Eplus Inc 10-Q for FY2027 Q1
Eplus Inc (PLUS)
10-Q
2026-08-04
For: 2026-06-30
View Original
Added on
August 04, 2026
About this 10-Q
Eplus Inc filed this 10-Q on August 4, 2026, covering the quarter ended June 30, 2026 (FY2027 Q1).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $649.11M
- up 1.0% from $642.78M a year earlier
- Net income
- $30.28M
- down 28.9% from net income of $42.58M a year earlier
- Diluted EPS
- $1.16
- down 28.0% from $1.61 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____ to ____.
Commission file number: 1-34167
(Exact name of registrant as specified in its charter)
| | | |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
(Address, including zip code, of principal executive offices)
Registrant’s telephone number, including area code: (703 ) 984-8400
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| | Accelerated filer ☐ |
| Non-accelerated filer ☐ | Smaller reporting company |
| | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The number of shares of common stock outstanding as of July 30, 2026, was 26,090,418 .
1
ePlus inc. AND SUBSIDIARIES
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Part I.
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Item 1.
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3
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4
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5
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6
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8
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9
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Item 2.
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22
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Item 3.
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34
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Item 4.
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34
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Part II.
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Item 1.
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34
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Item 1A.
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34
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Item 2.
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35
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Item 3.
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35
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Item 4.
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35
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Item 5.
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35
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Item 6.
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36
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37
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CAUTIONARY LANGUAGE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance upon the protections provided by such acts for forward-looking statements. Such forward-looking statements are not based on historical fact but are based upon numerous assumptions about future conditions that may not occur. Given their forward-looking nature, these statements involve substantial risks, uncertainties and potentially inaccurate assumptions. Forward-looking statements are generally identifiable by the use of forward-looking words such as “may,” “should,” “would,” “intend,” “estimate,” “will,” “potential,” “possible,” “could,” “believe,” “expect,” “intend,” “plan,” “anticipate,” “project,” and similar expressions or by using future dates. Readers are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf. Forward-looking statements are made based upon information that is currently available or management’s current expectations and beliefs concerning future developments and their potential effects upon us, speak only as of the date hereof, and are subject to certain risks and uncertainties. We do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we later become aware. Actual events, transactions and results may materially differ from the anticipated events, transactions, or results described in such statements. Our ability to consummate such transactions and achieve such events or results is subject to certain risks and uncertainties. Such risks and uncertainties include, but are not limited to, the matters set forth below:
●
financial losses resulting from national and international political instability fostering uncertainty and volatility in the global economy including changes in interest rates, tariffs, inflation, export requirements applicable to products we sell, sanctions and exposure to foreign currency rate changes;
●
supply chain issues, including a shortage of information technology (“IT”) component parts and products, and our vendors’ rapid and unpredictable price fluctuations relating thereto, or a customer’s or vendor’s cancellation of orders such as for, but not limited to, memory chips. These issues may increase our and the customer’s costs, decrease gross profit, cause a delay in fulfilling or inability to fulfill customer orders, increase our need for working capital, delay the completion of professional services, or require the purchase of IT products or services needed to support our internal infrastructure or operations, resulting in an adverse impact on our financial results;
●
significant adverse changes in our relationship with one or more of our larger customer accounts or vendors, including decreased account profitability, reductions in contracted services, or a loss of such relationships;
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risks relating to artificial intelligence (“AI”), including the use or capabilities of AI and emerging laws, rules and regulations related to AI;
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our ability to manage a diverse product set of solutions, including AI products and services, in highly competitive markets with a number of key vendors;
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changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service (“IaaS”), software as a service (“SaaS”), platform as a service (“PaaS”), and AI which may affect our financial results;
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our ability to remain secure during a cybersecurity attack or other IT outage, including disruptions in our, our vendors or a third party’s IT systems and data and audio communication networks;
●
a material decrease in the credit quality of our customer base, or a material increase in our credit losses;
●
increases to our costs including wages and our ability to increase our prices to our customers as a result, or negative financial impacts due to the pricing arrangements we have with our customers;
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reliance on third parties to perform some of our service obligations to our customers, and the reliance on a small number of key vendors in our supply chain with whom we do not have long-term supply agreements, guaranteed price agreements, or assurance of stock availability;
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the possibility of a reduction of vendor consideration provided to us;
●
our inability to identify merger and acquisition candidates, perform sufficient due diligence prior to completing mergers and acquisitions, successfully complete merger and acquisition transactions (including on favorable terms), successfully integrate a completed merger and/or acquisition, identify an opportunity for, or successfully complete, a business disposition, or achieve the operational and financial results we anticipate after a disposition;
●
our ability to secure our own and our customers’ electronic and other confidential information, while maintaining compliance with evolving data privacy and cybersecurity laws and regulations and appropriately providing required notice and disclosure of cybersecurity incidents when and if necessary;
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our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train, and retain sufficient qualified personnel by recruiting and retaining highly skilled, competent personnel with needed vendor certifications;
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our ability to increase our total number of customers and our ability to increase our total number of customers who use our managed services and professional services while we continuously enhance our managed services offerings to remain competitive in the marketplace;
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inadequate design or maintenance of our IT platforms for internal use or solutions we offer to our customers or our inability to effectively and timely capitalize on the opportunities made available by the adoption of AI and not having adequate or competent IT personnel to support our business;
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cybersecurity attacks that may occur while employees work remotely and our ability to adequately train our personnel to prevent a cyber event;
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exposure to changes in, interpretations of, or enforcement trends in, and customer and vendor actions in anticipation of or in response to, legislation and regulatory matters;
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our service agreements that may require external audits and any deficiencies identified in such audit reports could negatively affect our client engagements, and our professional and liability insurance policies coverage may be insufficient to cover a claim;
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a natural disaster or other adverse event at one of our primary configuration centers, data centers, or a third-party provider or vendor location could negatively impact our business;
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failure to comply with public sector contracts, or related applicable laws or regulations;
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our ability to raise capital, maintain or increase, as needed, our lines of credit with vendors or our floor plan facility, or the effect of those matters on our common stock price;
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our ability to predictably meet expectations of the investor and analyst community, including relative to our financial performance guidance that we provide, including based on our continuation of dividends and share repurchases;
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our ability to create and implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration, and other key strategies following mergers and acquisitions; and
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our ability to protect our intellectual property rights and successfully defend any challenges to the validity of our intellectual property or allegations that we are infringing upon any third-party intellectual property, and the costs associated with those actions, and, when appropriate, the costs associated with licensing required technology.
We cannot be certain that our business strategy will be successful or that we will successfully address these and other challenges, risks, and uncertainties. For a further list and description of various risks, relevant factors, and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see Part II, Item 1A, “Risk Factors” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained elsewhere in this report, as well as other reports that we file with the Securities and Exchange Commission (“SEC”).
ePlus inc. AND SUBSIDIARIES
(in thousands, except per share amounts)
|
June 30, 2026
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March 31, 2026
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | $ | ||||||
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Accounts receivable—trade, net
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Accounts receivable—other, net
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Inventories
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Deferred costs
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Other current assets
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Total current assets
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Deferred tax asset
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Property, equipment, and other assets—net
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Goodwill
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Other intangible assets—net
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TOTAL ASSETS
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$ | $ | ||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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LIABILITIES
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Current liabilities:
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Accounts payable
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$ | $ | ||||||
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Accounts payable—floor plan
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Salaries and commissions payable
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Contract liabilities
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Other current liabilities
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Total current liabilities
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Contract liabilities—long-term
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Other liabilities
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TOTAL LIABILITIES
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COMMITMENTS AND CONTINGENCIES (Note 8)
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STOCKHOLDERS' EQUITY
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| Preferred stock, $ |
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Common stock,
$
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Additional paid-in capital
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| Treasury stock, at cost, |
( | ) | ( | ) | ||||
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Retained earnings
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| Accumulated other comprehensive income—foreign currency translation adjustment | ||||||||
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Total Stockholders'
Equity
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | $ | ||||||
See Notes to Unaudited Consolidated Financial Statements.
ePlus inc. AND SUBSIDIARIES
(in thousands, except per share amounts)
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net sales | ||||||||
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Product
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$ | $ | ||||||
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Services
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Total
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Cost of sales
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Product
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Services
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Total
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Gross profit
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Selling, general, and administrative
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Depreciation and amortization
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Operating expenses
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Operating income
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Other income, net
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Earnings from continuing operations before tax
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Provision for income taxes
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Net earnings from continuing operations
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Earnings from discontinued operations, net of tax (Note 13)
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Net earnings
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$ | $ | ||||||
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Earnings per common share—basic
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Continuing operations
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$ | $ | ||||||
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Discontinued operations
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Earnings per common share—basic
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$ | $ | ||||||
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Earnings per common share—diluted
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Continuing operations
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$ | $ | ||||||
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Discontinued operations
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Earnings per common share—diluted
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$ | $ | ||||||
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Weighted average common shares outstanding—basic
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Weighted average common shares outstanding—diluted
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See Notes to Unaudited Consolidated Financial Statements.
ePlus inc. AND SUBSIDIARIES
(in thousands)
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
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NET EARNINGS
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$ | $ | ||||||
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OTHER COMPREHENSIVE INCOME, NET OF TAX:
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Foreign currency translation adjustments
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Other comprehensive income
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TOTAL COMPREHENSIVE INCOME
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$ | $ | ||||||
See Notes to Unaudited Consolidated Financial Statements.
ePlus inc. AND SUBSIDIARIES
(in thousands)
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
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Net earnings
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$ | $ | ||||||
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Less: Earnings from discontinued operations, net of tax
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Net earnings from continuing operations
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Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
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Depreciation and amortization
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Provision for credit losses
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Share-based compensation expense
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Net loss on disposal of property and equipment
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Changes in:
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Accounts receivable
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( | ) | ( | ) | ||||
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Inventories
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Other assets
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Accounts payable
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( | ) | ||||||
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Other liabilities
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Net cash provided by (used in) operating activities of continuing operations
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Net cash provided by operating activities of discontinued operations
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Net cash provided by (used in) operating activities
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Cash flows from investing activities:
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Proceeds from sale of property and equipment
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Purchases of property and equipment
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( | ) | ( | ) | ||||
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Net cash used in investing activities of continuing operations
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( | ) | ( | ) | ||||
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Net cash provided by investing activities of discontinued operations
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Net cash provided by (used in) investing activities
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Cash flows from financing activities:
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Proceeds from issuance of common stock
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Repurchase of common stock
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( | ) | ( | ) | ||||
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Dividend payments
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( | ) | ||||||
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Net borrowings (repayments) on floor plan facility
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( | ) | ||||||
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Net cash provided by (used in) financing activities of continuing operations
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( | ) | ||||||
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Net cash used in financing activities of discontinued operations
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( | ) | ||||||
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Net cash provided by (used in) financing activities
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( | ) | ||||||
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Effect of exchange rate changes on cash
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Net increase in cash and cash equivalents
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Cash and cash equivalents, beginning of period
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Cash and cash equivalents, end of period
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$ | $ | ||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
(in thousands)
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Supplemental disclosures of cash flow information: | ||||||||
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Cash paid for interest
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$ | $ | ||||||
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Cash paid for income taxes
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$ | $ | ||||||
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Cash paid for amounts included in the measurement of lease liabilities
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$ | $ | ||||||
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Schedule of non-cash investing and financing activities:
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Purchases of property and equipment
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$ | ( | ) | $ | ( | ) | ||
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Vesting of share-based compensation
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$ | $ | ||||||
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Repurchase of common stock
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$ | ( | ) | $ | ||||
See Notes to Unaudited Consolidated Financial Statements.
ePlus inc. AND SUBSIDIARIES
(in thousands)
ePlus inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
| Three months ended June 30, 2026 | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||
| Common Stock | Paid-In | Treasury | Retained | Comprehensive | ||||||||||||||||||||||||
| Shares | Par Value | Capital | Stock | Earnings | Income | Total | ||||||||||||||||||||||
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Balance, March 31, 2026
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$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
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Issuance of restricted stock awards
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( | ) | ||||||||||||||||||||||||||
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Issuance of performance stock units
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Issuance of common stock
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Share-based compensation
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Repurchase of common stock
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( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Dividends paid and accrued ($ |
- | ( | ) | ( | ) | |||||||||||||||||||||||
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Net earnings
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- | |||||||||||||||||||||||||||
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Foreign currency translation adjustment
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- | |||||||||||||||||||||||||||
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Balance, June 30, 2026
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$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
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Three months ended June 30, 2025
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| Accumulated | |||||||||||||||||||||||||||
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| Additional | Other | |||||||||||||||||||||||||
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Common Stock
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Paid-In
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Treasury
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Retained
| Comprehensive | ||||||||||||||||||||||||
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Shares
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Par Value
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Capital
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Stock
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Earnings
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Income
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Total
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Balance, March 31, 2025
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$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
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Issuance of restricted stock awards
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( | ) | ||||||||||||||||||||||||||
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Issuance of common stock
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Share-based compensation
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Repurchase of common stock
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( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
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Net earnings
|
- | |||||||||||||||||||||||||||
|
Foreign currency translation adjustment
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- | |||||||||||||||||||||||||||
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Balance, June 30, 2025
|
$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
See Notes to Unaudited Consolidated Financial Statements.
ePlus inc. AND SUBSIDIARIES
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business — Our company was founded in 1990 and is a Delaware corporation. ePlus inc. is sometimes referred to in this Quarterly Report on Form 10-Q as “we,” “our,” “us,” or “ePlus.” ePlus inc. is a holding company that through its subsidiaries provides information technology (“IT”) solutions which enable organizations to optimize their IT environment and supply chain processes. We also provide consulting, professional, and managed services and complete lifecycle management services. We focus on selling to medium and large enterprises and state and local government and educational institutions (“SLED”) in the United States (“US”) and select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, and Singapore.
