CLMB Q4 2025: Fortinet Onboarding Targets $250M, Dividend Suspended to Accelerate M&A
CLIMB Global Solutions enters 2026 with a sharpened focus on scaling vendor partnerships and geographic reach, prioritizing high-impact M&A and operational efficiency over dividends. The onboarding of Fortinet and the Interworks.cloud acquisition signal a decisive pivot toward larger, higher-margin opportunities and platform expansion, while leadership’s capital allocation shift sets the stage for accelerated inorganic growth. Investors should watch for execution on cross-sell and integration as the company seeks to leverage its evolving vendor mix and AI-driven internal enhancements.
Summary
- Vendor Portfolio Curation: CLMB prioritizes quality over quantity, onboarding only high-potential vendors like Fortinet with a target to reach top-three vendor status.
- Capital Allocation Shift: Dividend suspension reallocates cash to M&A and organic initiatives, signaling a more aggressive growth agenda.
- Integration and Efficiency Focus: Interworks.cloud acquisition and internal AI adoption aim to unlock cross-sell and margin leverage in 2026.
Performance Analysis
CLIMB Global Solutions delivered record net sales growth in Q4 2025, driven by organic expansion across both new and existing vendors, with the distribution segment leading at a 4% gross billings increase. The solution segment remained flat, but the overall top-line benefited from a higher mix of products recognized on a gross basis, reflecting a strategic shift in product mix. However, gross profit declined year-over-year, primarily due to the absence of a high-margin vendor transaction from the prior year, and effective margin compressed to 43.6% from 51.5%.
Despite a challenging comp from the prior year’s large deal, recurring and organic growth in core lines remained in the high teens, offsetting the $50–$60 million Citrix hole and demonstrating resilience in vendor replacement and cross-sell. SG&A rose modestly as a percent of gross billings, reflecting ongoing investment in platform and personnel to support both organic and inorganic expansion. Cash and liquidity strengthened, with working capital up and minimal debt, positioning CLMB for active deal-making in 2026.
- Recurring Revenue Model Stability: 80–90% renewal rates underpin predictable revenue streams, with upside from seat expansion and vendor cross-sell.
- Vendor Loss Offset: The Citrix exit was fully backfilled by new and expanded vendor relationships, testifying to sales agility and portfolio breadth.
- Margin Compression Watchpoint: Gross profit as a percent of gross billings dipped below 5%, with leadership targeting efficiency gains and higher-margin vendor additions to reverse the trend.
Overall, the quarter’s results highlight CLMB’s ability to navigate vendor churn, while the evolving mix and M&A-driven expansion present both opportunity and integration risk for the coming year.
Executive Commentary
"We evaluated nearly 100 potential vendor relationships and signed agreements to only two of them. Notably, in December, we launched our partnership with Fortinet... and we expect to ramp them up quickly and will become a meaningful contributor to both their business and client business."
Dale Foster, Chief Executive Officer
"Consistent with our capital allocation priorities, the board has determined to suspend our quarterly cash dividend beginning in the first quarter of 2026. This decision allows us to retain additional capital to support organic growth initiatives and strategic acquisitions while further strengthening our financial flexibility."
Matthew Sullivan, Chief Financial Officer
Strategic Positioning
1. Vendor Portfolio Curation and Fortinet Onboarding
CLMB’s approach has shifted from broad vendor accumulation to a curated, high-impact portfolio, evidenced by onboarding only two vendors out of nearly 100 evaluated in Q4. The Fortinet, cybersecurity and secure networking, partnership is positioned to be transformative, with management targeting a run rate of $250 million in gross billings within 18 months. This is a strategic move upmarket, aiming to make Fortinet a top-three vendor and leverage CLMB’s field sales strength to penetrate new reseller accounts beyond Tier 1 distributors’ reach.
2. M&A as Core Growth Lever
The Interworks.cloud acquisition marks a deliberate expansion into Southeastern Europe, adding a Microsoft CSP platform, 600+ resellers, and a high-margin business profile. Management emphasizes continuity of local leadership and rapid integration, with Interworks’ cloud marketplace capabilities expected to accelerate CLMB’s transition toward a more scalable, platform-driven model. The deal, at 9.4x EBITDA, is deemed immediately accretive and signals intent to deploy more capital into acquisitions, supported by the dividend suspension and a strong balance sheet.
3. Internal Efficiency and AI-Driven Transformation
CLMB is investing in generative AI and process automation to drive down manual workload and SG&A as a percent of sales. The new CIO, with experience from large-scale resellers, is spearheading ERP optimization and automation, aiming to enable the current workforce to support a business 1.5x its current size. This internal transformation is expected to be a key lever for future margin expansion and operational scalability.
