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 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.
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.
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 and made further investments in our systems needed to support the larger and more 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. 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 use 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, enabling partners to help customers improve operational efficiency, 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 the health, 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 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. Within 12 months of joining the Climb platform, Darktrace became one of our top 20 vendors and 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 will 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. Adobe will be one of the first vendor prioritizations 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 through 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 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 businesses and navigating the M&A landscape is directly relevant to our long-term strategy and will add operating and strategic perspective to our team as we scale 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?
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 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 $6.0 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 focused 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 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.
分析師問答
The operator provided instructions for the question-and-answer session. We'll take our first question from Keith Housum with North Coast Research.
Appreciate the opportunity. As we think about the results for this quarter, if I compare to last year, if I remember right, last year had some more one-time items related to Vast Data. How tough of a comparable was that for you this quarter?
Yes, Keith—go ahead, Matt.
No, you go ahead.
So Keith, number one, thanks for joining us. 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 and then another one that was going to be in Q3 got pulled into Q2. So we had a really tough comp to overcome. But going into the quarter, one of our bigger vendors had a down Q1 and really came back in Q2. So that helped. We were really thrilled by the teams. And like I mentioned in the opening remarks with Darktrace, they really went to the next level, along with some of the other performers. If you remember when I first said, we had 19 of our top 20 vendors outperform and grew in Q2. So it was a tough comp, but good to see our top vendors taking off.
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 over the next 12 months?
For sure. I mean, it was roughly 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 much more integrated than they were even in Q1. We started this relationship in November, so it will continue. I think I said it will 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 roughly $6 billion to $7 billion in size, they grew 14% in Q1 and were up double digits in Q2 as well. So it's just a great relationship. As your teams get closer and closer, everything gets faster in terms of getting more of our customers on board. Fortinet's portfolio goes so wide, right? They go from firewalls all the way to access and security cameras. So it's a good technology company that we're going to expand on.
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 restructuring and legal fees. As you look at that, how much would you say was one-time or nonrecurring? And how should we think about that for the rest of the year?
Go ahead, Matt.
Yes. 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. Thinking about it from an effective margin perspective, we declined in SG&A as a percentage of gross billings by 20 basis points from Q1 to Q2, which was consistent with our trajectory from Q1 to Q2 of last year. So that's how we're thinking about it: the consistent effective margin flow that we've historically experienced is what we expect to see in the future.
And Keith, real quick, I hate talking about one-timers because it seems like every quarter you have a one-timer. It is one time, but it's something different each time. If you look at our internal budget, we are right on track for the investments we put in. And when we're opportunistic and decide to invest more in a piece that will provide long-term efficiency, we'll do that even if it's an expense we didn't budget for. We're still going to do it because the efficiency we get for the rest of the 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.
So 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 a year?
From the IT side, for sure. Yes. Our ERP went live two years ago in July, and now we're tweaking it and trying to use the best tools for the job. Vishal has been on board a year now; we've expected a lot from him and he's delivered in getting the right team members in. You'll continue to see that piece of work. We know we'll get comments on our SG&A side—we need to keep a close watch and continue to drive efficiency down.
Right. Okay. Guys, I appreciate the opportunity. Look forward to seeing the growth going forward.
Our next question will come from Vincent Colicchio with Barrington Research.
Yes, Dale. I'm curious, have geopolitical factors had any impact on sentiment in Europe? And also, are you hitting your cross-selling objectives in Europe set on the Interworks side given how recent that is?
On the cross-selling side, 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 they're using over there. We're also getting the teams integrated together on territory vendors because we both have the Microsoft agreement for all of Europe. So we now think about Southern Europe with Greece or the U.K. and Ireland and we'll keep moving into the middle of Europe. On the macro side, we had a Board meeting this week and we talked about the macro environment. I know it sounds cliché—we're roughly a $2 billion company, still extremely small in our market. The companies we target and the resellers we go after, we just haven't seen much impact. Of course, it's happening on the fringes, but nothing that really impacts our business. We're not in the hardware business, so logistics isn't an issue like it was in other periods. We just haven't seen a material impact.
