Climb Global Solutions (CLMB) 2026财年第三季度业绩电话会议：账单金额创新高与利润率扩张

核心要点

• 2026财年第三季度总账单金额同比增长40%，达到创纪录的7.064亿美元；净销售额同比增长37%，达到创纪录的2.203亿美元。
• 毛利润增长28%，达到3300万美元。调整后EBITDA增长35%，达到1470万美元，有效利润率扩大230个基点，达到44.6%。
• 净利润大增69%，达到创纪录的790万美元，即稀释后每股收益0.43美元。调整后净利润达到800万美元，稀释后每股收益同样为0.43美元。
• 管理层表示，大部分增长来自现有的供应商合作关系。在Climb的前20大供应商中，有19家实现了环比增长，仅有Adobe一家保持相对平稳。
• 本季度结束后，Climb完成了对NeoVAD的收购，扩大了其在法国的市场布局。管理层透露，NeoVAD的毛利率处于低双位数水平，且近期增速高于Climb的历史水平。
• 管理层预计今年将再创历史新高，并表示第四季度的同比增长轨迹与第三季度类似，但要保持完全相同的增速难度较大。

核心财务数据

业务与经营表现

Climb Global Solutions第三季度的大部分增长源于既有的供应商合作关系，而非一次性交易。管理层表示，Interworks的表现符合预期，Fortinet的运行也符合公司内部2026财年的预算目标。

网络安全业务约占总业务的70%。管理层指出，对网络、端点及AI相关安全产品的持续需求是主要增长引擎。公司超过80%的业务来自续约，这为其第四季度传统的季节性强劲表现提供了支撑。

Climb在本季度评估了32家潜在的供应商品牌，但最终仅与Harmonic Security签约。公司将Harmonic描述为一家专注于帮助企业安全采用和扩展AI技术的网络安全提供商。

除了传统的提振新兴技术战略外，管理层还将目标对准需要专注分销合作伙伴的更大规模“挑战者供应商”。其中的机遇包括将直销转化为分销，以及夺取竞争对手分销商的份额。

本季度结束后，Climb收购了NeoVAD以拓展法国市场。NeoVAD拥有大量独家法国供应商关系，业务覆盖其他法语市场，毛利率处于低双位数水平。其全员团队将继续留任。管理层表示，Climb现有的四家供应商已明确表达了通过拓展后的业务进入法国市场的兴趣。

Climb正在针对ERP自动化及用于购买、开通和管理云订阅的自研云市场进行投资。该平台旨在简化交易、合并账单并减少重复的后台工作。

业绩指引

管理层预计Climb将在2026财年再创历史新高。公司表示，10月份的业绩较去年同期保持了类似第三季度的增长轨迹，但也提醒称，要维持第三季度确切的增速难度较大。

对于2026财年全年，管理层预计有效利润率将保持在公司历史上的40%低段水平。降本举措以及SG&A占毛利润比例的下降支撑了第三季度利润率的改善。

公司预计将在第一季度提供云市场的进一步更新。管理层表示，技术投资应通过提高运营效率来改善有效利润率，而非直接改变产品层面的利润率。

Climb继续坚持每年两到三起收购的目标。欧洲仍是重点关注区域，同时管理层也在评估中东和非洲的机会。

风险与关注领域

• 管理层提醒称，尽管供应商增长势头强劲，但在未来几个季度重复第三季度的增长率难度较大。
• 作为Climb前20大供应商之一，Adobe在本季度的表现相对平稳。
• 云市场依赖于通过API、EDI或其他接口与供应商的连接。管理层指出，此前使用第三方平台的尝试对Climb的需求而言过于宽泛。
• NeoVAD的整合要求Climb在将其接入自身更广泛的基础设施的同时，保留当地的专业知识和客户关系。
• Climb正在增加IT基础设施、自动化和云市场开发方面的支出，这导致了第三季度SG&A费用的上升。

分析师问答集锦

管理层表示，NeoVAD的利润率略高于Climb现有的欧洲业务，且与Interworks大致一致。NeoVAD的毛利率处于低双位数水平，而美国市场通常处于中单位数水平。

