CLMB Q3 2025: Cybersecurity Share Tops 60% as Organic Growth Drives Strategic Vendor Expansion
CLMB’s third quarter showcased robust organic growth and a deliberate deepening of its cybersecurity focus, with more than 60 percent of business now anchored in this high-demand segment. Management’s disciplined vendor selection, targeted M&A pipeline, and the launch of the Climb AI Academy in Europe all signal a company leaning into secular tech tailwinds while managing operational complexity. With a strong balance sheet and a healthy acquisition appetite, CLMB is positioning for another record year, but margin compression and solution segment volatility warrant close investor scrutiny heading into 2026.
Summary
- Cybersecurity Concentration Rises: Over 60 percent of business now in cybersecurity, with selective vendor additions reinforcing focus.
- AI Academy and Europe Initiatives: European operations and AI training investments differentiate CLMB’s partner ecosystem.
- M&A Pipeline Remains Aggressive: Balance sheet strength and strategic discipline set the stage for larger deals in 2026.
Performance Analysis
CLMB delivered double-digit organic growth in Q3, with net sales up sharply year-over-year, driven by both the core distribution business and the ongoing integration of Douglas Stewart Software (DSS), acquired last year. Gross billings rose across the board, though the solution segment saw a modest decline, highlighting some volatility in non-core operations. The company’s adjusted EBITDA margin compressed versus the prior year, reflecting a normalization after outsized vendor transactions in 2024 and a slight uptick in SG&A as a percentage of billings.
Cash and working capital expanded significantly, as timing of receivable collections and vendor payments improved the balance sheet. Management emphasized that swings in accounts receivable and payable are structural, tied to the timing and scale of large customer orders, especially in education and data center verticals. Despite these fluctuations, CLMB ended the quarter with minimal debt and ample liquidity, supporting its stated M&A ambitions.
- Distribution Outpaces Solutions: Distribution gross billings up 9 percent, while solution segment fell 5 percent, underscoring reliance on the core channel.
- Margin Compression Watch: Gross profit margin dipped slightly, and effective EBITDA margin declined by over 3 percentage points year-over-year.
- Cash Build Supports Growth: Cash nearly doubled since year-end, bolstering M&A flexibility and dividend continuity.
Overall, CLMB’s Q3 performance signals operational discipline and strategic focus, though margin headwinds and solution segment softness merit ongoing attention as the company scales.
Executive Commentary
"We continue to deepen our partnerships with existing vendors while assigning new cutting-edge partners to our line card. Our team consistently delivers solid results, maintains operational discipline, and continues driving growth, even with the challenging comparables from last year."
Dale Foster, CEO
"We’re actively evaluating acquisition opportunities that align with our growth strategy, enhance our capabilities, and strengthen our presence across key markets. With solid momentum across our business and a proven track record of execution, we believe we will close out 2025 on a strong note and set the stage for another year of record performance."
Matthew Sullivan, CFO
Strategic Positioning
1. Cybersecurity as the Core Growth Engine
CLMB’s business is now anchored by cybersecurity, which accounts for more than 60 percent of its revenue base. Management’s selective approach to vendor expansion—evaluating 70 potential partners but signing only four—reflects a focus on innovation, market differentiation, and integration with existing offerings. Recent partnerships with LionGuard, attack surface management for managed service providers (MSPs), and Halcyon, anti-ransomware platform, deepen CLMB’s value proposition for security-focused resellers and service providers.
2. European Expansion and AI Enablement
Europe remains a strategic priority, with the Climb AI Academy serving as a differentiator in the region’s fast-growing artificial intelligence market. The academy provides manufacturer-neutral training and internationally recognized certifications, helping partners navigate the complexity of AI adoption. With over 700 participants to date, this program not only enhances partner stickiness but also positions CLMB as a go-to distributor for AI-driven solutions across the continent.
3. M&A Discipline and Pipeline Readiness
CLMB’s approach to M&A is both aggressive and disciplined. The company is actively pursuing deals ranging from sub $10 million technical tuck-ins to $40 million-plus international distribution acquisitions. Management prioritizes margin profile, cultural fit, and strategic capability, with a clear intent to avoid smaller, less impactful transactions. Acquisition-related costs in Q3 reflect ongoing diligence, with a focus on closing larger, accretive transactions in 2026.