Basis of Presentation — The unaudited consolidated financial statements include the accounts of ePlus inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accounts of businesses acquired are included in the unaudited consolidated financial statements from the dates of acquisition. We reclassified certain previously reported amounts related to contract assets and contract liabilities in our consolidated balance sheets in this Quarterly Report on Form 10-Q to conform to current period presentation.
Interim Financial Statements — The unaudited consolidated financial statements for the three months ended June 30, 2026, and 2025, were prepared by us and include all normal and recurring adjustments that, in the opinion of management, are necessary for a fair presentation of our financial position, results of operations, changes in comprehensive income, and cash flows for such periods. Operating results for the three months ended June 30, 2026, and 2025, are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending March 31, 2027, or any other future period. These unaudited consolidated financial statements do not include all disclosures required by the accounting principles generally accepted in the United States (“US GAAP”) for annual financial statements. Our audited consolidated financial statements are contained in our annual report on Form 10-K for the year ended March 31, 2026 (“2026 Annual Report”).
Use of Estimates — The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values, vendor consideration, goodwill and intangible assets, allowance for credit losses, inventory obsolescence, and the recognition and measurement of income tax assets and other provisions and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.
Concentrations of Risk — A substantial portion of our sales are products from Cisco Systems, which represented approximately 25 % and 26 % of our net sales for the three months ended June 30, 2026, and 2025, respectively.
Significant Accounting Policies — The significant accounting policies used in preparing these consolidated financial statements were applied on a basis consistent with those reflected in our consolidated financial statements for the year ended March 31, 2026.
2. REVISION OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS
In the fourth quarter of our fiscal year ended March 31, 2026, we
identified misstatements in our previously issued consolidated financial
statements for the fiscal years 2025 and 2024 that related to a misstatement of
revenue from our Product segment that resulted from a miscalculation of accrued
revenue. We assessed the impacts of the misstatements from both quantitative
and qualitative perspectives and determined that the related impacts were not
material, either individually or in the aggregate, to our previously issued
consolidated financial statements. Notwithstanding the results of the
assessment, we are revising our previously issued consolidated financial
statements to correct these misstatements. Accordingly, all consolidated
financial information contained in these consolidated financial statements and
the accompanying notes has been revised to reflect the corrections. Previously
reported financial information will be corrected in future filings, as
applicable.
The following table details the impact of the
misstatements and provides revisions
to the impacted financial statement line items in the previously-issued
consolidated statements of operations and consolidated statements of
comprehensive income for the periods presented
(in thousands, except per share data):
| Three months ended June 30, 2025 | ||||||||||||
|
As reported
|
Adjusted
|
As revised
| ||||||||||
|
Net sales - product
|
$ | $ | $ | |||||||||
|
Net sales
|
||||||||||||
|
Gross profit
|
||||||||||||
|
Selling, general, and administrative
|
( | ) | ||||||||||
|
Operating expenses
|
( | ) | ||||||||||
|
Operating income
|
||||||||||||
|
Earnings from continuing operations before tax
|
||||||||||||
|
Provision for income taxes
|
||||||||||||
|
Net earnings from continuing operations
|
||||||||||||
|
Net earnings
|
||||||||||||
|
Total comprehensive income
|
||||||||||||
|
Basic earnings per common share, continuing operations
|
||||||||||||
|
Earnings per common share—basic
|
||||||||||||
|
Diluted earnings per common share, continuing operations
|
||||||||||||
|
Earnings per common share—diluted
|
||||||||||||
The following table details the impact of the
misstatements and provides revisions to the impacted financial statement line
items in the previously-issued consolidated statements of cash flows for the
periods presented (in thousands):
| Three months ended June 30, 2025 | ||||||||||||
|
As reported
|
Adjusted
|
As revised
| ||||||||||
|
Cash flows from operating activities:
|
||||||||||||
|
Net earnings
|
$ | $ | $ | |||||||||
|
Net earnings from continuing operations
|
||||||||||||
|
Share-based compensation expense
|
( | ) | ||||||||||
|
Accounts receivable
|
( | ) | ( | ) | ( | ) | ||||||
|
Other assets
|
||||||||||||
|
Accounts payable
|
( | ) | ( | ) | ||||||||
|
Other liabilities
|
( | ) | ||||||||||
The following table details the impact of the
misstatements and provides revisions to the impacted financial statement line
items in the previously-issued consolidated statements of stockholders’ equity
for the periods presented (in thousands):
| Three months ended June 30, 2025 | ||||||||||||
|
As reported
|
Adjusted
|
As revised
| ||||||||||
|
Additional paid-in capital
|
||||||||||||
|
Balance, beginning
|
$ | $ | $ | |||||||||
|
Share-based compensation
|
( | ) | ||||||||||
|
Retained earnings
|
||||||||||||
|
Balance, beginning
|
( | ) | ||||||||||
|
Net earnings
|
||||||||||||
|
Balance, ending
|
( | ) | ||||||||||
|
Total
|
||||||||||||
|
Balance, beginning
|
( | ) | ||||||||||
|
Share-based compensation
|
( | ) | ||||||||||
|
Net earnings
|
||||||||||||
|
Balance, ending
|
( | ) | ||||||||||
3. RECENT ACCOUNTING PRONOUNCEMENTS
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard requires public business entities to disclose detailed information about specific types of expenses that are relevant to certain line items on the income statement. This update is effective for us for annual periods beginning in our fiscal year ending March 31, 2028, and interim periods beginning in the first quarter of our fiscal year ending March 31, 2029. Early adoption is permitted. We are currently evaluating the impact that this update will have on our financial statement disclosures.
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 standard is intended to improve the operability and application of guidance related to capitalized software development costs. This update is effective for us beginning in the first quarter of our fiscal year ending March 31, 2029. Early adoption is permitted. We may adopt the guidance using prospective application, retrospective application, or a modified transition approach. We are currently evaluating the impact that this update will have on our consolidated financial statements upon adoption.
4. REVENUES
Accounts Receivable
Our accounts receivable—trade, net consists of accounts receivable recognized from contracts with customers. The following table provides a disaggregation of our balance in accounts receivable—trade, net (in thousands):
|
June 30, 2026
|
March 31, 2026
| |||||||
|
Accounts receivable
|
$ | $ | ||||||
|
Allowance for credit losses
|
( | ) | ( | ) | ||||
|
Total accounts receivable—trade, net
|
$ | $ | ||||||
As of June 30, 2026, and March 31, 2026, our accounts receivable—trade, net included $24.9 million and $8.6 million, respectively, of receivables due from financing partners in payment for our sale of customer receivables to them.
Additionally, as of June 30, 2026, and March 31, 2026, we had $2.9 million and $6.3 million, respectively, in receivables recognized from contracts with customers that we intend to sell to financing partners as part of other current assets in our consolidated balance sheet.
Contract Assets
Contract assets represent our right to consideration in exchange for goods or services that we transferred to a customer when that right is conditioned on something other than the passage of time. We had contract assets of $17.7 million and $17.8 million as of June 30, 2026, and March 31, 2026, respectively. Our contract assets are included as part of other current assets in our consolidated balance sheet.
Contract Liabilities
Contract liabilities represent our obligation to transfer goods or services to a customer for which we have received consideration, or the amount is due from the customer. Our contract liabilities consist of our contract liabilities and contract liabilities—long-term in our consolidated balance sheets. Revenues recognized from the beginning contract liability balance were $49.5 million and $42.8 million for the three months ended June 30, 2026, and 2025, respectively.
Performance Obligations
The following table includes revenue expected to be recognized in the future related to performance obligations, primarily non-cancelable contracts for ePlus managed services, that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands):
| | $ | |||
| | ||||
| | ||||
| | ||||
| | ||||
| Total remaining performance obligations | $ |
The table does not include the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, and (ii) contracts where we recognize revenue at the amount that we have the right to invoice for services performed.
5. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The following table summarizes the changes in the carrying amount of goodwill for the three months ended June 30, 2026 (in thousands):
| Product | Professional Services | Managed Services | Total | |||||||||||||
|
Balance, March 31, 2026 (1)
|
$ | $ | $ | $ | ||||||||||||
|
Foreign currency translations
|
||||||||||||||||
|
Balance, June 30, 2026 (1)
|
$ | $ | $ | $ | ||||||||||||
(1)
Goodwill represents the premium paid over the fair value of the net tangible and intangible assets that are individually identified and separately recognized in business combinations.
The only activity in our goodwill balance over the three months ended June 30, 2026, was foreign currency translation adjustments.
We test goodwill for impairment on an annual basis, as of the first day of our third fiscal quarter, and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying value.
In our annual test as of October 1, 2025, we performed a qualitative assessment of goodwill and concluded that, more likely than not, the fair value of our product, professional services, and managed services reporting units continued to exceed their carrying value.
Other Intangible Assets
Our other intangible assets consist of intangible assets purchased through business combinations. The following table provides the composition of our other intangible assets as of June 30, 2026, and March 31, 2026 (in thousands):
| June 30, 2026 | March 31, 2026 | |||||||||||||||||||||||
|
Gross
carrying amount |
Accumulated
amortization |
Net
carrying amount |
Gross
carrying amount |
Accumulated
amortization |
Net
carrying amount | |||||||||||||||||||
|
Customer relationships
|
$ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
|
Trade names and other
|
( | ) | ( | ) | ||||||||||||||||||||
|
Total
|
$ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
We generally amortize our customer relationships, trade names, and other purchased intangibles between 5 10
Total amortization expense for purchased intangibles was $4.6 million and $5.5 million for the three months ended June 30, 2026, and June 30, 2025, respectively.
6. ALLOWANCE FOR CREDIT LOSSES
The following table provides the activity in our allowance for credit losses within accounts receivable—trade for the three months ended June 30, 2026, and 2025 (in thousands):
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
Beginning
|
$ | $ | ||||||
|
Provision for credit losses
|
||||||||
|
Write-offs and other
|
( | ) | ( | ) | ||||
|
Ending
|
$ | $ | ||||||
7. CREDIT FACILITY
We finance the operations of our subsidiaries ePlus Technology, inc. and ePlus Technology Services, inc. (collectively, the “Borrowers”) through a credit facility with Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”). The WFCDF credit facility (the “WFCDF Credit Facility”) has a floor plan facility and a revolving credit facility.
Our credit facility is provided by a syndicate of banks for which WFCDF acts as administrative agent and consists of a discretionary senior secured floor plan facility in favor of the Borrowers in the aggregate principal amount of up to $500.0 million, together with a sub-limit for a revolving credit facility for up to $200.0 million. On June 20, 2025, the WFCDF Credit Facility was amended in anticipation of the sale of our financing business. The substantive terms of the WFCDF Credit Facility were not materially changed by such amendment.
Under the accounts payable floor plan facility, we had an outstanding balance of $112.5 million and $119.7 million as of June 30, 2026, and March 31, 2026, respectively. On our balance sheet, our liability under the accounts payable floor plan facility is presented as accounts payable – floor plan.
