Summary of ePlus Conference Call Company Overview - ePlus has been in business for over 30 years, initially starting as a finance company focused on IT assets, and has transitioned to a technology segment [2][3] - The company sold its finance segment in June 2025 for $180 million, which provides financial flexibility to focus on technology growth [2][17] Financial Performance - Revenues for the last fiscal year were over $2 billion, with gross billings at $3.2 billion [3] - The company has over 4,600 customers and 2,100 employees [3] - The net sales CAGR over the last five years was 7%, while gross billings CAGR was 10% [17] - Service revenue has grown at a CAGR of 19% over the last five years, now representing nearly 20% of net sales [19][20] - Consolidated gross profit has grown at a CAGR of 10%, with gross margins increasing from 23% in fiscal 2021 to 26% in fiscal 2025 [20][21] - Net earnings and EPS CAGR over the last five years was 12% [21] Strategic Focus - ePlus is focusing on areas such as data center, cloud, artificial intelligence, networking, security, and collaboration [5][8] - The company aims to leverage its cash reserves (approximately $480 million) for acquisitions and growth opportunities [14][24] - A quarterly dividend has been initiated, marking a return of value to shareholders [3][24] Market Position and Competitive Advantage - ePlus differentiates itself by maintaining higher gross margins (400 to 600 basis points higher than competitors) due to its focus on services rather than commodity sales [13][29] - The company is positioned well in the market, focusing on mid-market customers (500 to 10,000 employees) while also serving Fortune 100 clients [15][16] Artificial Intelligence and Infrastructure - The company is in the early stages of AI adoption, conducting envisioning sessions to help customers identify use cases [31] - There is a growing demand for AI-enabled technology infrastructure, with customers upgrading their compute, storage, and networking capabilities [32] Market Demand and Economic Outlook - The supply chain has eased, leading to normalized IT spending, with no significant slowdown observed in the market [33][34] - The company remains optimistic about future growth, driven by ongoing investments in technology and services [38] Conclusion - ePlus is strategically positioned as a pure technology play, focusing on growth in services and technology solutions, with a strong financial foundation to support its initiatives [38]

Financial Data and Key Metrics Changes - The company reported revenue of $415 million for H1 2025, representing a year-on-year growth of 4% [39] - EBITDA for the same period was $185 million, reflecting a significant increase of 1512% year-on-year [38] - Total customer deposits more than doubled to $3.1 billion, with an average deposit per active customer reaching approximately $17,000 [24][38] - The company ended the first half with cash balances of approximately $938 million and no debt [6][41] Business Line Data and Key Metrics Changes - Non-OTC revenues accounted for approximately 13% of the group's total revenue in 2025, up from just 1% when the futures business was acquired in 2021 [23] - The futures business saw customer segregated funds grow to approximately $850 million, a 140% increase from the previous year [25] - 66% of OTC revenue was derived from customers who have been trading with the company for over three years, indicating strong customer retention [8] Market Data and Key Metrics Changes - The company expanded its geographic reach with new offerings in Japan and the conditional acquisition of MetaEquities in India [5] - The UAE and the US were highlighted as key markets driving growth [5] Company Strategy and Development Direction - The company aims to deepen customer engagement and enhance retention through investments in technology and customer service [9] - The strategic roadmap focuses on diversification into non-OTC products and expanding operations in new markets [49] - The company is committed to being carbon negative by 2030 and has moved to a more energy-efficient headquarters [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the structural growth opportunities ahead and the positive momentum in the business [4] - The company is well-positioned to leverage its proprietary technology and regulatory licenses to drive future growth [20][47] Other Important Information - The company announced shareholder returns of $365 million for the year to date, equivalent to 11% of its market capitalization as of June 30, 2025 [6] - Plus500 has been recognized as the best-performing share in the FTSE All Share Index over the last twelve years [7] Q&A Session Summary Question: Impact of regulatory changes in India on MetaEquities - Management views the new regulatory changes in India as positive, as they support a more structured and regulated market environment [54][55] Question: Growth in non-OTC customer deposits - The company has exceeded its initial targets for non-OTC customer deposits, but management emphasizes the importance of balancing growth across both OTC and non-OTC segments [56][57] Question: Dynamics behind growth in customer deposits - Growth in customer deposits is driven by onboarding new institutional customers and introducing brokers, which has led to increased deposits from their customer bases [61][62] Question: Improvements in customer retention - The company has focused on enhancing its technology stack and integrating AI and big data capabilities to improve customer retention and reduce churn rates [64] Question: Future revenue acceleration from non-OTC products - Management anticipates continued growth in revenues from non-OTC products as the company invests in new fundamentals and expands its offerings [67] Question: Marketing efficiency improvements - The company has optimized its marketing strategies, leading to lower customer acquisition costs while increasing the quality of earnings and customer longevity [72]

