Financial Data and Key Metrics Changes - Gross billings increased by 3% to $625.4 million compared to $605 million in the prior year quarter [10] - Net sales in Q4 2025 increased by 20% to $193.8 million, up from $161.8 million, primarily reflecting organic growth from new and existing vendors [10] - Adjusted net income was $7 million, or $1.53 per diluted share, compared to $10.3 million, or $2.26 per diluted share for the year-ago period [12] - Adjusted EBITDA in Q4 2025 was $13 million, down from $16.1 million for the same period in 2024 [12] - Effective margin, defined as Adjusted EBITDA as a percentage of gross profit, was 43.6%, compared to 51.5% for the same period in 2024 [13] Business Line Data and Key Metrics Changes - Distribution segment gross billings increased by 4% to $602.3 million, while solution segment gross billings remained flat at $23.1 million [10] - In Q4, 70 partners transacted over $13 million in Darktrace product offerings, indicating strong pipeline growth [7] Market Data and Key Metrics Changes - The company launched a partnership with Fortinet, which is expected to become a significant contributor to both their business and Climb's business [5] - The acquisition of interworks.cloud is anticipated to enhance the company's ability to drive cross-sell opportunities and deepen engagement with vendors and reseller partners in Southeastern Europe [8] Company Strategy and Development Direction - The company is focused on accelerating organic growth while pursuing accretive M&A opportunities to strengthen its vendor portfolio and expand its geographic footprint [9] - Management emphasized the importance of disciplined capital allocation and strategic reinvestments to drive long-term shareholder value [16] - The integration of AI solutions is a priority to improve operational efficiency [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on organic and inorganic growth objectives in 2026, supported by a strong balance sheet and liquidity position [14] - The company is actively evaluating accretive targets for M&A that can strengthen its vendor profile and expand its geographic reach [15] - Management noted that the AI disruption in the market is expected to accelerate adoption rates, but they believe a hybrid environment will prevail [19][20] Other Important Information - The board decided to suspend the quarterly cash dividend beginning in Q1 2026 to retain capital for growth initiatives and strategic acquisitions [14] - Cash and cash equivalents were $36.6 million as of December 31, 2025, compared to $29.8 million on December 31, 2024 [13] Q&A Session Summary Question: Can you provide scope on the large acquisition from the prior year? - Management indicated that removing the large transaction from Q4 of last year still resulted in high teens organic growth for Q4 compared to the previous year [23][24] Question: How has the departure of Citrix impacted the quarter? - Management noted that while there was an impact, they managed to fill the gap with new vendors and achieved a 3% growth despite the loss [25][26] Question: What is the expected run rate for the Interworks acquisition? - Management stated that the $1 million in EBITDA is a good starting point for Interworks, with expectations for growth as they integrate [27][28] Question: What is the timeline for cross-selling synergies from Interworks? - Management indicated that onboarding vendors and integrating systems will happen quickly due to shared platforms [39][40] Question: What is the health of the market compared to the prior quarter? - Management noted that there has been no slowdown, with ongoing consolidation among resellers [42] Question: How does the Fortinet relationship impact Climb? - Management highlighted that Fortinet has a $2.5 billion addressable market in the U.S., and they aim to capture 10% of that market in the next 18 months [46][48] Question: What is the outlook for future acquisitions? - Management confirmed that they expect to pursue one or two acquisitions in 2026, leveraging the capital previously allocated for dividends [72]