Climb Global Solutions, Inc.

Previous wording

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.

Current wording

The 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.

Previous wording

Our Company is a value added IT distribution and solutions company, primarily selling software and other third-party IT products and services through two reportable operating segments. Through our “Distribution” segment we sell products and services to corporate resellers, VARs, consultants and systems integrators worldwide, who in turn sell these products to end users. Through our “Solutions” segment we act as a cloud solutions provider and value-added reseller, selling computer software and hardware developed by others and provide technical services directly to end user customers worldwide. We offer an extensive line of products from leading software vendors and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management and other technically sophisticated domains as well as computer hardware. We market these products through creative marketing communications, including our web sites, local seminars, webinars, social media, direct e-mail, and printed materials.

Current wording

Our Company is a value-added IT distribution and solutions company, primarily selling software and other third-party IT products and services through two reportable operating segments. Through our “Distribution” segment we sell products and services to corporate resellers, VARs, consultants and systems integrators worldwide, who in turn sell these products to end users. Through our “Solutions” segment we act as a cloud solutions provider and value-added reseller, selling computer software and hardware developed by others and providing technical services directly to end user customers worldwide. We offer an extensive line of products from leading software vendors and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management and other technically sophisticated domains as well as computer hardware. We market these products through creative marketing communications, including our web sites, local seminars, webinars, social media, direct e-mail, and printed materials.

Previous wording

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 $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 June 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.

Current wording

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 zero and $0.2 million for the three months ended September 30, 2026, respectively, and $0.8 million and $0.3 million for the three months ended September 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.

Previous wording

*Stock Volatility.*The technology, distribution and services sectors of the United States stock markets is subject to substantial volatility. Numerous conditions which impact these sectors or the stock market in general or the Company in particular, whether or not such events relate to or reflect upon the Company’s operating performance, could adversely affect the market price of the Company’s Common Stock. Furthermore, fluctuations in the Company’s operating results, announcements regarding litigation, the loss of a significant vendor partner or customer, increased competition, reduced vendor incentives and trade credit, higher operating expenses, and other developments, could have a significant impact on the market price of our Common Stock.

Current wording

*Stock Volatility.*The technology, distribution and services sectors of the United States stock markets are subject to substantial volatility. Numerous conditions which impact these sectors or the stock market in general or the Company in particular, whether or not such events relate to or reflect upon the Company’s operating performance, could adversely affect the market price of the Company’s Common Stock. Furthermore, fluctuations in the Company’s operating results, announcements regarding litigation, the loss of a significant vendor partner or customer, increased competition, reduced vendor incentives and trade credit, higher operating expenses, and other developments, could have a significant impact on the market price of our Common Stock.

Previous wording

Inflation. We have historically not been adversely affected by inflation, as abrupt changes in technology, rapid changes in customer preferences, short product life cycles and evolving industry standards within the IT industry have generally caused the prices of the products we sell to decline. This requires us to sell new products and have growth in unit sales of existing products in order to increase our net sales. We believe that most price increases could be passed on to our customers, as prices charged by us are not set by long-term contracts; however, as a result of competitive pressure, there can be no assurance that the full effect of any such price increases could be passed on to our customers or cause a reduction in our customers spending.

Current wording

Inflation. We have historically not been adversely affected by inflation, as abrupt changes in technology, rapid changes in customer preferences, short product life cycles and evolving industry standards within the IT industry have generally caused the prices of the products we sell to decline. This requires us to sell new products and have growth in unit sales of existing products in order to increase our net sales. We believe that most price increases could be passed on to our customers, as prices charged by us are not set by long-term contracts; however, as a result of competitive pressure, there can be no assurance that the full effect of any such price increases could be passed on to our customers without causing a reduction in our customers’ spending.