Vast Data was good to you, I believe, in the year-ago period. Does that pipeline remain substantial?
It does. As people on this call know, it's going to remain lumpy because the deals are so large. 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 quickly—that's their claim—and they have fewer than 100 customers worldwide. So it's going to be lumpy, but we have a pretty strong pipeline with them already.
Has the gross billings momentum you experienced in the quarter carried through into early Q3?
We're just finishing up July and we'll have a strong July, some of it falling over from the quarter, which happens. We look at the percentage that's pretty traceable between the first half and second half of the year. Our second half is always stronger than our first half, and we have the same expectations for that this year. Fortinet will be a driver in Q3 and Q4. We have good momentum going into the second half.
One for Matt. Could you remind us why the tax rate was so high in this quarter?
Yes. Compared to Q2 of last year, our effective tax rate was higher this quarter because there was a discrete item in Q2 of last year related to restricted stock vesting. As we've had a run-up in the stock value over the years, when awards vest from many years prior when the fair value was much lower, the company receives a tax benefit. Now, as those prior-year awards become fully vested and the award fair value is closer to our current stock value, we have less of a discrete favorable impact on our taxes, which is driving our tax rate to be more consistent with where we would expect it going forward.
Our next question comes from Bill Dezellem with Tieton Capital.
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?
We were restricted until May 4 of this year from the top 50 customers; they didn't want disruption. The goal with Fortinet has always been net new business. Our technology stack goes extremely wide, and many of our vendors are narrow in terms of where they go into the security stack. So for us, it's a great fit. Since the restriction ended in May, some share shift will happen, but we're seeing results. We have initiatives inside the teams for generating net new business and we're looking at where our existing vendors overlap with Fortinet's partnerships. We're doing more events together and true cross-sell activities. We still touch the top 50 and we're seeing activity come from those groups, and momentum will continue.
To what degree are you seeing those top 50 customers making choices to move to Climb?
Yes. Regionally and in territory, this goes back to what we're known for as a company: we show up. These sellers are in region and territory visiting their customers. They don't get that experience from many of our competitors. We don't do overlays; the field rep is that person's main Climb contact. As we get more aligned with their field sellers, good things happen. The bigger resellers are bid opportunities that will come up over the next couple of years, but it's really hand-to-hand combat in the regions right now.
So essentially, we should not think about this as a light switch turning on with the top 50, but more that as the relationship builds, it will naturally progress and generate more business from customers who see and trust your people?
For sure. It's about the buying experience. If we can make it more streamlined, we'll get more customers. If we provide products that resellers can take to end users with differentiation, that's another positive. In North America, Fortinet's sales are about $2.5 billion and that flows through four or five distributor partners, so it's a big pond. We're focused on what our resellers want in that stack and trying to grow the footprint of Fortinet products they buy.
Speaking of big vendors, the Ivanti relationship—you didn't talk about that much at the analyst meeting. Can you dive into how fast it will ramp and the ultimate size you think this could be for the line card?
We didn't get into Ivanti deeply because we're just getting launched. We had our launch plan with them in all territories. When we onboard vendors, Charles and his team pick vendors strategically—we're looking upstream at larger vendors because to move the needle we need vendors that can generate significant revenue. Ivanti is roughly $950 million in revenue, a great team; we met with their C-level recently. We're getting more at-bats with bigger vendors. We have another vendor to announce in a couple of weeks that's roughly $650 million in the security stack. Ivanti came to us and said our field presence is strong and they weren't getting that from other channel players, so we'll see that relationship grow as they move business to us.
Ultimately, do you see Ivanti as a top 20, top 10, or top 5 vendor?
Top 20, definitely a top 20 vendor. To give some context, in 2022, 48 vendors made up about 90% of our adjusted gross billings; today, 84 vendors make up 98%. We're much more diversified. We have 45 vendors that do more than $10 million in sales, whereas in 2022 we had only 22 vendors above $10 million. It's a better vendor portfolio and we are focusing on the right, more productive vendors.
