CLMB 10-K & 10-Q changes, risk factors and insider trading
Climb Global Solutions, Inc. · Nasdaq · Wholesale-Computers & Peripheral Equipment & Software · CIK 945983 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
“The secure transmission and storage of confidential and personal information over public and private networks, including in connection with electronic and cashless payment systems, is critical to our business. Although we did not experience any material cybersecurity breaches in 2025, our systems and those of our third-party vendors may be vulnerable to cybersecurity incidents, including unauthorized access, ransomware, malware, phishing or other attacks, system failures, human error or misconduct. …”see in full comparison
“Failure to adequately maintain the security of our electronic and other confidential information could materially adversely affect our financial condition and results of operations. We are dependent upon automated information technology processes. Privacy, security, and compliance concerns have continued to increase as technology has evolved to facilitate commerce and as cross-border commerce increases. …”see in full comparison
“Changes to U.S. Tariffs, import and export controls and other trade regulations could adversely affect our business, financial condition and results of operations. We rely on a global ecosystem of software publishers, hardware manufacturers, cloud service providers and other technology partners to market, deliver and support solutions for our customers. The United States has enacted, and may continue to enact or propose, significant tariffs and other trade measures, and the U.S. government may modify key aspects of U.S. …”see in full comparison
“We currently incorporate AI technology in certain offerings and in our business operations. AI systems are complex, rapidly changing, and may not operate as intended. …”see in full comparison
Our operations are subject to numerous complex federal, state, provincial, local and foreign laws and regulations in a number of areas, including labor and employment, advertising, e-commerce, tax, trade, import and export requirements, economic and trade sanctions, anti-corruption, data privacy requirements (including those under the European Union General Data Protection Regulation and the California Consumer Privacy Act), anti-competition, environmental and health and safety. Compliance with these requirements may require significant operational changes, and violations may result in investigations, fines, penalties, restrictions on our ability to process personal data, and reputational harm. In addition, privacy and data protection rules, including requirements applicable to cross-border transfers of personal data, are evolving and may be inconsistent across jurisdictions, which can increase compliance costs and the risk of noncompliance. The evaluation of, and compliance with these laws, regulations and similar requirements may be onerous and expensive, and these laws and regulations may have other adverse impacts on our business, results of operations or cash flows. Furthermore, these laws and regulations are evolving and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business, and the risk of noncompliance.see in full comparison
Our Common Stock is listed on Thesee in full comparisonNASDAQNasdaq Global Markettier of the Nasdaq Stock Market,and wethereforeare subject to Nasdaq's continued listing requirements, including requirementswithrelatingrespectto,toamongtheother things, minimum bid price, market valueand numberofpublicly-heldpublicly held shares, public float, number of stockholders,minimum bid price,number of market makers andeithercertain(i)financialstockholders’ equity or (ii) total market value of stock, total assets and total revenues.thresholds. If we fail to satisfy one or more ofthethese requirements,weNasdaq maybetake steps to delist our Common Stock. If our Common Stock were delistedfrom The NASDAQ Global Market. Ifand wedowerenotunable to qualify for listing on TheNASDAQNasdaq Capital Market,and if we are not able to list our Common Stock onor another national securities exchange, our Common Stock could be quoted on an over-the-counter market, including the OTC Bulletin Board oron the“pink sheets”.AsInathatresult,event, we couldfaceexperience significant adverseconsequencesconsequences,including,includingamongreducedothers,liquidity,a limited availability offewer market quotations for oursecuritiessecurities, increased price volatility and adecreaseddiminished ability to issue additional securities or obtainadditionalfinancinginontheacceptablefuture.terms, or at all.
Full comparison: every changed paragraph (26)
We serve customers and have locations throughout the world and are subject to terrorist attacks, acts of war, natural disasters, global pandemic and other similar risks, which could materially adversely affect our business, financial condition, and results of operations. Worldwide economic conditions remain uncertain due to the persistence of inflation, elevated interest rates, market volatility and adverse effects on product demand connected to geopolitical developments including tariff uncertainty, and other disruptions to global and regional economies and markets. Terrorist attacks, acts of war, natural disasters, global pandemics or other disasters or public health concerns in regions of the world where we have operations could result in the disruption of our business. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Specifically, these acts, pandemics, disasters and health concerns can result in increased travel restrictions and extended shutdowns of certain businesses in the region, as well as social, economic, or labor instability. Disruptions in affected regions over a prolonged period could have a material adverse impact on our business and our financial results.
Changes in the information technology industry and/or economic environment may reduce demand for the products and services we sell. Our results of operations are influenced by a variety of factors, including the condition of the IT industry, general economic conditions, seasonal buying by end-users, shifts in demand for, or availability of, computer products and software and IT services and industry introductions of new products, upgrades or methods of distribution. We typically sell to our customers on a purchase order basis, rather than pursuant to long-term contracts or contracts with minimum purchase requirements. Consequently, our sales are subject to demand variability by our customers. 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. Net sales can be dependent on demand for specific product categories, and any change in demand for or supply of such products could have a material adverse effect on our net sales, and/or cause us to record write-downs of obsolete inventory, if we fail to react in a timely manner to such changes.
If we fail to adequately invest successfully in and introduce digital, artificial intelligence (“AI”), and other technological developments, or our suppliers are not able to continue to offer competitive components and electronic computing solutions, it could materially adversely impact results. Our industry is subject to rapid and significant technological changes, and our ability to meet our customers’ needs and expectations is key to our ability to grow sales and earnings. Our customers and suppliers increasingly expect our platforms to include digital technologies to facilitate distribution of components and electronic computing solutions over time. For example, the ability of customers to access their accounts, place orders, and otherwise interface with us using digital technology is an important aspect of the distribution industry, and distribution companies are rapidly introducing new digital and other technology-driven products and services that aim to offer a better customer experience and reduce costs. If we are unable to maintain and enhance our digital platforms, cloud platforms, and artificial intelligence relatedAI-related tools to keep pace with competitors and align with evolving customer and supplier expectations and demands, it could adversely impact our sales revenues and ability to retain existing, and attract new, customers.
We currently incorporate AI technology in certain offerings and in our business operations. AI systems are complex, rapidly changing, and may not operate as intended. Use of AI could lead to unintended consequences, including exposing us to additional risks related to cybersecurity, privacy and data security, such as the risk of increased vulnerability to cybersecurity threats and exposure, impacts to the stability of our operations, the inadvertent disclosure, misuse, or corruption of intellectual property, confidential, personal, or competitively sensitive information that could affect our reputation. Our efforts to expand AI capabilities within our products and internal functions involve risks, costs and operational challenges. Although we aim to design, develop, and deploy AI responsibly and to identify and mitigate associated ethical, legal and technical risks, we may not detect or resolve issues before they occur. AI technologies are complex and rapidly evolving, we face significant competition in the market and from other companies regarding such technologies. Further, the legal and regulatory landscape for AI is rapidly evolving and uncertain, and requirements may differ across jurisdictions. Compliance with new or existing AI-related laws, regulations, or government guidance—including emerging frameworks such as those in the European Union—may impose significant costs, restrict our ability to integrate certain AI capabilities, or expose us to liability. Failures, deficiencies, or misuse of AI technologies could result in regulatory inquiries or actions, litigation or reputational damage, any of which could materially harm our business.
Our sales are also partially dependent on continued innovations in solutions by our suppliers, the competitiveness of our suppliers’ offerings, and our ability to partner with newnew, emerging and emergingdisruptive technology providers. We may have difficulty offering customers solutions that anticipate and respond to rapid and continuing changes in technology and which meet their evolving demands.
