Climb Global Solutions: Strategic Pivot to Large Vendors and Cloud Platform Drives Double-Digit Growth, but Margin Investments Temper Earnings

Q2 gross billings surge 17% on Fortinet and new vendor wins; aggressive M&A and platform buildout set stage for EBITDA doubling by 2030.

CLMB · Earnings Call · 2026-07-30

The Quarter in Numbers

Climb Global Solutions, a value-added technology distributor, reported a robust Q2 2026 with gross billings up 17% to $587.3M, driven by double-digit organic growth from 19 of its top 20 vendors. Net sales rose 9% to $174.2M, while gross profit expanded 15% to $30.2M, reflecting strength across North America and Europe plus the contribution from the Interworks acquisition. However, adjusted EBITDA dipped slightly to $11.3M from $11.4M as the company stepped up investments in IT infrastructure, legal fees, and vendor onboarding. The effective margin fell to 37.5% from 43.3%, but management emphasized that ex-one-time items, the underlying margin trajectory remains intact.

Vendor Strategy Shift: From Emerging to Enterprise

The quarter highlighted a deliberate strategic shift toward larger, higher-impact vendor relationships. CEO Dale Foster underscored Ivanti, a Utah-based IT and security software company, and Check MK, a German infrastructure monitoring firm, as new signings. More tellingly, Fortinet continued its explosive ramp, with gross billings rising 10x sequentially from Q1. Foster noted, “…it was a 10x factor from Q1 of this year to Q2 of this year…” — Dale Foster, CEO · 2026-07-30 and expressed confidence Fortinet will become a top-5 vendor within a year. This pivot toward "whale" vendors aligns with the company's goal to move the needle, as Foster explained: “…if we're going to move the needle, we can't sign a vendor that we're going to get to $5 million to $10 million to $15 million in a couple of years…” — Dale Foster, CEO · 2026-07-30 He also revealed an upcoming $650M vendor signing in security. The diversification is paying off: the number of vendors generating over $10M in sales has grown from 22 in 2022 to 45 today, reducing concentration risk.

Cloud Platform and Internal Efficiencies

Management is investing heavily in a proprietary cloud platform to streamline transactions and reduce operating costs. Foster stated, “…we've had a platform all along… but we don't control the road map… we're going to have a hybrid… we'll have some of our stuff done in Q4 of this year.” — Dale Foster, CEO · 2026-07-30 The platform, with Adobe as a first integration target, is expected to enhance the customer experience and drive operational leverage. These investments, combined with AI tools, aim to double the business by 2030 without doubling headcount—a key theme from prior calls. CFO Matthew Sullivan added, “…we had about $500,000 of what I would call nonrecurring type expenses…” — Matthew Sullivan, CFO · 2026-07-30 but stressed that SG&A discipline remains a focus.

Margin Pressures and the Path to 2030

The margin story is nuanced. While gross profit grew 15%, operating margin contracted on higher SG&A. The company's target of a 50-50 split between SG&A and gross profit (the "532" model) remains a guiding principle. Foster acknowledged the tension:

I hate talking about onetimers because it seems like every quarter, you have a 1 timer, right? Like it is 1 time, but it's something different.
Dale Foster, CEO · 2026-07-30

He explained that investments made now will pay off for years. The balance sheet remains strong with $56.6M cash and no debt, providing firepower for M&A.

M&A Acceleration

The most significant change is the accelerated M&A opportunities approach. Foster confirmed the company is evaluating two very large targets and is prepared to take on debt to finance them: “…we've got 2 that are very large that we can do. We're not going to be able to do them with cash, but we'll use the best form of capital to do that, and that's probably in the form of debt.” — Dale Foster, CEO · 2026-07-30 This marks a shift in capital allocation philosophy, as prior statements emphasized cash deals. The company also highlighted Europe as a key focus area, leveraging the Interworks acquisition to expand into Southern Europe and beyond. Gross profit reached $30.2M, up 15% year-over-year, reflecting the company's ability to convert billings growth into higher-margin revenue. In summary, Climb Global Solutions is undergoing a strategic transformation—moving up-market with larger vendors, investing in a proprietary platform, and aggressively pursuing M&A. While near-term margins face pressure, the company is positioning for a step-change in scale and efficiency by 2030.