关于第三季度增长的质量，管理层强调没有任何重大的一次性交易。在总账单金额同比增加的2.018亿美元中，大部分来自现有供应商，这得益于新产品的推出、供应商组合内部的收购以及分销份额的转移。

Climb在全球与约7,000至7,500家独立经销商合作。公司利用这一网络及其客户数据，将供应商与最匹配的渠道合作伙伴进行对接。

管理层认为大型供应商是加快绝对金额增长的潜在来源。这些公司可能会将无人管理的直销业务转入分销，以降低成本并提高渠道效率。

云市场初步针对Climb的核心供应商组合进行搭建，Adobe被列为适合云市场交易的供应商范例。Climb Elevate可能作为延伸功能在日后接入。

在收购方面，管理层表示目前有四家公司处于其目标清单的前列，此外还有10个潜在机会。Climb无债务的资产负债表以及5000万美元未使用的循环信贷额度为其进行更大规模的交易提供了资金支撑。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good morning, everyone, and thank you for participating in today's conference call to discuss Climb Global Solutions financial results for the third quarter ended September 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 third 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 will open the call for your questions.

I would now like to turn the call over to Mr. Mansouri for introductory comments.

Sean Mansouri

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.

Dale Foster

Thanks, Sean, and good morning, everyone. Our team delivered an exceptional third quarter, achieving record results across our key financial metrics, demonstrating the strength and scalability of our global platform.

Our strong performance was driven by growing momentum across our vendor portfolio and deepening our relationships with our partners. Within our line card, we generated sequential growth with 19 of our top 20 vendors during the quarter. We are seeing meaningful traction with several of our newer relationships that have added or expanded over the past year, underscoring our ability to identify innovative technology partners and develop into meaningful contributors over time.

During the quarter, we evaluated 32 new net brands that signed an agreement with only one, Harmonic Security, reflecting on our disciplined approach to our vendor selections. Harmonic is an innovative cybersecurity company focused on helping organizations securely adopt and scale AI technologies.

As AI adoption accelerates, we believe solutions like Harmonic's will become increasingly important in helping business capture and productivity benefits of AI while mitigating the associated security risks. This partnership further strengthens our security portfolio and positions our reseller partners to address a growing area of customer demand.

As these partnerships scale, we are also seeing a growing opportunity to work with larger, more established technology companies that may not fit in the traditional definition of emerging technology. While these vendors have already built meaningful scale and market presence, many are still looking for a more focused distribution partner that can help them expand their channel reach, strengthen reseller engagement and accelerate growth.

We refer to this segment of the market is called as challenger vendors, which aligns with the challenger category within Gartner's Magic Quadrant framework.

We believe this represents an attractive and underserved opportunity for Climb as these companies can benefit from the same high-touch sales, marketing and technical expertise that have helped us successfully scale our emerging vendor relationships.

Importantly, this is a natural extension of our existing strategy rather than a shift away from our core focus. By leveraging our specialized teams, established reseller network and proven go-to-market capabilities, we believe that we are well positioned to attract a broader range of technology partners and further expand our growth opportunities.

As we continue to expand our vendor portfolio and scale our global operations, we are equally focused on strengthening the infrastructure needed to support that growth. A key part of this effort is improving operational efficiency and leveraging technology to streamline processes across the business.

Our ERP systems serve as critical components of our global operating infrastructure, and we continue to focus on leveraging its capabilities to automate workflows and drive greater efficiencies across the organization. We are applying this approach to areas such as quoting various accounting functions along with digital connectivity to our vendors and partners where we see opportunities to reduce manual processes, improve productivity and support continued growth as we scale.

Separately, we are investing in the developing of our own cloud marketplace, which will provide a centralized platform for MSP and reseller partners to purchase, provision and manage cloud subscriptions. The platform is designed to simply -- to simplify transactions, consolidate billing and provide greater visibility across the customer life cycle.

Over time, we see an opportunity to leverage this infrastructure across all of our global territories, enabling us to scale recurring cloud transactions, strengthen our partner relationships and expand on new markets more efficiently.