We face substantial competition from other companies. We compete in all areas of our business against local, regional, national, and international firms. Some of our current competitors have substantially greater capital resources and sales and distribution capabilities than we do. In response to competitive pressures from any of our current or future competitors, we may be required to lower selling prices in order to maintain or increase market share, and such measures could adversely affect our operating results. In addition, we face competition from vendors, which may choose to market their products directly to end-users, rather than through channel partners such as the Company, and this could adversely affect our future sales. Many competitors compete based principally on price and may have lower costs or accept lower selling prices than we do and, therefore, our gross margins may not be maintainable. Our gross margins have declined historically and may continue to decline in the future. Our competitors may offer better or different products and services than we offer. In addition, we do not have guaranteed purchasing volume commitments from our customers and, therefore, our sales volume may be volatile.
As a result of significant price competition in the IT industry, our gross margins are low, and we expect them to continue to be low in the future. Increased competition arising from industry consolidation and low demand for certain IT products and services may hinder our ability to maintain or improve our gross margins. These low gross margins magnify the impact of variations in gross billings and operating costs on our operating results. A portion of our operating expenses are relatively fixed, and planned expenditures are based in part on anticipated orders that are forecasted with limited visibility of future demand. As a result, we may not be able to reduce our operating expenses to sufficiently mitigate any further reductions in gross profit or margin in the future. If we cannot proportionately decrease our cost structure in response to competitive price pressures, our business and operating results could suffer.
Our competitors may offer better or different products and services than we offer. In addition, we do not have guaranteed purchasing volume commitments from our customers and, therefore, our sales volume may be volatile.
Our business is substantially dependent on a limited number of customers and vendors, and the loss or any change in the business habits of such key customers or vendors may have a material adverse effect on our financial position and results of operations. Our business experiences customer and vendor concentration from time to time. Because our standing arrangements and agreements with our customers and vendors typically contain no purchase or sale obligations and are terminable by either party upon several months or otherwise relatively short notice, we are subject to significant risks associated with the loss or change at any time in the business habits and financial condition of key customers or vendors. We have experienced the loss and changes in the business habits of key customer and vendor relationships in the past and expect to do so again in the future.
Failure to adequately maintain the security of our electronic systems and confidential information could materially adversely affect our business, financial condition and results of operations. We are dependent on automated information technology systems to conduct our operations, and privacy, data security and regulatory compliance risks have increased as technology has evolved and as our business and cross-border activities have expanded. In the ordinary course of our business, we collect, process and store confidential information, including personal information relating to our employees and information relating to our partners and clients, much of which is subject to protection under applicable data protection, privacy and cybersecurity laws and regulations. We also routinely share certain of this information with third-party vendors and service providers that support our operations.
The secure transmission and storage of confidential and personal information over public and private networks, including in connection with electronic and cashless payment systems, is critical to our business. Although we did not experience any material cybersecurity breaches in 2025, our systems and those of our third-party vendors may be vulnerable to cybersecurity incidents, including unauthorized access, ransomware, malware, phishing or other attacks, system failures, human error or misconduct. Any failure by us or our vendors to prevent or mitigate such incidents, including a compromise of network security or misappropriation of confidential or personal information, could result in business interruption, loss of data, reputational harm, contractual or other financial obligations, fines, penalties, regulatory investigations or proceedings and private litigation, as well as a loss of confidence by our employees, partners and clients, any of which could have a material adverse effect on our business, financial condition and results of operations.
Failure to adequately maintain the security of our electronic and other confidential information could materially adversely affect our financial condition and results of operations. We are dependent upon automated information technology processes. Privacy, security, and compliance concerns have continued to increase as technology has evolved to facilitate commerce and as cross-border commerce increases. As part of our normal business activities, we collect and store certain confidential information, including personal information of employees and information about partners and clients which may be entitled to protection under several regulatory regimes. In the course of normal and customary business practice, we may share some of this information with vendors who assist us with certain aspects of our business. Moreover, the success of our operations depends upon the secure transmission of confidential and personal data over public networks, including the use of cashless payments. Although we did not have any material cybersecurity breaches in 2024, any failure on the part of us or our vendors to maintain the security of data we are required to protect, including via the penetration of our network security and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also result in deterioration in our employees’, partners’ and clients’ confidence in us and other competitive disadvantages, and thus could have a material adverse impact on our business, financial condition and results of operations.
We rely heavily on our internal information systems, which, if not properly functioning, could materially adversely affect our business. We rely on our information systems to support daily operations and generate timely, accurate, and reliable financial and operational data. We are undergoing projects to streamline and optimize our multiple technology platforms to a consistent technology platform globally. The size and complexity of our information systems make them vulnerable to breakdown, defective software updates from our information-technology vendors, failure to keep software updated and current, and ransomware attacks. Failure to properly or adequately address such issues could impact our ability to perform necessary business operations, which could materially adversely affect our business. Technologies used in or integrated into our operations, such as cloud-based services, artificial intelligence,AI, and automation, may cause an adverse shift in the way our existing business operations are conducted.
We may explore additional growth through acquisitions. DuringWe have in the yearpast, endedpursued, Decemberand 31,in 2024,the wefuture completed one acquisitionexpect to pursue, acquisitions of businesses and assets in new markets, either within the IT industry, that complement or expand our salesexisting presence in the United States distribution operations and bring key vendor partner relationships to our portfolio.business. As part of our strategic growth plan, we may pursue the acquisition of companies that either complement or expand our existing business. As a result, we regularly evaluate potential acquisition opportunities, which may be material in size and scope. In addition to those risks to which our business and the acquired businesses are generally subject, the acquisition of these businesses gives rise to transactional and transitional risks, and the risk that the anticipated benefits will not be realized. We may incur additional costs and certain redundant expenses in connection with our acquisitions, which may have an adverse impact on our operating margins. Future acquisitions may result in dilutive issuances of equity securities, the incurrence of additional debt, large write-offs, a decrease in future profitability, or future losses.
The Company’s non-U.S. sales represent ana increasingsignificant portion of itsour revenues, and consequently, the companyCompany is exposed to risks associated with operating internationally. In 2025, 2024 and 2023, approximately 23%, 27% and 26% of the Company’s net sales came from its operations outside the United States, respectively. As a result of the Company’s international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following:
Our operations are subject to numerous complex federal, state, provincial, local and foreign laws and regulations in a number of areas, including labor and employment, advertising, e-commerce, tax, trade, import and export requirements, economic and trade sanctions, anti-corruption, data privacy requirements (including those under the European Union General Data Protection Regulation and the California Consumer Privacy Act), anti-competition, environmental and health and safety. Compliance with these requirements may require significant operational changes, and violations may result in investigations, fines, penalties, restrictions on our ability to process personal data, and reputational harm. In addition, privacy and data protection rules, including requirements applicable to cross-border transfers of personal data, are evolving and may be inconsistent across jurisdictions, which can increase compliance costs and the risk of noncompliance. The evaluation of, and compliance with these laws, regulations and similar requirements may be onerous and expensive, and these laws and regulations may have other adverse impacts on our business, results of operations or cash flows. Furthermore, these laws and regulations are evolving and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business, and the risk of noncompliance.
Changes to U.S. Tariffs, import and export controls and other trade regulations could adversely affect our business, financial condition and results of operations. We rely on a global ecosystem of software publishers, hardware manufacturers, cloud service providers and other technology partners to market, deliver and support solutions for our customers. The United States has enacted, and may continue to enact or propose, significant tariffs and other trade measures, and the U.S. government may modify key aspects of U.S. trade policy, including the use of tariffs, sanctions, import restrictions and export controls.
