ePlus Q2 sales climb to $668M as earnings rise
Management believes extended lead times and price increases tied to memory-chip shortages will likely persist for at least the next few quarters.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
ePlus inc. reported second-quarter net sales of $667.9 million, compared with $608.8 million a year earlier. Gross profit was $180.3 million versus $162.1 million, and gross margin was 27.0%, up from 26.6%. Net earnings from continuing operations were $40.4 million, compared with $38.2 million.
Quarterly Adjusted EBITDA, a non-GAAP measure, was $67.1 million versus $58.7 million, with a 10.0% margin versus 9.6%. For the six months ended September 30, 2026, net cash provided by operating activities was $19.1 million, compared with net cash used of $133.7 million a year earlier. Management believes extended lead times and price increases tied to memory-chip shortages will likely persist for at least the next few quarters.
ePlus acquired certain assets and liabilities of Daymark Solutions on August 21, 2026, for preliminary consideration of $17.4 million, including $15.9 million paid at closing and an estimated $1.5 million due to sellers. It repurchased 399,388 shares under its repurchase plan for $33.9 million during the six months ended September 30, 2026. The company revised prior financial statements to correct accrued product revenue miscalculations it determined were not material individually or in aggregate.
2 points · 0 major0 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointQuarterly net sales: $667.9 million, versus $608.8 million.
- Moderate pointQuarterly continuing-operations earnings: $40.4 million, versus $38.2 million.
Negative
- Minor pointSix-month net earnings: $70.7 million vs. $77.4 million; 2025 included $7.3 million from discontinued operations.
Filing Explained
The share-buyback limit is authority, not a purchase commitment; ePlus also reported $139.2 million drawn on its working-capital facility at September 30, 2026.
The Board authorized up to 1.5 million common-share repurchases over the 12 months beginning
The filing says repurchased shares become treasury shares, so the authorization itself does not change the share count; any effect depends on purchases actually made.
The filing describes a discretionary, secured floor-plan facility with aggregate principal of up to
Revolving borrowing is subject to a borrowing-base formula and reserves, and ePlus says it relies on the facility for daily working capital and liquidity; the stated limits therefore do not establish that all revolving capacity is available to draw.
Key Figures
Net sales: $667.9 million
Gross profit: $180.3 million
Gross margin: 27.0%
+5 more
8 metrics
Net sales
$667.9 million
Three months ended September 30, 2026; $608.8 million in 2025
Gross profit
$180.3 million
Three months ended September 30, 2026; $162.1 million in 2025
Gross margin
27.0%
Three months ended September 30, 2026; 26.6% in 2025
Net earnings from continuing operations
$40.4 million
Three months ended September 30, 2026; $38.2 million in 2025
Adjusted EBITDA
$67.1 million
Three months ended September 30, 2026; $58.7 million in 2025; non-GAAP measure
Net cash provided by (used in) operating activities
$19.1 million provided
Six months ended September 30, 2026; $133.7 million used in 2025
Net earnings
$70.7 million
Six months ended September 30, 2026; $77.4 million in 2025, which included $7.3 million from discontinued operations
Shares repurchased under plan
399,388 shares
Six months ended September 30, 2026; value of $33.9 million
Key Terms
Adjusted EBITDA, discontinued operations, performance obligations, contract liabilities, +1 more
5 terms
Adjusted EBITDA financial
"We define Adjusted EBITDA as net earnings from continuing operations"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
discontinued operations financial
"presenting the results of our domestic financing business as discontinued operations"
Discontinued operations are parts of a company that it has decided to sell or shut down, and no longer plans to run in the future. This matters to investors because it helps them understand which parts of the business are ongoing and which are being phased out, providing a clearer picture of the company’s current performance and future prospects. Think of it like a store closing a department—it no longer contributes to sales or profits.
performance obligations financial
"revenue expected to be recognized in the future related to performance obligations"
Performance obligations are the specific promises a company makes to deliver goods or services to a customer under a contract, treated as separate deliverables when a customer can benefit from them on their own. Investors care because these promises determine when and how much revenue a company records — like breaking a bundled purchase into separate billable parts — which affects reported earnings, growth trends and the clarity of future cash flows.
contract liabilities financial
"Contract liabilities represent our obligation to transfer goods or services"
Contract liabilities are amounts a company has been paid in advance for goods or services it still owes to customers — think of them like gift cards or prepaid subscriptions the company must fulfill later. For investors, they show promised future work or deliveries that will turn into revenue over time, reveal cash already collected, and help assess whether a firm has a backlog of obligations that could affect future earnings and cash flow.
contingent consideration financial
"We recorded a $3.5 million reduction in the fair value of the Contingent Consideration"
Contingent consideration is an additional payment agreed when one company buys another that will be paid later only if specific future targets are met, such as revenue, profit, or regulatory milestones. It matters to investors because it shifts risk between buyer and seller and affects the acquiring company's future cash flow and reported value — like promising a bonus after results are proven.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were PLUS's second-quarter results?
PLUS reported net sales of $667.9 million for the three months ended September 30, 2026, versus $608.8 million a year earlier. Gross profit was $180.3 million versus $162.1 million, and net earnings from continuing operations were $40.4 million versus $38.2 million.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended September 30, 2026
OR
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 November 2, 2026, was 25,978,588 .
TABLE OF CONTENTS
ePlus inc. AND SUBSIDIARIES
|
Part I.
|
Financial Information
|
||
|
Item 1.
|
Financial Statements
|
||
|
Unaudited Consolidated Balance Sheets as of September 30, 2026, and March 31, 2026
|
3
|
||
|
Unaudited Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2026, and 2025
|
4
|
||
|
Unaudited Consolidated Statements of Comprehensive Income for the Three and Six Months Ended September 30, 2026, and 2025
|
5
|
||
|
Unaudited Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2026, and 2025
|
6
|
||
|
Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended September 30, 2026, and 2025
|
8
|
||
|
Notes to Unaudited Consolidated Financial Statements
|
9
|
||
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
23
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
36
|
|
|
Item 4.
|
Controls and Procedures
|
36
|
|
|
Part II.
|
Other Information
|
||
|
Item 1.
|
Legal Proceedings
|
37
|
|
|
Item 1A.
|
Risk Factors
|
37
|
|
|
Item 2.
|
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
|
37
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
37
|
|
|
Item 4.
|
Mine Safety Disclosures
|
37
|
|
|
Item 5.
|
Other Information
|
37
|
|
|
Item 6.
|
Exhibits
|
38
|
|
|
Signatures
|
39
|
||
Table of Contents
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’ corresponding rapid and unpredictable price fluctuations, 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 our 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;
●
risks relating to artificial intelligence (“AI”), including the use or capabilities of AI and emerging laws, rules and regulations related to AI and data centers;
●
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;
●
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;
●
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 in 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;
●
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;
●
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;
1
Table of Contents
●
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;
●
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;
●
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;
●
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;
●
cybersecurity attacks that may occur while employees work remotely and our ability to adequately train our personnel to prevent a cyber event;
●
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;
●
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;
●
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;
●
failure to comply with public sector contracts, or related applicable laws or regulations;
●
our ability to raise capital, maintain or increase, as needed, our lines of credit with vendors or our floor plan facility, or the related effect of those matters on our common stock price;
●
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 the continuation of our regular dividend issuance and share repurchases;
●
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
●
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” contained elsewhere in this report, as well as other reports that we file with the Securities and Exchange Commission (the “SEC”).