Subsequent to quarter end, we expanded our European presence through the acquisition of NeoVAD, bolstering our position in France with a highly complementary team, reseller network and vendor portfolio. The transaction builds on the investments we have made in Europe and creates additional opportunities to deepen vendor relationships while broadening the solutions available to our channel partners.

Similar to our approach with Interworks, which continues to perform on plan since closing the acquisition earlier this year, we believe Climb's infrastructure can support NeoVAD growth while maintaining their local market expertise and customer relationships that have contributed to its success.

We believe NeoVAD is a strategic and cultural fit and an important part of the increasing of our scale across Europe operations -- European operations. Looking ahead, we will continue to identify cutting-edge technologies that can strengthen our line card and support organic growth.

We will also selectively pursue acquisitions that fit our culture and operating model with Europe remaining as an important focus area. With the growing momentum we are seeing across our business, we believe we are well positioned to close out the year on a strong note and deliver another year of performance -- of record performance for Climb shareholders. With that, I will turn the call over to Matt Sullivan for financial results. Matt?

Matthew Sullivan

Thank you, Dale, and good morning, everyone. A quick reminder as we review the financial results for our third 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 third quarter of 2026 increased 40% to a quarterly record of $706.4 million compared to $504.6 million in the year ago quarter. Distribution segment gross billings increased 41% to $680.5 million, while Solutions segment gross billings increased 14% to $25.9 million.

Net sales in the third quarter of 2026 increased 37% to a quarterly record of $220.3 million compared to $161.3 million in the prior year period. This increase reflects strong double-digit organic growth from new and existing vendors.

Gross profit in the third quarter of 2026 increased 28% to a quarterly record of $33 million compared to $25.7 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 third quarter of 2026 were $20.9 million compared to $16.2 million in the prior year period. The increase primarily reflects SG&A associated with Interworks and variable sales compensation attributed to the growth in organic gross profit.

SG&A in Q3 of 2026 was also impacted by our investments in IT infrastructure and automation initiatives designed to improve operating efficiencies. SG&A as a percentage of gross billings decreased to 3% for the third quarter of 2026 compared to 3.2% for the prior year period.

SG&A as a percentage of gross profit for the third quarter of 2026 was 63.2% and represents a decline from the first 2 quarters of 2026, which was 68.5% for the second quarter of 2026 and 76.7% for the first quarter of 2026. Net income in the third quarter of 2026 increased 69% to a quarterly record of $7.9 million or $0.43 per diluted share compared to $4.7 million or $0.25 per diluted share for the prior year period.

Adjusted net income increased 34% to $8 million or $0.43 per diluted share compared to $6 million or $0.33 per diluted share for the year ago period. Adjusted EBITDA in the third quarter of 2026 increased 35% to $14.7 million compared to $10.9 million in the same period of 2025.

Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit increased 230 basis points to 44.6% compared to 42.3% for the same period of 2025. Turning to our balance sheet. Cash and cash equivalents were $66.9 million as of September 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 September 30, 2026, we had no debt outstanding or outstanding borrowings under our $50 million revolving credit facility. We ended the quarter with a strong balance sheet, giving us the flexibility to support organic growth, invest in our operating infrastructure and pursue strategic acquisition opportunities.

We remain disciplined in our approach to capital allocation, focusing on investments that align with our long-term strategy, drive earnings growth and create sustainable value for our shareholders. This concludes our prepared remarks. Operator, please open the line for questions.

Operator

[Operator Instructions] Our first question is from Keith Housum with Northcoast Research.

分析师问答

Keith Housum

Great job on the quarter. Guys, just a few questions on the NeoVAD acquisition. I guess any differences in terms of their margin profile versus Climb's? Or is it pretty similar?

Dale Foster

It is -- and Matt can give the details, but it's in line with a lot of our European acquisitions, right? So the margins are typically double what we see in North America, and this one is actually higher than that. And it really is attributed to how they actually work with their customer base, where they bring on vendor lines, negotiate a higher margin upfront as they're going to take a new vendor line into the French territory. And then that will decrease over time as the resellers take on more of the burden. But those margins still stay in that double-digit range compared to what we see in the U.S. is single -- mid-single digit.