Ongoing geopolitical developments and changes in trade policies, treaties and tariffs have created and may continue to create, significant uncertainty regarding the scope, timing and impact of such measures, including with respect to trade between the United States and other countries. These developments, or the perception that they may occur, could increase costs, reduce availability, or extend lead times for the hardware products that we distribute, and could disrupt cross-border service delivery, support or licensing for software and cloud offerings. In addition, tariffs or other trade restrictions could adversely affect our vendors' manufacturing and supply chains, limit our or our vendors' ability to transact with certain counterparties or in certain jurisdictions, reduce customer demand, delay purchasing decisions, or compress margins if increased costs are borne within our distribution ecosystem. Any of these factors could disrupt our operations or relationships with vendors and customers and materially adversely affect our business, financial condition and results of operations.
Changes to United States tariff and import/export regulations may have a negative effect on our Company and, in turn, harm us. The United States has recently enacted and proposed to enact significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us.
A decline in general economic conditions, a substantial increase in market interest rates, andan increase in income tax rates, or the company’sCompany’s inability to meet long-term working capital or operating income projections could impact future valuations of the Company’s reporting units, and the companyCompany could be required to record an impairment charge in the future, which could impact the company’sCompany’s consolidated balance sheets, as well as the Company’s consolidated statements of operations.
We have suspended quarterly dividends and may not resume paying dividends on our Common Stock, which could adversely affect the value of our Common Stock. Beginning with the first quarter of 2026, our Board of Directors determined to suspend quarterly cash dividends in order to preserve financial flexibility and prioritize our capital allocation objectives. Any future declaration and payment of dividends will be determined from time to time by our Board of Directors and will depend on, among other things, our results of operations, cash flows, liquidity, financial condition, capital requirements and other factors the Board of Directors deems relevant. There can be no assurance that we will resume paying dividends in the future. The suspension of dividends, or any future reduction or continued absence of dividends, could cause the market price of our Common Stock to decline and could adversely affect your ability to realize a return on your investment.
Risks related to our Common Stock. The issuance of additional shares of our Common Stock, or securities convertible into or exercisable for shares of our Common Stock, could dilute your ownership interest and could adversely affect the market price of our Common Stock.
Trading volume in our Common Stock may be limited and may fluctuate significantly, and these dynamics may be affected from time to time by our repurchases of our Common Stock. As a result of a potentially limited trading market and public float, the market price of our Common Stock may be more volatile than the overall stock market and the stock prices of other companies with larger public floats. In addition, trading in relatively small volumes of our Common Stock may have a disproportionate effect on its trading price compared to companies with broader public ownership.
We may not be able to continue to pay dividends on our Common Stock in the future, which could impair the value of our Common Stock. We have paid a quarterly dividend on our Common Stock since the first quarter of 2003. Any future declaration of dividends remains subject to further determination from time to time by our Board of Directors. Our ability to pay dividends in the future will depend on our financial results, liquidity and financial condition. There is no assurance that we will be able to pay dividends in the future, or if we are able to, that our Board of Directors will continue to declare dividends in the future, at current rates or at all. If we discontinue or reduce the amount or frequency of dividends, the value of our Common Stock may be impaired.
Risks related to our Common Stock. The issuance of shares by us may dilute your ownership of our Common Stock. Trading volume in our Common Stock varies significantly based on a number of factors, which may be exacerbated by our repurchases of our Common Stock. As a result of the potentially low volume trading market for our stock, its market price may fluctuate significantly more than the stock market as a whole or of the stock prices of similar companies. Without a larger float, our Common Stock will be less liquid than the stock of companies with broader public ownership, and, as a result, the trading prices for our Common Stock may be more volatile. Among other things, trading of a relatively small volume of our Common Stock may have a greater impact on the trading price of our stock than would be the case if our public float were larger.
Our Common Stock is listed on The NASDAQNasdaq Global Market tier of the Nasdaq Stock Market, and we therefore are subject to Nasdaq's continued listing requirements, including requirements withrelating respectto, toamong theother things, minimum bid price, market value and number of publicly-heldpublicly held shares, public float, number of stockholders, minimum bid price, number of market makers and eithercertain (i)financial stockholders’ equity or (ii) total market value of stock, total assets and total revenues.thresholds. If we fail to satisfy one or more of thethese requirements, weNasdaq may betake steps to delist our Common Stock. If our Common Stock were delisted from The NASDAQ Global Market. Ifand we dowere notunable to qualify for listing on The NASDAQNasdaq Capital Market, and if we are not able to list our Common Stock onor another national securities exchange, our Common Stock could be quoted on an over-the-counter market, including the OTC Bulletin Board or on the “pink sheets”. AsIn athat result,event, we could faceexperience significant adverse consequencesconsequences, including,including amongreduced others,liquidity, a limited availability offewer market quotations for our securitiessecurities, increased price volatility and a decreaseddiminished ability to issue additional securities or obtain additional financing inon theacceptable future.terms, or at all.
Management's Discussion & Analysis (MD&A)
New heading “Year Ended December 31, 2025 Compared to Year Ended December 31, 2024”
New heading “Selling, General and Administrative Expenses”
New heading “Acquisition Related Costs”
New heading “Foreign Currency Transaction Loss”
New heading “Change in Fair Value of Acquisition Contingent Consideration”
Largest changes
“Year Ended December 31, 2025 Compared to Year Ended December 31, 2024”see in full comparison
“In September 2025, the FASB issued ASU No. 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”. This ASU amends the guidance under ASC 350-40 for internal-use software. The amendments remove referenced to development-stages, clarify when capitalization may begin, and require entities to apply to property, plant and equipment disclosure requirements under ASC 350-10 to capitalize internal-use software costs. …”see in full comparison
We derive most of our net salessee in full comparisonthoughthrough the sale of third-party software licenses, maintenance and service agreements. In our Distribution segment, sales are impacted by the number of product lines we distribute, and sales penetration of those products into the reseller channel, product lifecycle competition, and demand characteristics of the products which we are authorized to distribute. In our Solutions segment sales are generally driven by sales force effectiveness and success in providing superior customer service and cloud solutions support, competitive pricing, and flexible payment solutions to our customers. Our sales are also impacted by external factors such as levels of IT spending and customer demand for products we distribute. Our customers evaluate the complex technology landscape in order to balance priorities and focus on products that lead to business optimization, cost management and security risk management, resulting in a more measured approach to their IT spending. We provide security, software and hybrid and cloud offerings to help customers achieve their objectives. Technology trends drive customer purchasing behaviors in the market. Current technology trends are focused on delivering greater flexibility and efficiency, as well as designing and managing IT securely. These trends are driving customer adoption of cloud, AI, software defined architectures and hybrid on-premise and off-premise combinations. Technology trends are likely to evolve as customers prioritize spend that will produce the most important outcomes for their business.
Full comparison: every changed paragraph (46)
We have subsidiaries in the United States, Canada, Netherlands, United Kingdom, Ireland, and Ireland,Germany through which sales are made.
We derive most of our net sales thoughthrough the sale of third-party software licenses, maintenance and service agreements. In our Distribution segment, sales are impacted by the number of product lines we distribute, and sales penetration of those products into the reseller channel, product lifecycle competition, and demand characteristics of the products which we are authorized to distribute. In our Solutions segment sales are generally driven by sales force effectiveness and success in providing superior customer service and cloud solutions support, competitive pricing, and flexible payment solutions to our customers. Our sales are also impacted by external factors such as levels of IT spending and customer demand for products we distribute. Our customers evaluate the complex technology landscape in order to balance priorities and focus on products that lead to business optimization, cost management and security risk management, resulting in a more measured approach to their IT spending. We provide security, software and hybrid and cloud offerings to help customers achieve their objectives. Technology trends drive customer purchasing behaviors in the market. Current technology trends are focused on delivering greater flexibility and efficiency, as well as designing and managing IT securely. These trends are driving customer adoption of cloud, AI, software defined architectures and hybrid on-premise and off-premise combinations. Technology trends are likely to evolve as customers prioritize spend that will produce the most important outcomes for their business.