4. Vendor and Product Portfolio Optimization
Management continues to prune underperforming vendors, freeing up resources for higher-value partnerships and reducing sales cycle clutter. This ongoing optimization is designed to maximize salesforce effectiveness and margin capture, while maintaining an open pipeline for innovative, differentiated products, particularly in security and AI.
5. Financial Flexibility and Capital Allocation
With nearly $50 million in cash and a $50 million undrawn credit facility, CLMB has ample firepower to pursue strategic investments and maintain its dividend policy. The company’s focus on working capital management and opportunistic vendor payment strategies further enhance its financial agility as it navigates lumpy order cycles and prepares for larger-scale acquisitions.
Key Considerations
CLMB’s Q3 results reflect a company executing on its core strengths in cybersecurity distribution, while methodically investing in AI enablement and M&A pipeline development. Investors should weigh the following:
Key Considerations:
- Security Dominance: Over 60 percent of revenue now tied to cybersecurity, reinforcing CLMB’s leadership in a secular growth vertical.
- AI Academy Differentiation: European AI training investments enhance channel loyalty and position CLMB as a partner of choice for emerging tech enablement.
- Margin Compression Risk: EBITDA and gross profit margins declined year-over-year, with normalization after prior-year lumpy deals and higher SG&A spend.
- M&A Execution: The company’s robust cash position and pipeline signal a high likelihood of transformative deals in 2026, but integration and margin profile will be critical.
- Solution Segment Volatility: Declines in the solution business, particularly in the US, highlight the need for continued portfolio optimization and growth discipline.
Risks
Margin compression and solution segment volatility present ongoing risks, especially as CLMB integrates new vendors and navigates large, lumpy transactions. The company’s exposure to education and data center verticals introduces seasonality and order timing unpredictability, while aggressive M&A ambitions raise execution and integration risks. Currency and tariff impacts remain muted but could reemerge if macro conditions shift, and any slowdown in cybersecurity demand would directly impact CLMB’s growth trajectory.
Forward Outlook
For Q4 2025, CLMB management signaled:
- Continued focus on organic growth in cybersecurity and AI-driven solutions
- Ongoing evaluation and pursuit of strategic M&A, with a bias toward larger, accretive deals
For full-year 2025, management maintained its expectation of record performance, citing:
- Strong pipeline in both vendor partnerships and acquisition targets
- Operational momentum in core markets, especially Europe and North America
Management highlighted several factors that will drive results:
- Execution on strategic vendor additions and AI enablement programs
- Prudent capital allocation and working capital management to support growth and M&A
Takeaways
CLMB’s Q3 results reinforce its position as a cybersecurity-centric distributor with a disciplined, high-selectivity approach to vendor and M&A expansion. The company’s financial flexibility, operational discipline, and innovation investments set the stage for continued growth, though margin pressure and solution segment softness warrant close monitoring.
- Cybersecurity Focus Drives Growth: More than 60 percent of business in security, with selective vendor expansion and deepening partner engagement fueling momentum.
- AI and European Initiatives Differentiate: AI Academy and European expansion provide strategic differentiation and deepen partner relationships.
- M&A Pipeline and Margin Execution Key for 2026: Investors should watch for transformative acquisitions and margin stabilization as CLMB executes on its growth agenda.
Conclusion
CLMB’s third quarter underscores the company’s commitment to cybersecurity leadership, disciplined vendor management, and strategic M&A execution. While the growth story remains intact, the next phase will depend on the company’s ability to defend margins, integrate new capabilities, and scale its differentiated European and AI-driven offerings.
Industry Read-Through
CLMB’s results highlight the sustained momentum in cybersecurity distribution and the growing importance of AI enablement within the IT channel. The company’s selective vendor approach and emphasis on value-added services signal a broader industry shift toward quality over quantity in partner ecosystems. Distributors and value-added resellers (VARs) should note the rising demand for AI training and certifications, as well as the need to optimize vendor portfolios for both growth and operational efficiency. The continued appetite for M&A, especially in Europe, suggests ongoing consolidation and the need for scale and specialization to remain competitive in the evolving tech distribution landscape.