PLUS 10-K & 10-Q changes, risk factors and insider trading

Many factors could adversely affect our business, results of operations and cash flows, some of which are beyond our control. The following is a description of some important factors that may cause our business prospects, results of operations and cash flows in future periods to differ materially from those currently expected or desired. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. Factors not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, results of operations and cash flows.

The contracts for the provision of products and services from us to our customers are generally non-exclusive agreements without volume purchase commitments and are terminable by either party upon 30 days’ notice. A material adverse effect on our business, financial position, results of operations and cash flows could result from one or more such customers’ failing to pay amounts due to us, reducing or ceasing to purchase from us, or if we experience a material adverse change in the profitability of sales to our customers. On both March 31, 2025,2026, and March 31, 2024,2025, our accounts receivable-trade balance included a concentration of approximately 36% and 17% of invoices due from Verizon Communications Inc.Inc., respectively.

As a provider of a comprehensive set of technology solutions, which involves the offering of bundled solutions consisting of direct IT sales, advancedand professional and managed services, our proprietary software, and financing, we expect to encounter some of the challenges, risks, and uncertainties frequently encountered by companies providing bundled solutions in rapidly evolving markets. Some of these challenges include our ability to increase the total number of users of our services,services and adapt to meet changes in our marketsmarkets, particularly our ability to develop, deploy and competitivemonetize developments,AI orenabled continue to update our technology to enhance the features and functionality of our suite of products.solutions. Our personnel must continually stay current with vendor and marketplace technology advancements, develop solutions which may integrate evolving and multiple vendor products and services, as well as services and solutions we provide, to meet changing marketplace and customer demand. Further, we may provide customized solutions and services that are solely reliant on our own marketing, design, and fulfillment services, and we may lack the skillsskills, systems, or personnel to execute. Our failure to innovate and provide bespoke value to our customers may erode our competitive position, market share and lead to reduced revenue and financial performance.

In all our markets, some of our competitors have longer operating histories and greater financial, technical, marketing, and other resources than we do. In addition, some of these competitors may be able to respond more quickly to new or changing opportunities, technologies, and customer requirements such as generative AI. Many current competitors may have, and potential competitors may have, greater name recognition, greater financial, technical, research and development or other resources thatthan we do. As compared to us, our current and potential competitors may engage in more extensive promotional marketing and advertising activities, offer more attractive terms to customers, adopt more aggressive pricing and credit policies, have broader distribution and established relationships with vendors and end customers, and have greater ability to leverage their sales efforts across a broader portfolio of products.

In our technology business segments, weWe compete in all areas of our business againstwith local, regional, national, and international firms, including other direct marketers; national and regional resellers; onlinecloud marketplace competitors; hyperscale cloud providers; and regional, national, and international service providers. In addition, we face competition from vendors,vendors or distributors, which may choose to market their products directly to end-users, rather than through channel partners such as our company which could adversely affect our future sales. Many competitors compete principally based on price and may have lower costs or accept lower selling prices than we do and, therefore, our gross margins may not be maintainable. Online marketplace competitors are continually improving their pricing and offerings to customers as well as ease of use of their online marketplaces.

A substantial portion of our revenue within our technology business segments depends on a small number of key vendors. Products manufactured by Cisco Systems represented approximately 29%, 32%, 44%, and 40%44% of net sales of our combined technology business segments for the years ended March 31, 2026, 2025, 2024, and 2023,2024, respectively. Products manufactured by NetApp, Hewlett Packard Enterprise, Juniper Networks, Dell EMC,Dell, and Arista Networks, collectively represented approximately 23% to 25%28% of net sales of our combined technology business segments for the last three years. We may also be adversely affected by consolidation among our vendors, such as Hewlett Packard Enterprise’s proposed acquisition of Juniper Networks.vendors.

Manufacturing interruptions or delays, including as a result of the financial instability or bankruptcy of manufacturers, changes to or the addition of trade laws, duties or tariffs, political or social unrest, energy market disruption, scarcity and price volatility of critical minerals and other materials, international conflicts, financial instability or bankruptcy of vendors, currency translation losses, significant labor disputes such as strikes, natural disasters, political or social unrest, international conflicts, pandemics, other public health crises, or other adverse events affecting any aspect of our vendors’ business, could disrupt our supply chain. We are experiencing product constraints due to increased demand for high performing computing components driven by AI workloads. In addition, we may experience product constraints due to the unavailability of raw materials or components, delays in shipping, failure of vendors to accurately forecast customer demand or to manufacture or otherwise obtain sufficient quantities of product or component parts to meet customer demand, among other reasons. If we experience significant supply chain disruptions, we may not be able to develop alternate sourcing quickly on favorable terms, if at all, which could result in increased inventory costs,levels, delay the completion of related services, a loss of sales and a loss of customers adversely impacting our financial condition and results of operations. In addition, we may be at risk for customers’ cancelling orders due to delays and we may not be able to cancel our corresponding order with the supplier.vendor. If we are unable to mitigate these disruptions, our financial results may be adversely impacted.