Dividend Policy and Share Repurchase Program. Historically we have sought to return value to investors through the payment of quarterly dividends and share repurchases. Total dividends paid and the dollar value of shares repurchased were $3.0 million and $2.0 million for the year ended December 31, 2025, respectively, $3.0 million and $1.6 million for the year ended December 31, 2024, respectively, and $3.0 million and $1.7 million for the year ended December 31, 2023, respectively. Following the end of fiscal year 2025, our Board of Directors determined to suspend quarterly cash dividends on our 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 arewill be at the discretion of our Board of Directors and dependentwill depend on our results of operations, projectedfinancial condition, capital requirementsrequirements, contractual restrictions and other factors the Board of Directors may finddeems relevant.
Net sales increased 32%, or $113.6 million, to $465.6 million for the year ended December 31, 2024, compared to $352.0 million for the same period in 2023. Gross profit increased 42%, or $26.9 million, to $91.1 million for the year ended December 31, 2024, compared to $64.2 million for the same period in 2023. SG&A expenses increased 27%, or $12.2 million, to $56.5 million for the year ended December 31, 2024, compared to $44.3 million for the same period in 2023. Acquisition related costs for the years ended December 31, 2024 and 2023 were $2.3 million and $0.6 million, respectively. Amortization and depreciation expense increased $1.5 million to $4.3 million for the year ended December 31, 2024 compared to $2.8 million for the same period in the prior year. Net income increased 51%, or $6.3 million, to $18.6 million for the year ended December 31, 2024 compared to $12.3 million for the same period in 2023. Income per diluted share increased 49%, or $1.34, to $4.06 for the year ended December 31, 2024 compared to $2.72 for the same period in 2023.
Income Taxes
The Company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase the product. In cases where the Company is not able to create a natural hedge by maintaining offsetting asset and liability amounts in the same currency, it may enter into foreign exchange contracts, typically in the form of forward purchase agreements, to facilitate the hedging of foreign currency exposures to mitigate the impact of changes in foreign currency exchange rates. These contracts generally have terms of no more than two months. The Company does not apply hedge accounting to these contracts and therefore the changes in fair value are recorded in earnings. The Company does not enter into foreign exchange contracts for trading purposes and the risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the Company minimizes by limiting its counterparties to major financial institutions. The Company recognized an unrealized gainloss of less than $0.1 million on contracts outstanding as of December 31, 2024,2025, which is included in foreign currency transaction loss in the Consolidated Statement of Earnings.
In September 2025, the FASB issued ASU No. 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”. This ASU amends the guidance under ASC 350-40 for internal-use software. The amendments remove referenced to development-stages, clarify when capitalization may begin, and require entities to apply to property, plant and equipment disclosure requirements under ASC 350-10 to capitalize internal-use software costs. The ASU is effective for annual periods beginning after December 15, 2027, and for interim periods within those annual periods. Early adoption of ASU No. 2025-06 is permitted. The Company has performed an initial assessment and currently does not expect the adoption of ASU No. 2025-06 to have a material effect on its financial position, results of operations or cash flows.
In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets”. The update amends the guidance in ASC 326-20 to introduce a practical expedient when estimating credit losses that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments apply to current accounts receivable and current contract assets arising from transactions under ASC 606 (Revenue from Contracts with Customers). The amendments are applied prospectively and are effective for annual reporting periods beginning after December 15, 2025, and interim periods within those years. Early adoption of ASU No. 2025-05 is permitted. The Company has evaluated the impact of ASU No. 2025-05 on its accounting policies and internal controls related to its credit-customer receivables. The Company has determined that, given (i) the nature of its receivables (primarily receivables from customers on credit terms), (ii) its historical credit-loss experience and collection patterns, and (iii) its allowance methodology, adoption of ASU No. 2025-05 is not expected to have a material effect on the Company's consolidated financial position.
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”. This ASU requires entities to disaggregate expense items in the notes to the financial statements and requires disclosure of specified information related to purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The amendments in this ASU are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Companies have the option to apply the guidance either on a retrospective or prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of the ASU on its condensed consolidated financial statements and related disclosures. In January 2025, the FASB issued ASU No. 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This ASU amends the effective date of ASU No. 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU No. 2024-03 is permitted. The Company is currently evaluating the impact the new accounting standard will have on its expense disclosures in the notes to the consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09,
“
Income Taxes (Topic 740): Improvements to Income Tax Disclosures
”
. Upon adoption of this ASU, the companyCompany will disclose specific new categories in its income tax rate reconciliation and provide additional information for reconciling items above a quantitative threshold. The Company will also disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions in which income taxes paid were above a threshold. The Company expectsadopted theseASU amendmentsNo. will first be applied in
the company’s annual report2023-09 on Forma 10-Kprospective basis for the fiscal year ending December 31, 2025, on a prospective basis.2025.
In November 2023, the FASB issued Accounting Standards Update 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The Company adopted this ASU in the first quarter of 2024 and upon adoption, the Company has disclosed significant segment expenses, the title and position of the CODM, and an explanation of how the reported measure of segment profit or loss is used by the CODM to assess segment performance and make resource allocation decisions.
Our management monitors several financial and non-financial measures and ratios on a regular basis in order to track the progress of our business. We believe that the most important of these measures and ratios include net sales, gross profit and net income, in each case based on information prepared in accordance with US GAAP, as well as certain non-GAAP financial measures and ratios which include adjusted EBITDA and adjusted EBITDA as a percentage of gross profit, or effective margin. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are correspondingly not normally excluded or included in the most directly comparable measure calculated and presented in accordance with US GAAP. Our use of non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results reported under US GAAP, as these measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.
We consider gross profit growth and effective margin to be key metrics in evaluating our business. During the year ended December 31, 2025, gross profit increased 16%, or $14.2 million, to $105.3 million compared to $91.1 million for the same period in 2024 while effective margin decreased 280 basis points to 40.7% compared to 43.5% for the same period in 2024. During the year ended December 31, 2024, gross profit increased 42%, or $26.9 million, to $91.1 million compared to $64.2 million for the same period in 2023 while effective margin increased 520 basis points to 43.5% compared to 38.3% for the same period in 2023.
The Company recorded net revenue for DSS of approximately $11.8 million and net income of approximately $0.8 million during the year ended December 31, 2024.
Operating results of Douglas Stewart Software & ServicesDSS and Data Solutions are included in our Distribution segment.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Net Sales
Net sales for the year ended December 31, 2025 increased 40%, or $186.9 million, to $652.5 million compared to $465.6 million for the same period in 2024.
Gross billings, an operational metric, for the year ended December 31, 2025 increased 18%, or $319.9 million, to $2,105.2 million compared to $1,785.3 million for the same period in 2024.
Net sales in our Distribution segment for the year ended December 31, 2025 increased 42%, or $185.5 million, to $627.4 million compared to $441.9 million for the same period in the prior year. Gross billings for the Distribution segment for the year ended December 31, 2025 increased 19%, or $319.3 million, to $2,014.8 million compared to $1,695.5 million for the same period in 2024. Net sales and gross billings increased due to organic growth at our existing vendor lines and the full year impact of the DSS acquisition that closed in the third quarter of 2024. Gross billings increased at a lesser rate than net sales due to differences in the product mix between the two periods, which positively impacted our net sales by approximately $102.3 million, or 16%.
