be running on a treadmill at that point. So that's our goal: using the technology. It's out there to use and we just keep putting the projects on the list to make it more efficient.
We'll move next to Vincent Colicchio with Barrington Research.
Yes, Dale, was the organic growth broad-based in the quarter across your vendors — and were there any lumpy deals that impacted the period?
Yes. It is our top 20 that happened. We had some fallover that typically happens from Q4; deals that didn't get closed carried into this period. But no, it was just a good quarter for us. When you look at vendor performances, we had some vendors that finished their fiscal year at the end of March, so there's going to be some timing there. And some of our new vendors did that as well. But other than that, it's just across all of our vendors and was a decent performance.
And as gross billings momentum carried through April?
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 not seeing a slowdown in our workloads. So that's where our focus is: how we become more efficient with those workloads. But if you look at our adjusted gross billings and 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. We're going to use AI more than we're going to sell it this year. Our vendors are going to use it more internally to develop products faster. That's the thing that gets talked about the most when we have all of our QBRs with our vendors: how much faster they're able to develop products. AI does a great job with repetitive processes, and that's how we're using it inside of Climb. But when it comes to sophisticated threats, 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.
And curious about VAST Data. Does the pipeline remain substantial there?
Yes, it's still going to be lumpy with VAST, but it's still — I mean if you look at VAST as a company, how much money they've raised, they mainly appeal to the high-speed data pull for AI engines, and that's where their claim to fame is. They're still doing a good job. So you'll see throughout this year some more lumpy deals that are coming in, but it's hard to predict because they're all based on, back to Keith's comment about memory, they're going to be affected by that. Anybody that's going into data centers is going to be affected by some of the chip issues.
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?
It's the cross-sell that we have; 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 in 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 so 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: from the U.S. vendors to the Greek team and from the Greek team to us in terms of how they actually transact and how they look to add more vendors. So you'll see the cross-selling and really the onboarding of new vendors in Southern Europe. As I mentioned, Cera Peters has taken that role and that was one of the reasons for it.
Move next to Howard Root with Fairhome Capital.
I want to follow up a little bit more on the SG&A line. 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 one-time 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 quantify it? And then when you say one-time, does that mean one quarter? Or is that going to continue into Q2 and for the rest of the year?
Yes. So when we refer to that as one-time, 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 one-time professional and legal-type costs associated with the stock split and some other initiatives there. So like I mentioned in the prepared remarks, 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 when it was about 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.
So just looking forward — go ahead, Dale — sorry.
Real quick, Howard — when Matt and I look at it as we're going through the quarter, we just have some miscellaneous items, we call them one-time 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 one-time items in the quarter, as we pointed out. If you look at the actual SG&A as a percentage, I think it went from 3.5% to 3.7%. But yes, we need to get that in the other direction. And as you often point out, we kicked off this year with our executive meetings, including presenting to the Board, how do we get our 5% effective margin to more of a 50-50 split on our SG&A and our effective margin. So that is the goal that we have. And we do not see our vision changing on that.
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 decreased from that, an increase from that, or relatively the same?
Well, it all depends — we have to go by percentages, Howard, because it all depends on our Q2. Q2 is typically higher than Q1. We're going in with our education period where all the buying starts happening and all the quoting starts happening. So that affects gross profit and the commissions that we pay out. I can't give you a hard dollar number that way, but percentage-wise we're going to see that drop.
Okay. So then you mentioned the 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 roughly 2% for income from operations after 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?
Yes, our goal — and we presented this to the Board — is to get that to a 50-50 split. We had our sales kickoff both in the U.S. and overseas, and the objective is to get the 5% split to be roughly 2.5% SG&A and 2.5% operating margin. I mean, we know where our competitors are. We know we can get there, but it's an efficiency play for us to split that 5% in half and drop it through. So that is our hard target to get to that we have set for ourselves as a management team.
And our expectation is that the 5% gross profit doesn't change?
Okay. So 5% gross profit, but 2.5% would be what your real goal is here, not just to be better than that.
That's where we have our sights set: to take the 5% and split it half and half, with half going to SG&A and the other half dropping through to profit.
Okay. All right. Then just bigger picture, and I don't want to get too nitty — congrats on the revenue growth, you guys are still doing a great job. On the M&A environment though — the Interwork acquisition was kind of one of these new things where it was acquire-or-go-out because of the Microsoft vendor dynamic 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?