We use the floor plan to facilitate the purchase of inventory from designated vendors. WFCDF pays our vendors and provides us with extended payment terms. We pay down the floor plan facility on three specified dates each month, generally 45 to 60 days from the invoice date. Other than unused line fees, if applicable, we do not incur any interest or other incremental expenses for the floor plan facility. We are not involved in establishing the terms or conditions of the arrangements between our vendors and WFCDF.
We may use the revolving credit facility for our borrowing needs. We did no
The amount of principal available is subject to a borrowing base determined by, among other things, the Borrowers’ accounts receivable and inventory, each pursuant to a formula and subject to certain reserves. Loans accrue interest at a rate per annum equal to Term SOFR Rate plus a Term Adjustment of 0.10 % plus an Applicable Margin of 1.75 %.
Our borrowings under the WFCDF Credit Facility are secured by the assets of the Borrowers. Additionally, the WFCDF Credit Facility requires a guaranty of $10.5 million by ePlus inc.
Under the WFCDF Credit Facility, the Borrowers are restricted in their ability to pay dividends to ePlus inc. unless their available borrowing meets certain thresholds. As of June 30, 2026, and March 31, 2026, their available borrowing met the thresholds such that there were no restrictions on their ability to pay dividends.
The WFCDF Credit Facility had an initial one-year term, which automatically renews for successive one-year 90 days prior to such termination.
The loss of the WFCDF Credit Facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our business and as an operational function of our accounts payable process.
8. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are subject to various legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of our business and have not been fully resolved. The ultimate outcome of any litigation or other legal dispute is uncertain. When a loss related to a legal proceeding or claim is probable and reasonably estimable, we accrue our best estimate for the ultimate resolution of the matter. If one or more legal matters are resolved against us in a reporting period for amounts above our expectations, our financial condition and operating results for that period may be adversely affected. As of June 30, 2026, we do not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for these proceedings and matters, if any, has been incurred. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current, or future transactions or events.
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding plus common stock equivalents during each period.
The following table provides a reconciliation of the numerators and denominators used to calculate basic and diluted net income per common share as disclosed in our unaudited consolidated statements of operations for the three months ended June 30, 2026, and 2025, respectively (in thousands, except per share data).
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
Net earnings attributable to common shareholders—basic and diluted
|
||||||||
|
Continuing operations
|
$ | $ | ||||||
|
Discontinued operations
|
||||||||
|
Net earnings
|
$ | $ | ||||||
|
Basic and diluted common shares outstanding:
|
||||||||
|
Weighted average common shares outstanding—basic
|
||||||||
|
Effect of dilutive shares
|
||||||||
|
Weighted average shares common outstanding—diluted
|
||||||||
|
Earnings per common share—basic
|
||||||||
|
Continuing operations
|
$ | $ | ||||||
|
Discontinued operations
|
||||||||
|
Earnings per common share—basic
|
$ | $ | ||||||
|
Earnings per common share—diluted
|
||||||||
|
Continuing operations
|
$ | $ | ||||||
|
Discontinued operations
|
||||||||
|
Earnings per common share—diluted
|
$ | $ | ||||||
10. STOCKHOLDERS’ EQUITY
Share Repurchase Plan
On August 7, 2025, our Board of Directors (“Board”) authorized the repurchase of up to 1,500,000 shares of our outstanding common stock, over a 12-month period beginning August 11, 2025. Previously, on May 18, 2024, our Board authorized the repurchase of up to 1,250,000 shares of our outstanding common stock over a 12-month period that began on May 28, 2024 and terminated on May 27, 2025. Under each authorized share repurchase program, when such program is in place, we may make purchases from time to time in the open market, or in privately negotiated transactions, subject to availability and the plan terms. Any repurchased shares have the status of treasury shares and may be used, when needed, for general corporate purposes.
During the three months ended June 30, 2026, we purchased 251,287 shares of our outstanding common stock at a value of $20.8 million under the share repurchase plan; we also purchased 52,927 shares of common stock at a value of $4.4 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock awards and performance stock units.
During the three months ended June 30, 2025, we repurchased 47,488 shares of common stock at a value of $3.3 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock awards.
On August 4, 2026, our Board authorized the repurchase of up to 1,500,000 shares of our outstanding common stock over a 12-month period commencing on August 11, 2026.
11. SHARE-BASED COMPENSATION
Share-Based Plans
During the three months ended June 30, 2026, we had share-based awards outstanding under the following plans: (1) the 2024 Non-Employee Director Long-Term Incentive Plan (the “2024 Director LTIP”) and (2) the 2021 Employee Long-Term Incentive Plan (the “2021 Employee LTIP”).
These share-based plans define fair market value as the closing sales price of a share of common stock as quoted on any established stock exchange for such date or the most recent trading day preceding such date if there were no trades on such date.
Restricted Stock Activity
For the three months ended June 30, 2026, we granted 283 restricted shares under the 2024 Director LTIP and 111,773 restricted shares under the 2021 Employee LTIP. For the three months ended June 30, 2025, we granted 351 restricted shares of our stock under the 2024 Director LTIP, and 121,844 restricted shares of our stock under the 2021 Employee LTIP.
The following table provides a summary of the unvested restricted shares for the three months ended June 30, 2026:
| Number of shares | Weighted average grant-date fair value | |||||||
|
Unvested April 1, 2026
|
$ | |||||||
|
Granted
|
$ | |||||||
|
Vested
|
( | ) | $ | |||||
|
Forfeited
|
( | ) | $ | |||||
|
Unvested June 30, 2026
|
$ | |||||||
Performance Stock Units
We have granted Performance Stock Units (“PSUs”) to certain executive officers under our 2021 Employee LTIP. The PSUs will vest based on the achievement of certain performance goals at the end of a three-year performance period. The PSUs represent the right to receive shares of our common stock at the time of vesting. The total number of PSUs that vest range from 0 % to 200 % of the target number of PSUs based on our achievement of certain performance targets.
The following table provides a summary of the unvested PSUs for the three months ended June 30, 2026:
| Number of units | Weighted average grant-date fair value | |||||||
|
Unvested April 1, 2026
|
$ | |||||||
|
Vested
|
( | ) | $ | |||||
|
Unvested June 30, 2026
|
$ | |||||||
Employee Stock Purchase Plan
We provide eligible employees the opportunity to purchase shares of our stock through the 2022 Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, eligible employees may collectively purchase up to an aggregate of 2.50 million shares of our stock. Employees in the ESPP contribute part of their earnings over a six-month offering period. At the end of each offering period, employees purchase our shares using their contributions at a discount off the lesser of the closing market price on the first or the last trading day of each offering period. During the three months ended June 30, 2026, and 2025, we issued 25,930 shares at a weighted average price of $70.75 per share and 28,665 shares at a weighted average price of $61.29 per share, respectively, under the ESPP. As of June 30, 2026, there were 2.29 million shares remaining under the ESPP.
Compensation Expense
The following table provides a summary of our total share-based compensation expense for continuing operations, including for restricted stock awards, PSUs, our ESPP, and the related income tax benefit for the three months ended June 30, 2026, and 2025, respectively (in thousands):
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
Share-based compensation expense
|
$ | $ | ||||||
|
Income tax benefit
|
( | ) | ( | ) | ||||
We recognized the income tax benefit as a reduction to our provision for income taxes. As of June 30, 2026, the total unrecognized compensation expense related to unvested restricted stock was $17.5 million, which is expected to be recognized over a weighted-average period of 33 months.
We also provide our employees with a contributory 401(k) profit sharing plan (the “401(k) plan”), to which we may contribute from time to time at our sole discretion. Employer contributions to the 401(k) plan are always fully vested. Our estimated contribution expense to the 401(k) plan for the three months ended June 30, 2026, and 2025, were $1.6 million and $1.5 million, respectively.
12. INCOME TAXES
Our provision for income tax expense was $11.7 million for the three months ended June 30, 2026, as compared to $11.5 million for the same three-month period in the prior year. Our effective tax rate for the three months ended June 30, 2026, and June 30, 2025, was 27.8 % and 26.5 %, respectively. The effective tax rate for the three months ended June 30, 2026, and June 30, 2025, differed from the US federal statutory rate of 21.0
13. DISCONTINUED OPERATIONS
On June 30, 2025, (the “Closing Date” or the “Closing”), we completed the sale of 100 % of the membership interests of Expo Holdings, LLC, a Delaware limited liability company and our wholly-owned subsidiary (“HoldCo”), to Marlin Leasing Corporation, a Delaware corporation (d/b/a PEAC Solutions) pursuant to the terms of the Membership Interest Purchase Agreement, dated June 20, 2025 (the “Sale Transaction”). By selling HoldCo, together with its US subsidiaries, we sold our domestic financing business that comprised most of our financing business segment.
As a result of the Sale Transaction, we determined that the domestic financing business that was sold met the definition of discontinued operations. Consequently, for all periods presented in these financial statements, we are presenting the results of our domestic financing business as discontinued operations.
In the Sale Transaction, we received net cash proceeds of $164.2 million, consisting of initial net cash proceeds of $156.7 million delivered in June 2025 and $7.5 million delivered in March 2026 upon settlement of the final purchase price adjustment. Our initial net cash proceeds of $156.7 million consisted of cash proceeds of $180.1 million less cash transferred with HoldCo of $23.4 million.
Additionally, we also recognized a receivable for contingent consideration that had an initial fair value of $13.5 million. See Note 14, “Fair Value of Financial Instruments” for a discussion of our contingent consideration asset. After settling the final purchase price adjustment, we have a $0.2 million payable related to the Sale Transaction.
We incurred approximately $4.0 million in transaction costs during our quarter ended June 30, 2025, which is netted against the gain on sale of HoldCo before income taxes.
In our year ended March 31, 2026, we recognized a gain on sale before taxes of $3.8 million consisting of an initial gain on sale of $4.4 million that was recognized in our quarter ended June 30, 2025 less an adjustment of $0.6 million that was recognized in our quarter ended March 31, 2026, due to concessions offered to the buyer related to settling the final purchase price adjustment.
The following table provides our operating results of discontinued operations for the three months ended June 30, 2025 (in thousands):
| Three months ended June 30, 2025 | ||||
|
Net sales
|
$ | |||
|
Cost of sales
|
||||
|
Gross profit
|
||||
|
Selling, general, and administrative
|
||||
|
Interest and financing costs
|
||||
|
Operating expenses
|
||||
|
Operating income
|
||||
|
Other income—net
|
||||
|
Earnings before gain from sale and income taxes
|
||||
|
Gain from sale of HoldCo before income taxes
|
||||
|
Earnings before income taxes
|
||||
|
Provision for income taxes
|
||||
|
Earnings from discontinued operations, net of tax
|
$ | |||
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
We account for the fair values of our assets and liabilities utilizing a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. The following table provides the fair value of our assets and liabilities measured at fair value as categorized within the fair value hierarchy as of June 30, 2026, and March 31, 2026 (in thousands):
| Fair value measurement using | ||||||||||||||||
|
Recorded amount |
Quoted prices in active markets for identical assets (Level 1) |
Significant other observable inputs (Level 2) |
Significant unobservable inputs (Level 3) | |||||||||||||
|
June 30, 2026
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Money market funds
|
$ | $ | $ | $ | ||||||||||||
|
Contingent receivable
|
$ | $ | $ | $ | ||||||||||||
|
Receivables held for sale
|
$ | $ | $ | $ | ||||||||||||
|
March 31, 2026
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Money market funds
|
$ | $ | $ | $ | ||||||||||||
|
Contingent receivable
|
$ | $ | $ | $ | ||||||||||||
|
Receivables held for sale
|
$ | $ | $ | $ | ||||||||||||
Our contingent receivable was part of the consideration that we received from our sale of HoldCo. Through the agreement for the sale of HoldCo, we may earn and receive Holdback Premium (as defined below) payments and two different types of Earn-Outs (as defined below, and together with the Holdback Premium the “Contingent Consideration”) based on the post-Closing performance of the HoldCo Group (as defined below), as operated by PEAC Solutions. We estimated the fair value of each element of the Contingent Consideration using a Monte Carlo simulation model. We recognize the short-term and long-term portions of the receivable for the Contingent Consideration as part of other current assets and property, equipment, and other assets—net, respectively, in our consolidated balance sheet.
We may receive aggregate post-Closing cash payments of up to $3.0 million (the “Holdback Premium”) based on the achievement of customer lease receivable originations targets by HoldCo (i) from the Closing Date to the 18-month anniversary of the Closing Date and (ii) from the 18-month anniversary of the Closing Date to the 30-month anniversary of the Closing Date.