2
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
ePlus inc. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
|
September 30, 2026
|
March 31, 2026
| |||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | $ | ||||||
|
Accounts receivable—trade, net
|
||||||||
|
Accounts receivable—other, net
|
||||||||
|
Inventories
|
||||||||
|
Deferred costs
|
||||||||
|
Other current assets
|
||||||||
|
Total current assets
|
||||||||
|
Deferred tax asset
|
||||||||
|
Property, equipment, and other assets—net
|
||||||||
|
Goodwill
|
||||||||
|
Other intangible assets—net
|
||||||||
|
TOTAL ASSETS
|
$ | $ | ||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
LIABILITIES
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | $ | ||||||
|
Accounts payable—floor plan
|
||||||||
|
Salaries and commissions payable
|
||||||||
|
Contract liabilities
|
||||||||
|
Other current liabilities
|
||||||||
|
Total current liabilities
|
||||||||
|
Contract liabilities—long-term
|
||||||||
|
Other liabilities
|
||||||||
|
TOTAL LIABILITIES
|
||||||||
|
COMMITMENTS AND CONTINGENCIES (Note 8)
|
||||||||
|
STOCKHOLDERS' EQUITY
|
||||||||
| Preferred stock, $ |
||||||||
| Common stock, $ |
||||||||
|
Additional paid-in capital
|
||||||||
| Treasury stock, at cost, |
( | ) | ( | ) | ||||
|
Retained earnings
|
||||||||
|
Accumulated other comprehensive income—foreign currency translation adjustment
|
||||||||
|
Total Stockholders' Equity
|
||||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | $ | ||||||
See Notes to Unaudited Consolidated Financial Statements.
3
Table of Contents
ePlus inc. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
|
Three months ended
September 30, |
Six months ended September 30,
|
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
| |||||||||||||
|
Net sales
|
||||||||||||||||
|
Product
|
$ | $ | $ | $ | ||||||||||||
|
Services
|
||||||||||||||||
|
Total
|
||||||||||||||||
|
Cost of sales
|
||||||||||||||||
|
Product
|
||||||||||||||||
|
Services
|
||||||||||||||||
|
Total
|
||||||||||||||||
|
Gross profit
|
||||||||||||||||
|
Selling, general, and administrative
|
||||||||||||||||
|
Depreciation and amortization
|
||||||||||||||||
|
Operating expenses
|
||||||||||||||||
|
Operating income
|
||||||||||||||||
|
Other income (expense), net
|
( | ) | ||||||||||||||
|
Earnings from continuing operations before tax
|
||||||||||||||||
|
Provision for income taxes
|
||||||||||||||||
|
Net earnings from continuing operations
|
||||||||||||||||
|
Earnings (loss) from discontinued operations, net of tax (Note 13)
|
( | ) | ||||||||||||||
|
Net earnings
|
$ | $ | $ | $ | ||||||||||||
|
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
|
$ | $ | $ | $ | ||||||||||||
|
Weighted average common shares outstanding—basic
|
||||||||||||||||
|
Weighted average common shares outstanding—diluted
|
||||||||||||||||
See Notes to Unaudited Consolidated Financial Statements.
4
Table of Contents
ePlus inc. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
|
Three months ended
September 30, |
Six months ended September 30,
|
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
| |||||||||||||
|
NET EARNINGS
|
$ | $ | $ | $ | ||||||||||||
|
OTHER COMPREHENSIVE INCOME, NET OF TAX:
|
||||||||||||||||
|
Foreign currency translation adjustments
|
( | ) | ||||||||||||||
|
Other comprehensive income (loss)
|
( | ) | ||||||||||||||
|
TOTAL COMPREHENSIVE INCOME
|
$ | $ | $ | $ | ||||||||||||
See Notes to Unaudited Consolidated Financial Statements.
5
Table of Contents
ePlus inc. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
Six months ended September 30,
|
||||||||
|
2026
|
2025
| |||||||
|
Cash flows from operating activities:
|
||||||||
|
Net earnings
|
$ | $ | ||||||
|
Less: Earnings from discontinued operations, net of tax
|
||||||||
|
Net earnings from continuing operations
|
||||||||
|
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
|
||||||||
|
Depreciation and amortization
|
||||||||
|
Provision for credit losses
|
( | ) | ||||||
|
Share-based compensation expense
|
||||||||
|
Deferred taxes
|
||||||||
|
Net loss on disposal of property and equipment
|
||||||||
|
Changes in:
|
||||||||
|
Accounts receivable
|
( | ) | ( | ) | ||||
|
Inventories
|
( | ) | ( | ) | ||||
|
Other assets
|
( | ) | ( | ) | ||||
|
Accounts payable
|
( | ) | ||||||
|
Other liabilities
|
||||||||
|
Net cash provided by (used in) operating activities of continuing operations
|
( | ) | ||||||
|
Net cash provided by operating activities of discontinued operations
|
||||||||
|
Net cash provided by (used in) operating activities
|
( | ) | ||||||
|
Cash flows from investing activities:
|
||||||||
|
Proceeds from sale of property and equipment
|
||||||||
|
Purchases of property and equipment
|
( | ) | ( | ) | ||||
|
Cash used in acquisitions, net of cash acquired
|
( | ) | ||||||
|
Net cash used in investing activities of continuing operations
|
( | ) | ( | ) | ||||
|
Net cash provided by investing activities of discontinued operations
|
||||||||
|
Net cash provided by (used in) investing activities
|
( | ) | ||||||
|
Cash flows from financing activities:
|
||||||||
|
Proceeds from issuance of common stock
|
||||||||
|
Repurchase of common stock
|
( | ) | ( | ) | ||||
|
Dividend payments
|
( | ) | ( | ) | ||||
|
Net borrowings on floor plan facility
|
||||||||
|
Net cash used in financing activities of continuing operations
|
( | ) | ( | ) | ||||
|
Net cash used in financing activities of discontinued operations
|
( | ) | ||||||
|
Net cash used in financing activities
|
( | ) | ( | ) | ||||
|
Effect of exchange rate changes on cash
|
||||||||
|
Net increase (decrease) in cash and cash equivalents
|
( | ) | ||||||
|
Cash and cash equivalents, beginning of period
|
||||||||
|
Cash and cash equivalents, end of period
|
$ | $ | ||||||
6
Table of Contents
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
(in thousands)
|
| Six months ended September 30, | |||||||
|
2026
|
2025
| |||||||
|
Supplemental disclosures of cash flow information:
|
||||||||
|
Cash paid for interest
|
$ | $ | ||||||
|
Cash paid for income taxes
|
$ | $ | ||||||
|
Cash paid for amounts included in the measurement of lease liabilities
|
$ | $ | ||||||
|
Schedule of non-cash investing and financing activities:
|
||||||||
|
Purchases of property and equipment
|
$ | ( | ) | $ | ( | ) | ||
|
Financing of acquisitions
|
$ | ( | ) | |||||
|
Vesting of share-based compensation
|
$ | $ | ||||||
|
Repurchase of common stock
|
$ | ( | ) | $ | ||||
|
New operating lease assets obtained in exchange for lease obligations
|
$ | $ | ||||||
See Notes to Unaudited Consolidated Financial Statements.