Keith Housum

Great. Go ahead, I am sorry, Matt.

Matthew Sullivan

I was just going to say, like just to reiterate what Dale said, I mean, it's consistent margins with what we've talked about with the Interworks acquisition. So it is slightly higher than our existing European business, but it is in those low double-digit gross profit percentages.

Keith Housum

Great. And in terms of their historical growth rates, are they growing in line with you guys as well?

Dale Foster

Go ahead, Matt.

Matthew Sullivan

In recent years, they've signed a couple of strong vendor lines in France. So their growth has accelerated in the last 2 years even greater than the growth rates that we've seen historically.

Keith Housum

Great.

Dale Foster

Keith, what's unique? I mean, we've been talking for a while. We've had one sales representative in France, Kamel, and he was both selling in France, our product portfolio, but also prospecting for us. So it's the relationship that he built with Jerome, the owner of NeoVAD. But the uniqueness of NeoVAD is that they have majority exclusive relationships with their vendors for France.

And they also sell into other French-speaking countries, but really the focus in France, and they get the higher margins because they have exclusivity. And then we -- like I've said this in the past, how do you target potential acquisition targets? We use our vendor network, and we've done it in this case as well, just to check on and saying, okay, how is this distributor? -- what's the go-to-market? So you find out a lot about them before you even maybe have your first meeting with them. So it works out very well.

Keith Housum

Great. I appreciate that. And is management going to be staying on?

Dale Foster

It is. Their full team will be staying on. They're just in a suburb of Paris. Matt's been out there for a while. I'll be heading back out for another trip in a couple of weeks.

Keith Housum

Great to hear that. And if I just look here at Climb's results for the quarter, obviously, outstanding results. Sales and billings growing faster than gross profits there. So was there a mix change versus prior quarters here or just kind of the lower profitable business? Or maybe just the mix of what you have there, if you can give a little bit of color on that, please?

Dale Foster

Yes. It goes back to Q2 when we had 18 of our top 20 brands growing at a really good clip, and now we have 19 of our top 20 brands. And I'll just put it out there. I mean the 20th brand is Adobe. And Adobe, it's not that it's not growing. It's a little flat, but it's still a great relationship with us, but that's our 19.

So it's really the core piece of our vendors that are growing at this clip to make it there. We didn't have any big one-offs that we've had in the past. So it's just -- like I said, just a really good quarter. Teams are firing on all cylinders. And like I mentioned in the prepared remarks, we're just so focused, and I think I said this in Q1 that this is going to be the year that we really get off and get our efficiencies going and putting -- we're putting quite a few dollars into our systems and our technical teams.

Keith Housum

Great. So there's nothing really onetime item in the quarter. It's all sustainable growth from here, correct?

Dale Foster

It is. And when we talk about our top 20 brands, we still have brands going in and out of our top 20, the ones that are growing faster, the ones that are becoming large. We just got some ones that we signed over a year to 2 years ago. I'll mention Darktrace. They're on that $100 million run rate as a vendor, and we're just seeing more of them.

And as we said before, I mean, we're still getting a lot of inquiries for vendors for us to take a look at that are just much larger brands and that come with a much larger share shift either from their direct model that they need to get more efficient or a share shift from our competitors.

Keith Housum

Great. And I guess last question for me, and I'll turn it over. But in terms of your reseller count, do you guys -- I'm sure you guys track it, but you guys discuss it publicly in terms of how many resellers you're working with and how it's growing over time?

Dale Foster

We do. We do it in our investor deck. And we talk worldwide, I think we give a range of 7,000 to 7,500 resellers that are a unique customer of ours. But yes, we don't -- we track it because we're mining our database all the time, especially our vendors to get into the resellers that are the closest fit to where they think they can go to market. But -- so that's about the number worldwide.

Operator

Our next question is from Vincent Colicchio with Barrington Research.