The two types of earn-out payments that are potentially payable to us are based on (i) the volume of originations of certain types of lease receivables (the “Lease Originations Earn-Out”) and (ii) the profitability of certain lease receivables originated either to US federal governmental entities or for which a prime contractor acting on behalf of a government entity is the obligor (the “Transaction Gains Earn-Out,” and together with the Lease Originations Earn-Out, the “Earn-Outs”). Each of the Earn-Outs will be measured for each of the first three consecutive twelve-month periods following the Closing. The Lease Originations Earn-Out is capped at $10.0 million in aggregate for all three post-Closing years . The Transaction Gains Earn-Out does not have a maximum cap.
15. SEGMENT REPORTING
We manage and report our operating results through three operating segments: product, professional services, and managed services. Our organizational structure is based on how our chief operating decision maker (“CODM”) allocates resources, manages operations, and evaluates performance. Our CODM is our Chief Executive Officer.
Our product segment includes sales of IT products, third-party software, and third-party maintenance, software assurance, and other third-party services. Our professional services segment includes our advanced professional services, staff augmentation, project management services, cloud consulting services and security services. Our managed services segment includes our advanced managed services, service desk, storage-as-a-service, cloud hosted services, cloud managed services and managed security services. Our other category consists of the international entities of our financing business that we retained after selling our domestic financing business.
Our CODM measures the performance of the segments based on gross profit. We do not present asset information for our reportable segments as we do not provide asset information to our CODM. Our CODM reviews financial results and forecasts quarterly to manage operations and evaluate performance. Our CODM also uses our financial results and forecasts to make investment decisions as part of our annual budgeting process.
The following table provides reportable segment information (in thousands):
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
Net sales:
| ||||||||
|
Product
| $ | $ | ||||||
|
Professional services
| ||||||||
|
Managed services
| ||||||||
|
Total reportable segments
| ||||||||
|
Other
| ||||||||
|
Total
| ||||||||
|
Cost of sales:
| ||||||||
|
Product
| ||||||||
|
Professional services
| ||||||||
|
Managed services
| ||||||||
|
Total reportable segments
| ||||||||
|
Other
| ||||||||
|
Total
| ||||||||
|
Gross profit:
| ||||||||
|
Product
| ||||||||
|
Professional services
| ||||||||
|
Managed services
| ||||||||
|
Total reportable segments
| ||||||||
|
Other
| ||||||||
|
Total
| $ | $ | ||||||
Disaggregation of Revenue
We recognize revenue in our product, professional services, and managed services segments from contracts with customers. We recognize revenue in the other category under guidance for financing and leases.
The following tables provide a disaggregation of revenue recognized from contracts with customers by timing and our position as principal or agent (in thousands):
| Three months ended June 30, 2026 | ||||||||||||||||
| Product |
Professional Services |
Managed Services | Total | |||||||||||||
|
Timing and position as principal or agent:
|
||||||||||||||||
|
Transferred at a point in time as principal
|
$ | $ | $ | $ | ||||||||||||
|
Transferred at a point in time as agent
|
||||||||||||||||
|
Transferred over time as principal
|
||||||||||||||||
|
Total revenue from contracts with customers
|
$ | $ | $ | $ | ||||||||||||
| Three months ended June 30, 2025 | ||||||||||||||||
| Product | Professional Services | Managed Services | Total | |||||||||||||
|
Timing and position as principal or agent:
|
||||||||||||||||
|
Transferred at a point in time as principal
|
$ | $ | $ | $ | ||||||||||||
|
Transferred at a point in time as agent
|
||||||||||||||||
|
Transferred over time as principal
|
||||||||||||||||
|
Total revenue from contracts with customers
|
$ | $ | $ | $ | ||||||||||||
The following table provides a disaggregation of our revenue from contracts with customers by customer end market and by type (in thousands):
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
Customer end market:
|
||||||||
|
Telecom, media & entertainment
|
$ | $ | ||||||
|
Technology
|
||||||||
|
SLED
|
||||||||
|
Healthcare
|
||||||||
|
Financial services
|
||||||||
|
Retail
|
||||||||
|
All others
|
||||||||
|
Total revenue from contracts with customers
|
$ | $ | ||||||
|
Type:
|
||||||||
|
Product segment:
|
||||||||
|
Networking
|
$ | $ | ||||||
|
Cloud
|
||||||||
|
Security
|
||||||||
|
Collaboration
|
||||||||
|
Other
|
||||||||
|
Total product segment
|
||||||||
|
Professional services segment
|
||||||||
|
Managed services segment
|
||||||||
|
Total revenue from contracts with customers
|
$ | $ | ||||||
The below is intended to provide context to our consolidated financial condition and results of continuing operations. It should be read in conjunction with the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements included in our annual report on Form 10-K for the year ended March 31, 2026 (“2026 Annual Report”). These historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described in Part I, Item 1A, “Risk Factors,” in our 2026 Annual Report, as well as those described in our other filings with the SEC.
We have revised our results to reflect the correction of certain misstatements in previously issued financial statements for the three months ended June 30, 2025, which we determined are not material either individually or in aggregate. Please see Note 2, “Revision of Previously Issued Consolidated Financial Statements” in the accompanying Consolidated Financial Statements included in “Part I, Item 1. Financial Statements.”
EXECUTIVE OVERVIEW
Business Description
We are a leading information technology (“IT”) solutions provider in the areas of artificial intelligence (“AI”), cloud, data center, security, networking and collaboration. Leveraging our engineering talent, we assess, plan, deliver, and secure solutions comprised of leading technologies aligned with our customers’ needs. Our expertise and experience enable us to craft optimized solutions for our customers that take advantage of the cost, scale, and efficiency of private, public and hybrid cloud services in an evolving IT market.
We deliver integrated solutions that address our customers’ IT business needs, leveraging the appropriate technologies, both on-premises and in the cloud. Our approach is to lead with advisory consulting, to understand our customers’ needs, and then design, deploy, and manage IT solutions aligned to their objectives. We are skilled in orchestration and automation, application modernization, DevSecOps, zero-trust architectures, data management, data visualization, analytics, network modernization including high-end optical networking, edge computing and other advanced and IT emerging technologies. These solutions are comprised of class-leading technologies from our commercial partners.
AI continues to be a transformative force and a demand driver, particularly for our core products. Across industries, our customers are using AI to enhance their decision making, automate tasks, and drive both growth and efficiency. Through assessments, bespoke workshops and labs and consulting engagements, we deliver actionable outcomes for our customer organizations by using IT and consulting solutions to enhance their decision making, automate tasks and drive business agility and innovation.
As part of our solutions, we provide consulting, professional services, managed services, IT staff augmentation, and complete lifecycle management services in the areas of security, cloud, networking, collaboration, and emerging technologies. Further, we offer professional services to our customers in the spaces of digital signage, electric vehicle (“EV”) charging solutions, loss prevention and security, retail store openings, remodels, and closings.
We are a reseller for thousands of vendors, which enables us to provide our customers with new and evolving IT solutions. We possess top-level IT engineering certifications with a broad range of leading IT vendors that enable us to offer IT solutions that are optimized for each of our customers’ specific requirements.
We serve primarily middle market to large enterprises across diverse markets including telecom, media and entertainment, technology, state and local government and educational institutions (“SLED”), healthcare, and financial services. We sell to customers in the United States (“US”), which account for most of our sales, and to customers in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, and Singapore.
On June 30, 2025, we completed the sale of 100% of the membership interests of Expo Holdings, LLC, a Delaware limited liability company and our wholly-owned subsidiary (“HoldCo”), to Marlin Leasing Corporation, a Delaware corporation (d/b/a PEAC Solutions) pursuant to the terms of the Membership Interest Purchase Agreement, dated June 20, 2025 (the “Sale Transaction”). By selling HoldCo, together with its US subsidiaries, we sold our domestic financing business that comprised most of our financing business segment, which is a business that finances information technology equipment, software and related services for customers. We continue to own the international entities in the financing business.
Our sale of HoldCo positions us to focus on being a technology solutions provider and represents a strategic shift in our operations. As a result of the Sale Transaction, we determined that the domestic financing business that was sold met the definition of discontinued operations. Consequently, for all periods presented in these financial statements, we are presenting the results of our domestic financing business as discontinued operations. In our unaudited consolidated statements of operations for all periods, we present the operating results of our domestic financing business in earnings from discontinued operations. After the Sale Transaction, our remaining three reportable segments are product, professional services, and managed services, which we formerly referred to collectively as our technology business. Please refer to Note 13, “Discontinued Operations” in the accompanying Consolidated Financial Statements included in “Part I, Item 1. Financial Statements” for further information.
Business Trends
We believe the following key factors may impact our business performance and our ability to achieve business results:
●
General economic conditions including changes in law and policy by the US government, inflation, tariffs, export requirements, sanctions, changing interest rates, staffing shortages, remote work trends, geopolitical concerns and changes in US government spending and contracting practices may impact our customers’ willingness to spend on IT and services.
●
There is a worldwide shortage of memory chips due to the demand for AI-ready products, which is also causing rapid price increases across many IT products. Like others, we may experience ongoing supply constraints for memory chips that may affect: lead times for delivery of products; our having to carry more inventory for longer periods; the costs of products for us and our customers; vendor return and cancellation policies and our ability to meet customer demands. We continue to work closely with our vendors to mitigate disruptions outside our control. Despite these actions, we believe extended lead times and price increases will likely persist for at least the next few quarters.
●
Our customers’ top focus areas include AI, security, and cloud solutions, as well as digital transformation and modernization. We have developed advisory services, assessments, solutions, and professional and managed services to meet these priorities and help our customers attain and maintain their desired outcomes.
●
Rapid cloud adoption has led to customer challenges around increasing costs, security concerns, and skillset gaps. These challenges are consistent across all industries and business sizes. We have developed a Cloud Managed Services portfolio to address these needs, allowing our clients to focus on driving business outcomes via optimized and secure cloud platforms.
●
The IT industry continues to shift from upfront, product-based purchasing toward subscription and consumption-based (“ratable”) models, driven by increased adoption of cloud computing, software-as-a-service (“SaaS”), and as-a-service infrastructure offerings. This transition is changing customer buying behavior, elongating revenue recognition periods and increasing revenues recognized on a net basis, and increasing the importance of recurring revenue streams, while also placing greater emphasis on lifecycle management, financing capabilities, and vendor-aligned service delivery.
Key Business Metrics
Our management monitors several financial and non-financial measures and ratios on a regular basis to track the progress of our business. We believe that the most important of these measures and ratios include net sales, gross profit, gross profit margin, operating income, net earnings, and net earnings per common share, in each case based on information prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”), as well as the non-GAAP financial measures and ratios, including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share - diluted.
We also use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve our annual budgets. We use gross billings as an operational metric to assess the volume of transactions or market share for our product, professional services, and managed services segments, as well as to understand changes in our accounts receivable and accounts payable balances and our statement of cash flows. We believe our gross billings metric will aid investors in the same manner to evaluate our business.
These key indicators include financial information that is prepared in accordance with US GAAP and presented in our consolidated financial statements, as well as non-GAAP and operational performance measurement tools. 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 an analytical tool has limitations and should not be considered in isolation or as a substitute for analysis of our financial results reported under 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 use Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP: net earnings from continuing operations and Non-GAAP: net earnings from continuing operations per common share - diluted as supplemental measures of our performance to gain insight into our operating performance and performance trends. We believe that these measures provide management and investors with a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that such non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results. Please see footnotes (1) and (2) of the tables below for more information.