Previous wording

Net sales increased 9%, or $14.9 million, to $174.2 million for the three months ended June 30, 2026 compared to $159.3 million for the same period in the prior year. Gross profit increased 15%, or $3.9 million, to $30.2 million for the three months ended June 30, 2026, compared to $26.3 million for the same period in the prior year. Selling, general and administrative (“SG&A”) expenses increased 26%, or $4.3 million, to $20.7 million for the three months ended June 30, 2026 compared to $16.4 million for the same period in the prior year. Depreciation and amortization expense increased 5%, or $0.1 million, to $2.1 million for the three months ended June 30, 2026 compared to $2.0 million for the same period in the prior year. Net income decreased 8%, or $0.4 million, to $5.5 million for the three months ended June 30, 2026 compared to $5.9 million for the same period in the prior year. Diluted income per share decreased 8%, or $0.03 to $0.30 for the three months ended June 30, 2026 compared to $0.33 for the same period in the prior year.

Current wording

Net sales increased 37%, or $59.0 million, to $220.3 million for the three months ended September 30, 2026 compared to $161.3 million for the same period in the prior year. Gross profit increased 28%, or $7.3 million, to $33.0 million for the three months ended September 30, 2026, compared to $25.7 million for the same period in the prior year. Selling, general and administrative (“SG&A”) expenses increased 29%, or $4.7 million, to $20.9 million for the three months ended September 30, 2026 compared to $16.2 million for the same period in the prior year. Depreciation and amortization expense increased 5%, or $0.1 million, to $2.1 million for the three months ended September 30, 2026 compared to $2.0 million for the same period in the prior year. Net income increased 69%, or $3.2 million, to $7.9 million for the three months ended September 30, 2026 compared to $4.7 million for the same period in the prior year. Diluted income per share increased 72%, or $0.18, to $0.43 for the three months ended September 30, 2026 compared to $0.25 for the same period in the prior year.

Previous wording

On an on-going basis, the Company evaluates its estimates, including those related to product returns, bad debts, inventories, intangible assets, income taxes, stock-based compensation, contingencies and litigation.

Current wording

On an ongoing basis, the Company evaluates its estimates, including those related to product returns, bad debts, inventories, intangible assets, income taxes, stock-based compensation, contingencies and litigation.

Previous wording

Our valuation of acquired assets and assumed liabilities requires estimates, especially with respect to intangible assets that was derived using valuation techniques and models such as the income approach. Such models require use of estimates including discount rates, and future expected revenue. The approach to estimating an initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected cash flows over the term of the contingent earn-out period, discounted for the period over which the initial contingent consideration is measured and expected volatility. Based upon these assumptions, the initial contingent consideration is then valued using a Monte Carlo simulation.

Current wording

Our valuation of acquired assets and assumed liabilities requires estimates, especially with respect to intangible assets, which are derived using valuation techniques and models such as the income approach. Such models require use of estimates including discount rates, and future expected revenue. The approach to estimating an initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected cash flows over the term of the contingent earn-out period, discounted for the period over which the initial contingent consideration is measured and expected volatility. Based upon these assumptions, the initial contingent consideration is then valued using a Monte Carlo simulation.

Previous wording

Intangible assets with determinable lives are amortized on a straight-line basis over their respective estimated useful lives, which is determined based on their expected period of benefit or are amortized weighted toward their expected periods of benefit. Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying amount over its fair value. In addition, each quarter, the Company evaluates whether events and circumstances warrant a revision to the remaining estimated useful life of each of these intangible assets. If the Company were to determine that a change to the remaining estimated useful life of an intangible asset was necessary, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life.

Current wording

Intangible assets with determinable lives are amortized on a straight-line basis over their respective estimated useful lives, which are determined based on their expected period of benefit or are amortized weighted toward their expected periods of benefit. Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying amount over its fair value. In addition, each quarter, the Company evaluates whether events and circumstances warrant a revision to the remaining estimated useful life of each of these intangible assets. If the Company were to determine that a change to the remaining estimated useful life of an intangible asset was necessary, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life.

Previous wording

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 June 30, 2026 and 2025, respectively, which is included in foreign currency transaction loss in the Consolidated Statements of Earnings.

Current wording

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.

Previous wording

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.