4. Resilient Recurring Revenue and Cross-Sell Model
With 80–90% annual renewal rates and a focus on cross-selling into existing reseller and vendor relationships, CLMB’s model is designed for stability and incremental growth. The ability to quickly replace lost revenue from vendor churn (as with Citrix) demonstrates the robustness of the channel and the effectiveness of the sales organization in pivoting to new products and partners.
5. Disciplined Capital Allocation and Dividend Policy Shift
The suspension of the dividend is a clear signal that CLMB sees greater shareholder value in reinvestment and M&A than in cash returns at this stage. Management is targeting one to two acquisitions per year, with a focus on high-margin, accretive targets that expand geographic and vendor reach. This marks a transition to a more aggressive, growth-oriented capital allocation stance.
Key Considerations
CLMB’s Q4 marks a strategic inflection point, with leadership making decisive moves to reposition the business for scale, efficiency, and higher-value partnerships. The evolving vendor mix, aggressive M&A stance, and internal technology upgrades all set the stage for a more leveraged growth profile in 2026.
Key Considerations:
- Fortinet as a Growth Catalyst: Management expects Fortinet to be a top-three vendor, targeting $250 million in billings within 18 months, with unique channel access as a differentiator.
- Interworks.cloud Integration: The acquisition brings Microsoft CSP scale and cloud marketplace expertise, with rapid cross-sell and platform synergies anticipated.
- AI and Automation Efficiency Drive: Internal adoption of generative AI and process streamlining is expected to reduce manual workload and support future margin expansion.
- Dividend Suspension Signals M&A Priority: Cash is being redirected to fund acquisitions and organic initiatives, with management targeting at least one to two deals per year.
- Vendor and Product Mix Evolution: Ongoing focus on curating high-impact vendors and cross-selling into the existing channel as the business shifts toward higher-margin, recurring revenue streams.
Risks
Execution risk is elevated as CLMB pursues large-scale vendor onboarding and multi-country M&A integration, with potential for disruption if cross-sell synergies or platform integration underdeliver. Margin compression remains a concern if efficiency gains lag or the vendor mix does not shift as planned. The company’s ability to maintain high renewal rates and replace lost vendors will be tested as the competitive landscape evolves, particularly with rapid AI adoption and channel consolidation.
Forward Outlook
For Q1 2026, management anticipates typical seasonal softness, especially in education and SLED (state, local, education) channels, before a pickup in later quarters. The full-year 2026 outlook calls for:
- Continued organic growth driven by new vendor ramp (Fortinet, Darktrace) and expanded cross-sell from Interworks.cloud.
- Active M&A pipeline, with one to two acquisitions targeted in the next twelve months.
Management highlighted several factors that will drive results:
- Fortinet onboarding and field sales collaboration as a primary growth lever.
- AI-driven efficiency and automation to support margin improvement.
Takeaways
CLMB’s 2025 exit velocity is shaped by a deliberate pivot toward larger, higher-impact partnerships and platform expansion, with capital allocation squarely focused on scaling the business through M&A and operational leverage. Investors should monitor execution on the Fortinet ramp, Interworks.cloud integration, and internal efficiency gains as key drivers of margin and top-line acceleration in 2026.
- Vendor Mix and Margin Recovery: Success in onboarding and scaling Fortinet and other curated vendors will be critical to reversing recent margin compression and driving higher-value sales.
- Cross-Sell and Platform Synergy: The integration of Interworks.cloud’s cloud marketplace is a pivotal test of CLMB’s ability to unlock cross-sell and geographic expansion synergies.
- Capital Deployment Discipline: The dividend suspension raises the bar for M&A execution, with investors expecting tangible accretion and strategic fit from future deals.
Conclusion
CLMB’s Q4 2025 results underscore a business in strategic transition, leveraging vendor curation, M&A, and internal efficiency to reposition for scale and margin expansion. The coming quarters will test management’s ability to execute on these ambitions and deliver on the promise of a more focused, higher-value platform model.
Industry Read-Through
CLMB’s experience highlights the growing importance of vendor curation and platform integration in the IT distribution sector, as channel partners seek differentiated access and value-add beyond traditional volume distribution. The rise of cloud marketplaces and the need for rapid onboarding of high-growth vendors like Fortinet signal a shift toward more selective, partnership-driven models. The dividend suspension and capital redeployment reflect a broader trend among specialty distributors prioritizing scale and geographic reach through M&A, while internal AI adoption becomes table stakes for margin resilience. Competitors and adjacent channel players should expect increased competition for high-potential vendors and accelerating consolidation, particularly in underserved regional markets.