The following tables provide our key business metrics for our consolidated entity (in thousands, except per share amounts):
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
Financial metrics
|
||||||||
|
Net sales
|
$ | 649,113 | $ | 642,775 | ||||
|
Gross profit
|
$ | 151,329 | $ | 153,676 | ||||
|
Gross profit margin
|
23.3 | % | 23.9 | % | ||||
|
Selling, general, and administrative
|
$ | 106,621 | $ | 103,667 | ||||
|
Depreciation and amortization
|
5,876 | 7,069 | ||||||
|
Operating expenses
|
$ | 112,497 | $ | 110,736 | ||||
|
Operating income
|
$ | 38,832 | $ | 42,940 | ||||
|
Operating income margin
|
6.0 | % | 6.7 | % | ||||
|
Net earnings from continuing operations
|
$ | 30,279 | $ | 32,014 | ||||
|
Net earnings from continuing operations margin
|
4.7 | % | 5.0 | % | ||||
|
Net earnings from continuing operations per common share - diluted
|
$ | 1.16 | $ | 1.21 | ||||
|
Non-GAAP financial metrics
|
||||||||
|
Non-GAAP: Net earnings from continuing operations (1)
|
$ | 33,325 | $ | 37,477 | ||||
|
Non-GAAP: Net earnings from continuing operations per common share - diluted (1)
|
$ | 1.28 | $ | 1.41 | ||||
|
Adjusted EBITDA (2)
|
$ | 47,829 | $ | 52,672 | ||||
|
Adjusted EBITDA margin (2)
|
7.4 | % | 8.2 | % | ||||
|
Operational metrics
|
||||||||
|
Gross billings: (3)
|
||||||||
|
Cloud
|
$ | 288,842 | $ | 312,017 | ||||
|
Networking
|
258,728 | 268,732 | ||||||
|
Security
|
219,767 | 190,045 | ||||||
|
Collaboration
|
25,717 | 22,777 | ||||||
|
Other
|
47,857 | 51,446 | ||||||
|
Product gross billings
|
840,911 | 845,017 | ||||||
|
Service gross billings
|
116,224 | 107,748 | ||||||
|
Total gross billings
|
$ | 957,135 | $ | 952,765 | ||||
(1)
Non -GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted are based on net earnings from continuing operations calculated in accordance with US GAAP, adjusted to exclude other (income) expense, net, share-based compensation, acquisition related amortization expense, and the related tax effects.
We believe that the exclusion of other income and acquisition related amortization expense in calculating Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance, which helps in understanding and evaluating our operating results. We use Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted as supplemental measures of our performance to gain and provide insight into our operating performance and performance trends. However, our use of non-GAAP information as an analytical tool has limitations and should not be considered in isolation or as a substitute for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate similar Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted, or similarly titled measures differently, which may reduce their usefulness as comparative measures.
The following table provides our calculation of Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted (in thousands, except per share amounts):
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
GAAP: Earnings from continuing operations before tax
|
$ | 41,962 | $ | 43,552 | ||||
|
Share-based compensation
|
3,121 | 2,663 | ||||||
|
Acquisition related amortization expense
|
4,565 | 5,548 | ||||||
|
Other (income), net
|
(3,130 | ) | (612 | ) | ||||
|
Non-GAAP: Earnings from continuing operations before provision for income taxes
|
46,518 | 51,151 | ||||||
|
GAAP: Provision for income taxes
|
11,683 | 11,538 | ||||||
|
Share-based compensation
|
885 | 712 | ||||||
|
Acquisition related amortization expense
|
1,295 | 1,473 | ||||||
|
Other (income), net
|
(888 | ) | (163 | ) | ||||
|
Tax benefit on restricted stock
|
218 | 114 | ||||||
|
Non-GAAP: Provision for income taxes
|
13,193 | 13,674 | ||||||
|
Non-GAAP: Net earnings from continuing operations
|
$ | 33,325 | $ | 37,477 | ||||
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
GAAP: Net earnings from continuing operations per common share—diluted
|
$ | 1.16 | $ | 1.21 | ||||
|
Share-based compensation
|
0.09 | 0.07 | ||||||
|
Acquisition related amortization expense
|
0.13 | 0.15 | ||||||
|
Other (income), net
|
(0.09 | ) | (0.02 | ) | ||||
|
Tax benefit on restricted stock
|
(0.01 | ) | - | |||||
|
Total non-GAAP adjustments—net of tax
|
0.12 | 0.20 | ||||||
|
Non-GAAP: Net earnings from continuing operations per common share—diluted
|
$ | 1.28 | $ | 1.41 | ||||
(2)
We define Adjusted EBITDA as net earnings from continuing operations calculated in accordance with US GAAP, adjusted for the following: depreciation and amortization, share-based compensation, provision for income taxes, and other (income), net. In the table below, we provide a reconciliation of Adjusted EBITDA to net earnings from continuing operations, which is the most directly comparable financial measure to this non-GAAP financial measure. Adjusted EBITDA margin is our calculation of Adjusted EBITDA divided by net sales.
We believe that these exclusions in calculating Adjusted EBITDA and Adjusted EBITDA margin provides management and investors with a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance, which helps in the understanding and evaluation of our operating results. We use Adjusted EBITDA as a supplemental measure of our performance to gain and provide insight into our operating performance and performance trends. However, our use of Adjusted EBITDA and Adjusted EBITDA margin as analytical tools has limitations and should not be considered in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate Adjusted EBITDA and Adjusted EBITDA margin, or similarly titled measures, differently which may reduce their usefulness as comparative measures.
The following table provides our calculations of Adjusted EBITDA (in thousands):
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
GAAP: Net earnings from continuing operations
|
$ | 30,279 | $ | 32,014 | ||||
|
Provision for income taxes
|
11,683 | 11,538 | ||||||
|
Share-based compensation
|
3,121 | 2,663 | ||||||
|
Depreciation and amortization
|
5,876 | 7,069 | ||||||
|
Other (income), net
|
(3,130 | ) | (612 | ) | ||||
|
Non-GAAP: Adjusted EBITDA
|
$ | 47,829 | $ | 52,672 | ||||
(3)
Gross billings are the total dollar value of customer purchases of goods and services including shipping charges during the period, net of customer returns, credit memos, and sales or other taxes. Gross billings include the transaction values for certain sales transactions that are recognized on a net basis, and, therefore, include amounts that will not be recognized as revenue.
Results of Operations
The three months ended June 30, 2026, compared to the three months ended June 30, 2025
Net sales: Net sales for the three months ended June 30, 2026, increased $6.3 million compared to the three months ended June 30, 2025, due to increased net sales to customers in the technology, healthcare, retail, and financial services industries, offset by decreased net sales to customers in the telecom, media and entertainment, and SLED industries. Our increase in net sales was primarily driven by large small and mid-market customers. For further information, see the “Segment Results of Operations” below.
Gross profit: Gross profit for the three months ended June 30, 2026, decreased $2.3 million compared to the prior three-month period due to decreases in net sales in our professional services segment, offset by increases in our product segment and managed services segment. Overall, gross profit margin decreased 60 basis points year over year to 23.3%, primarily due to lower margins in all three segments and a lower proportion of sales of third-party maintenance and subscriptions that are recognized on a net basis, offset by an increase to vendor consideration. For further information, see the “Segment Results of Operations” below.
Selling, general, and administrative: Selling, general, and administrative expenses for the three months ended June 30, 2026, increased $3.0 million, compared to the three months ended June 30, 2025.
Salaries and benefits, including variable compensation and share-based compensation for the three months ended June 30, 2026, increased $1.0 million, compared to the same three-month period in the prior year, primarily due to increased headcount of employees whose costs are included in continuing operations, offset by a decrease in variable compensation commensurate with the decrease in our gross profit. As of June 30, 2026, we had 2,171 employees, an increase of 33 from 2,138 employees as of June 30, 2025.
General and administrative expenses for the three months ended June 30, 2026, increased $2.3 million as compared to the prior three-month period, mainly driven by higher third-party consultant fees and legal fees.
Provision for credit losses for the three months ended June 30, 2026, was $0.3 million, as compared to $0.6 million for the prior three-month period. Our lower provision for credit losses for the three months ended June 30, 2026, was due to favorable changes in our net credit exposure.
Depreciation and amortization: Depreciation and amortization for the three months ended June 30, 2026, decreased compared to the three months ended June 30, 2025, primarily due to decreased acquisition related amortization expense.
Operating income: As a result of the foregoing, operating income for the three months ended June 30, 2026, decreased $4.1 million compared to the prior three-month period, and operating income margin decreased by 70 basis points to 6.0%.
Other income, net: Other income, net for the three months ended June 30, 2026, was $3.1 million, compared to $0.6 million for the three months ended June 30, 2025. Higher other income was driven by increased interest income and decreased foreign exchange losses. We had $3.3 million in interest income for the three months ended June 30, 2026, compared to $2.1 million for the three months ended June 30, 2025. We had foreign exchange losses of $0.2 million for the three months ended June 30, 2026, compared to losses of $1.5 million for the same three-month period in the prior year.
Provision for income taxes: Our provision for income tax expense was $11.7 million for the three months ended June 30, 2026, as compared to $11.5 million for the same three-month period in the prior year. Our effective tax rate for the three months ended June 30, 2026, was 27.8%, compared with 26.5%, for the same three- month period in the prior year. Our effective income tax rate for the three months ended June 30, 2026, was higher compared to the same three-month period in the prior year primarily due to higher state and local taxes and higher non-deductible executive compensation in the current three-month period.
Net earnings from continuing operations: Net earnings from continuing operations for the three months ended June 30, 2026, were $30.3 million, a decrease of $1.7 million, as compared to $32.0 million for the same three-month period in the prior year. The net earnings decrease was due to the decrease in operating profits, offset by an increase in other income.
Net earnings from discontinued operations, net of tax: Net earnings from discontinued operations, net of tax for the three months ended June 30, 2025, were $10.6 million. There were no discontinued operations transactions during the three months ended June 30, 2026.
Net earnings: Due to the aforementioned reasons, net earnings for the three months ended June 30, 2026, were $30.3 million, a decrease of $12.3 million, as compared to $42.6 million for the same three-month period in the prior year.
Segment Overview
Following the divestiture of our domestic financing business in the Sale Transaction, we organize our business into three reportable segments (which we formerly referred to collectively as the technology business):
●
Product segment: Our product segment consists of the sale of third-party hardware, third-party perpetual and subscription software, and third-party maintenance, software assurance, and other third-party services. The product segment also includes internet-based business-to-business supply chain management solutions for IT products. We utilize vendor programs to obtain vendor consideration to minimize our cost of sales.
●
Professional services segment: Our professional services segment includes our advanced professional services to our customers that are performed under time and materials, fixed fee, or milestone contracts. Professional services include consulting, assessments, architecture, deployment, and configuration, logistic services, training, staff augmentation services, and project management services. Additionally, we offer professional services in the spaces of digital signage, EV charging solutions, loss prevention and security, store openings, remodels, and store closings.
●
Managed services segment: Our managed services segment includes our advanced managed services that encompass managing various aspects of our customers’ environments that are billed in regular intervals over a contract term, usually between three to five years. Managed services also include security solutions, storage-as-a-service, cloud hosted services, cloud managed services, and service desk.
Our other category consists of the international entities of our financing business that we retained after selling our domestic financing business.
Segment Results of Operations
The three months ended June 30, 2026, compared to the three months ended June 30, 2025
The results of operations for our segments were as follows (dollars in thousands):
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
Financial metrics
|
||||||||
|
Net sales:
|
||||||||
|
Product segment
|
$ | 529,603 | $ | 526,355 | ||||
|
Professional services segment
|
68,081 | 71,729 | ||||||
|
Managed services segment
|
51,302 | 44,580 | ||||||
|
Total reportable segments
|
648,986 | 642,664 | ||||||
|
Other
|
127 | 111 | ||||||
|
Total
|
$ | 649,113 | $ | 642,775 | ||||
|
Gross profit:
|
||||||||
|
Product segment
|
$ | 111,067 | $ | 111,942 | ||||
|
Professional services segment
|
25,144 | 28,153 | ||||||
|
Managed services segment
|
15,065 | 13,534 | ||||||
|
Total reportable segments
|
151,276 | 153,629 | ||||||
|
Other
|
53 | 47 | ||||||
|
Total
|
$ | 151,329 | $ | 153,676 | ||||
|
Gross profit margin:
|
||||||||
|
Product segment
|
21.0 | % | 21.3 | % | ||||
|
Professional services segment
|
36.9 | % | 39.2 | % | ||||
|
Managed services segment
|
29.4 | % | 30.4 | % | ||||
|
Net sales by customer end market:
|
||||||||
|
Telecom, media & entertainment
|
$ | 138,697 | $ | 184,979 | ||||
|
Technology
|
117,999 | 82,747 | ||||||
|
SLED
|
79,856 | 90,562 | ||||||
|
Healthcare
|
79,197 | 74,291 | ||||||
|
Financial services
|
73,386 | 47,500 | ||||||
|
Retail
|
34,923 | 31,971 | ||||||
|
All others
|
124,928 | 130,614 | ||||||
|
Total reportable segments
|
$ | 648,986 | $ | 642,664 | ||||
|
Net sales by type:
|
||||||||
|
Networking
|
$ | 223,721 | $ | 218,202 | ||||
|
Cloud
|
180,748 | 206,996 | ||||||
|
Security
|
78,265 | 61,107 | ||||||
|
Collaboration
|
15,492 | 11,757 | ||||||
|
Other
|
31,377 | 28,293 | ||||||
|
Total products segment
|
529,603 | 526,355 | ||||||
|
Professional services segment
|
68,081 | 71,729 | ||||||
|
Managed services segment
|
51,302 | 44,580 | ||||||
|
Total reportable segments
|
$ | 648,986 | $ | 642,664 | ||||
Net sales:
Product segment sales for the three months ended June 30, 2026, increased compared to the same three-month period in the prior year, due to increases in revenue from networking, security, and collaboration products, offset by a decrease in cloud products. These increases were driven by the timing of purchases by existing customers, which are determined by their buying cycles and the timing of specific IT-related initiatives. Contributing to the increase, the proportion of our sales that were sales of third-party maintenance and subscriptions that are recognized on a net basis decreased for the three months ended June 30, 2026, compared to the same period in the prior year.