As we do not stock inventory that is not related to an order we have received from our customers, we depend upon the supply of products available from our vendors to fulfill orders from our customers on a timely basis. Supply chain issues, including a shortage of IT products and available services, may increase prices and affect demand by our customers.

If third parties or our employees are able to maliciously penetrate our network security or otherwise misappropriate our customers’ information or employees’ personal information, or other information for which our customers may be responsible and for which we agree to be responsible in connection with service contracts into which we may enter, or if we give third parties or our employees improper access to certain information, we could be subject to liability. This liability could include claims for unauthorized access to devices on our network; unauthorized access to our customers’ or suppliers’vendors’ networks, hardware, applications, data, devices, or software; unauthorized purchases with credit card information; and identity theft or other similar fraud-related claims. This liability could also include claims for other misuses of or inappropriate access to personal information. Other liability could include claims alleging misrepresentation of our privacy and data security practices. Any such liability could decrease our profitability. We could incur additional expenses when new laws or regulations regarding the use, safeguarding, or privacy of information are enacted or interpreted if governmental agencies require us to substantially modify our privacy or security practices. We could fail to comply with international and domestic data privacy laws, the violation of which may result in audits, fines, penalties, litigation, or administrative enforcement actions with associated costs.

TheWhile the Board and management engage in regular succession planning discussions, the loss of senior leaders or the failure to successfully implement a succession plan, particularly for the Chief Executive Officer, could adversely affect our ability to execute strategies and manage operations. In addition, changes in our Board of Directors (“Board”) could impact our business including formulation, alignment or execution of strategy or appropriate oversight as tasked by our Board.

WeAny dependfinancial onlosses havingof creditworthyour customers that inhibit their ability to avoidpay us may have an adverse impact on our operating results and financial condition.

We receive payments and credits from vendors, including consideration pursuant to volume incentive programs, shared marketing expensesupport programs, and earlyshared paymarketing discounts.expense programs. These programs are usually of finite terms and may not be renewed or may be discontinued or changed in ways that adversely affect us. Vendor funding is used to offset inventory costs, costs of goods sold, marketing costs and other operating expenses. Certain of these funds are based on our volume of purchases, growth rate of purchases, marketing programs and marketingshared support programs. Supply chain constraints may affect our ability to meet purchase requirements and may affect our and our vendors’ ability to engage in marketing programs. We may not be able to collect outstanding amounts relating to these incentives in a timely manner, or at all. Any sizeable reduction in, the discontinuance of, a significant delay in receiving, or the inability to collect such incentives, particularly related to incentive programs with our largest vendors, could have a material adverse effect on our business, results of operations and financial condition.

Mergers and acquisitions are significant factors in our growth strategy. If we fail to identify businesses available for purchase or at an acceptable valuation, our growth strategy may be negatively affected and, as such, may negatively affect our results of operations. Additionally, if we fail to identify an opportunity or successfully complete an intended asset disposition at a fair valuation or successfully operationally transition the asset, our operations or earnings may be negatively affected. After disposition of thean asset, we may fail to make the appropriate strategic decisions relating to the investment of proceeds from the disposition or we may fail to properly protect ourselves from liabilities arising from the disposition.

Our ability to successfully integrate the operations we acquire, reduce costs, or leverage these operations to generate revenue and earnings growth, could significantly impact future revenue and earnings. Integrating acquired operations is a significant challenge,challenge. and integrationIntegration may divert management’s attention from other business concerns, and there is no assurance that we will be able to complete the integrations successfully. Failure to successfully integrate acquired operations may adversely affect our cost structure thereby reducing our earnings and return on investment. In addition, we may fail to perform adequate due diligence and acquire entities with unknown liabilities, fraud, cultural, data security, or business environment issues, or that may not have adequate internal controls.

If we acquire a company that does not fit culturally, strategically, or in some other fashion, the acquisition may not produce the expected results or may negatively affect our reputation, which may negatively affect our business, results of operations, or cash flows. The unpredictability of the economy, orderproduct backlogs,constraints, and inflation will also make it difficult to properly value or anticipate the future success of acquisition targets and impact our overall growth strategy.