Net sales in our Solutions segment for the year ended December 31, 2025 increased 6%, or $1.4 million, to $25.1 million compared to $23.7 million for the prior year. Gross billings for the Solutions segment for the year ended December 31, 2025 increased 1%, or $0.5 million, to $90.3 million compared to $89.8 million for the same period in 2024. Gross billings increased at a lesser rate than net sales due to differences in the product mix between the two periods, which positively impacted our net sales by approximately $1.3 million, or 5%.
During the year ended December 31, 2025, we relied on two key customers for a total of 37% of our total net sales. The major customers accounted for 24% and 13%, respectively, of our total net sales during the year ended December 31, 2025. These same customers accounted for 15% and 8%, respectively, of total net accounts receivable as of December 31, 2025.
Gross Profit
Gross profit for the year ended December 31, 2025 increased 16%, or $14.2 million, to $105.3 million compared to $91.1 million for the same period in 2024.
Distribution segment gross profit for the year ended December 31, 2025 increased 17%, or $13.6 million, to $91.9 million compared to $78.3 million for the same period in 2024. The increase in Distribution segment gross profit resulted primarily from the organic growth at our existing vendor lines and the impact of DSS acquisition, partially offset by higher early pay discounts and other rebates and discounts offered to our customers.
Solutions segment gross profit for the year ended December 31, 2025, increased 5%, or $0.6 million, to $13.4 million compared to $12.8 million for the same period in 2024. This increase was the result of the aforementioned increase in gross billings.
Customer rebates and discounts for the year ended December 31, 2025 were $22.7 million compared to $19.7 million for the same period in the prior year. Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.
Vendor rebates and discounts for the year ended December 31, 2025, were $17.4 million compared to $6.1 million for the same period in the prior year. Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors or meeting certain early payment programs offered by our vendors. The Company monitors vendor rebate levels, competitive pricing, and gross profit margins carefully. We anticipate that price competition in our market will continue in both of our business segments.
Selling, General and Administrative Expenses
SG&A expenses for the year ended December 31, 2025, increased 20%, or $11.1 million, to $67.6 million, compared to $56.5 million for the same period in the prior year. The increase was primarily driven by higher payroll and related costs consistent with higher gross profit, as well as the impact of the DSS acquisition. SG&A expenses were 3.2% of gross billings, an operational metric, for the year ended December 31, 2025 and 2024, respectively.
The Company expects that its SG&A expenses, as a percentage of gross billings, an operational metric, may vary depending on changes in sales volume, as well as the levels of continuing investments in key growth initiatives. We plan to continue to expand our investment in information technology to support the growth of our business.
Acquisition Related Costs
Acquisition related costs for the years ended December 31, 2025 and 2024 were $0.8 million and $2.3 million, respectively. These expenses in the current year relate to costs incurred in conjunction with our continued acquisition initiatives, while these expenses in the same period the prior year related to the acquisition of DSS.
Foreign Currency Transaction Loss
Foreign currency transaction loss for the year ended December 31, 2025 was $0.7 million compared to a foreign currency transaction loss of $0.3 million for the same period in the prior year. These expenses primarily relate to the change in the value of accounts payable and other monetary assets and liabilities denominated in currencies other than their functional currency between the date of origination and settlement.
Change in Fair Value of Acquisition Contingent Consideration
Change in fair value of acquisition contingent consideration for the year ended December 31, 2025 and 2024 were $1.4 million and $3.6 million, respectively. The change in fair value adjustments in the current year primarily relate to the earnout associated with the DSS acquisition, while the fair value adjustments in the same period the prior year related to the earnouts associated with the Data Solutions acquisition and the acquisition of Spinnakar Limited in August 2022.
For the year ended December 31, 2025, the Company recorded a provision for income taxes of $6.6 million, or 23.6% of income before taxes, compared to $6.4 million, or 25.6% of income before taxes for the same period in the prior year. The effective tax rate for the year ended December 31, 2025 as well as the same period in the prior year are impacted by limitations on the deductibility of certain executive compensation amounts during both periods, as well as the Company’s effective tax rate for both periods were impacted changes in the mix of jurisdictions in which taxable income was earned.
Income Taxes
Our cash and cash equivalents decreasedincreased by $6.5$6.8 million to $36.6 million at December 31, 2025 compared to $29.8 million at December 31, 2024 compared to $36.3 million at December 31, 2023.2024. The decreaseincrease in cash and cash equivalents was primarily the result of $33.7$16.6 million of cash and cash equivalents provided by operating activities, offset by $20.9 million payment for the DSS and Data Solutions acquisitions, $5.5$2.0 million of cash used in other investing activities, $13.0$9.1 million of cash used in financing activities and $0.9$1.2 million negativepositive impact of foreign exchange rates on cash and cash equivalents.
Net cash provided by operating activities for the year ended December 31, 20242025 was $33.7$16.6 million, comprised of net income adjusted for non-cash items of $30.6$35.8 million offset by changes in operating assets and liabilities of $3.1$19.2 million. Net income adjusted for non-cash items primarily driven by higher net income, higher depreciation expense associated with capitalized ERP system, and higher share-based compensation expense. Changes in operating assets and liabilities primarily related to increase in sales volumes and timing of associated cash collections and payments.
Net cash and cash equivalents used in investing activities during the year ended December 31, 2025 was $2.0 million of purchases of fixed assets supporting our ERP project.
Net cash and cash equivalents used in investing activities during the year ended December 31, 2024 was $26.4 million, comprised of $5.5 million of purchases of fixed assets supporting our ERP project and $20.9 million payment for the DSS and Data Solutions acquisitions, net of cash acquired. On July 31, 2024, we completed the acquisition of DSS for an aggregate purchase price of approximately $20.3 million, subject to certain working capital and other adjustments, paid at closing plus a potential post-closing earn-out. The operating results of DSS are included in our operating results from the date of acquisition.
Net cash and cash equivalents used in financing activities during the year ended December 31, 20242025 was $13.0$9.1 million, comprised of net repayments of borrowings under credit facilities of $4.2 million, payments of contingent considerations of $3.6$3.4 million, dividend payments on our Common Stock of $3.0$3.1 million, purchases of treasury stock of $1.6$2.1 million and repayments of borrowing under term loan of $0.5 million.
On May 18, 2023, the Company entered into a revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JPM”), providing for a revolving credit facility of up to $50.0 million subject to a borrowing base, including the issuance of letters of credit and swingline loans not to exceed $2.5 million and $5.0 million, respectively, at any time outstanding. In addition, subject to certain conditions enumerated in the Credit Agreement, the Company has the right to increase the revolving credit facility by a total amount not to exceed $20.0 million. The proceeds of the revolving loans, letters of credit and swingline loans under the Credit Agreement may be used for working capital needs, general corporate purposes and for acquisitions permitted by the terms of the Credit Agreement. All outstanding loans issued pursuant to the Credit Agreement become due and payable, on May 18, 2028. There were no amounts outstanding under the Credit Agreement as of December 31, 20242025 and 2023. In connection with entering into the Credit Agreement, the Company voluntarily terminated that certain existing revolving credit agreement, dated November 15, 2017, by and among the Company, certain subsidiaries of the Company and Citibank, N.A.2024.
The Company’s foreign business is subject to changes in demand or pricing resulting from fluctuations in currency exchange rates or other factors. We are subject to fluctuations primarily in the Canadian Dollar, Euro Dollar and British Pound-to-U.S. Dollar exchange rate.