Vincent Colicchio

Nice quarter. In terms of organic growth, it looks like it accelerated this quarter. Should we expect this level of growth to continue in coming quarters?

Dale Foster

We mentioned right at the end, that we expect to have a record year. We're already into -- almost done with October. And we're on that same trajectory that we did with Q3, just being up in the right over last year's Q4. So we're trying to clean up our line card. It's important for us.

We talk about these top 70 brands, and that's what we go to market with. And then everything from 70 above goes to our Climb Elevate team. And that's a real focus that we've had over these last really 6 months to get transacting lines that just don't meet the criteria of a go-to-market, to push them to Climb Elevate, which that team is growing very quickly and the rest of them so we can do more focus.

But yes, I mean, at this rate, I mean, we had a great quarter. There's no doubt about it. At the same level, of course, I wanted to be there. I think that's going to be a tough one, but we don't see it slowing down as far as this is just one bump of a quarter.

We just have a lot of our vendors performing at a great clip. And I think it's due to a lot of the -- we're 70% in the cybersecurity space and a lot of it is because people have to secure the networks, and they're securing it in so many different ways and making sure they go from a firewall to an endpoint to everything in between with everything in the news you hear about an AI agent escaped and is doing and creating havoc on somebody's system. So everybody is looking for ways to make sure that they aren't the news.

Vincent Colicchio

Effective margin increased 230 basis points year-over-year. How much of that improvement is structural? Should we expect that level or better to continue?

Matthew Sullivan

Yes. The -- so we're tracking for the full year on an effective margin percentage that we've historically seen, right? So when you look at it on a full fiscal year basis, we're in that low 40% range. That's definitely where we're continuing to track for 2026. We did do some initiatives and some cost savings initiatives in Q3 that we executed upon. So that brought the -- as I highlighted in the call, that brought the SG&A expenses as a percentage of gross profit down even compared to not only the first 2 quarters of this year, but in line with where we were in Q3 of last year. So it's really -- it's continuing to trend in the positive direction kind of where we've seen our historical effective margin.

Vincent Colicchio

And then some of the investments you summarized in the ERP system and in the marketplace. Will we see the results of that in margin in '27?

Dale Foster

It won't be in margin. it will be an effective margin, right, as we get more efficient. And if I was to take it overall, structurally, we're in a great place in the company, but we're fine-tuning different areas. And with that, Vince, it's all about the technology that I mentioned our different ERP systems.

We have -- with Vishal, our new CIO, that came on board over like 2 years ago, a lot of things have changed. We have more projects, and I've mentioned in Q1 than we've ever had before, and we're completing more projects in a short period of time than we've ever had before. So I mentioned the cloud marketplace. It's something that's always been our agenda.

We have -- and I mentioned at the end of Q2 or the Q2 earnings release that we've hired somebody to do that, and we are well on our way. So we'll have some announcements for you in Q1 on our cloud marketplace and what that really will mean. I've said it all along, a portion of our business should be a self-service platform that we're building so our customers can interface and do it quickly and how they want to interact with us versus how they have to interact with us right now vendor by vendor.

Vincent Colicchio

And then, Matt, what was the revenue contribution of NeoVAD in '25? And then what monthly contribution should we expect in the coming quarter?

Matthew Sullivan

Yes. We haven't put that information out in our press release when we announced the acquisition, we announced the adjusted EBITDA impact, but we'll have more to talk about on the NeoVAD contribution as we move forward here.

Dale Foster

And Vince, our CRO, Gerard Brophy, that runs our EMEA operations, NeoVAD will go up through him. And just since we have the announcement last week, we already have 4 of our existing vendors that have reached out and said, "Hey, we want to do something in France." We've said this many times, the French buy from French and Germans buy from Germans.

We think that we are just so positioned with our larger portfolio of vendors with NeoVAD's limited portfolio that we'll do a combination and figure out which vendors fit best for us and best for the NeoVAD and then take it into the French market. That's the real opportunity here.

Operator

Our next question comes from Bill Dezellem with Tieton Capital.