Current wording

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 references to development stages, clarify when capitalization may begin, and require entities to apply property, plant and equipment disclosure requirements under ASC 360-10 to capitalized 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.

Previous wording

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 apractical 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 did not have a material effect on the Company's consolidated financial position.

Current wording

In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”*.*The update amends the guidance in ASC 326-20 to introduce apractical 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 did not have a material effect on the Company's consolidated financial position.

Previous wording

We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation, interest expense, acquisition related costs and changes in the fair value of contingent considerations. We define effective margin as adjusted EBITDA as a percentage of gross profit. We provided a reconciliation of adjusted EBITDA to net income, which is the most directly comparable U.S. GAAP measure. We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our businesses profitability, operating performance and performance trends, and to provide management and investors a useful measure for period-to-period comparisons by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that Adjusted EBITDA and effective margin provide useful information to investors and others in understanding and evaluating our operating results. Adjusted EBITDA is also a component to our financial covenants in our credit facility. Our use of adjusted EBITDA has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Current wording

We define adjusted EBITDA as net income, plus provision for income taxes, depreciation, amortization, share-based compensation, interest expense, acquisition related costs and changes in the fair value of contingent considerations. We define effective margin as adjusted EBITDA as a percentage of gross profit. We provide a reconciliation of adjusted EBITDA to net income, which is the most directly comparable U.S. GAAP measure. We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our business's profitability, operating performance and performance trends, and to provide management and investors a useful measure for period-to-period comparisons by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that adjusted EBITDA and effective margin provide useful information to investors and others in understanding and evaluating our operating results. Adjusted EBITDA is also a component of our financial covenants in our credit facility. Our use of adjusted EBITDA has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Previous wording

We consider gross profit growth and effective margin to be key metrics in evaluating our business. During the three months ended June 30, 2026, gross profit increased 15%, or $3.9 million, to $30.2 million compared to $26.3 million for the same period in the prior year, while effective margin decreased to 37.5% compared to 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.

Current wording

We consider gross profit growth and effective margin to be key metrics in evaluating our business. During the three months ended September 30, 2026, gross profit increased 28%, or $7.3 million, to $33.0 million compared to $25.7 million for the same period in the prior year, while effective margin increased to 44.6% compared to 42.3% for the same period in the prior year. During the nine months ended September 30, 2026, gross profit increased 19%, or $14.3 million, to $89.7 million compared to $75.4 million for the same period in the prior year, while effective margin decreased to 37.9% compared to 39.6% for the same period in the prior year.

Previous wording

Net sales for the three months ended June 30, 2026 increased 9%, or $14.9 million, to $174.2 million compared to $159.3 million for the same period in the prior year. Gross billings, an operational metric, for the three months ended June 30, 2026 increased 17%, or $86.7 million, to $587.3 million compared to $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 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 higher rate than net sales due to differences in the product mix between the two periods. During the three months ended June 30, 2026, gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of 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.

Current wording

Net sales for the three months ended September 30, 2026 increased 37%, or $59.0 million, to $220.3 million compared to $161.3 million for the same period in the prior year. Gross billings, an operational metric, for the three months ended September 30, 2026 increased 40%, or $201.8 million, to $706.4 million compared to $504.6 million for the same period in the prior year. Net sales and gross billings both increased, reflecting strong double-digit organic growth from new and existing vendors and the Interworks acquisition. Interworks contributed approximately $1.6 million of net sales during the quarter; excluding Interworks, net sales increased by approximately $57.4 million. Interworks contributed approximately $6.7 million of gross billings during the quarter. Excluding Interworks, gross billings increased by approximately $195.1 million. Gross billings increased at a higher rate than net sales due to differences in the product mix between the two periods. During the three months ended September 30, 2026, gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales, while during the three months ended September 30, 2025, gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis.