Our technology business, primarily through our subsidiary ePlus Technology, inc., finances its operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC, and its agents (“WFCDF”). This facility provides short-term capital for certain of our technology business entities. There are two components of the WFCDF credit facility (collectively, the “WFCDF Credit Facility”): (1) a floor plan facility and (2) a revolving credit facility. As of March 31, 2025,2026, the facility agreement had an aggregate limit of the two components of $500 million, together with a sublimit for the revolving credit facility component for up to $200 million.

Legal, social, ethical, and accuracy issues relating to the use of new and evolving technologies (such as AI) in our hardware, software, and service offerings, as well as in our internal platforms, may result in incorrect decisions, reputational harm and legal liability. The hardware, software, and services we offer increasingly utilize AI, and, as with many innovations, AI presents risks and challenges that could affect its adoption, and therefore our business. If we use, enable, or offer AI solutions that cause damage to systems or data or draw controversy due to their perceived or actual impact on individuals, entities, or society, we may experience brand or reputational harm, competitive harm, or legal liability. Increased focus and potential government regulation in the space of AI ethics and efficacy may also increase the burden and cost of research and development in this area, subjecting us to brand or reputational harm, competitive harm, or legal liability. Failure by us or others in our industry to address AI ethical and legal issues could undermine public confidence in AI and slow adoption of AI in our products and services.

Additionally, the development, adoption and use of AI is growing, and ineffective or inadequate AI development or deployment practices by us or our vendor partnersvendors could result in unintended consequences. AI technologies are complex and rapidly evolving, and we face significant competition in the market and from other companies regarding such technologies.

We depend heavily upon the accuracy and reliability of our IT, telecommunication, cybersecurity, and other platforms which are used for customer management, sales, distribution, marketing, purchasing, inventory management, order processing and fulfillment, customer service and general accounting functions. We must continually maintain, secure, and improve our systems. We may not properly select or implement software which may result in the lack of data integrity within or between systems, increase our costs or impair our control environment or may lead to other negative impacts on our business or results. We may need to implement new software, or update existing software and processes, to be compliant with rapidly evolving regulation, regulations, including data privacy laws, which may incur costs and impact data integrity. As we increasingly rely on cloud-based enterprise applications to support critical business functions, our operational performance depends in part on the availability, reliability, and proper integration of these externally hosted systems. The protections we have in place address a variety of threats to our information technology systems, both internal and external, including human error. Inadequate security practices or design of our IT systems, or IT systems from third parties which we utilize, or third-party service providers’ failure to provide adequate services could result in the disclosure of sensitive or confidential information or personal information or cause other business interruptions that could damage our reputation and disrupt our business. Inadequate design or interruption of our information systems, telecommunications systems or power failures could have a material adverse effect on our business, our reputation, financial condition, cash flows, or results of operations. The current product constraints may increase our costs or cause a delay in purchasing IT products needed to support our internal infrastructure or operations, resulting in an impact on our technology operations and availability of our IT systems, which could result in an adverse effect on our operations and financial results.

We have configuration centers, warehouses, and data centers in the US, as well as through third-party providers in the UK and Netherlands. The configuration centers and warehouses contain inventory owned by us and our customers and serve as distribution centers for orders we do not dropship directly to the customer. We perform services in these facilities such as product configuration and other professional services, and warehouse and logistics services. If the configuration centers or surrounding infrastructure were to be seriously damaged or disrupted by a natural disaster or other adverse event, including disruption related to political or social unrest, we could utilize another distribution center or third-party distributors to ship products to our customers. However, this may not be sufficient to avoid interruptions in our service, or the loss of inventory at that location may prevent us from meeting all the needs of our customers and may cause us to incur incremental operating costs. Also, we rely on energy and internet access in these facilities. Any disruption to the energy market could result in increased energy costs to run the facilities and transport our products and any disruption in internet services to these locations could interrupt services conducted in the facilities. In addition, we operate in facilities which may contain both business-critical data and confidential information of our customers and third parties, such as data center colocationco-locations and hosted solution partners. A natural disaster or other adverse event at locations such as these or third-party provider locations could negatively impact our business, results of operations or cash flows.

Actual or anticipated epidemics, pandemics, outbreaks, or other public health crises may adversely affect our customers’ and suppliers’vendors’ financial condition and the operations of our business.