7
Table of Contents
ePlus inc. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
|
Six months ended September 30, 2026
|
||||||||||||||||||||||||||||
|
| Common Stock |
Additional
Paid-In
Capital
|
Treasury
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income
|
Total
| ||||||||||||||||||||||
|
Shares
|
Par
Value
| |||||||||||||||||||||||||||
|
Balance, March 31, 2026
|
$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
|
Issuance of restricted stock awards
|
( | ) | ||||||||||||||||||||||||||
|
Issuance of performance stock units
|
||||||||||||||||||||||||||||
|
Issuance of common stock
|
||||||||||||||||||||||||||||
|
Share-based compensation
|
||||||||||||||||||||||||||||
|
Repurchase of common stock
|
( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Dividends paid and accrued ($ |
- | ( | ) | ( | ) | |||||||||||||||||||||||
|
Net earnings
|
- | |||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
- | |||||||||||||||||||||||||||
|
Balance, June 30, 2026
|
$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
|
Issuance of restricted stock awards
|
( | ) | ||||||||||||||||||||||||||
|
Share-based compensation
|
||||||||||||||||||||||||||||
|
Repurchase of common stock
|
( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Dividends paid and accrued ($ |
- | ( | ) | ( | ) | |||||||||||||||||||||||
|
Net earnings
|
- | |||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
- | |||||||||||||||||||||||||||
|
Balance, September 30, 2026
|
$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
|
Six months ended September 30, 2025
|
||||||||||||||||||||||||||||
|
| Common Stock |
Additional Paid-In Capital |
Treasury
Stock |
Retained
Earnings |
Accumulated
Other
Comprehensive
Income
|
Total | ||||||||||||||||||||||
|
Shares
|
Par
Value | |||||||||||||||||||||||||||
|
Balance, March 31, 2025
|
$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
|
Issuance of restricted stock awards
|
( | ) | ||||||||||||||||||||||||||
|
Issuance of common stock
|
||||||||||||||||||||||||||||
|
Share-based compensation
|
||||||||||||||||||||||||||||
|
Repurchase of common stock
|
( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
|
Net earnings
|
- | |||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
- | |||||||||||||||||||||||||||
|
Balance, June 30, 2025
|
$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
|
Issuance of restricted stock awards
|
( | ) | ||||||||||||||||||||||||||
|
Share-based compensation
|
||||||||||||||||||||||||||||
|
Repurchase of common stock
|
( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Dividends paid and accrued ($ |
- | ( | ) | ( | ) | |||||||||||||||||||||||
|
Net earnings
|
- | |||||||||||||||||||||||||||
|
Foreign currency translation adjustment
|
- | ( | ) | ( | ) | |||||||||||||||||||||||
|
Balance, September 30, 2025
|
$ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
See Notes to Unaudited Consolidated Financial Statements.
8
Table of Contents
ePlus inc. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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 and six months ended September 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 and six months ended September 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 IT products, including hardware, software, maintenance, and services, from Cisco Systems, which represented approximately 31 28
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.
9
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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):
|
Six months ended September 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):
| Six months ended September 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
|
( | ) | ||||||||||
10
Table of Contents
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):
|
Six months ended September 30, 2025
|
||||||||||||
|
As reported
|
Adjusted
|
As revised
| ||||||||||
|
Retained
earnings
|
||||||||||||
|
Balance, ending
|
$ | $ | ( | ) | $ | |||||||
|
Total
|
||||||||||||
|
Balance, ending
|
( | ) | ||||||||||
3. RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted Accounting Pronouncements
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update is intended to improve the operability of the guidance for determining when to capitalize internal-use software development costs. We early adopted this update in our fiscal year ending March 31, 2027 using the prospective transition method. Accordingly, we are applying the amended guidance to all software costs incurred after the beginning of our current annual reporting period. Our adoption of this update did not have a material impact on our consolidated financial statements. The impact of our adoption of this update in future periods will depend on the nature and extent of our future software development activities.
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.
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):
| September 30, 2026 | March 31, 2026 | |||||||
|
Accounts receivable
|
$ | $ | ||||||
|
Allowance for credit losses
|
( | ) | ( | ) | ||||
|
Total accounts receivable—trade, net
|
$ | $ | ||||||
As of September 30, 2026, and March 31, 2026, our accounts receivable—trade, net included $1.7 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 September 30, 2026, and March 31, 2026, we had $9.6 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.
11
Table of Contents
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 short-term contract assets of $28.3 million and $17.8 million as of September 30, 2026, and March 31, 2026, respectively. We had long-term contract assets of $8.1 million as of September 30, 2026. We did not have any long-term contract assets as of March 31, 2026. We recognize the short-term and long-term portions of our contract asset balance as part of other current assets and property, equipment, and other assets—net, respectively, 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 $46.1 million and $95.9 million for the three and six months ended September 30, 2026, respectively, and $33.5 million and $76.3 million for the three and six months ended September 30, 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 six months ended September 30, 2026 (in thousands):
| Product | Professional Services | Managed Services |
Total | |||||||||||||
|
Balance, March 31, 2026 (1)
|
$ | $ | $ | $ | ||||||||||||
|
Acquisitions
|
||||||||||||||||
|
Foreign currency translations
|
||||||||||||||||
|
Balance, September 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.
12
Table of Contents
Our goodwill balance increased by $9.2 million for the six months ended September 30, 2026, due to our acquisition of certain assets and assumption of certain liabilities of Daymark Solutions, Inc. (“Daymark”) that closed on August 21, 2026. Please refer to Note 15, “Business Combinations” for details on the acquisition of certain assets and assumption of certain liabilities of Daymark.
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 September 30, 2026, and March 31, 2026 (in thousands):
| September 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 other intangible assets was $4.4 million and $9.0 million for the three and six months ended September 30, 2026, respectively, and $5.3 million and $10.9 million for the three and six months ended September 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 six months ended September 30, 2026, and 2025 (in thousands):
|
Six months ended September 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.
13
Table of Contents
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.