What changed in the latest 10-Q
Risk Factors
You should carefully consider the risks described in "Item 1A. Risk Factors" in Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as our business, financial condition and results of operations could be adversely affected by any of the risks and uncertainties described therein. There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025”
New heading “Net Sales and Gross Billings”
New heading “Selling, General and Administrative Expenses”
New heading “Depreciation and Amortization Expense”
New heading “Acquisition Related Costs”
Removed heading “Off-Balance Sheet Arrangements”
Largest changes
“Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025”see in full comparison
“As of March 31, 2026, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934, as amended.”see in full comparison
Full comparison: every changed paragraph (51)
This following information should be read in conjunction with the consolidated financial statements and the notes included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2026 for the fiscal year ended December 31, 2025. In addition to historical information, the following discussion contains certain forward-looking information. See “Cautionary Note Regarding Forward-Looking Statements” above for certain information concerning -forward-looking statements.
We have subsidiaries in the United States, Canada, Netherlands, United Kingdom, Ireland, Germany, Greece, and GreeceSouth Africa through which sales are made.
Dividend Policy and Share Repurchase Program. Historically we have sought to return value to investors through the payment of quarterly dividends and share repurchases. Total dividends paid and the dollar value of the shares repurchased were $0.0 million and $1.5$0.1 million for the three months ended June 30, 2026, respectively, and $0.8 million and $0.5 million, for the three months ended MarchJune 31, 2026 and 2025, respectively, and $0.8 million and $0.9 million, for the three months ended March 31,30, 2025, respectively. Following the end of fiscal year 2025, our Board of Directors determined to suspend quarterly cash dividends on our 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 our Board of Directors and will depend on our results of operations, financial condition, capital requirements, contractual restrictions and other factors the Board of Directors deems relevant.
Net sales increased 32%,9%, or $44.4$14.9 million, to $182.4$174.2 million for the three months ended MarchJune 31,30, 2026 compared to $138.0$159.3 million for the same period in the prior year. Gross profit increased 13%,15%, or $3.1$3.9 million, to $26.5$30.2 million for the three months ended MarchJune 31,30, 2026, compared to $23.4$26.3 million for the same period in the prior year. Selling, general and administrative (“SG&A”) expenses increased 21%,26%, or $3.5$4.3 million, to $20.3$20.7 million for the three months ended MarchJune 31,30, 2026 compared to $16.8$16.4 million for the same period in the prior year. Depreciation and amortization expense increased 18%,5%, or $0.3$0.1 million, to $2.0$2.1 million for the three months ended MarchJune 31,30, 2026 compared to $1.7$2.0 million for the same period in the prior year. Net income decreased 10%,8%, or $0.4 million, to $3.3$5.5 million for the three months ended MarchJune 31,30, 2026 compared to $3.7$5.9 million for the same period in the prior year. Diluted income per share decreased 10%,8%, or $0.02$0.03 to $0.18$0.30 for the three months ended MarchJune 31,30, 2026 compared to $0.20$0.33 for the same period in the prior year.
The Company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase the product. In cases where the Company is not able to create a natural hedge by maintaining offsetting asset and liability amounts in the same currency, it may enter into foreign exchange contracts, typically in the form of forward purchase agreements, to facilitate the hedging of foreign currency exposures to mitigate the impact of changes in foreign currency exchange rates. These contracts generally have terms of no more than two months. The Company does not apply hedge accounting to these contracts and therefore the changes in fair value are recorded in earnings. The Company does not enter into foreign exchange contracts for trading purposes and the risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the Company minimizes by limiting its counterparties to major financial institutions. The Company recognized an unrealized gain of less than $0.1 million on contracts outstanding during the three months ended MarchJune 31,30, 2026 and 2025, respectively, which is included in foreign currency transaction loss in the Consolidated Statements of Earnings.
In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements." This ASU clarifies the guidance in Accounting Standards Codification (“ASC”) Topic 270 - Interim Reporting, adding a comprehensive list of required interim disclosures and a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating these new disclosure requirements.
In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and ContactContract Assets”. The update amends the guidance in ASC 326-20 to introduce a practical expedient when estimating credit losses that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments apply to current accounts receivable and current contract assets arising from transactions under ASC 606 (Revenue from Contracts with Customers). The amendments are applied prospectively and are effective for annual reporting periods beginning after December 15, 2025, and interim periods within those years. Early adoption of ASU No. 2025-05 is permitted. The Company adopted this ASU for the three months ended March 31, 2026. The Company has evaluated the impact of ASU No. 2025-05 on its accounting policies and internal controls related to its credit-customer receivables. The Company has determined that, given (i) the nature of its receivables (primarily receivables from customers on credit terms), (ii) its historical credit-loss experience and collection patterns, and (iii) its allowance methodology, adoption of ASU No. 2025-05 isdid not expected to have a material effect on the Company's consolidated financial position.
We consider gross profit growth and effective margin to be key metrics in evaluating our business. During the three months ended MarchJune 31,30, 2026, gross profit increased 13%,15%, or $3.1$3.9 million, to $26.5$30.2 million compared to $23.4$26.3 million for the same period in the prior year, while effective margin decreased to 29.9%37.5% compared to 32.7%43.3% for the same period in the prior year. During the six months ended June 30, 2026, gross profit increased 14%, or $7.0 million, to $56.7 million compared to $49.7 million for the same period in the prior year, while effective margin decreased to 33.9% compared to 38.3% for the same period in the prior year.
On February 24, 2026, we completed the acquisition of Interworks for an aggregate purchase price of approximately €8.0 million (equivalent to $9.4 million USD), adjusted upwards for $3.5$3.6 million in net working capital adjustment resulting in a final purchase consideration $13of $13.0 million. The operating results of Interworks are included in our operating results from the date of acquisition within our Distribution segment.
Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025
Net sales for the three months ended MarchJune 31,30, 2026 increased 32%,9%, or $44.4$14.9 million, to $182.4$174.2 million compared to $138.0$159.3 million for the same period in the prior year. Gross billings, an operational metric, for the three months ended MarchJune 31,30, 2026 increased 14%,17%, or $68.2$86.7 million, to $542.8$587.3 million compared to $474.6$500.6 million for the same period in the prior year. Net sales and gross billings both increased due to organic growth from our existing vendor partnerships.partnerships and the Interworks acquisition. Interworks contributed approximately $1.5 million of net sales during the quarter; excluding Interworks, net sales increased by approximately $13.4 million. Interworks contributed approximately $8.2 million of gross billings during the quarter. Gross billings increased at a lesserhigher rate than net sales due to differences in the product mix between the two periods. During the three months ended MarchJune 31,30, 2026, gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis, while during the three months ended March 31, 2025, gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales.sales, while during the three months ended June 30, 2025, gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis.
Distribution segment net sales for the three months ended MarchJune 31,30, 2026 increased 34%,10%, or $44.9$14.8 million, to $177.1$167.8 million compared to $132.2$153.0 million for the same period in the prior year. Gross billings for the Distribution segment for the three months ended MarchJune 31,30, 2026 increased 15%,18%, or $67.3$85.8 million, to $520.9$562.9 million compared to $453.6$477.0 million for the same period in the prior year. Net sales increased organically at a greaterlesser rate than gross billings increased due to the impact of hardwaresecurity, maintenance, and softwarecloud products sales recognized during the current period, which are recorded on a grossnet basis.