Our results of operations are largely dependent upon the state of the economy. Global and domestic economic weakness, economic recession, trade wars or trade disruption, energy market disruption, inflation, rising costcosts and interest rates, and other economic uncertainties may result in increased expenses or decreased sales, gross margin, earnings, and/or growth rates from our US-based customers and from customers outside the US. Actions taken by central banks to counter inflation or weakness in the global banking industry, sustained uncertainty about global political conditions, the downgrade of the US debt rating, periods of intense diplomatic or armed conflict, government spending cuts including efforts from The Department of Government Efficiency (“DOGE”) and the impact of new laws, regulations, or government policies (including the introduction of new or increased taxes, the imposition of minimum taxes or new or increased limitations on deductions, credits or other tax benefits), or a tightening of credit markets, or rising interest rates, could cause our customers and potential customers to postpone, reduce or stop spending on technology products or services which could have a material adverse effect on our business, results of operations or cash flows.

In addition, if we are unable to keep up with changes in technology and new hardware, software, and service offerings––for exampleexample, by not providing the appropriate training to our account managers, sales technology specialists and engineers to enable them to effectively sell and deliver such new offerings to customers––our business, results of operations or cash flows could be adversely affected.

Cloud offerings may influence our customers to move workloads to cloud providers, which may reduce the procurement of products and alter or reduce services from us. Changes in the IT industry may also affect the demand for our advanced professional and managed services. These ‘as a service’ offerings in many cases are recorded on a net basis which results in a reduction of net sales and an increase in gross margin, or on a ratable basis. Over the past several years, we have seen a significant increase in gross billings recorded on a net basis and a ratable basis due to the industry shift to ‘as a service’ offerings. In addition, these ‘as a service’ offerings that are billed over time decrease the demand for financing these types of transactions and do not provide post contract revenue opportunities due to the intangible nature of the offering as well as similar other software offerings. We have invested a significant amount of capital in our strategy to provide certain products and services, and this strategy may adversely impact our financial position due to competition or changes in the industry or improper focus or selection of the products and services we decide to offer. If we fail to react in a timely manner to such changes, such as generative AI,AI or insufficient memory capacity, our results of operations may be adversely affected. Our sales can be dependent on demand for specific product categories, and any change in demand for, or supply of, such products could have a material adverse effect on our results of operations.

Our contracts may not protect us against the risks inherent in our business including, but not limited to, rapid price increases and resulting order cancellations, warranties, limitations of liability, indemnification obligations, human resources and subcontractor-related claims, patent and product liability, regulatory and compliance obligations, data security and privacy, and financing activities. Also, we face pressure from our customers for competitive pricing and contract terms. In addition, order cancellations by our customers may result from product constraints, or other economic concerns. While we may mitigate risk through our contracts, if orders are cancelled by our customers, we may have an increased risk of dispute resulting in non-payment. Such disputes may be complicated by novel legal arguments relating to contract enforceability, such as the application of force majeure, impossibility or impracticability of performance, and frustration of purpose. Despite the non-recourse nature of the loans financing certain of our activities, non-recourse lenders may file suit if the underlying transaction turns out poorly for the lenders. We are currently experiencing an increase in federal contract terminations, some arising from the mission of the DOGE. While most of these contracts were sold to a lender, we may be subject to claims and the cost of defending such claims due to the nature of our business.

We also are subject to audits by various vendor partnersvendors and customers, including government agencies, relating to purchases, sales, data privacy and compliance under various contracts. In addition, we are subject to indemnification claims under various contracts.

Revenues in our public sector are derived from sales to SLED customers, through various contracts and open market sales of products and services. Sales to SLED customers are highly regulated and SLED customer purchases are subject to availability of funds from taxation, grants, or other sources including the federal government. The DOGE is cancelling certain funding mechanisms and continuing to seek spending cuts in the federal government which have and most likely will continue to decrease funds from the federal government to our SLED customers. This may decrease SLED customers spend with us. Noncompliance with contract provisions, government procurement regulations, or other applicable laws or regulations could result in civil, criminal, and administrative liability, including substantial monetary fines or damages, termination of SLED sector customer contracts, and suspension, debarment, or ineligibility from doing business with the government and other customers in the SLED sector. Contracts in the SLED sector are generally terminable at any time for convenience of the contracting agency or upon default and are subject to audits. In addition, most contracts require successfully bidding and award of the contract. These bid processes can be complex and require extensive review of terms and conditions and data compilation. Multiple bidders may win a product category, which creates aggressive competition even after contract award. We are currently experiencing rapid price increases by vendors, and our SLED contracts may not allow us to pass these increases to our SLED customers. The effect of any of these possible actions could adversely affect our business, results of operations or cash flows. In addition, the adoption of new or modified procurement regulations and other requirements may increase our compliance costs and reduce our gross margins, which could have a negative effect on our business, results of operations, or cash flows.

