Climb Global Solutions, Inc. Q1 FY2026 earnings call

• CEO Dale Foster mentioned double-digit organic growth in core business and benefit from Interworks.cloud acquisition. Evaluated 39 net new brands and signed CheckMK and launched LogicMonitor. Acquired Interworks, seeing opportunities in southeastern Europe. Promoted Sarah Peters to Senior Director of Alliances. Focused on driving organic growth, capital allocation, and investing in infrastructure with over 41 IT projects. Viewed M&A as strategic lever. - CFO Matt Sullivan discussed financial results, including gross billings, net sales, gross profit, SG&A, net income, adjusted EBITDA, and balance sheet details. Mentioned board approved four-for-one forward stock split.

In Q1 2026, gross billings increased 14% to $542.8 million. Distribution segment gross billings increased 15% to $520.9 million, and solution segment gross billings increased 4% to $21.9 million. Net sales increased 32% to $182.4 million. Gross profit increased 13% to $26.5 million. SG&A expenses were $20.3 million compared to $16.8 million in the prior year. Net income was $3.3 million or 18 cents per diluted share. Adjusted net income was $3.6 million or 19 cents per diluted share. Adjusted EBITDA increased 4% to $7.9 million. Effective margin was 29.9% compared to 32.7% in the prior year. Cash and cash equivalents were $41.8 million as of March 31, 2026.

• Remain focused on driving organic growth and disciplined capital allocation. Investing in infrastructure including advanced automation and AI-enabled tools. Actively evaluating M&A opportunities aligning with culture, service offerings, and geographic reach. Goal to double business in next three years without commensurate headcount increase. - Expect Fortinet investment to start turning to positive contribution in later 2026, with return on investment seen in Q3. - Goal to get SG&A and effective margin to 50-50 split, targeting 5-2.5 in terms of percentages related to gross billings and profit.

• Forward-looking statements subject to known and unknown risks and uncertainties, including those described in SEC filings. Risks related to actual results differing from forward-looking statements. Impact of one-time investments and costs on financial metrics. Potential impact of external factors like memory issues in hardware on software business, though no significant impact seen yet.

Q: Asked about bifurcating SG&A spending, specifically Fortinet investment and other one-time costs.

A: Matt Sullivan said Fortinet investment was about half a million, expected to turn positive in later 2026, and other one-time costs related to stock split and initiatives.

Q: Asked about organic growth broad-based across top 20 and lumpy deals.

A: Dale Foster said it was broad-based with some fall over from Q4, and no major lumpy deals impacting the period.

Q: Asked about gross billings momentum in April.

A: Dale Foster said no slowdown seen.

Q: Asked about VAST pipeline.

A: Dale Foster said pipeline still substantial with lumpy deals.

Q: Asked about Interworks cross-selling synergies timing.

A: Dale Foster said cross-selling opportunities start with US vendors moving to Europe, with Sarah Peters in new role.

Q: Asked about SG&A sequential and year-over-year increase detail.

A: Matt Sullivan and Dale Foster explained Fortinet investment and other one-time costs.

Q: Asked about Q2 SG&A dollar basis.

A: Dale Foster said depends on percentages, Q2 typically higher than Q1.

Q: Asked about M&A environment and valuations.

A: Dale Foster said valuations still present, targeting Europe and Middle East, depending on company makeup.

Q: Asked about follow-on effects with other large vendors after Fortinet deal.

A: Dale Foster said other large vendors have reached out, with discussions ongoing for deals this calendar year.

Q: Asked about one-time investments for other vendors.

A: Dale Foster said it depends on the opportunity, with examples from previous acquisitions.