Previous wording

Distribution segment net sales for the three months ended June 30, 2026 increased 10%, or $14.8 million, to $167.8 million compared to $153.0 million for the same period in the prior year. Gross billings for the Distribution segment for the three months ended June 30, 2026 increased 18%, or $85.8 million, to $562.9 million compared to $477.0 million for the same period in the prior year. Net sales increased organically at a lesser rate than gross billings increased due to the impact of security, maintenance, and cloud products sales recognized during the current period, which are recorded on a net basis.

Current wording

Distribution segment net sales for the three months ended September 30, 2026 increased 37%, or $57.3 million, to $211.7 million compared to $154.4 million for the same period in the prior year. Gross billings for the Distribution segment for the three months ended September 30, 2026 increased 41%, or $198.6 million, to $680.5 million compared to $481.9 million for the same period in the prior year. Net sales increased organically at a lesser rate than gross billings increased due to the impact of security, maintenance, and cloud products sales recognized during the current period, which are recorded on a net basis.

Previous wording

Solutions segment net sales for the three months ended June 30, 2026, increased 3%, or $0.1 million, to $6.4 million compared to $6.3 million for the same period in the prior year. Gross billings for the Solutions segment for the three months ended June 30, 2026 increased 4%, or $0.9 million, to $24.4 million compared to $23.5 million for the same period in the prior year. Net sales increased organically at a lesser rate than gross billings due to differences in the product mix between the two periods in our Solution segment.

Current wording

Solutions segment net sales for the three months ended September 30, 2026, increased 25%, or $1.8 million, to $8.7 million compared to $6.9 million for the same period in the prior year. Gross billings for the Solutions segment for the three months ended September 30, 2026 increased 14%, or $3.2 million, to $25.9 million compared to $22.7 million for the same period in the prior year. Net sales increased organically at a greater rate than gross billings due to differences in the product mix between the two periods in our Solutions segment.

Previous wording

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.

Current wording

The Company had three major customers that accounted for 20%, 13%, and 13%, respectively, of its net sales during the three months ended September 30, 2026, and 22%, 14%, and 2%, respectively, of its net sales during the three months ended September 30, 2025. The Company had no major vendors during the three months ended September 30, 2026, and one major vendor that accounted for 13% of total purchases during the three months ended September 30, 2025.

Previous wording

Distribution segment gross profit for the three months ended June 30, 2026 increased 13%, or $3.0 million, to $26.0 million compared to $23.0 million for the same period in the prior year. The increase reflects the previously noted organic growth from existing vendor partnerships and a $1.0 million contribution from the Interworks acquisition.

Current wording

Distribution segment gross profit for the three months ended September 30, 2026 increased 32%, or $7.1 million, to $29.5 million compared to $22.4 million for the same period in the prior year. The increase reflects the previously noted strong double-digit organic growth from new and existing vendors and a $1.0 million contribution from the Interworks acquisition.

Previous wording

Customer rebates and discounts for the three months ended June 30, 2026 were $6.4 million compared to $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.

Current wording

Customer rebates and discounts for the three months ended September 30, 2026 were $7.9 million compared to $5.6 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.

Previous wording

Vendor rebates and discounts for the three months ended June 30, 2026 were $5.2 million compared to $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.

Current wording

Vendor rebates and discounts for the three months ended September 30, 2026 were $6.4 million compared to $3.9 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.

Previous wording

SG&A expenses for the three months ended June 30, 2026 increased 26%, or $4.3 million, to $20.7 million compared to $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, targeted investments to drive organic growth from new vendors and in the Company's infrastructure to support long-term growth initiatives, and a $0.7 million contribution from the Interworks acquisition. SG&A expenses were 3.5% of gross billings for the three months ended June 30, 2026, compared to 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.

Current wording

SG&A expenses for the three months ended September 30, 2026 increased 29%, or $4.7 million, to $20.9 million compared to $16.2 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, targeted investments to drive organic growth from new vendors, and in the Company's infrastructure to support long-term growth initiatives. SG&A expenses were 3.0% of gross billings for the three months ended September 30, 2026, compared to 3.2% 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.

Previous wording

Acquisition related costs for the three months ended June 30, 2026 and 2025 were less than $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.