• changes in financial estimates by any securities analysts who follow our common stock, and our failure to meet these estimates or failure of securities;

• our failure to obtain achieve our financial guidance estimates;

• significant variations in our quarterly results of operations;

• analysts maintaining coverage of our common stock;

• downgrades by any securities analysts who follow our common stock;

• future sales of our common stock by our officers, directors, and significant stockholders;

• market conditions or trends in our industry or the economy as a whole including market expectations of changes inchanging interest rates;

• investors’ perceptions of our prospects;

• announcements by us or our competitors of significant contracts, acquisitions, divestitures, joint ventures, or capital commitments; and • changes in key personnel.

Any determination to repurchase,repurchase shares of our common stock in the future 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, market conditions, tax considerations and other factors our Board deems relevant. There can be no assurance that we will continue to repurchase shares of our common stock and, therefore, the future realization of a gain on our shareholders’stockholders’ investment will depend entirely on the appreciation of the price of our common stock,stock and/or dividends, which may never occur.

The following discussion and analysis of the financial condition and results of operations (the “financial review”) of ePlus is intended to help investors understand our company and our operations. The financial review is provided as a supplement to, and should be read in conjunction with, the Consolidated Financial Statements and the related notes included elsewhere in this Annual Report on Form 10-K. Unless specifically stated, all discussions below reflect continuing operations for all periods presented.

We are a leading information technology (“IT”) solutions provider in the areas of security,artificial intelligence (“AI”), cloud, networking,data collaboration,center, AI,security, networking and emerging technologies. We deliver actionable outcomes for organizations by using IT and consulting solutions to drive business agility and innovation.collaboration. Leveraging our engineering talent, we assess, plan, deliver, and secure solutions comprised of leading technologies and consumption models 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 consultingconsulting, to understand our customers’ needs, and then design, deploy, and manage IT solutions aligned to their objectives. Underpinning the broader areas of cloud, security, networking, and collaborationWe are specific skillsskilled in orchestration and automation, application modernization, DevSecOps, zero-trust architectures, data management, data visualization, analytics, network modernization,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.

We are a reseller for thousands of manufacturers,vendors, which have enabledenables 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 believe the following key factors aremay impactingimpact our business performance and our ability to achieve business results:

General economic concernsconditions including changes in law and policy by the current 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 technology, servicesIT and financing.services.

Our customers’ top focus areas include AI, security, 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 outcome.outcomes.

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 profitprofit, andgross margin, operating income margin,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 technology business segments—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 metricsmetric 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 toolstool has limitations,limitations and you should not considerbe themconsidered in isolation or as substitutesa 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 a supplemental measuremeasures of our performance to gain insight into our operating performance and performance trends. We believe that thethese exclusionmeasures of other income in calculating Adjusted EBITDA and Adjusted EBITDA margin providesprovide 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 Adjustedsuch EBITDAnon-GAAP andfinancial Adjusted EBITDA marginmeasures provide useful information to investors and others in understanding and evaluating our operating results. However,Please oursee usefootnotes (1) and (2) of Adjustedthe EBITDAtables and Adjusted EBITDA margin as analytical tools has limitations, and you should not consider them in isolation or as substitutesbelow for analysismore 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.information.

Net sales: Net sales for the year ended March 31, 2025,2026, decreasedincreased $156.5$442.4 million compared to the prior fiscal year.year, Thedue decreaseto inincreased net sales to customers in the telecom, media and entertainment, healthcare, technology, retail, and financial services industries, offset by decreased net sales to customers in the SLED industry. Our increase in sales was primarily driven by lowerlarge productenterprise revenues offset by higher managed services and professional services revenue from our technology business segments, and higher revenues from our financing business segment.customers. For additionalfurther information, see the “Segment Results of Operations” below.

Gross profit: Consolidated grossGross profit for the year ended March 31, 2025,2026, increased $18.3$104.0 million compared to the prior fiscal year due to increases in professionalnet and managed services that were partially offset by declinessales in productall sales.three of our business segments. Overall, gross marginsmargin weredecreased up by 27040 basis points year over year to 27.5%,25.2%, primarily due to higherlower product marginsmargin led by a shift in product mix towardsas well as a lower percentage of sales of third-party maintenance and subscriptions that are recognized on a net basis,basis. partiallyAdditionally, offsetwe byhad lower services margins. For further information, see the “Segment Results of Operations” below.