Under the accounts payable floor plan facility, we had an outstanding balance of $139.2 million and $119.7 million as of September 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 September 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 September 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.
14
Table of Contents
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 and six months ended September 30, 2026, and 2025, respectively (in thousands, except per share data).
|
Three months ended September 30,
|
Six months ended September 30,
|
|||||||||||||||
|
2026
|
2025
|
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 common shares 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 4, 2026, 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 commencing on August 11, 2026. Previously, 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 that began on August 11, 2025 and terminated on August 10, 2026. 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 six months ended September 30, 2026, we purchased 399,388 shares of our outstanding common stock at a value of $33.9 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 six months ended September 30, 2025, we purchased 60,000 shares of our outstanding common stock at a value of $4.4 million under the share repurchase plan; we also purchased 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.
15
Table of Contents
11. SHARE-BASED COMPENSATION
Share-Based Plans
During the six months ended September 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 six months ended September 30, 2026, we granted 853 restricted shares under the 2024 Director LTIP and 111,773 restricted shares under the 2021 Employee LTIP. For the six months ended September 30, 2025, we granted 652 restricted shares under the 2024 Director LTIP and 121,844 restricted shares under the 2021 Employee LTIP.
The following table provides a summary of the unvested restricted shares for the six months ended September 30, 2026:
|
Number of shares
|
Weighted average grant-date fair value
| |||||||
|
Unvested April 1, 2026
|
$ | |||||||
|
Granted
|
||||||||
|
Vested
|
( | ) | ||||||
|
Forfeited
|
( | ) | ||||||
|
Unvested September 30, 2026
|
$ | |||||||
Performance Stock Units
We have granted Performance Stock Units (“PSUs”) to 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 target amount of unvested PSUs for the six months ended September 30, 2026:
|
Number of units
|
Weighted average grant-date fair value
| |||||||
|
Unvested April 1, 2026
|
$ | |||||||
|
Granted
|
||||||||
|
Attainment adjustment (1)
|
||||||||
|
Vested
|
( | ) | ||||||
|
Unvested September 30, 2026
|
$ | |||||||
(1)
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 six months ended September 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 September 30, 2026, there were 2.29 million shares remaining under the ESPP.
16
Table of Contents
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 and six months ended September 30, 2026, and 2025, respectively (in thousands):
| Three months ended September 30, | Six months ended September 30, | |||||||||||||||
|
2026
|
2025
|
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 September 30, 2026, the total unrecognized compensation expense related to unvested restricted stock was $14.8 million, which is expected to be recognized over a weighted-average period of 30 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 September 30, 2026, and 2025, were each $1.5 3.2 million and $3.0 million, respectively.
12. INCOME TAXES
Our provision for income tax expense was $15.6 million and $27.3 million for the three and six months ended September 30, 2026, as compared to $15.8 million and $27.4 million for the same three-and six-month periods in the prior year. Our effective tax rate for the three and six months ended September 30, 2026, were each 27.9 29.3 % and 28.1 % for the same three- and six-month periods in the prior year, respectively. The effective tax rate for the three and six months ended September 30, 2026, and September 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 (“”), 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.
17
Table of Contents
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 had $0.2 million payable related to the Sale Transaction, which we paid in August 2026.
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 and six months ended September 30, 2025 (in thousands):
|
Three months ended
September 30, 2025 |
Six months ended
September 30, 2025 | |||||||
| $ | $ | |||||||
|
Cost of sales
|
||||||||
|
Gross profit
|
||||||||
|
Selling, general, and administrative
|
||||||||
|
Interest and financing costs
|
||||||||
|
Operating expenses
|
||||||||
|
Operating income
|
||||||||
|
Other (expense), net
|
( | ) | ( | ) | ||||
|
Earnings (loss) before gain from sale and income
taxes
|
( | ) | ||||||
|
Gain from sale of HoldCo before income taxes
|
||||||||
|
Earnings (loss) before income taxes
|
( | ) | ||||||
|
Provision for income taxes
|
( | ) | ||||||
|
Earnings (loss) from discontinued operations, net of
tax
|
$ | ( | ) | $ | ||||
18
Table of Contents
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 September 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)
| |||||||||||||
|
September 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 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.
On the Closing date, we estimated the fair value of each component of the Contingent Consideration using a Monte Carlo simulation model based on forecasted results. We subsequently updated these estimates to reflect actual results and revised forecasts. During the three and six months ended September 30, 2026, we recorded a $3.5 0.4 million in cash, which reduced the receivable.
15. BUSINESS COMBINATIONS
DAYMARK SOLUTIONS, INC.
On August 21, 2026, our subsidiary, ePlus Technology, inc., acquired certain assets and liabilities of Daymark. Based in Burlington, Massachusetts, Daymark is an IT solutions and professional services provider focused on architecting, implementing, and supporting complex hybrid cloud, cybersecurity, compliance, and modern data center environments.
Our preliminary sum for consideration transferred was $17.4 million, which consisted of $15.9 million paid in cash at closing, plus an estimated $1.5 million due to the sellers based on adjustments to a determination of the total net assets at closing. Our preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed is presented below (in thousands):
19
Table of Contents
|
Acquisition date amount
| ||||
|
Accounts receivable
|
$ | |||
|
Other assets
|
||||
|
Identified intangible assets
|
||||
|
Accounts payable and other liabilities
|
( | ) | ||
|
Contract liabilities
|
( | ) | ||
|
Total identifiable net assets
|
||||
|
Goodwill
|
||||
|
Total purchase consideration
|
$ | |||
Our $7.5 million in identified intangible assets consists of $6.5 million for customer relationships with a ten-year useful life and $1.0 million for certifications with a five-year useful life.
We recognized goodwill related to this transaction of $9.2 million, which was assigned to our professional services, managed services and product segments. The goodwill recognized in the Daymark acquisition is attributable to the acquired assembled workforce and expected synergies, none of which qualify for recognition as a separate intangible asset. The total amount of goodwill expected to be deductible for tax purposes is $9.2 million.
The amount of revenues and earnings of Daymark since the acquisition date are not material. Likewise, the impact to the revenue and earnings of the combined entity for the current reporting period as though the acquisition date had been April 1, 2026, is not material.
16. SEGMENT REPORTING
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. We have three reportable segments: product, professional services, and managed services. In addition, we have one other operating segment: financing, which does not meet the reportable segment quantitative thresholds and, accordingly, is included in an other category.
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 financing segment consists of the international entities of our financing business that we retained after selling our domestic financing business.
Our CODM measures the performance of our reportable 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.