Current wording

Acquisition related costs for the three months ended September 30, 2026 and 2025 were $0.1 million and $0.6 million, respectively. These expenses in both the current period and the same period in the prior year relate to exploratory acquisition-related initiatives.

Previous wording

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 June 30, 2026 and 2025, the Company recorded a provision for income taxes of $2.0 million and $1.8 million, respectively. The effective tax rate for the three months ended June 30, 2026 and 2025 was 26.8% and 22.9%, respectively. The effective tax rate for the three 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. A net tax benefit was not recognized relating to shared-based compensation during the three 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 $0.2 million, which reduced our effective tax rate by 2.6% during the three months ended June 30, 2025.

Current wording

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 September 30, 2026 and 2025, the Company recorded a provision for income taxes of $2.9 million and $1.6 million, respectively. The effective tax rate for the three months ended September 30, 2026 and 2025 was 27.0% and 25.5%, respectively. The effective tax rate for the three months ended September 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 less than $0.1 million, which reduced our effective tax rate by 0.6% during the three months ended September 30, 2026. The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $0.1 million, which reduced our effective tax rate by 1.9% during the three months ended September 30, 2025.

Previous wording

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 thesix 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 thesix 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.

Current wording

Net sales for the nine months ended September 30, 2026 increased 26%, or $118.3 million, to $576.9 million compared to $458.6 million for the same period in the prior year. Gross billings, an operational metric, for the nine months ended September 30, 2026 increased 24%, or $356.7 million, to $1.8 billion, compared to $1.5 billion for the same period in the prior year. Net sales and gross billings both increased, reflecting strong double-digit organic growth from new and existing vendors and the Interworks acquisition. Interworks contributed approximately $3.6 million of net sales for the period from acquisition through September 30, 2026; excluding Interworks, net sales increased by approximately $114.7 million. Interworks contributed approximately $18.8 million of gross billings for the period from acquisition through September 30, 2026. Excluding Interworks, gross billings increased by approximately $337.9 million. Gross billings increased at a lesser rate than net sales due to differences in the product mix between the two periods. During thenine months ended September 30, 2026, gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis, while during thenine months ended September 30, 2025, gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales.

Previous wording

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.

Current wording

Distribution segment net sales for the nine months ended September 30, 2026 increased 27%, or $116.9 million, to $556.5 million compared to $439.6 million for the same period in the prior year. Gross billings for the Distribution segment for the nine months ended September 30, 2026 increased 25%, or $351.8 million, to $1.8 billion, compared to $1.4 billion 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.

Previous wording

The Company had three major customers that accounted for 21%, 14%, and 13%, respectively, of its total net sales during the three months ended June 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 June 30, 2026 and June 30, 2025, respectively.

Current wording

The Company had three major customers that accounted for 19%, 13%, and 17%, respectively, of its net sales during the nine months ended September 30, 2026, and 24%, 13%, and 9%, respectively, of its net sales during the nine months ended September 30, 2025. The Company had no major vendors during the nine months ended September 30, 2026 and September 30, 2025.

Previous wording

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.

Current wording

Distribution segment gross profit for the nine months ended September 30, 2026 increased 20%, or $13.0 million, to $78.8 million compared to $65.8 million for the same period in the prior year. The increase reflects the previously noted strong double-digit organic growth from new and existing vendor partnerships and a $2.3 million contribution from the Interworks acquisition, partially offset by higher other rebates and discounts offered to our customers as a percentage of gross billings.

Previous wording

Solutions segment gross profit for the three months ended June 30, 2026 increased 27%, or $0.9 million, to $4.2 million compared to $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.

Current wording

Solutions segment gross profit for the nine months ended September 30, 2026 increased 13%, or $1.2 million, to $10.8 million compared to $9.6 million for the same period in the prior year. This increase was driven by higher gross profit margins generated in both North America and Europe.

Previous wording

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.

Current wording

Customer rebates and discounts for the nine months ended September 30, 2026 were $21.1 million compared to $16.5 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.