One additional question: what additional details do you have on the marketplace? I think you mentioned Adobe will be first—any additional details beyond what you had earlier this month in New York?
We've had a platform all along, but the issue with a platform you don't control is you don't control the roadmap for vendor additions. If I want a vendor added to drive internal efficiency, I may have to wait for that third-party platform's roadmap. We're going to have a hybrid approach. We've developed an architecture and will have a committee to prioritize what we need, because we want the experience to match what the customer wants—balancing online self-service with the personal relationship. Right now they have the personal experience but we need more online capabilities so customers can get answers faster. We'll continue investing; this is the first step. Some of our work will be done in Q4 of this year.
We'll take our next question from the Howard Group with Far Hope Capital.
First, congratulations once again on great growth in billings. You continue to do excellent work there. I have two questions. One, just a follow-up on the SG&A line: going up 26% year-over-year looks concerning, though you did reduce SG&A as a percentage of gross billings from 3.7% to 3.5% Q1 to Q2. The target was always that 3% level. What do you see as a percentage of gross billings for 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 near-term target?
I want to say yes, but a couple of things will happen and we'll call them out. If we have some bigger one-time deals, that affects the math. Over the last eight quarters we dipped below 3% a couple of times and were just above 3% other times. That is our goal. But it's a catch-22: if I invest in technology now that makes us efficient for years, I want to do that now rather than wait. That's contributing to SG&A. I'm trying to be a good steward—focused on quarters but unwilling to sacrifice long-term efficiency. Q3 and Q4 are very strong; the Adobe relationship really kicks off because it's buying season. We'll see if the numbers go up without adding extra resources. We're also making some cost-cutting measures and we'll discuss that in Q3.
Just to reiterate what Dale was saying: historically our effective margin grows from Q1 to Q4 each year. There are quarter-to-quarter fluctuations. If you take out the impact of the large non-recurring Vast transactions from Q2 of last year and the impact of Interworks, which wasn't in Q2 of last year, we still grew adjusted EBITDA with strong double-digit organic growth levels of gross billings and gross profit. So, there are things to peel back, but it was still a strong quarter when you consider those pieces.
Right. So the flip side is that from where you were 3-4 years ago, you're adding a lot more service to your offering—it's not just a product buy. If it takes 3.5% SG&A to deliver that, is there a way to get your gross margin on billings up from 5% to 6% to capture more? Is that possible, or does the market not allow that?
North America makes that tough because of competition. In Europe and other regions, margins can be double digits higher because competition is less. If we can grow our presence in Europe, we can move that number. The contribution from our Solutions team is 11% to 12% margin, which makes a big impact. The question has been whether we can do that efficiently in Europe as we do in the U.S.; that's what we're working on with systems and platform improvements. A couple of years ago I would have said it was tough; now I think we can move the number and you'll see that reflected in targeted acquisitions and operations.
My second question is on the M&A environment. At Investor Day, it sounded like you were picking up the pace on evaluations and targets and increasing the size of deals you could do. Is that correct? What do you see for the rest of this year on your M&A target list and your ability to do bigger deals?
You're spot on. The Board meeting this week was to make sure the Board and I are aligned on the next three to five years. We're not afraid to take on debt if it's the right capital structure. We're accelerating targets—we've had them for some time, and the business is relationship-driven so we need to get comfortable with each target's vendor and customer relationships and culture. It takes time, but we've been working on them for the last two to three years and now we have some really good targets. We have two that are very large and we can do them; we likely won't do them with cash alone and would use the best form of capital, probably debt.
At this time, there are no further questions in queue. I will now turn the meeting back to Dale Foster.
Thank you, operator. Appreciate it, and thanks again for joining the call. I want to thank the Greater Climb team. When we talk about relationships, we have to talk about both customers and vendors—both are our customers. Our teams are doing a great job on both sides. We're halfway through 2026, with a lot of momentum going into the second half, and we look to have a great year for 2026. I appreciate it. 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.