Yes. Valuations have settled and our focus has been mostly in Europe and a little bit in the Middle East where we're prospecting two years out into some territories. It was opportunistic that we did this with Interwork because we already had a cloud platform relationship with them. We're continuing to see opportunities on my list; Matt and I met with many when we were over in Greece with the team. It all depends on what a company internally does — are they reliant on one vendor or one territory — there are different factors that go into the valuation piece. From where we acquired Douglas Stewart at around 4.5% up to paying close to 8.5% for other companies, it just depends on their makeup and where we see that we can effectively grow them and how quickly we can grow them. That's what determines what we pay.
Great. All right. Congrats on the progress.
We will move next to Bill Dezellem with Titan Capital.
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?
Thanks for the question, Bill. It actually has. Our talk track is that we're going after emerging vendors, and if you look at our line card and even our top vendors like SolarWinds and others, they've been great partners and continue to be. But as far as looking at a Tier 1 vendor like Juniper or Fortinet, we typically don't market toward that environment. When this one came up, it wasn't an immediate 'this will change Climb,' but it was attractive — and for the better. My first reaction was that I didn't want to change our culture and become a broad-line distributor because there's so much value in what we do and what we take to market. But to your point, since it happened Charles Bass, who runs our alliances team, has had some pretty large companies reach out to us saying, 'Hey, I didn't realize you guys did this. I didn't realize you have wins in some of the markets that you do.' In the North American market, you have the three large distributors now all public with Ingram going public last year, and then it goes all the way down where Climb is much smaller in scale compared to these $50 billion, $60 billion companies. We don't want to be them, but we're having vendors come to us and say, '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 names, of course, until we announce them. But yes, it's nice to have them coming to us instead of us knocking on every door.
So 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?
I'll leave it at that, yes.
Would you anticipate that if these come to fruition that it would happen this calendar year? Or are these discussions much more drawn out than that?
No, those would happen in this calendar year for the ones we're looking at. But it's always a bit unpredictable. We expected Fortinet to have a slightly faster start than it has, and it's always putting energy into ramping. As I told my field sales team, I'm putting tons of pressure on them to launch this and get into net-new customers. We're going to take advantage of this vendor relationship for the next five, ten, fifteen years, because I think we're a better go-to-market play than our competitors. So that's why we're putting the energy in now. Everyone has their day jobs, but we're pushing our field teams because this is important to us. It will 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 they work with; there are quite a few on the list. There are seven or eight that we already work with, so there's cross-selling and marketing programs together. So yes, there are more new targets for us and I see more of that coming our way.
And if you were to sign one more of them, would the one-time investments that you've discussed here relative to Fortinet scale to 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?
Yes. I'll give you a real-time example. When we acquired Douglas Stewart, Adobe was a big part of that relationship and they had a separate team, and that team was maintained separately until we integrated them into our ERP. Now the Adobe platform and Adobe marketing are part of Climb. We want a one-Climb approach to how we go to market. The same will eventually happen with Fortinet: it will morph into our overall team and become part of the Climb ecosystem. But right now we kept it separate so we can track it and show our progress. Everybody — we have 80 some sellers in North America — they're all selling Fortinet products just like they're all selling Adobe. It wasn't that way to start with. So it depends on the opportunity. If the vendor is already in our same work stream like most of the vendors we sign, it just goes right in. 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 it's transactional. I'm trying to continue to move vendors off so we can focus on our core. We started with 100 vendors and we're down to 70 in our core. I would like that number to go down to 50 because our top 20 represent over 90% of our business. We want to keep that focus, and that's what our vendors want on the top side, and that's what our customers expect. How many vendors can a sales rep really represent? We want to limit that. We're really an extension of the vendor sales force.
Great. Thank you for the additional perspective.
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.
Thank you, operator. Again, thanks to the entire Climb team for the hard work this year. A lot of things are going on and a lot of moving parts. Also, I want to welcome the team members from our newly acquired Greek team, in particular Semanie and Afton. Matt and I had a chance to go over and spend time with them. It was a doubling down on the culture that we have at Climb. It's the same strand that goes right through our team in Greece and they fit not only with our go-to-market but 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. For our shareholders, we'll be sending out invites for that. I'd love to see you in New York. Thank you, operator.
Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.