OperatingSelling, incomegeneral, and administrative: AsSelling, ageneral, resultand ofadministrative the foregoing, operating incomeexpenses for the year ended March 31, 2025,2026, decreasedincreased $16.8$36.7 millionmillion, compared to the prior fiscal year, and operating margin decreased by 30 basis points to 6.8%.year.

NetProvision earningsfor percredit common share—dilutedlosses for the year ended March 31, 2025,2026, decreasedwas $0.28,$0.5 to $4.05 per share,million as compared to $4.33$1.7 permillion share infor the prior fiscal year. Non-GAAP:Our Netlower earningsprovision perfor commoncredit share—dilutedlosses for the year ended March 31, 2025,2026, decreasedwas $0.25,due to $4.67favorable perchanges share,in asour comparednet tocredit $4.92 per share for the year ended March 31, 2024.exposure.

Other than as disclosed in “Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, thereThere 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, 2025.2026.

The below is intended to provide context to our consolidated financial condition and results of continuing operations. It should be read in conjunction with the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q,10-Q and the audited consolidated financial statements included in our annual report on Form 10-K for the year ended March 31, 20252026 (“20252026 Annual Report”), and our current report on Form 8-K that we filed with the SEC on January 26, 2026, which recasts prior period financial information and related disclosures in certain portions of our 2025 Annual Report to present the operations of the domestic financing business as discontinued operations separately from our continuing operations.. 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 20252026 Annual Report, as well as those described in Part II, Item 1A. “Risk Factors” of our subsequent Quarterly Reports on Form 10-Q and in our other filings with the SEC.

We are a leading information technology (“IT”) solutions provider in the areas of security, cloud, networking, collaboration, artificial intelligence (“AI”), andcloud, emergingdata technologies. AI continues to be a transformative force and demand driver particularly for our core products: Compute, Cloud,center, security, networking and our consultative services. Across industries, customers are using AI to enhance decision making, automate tasks, and drive both growth and efficiency. Through assessments, bespoke workshops and labs and consulting engagements, we deliver actionable outcomes for organizations by using information technology (“IT”) and consulting solutions to enhance decision making, automate tasks and drive business agility and innovation.collaboration. Leveraging our engineering talent, we assess, plan, deliver, and secure solutions comprised of leading technologies and consumption models 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 consultingconsulting, to understand our customers’ needs, and then design, deploy, and manage IT solutions aligned to their objectives. Underpinning the broader areas of cloud, security, networking, and collaborationWe are specific skillsskilled in orchestration and automation, application modernization, DevSecOps, zero-trust architectures, data management, data visualization, analytics, network modernization,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.

We are a reseller for thousands of manufacturers,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.

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 U.S.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. This divestiture 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 retrospectively presenting the results of our domestic financing business as discontinued operations. In our unaudited consolidated balance sheets for all periods, we present the assets and liabilities of our domestic financing business as assets and liabilities of 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, our remaining three reportable segments are product, professional services, and managed services, which we formerly referred to collectively as our technology business. Refer to Note 4, “Discontinued Operations” in the notes to the accompanying unaudited consolidated financial statements for further information.

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 technologyIT 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,products; our having to carry more inventory for longer periods, our andperiods; the customer’s costs of products, products for us and our customers; vendor return and cancellation policies,policies and our ability to meet customer demands. We continue to work closely with our suppliers and manufacturersvendors 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.

Our management monitors several financial and non-financial measures and ratios on a regular basis to track the progress of our business. We believe that the most important of these measures and ratios include net sales, gross profit, gross profit and margin, operating income margin,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 segmentssegments, 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 toolstool has limitations and should not be considered in isolation or as substitutesa 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 tables for more information.

Non-GAAPNon -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, and acquisition related amortization and integration expenses,expense, and the related tax effects.

We believe that the exclusion of other income and acquisition-relatedacquisition related amortization expense in calculating Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance, which helps in understanding and the evaluation ofevaluating 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 toolstool has limitations and should not be considered in isolation or as substitutesa 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.

We define Adjusted EBITDA as net earnings from continuing operations calculated in accordance with US GAAP, adjusted for the following: interest expense, depreciation and amortization, share-based compensation, acquisition and integration expenses, provision for income taxes, and other (income), expense.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 thethese exclusion of other incomeexclusions in calculating Adjusted EBITDA and Adjusted EBITDA margin provides management and investors with a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance, which helps in the understanding and evaluation of our operating results. We use Adjusted EBITDA as a supplemental measure of our performance to gain and provide insight into our operating performance and performance trends. However, our use of Adjusted EBITDA and Adjusted EBITDA margin as analytical tools has limitations and should not be considered in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate Adjusted EBITDA and Adjusted EBITDA margin, or similarly titled measuresmeasures, differently,differently which may reduce their usefulness as comparative measures.