William Dezellem

I have a group of questions. First of all, relative to the larger vendors wanting to work with Climb, does this ultimately imply that your growth rate will be accelerating over time as a result of just a larger dollar volume of revenue that can be transacted with larger vendors?

Dale Foster

Yes, Bill, you're spot on, right? So if you look at it, and this is an internal discussion we have a lot, and that is if we're a $2.2 billion company, and we signed a $20 million line that we think we can get up to speed in 6 months, $20 million, it's only 1% of our overall revs. So we're looking -- and we -- if you go back 3 years ago, we were talking about, "hey, we'll sign a vendor line if we think we can get to $10 million in the first 18 months." And now we're saying there's 2 components of that. Can we grow that vendor line in our ecosystem?

And what is the share shift opportunity? And I mentioned it, is that share shift opportunity from competitors that are just not serving the customers like they need to be serviced? Or is it from a direct go-to-market that these vendors have? And I was with a very large vendor yesterday and having this exact discussion.

And the discussion goes kind of like this. They have $200 million of business that is unmanaged, and they know they have to put in the channel, and here's the good part of PE firms. They're owned by a PE firm as most of our vendors are. And the PEs are saying, "you've got to be more efficient now because this is what the market will bear as far as cost, how do you become more efficient?" and going direct and hiring expensive people and hiring and keep continue to build your infrastructure doesn't work.

When a channel exists that's already super efficient, why aren't we doing that? So they're pushing these management teams to go find channel people versus direct sellers. And that's how the conversation goes. So if you look at a vendor like that and said, okay, we've got $200 million unmanaged. We want to run this through distribution. What is it going to cost us and we start playing the financial game.

So those are the conversations we're having as well as back on -- and this goes to our challenger brands. If you look at Gartner's Magic Quadrant in the top left, that's the challenger brand. So we have quite a few sitting in there. And then our emerging brands, that's not going to be something we're not going to continue to focus on because we -- if you look at who sits in our top 20, those are emerging brands that we signed 4 and 5 years ago. We see opportunity with existing larger vendors that need a solution, whether it's a direct to channel or a share shift because they're not being serviced.

William Dezellem

That's very helpful. We look forward to hearing more on those vendors in the future. Relative to your comment that you made to the prior question, relative to your marketplace, is this something that we are going to see tied in with the Climb Elevate program and ultimately, finding a way for those vendors to be able to transact on your site, but ultimately, it's not going to require even the Elevate's time. Is that part of the strategy here? Or is it really more for a larger vendor, let's say, a Fortinet or an Adobe that's well known that the resellers can simply go on to your site and accomplish what they want to, and they already know what they need and what they're trying to accomplish and don't need a human assistance.

Dale Foster

Yes. So the -- I'm going to use sort of referring to more of a platform because we're going to be doing a lot of things on this platform to service our customers and our vendors. And I talked about the connectivity that we have to have between our vendors and our customers. But it's the -- it's really our core, right? So Climb Elevate does a great job, but that's not what we're doing this for. Will that be an extension of the platform, 100%, right?

So we can transact and make it much more efficient as we work with that. But it's really for the core part of Climb. If you look at -- I could go vendor by vendor and you brought up Adobe, a great vendor that needs to be transacted on a marketplace platform because of what Adobe has done similar to Microsoft did with their licensing schemes.

So as vendors get to that size, they need to take out and make it more frictionless. And I've said this for years and years now, and now we have a leader that's doing that, and I have a CIO that's backing it and making sure that this is going to get completed.

And then we'll just continue to expand on it. But yes, the Elevate piece of it will be great in the future. But right now, it's really for the core part of Climb. And I could go vendor by vendor and tell you the ones that would be the first ones that would go on that make the most sense. And we're just going to pick them by size and the ones that we spend the most time in the back office trying to transact.

William Dezellem

And Dale, this is -- this marketplace platform is something that I think that you have talked about for some time now. What has taken this long to get this accomplished -- sitting on the outside looking in, it seems pretty straightforward. Clearly, it's not as easy as it seems from the outside. But what's been the friction point?