20
Table of Contents
The following table provides reportable segment information (in thousands):
|
Three months ended
September 30,
|
Six months ended
September 30,
|
|||||||||||||||
|
2026
|
2025
|
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 September 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
|
$ | $ | $ | $ | ||||||||||||
|
Six months ended September 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 September 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
|
$ | $ | $ | $ | ||||||||||||
21
Table of Contents
|
Six months ended September 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 September 30,
|
Six months ended September 30,
|
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
| |||||||||||||
|
Customer end market:
|
||||||||||||||||
|
Telecom, Media & Entertainment
|
$ | $ | $ | $ | ||||||||||||
|
Healthcare
|
||||||||||||||||
|
Financial Services
|
||||||||||||||||
|
SLED
|
||||||||||||||||
|
Technology
|
||||||||||||||||
|
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
|
$ | $ | $ | $ | ||||||||||||
22
Table of Contents
Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides context for 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 six months ended September 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.
23
Table of Contents
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.
24
Table of Contents
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 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.
25
Table of Contents
The following tables provide our key business metrics for our consolidated entity (in thousands, except per share amounts):
|
Three
months ended September 30,
|
Six
months ended September 30,
|
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
| |||||||||||||
|
Financial
metrics
|
||||||||||||||||
|
Net
sales
|
$ | 667,924 | $ | 608,826 | $ | 1,317,037 | $ | 1,251,601 | ||||||||
|
Gross
profit
|
$ | 180,285 | $ | 162,124 | $ | 331,614 | $ | 315,800 | ||||||||
|
Gross
margin
|
27.0 | % | 26.6 | % | 25.2 | % | 25.2 | % | ||||||||
|
Selling,
general, and administrative
|
$ | 118,032 | $ | 106,479 | $ | 224,653 | $ | 210,146 | ||||||||
|
Depreciation
and amortization
|
5,726 | 6,810 | 11,602 | 13,879 | ||||||||||||
|
Operating
expenses
|
$ | 123,758 | $ | 113,289 | $ | 236,255 | $ | 224,025 | ||||||||
|
Operating
income
|
$ | 56,527 | $ | 48,835 | $ | 95,359 | $ | 91,775 | ||||||||
|
Operating
income margin
|
8.5 | % | 8.0 | % | 7.2 | % | 7.3 | % | ||||||||
|
Net
earnings from continuing operations
|
$ | 40,383 | $ | 38,160 | $ | 70,662 | $ | 70,174 | ||||||||
|
Net
earnings from continuing operations margin
|
6.0 | % | 6.3 | % | 5.4 | % | 5.6 | % | ||||||||
|
Net
earnings from continuing operations per common share—diluted
|
$ | 1.56 | $ | 1.45 | $ | 2.72 | $ | 2.66 | ||||||||
|
Non-GAAP
financial metrics
|
||||||||||||||||
|
Non-GAAP:
Net earnings from continuing operations (1)
|
$ | 47,394 | $ | 40,457 | $ | 80,719 | $ | 77,934 | ||||||||
|
Non-GAAP:
Net earnings from continuing operations per common share—diluted (1)
|
$ | 1.82 | $ | 1.53 | $ | 3.11 | $ | 2.96 | ||||||||
|
Adjusted
EBITDA (2)
|
$ | 67,101 | $ | 58,703 | $ | 114,930 | $ | 111,375 | ||||||||
|
Adjusted
EBITDA margin (2)
|
10.0 | % | 9.6 | % | 8.7 | % | 8.9 | % | ||||||||
|
Operational
metrics
|
||||||||||||||||
|
Gross
billings (3)
|
||||||||||||||||
|
Networking
|
$ | 286,256 | $ | 315,189 | $ | 544,984 | $ | 583,921 | ||||||||
|
Security
|
272,182 | 255,158 | 491,949 | 445,203 | ||||||||||||
|
Cloud
|
270,003 | 202,828 | 558,845 | 514,845 | ||||||||||||
|
Collaboration
|
43,519 | 41,286 | 69,236 | 64,063 | ||||||||||||
|
Other
|
75,710 | 76,917 | 123,567 | 128,363 | ||||||||||||
|
Product
gross billings
|
947,670 | 891,378 | 1,788,581 | 1,736,395 | ||||||||||||
|
Service
gross billings
|
119,141 | 131,277 | 235,365 | 239,025 | ||||||||||||
|
Total
gross billings
|
$ | 1,066,811 | $ | 1,022,655 | $ | 2,023,946 | $ | 1,975,420 | ||||||||
(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 expenses, acquisition related amortization expense, and the related tax effects.
We believe that these exclusions 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 with useful measures 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.
26
Table of Contents
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
September 30, |
Six
months ended
September 30, |
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
| |||||||||||||
|
GAAP: Net earnings from continuing operations before
tax
|
$ | 56,000 | $ | 53,998 | $ | 97,962 | $ | 97,550 | ||||||||
|
Share-based compensation
|
4,102 | 3,058 | 7,223 | 5,721 | ||||||||||||
|
Acquisition related expenses
|
746 | - | 746 | - | ||||||||||||
|
Acquisition related amortization expense
|
4,449 | 5,313 | 9,014 | 10,861 | ||||||||||||
|
Other (income) expense, net
|
527 | (5,163 | ) | (2,603 | ) | (5,775 | ) | |||||||||
|
Non-GAAP: Earnings from continuing operations before
provision for income taxes
|
65,824 | 57,206 | 112,342 | 108,357 | ||||||||||||
|
GAAP: Provision for income taxes
|
15,617 | 15,838 | 27,300 | 27,376 | ||||||||||||
|
Share-based compensation
|
1,149 | 896 | 2,034 | 1,608 | ||||||||||||
|
Acquisition related expenses
|
209 | - | 209 | - | ||||||||||||
|
Acquisition related amortization expense
|
1,246 | 1,552 | 2,541 | 3,025 | ||||||||||||
|
Other (income) expense, net
|
148 | (1,512 | ) | (740 | ) | (1,675 | ) | |||||||||
|
Tax benefit (expense) on restricted stock
|
61 | (25 | ) | 279 | 89 | |||||||||||
|
Non-GAAP: Provision for income taxes
|
18,430 | 16,749 | 31,623 | 30,423 | ||||||||||||
|
Non-GAAP: Net earnings from continuing operations
|
$ | 47,394 | $ | 40,457 | $ | 80,719 | $ | 77,934 | ||||||||
|
Three
months ended
September 30, |
Six
months ended
September 30, |
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
| |||||||||||||
|
GAAP: Net earnings from continuing operations per
common share - diluted
|
$ | 1.56 | $ | 1.45 | $ | 2.72 | $ | 2.66 | ||||||||
|
Share-based compensation
|
0.11 | 0.08 | 0.20 | 0.16 | ||||||||||||
|
Acquisition related expenses
|
0.02 | - | 0.02 | - | ||||||||||||
|
Acquisition related amortization expense
|
0.12 | 0.14 | 0.25 | 0.30 | ||||||||||||
|
Other (income) expense, net
|
0.01 | (0.14 | ) | (0.07 | ) | (0.16 | ) | |||||||||
|
Tax benefit (expense) on restricted stock
|
- | - | (0.01 | ) | - | |||||||||||
|
Total non-GAAP adjustments - net of tax
|
0.26 | 0.08 | 0.39 | 0.30 | ||||||||||||
|
Non-GAAP: Net earnings from continuing operations
per common share - diluted
|
$ | 1.82 | $ | 1.53 | $ | 3.11 | $ | 2.96 | ||||||||
(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, acquisition related expenses, 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 useful measures 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 and Adjusted EBITDA margin as supplemental measures 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
September 30, |
Six months ended
September 30, |
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
| |||||||||||||
|
GAAP: Net earnings from continuing
operations
|
$ | 40,383 | $ | 38,160 | $ | 70,662 | $ | 70,174 | ||||||||
|
Provision for income taxes
|
15,617 | 15,838 | 27,300 | 27,376 | ||||||||||||
|
Share-based compensation
|
4,102 | 3,058 | 7,223 | 5,721 | ||||||||||||
|
Acquisition related expenses
|
746 | - | 746 | - | ||||||||||||
|
Depreciation and amortization
|
5,726 | 6,810 | 11,602 | 13,879 | ||||||||||||
|
Other (income) expense, net
|
527 | (5,163 | ) | (2,603 | ) | (5,775 | ) | |||||||||
|
Non-GAAP: Adjusted EBITDA
|
$ | 67,101 | $ | 58,703 | $ | 114,930 | $ | 111,375 | ||||||||
(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.
