Climb Global Solutions, Inc.

Climb Global Solutions, Inc. is a value added information technology distribution and solutions company operating primarily through two reportable segments: Distribution and Solutions. The Distribution segment distributes emerging and disruptive technologies to corporate resellers, value added resellers, consultants, and systems integrators worldwide under the name Climb Channel Solutions. The Solutions segment is a cloud solutions provider and value-added reseller of software, hardware, and services for customers worldwide under the name Grey Matter. The company offers an extensive line of products from leading software vendors and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management, and other technically sophisticated domains, as well as computer hardware.

The company operates in a highly competitive environment, both in North America and Europe, facing significant competition within each market segment and geography. In the Distribution segment, the company competes against much larger broad-line distributors including Arrow Electronics Inc., TD Synnex Corporation, and Ingram Micro, as well as specialty distributors. The company believes it offers a compelling solution for emerging and disruptive technology vendors seeking to establish the IT channel as a route to market by offering broad distribution capabilities with more flexibility than some larger competitors. In the Solutions segment, the company competes against a large variety of IT solutions providers including e-commerce sites, service organizations, VARs, cloud solution providers, and technology providers offering direct solutions. The company's top five customers accounted for 55% ¹ of consolidated net sales in 2025, 54% ² in 2024, and 51% ³ in 2023.

The company generates revenue primarily through the sale of third-party software licenses, maintenance and service agreements. In the Distribution segment, sales are impacted by the number of product lines distributed, sales penetration of those products into the reseller channel, product lifecycle competition, and demand characteristics. In the Solutions segment, sales are generally driven by sales force effectiveness, superior customer service, cloud solutions support, competitive pricing, and flexible payment solutions. The company sells in a competitive environment where gross product margins have historically declined due to competition and changes in product mix towards products where no delivery of a physical product is required. The company grants discounts, allowances, and rebates to certain customers, which may vary from period to period based on volume, payment terms, and other criteria. The company evaluates profitability based on return on equity and effective margin.

The Distribution segment accounted for approximately 96% ⁴ of consolidated net sales and 87% ⁵ of consolidated gross profit during the year ended December 31, 2025. In this segment, the company distributes technology products from software developers, software vendors, or original equipment manufacturers to resellers and system integrators worldwide. The large majority of hardware products sold are drop shipped directly to customers, reducing physical handling and inventory investment. The company utilizes electronic data interchange and other automation tools to fulfill orders on a cost-efficient basis. The company maintains relatively low inventory balances relative to gross billings and enjoys favorable credit from vendor partners, allowing a capital efficient model reflected by return on equity and pre-tax income as a percentage of gross profit. The company sells a wide variety of technology products from vendors such as Adobe, Bluebeam Software, Dark Trace, Delinea, ExtraHop, Fortinet, Micro Focus, Microsoft, SmartBear Software, SolarWinds, Sophos, TechSmith, and Trend Micro. The Climb Elevate program allows resellers and vendors to connect through the company for products typically outside the main line-card. Sales of hardware and peripherals consistently represented 8% ⁶ in 2025 and 6% ⁷ of gross billings in 2024 and 2023.

The Solutions segment accounted for approximately 4% ⁸ of consolidated net sales and 13% ⁹ of consolidated gross profit during the year ended December 31, 2025. Products in this segment are acquired directly from OEMs, software developers, or distributors and sold to end users. The company provides customer service, billing, sales, and marketing support in this segment and provides extended payment terms to facilitate sales. Through acquisitions in prior years, the company added certain technical and administrative support capabilities to enable reselling of cloud and software as a service products including Microsoft products in the United Kingdom. The strategic growth plan is to expand cloud offerings by leveraging these support services to other markets and products. The company currently has the ability to provide support for cloud services in North America, the United Kingdom, and Europe.

In 2023, the company completed the acquisition of Data Solutions Holdings Limited, which further expanded its geographic footprint and partner relationships in the United Kingdom and Ireland software distribution markets. In 2024, the company completed the acquisition of Douglas Stewart Software & Services, LLC, which further strengthened its reach in the North American K-12 and higher education software distribution markets. On July 31, 2024, the company completed the acquisition of DSS for an aggregate purchase price of approximately $20.3 million ¹⁰ plus a potential post-closing earnout payment. On October 6, 2023, the company completed the acquisition of Data Solutions for an aggregate purchase of approximately €15.0 million ¹¹ (equivalent to $15.9 million ¹² USD). Total dividends paid were $3.0 million ¹³ and the dollar value of shares repurchased was $2.0 million ¹⁴ for the year ended December 31, 2025. Following the end of fiscal year 2025, the Board of Directors determined to suspend quarterly cash dividends beginning with the first quarter of 2026. As of December 31, 2025, the company had 412 ¹⁵ total employees, including 392 ¹⁶ full-time employees.

Net sales increased 40%, or $186.9 million ¹⁷, to $652.5 million ¹⁸ for the year ended December 31, 2025, compared to $465.6 million ¹⁹ for 2024. Gross profit increased 16%, or $14.2 million ²⁰, to $105.3 million ²¹ for 2025, compared to $91.1 million ²² for 2024. Net income increased 15%, or $2.7 million ²³, to $21.3 million ²⁴ for 2025, compared to $18.6 million ²⁵ for 2024. Income per diluted share increased 14%, or $0.58 ²⁶, to $4.64 ²⁷ for 2025, compared to $4.06 ²⁸ for 2024. Adjusted EBITDA was $42.9 million ²⁹ for 2025, compared to $39.6 million ³⁰ for 2024. Effective margin decreased 280 basis points to 40.7% ³¹ compared to 43.5% ³² for 2024.