Professional services segment sales for the three months ended June 30, 2026, decreased compared to the same three-month period in the prior year, primarily due to decreases in revenues from project services and staff augmentation.
Managed services segment sales for the three months ended June 30, 2026, increased compared to the same three- month period in the prior year, due to ongoing expansion of these service offerings, primarily related to ongoing growth in enhanced maintenance support and cloud services.
Gross profit margin:
Product segment gross profit margin for the three months ended June 30, 2026, decreased by 30 basis points from the same three-month period in the prior year due to a shift in product mix and a lower proportion of our sales that were sales of third-party maintenance and subscriptions which are recorded on a net basis, offset by an increase in vendor consideration. Vendor consideration earned as a percentage of sales for the three months ended June 30, 2026, increased by 90 basis points.
Professional services segment gross profit margin for the three months ended June 30, 2026, decreased by 230 basis points, from the same three-month period in the prior year primarily due to the use of a higher proportion of third parties for delivery and lower revenue from professional services.
Managed services segment gross profit margin for the three months ended June 30, 2026, decreased by 100 basis points, from the same three-month period in the prior year, mainly driven by a decrease in gross profit margin from our managed services offerings due to increased third-party costs.
Liquidity and Capital Resources
Overview
We finance our operations through funds generated from operations and through borrowings. We use those funds to meet our capital requirements, which primarily consist of working capital for operational needs, capital expenditures, mergers and acquisitions, the issuance of dividends and repurchase of shares of our common stock.
We believe that cash on hand and funds generated from operations, together with available credit under our credit facility, will be sufficient to finance our working capital, capital expenditures, and other requirements for at least the next year.
Our ability to continue to expand, both organically and through acquisitions, is dependent upon our ability to generate enough cash flow from operations or from borrowing or other sources of financing as may be required. While at this time we do not anticipate requiring any additional sources of financing to fund our current operations, if demand for IT products declines, or if our supply of products is delayed or interrupted, our cash flows from operations may be substantially affected.
Cash Flows
The following table summarizes our sources and uses of cash for the three months ended June 30, 2026, and 2025 (in thousands):
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
|
Net cash provided by (used in) operating activities of continuing operations
|
$ | 76,477 | $ | (106,003 | ) | |||
|
Net cash provided by operating activities of discontinued operations
|
- | 7,036 | ||||||
|
Net cash provided by (used in) operating activities
|
76,477 | (98,967 | ) | |||||
|
Net cash used in investing activities of continuing operations
|
(853 | ) | (824 | ) | ||||
|
Net cash provided by investing activities of discontinued operations
|
- | 156,681 | ||||||
|
Net cash provided by (used in) investing activities
|
(853 | ) | 155,857 | |||||
|
Net cash provided by (used in) financing activities of continuing operations
|
(37,844 | ) | 38,341 | |||||
|
Net cash used in financing activities of discontinued operations
|
- | (6,417 | ) | |||||
|
Net cash provided by (used in) financing activities
|
(37,844 | ) | 31,924 | |||||
|
Effect of exchange rate changes on cash
|
305 | 1,989 | ||||||
|
Net increase in cash and cash equivalents
|
$ | 38,085 | $ | 90,803 | ||||
Cash flows from operating activities: During the three months ended June 30, 2026, we provided $76.5 million through operating activities primarily due to a decrease in inventories and an increase in our accounts payable, offset by net earnings and an increase in accounts receivable. During the three months ended June 30, 2025, we used $106.0 million through operating activities of continuing operations primarily due to an increase in our accounts receivable, partially offset by net earnings and a decrease in our inventories.
To manage our working capital, we monitor our cash conversion cycle for our business segments, which is defined as days sales outstanding (“DSO”) in accounts receivable plus days of supply in inventory (“DIO”) minus days of purchases outstanding in accounts payable (“DPO”).
The following table presents the components of the cash conversion cycle:
| As of June 30, | ||||||||
| 2026 | 2025 | |||||||
|
(DSO) Days sales outstanding (1)
|
64 | 58 | ||||||
|
(DIO) Days inventory outstanding (2)
|
22 | 14 | ||||||
|
(DPO) Days payable outstanding (3)
|
(45 | ) | (46 | ) | ||||
|
Cash conversion cycle
|
41 | 26 | ||||||
(1)
Represents the rolling three-month average of the balance of trade accounts receivable-trade, net at the end of the period divided by Gross billings for the same three-month period.
(2)
Represents the rolling three-month average of the balance of inventory, net at the end of the period divided by the direct cost of products billed to our customers for the same three-month period.
(3)
Represents the rolling three-month average of the combined balance of accounts payable-trade and accounts payable-floor plan at the end of the period divided by the direct cost of products and services billed to our customers for the same three-month period.
Our cash conversion cycle increased to 41 days as of June 30, 2026, as compared to 26 days as of June 30, 2025. Our standard payment term for customers is between 30-60 days; however, certain customer orders may be approved for extended payment terms. Our DSO increased 6 days to 64 days as of June 30, 2026, compared to 58 days as of June 30, 2025, reflecting higher sales to customers with terms greater than 60 days. Our DIO increased to 22 days as of June 30, 2026, compared to 14 days as of June 30, 2025, due to longer customer delivery schedules. Our DPO increased by 1 day to 45 days as of June 30, 2026, as compared to 46 days as of June 30, 2025. Invoices processed through our credit facility, or the accounts payable-floor plan balance, are typically paid within 45-60 days from the invoice date, while accounts payable trade invoices are typically paid around 30-45 days from the invoice date.
Cash flows related to investing activities: During the three months ended June 30, 2026, we used $0.9 million through investing activities consisting of purchases of property and equipment. During the three months ended June 30, 2025, we used $0.8 million through investing activities of continuing operations consisting primarily of purchases of property and equipment, and provided $156.7 million through investing activities of discontinued operations, consisting of cash proceeds from our sale of HoldCo of $180.1 million less cash transferred with the HoldCo entities of $23.4 million.
Cash flows from financing activities: During the three months ended June 30, 2026, we used $37.8 million through financing activities. We had cash outflows of $25.5 million to repurchase outstanding shares of our common stock, $7.1 million paid for dividends, and $7.1 million in net repayments on our floor plan facility. These cash outflows were partially offset by cash inflows of $1.8 million in proceeds from the issuance of common stock to employees under our employee stock purchase plan.
During the three months ended June 30, 2025, we provided $38.3 million from financing activities of continuing operations consisting of $1.8 million in proceeds from the issuance of common stock to employees under an employee stock purchase plan, and $39.9 million in net borrowings on the floor plan component of our credit facility, partially offset by $3.3 million in cash used to repurchase outstanding shares of our common stock.
Credit Facility
We finance the operations of our subsidiaries ePlus Technology, inc. and ePlus Technology Services, inc. (collectively, the “Borrowers”) through the WFCDF Credit Facility. The WFCDF Credit Facility has a floor plan facility and a revolving credit facility.
Please refer to Note 7, “Credit Facility” in the accompanying Consolidated Financial Statements included in “Part I, Item 1. Financial Statements” for additional information concerning our WFCDF Credit Facility.
The loss of the WFCDF Credit Facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity and as an operational function of our accounts payable process.
Floor plan facility: We finance certain purchases of products for sale to our customers through the floor plan facility. Once our customer places a purchase order with us and we have approved their credit, we place an order for the desired products with one of our vendors. Our vendors are generally paid by the floor plan facility and our liability is reflected in “accounts payable—floor plan” in our consolidated balance sheets.
Most customer payments to us are remitted to our lockbox accounts. Once payments are cleared, the monies in the lockbox accounts are automatically and daily transferred to our operating account. We pay down the floor plan facility on three specified dates each month, generally 45 to 60 days from the invoice date. Our borrowings and repayments under the floor plan component are included in “net borrowings (repayments) on floor plan facility” within cash flows from the financing activities in our consolidated statements of cash flows.
As of June 30, 2026, and March 31, 2026, we had a maximum credit limit of $500.0 million, and an outstanding balance on the floor plan facility of $112.5 million and $119.7 million, respectively. On our balance sheet, our liability under the floor plan facility is presented as part of accounts payable – floor plan.
Revolving credit facility: As of June 30, 2026, and March 31, 2026, we did not have any outstanding balance under the revolving credit facility. The maximum credit limit under this facility was $200.0 million as of both June 30, 2026, and March 31, 2026.
Dividends
A summary of fiscal year-to-date dividend activity for our common stock is as follows:
|
Dividend amount
|
Declaration date
|
Record date
|
Payment date
|
|||
| $0.27 |
May 28, 2026
|
June 17, 2026
|
June 30, 2026
|
On August 4, 2026, we announced that our Board of Directors (“Board”) declared a quarterly dividend. The quarterly cash dividend of $0.27 per common share will be paid on September 16, 2026, to shareholders of record as of the close of business on August 25, 2026.
The payment of any future dividends will be at the discretion of our Board and will depend upon our results of operations, financial condition, business prospects, capital requirements, contractual restrictions (including in current or future agreements governing our indebtedness), restrictions imposed by applicable law, tax considerations and other factors that our Board deems relevant.
Performance Guarantees
In the normal course of business, we may provide certain customers with performance guarantees, which are generally backed by surety bonds. In general, we would only be liable for these guarantees in the event of default in the performance of our obligations. We believe we currently comply with the performance obligations under our service contracts for which there is a performance guarantee, and we believe that any liability incurred in connection with these guarantees would not have a material adverse effect on our consolidated statements of operations.
Off-Balance Sheet Arrangements
As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of June 30, 2026, we were not involved in any unconsolidated special purpose entity transactions.
Adequacy of Capital Resources
The continued implementation of our business strategy will require a significant investment in both resources and managerial focus. For example, we may selectively enter into merger and acquisition transactions with other companies that have attractive customer relationships, skilled sales and/or engineering forces, and/or other attributes that may be complementary to our business or are aligned with our long-term strategy. Specifically, we may acquire technology companies to expand and enhance our geographic footprint, or the platform of bundled solutions to provide additional functionality and value-added services. Further, we may also open facilities in new geographic areas, which may require a significant investment of cash. We may require additional capital due to increases in inventory to accommodate our customers’ IT installation schedules and delivery delays from product shortages to complete orders. These actions may result in increased working capital needs as the business expands. As a result, we may require additional financing to fund our strategy, implementation, potential future mergers and acquisitions, and working capital needs, which may include additional debt and equity financing. While the future is uncertain, we do not expect our WFCDF Credit Facility will be terminated by WFCDF or us.
Potential Fluctuations in Quarterly Operating Results
Our future quarterly operating results and the market price of our common stock may fluctuate. In the event our revenues or earnings for any quarter are less than the level expected by securities analysts or the market in general, such shortfall could have an immediate and significant adverse impact on the market price of our common stock. Any such adverse impact could be greater if any such shortfall occurs near the time of any material decrease in any widely followed stock index or in the market price of the stock of one or more competitors, IT resellers, major customers, or vendors of ours.
Our quarterly results of operations are susceptible to fluctuations for several reasons, including, but not limited to currency fluctuations, reduction in IT spending by our customers and potential customers, shortages of products from our vendors, the timing and mix of specific transactions, the reduction of vendor consideration programs, and other factors. See Part I, Item 1A, “Risk Factors,” in our 2026 Annual Report, as supplemented in subsequently filed reports.
We believe that comparisons of quarterly results of our operations are not necessarily meaningful and that results for one quarter should not be relied upon as an indication of future performance.