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Table of Contents
Results of Operations
The three and six months ended September 30, 2026, compared to the three and six months ended September 30, 2025
Net sales: Net sales for the three months ended September 30, 2026, increased $59.1 million compared to the three months ended September 30, 2025, due to increased net sales to customers in the financial services, healthcare, and SLED industries, offset by decreased net sales to customers in the telecom, media and entertainment, retail, and technology industries. In sales to our commercial customers, our increase in net sales was primarily driven by small and mid-market customers. For further information, see the “Segment Results of Operations” below.
Net sales for the six months ended September 30, 2026, increased $65.4 million compared to the six months ended September 30, 2025, due to increased net sales to customers in the financial services, technology, and healthcare industries, offset by decreased net sales to customers in the telecom, media and entertainment, SLED, and retail industries. In sales to our commercial customers, our increase in net sales was primarily driven by small and mid-market customers. For further information, see the “Segment Results of Operations” below.
Gross profit: Gross profit for the three months ended September 30, 2026, increased $18.2 million compared to the prior year three-month period due to increases in net sales in our product segment and managed services segment, offset by a decrease in our professional services segment. Overall, gross margin increased 40 basis points year over year to 27.0%, primarily due to higher gross margins in our product segment and an increase in vendor consideration, offset by lower gross margins in our professional services segment and managed services segment. Contributing to higher gross margins in our product segment, we had an increase in net sales from sales of third-party maintenance and subscriptions that are recognized on a net basis. For further information, see the “Segment Results of Operations” below.
Gross profit for the six months ended September 30, 2026, increased $15.8 million compared to the prior year six-month period due to increases in net sales in our product segment and managed services segment offset by a decrease in our professional services segment. Overall, gross margin was flat at 25.2%. For further information, see the “Segment Results of Operations” below.
Selling, general, and administrative: Selling, general, and administrative expenses for the three and six months ended September 30, 2026, increased $11.6 million and $14.5 million, respectively, compared to the three and six months ended September 30, 2025.
Salaries and benefits, including variable compensation and share-based compensation for the three and six months ended September 30, 2026, increased $7.0 million and $8.0 million, respectively, compared to the same three- and six-month periods in the prior year, primarily due to increased headcount and an increase in variable compensation commensurate with the increase in our gross profit. As of September 30, 2026, we had 2,173 employees, an increase of 35 from 2,138 employees as of September 30, 2025. We added 19 employees from the acquisition of certain assets of Daymark Solutions, Inc. (“Daymark”) on August 21, 2026.
General and administrative expenses for the three and six months ended September 30, 2026, increased $4.6 million and $6.9 million, respectively, as compared to the same three- and six-month periods in the prior year, mainly driven by the acquisition of certain assets of Daymark, higher third-party consultant fees, and higher software, subscription, and maintenance fees.
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Table of Contents
Provision for credit losses for the three months ended September 30, 2026, was a benefit of $0.5 million, as compared to a benefit of $0.4 million for the prior year three-month period. Our lower provision for credit losses for the three months ended September 30, 2026, was due to favorable changes in our net credit exposure.
Provision for credit losses for the six months ended September 30, 2026, was a benefit of $0.1 million, as compared to an expense of $0.2 million for the prior year six-month period. The benefit we recognized in our provision for credit losses for the six months ended September 30, 2026, was due to favorable changes in our net credit exposure.
Depreciation and amortization: Depreciation and amortization for the three and six months ended September 30, 2026, decreased compared to the three and six months ended September 30, 2025, primarily due to decreased amortization expense from customer relationship assets acquired in prior acquisitions that are being amortized on an accelerated basis, slightly offset by increased amortization from intangible assets acquired from the acquisition of certain assets of Daymark in the current three- and six-month periods.
Operating income: As a result of the foregoing, operating income for the three months ended September 30, 2026, increased by $7.7 million as compared to the same three-month period in the prior year, and operating income margin increased by 50 basis points to 8.5%.
As a result of the foregoing, operating income for the six months ended September 30, 2026, increased by $3.6 million as compared to the same six-month period in the prior year, and operating income margin decreased by 10 basis points to 7.2%.
Other income (expense), net: Other income (expense), net for the three months ended September 30, 2026, was an expense of $0.5 million, compared to income of $5.2 million for the three months ended September 30, 2025. Our other expense in the three-month period ended September 30, 2026, primarily relates to adjustments of $3.5 million to reduce our estimate of the fair value of contingent consideration relating to our sale of HoldCo. We had foreign exchange losses of $0.3 million for the three months ended September 30, 2026, compared to foreign exchange gains of $0.7 million for the same three-month period in the prior year. We had $3.3 million in interest income for the three months ended September 30, 2026, compared to $3.9 million for the three months ended September 30, 2025.
Other income (expense), net for the six months ended September 30, 2026, was income of $2.6 million, compared to income of $5.8 million for the six months ended September 30, 2025. Our other income in the six-month period ended September 30, 2026 was lower due to expense of $3.5 million to reduce our estimate of the fair value of contingent consideration relating to our sale of HoldCo. We had foreign exchange losses of $0.5 million for the six months ended September 30, 2026, compared to losses of $0.8 million for the same six-month period in the prior year. We had $6.6 million in interest income for the six months ended September 30, 2026, compared to $6.0 million for the six months ended September 30, 2025.