Gross billings are the total dollar value of customer purchases of goods and services including shipping charges during the period, net of customer returns andreturns, credit memos, sales,and sales or other taxes from our product, professional services, and managed services segments.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.

Net sales: Net sales for the three months ended DecemberJune 31,30, 2025,2026, increased $121.6$6.3 million compared to the three months ended DecemberJune 31,30, 2024,2025, due to increased net sales to customers in the telecom, media and entertainment,technology, healthcare, technology, retail, and financial services industries, offset by decreased net sales to customers in the telecom, media and entertainment, and SLED industry.industries. Our increase in demandnet sales was primarily driven by midmarket, large enterprise,small and healthcaremid-market customers. For further information, see the “Segment Results of Operations” below.

Gross profit: Consolidated grossGross profit for the three months ended DecemberJune 31,30, 2025,2026, increaseddecreased $33.6$2.3 million compared to the prior three-month period due to increases decreases in net sales in our professional services segment, offset by increases in our product segment and managed services segment, offset by a decrease in our professional services segment. Overall, gross profit margin increased 40decreased 60 basis points year over year to 25.8%,23.3%, primarily due to higherlower product margin led by a shiftmargins in productall mixthree segments and higher vendor incentives, partially offset by a lower percentageproportion of sales of third-party maintenance and subscriptions that are recognized on a net basisbasis, andoffset lowerby servicesan margin.increase to vendor consideration. For further information, see the “Segment Results of Operations” below.

Selling, general, and administrative: Selling, general, and administrative expenses for the three and nine months ended DecemberJune 31,30, 2025,2026, increased $7.8 million and $34.1$3.0 million, compared to the three and nine months ended DecemberJune 31,30, 2024, respectively.2025.

Salaries and benefits, including variable compensation and share-based compensation for the three months ended DecemberJune 31,30, 2025,2026, increased $8.1$1.0 million, compared to the same three-month period in the prior year, primarily due to increasesincreased headcount of employees whose costs are included in continuing operations, offset by a decrease in variable compensation commensurate with the increasedecrease in our gross profit. As of June 30, 2026, we had 2,171 employees, an increase of 33 from 2,138 employees as of June 30, 2025.

General and administrative expenses for the three months ended DecemberJune 31,30, 2025,2026, increased $0.5$2.3 million as compared to the prior three-month period, mainly driven by higher third-party consultant fees and legal fees.

Provision for credit losses for the three and nine months ended DecemberJune 31,30, 2025,2026, was $0.4 million and $0.6$0.3 million, respectively, as compared to $1.2 million and $1.5$0.6 million for the prior three-three-month and nine-month periods, respectively.period. Our lower provision for credit losses for the three and nine months ended DecemberJune 31,30, 2025,2026, was due to favorable changes in our net credit exposure.

Depreciation and amortization: Depreciation and amortization for the three months ended DecemberJune 31,30, 2025,2026, decreased compared to the three months ended DecemberJune 31,30, 2024,2025, primarily due to decreased acquisition related amortization expense.

Operating income: As a result of the foregoing, operating income for the three months ended DecemberJune 31,30, 2025,2026, increaseddecreased $27.0$4.1 million compared to the prior three-month period, and operating income margin increaseddecreased by 38070 basis points to 7.1%.6.0%.

Other incomeincome, net: Other income, net for the ninethree months ended DecemberJune 31,30, 2025,2026, was $7.9$3.1 million, compared to $5.5$0.6 million for the ninethree months ended DecemberJune 31,30, 2024.2025. Our increase inHigher other income was primarilydriven dueby to higherincreased interest income in the current nine-month period compared to the same period in the prior year and earnings from our transition services agreement with PEAC offset by higherdecreased foreign exchange losses in the current nine-month period compared to the same period in the prior year and $1.1 million in expense in the current nine-month period related to adjustments to our estimate of the fair value of contingent consideration due from PEAC Solutions relating to our sale of HoldCo.losses. We had $9.0$3.3 million in interest income for the ninethree months ended DecemberJune 31,30, 2025,2026, compared to $5.9$2.1 million for the samethree periodmonths inended theJune prior30, year.2025. We had foreign exchange losses of $0.6$0.2 million for the ninethree months ended DecemberJune 31,30, 2025,2026, compared to losses of $0.4$1.5 million for the same three-month period in the prior year.