Dale Foster

So here's the inside baseball part of it, and that is we tried with a couple of development companies that already have platforms, and we were going to modify what they had and use that instead of reinventing the wheel.

And we went down the road with a couple and it just -- it gets too wide, right? So they want to do -- just like AWS, right? Their marketplace is super wide and it's like, you can go and get anything, but no one really uses that much in our space unless they have to retire some kind of spend.

And if you look at how much Amazon has sitting there on their books for people to still spend on the marketplace, whether it's compute storage or licensing. So the good thing for us is that the vendors weren't ready for that, and I'm talking about our vendors because you have to have the connectivity and they have to build out either an API, EDI or some kind of interface to your platform.

So we're getting the number of vendors coming to and say, okay, we're ready for this now. So it was a good timing for us to really kick this off. So with that, it's -- we weren't behind. I kept thinking we're way behind, we're way behind. I look at our competitors. If you look at what people call the gold standard out there for MSPs is Pax8, and Pax8 does it, but we don't even run into Pax8 in any of our vendors.

Our vendors sign Pax8. We don't run into them as far as a competitor. We might say we're not running into because we're not touching as many MSPs as they are. But the timing is now for us, and it's a good time for us with our vendors. And the amount of vendors we'll have on the platform this time next year, we'll -- will be how they want to transact. We don't want to ever tell somebody how to go to market, but if it fits with us and how we service our customers, then we're all in.

William Dezellem

Thank you for that genuine response. I really appreciate that. And then one additional question here. Because you have tried a couple of approaches and because technology is advancing so quickly, whether it be due to artificial intelligence models or otherwise, do you believe today that when you do launch your marketplace, the characteristics that marketplace will have and capabilities is going to be better than what you had originally envisioned and therefore, what I was thinking may have been a delay or it sounds like what you may have been thinking was a delay ultimately is your benefit.

Dale Foster

Yes. So a couple of things. It's purpose-built for how Climb goes to market. So we're not doing things that nobody wants just to be flashy and do some kind of marketing ploy. But it's what our vendors want, our customers want and how they want to actually transact with us. So there's -- we're never going to get away, and we can say that -- and I'll go back to just look at our numbers and where we're going.

The vendors, unfortunately, for them don't have a lot of choices, right, in North America. They have a lot of choices overseas. But in North America, they don't have a lot. They have the big 3 distributors that are $40 billion plus. And then there's a couple of small ones, but there's nobody else.

And so if they either have to keep that direct model, how are they going to do it? Are they going to build their own platform marketplace? The problem is VARs customers, resellers, MSPs they don't want to have to log into 40 different vendors just to get their licensing. And that's why it's a perfect fit for distribution to aggregate all those.

So -- and I'm a little off topic, but as far as back to your question on the platform, I've got Vishal, which Vishal coming from WWT, our CIO, he was involved in integration when WWT bought Softchoice. He's familiar with some of the platforms that they were using. Some of it was outsourced, some of it was built.

And then he brought a gentleman in that Ben Ryan, that's done this before, spent time at Ingram with some of their marketplace, and they've got quite a long history of that. And they -- the most time is spent in the architecture of it before we even write code. The coding part is the quick part. It's the architecture to make sure we're not building something somebody doesn't want.

And we're looking at the efficiencies of what my team does every day that's just monotonous on the inside sales team and that we can automate this where you can go to get your information very quickly and then get back -- our team can get back to actually selling and saying, okay, why is this emerging technology something that I need? And that is in my background, it's selling, selling, selling and getting that -- whatever that new technology is in front as many eyeballs as possible.

Operator

Our next question is from Howard Root with Fairhope Capital.

Unknown Analyst

Congratulations on really an exceptional quarter. Most of my questions have already been asked, but 2 quick ones. One, on the gross billings, I mean, up 41% year-over-year or up $200 million. I mean it's almost -- to me, following for a long time, almost unbelievable. But can you break down kind of what -- on a rough basis, what of that came from Interworks, what came from new vendors, what came from -- and I'd put Fortinet into the new vendors category and what came from expansion of just the current line?