Solutions segment net sales for the three months ended MarchJune 31,30, 2026, decreasedincreased 10%,3%, or $0.6$0.1 million, to $5.3$6.4 million compared to $5.9$6.3 million for the same period in the prior year. Gross billings for the Solutions segment for the three months ended MarchJune 31,30, 2026 increased 4%, or $0.9 million, to $21.9$24.4 million compared to $21.0$23.5 million for the same period in the prior year. Net sales decreasedincreased despiteorganically theat increasea inlesser rate than gross billings due to differences in the product mix between the two periods in our Solution segment.
The Company had twothree major customers that accounted for 26%21%, and 17%, respectively, of its total net sales during the three months ended March 31, 2026 and 26%14%, and 13%, respectively, of its total net sales during the three months ended MarchJune 31,30, 2026 and 24%, 13%, and 20%, respectively, of its total net sales during the three months ended June 30, 2025. The Company had no major vendors during the three months ended MarchJune 31,30, 2026,2026 comparedand toJune one30, major2025, vendor that accounted for 13% of total purchases during the three months ended March 31, 2025.respectively.
Gross profit for the three months ended MarchJune 31,30, 2026 increased 13%,15%, or $3.1$3.9 million, to $26.5$30.2 million compared to $23.4$26.3 million for the same period in the prior year. Gross profit increased due to organic growth from our existing vendor partnerships.partnerships and a $1.0 million contribution from the Interworks acquisition.
Distribution segment gross profit for the three months ended MarchJune 31,30, 2026 increased 15%,13%, or $3.0 million, to $23.4$26.0 million compared to $20.4$23.0 million for the same period in the prior year. The increase reflects the previously noted organic growth from existing vendor partnerships, partially offset by higher other rebatespartnerships and discounts offered to our customers as a percentage$1.0 ofmillion grosscontribution billings.from the Interworks acquisition.
Solutions segment gross profit for the three months ended MarchJune 31,30, 2026 increased 5%,27%, or $0.1$0.9 million, to $3.1$4.2 million compared to $3.0$3.3 million for the same period in the prior year. This increase was driven by higher gross profit margins generated in both North American and Europe.
Customer rebates and discounts for the three months ended MarchJune 31,30, 2026 were $6.8$6.4 million compared to $4.6$6.3 million for the same period in the prior year. Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.
Vendor rebates and discounts for the three months ended MarchJune 31,30, 2026 were $2.3$5.2 million compared to $4.7$5.5 million for the same period in the prior year. Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors or meeting certain early payment programs offered by our vendors. The Company monitors vendor rebate levels, competitive pricing, and gross profit margins carefully.
SG&A expenses for the three months ended MarchJune 31,30, 2026 increased 21%,26%, or $3.5$4.3 million, to $20.3$20.7 million compared to $16.8$16.4 million for the same period in the prior year. This increase was primarily due to an increase in salaries, commissions and other employee related expenses in support of the increased gross profit, as well as one-timetargeted investments to drive organic growth from new vendors and in the Company's infrastructure to support long-term growth initiatives.initiatives, and a $0.7 million contribution from the Interworks acquisition. SG&A expenses were 3.7%3.5% of gross billings for the three months ended MarchJune 31,30, 2026, compared to 3.5%3.3% for the same period in the prior year. The Company expects that its SG&A expenses, as a percentage of gross billings, may vary depending on changes in sales volume, as well as the levels of continuing investments to drive future growth.
Depreciation and amortization expense for the three months ended MarchJune 31,30, 2026, increased 18%,5%, or $0.3$0.1 million, to $2.0$2.1 million compared to $1.7$2.0 million for the same period in the prior year, primarily due to increased amortization for athe vendor relationship intangible acquired through athe prior yearInterworks acquisition. The Company received notice of termination of its distribution agreement from this vendor during the first quarter of 2025 and therefore changed the amortization life of the intangible asset to a shorter period to reflect the expected period of benefits.
Acquisition related costs for the three months ended MarchJune 31,30, 2026 and 2025 were $0.3less million andthan $0.1 million, respectively. These expenses in the current period relate to costs incurred with the acquisition of Interworks, while these expenses in the same period in the prior year relate to aexploratory previouslyacquisition-related completed acquisition.initiatives.
We compute interim period income taxes by applying an anticipated annual effective tax rate to our year-to-date income or loss from operations before income taxes, except for significant unusual or infrequently occurring items and discrete items. As a result, our estimated tax rate is adjusted each quarter. For the three months ended MarchJune 31,30, 2026 and 2025, the Company recorded a provision for income taxes of $0.8$2.0 million and $0.6$1.8 million, respectively. The effective tax rate for the three months ended MarchJune 31,30, 2026 and 2025 was 20.1%26.8% and 13.3%,22.9%, respectively. The effective tax rate for the three months ended MarchJune 31,30, 2026 compared to the same period in the prior year was primarily impacted by changes in the mix of jurisdictions in which taxable income was earned, as well as a discrete item for the recognition of excess tax benefits related to share-based compensation in income tax expense, and limitations on the deductibility of certain executive compensation amounts during both periods. The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in aA net tax benefit ofwas $0.4not million,recognized whichrelating reducedto ourshared-based effective tax rate by 10.5%compensation during the three months ended MarchJune 31,30, 2026. The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $0.5$0.2 million, which reduced our effective tax rate by 10.7%2.6% during the three months ended MarchJune 31,30, 2025.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Net Sales and Gross Billings
Net sales for the six months ended June 30, 2026 increased 20%, or $59.3 million, to $356.6 million compared to $297.3 million for the same period in the prior year. Gross billings, an operational metric, for the six months ended June 30, 2026 increased 16%, or $154.9 million, to $1.1 billion, compared to $975.1 million for the same period in the prior year. Net sales and gross billings both increased due to organic growth from our existing vendor partnerships and the Interworks acquisition. Interworks contributed approximately $2.1 million of net sales for the period from acquisition through June 30, 2026; excluding Interworks, net sales increased by approximately $57.2 million. Interworks contributed approximately $12.1 million of gross billings for the period from acquisition through June 30, 2026. Gross billings increased at a lesser rate than net sales due to differences in the product mix between the two periods. During the six months ended June 30, 2026, gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis, while during the six months ended June 30, 2025, gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales.
Distribution segment net sales for the six months ended June 30, 2026 increased 21%, or $59.7 million, to $344.9 million compared to $285.2 million for the same period in the prior year. Gross billings for the Distribution segment for the six months ended June 30, 2026 increased 17%, or $154.9 million, to $1.1 billion, compared to $930.6 million for the same period in the prior year. Net sales increased organically at a greater rate than gross billings increased due to the impact of hardware and software sales recognized during the current period, which are recorded on a gross basis.
Solutions segment net sales for the six months ended June 30, 2026, decreased 4%, or $0.4 million, to $11.7 million compared to $12.1 million for the same period in the prior year. Gross billings for the Solutions segment for the six months ended June 30, 2026 increased 4%, or $1.8 million, to $46.3 million compared to $44.5 million for the same period in the prior year. Net sales decreased despite the increase in gross billings due to differences in the product mix between the two periods in our Solution segment.
The Company had three major customers that accounted for 19%, 13%, and 20%, respectively, of its total net sales during the six months ended June 30, 2026 and 25%, 13%, and 13% respectively, of its total net sales during the six months ended June 30, 2025. The Company had no major vendors during the six months ended June 30, 2026 and June 30, 2025, respectively.
Gross Profit
Gross profit for the six months ended June 30, 2026 increased 14%, or $7.0 million, to $56.7 million compared to $49.7 million for the same period in the prior year. Gross profit increased due to organic growth from our existing vendor partnerships and a $1.4 million contribution from the Interworks acquisition.