Provision for income taxes: Our provision for income tax expense was $12.2 million and $37.7$11.7 million for the three and nine months ended DecemberJune 31,30, 2025,2026, as compared to $5.4 million and $21.8$11.5 million for the same three-three-month and nine-month periodsperiod in the prior year. Our effective tax rate for the three and nine months ended DecemberJune 31,30, 2025,2026, was 26.7% and 27.6% respectively,27.8%, compared with 26.9% and 27.2%, respectively,26.5%, for the same three- andmonth nine-month periodsperiod in the prior year. Our effective income tax rate for the three months ended DecemberJune 31,30, 2025,2026, was lowerhigher compared to the same three-month period in the prior year primarily due to lowerhigher state taxes.and Ourlocal effectivetaxes income tax rate for the nine months ended December 31, 2025, wasand higher comparednon-deductible toexecutive the same nine-month periodcompensation in the priorcurrent yearthree-month primarily due a higher tax benefit from restricted stock and state taxes in the prior year.period.

Net earnings from continuing operations: Net earnings from continuing operations for the three months ended DecemberJune 31,30, 2025,2026, were $33.4$30.3 million, ana increasedecrease of $18.8$1.7 million, as compared to $14.6$32.0 million for the same three-month period in the prior year. The net earnings increasedecrease was due to the increasedecrease in operating profits, offset by an increase in provision for income taxes and decrease in other income.

Net earnings: Due to the aforementioned reasons, net earnings for the three months ended DecemberJune 31,30, 2025,2026, were $35.1$30.3 million, ana increasedecrease of $11.0$12.3 million, as compared to $24.1$42.6 million for the same three-month period in the prior year.

Following the divestiture of our domestic financing business,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 endeavorutilize vendor programs to obtain vendor consideration to minimize theour cost of sales in our product segment through incentive programs provided by vendors and distributors.sales.

The three and nine months ended DecemberJune 31,30, 2025,2026, compared to the three and nine months ended DecemberJune 31,30, 20242025

Product segment sales for the three months ended DecemberJune 31,30, 2025,2026, increased compared to the same three-month period in the prior year, due to increases in revenue from networking, cloud, security, and collaboration products. Product segment sales for the nine months ended December 31, 2025, increased compared to the same nine-month period in the prior year, due to increases in revenue from networking, cloud, and security products, offset by a declinedecrease in collaborationcloud products. These increases were driven by the timing of purchases by existing customers, which are determined by their buying cycles and the timing of specific IT-related initiatives. Contributing to the increase, the proportion of our sales that were sales of third-party maintenance and subscriptions that are recognized on a net basis decreased for both the three and nine months ended DecemberJune 31,30, 2025,2026, compared to the same periods period in the prior year.

ManagedProfessional services segment sales for the three and nine months ended DecemberJune 31,30, 2025,2026, increaseddecreased compared to the same three-three-month and nine-month periodsperiod in the prior year, primarily due to ongoing expansion of these service offerings, primarily related to ongoing growthdecreases in enhancedrevenues maintenancefrom supportproject services and cloudstaff services.augmentation.

Product segment gross profit margin for the three and nine months ended DecemberJune 31,30, 2025,2026, increaseddecreased by 17030 basis points and 70 basis points, respectively, from the same three-three-month and nine-month periodsperiod in the prior year due to a shift in product mix and vendor incentives, offset by a decrease in thelower proportion of our sales that were sales of third-party maintenance and subscriptions which are recorded on a net basis.basis, offset by an increase in vendor consideration. Vendor incentivesconsideration earned as a percentage of sales for the three and nine months ended DecemberJune 31,30, 2025 2026, increased by 14090 basis points and 50 basis points, respectively, which had a positive effect on gross margin, as compared to the same three- and nine-month periods in the prior year.points.

Professional services segment gross profit margin for the three and nine months ended DecemberJune 31,30, 2025,2026, decreased by 90 basis points and 190230 basis points, respectively, from the same three-three-month and nine-month periodsperiod in the prior year primarily due to our acquisition of Bailiwick whose services have a lower gross margin due to the use of a higher proportion of third parties for delivery thanand ourlower organicrevenue from professional services.

Managed services segment gross profit margin for the three and nine months ended DecemberJune 31,30, 2025,2026, decreased by 80 basis points and 60100 basis points, respectively, from the same three-three-month and nine-month periodsperiod in the prior year, mainly driven by a decrease in gross profit margin from our managed services offerings due to increased third partythird-party costs.

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