Critical Accounting Estimates
Our critical accounting estimates have not changed from those reported in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2026 Annual Report.
Foreign Currency Risk
We have foreign currency exposure when transactions are not denominated in our subsidiaries’ functional currency, which include purchases and sales of the products and services we provide, as well as loans with other ePlus entities. To date, foreign currency exposure associated with purchases and sales of the products and services we provide has not been significant. We have incurred foreign currency transaction gains and losses in certain foreign subsidiaries on US dollar denominated loans. Fluctuations in currency exchange rates may impact our results of operations and financial position.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures, or “disclosure controls,” as defined in the Exchange Act Rule 13a-15(e). Disclosure controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized, and reported within the periods specified in the SEC’s rules and forms. Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls include some, but not all, components of our internal control over financial reporting. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2026.
Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations and Effectiveness of Controls
Our management, including our CEO and CFO, do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system cannot provide absolute assurance due to its inherent limitations; it is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. A control system also can be circumvented by collusion or improper management override. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of such limitations, disclosure controls and internal control over financial reporting cannot prevent or detect all misstatements, whether unintentional errors or fraud. However, these inherent limitations are known features of the financial reporting process; therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Please refer to Note 8, “Commitment and Contingencies” in the accompanying Consolidated Financial Statements included in “Part I, Item 1. Financial Statements.”
There has not been any material change in the risk factors disclosed in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
Item 2.
The following table provides information regarding our purchases of common stock during the three months ended June 30, 2026.
|
Period
|
Total number of shares purchased (1) |
Average price paid per share |
Total number of shares purchased as part of publicly announced plans or programs |
Maximum number of shares that may yet be purchased under the plans or programs (2) | ||||||||||||
|
April 1, 2026 through April 30, 2026
|
89,500 | $ | 81.39 | 89,500 | 1,047,600 | |||||||||||
|
May 1, 2026 through May 31, 2026
|
74,000 | $ | 85.37 | 74,000 | 973,600 | |||||||||||
|
June 1, 2026 through June 30, 2026
|
140,714 | $ | 82.31 | 87,787 | 885,813 | |||||||||||
|
Total
|
304,214 | 251,287 | ||||||||||||||
(1)
All shares were acquired in open-market purchases.
(2)
The amounts presented in this column are the remaining number of shares that may be repurchased after repurchases during the month. On August 7, 2025, our Board authorized the repurchase of up to 1,500,000 shares of our outstanding common stock, over a 12-month period beginning August 11, 2025.
The timing and expiration date of the current stock repurchase authorizations are included in Note 10, “Stockholders’ Equity” in our Consolidated Financial Statements included in “Part I, Item 1. Financial Statements.”
Not Applicable.
Not Applicable.
Insider Trading Arrangements
During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted terminated
Additionally, certain of our executive officers may participate in employee stock purchase plans that have been designed to comply with Rule 10b5-1(e) under the Exchange Act.
Exhibit 10.1 is a management contract or compensatory plan or arrangement.
|
Exhibit
Number |
Exhibit Description
|
|
|
ePlus inc. Amended and Restated Certificate of Incorporation, as last amended September 18, 2023. (Incorporated herein by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the period ended September 30, 2023).
|
||
|
Amended and Restated Bylaws of ePlus inc., as of February 17, 2026. (Incorporated herein by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on February 17, 2026).
|
||
|
Form of Restricted Stock Award Agreement (for awards granted to U.S. employees under and subject to the provisions of the ePlus inc. 2021 Employee Long-Term Incentive Plan)
|
||
|
Form of Restricted Stock Award Agreement (for awards granted to U.K. employees under and subject to the provisions of the ePlus inc. 2021 Employee Long-Term Incentive Plan)
|
||
|
Certification of the Chief Executive Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
|
||
|
Certification of the Chief Financial Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
|
||
|
Certification of the Chief Executive Officer and Chief Financial Officer of ePlus inc. pursuant to 18 U.S.C. § 1350.
|
||
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
104
|
Cover Page Interactive Data File (embedded within the Exhibit 101 Inline XBRL document)
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
ePlus inc.
| ||
|
Date: August 4, 2026
|
/s/ MARK P. MARRON
| |
|
By: Mark P. Marron
| ||
|
Chief Executive Officer and President
| ||
|
(Principal Executive Officer)
| ||
|
Date: August 4, 2026
|
/s/ ELAINE D. MARION
| |
|
By: Elaine D. Marion
| ||
|
Chief Financial Officer
| ||
|
(Principal Financial Officer)
|
37
Exhibit 10.1
ePlus inc.
Restricted Stock Award Agreement
|
Award Recipient:
|
%%FIRST_NAME_MIDDLE_NAME_LAST_NAME%-%
|
|
|
Grant Number:
|
%%OPTION_NUMBER%-%
|
|
|
Date of Award:
|
%%OPTION_DATE,’Month DD, YYYY’%-%
|
|
|
Total Number of Shares:
|
%%TOTAL_SHARES_GRANTED,’999,999,999’%-%
|
|
| Vesting Schedule: The Restricted Stock Award will vest with respect to one-third of the award (rounding down in years 1 and 2 to avoid a fractional share) on each of the following dates (each, a vesting date): %%VEST_DATE_PERIOD1,'Month DD, YYYY'%-%, %%VEST_DATE_PERIOD2,'Month DD, YYYY'%-%, and %%VEST_DATE_PERIOD3,'Month DD, YYYY'%-% |
||
1.
Restricted Stock Award – Terms and Conditions. This Agreement confirms the grant under and subject to the provisions of the ePlus inc. 2021 Employee Long-Term Incentive Plan (the “Plan”) and the terms and conditions set forth herein (“Terms and Conditions”) to the above-named Participant of the number of a Restricted Stock award of such number of shares of common stock, $0.01 par value per share (the “Common Stock”), of the Company as set forth above. The Restricted stock is granted to Participant in consideration of the services to be rendered by Participant to the Company or its subsidiaries. This Agreement merely evidences such grant, and does not constitute property of any nature or type or confer any additional rights. This grant is subject in all respects to the applicable terms of the Plan. A copy of the Plan (or related Prospectus delivered to you with this Agreement) may be obtained at no cost by contacting the HR Department at hr@eplus.com.
2.
Restriction Period. For purposes of this Agreement, the Restriction Period is the period beginning on the grant date and ending on vesting date(s) or, if earlier, upon termination of employment as the result of Participant’s death or Disability or upon a Change in Control, as defined in the Plan, provided Participant is in employment with the Company on the date of the Change in Control (the “Restriction Period”). Upon termination of Participant’s employment for any other reason prior to the date that Participant becomes 100% vested in the Award, the unvested Shares shall be forfeited immediately and Participant shall have no right with respect to the unvested Shares. No additional Shares shall vest after the date of termination of Participant’s employment.
3.
Restrictions and Forfeiture. The Restricted Stock is granted to the Participant subject to the prohibitions on transfer set forth in Section 6 below, which shall lapse, if at all, upon the expiration of the Restriction Period as described in Section 7 below.
4.
Rights During Restriction Period. During the Restriction Period, the Participant shall be the record owner of the Restricted Stock and may exercise full voting rights with respect to all Common Stock subject to the award. The Restricted Stock shall accrue dividends that will be credited in the form of cash or securities, as applicable, to the Participant’s account, on the date the dividend is issued. At the end of the Restriction Period, all credited cash dividends or securities, as applicable, will be distributed to the Participant. If the number of outstanding shares of Common Stock is changed as a result of a stock dividend, stock split or the like, without additional consideration to the Company, the Restricted Stock subject to this award shall be adjusted to correspond to the change in the outstanding shares of the Company’s Common Stock.
5.
Release of Award. Provided the award has not previously been forfeited, as soon as reasonably practicable following the expiration of the Restriction Period and the satisfaction of the applicable tax withholding obligations, the Company shall at its option, cause the Restricted Stock to which the Participant is entitled pursuant hereto (i) to be released without restriction on transfer by delivery to the custody of the Participant of a stock certificate in the name of the Participant or his or her designee, or (ii) to be credited without restriction on transfer to a book-entry account for the benefit of the Participant or his or her designee maintained by the Company’s stock administrator, stock transfer agent or its designee.
1
6.
Prohibition Against Transfer. Until the expiration of the Restriction Period, the award and the Restricted Stock subject to the award and the rights granted under the Terms and Conditions and this Agreement are not transferable except to family members or trusts by will or by the laws of descent and distribution, provided that the award and the Restricted Stock may not be so transferred to family members or trusts except as permitted by applicable law or regulations. Without limiting the generality of the foregoing, except as aforesaid, until the expiration of the Restriction Period, the award and shares of Restricted Stock may not be sold, exchanged, assigned, transferred, pledged, hypothecated, encumbered or otherwise disposed of, shall not be assignable by operation of law, and shall not be subject to execution, attachment, charge, alienation or similar process. Any attempt to effect any of the foregoing shall be wholly ineffective.
7.
Forfeiture; Termination of Employment. Shares of Restricted Stock that are included in this award shall be forfeited by the Participant upon the Participant’s termination of employment prior to vesting for any reason other than death or Disability, as defined in the Plan. All shares of Restricted Stock will immediately vest upon a Change in Control, as defined in the Plan, provided Participant is in employment with the Company on the date of the Change in Control.
8.
Tax Withholding. Participant shall be required to meet any applicable tax withholding obligations in accordance with the provisions of the Plan. The Committee shall be authorized, in its sole discretion, to establish such rules and procedures relating to the use of Shares to satisfy any tax withholding obligations as it deems necessary and appropriate. Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding, the ultimate liability for all tax-related items is and remains the Participant’s responsibility.
9.
Tax Elections. Participant acknowledges that Participant has considered the advisability of all tax elections in connection with the purchase of the Shares, including the making of an election under Section 83(b) under the Internal Revenue Code of 1986, as amended (“Code”); Participant further acknowledges that the Company has no responsibility for the making of such Section 83(b) election. In the event Participant determines to make a Section 83(b) election, Participant agrees to timely provide a copy of the election to the Company as required under the Code.
10.
Miscellaneous. These Terms and Conditions and other portions of this Agreement: (a) shall be binding upon and inure to the benefit of any successor of the Company; (b) shall be governed by the laws of the State of Delaware and any applicable laws of the United States; and (c) except as permitted under Sections 7 and 8 of the Plan, may not be amended without the written consent of both the Company and the Participant.
11.
No Agreement to Employ. The Agreement shall not in any way interfere with or limit the right of the Company to terminate the Participant’s employment or service with the Company at any time, and no contract or right of employment shall be implied by the Terms and Conditions and this Agreement of which they form a part.
12.
Incorporation of Plan Provisions. The Terms and Conditions and this Agreement are made pursuant to the Plan, the provisions of which are hereby incorporated by reference (including without limitation, Section 6(g)(xii) of the Plan, such that the Participant may be subject to the forfeiture of the unvested portion of this Restricted Stock award and must return any vested shares already delivered pursuant to this Agreement in certain circumstances described in that section). Capitalized terms not otherwise defined herein shall have the meanings set forth for such terms in the Plan. In the event of a conflict between the terms of the Terms and Conditions and this Agreement, and the Plan, the terms of Plan shall govern.
13.
Adjustment of Award. In the event it is determined that the grant, vesting or Common Stock delivery or cash payment under an award of Restricted Stock was made based on incorrect financial results, the Compensation Committee of the Board of Directors will review such grant, vesting, delivery or payment. If the amount of the grant, vesting, delivery or payment would have been lower had the level of achievement of applicable financial performance goals been calculated based on the correct financial results, the Compensation Committee may, in its sole discretion, adjust (i.e., lower) the amount of such grant, vesting, delivery or payment so that it reflects the amount that would have applied based on the correct financial results and, to the extent permitted by applicable law, require the reimbursement by the Participant of any amount delivered or paid to or received by the Participant with respect to such award. Additionally, Common Stock deliveries or cash payments under this Agreement are subject to recovery by the Company to the extent required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Sarbanes-Oxley Act of 2002 and any regulations promulgated thereunder.
2
14.