Provision for income taxes: Our provision for income tax expense was $15.6 million and $27.3 million for the three and six months ended September 30, 2026, as compared to $15.8 million and $27.4 million for the same three-and six-month periods in the prior year. Our effective tax rate for the three and six months ended September 30, 2026, were each 27.9%, compared with 29.3% and 28.1%, respectively, for the same three- and six-month periods in the prior year. Our effective income tax rate for the three- and six- month periods ended September 30, 2026, differed compared to the same three- and six-month periods in the prior year primarily due to state and local taxes and non-deductible executive compensation.
Net earnings from continuing operations: Net earnings from continuing operations for the three months ended September 30, 2026, was $40.4 million, an increase of $2.2 million, as compared to $38.2 million for the same three-month period in the prior year. The net earnings increase was due to the increase in operating income, offset by a decrease in other income (expense), net.
Net earnings from continuing operations for the six months ended September 30, 2026, was $70.7 million, an increase of $0.5 million, as compared to $70.2 million for the same six-month period in the prior year. The net earnings increase was due to the increase in operating income, offset by a decrease in other income (expense), net.
29
Table of Contents
Earnings (loss) from discontinued operations, net of tax: Losses from discontinued operations, net of tax, for the three months ended September 30, 2025, were $3.3 million. There were no discontinued operations transactions during the three months ended September 30, 2026.
Earnings from discontinued operations, net of tax, for the six months ended September 30, 2025, was $7.3 million consisting of earnings before gain from sale and income taxes of $5.6 million and gain from the sale of our domestic financing business of $4.4 million, less income tax of $2.7 million. There were no discontinued operations transactions during the six months ended September 30, 2026.
Net earnings: Due to the aforementioned reasons, net earnings for the three months ended September 30, 2026, were $40.4 million, as compared to $34.9 million for the same three-month period in the prior year.
Due to the aforementioned reasons, net earnings for the six months ended September 30, 2026, were $70.7 million, as compared to $77.4 million for the same six-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.
30
Table of Contents
Segment Results of Operations
The three and six months ended September 30, 2026, compared to the three and six months ended September 30, 2025
The results of operations for our segments were as follows (dollars in thousands):
|
Three months ended
September 30, |
Six months ended
September 30, |
|||||||||||||||
|
2026
|
2025
|
2026
|
2025
| |||||||||||||
|
Financial
metrics
|
||||||||||||||||
|
Net sales
|
||||||||||||||||
|
Product segment
|
$ | 547,117 | $ | 485,014 | $ | 1,076,720 | $ | 1,011,369 | ||||||||
|
Professional services
segment
|
67,752 | 76,344 | 135,833 | 148,073 | ||||||||||||
|
Managed services
segment
|
53,055 | 47,417 | 104,357 | 91,997 | ||||||||||||
|
Total reportable
segments
|
667,924 | 608,775 | 1,316,910 | 1,251,439 | ||||||||||||
|
Other
|
- | 51 | 127 | 162 | ||||||||||||
|
Total
|
$ | 667,924 | $ | 608,826 | $ | 1,317,037 | $ | 1,251,601 | ||||||||
|
Gross Profit
|
||||||||||||||||
|
Product segment
|
$ | 141,005 | $ | 119,013 | $ | 252,072 | $ | 230,955 | ||||||||
|
Professional services
segment
|
24,014 | 29,172 | 49,158 | 57,325 | ||||||||||||
|
Managed services
segment
|
15,266 | 13,953 | 30,331 | 27,487 | ||||||||||||
|
Total reportable
segments
|
180,285 | 162,138 | 331,561 | 315,767 | ||||||||||||
|
Other
|
- | (14 | ) | 53 | 33 | |||||||||||
|
Total
|
$ | 180,285 | $ | 162,124 | $ | 331,614 | $ | 315,800 | ||||||||
|
Gross margin:
|
||||||||||||||||
|
Product segment
|
25.8 | % | 24.5 | % | 23.4 | % | 22.8 | % | ||||||||
|
Professional services
segment
|
35.4 | % | 38.2 | % | 36.2 | % | 38.7 | % | ||||||||
|
Managed services
segment
|
28.8 | % | 29.4 | % | 29.1 | % | 29.9 | % | ||||||||
|
Total
|
27.0 | % | 26.6 | % | 25.2 | % | 25.2 | % | ||||||||
|
Net sales by customer
end market:
|
||||||||||||||||
|
Telecom, media &
entertainment
|
$ | 153,884 | $ | 176,772 | $ | 292,581 | $ | 361,751 | ||||||||
|
Healthcare
|
100,413 | 82,285 | 179,610 | 156,576 | ||||||||||||
|
Financial Services
|
93,521 | 63,079 | 166,907 | 110,579 | ||||||||||||
|
SLED
|
91,902 | 87,246 | 171,758 | 177,808 | ||||||||||||
|
Technology
|
69,434 | 69,549 | 187,433 | 152,296 | ||||||||||||
|
Retail
|
34,962 | 40,062 | 69,885 | 72,033 | ||||||||||||
|
All others
|
123,808 | 89,782 | 248,736 | 220,396 | ||||||||||||
|
Total reportable
segments
|
$ | 667,924 | $ | 608,775 | $ | 1,316,910 | $ | 1,251,439 | ||||||||
|
Net sales by type:
|
||||||||||||||||
|
Networking
|
234,382 | 258,156 | 458,103 | 476,358 | ||||||||||||
|
Cloud
|
178,599 | 128,270 | 359,347 | 335,266 | ||||||||||||
|
Security
|
72,693 | 65,889 | 150,958 | 126,996 | ||||||||||||
|
Collaboration
|
18,422 | 16,558 | 33,914 | 28,315 | ||||||||||||
|
Other
|
43,021 | 16,141 | 74,398 | 44,434 | ||||||||||||
|
Total products
segment
|
$ | 547,117 | $ | 485,014 | $ | 1,076,720 | $ | 1,011,369 | ||||||||
|
Professional services
segment
|
67,752 | 76,344 | 135,833 | 148,073 | ||||||||||||
|
Managed services
segment
|
53,055 | 47,417 | 104,357 | 91,997 | ||||||||||||
|
Total reportable
segments
|
$ | 667,924 | $ | 608,775 | $ | 1,316,910 | $ | 1,251,439 | ||||||||
Net sales:
Product segment sales for the three and six months ended September 30, 2026, increased compared to the same three- and six-month periods in the prior year, due to increases in revenue from cloud, security, and collaboration products, offset by a decrease in networking 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.
Professional services segment sales for the three and six months ended September 30, 2026, decreased compared to the same three- and six-month periods in the prior year, primarily due to decreases in revenues from project services and staff augmentation.
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Table of Contents
Managed services segment sales for the three and six months ended September 30, 2026, increased compared to the same three- and six-month periods in the prior year, due to ongoing expansion of these service offerings, primarily related to ongoing growth in cloud services.
Gross margin:
Product segment gross margin for the three and six months ended September 30, 2026, increased by 130 basis points and 60 basis points, respectively, from the same three- and six-month periods in the prior year due to a shift in product mix and increase in vendor consideration. Contributing to higher gross margins, we had an increase in net sales from sales of third-party maintenance and subscriptions that are recognized on a net basis. Vendor consideration earned as a percentage of sales for the three and six months ended September 30, 2026, increased by 20 basis points and 50 basis points, respectively.