A key growth vector is the continued recruitment of software vendors for which the company becomes an authorized distributor. The company focuses on establishing deep relationships with vendor and reseller partners by providing specialized product training and dedicated sales teams. The Climb Elevate program provides a high level of support to select emerging and disruptive technology vendors to develop future relationships throughout the growth cycle of a vendor partner. The company plans to continue to evaluate acquisition opportunities as part of its overall capital allocation strategy and continuing growth plan. On February 24, 2026, the company entered into a Share Purchase Agreement to purchase Interworks Single Member SA, a Greece-based cloud distributor serving reseller markets across Southeastern Europe, for an aggregate purchase price of approximately €8.0 million ³³.

Another growth vector is the expansion of cloud offerings. The company's vendor and reseller partners are increasingly incorporating cloud and hybrid cloud products into their portfolios. The company currently has the ability to provide support for cloud services in North America, the United Kingdom, and Europe, and plans to continue to leverage these capabilities to provide cloud support services throughout its worldwide operations. The company also aims to expand its cloud offerings by leveraging support services acquired through prior acquisitions to other markets and products. The company expects to continue diversifying its customer base by offering compelling products to the VAR community as it develops its vendor partner lineup, with an increasing proportion of sales in 2025 from VARs driven by a continued focus on increasing sales to larger VARs with more than $1 million in annual sales.

The company expects that its selling, general and administrative expenses, as a percentage of gross billings, may vary depending on changes in sales volume, as well as the levels of continuing investments in key growth initiatives. The company plans to continue to expand its investment in information technology to support the growth of its business. The company anticipates that price competition in its market will continue in both of its business segments. The company's gross margins are low, and it expects them to continue to be low in the future.

The company plans to continue to expand its investment in information technology to support the growth of its business. The company recognizes the need to continually upgrade its IT systems to effectively manage and secure its infrastructure and customer data and to provide continued scalability and flexibility. The company anticipates that it will, from time to time, require software and hardware upgrades for its present IT systems. The company is undergoing projects to streamline and optimize its multiple technology platforms to a consistent technology platform globally.

The company's capital allocation strategy includes evaluating acquisition opportunities. The company has a share repurchase program with 545,786 ³⁴ shares of Common Stock available for repurchase as of December 31, 2025. The Common Stock repurchase program does not have an expiration date. Following the end of fiscal year 2025, the Board of Directors determined to suspend quarterly cash dividends on Common Stock beginning with the first quarter of 2026 in order to preserve financial flexibility and prioritize capital allocation objectives. The payment of future dividends and any share repurchases will be at the discretion of the Board of Directors.

The company faces structural headwinds including the persistence of inflation, elevated interest rates, market volatility, and adverse effects on product demand connected to geopolitical developments including tariff uncertainty. The information technology products industry is characterized by abrupt changes in technology, rapid changes in customer preferences, short product life cycles, and evolving industry standards. The way software products are distributed and sold is constantly changing, and new methods of distribution and sale may emerge or expand, including direct sales by technology providers to end users and the introduction of cloud versions of their products. The company's non-U.S. sales represented approximately 23% ³⁵ of net sales in 2025, exposing the company to risks associated with operating internationally.

The company faces execution risks including the loss of key vendor partners or customers. The company had no major vendors that accounted for greater than 10% of consolidated purchases in 2025, compared to one vendor that accounted for 10% ³⁶ and 14% ³⁷ in 2024 and 2023, respectively. The largest five vendors generated approximately 29% ³⁸ of consolidated purchases in 2025. The company had two customers that accounted for 24% ³⁹ and 13% ⁴⁰ of consolidated net sales in 2025. The loss of a key vendor or customer could have an adverse effect. The company also faces risks from the inability to successfully integrate acquisitions, including unanticipated costs, not realizing anticipated financial benefits, diversion of management attention, and potential loss of key employees.

The company's business is substantially dependent on a limited number of customers and vendors, with the top five customers accounting for 55% ⁴¹ of net sales in 2025 and the largest five vendors generating approximately 29% ⁴² of purchases. The loss of any key customer or vendor could materially adversely affect financial position and results of operations. The company operates in a highly competitive environment against larger competitors such as Arrow Electronics, TD Synnex, and Ingram Micro, creating pricing pressure and low gross margins that magnify the impact of variations in gross billings and operating costs. The company offers credit to customers with payment terms of 30 to 60 days and extended terms of up to two years, exposing it to significant credit risk if customers' financial condition deteriorates. The company's non-U.S. sales represented approximately 23% ⁴³ of net sales in 2025, exposing it to risks including import/export regulations, tariffs, currency fluctuations, and compliance with complex multi-national laws. The company's variable rate indebtedness subjects it to interest rate risk, and interest rates have increased and may continue to increase, which could increase debt service obligations.

Management's overall tone is forward-looking and focused on strategic growth through vendor recruitment, cloud expansion, and acquisitions. The company views acquisitions as an important part of its strategic growth plan and plans to continue to evaluate acquisition opportunities. Management emphasizes the importance of the Climb Elevate program for developing relationships with emerging and disruptive technology vendors. The company's strategic growth plan includes expanding cloud offerings by leveraging support services to other markets and products. Management also highlights the importance of diversifying the customer base by offering compelling products to the VAR community. The company's strategic priorities include continuing to recruit software vendors, expanding cloud capabilities, and pursuing acquisitions.