Parachute Payments. In the event that any payment or benefit received or to be received by the Participant under this Agreement or any other award under the Plan in connection with a Change in Control, as defined in the Plan, (collectively, the “Change in Control Payments”) would (i) constitute (together with other payments or benefits contingent on a Change in Control) a “parachute payment” within the meaning of Section 280G of the Code or any successor provision and (ii) but for this section, be subject to the excise tax imposed by Section 4999 of the Code or any successor provision (the “Excise Tax”), then the Participant shall receive:
(A)
the full amount of such Change in Control Payments, or
(B)
such lesser amount of such Change in Control Payments, which would result in no portion of such Change in Control Payments being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of payments or benefits contingent on the Change in Control (including without limitation the Change in Control Payments), notwithstanding that all or some portion of such Change in Control Payments may be taxable under Section 4999 of the Code.
Any determination required under this section shall be made in writing by an independent public accounting firm or other independent third party selected by the Company (the “Accountants”), whose costs shall be paid by the Company and whose determination shall be conclusive and binding upon the Participant and the Company for all purposes. For purposes of making the calculations required by this section, the Accountants may make reasonable assumptions concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Participant shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section. In the event the Accountants determine the Change in Control Payments are to be reduced under (B) above, such reduction shall first be made as to any such Common Stock payment or benefit under any Plan awards in reverse chronological order of the grant date, then any such cash payment or benefit under any Plan awards in reverse chronological order of the grant date.
15.
Committee Authority. The Committee will have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Shares of Restricted Stock have vested). Any dispute regarding the interpretation of this Agreement or the Plan shall be submitted by the Participant or the Company to the Committee for review. All actions taken and all interpretations and determinations made by the Committee in good faith will be final and binding upon Participant, the Company and all other interested persons.
16.
Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior or contemporaneous written or oral agreements and understandings of the parties, either express or implied.
3
Exhibit 10.2
ePlus inc.
Restricted Stock Award Agreement
|
|
|
|
| Award Recipient: | %%FIRST_NAME_MIDDLE_NAME_LAST_NAME%-% | |
|
Grant Number:
|
%%OPTION_NUMBER%-%
|
|
|
Date of Award:
|
%%OPTION_DATE,'Month DD, YYYY'%-%
|
|
|
Total Number of Shares:
|
%%TOTAL_SHARES_GRANTED,’999,999,999’%-%
|
|
| Vesting Schedule: The Restricted Stock Award will vest with respect to one-third of the award (rounding down in years 1 and 2 to avoid a fractional share) on each of the following dates (each, a vesting date): %%VEST_DATE_PERIOD1,'Month DD, YYYY'%-%, %%VEST_DATE_PERIOD2, 'Month DD, YYYY'%-%, and %%VEST_DATE_PERIOD3, 'Month DD, YYYY'%-% | ||
1.
Restricted Stock Award – Terms and Conditions. This Agreement confirms the grant under and subject to the provisions of the ePlus inc. 2021 Employee Long-Term Incentive Plan (the “Plan”) and the terms and conditions set forth herein (“Terms and Conditions”) to the above-named Participant of the number of a Restricted Stock award of such number of shares of common stock, $0.01 par value per share (the “Common Stock”), of the Company as set forth above. The Restricted Stock is granted to Participant in consideration of the services to be rendered by Participant to the Company or its subsidiaries. This Agreement merely evidences such grant, and does not constitute property of any nature or type or confer any additional rights. This grant is subject in all respects to the applicable terms of the Plan. A copy of the Plan (or related Prospectus delivered to you with this Agreement) may be obtained at no cost by contacting the HR Department at hr@eplus.com.
2.
Restriction Period. For purposes of this Agreement, the Restriction Period is the period beginning on the grant date and ending on vesting date(s) or, if earlier, upon termination of employment as the result of Participant’s death or Disability or upon a Change in Control, as defined in the Plan, provided Participant is in employment with the Company on the date of the Change in Control (the “Restriction Period”). Upon termination of Participant’s employment for any other reason prior to the date that Participant becomes 100% vested in the Award, the unvested Shares shall be forfeited immediately and Participant shall have no right with respect to the unvested Shares. No additional Shares shall vest after the date of termination of Participant’s employment.
3.
Restrictions and Forfeiture. The Restricted Stock is granted to the Participant subject to the prohibitions on transfer set forth in Section 6 below, which shall lapse, if at all, upon the expiration of the Restriction Period as described in Section 7 below.
4.
Rights During Restriction Period. During the Restriction Period, the Participant shall be the record owner of the Restricted Stock and may exercise full voting rights with respect to all Common Stock subject to the award. The Restricted Stock shall accrue dividends that will be credited in the form of cash or securities, as applicable, to the Participant’s account, on the date the dividend is issued. At the end of the Restriction Period, all credited cash dividends or securities, as applicable, will be distributed to the Participant. If the number of outstanding shares of Common Stock is changed as a result of a stock dividend, stock split or the like, without additional consideration to the Company, the Restricted Stock subject to this award shall be adjusted to correspond to the change in the outstanding shares of the Company’s Common Stock.
5.
Release of Award. Provided the award has not previously been forfeited, as soon as reasonably practicable following the expiration of the Restriction Period and the satisfaction of the applicable tax withholding obligations, the Company shall at its option, cause the Restricted Stock to which the Participant is entitled pursuant hereto (i) to be released without restriction on transfer by delivery to the custody of the Participant of a stock certificate in the name of the Participant or his or her designee, or (ii) to be credited without restriction on transfer to a book-entry account for the benefit of the Participant or his or her designee maintained by the Company’s stock administrator, stock transfer agent or its designee.
1
6.
Prohibition Against Transfer. Until the expiration of the Restriction Period, the award and the Restricted Stock subject to the award and the rights granted under the Terms and Conditions and this Agreement are not transferable except to family members or trusts by will or by the laws of descent and distribution, provided that the award and the Restricted Stock may not be so transferred to family members or trusts except as permitted by applicable law or regulations. Without limiting the generality of the foregoing, except as aforesaid, until the expiration of the Restriction Period, the award and shares of Restricted Stock may not be sold, exchanged, assigned, transferred, pledged, hypothecated, encumbered or otherwise disposed of, shall not be assignable by operation of law, and shall not be subject to execution, attachment, charge, alienation or similar process. Any attempt to effect any of the foregoing shall be wholly ineffective.
7.
Forfeiture; Termination of Employment. Shares of Restricted Stock that are included in this award shall be forfeited by the Participant upon the Participant’s termination of employment prior to vesting for any reason other than death or Disability, as defined in the Plan. All shares of Restricted Stock will immediately vest upon a Change in Control, as defined in the Plan, provided Participant is in employment with the Company on the date of the Change in Control.
8.
Tax Withholding. Participant shall be required to meet any applicable tax withholding obligations in accordance with the provisions of the Plan. The Committee shall be authorized, in its sole discretion, to establish such rules and procedures relating to the use of Shares to satisfy any tax withholding obligations as it deems necessary and appropriate. Notwithstanding any action the Company takes with respect to any or all income tax, national insurance contributions including primary class 1 (employee’s) national insurance contributions [and secondary class 1 (employer’s) national insurance contributions] or their equivalent in any jurisdiction, which may lawfully be recovered from the Participant, payroll tax, or other tax-related withholding, the ultimate liability for all tax-related items is and remains the Participant’s responsibility.
9.
Tax Elections. Participant acknowledges that Participant has considered the advisability of all tax elections in connection with the purchase of the Shares, including the making of an election under Section 431(1) of the Income Tax (Earnings & Pensions) Act 2003 in a form prescribed by HM Revenue & Customs pursuant to which the Participant elects to pay income tax (if any) on the amount equal to the difference between the unrestricted market value of the Restricted Stock and the consideration paid for them, and such election be entered into with Participant’s employing company no later than 14 days after the date on which the Participant has acquired Shares of Restricted Stock.
10.
Miscellaneous. These Terms and Conditions and other portions of this Agreement: (a) shall be binding upon and inure to the benefit of any successor of the Company; (b) shall be governed by the laws of the State of Delaware and any applicable laws of the United States; and (c) except as permitted under Sections 7 and 8 of the Plan, may not be amended without the written consent of both the Company and the Participant.
11.
No Agreement to Employ. The Agreement shall not in any way interfere with or limit the right of the Company to terminate the Participant’s employment or service with the Company at any time, and no contract or right of employment shall be implied by the Terms and Conditions and this Agreement of which they form a part.
12.
Incorporation of Plan Provisions. The Terms and Conditions and this Agreement are made pursuant to the Plan, the provisions of which are hereby incorporated by reference (including without limitation, Section 6(g)(xii) of the Plan, such that the Participant may be subject to the forfeiture of the unvested portion of this Restricted Stock award and must return any vested shares already delivered pursuant to this Agreement in certain circumstances described in that section). Capitalized terms not otherwise defined herein shall have the meanings set forth for such terms in the Plan. In the event of a conflict between the terms of the Terms and Conditions and this Agreement, and the Plan, the terms of Plan shall govern.
13.
Adjustment of Award. In the event it is determined that the grant, vesting or Common Stock delivery or cash payment under an award of Restricted Stock was made based on incorrect financial results, the Compensation Committee of the Board of Directors will review such grant, vesting, delivery or payment. If the amount of the grant, vesting, delivery or payment would have been lower had the level of achievement of applicable financial performance goals been calculated based on the correct financial results, the Compensation Committee may, in its sole discretion, adjust (i.e., lower) the amount of such grant, vesting, delivery or payment so that it reflects the amount that would have applied based on the correct financial results and, to the extent permitted by applicable law, require the reimbursement by the Participant of any amount delivered or paid to or received by the Participant with respect to such award. Additionally, Common Stock deliveries or cash payments under this Agreement are subject to recovery by the Company to the extent required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Sarbanes-Oxley Act of 2002 and any regulations promulgated thereunder.
2
14.
Parachute Payments. In the event that any payment or benefit received or to be received by the Participant under this Agreement or any other award under the Plan in connection with a Change in Control, as defined in the Plan, (collectively, the “Change in Control Payments”) would (i) constitute (together with other payments or benefits contingent on a Change in Control) a “parachute payment” within the meaning of Section 280G of the Code or any successor provision and (ii) but for this section, be subject to the excise tax imposed by Section 4999 of the Code or any successor provision (the “Excise Tax”), then the Participant shall receive:
(A)
the full amount of such Change in Control Payments, or
(B)
such lesser amount of such Change in Control Payments, which would result in no portion of such Change in Control Payments being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of payments or benefits contingent on the Change in Control (including without limitation the Change in Control Payments), notwithstanding that all or some portion of such Change in Control Payments may be taxable under Section 4999 of the Code.
Any determination required under this section shall be made in writing by an independent public accounting firm or other independent third party selected by the Company (the “Accountants”), whose costs shall be paid by the Company and whose determination shall be conclusive and binding upon the Participant and the Company for all purposes. For purposes of making the calculations required by this section, the Accountants may make reasonable assumptions concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Participant shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section. In the event the Accountants determine the Change in Control Payments are to be reduced under (B) above, such reduction shall first be made as to any such Common Stock payment or benefit under any Plan awards in reverse chronological order of the grant date, then any such cash payment or benefit under any Plan awards in reverse chronological order of the grant date.
15.
Committee Authority. The Committee will have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Shares of Restricted Stock have vested). Any dispute regarding the interpretation of this Agreement or the Plan shall be submitted by the Participant or the Company to the Committee for review. All actions taken and all interpretations and determinations made by the Committee in good faith will be final and binding upon Participant, the Company and all other interested persons.
16.
Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior or contemporaneous written or oral agreements and understandings of the parties, either express or implied.
3
Exhibit 31.1
CERTIFICATION
I, Mark P. Marron, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of ePlus inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 4, 2026
|
/s/ MARK P. MARRON
| |
|
Mark P. Marron
| |
|
Chief Executive Officer and President
| |
|
(Principal Executive Officer)
|
Exhibit 31.2
CERTIFICATION
I, Elaine D. Marion, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of ePlus inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 4, 2026
| /s/ ELAINE D. MARION | |
| Elaine D. Marion | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
Exhibit 32
CERTIFICATION
PURSUANT TO 18 USC SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ePlus inc. on Form 10-Q for the quarter ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to 18 USC section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the undersigned's best knowledge and belief:
a)
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
b)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of ePlus inc.
Date: August 4, 2026
| /s/ MARK P. MARRON | |
| Mark P. Marron, Chief Executive Officer and President | |
| (Principal Executive Officer) | |
| /s/ ELAINE D. MARION | |
| Elaine D. Marion, Chief Financial Officer | |
| (Principal Financial Officer) |
A signed original of this written statement required by Section 906 has been provided to ePlus and will be retained by us and furnished to the Securities and Exchange Commission or its staff upon request.