Professional services segment gross margin for the three and six months ended September 30, 2026, decreased by 280 basis points and 250 basis points, respectively, from the same three- and six-month periods 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 margin for the three and six months ended September 30, 2026, decreased by 60 basis points and 80 basis points, respectively, from the same three- and six-month periods in the prior year, mainly driven by a decrease in gross 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 six months ended September 30, 2026, and 2025 (in thousands):
|
Six months ended September
30,
|
||||||||
|
2026
|
2025
| |||||||
|
Net cash provided by
(used in) operating activities of continuing operations
|
$ | 19,066 | $ | (137,623 | ) | |||
|
Net cash provided by
operating activities of discontinued operations
|
- | 3,881 | ||||||
|
Net cash provided by
(used in) operating activities
|
19,066 | (133,742 | ) | |||||
|
Net cash used in
investing activities of continuing operations
|
(18,280 | ) | (1,813 | ) | ||||
|
Net cash provided by
investing activities of discontinued operations
|
- | 156,681 | ||||||
|
Net cash provided by
(used in) investing activities
|
(18,280 | ) | 154,868 | |||||
|
Net cash used in
financing activities of continuing operations
|
(31,235 | ) | (3,182 | ) | ||||
|
Net cash used in
financing activities of discontinued operations
|
- | (6,417 | ) | |||||
|
Net cash used in
financing activities
|
(31,235 | ) | (9,599 | ) | ||||
|
Effect of exchange
rate changes on cash
|
571 | 1,255 | ||||||
|
Net increase
(decrease) in cash and cash equivalents
|
$ | (29,878 | ) | $ | 12,782 | |||
32
Table of Contents
Cash flows from operating activities: During the six months ended September 30, 2026, we provided $19.1 million through operating activities primarily due to an increase in our accounts payable and net earnings, offset by an increase in inventories and accounts receivable. During the six months ended September 30, 2025, we used $137.6 million through operating activities of continuing operations primarily due to an increase in our accounts receivable and inventories and a decrease in our accounts payable, partially offset by net earnings.
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 September
30,
|
||||||||
|
2026
|
2025
| |||||||
|
(DSO) Days sales outstanding (1)
|
63 | 62 | ||||||
|
(DIO) Days inventory outstanding
(2)
|
23 | 15 | ||||||
|
(DPO) Days payable outstanding
(3)
|
(50 | ) | (48 | ) | ||||
|
Cash conversion cycle
|
36 | 29 | ||||||
(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 36 days as of September 30, 2026, as compared to 29 days as of September 30, 2025. Our standard payment term for customers is between 30 to 60 days; however, certain customer orders may be approved for extended payment terms. Our DSO increased by 1 day to 63 days as of September 30, 2026, compared to 62 days as of September 30, 2025. Our DIO increased to 23 days as of September 30, 2026, compared to 15 days as of September 30, 2025, due to longer customer delivery schedules. Our DPO decreased by 2 days to 50 days as of September 30, 2026, as compared to 48 days as of September 30, 2025. Invoices processed through our credit facility, or the accounts payable-floor plan balance, are typically paid within 45 to 60 days from the invoice date, while accounts payable trade invoices are typically paid around 30 to 45 days from the invoice date.
Cash flows related to investing activities: During the six months ended September 30, 2026, we used $18.3 million through investing activities consisting of purchases of property and equipment and cash used for an acquisition. During the six months ended September 30, 2025, we used $1.8 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.
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Cash flows from financing activities: During the six months ended September 30, 2026, we used $31.2 million through financing activities. We had cash outflows of $38.5 million to repurchase outstanding shares of our common stock and $14.1 million paid in dividends, partially offset by cash inflows of $19.5 million in net borrowings on our floor plan facility and $1.8 million in proceeds from the issuance of common stock to employees under our employee stock purchase plan.
During the six months ended September 30, 2025, we used $3.2 million through financing activities of continuing operations. We had cash outflows of $7.4 million to repurchase outstanding shares of our common stock and $6.6 million paid in dividends. These cash outflows were partially offset by cash inflows of $9.0 million in net borrowing on our floor plan facility and $1.8 million in proceeds from the issuance of common stock to employees under our employee stock purchase plan.
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 the customer’s 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 September 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 $139.2 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 September 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 is constrained by both the maximum credit limit of $500.0 million and a sub-limit of $200.0 million as of both September 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
|
|||
|
$0.27
|
August 4, 2026
|
August 25, 2026
|
September 16, 2026
|
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On November 5, 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 December 16, 2026, to shareholders of record as of the close of business on November 24, 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 September 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.
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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.
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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.
Item 4.
CONTROLS AND PROCEDURES
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 September 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 September 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.
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PART II. OTHER INFORMATION
Item 1.
LEGAL PROCEEDINGS
Please refer to Note 8, “Commitment and Contingencies” in the accompanying Consolidated Financial Statements included in “Part I, Item 1. Financial Statements.”
Item 1A.
RISK FACTORS
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.
UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
The following table provides information regarding our purchases of common stock during the three months ended September 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) | ||||||||||||
|
July 1, 2026 through
July 31, 2026
|
62,500 | $ | 87.43 | 62,500 | 823,313 | |||||||||||
|
August 1, 2026
through August 31, 2026
|
37,669 | $ | 88.40 | 37,669 | 1,472,000 | |||||||||||
|
September 1, 2026
through September 30, 2026
|
47,932 | $ | 89.81 | 47,932 | 1,424,068 | |||||||||||
|
Total
|
148,101 | 148,101 | ||||||||||||||
(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. As of August 10, 2026, the authorization under the then-existing share repurchase plan expired. 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 beginning August 11, 2026.
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.”
Item 3.
DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
Item 4.
MINE SAFETY DISCLOSURES
Not Applicable.
Item 5.
OTHER INFORMATION
Insider Trading Arrangements
During the three months ended September 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.
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Item 6.
EXHIBITS
|
Exhibit Number
|
Exhibit Description
|
|
|
3.1
|
ePlus inc. Amended and Restated
Certificate of Incorporation, as last amended September 10, 2026 (filed
herewith).
|
|
|
3.2
|
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).
|
|
|
31.1
|
Certification of the Chief Executive
Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a)
and 15d-14(a).
|
|
|
31.2
|
Certification of the Chief Financial
Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a)
and 15d-14(a).
|
|
|
32
|
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)
|
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SIGNATURES
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: November 5, 2026
|
/s/ MARK P. MARRON
|
|
|
|
By: Mark P. Marron
|
|
|
|
Chief Executive Officer and President
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
Date: November 5, 2026
|
/s/ ELAINE D. MARION
|
|
|
|
By: Elaine D. Marion
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
39