Previous wording

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.

Current wording

Vendor rebates and discounts for the nine months ended September 30, 2026 were $13.9 million compared to $14.1 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.

Previous wording

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.

Current wording

SG&A expenses for the nine months ended September 30, 2026 increased 25%, or $12.6 million, to $61.9 million compared to $49.3 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 $1.6 million contribution from the Interworks acquisition. SG&A expenses were 3.4% of gross billings for the nine months ended September 30, 2026, compared to 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.

Previous wording

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.

Current wording

Depreciation and amortization expense for the nine months ended September 30, 2026, increased 8%, or $0.4 million, to $6.1 million compared to $5.7 million for the same period in the prior year, primarily due to increased amortization for the vendor relationship intangible acquired through the Interworks acquisition.

Previous wording

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.

Current wording

Acquisition related costs for the nine months ended September 30, 2026 and 2025 were $0.4 million and $0.7 million, respectively. These expenses in the current period relate to costs incurred with the acquisition of Interworks, as well as costs incurred for potential acquisitions, while these expenses in the same period in the prior year relate to exploratory acquisition related initiatives.

Previous wording

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.

Current wording

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 nine months ended September 30, 2026 and 2025, the Company recorded a provision for income taxes of $5.8 million and $3.9 million, respectively. The effective tax rate for the nine months ended September 30, 2026 and 2025 was 25.6% and 21.6%, respectively. The effective tax rate for the nine months ended September 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 2.4% during the nine months ended September 30, 2026. The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $0.8 million, which reduced our effective tax rate by 4.6% during the nine months ended September 30, 2025.

Previous wording

Our cash and cash equivalents as of June 30, 2026 increased 55%, or $20.0 million, to $56.6 million compared to $36.6 million as of December 31, 2025.

Current wording

Our cash and cash equivalents as of September 30, 2026 increased 83%, or $30.3 million, to $66.9 million compared to $36.6 million as of December 31, 2025.

Previous wording

Net cash and cash equivalents provided by operating activities for the six months ended June 30, 2026 was $32.2 million, comprised primarily of net income adjusted for non-cash items of $7.0 million and changes in operating assets and liabilities of $16.4 million.

Current wording

Net cash and cash equivalents provided by operating activities for the nine months ended September 30, 2026 was $44.1 million, comprised primarily of net income adjusted for non-cash items of $27.3 million and changes in operating assets and liabilities of $16.8 million.

Previous wording

Net cash and cash equivalents used in investing activities during the six months ended June 30, 2026 was $9.2 million, comprised primarily of the payment for the Interworks acquisition.

Current wording

Net cash and cash equivalents used in investing activities during the nine months ended September 30, 2026 was $10.0 million, comprised primarily of the payment for the Interworks acquisition.

Previous wording

Net cash and cash equivalents used in financing activities during the six months ended June 30, 2026 was $2.9 million, comprised of repayments under credit facilities of $10.1 million, purchases of treasury stock of $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 six months ended June 30, 2026, that resulted in $9.0 million of borrowings under credit facilities, which was subsequently repaid in full during the six months ended June 30, 2026.

Current wording

Net cash and cash equivalents used in financing activities during the nine months ended September 30, 2026 was $3.0 million, comprised of repayments under credit facilities of $10.1 million and purchases of treasury stock of $1.8 million, partially offset by borrowings under credit facilities of $9.0 million. The Company had a short-term operating need during the nine months ended September 30, 2026, that resulted in $9.0 million of borrowings under credit facilities, which was subsequently repaid in full during the nine months ended September 30, 2026.

Previous wording

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 was repaid over forty-eight monthly installments of principal and interest through March 2026. As of June 30, 2026, the Company had no amounts outstanding under the Term Loan.

Current wording

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 were used to fund certain capital expenditures. The borrowing under the Term Loan bore interest at a rate of 3.73% per annum and was repaid over forty-eight monthly installments of principal and interest through March 2026. As of September 30, 2026, the Company had no amounts outstanding under the Term Loan.