Distribution segment gross profit for the six months ended June 30, 2026 increased 14%, or $5.9 million, to $49.3 million compared to $43.4 million for the same period in the prior year. The increase reflects the previously noted organic growth from existing vendor partnerships and a $1.4 million contribution from the Interworks acquisition, partially offset by higher other rebates and discounts offered to our customers as a percentage of gross billings.
Solutions segment gross profit for the six months ended June 30, 2026 increased 17%, or $1.0 million, to $7.3 million compared to $6.3 million for the same period in the prior year. This increase was driven by higher gross profit margins generated in both North American and Europe.
Customer rebates and discounts for the six months ended June 30, 2026 were $13.1 million compared to $10.9 million for the same period in the prior year. Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.
Vendor rebates and discounts for the six months ended June 30, 2026 were $7.5 million compared to $10.3 million for the same period in the prior year. Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors or meeting certain early payment programs offered by our vendors. The Company monitors vendor rebate levels, competitive pricing, and gross profit margins carefully.
Selling, General and Administrative Expenses
SG&A expenses for the six months ended June 30, 2026 increased 24%, or $8.0 million, to $41.0 million compared to $33.1 million for the same period in the prior year. This increase was primarily due to an increase in salaries, commissions and other employee related expenses in support of the increased gross profit, one-time investments to drive organic growth from new vendors and in the Company's infrastructure to support long-term growth initiatives, and a $0.9 million contribution from the Interworks acquisition. SG&A expenses were 3.6% of gross billings for the six months ended June 30, 2026, compared to 3.4% for the same period in the prior year. The Company expects that its SG&A expenses, as a percentage of gross billings, may vary depending on changes in sales volume, as well as the levels of continuing investments to drive future growth.
Depreciation and Amortization Expense
Depreciation and amortization expense for the six months ended June 30, 2026, increased 9%, or $0.3 million, to $4.0 million compared to $3.7 million for the same period in the prior year, primarily due to increased amortization for the vendor relationship intangible acquired through the Interworks acquisition.
Acquisition Related Costs
Acquisition related costs for the six months ended June 30, 2026 and 2025 were $0.3 million and $0.1 million, respectively. These expenses in the current period relate to costs incurred with the acquisition of Interworks, while these expenses in the same period in the prior year relate to exploratory acquisition related initiatives.
Income Taxes
We compute interim period income taxes by applying an anticipated annual effective tax rate to our year-to-date income or loss from operations before income taxes, except for significant unusual or infrequently occurring items and discrete items. As a result, our estimated tax rate is adjusted each quarter. For the six months ended June 30, 2026 and 2025, the Company recorded a provision for income taxes of $2.9 million and $2.3 million, respectively. The effective tax rate for the six months ended June 30, 2026 and 2025 was 24.4% and 19.5%, respectively. The effective tax rate for the six months ended June 30, 2026 compared to the same period in the prior year was primarily impacted by changes in the mix of jurisdictions in which taxable income was earned, as well as a discrete item for the recognition of excess tax benefits related to share-based compensation in income tax expense, and limitations on the deductibility of certain executive compensation amounts during both periods. The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $0.5 million, which reduced our effective tax rate by 3.9% during the six months ended June 30, 2026. The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $0.7 million, which reduced our effective tax rate by 5.9% during the six months ended June 30, 2025.
Our cash and cash equivalents as of MarchJune 31,30, 2026 increased 14%,55%, or $5.2$20.0 million, to $41.8$56.6 million compared to $36.6 million as of December 31, 2025.
Net cash and cash equivalents provided by operating activities for the threesix months ended MarchJune 31,30, 2026 was $16.9$32.2 million, comprised primarily of net income adjusted for non-cash items of $6.7$7.0 million,million partially offset byand changes in operating assets and liabilities of $10.2$16.4 million.
Net cash and cash equivalents used in investing activities during the threesix months ended MarchJune 31,30, 2026 was $8.7$9.2 million, comprised primarily of the payment for the Interworks acquisition.
Net cash and cash equivalents used in financing activities during the threesix months ended MarchJune 31,30, 2026 was $2.8$2.9 million, comprised of repayments under credit facilities of $10.1 million, purchases of treasury stock of $1.5$1.6 million, and repayments of borrowings under term loan of $0.2 million, partially offset by borrowings under credit facilities of $9.0 million. The Company had a short-term operating need during the threesix months ended MarchJune 31,30, 2026, that resulted in $9.0 million of borrowings under credit facilities, which was subsequently repaid in full during the threesix months ended MarchJune 31,30, 2026.
On May 18, 2023, the Company entered into a revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JPM”), providing for a revolving credit facility of up to $50.0 million, including the issuance of letters of credit and swingline loans not to exceed $2.5 million and $5.0 million, respectively, at any time outstanding. In addition, subject to certain conditions enumerated in the Credit Agreement, the Company has the right to increase the revolving credit facility by a total amount not to exceed $20.0 million. The proceeds of the revolving loans, letters of credit and swingline loans under the Credit Agreement may be used for working capital needs, general corporate purposes and for acquisitions permitted by the terms of the Credit Agreement. All outstanding loans issued pursuant to the Credit Agreement become due and payable, on May 18, 2028. There were no amounts outstanding under the Credit Agreement as of MarchJune 31,30, 2026.
On April 8, 2022, the Company entered into a $2.1 million term loan (the “Term Loan”) with First American Commercial Bancorp, Inc. (“First American”) pursuant to a Master Loan and Security Agreement. The proceeds from the Term Loan was used to fund certain capital expenditures. The borrowing under the Term Loan bears interest at a rate of 3.73% per annum and is beingwas repaid over forty-eight monthly installments of principal and interest through March 2026. As of MarchJune 31,30, 2026, the Company had no amounts outstanding under the Term Loan.
Off-Balance Sheet Arrangements
As of March 31, 2026, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934, as amended.
CLMB insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 4,000 shares, about $75.3K) and open-market sales in 0 filings. Net open-market shares: 4,000 (purchases minus sales); net value about $75.3K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-05 | Bass Charles Edward |
Shares withheld for tax | 746 | $26.78 | $20.0K |
| 2026-08-05 | Sullivan Matthew M |
Shares withheld for tax | 646 | $26.78 | $17.3K |
| 2026-08-05 | Foster Dale Richard |
Shares withheld for tax | 1,015 | $26.78 | $27.2K |
| 2026-08-05 | Popovich Timothy |
Shares withheld for tax | 222 | $26.78 | $5.9K |
| 2026-07-28 | Bell Peter W |
Grant/award | 5,855 | — | — |
| 2026-06-02 | Giovacchini Paul G |
Grant/award | 7,665 | — | — |
| 2026-06-02 | Bryant Andrew S |
Grant/award | 7,665 | — | — |
| 2026-06-02 | Mccarthy John R |
Grant/award | 7,665 | — | — |
| 2026-05-05 | Foster Dale Richard |
Shares withheld for tax | 883 | $18.76 | $16.6K |
| 2026-05-05 | Bass Charles Edward |
Shares withheld for tax | 645 | $18.76 | $12.1K |
| 2026-05-05 | Sullivan Matthew M |
Shares withheld for tax | 558 | $18.76 | $10.5K |
| 2026-05-05 | Popovich Timothy |
Shares withheld for tax | 725 | $18.76 | $13.6K |
| 2026-05-04 | Mccarthy John R |
Open-market purchase | 4,000 | $18.83 | $75.3K |
Well-known investors holding CLMB (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 471,140 | $10.9M | 0.02% | Reduced 12% |
| Millennium Management (Israel Englander) | 2026-06-30 | 172,704 | $4.0M | 0.0% | Reduced 17% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 127,919 | $3.0M | 0.0% | Added 221% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 22,576 | $524.0K | 0.0% | New position |