Climb Global Solutions (CLMB) 2026年第三季財報電話會議：帳單總額創新高與利潤率擴張

重點摘要

• 2026 財年第三季總帳單金額年增 40% 至 7.064 億美元，創下單季歷史新高；淨銷售額成長 37% 至創紀錄的 2.203 億美元。
• 毛利成長 28% 至 3,300 萬美元。調整後 EBITDA 成長 35% 至 1,470 萬美元，有效利潤率擴大 230 個基點至 44.6%。
• 淨利大增 69% 至創單季新高的 790 萬美元，或稀釋後每股盈餘 0.43 美元。調整後淨利達 800 萬美元，稀釋後每股盈餘同為 0.43 美元。
• 管理層表示，大部分成長來自現有的供應商合作關係。Climb 前 20 大供應商中有 19 家實現季增，而 Adobe 是唯一表現相對平穩的供應商。
• Climb 在本季結束後完成了對 NeoVAD 的收購，擴大了在法國的業務版圖。管理層指出，NeoVAD 的毛利率處於 10% 出頭的水準，且近期成長速度快於 Climb 的歷史水準。
• 管理層預計今年將再創歷史新高，並表示第四季仍保持與第三季類似的年成長軌跡，儘管要維持相同的成長率會較為困難。

核心財務數據

業務與營運表現

Climb Global Solutions 第三季的大部分成長來自既有的供應商合作關係，而非一次性交易。管理層表示，Interworks 的表現符合預期，Fortinet 也符合公司內部 2026 財年的預算規劃。

資訊安全業務約占總業務的 70%。管理層指出，網路、端點與 AI 相關資安產品的持續需求是主要的成長動力。公司超過 80% 的業務屬於續約，支撐了第四季傳統的季節性強勢。

Climb 在本季評估了 32 個潛在供應商品牌，但僅簽下了 Harmonic Security。公司將 Harmonic 描述為一家專注於協助企業安全導入與擴展 AI 技術的資安廠商。

除了傳統的新興技術策略外，管理層還鎖定了需要專注分銷夥伴的更大規模「挑戰者供應商」。這一商機包括將直銷轉向分銷，並搶占競爭分銷商的市佔率。

在本季結束後，Climb 收購了 NeoVAD 以擴大在法國的業務。NeoVAD 擁有大部分獨家的法國供應商合作關係，銷往其他法語市場，且毛利率保持在 10% 出頭的水準。其完整團隊將留任。管理層表示，已有四家 Climb 的現有供應商表達了透過這一擴展業務進入法國市場的意願。

Climb 正投資於 ERP 自動化與自有的雲端市集，用於購買、開通及管理雲端訂閱服務。該平台旨在簡化交易、合併帳單並減少重複性的後勤工作。

管理層展望

管理層預計 Climb 在 2026 財年將再創歷史新高。公司表示，與去年同期相比，10 月份的表現仍保持類似第三季的軌跡，但也提醒要維持與第三季完全相同的成長率將有困難。

就 2026 財年全年而言，管理層預計有效利潤率將維持在公司歷史上 40% 出頭的區間。成本控制措施以及 SG&A 占毛利比例的降低，支撐了第三季利潤率的改善。

公司預計在第一季提供更多關於雲端市集的最新進展。管理層表示，技術投資應透過提高營運效率來提升有效利潤率，而非直接改變產品層面的利潤率。

Climb 繼續維持每年進行兩至三筆收購的目標。歐洲仍是主要焦點，同時管理層也在評估中東和非洲的機會。

風險與關注領域

• 管理層提醒，儘管供應商動能持續，但在未來幾個季度要複製第三季的成長率將有困難。
• Climb 前 20 大供應商之一的 Adobe 本季表現相對持平。
• 雲端市集依賴透過 API、EDI 或其他介面與供應商對接。管理層表示，早先使用第三方平台的嘗試對於 Climb 的需求來說過於泛化。
• NeoVAD 的整合需要 Climb 在將被收購業務連接至其更廣泛的基礎設施時，同時保留當地的專業知識與客戶關係。
• Climb 正在增加對 IT 基礎設施、自動化及市集開發的支出，這導致第三季 SG&A 費用上升。

分析師問答亮點

管理層表示，NeoVAD 的利潤率略高於 Climb 在歐洲的既有業務，且與 Interworks 大致一致。NeoVAD 的毛利率在 10% 出頭，而美國市場通常為 5% 左右的水準。

談及第三季成長的質量，管理層強調並無重大一次性交易。總帳單金額 2.018 億美元的年增額中，大部分來自現有供應商，並獲得新產品發布、供應商投資組合內的收購以及分銷市佔率轉移的支持。

Climb 與全球約 7,000 至 7,500 家獨立經銷商合作。公司利用該網路與客戶數據，協助供應商與最相關的通路夥伴進行匹配。

管理層認為，規模較大的供應商是帶來更快金額增長的潛在來源。這些公司可能會將未經管理的直銷業務轉交給分銷商，以降低成本並提升通路效率。

雲端市集最初是為 Climb 的核心供應商產品組合建置的，並以 Adobe 作為適合進行市集交易的供應商範例。Climb Elevate 後續可能會作為擴展功能加入。

在併購方面，管理層表示目前目標清單前列有四家公司，後面還有 10 個潛在機會。Climb 無債務的資產負債表及未使用的 5,000 萬美元循環融資額度為更大規模的交易提供了資金能力。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

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.

分析師問答

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.