Matthew Sullivan

Yes. Thanks, Howard. The bulk of that -- the majority of that expansion is from existing vendor relationships. So we are on target with numbers that internally we've budgeted for, for Fortinet as an example, for 2026.

Interworks, as Dale highlighted in the call earlier, has performed on plan. But really that growth in the gross billings line and even gross profit on down is from our existing vendor relationships, and that makes up the majority of that growth there.

Dale Foster

And Howard, I could go. Just real quick, Howard. We can go vendor by vendor and tell you, I'll just pick up Sophos because we talk about them as one of our top 3 vendors. They bought Secureworks, they're Thoma Bravo company. They've been flat for the last couple of years. And now they finally got those 2 companies integrated.

They kicked off the new Fusion play, and there's just so much more hype around them, and we've seen it in the market. We have people that are renewing their licensing. So I could go each vendor, like Matt mentioned, Fortinet, each one of our top 20, and there's some new thing that they did or they acquired a company or it's a share shift play where we're outservicing our competition, and we're getting that. And that's -- for a sales rep, that's the easiest thing they can do is give their customer why they're better and we get a share shift piece of it, but then you have to perform, right, or they'll shift back to your competitor.

Unknown Analyst

Great. Great. And here I was told that AI was going to destroy your business. So Q4 is historically your strongest quarter. Is there any change to that?

Dale Foster

It's not. And it goes back to the whole thing as far as people from way back, and we have an annuity stream of licensing that gets renewed by people extinguishing their budgets. So we'll see the same thing. I mean, 80-some percent of our business is renewals. We don't see that changing.

We've already -- we're quoting the vendors are pushing us to go after renewals 90 to 120 days, which I think is kind of ridiculous before the renewal is up. There's just a lot of maneuvering in the vendor market as far as how they want the renewals done. We're doing a lot of it for them. So we see a lot of that business already setting up for Q4. And then just on our lines, our vendor lines that we had in our top 20 are not slowing down into Q4.

Unknown Analyst

Great. And then just on acquisitions. I mean, I know that you always are your lookout and you do acquisitions, but here we are at the end of the year, you do an acquisition and you end up with even more cash than you had at the beginning of the year. So you've got more ability to do larger ones. What's your -- what do you see out there in the acquisition field? What's your appetite? And how do you see things coming in the next 2 or 3 years in your M&A activity?

Dale Foster

Yes. So right, the top on my list right now is 4 companies. And I've said this, I said at Investor Day that we're looking to acquire 2 to 3 companies per year, and it was great that we could get this one done. We have a couple already that we've put not LOIs in, but initial points in to say, okay, this is what it would look like. But yes, we can go larger.

We haven't taken any debt on this company, as Matt explained in his remarks, but it's going to be in Europe. And there are some other regions that we're actually prospecting in that have come to us by our vendors saying, "Hey, we need help here. This is a great distributor. You should take a look at them. We think the owner is going to retire.

So there's a lot of those. Outside of those 4 or 5 that are hot right now, there's another 10 right behind those. And that reaches into areas like the Middle East. We're going to invest more into the African market as we're getting going with our African team and the South African team. But it's a robust list, and it's not slowing down.

And the good thing for us is you have these -- like I said before, these 3 massive distributors that are worldwide, then you have some that are in that $4 billion to $5 billion range, but they think they already have those territories covered. So there's not as much competition on the acquisition side. It's more of me competing with a $30 million distributor trying to buy a $15 million or a $60 million trying to buy a $30 million in the European space.

Unknown Analyst

Congrats again to everyone at Climb's for a great quarter.

Operator

At this time, there are no further questions in the queue.

Dale Foster

Thank you, operator. And I just want to say to everyone that joins today. I'd like to thank the entire Climb team across all our regions. A big welcome to our French team. I can't spend more time with them in the upcoming weeks, and our teams are going to get more integrated as we go and putting on to our platforms. And then to our just core Climb team, great quarter. We'll continue to deliver that first-class experience to our customers and to our vendor partners. But 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.