Financial Data and Key Metrics Changes - The company reported revenue of $415 million for the first half of 2025, representing a year-on-year growth of 4% [40] - EBITDA grew significantly by 1512% year-on-year, reaching $185 million [39] - Total customer deposits more than doubled to $3.1 billion, with an average deposit per active customer increasing to approximately $17,000 [25][39] - The company ended the period with cash balances of approximately $938 million and no debt, indicating a strong financial position [42] Business Line Data and Key Metrics Changes - Non-OTC revenues accounted for approximately 13% of the group's total revenue in 2025, up from just 1% when the futures business was acquired in 2021 [24] - The futures business saw customer segregated funds grow to approximately $850 million, a 140% increase from the previous year [26] - 66% of OTC revenue was derived from customers who have been trading with the company for over three years, highlighting customer retention [9] Market Data and Key Metrics Changes - The company expanded its operations into new markets, including the UAE and Canada, and secured a new license in Japan [10][20] - The acquisition of MetaEquities in India is expected to enhance the company's presence in a significant market [18][14] - The company operates in over 60 countries, serving approximately 32 million registered customers [21] Company Strategy and Development Direction - The company aims to deepen customer engagement and enhance retention through investments in technology and customer service [10] - A strategic roadmap has been established to focus on growth, innovation, and diversification into non-OTC products [48] - The company is committed to maintaining its competitive advantage through proprietary technology and expanding its product offerings [30][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the structural growth opportunities ahead and the positive momentum in the business [4] - The company views regulatory changes in India as positive for long-term growth and market stability [54] - There is a focus on balancing growth between non-OTC and OTC segments to ensure robust returns [57] Other Important Information - The company has returned approximately $365 million to shareholders year-to-date, equivalent to 11% of its market capitalization [6] - Plus500 has been recognized as the best-performing share in the FTSE All Share Index over the last twelve years [7] - The company is committed to being carbon negative by 2030 and has moved to a more energy-efficient headquarters [15] Q&A Session Summary Question: What are the implications of regulatory changes in India for MetaEquities? - Management views the new regulatory changes as positive, as they support a more structured and regulated market, which can attract new customers [55] Question: What is driving the growth in non-OTC customer deposits? - The growth is primarily driven by recruiting introducing brokers, which brings in their customers, thus increasing deposits [63] Question: What strategies have been implemented to improve customer retention? - The company has focused on enhancing its technology stack and integrating AI and big data capabilities to improve customer retention and reduce churn rates [65] Question: When can we expect revenue from non-OTC products to accelerate? - Management anticipates continued growth in revenues as investments in new products and geographies yield results [68] Question: What changes have been made to improve marketing efficiency? - The company has optimized its marketing processes, leading to lower customer acquisition costs while increasing the quality of earnings and customer longevity [71]

Financial Performance - Plus500 announced shareholder returns of $365 million in YTD 2025[8] - Total shareholder returns since IPO in 2013 reached $2.7 billion[10] - H1 2025 revenue increased by 4% to $415.1 million compared to $398.2 million in H1 2024[107, 114] - EBITDA for H1 2025 grew by 1% to $185.1 million from $183.9 million in H1 2024[107, 114] - The company maintains a strong balance sheet with cash balances of over $0.9 billion and no debt[49, 72] Customer Metrics - Average deposit per active customer increased by 105% to approximately $17,250 in H1 2025[14, 107] - Active customers increased by 2% to 179,931 in H1 2025[52, 107] - 89% of OTC revenue in H1 2025 was generated through mobile and tablet offerings[14, 99] - 66% of OTC revenue was derived from customers trading with Plus500 for over three years[14] Strategic Growth - Non-OTC revenue is anticipated to be more than $100 million in FY 2025[61] - Customer segregated funds in the US futures market reached approximately $850 million as of June 30, 2025[67]

Core Insights - ePlus inc. (NASDAQ: PLUS) reported impressive Q1 FY26 earnings, surpassing expectations on both revenue and profit margins [1] Financial Performance - The company beat both top and bottom line estimates, indicating strong operational performance [1] Strategic Moves - ePlus unveiled strategic initiatives alongside their earnings report, which may enhance future growth prospects [1]

Core Insights - ePlus reported Q1 FY2026 results with GAAP revenue of $637.3 million, exceeding analyst estimates of $523.9 million, and Non-GAAP EPS of $1.26, surpassing expectations of $1.06, marking significant year-over-year growth [1][2] - The company set all-time quarterly records for gross billings and net sales, driven by broad-based revenue expansion primarily from services [1] - ePlus initiated its first-ever quarterly dividend and launched a new share repurchase program, enhancing its capital return profile [1][10] Financial Performance - Non-GAAP EPS increased by 24.8% year-over-year to $1.26, while GAAP revenue rose by 19.0% compared to the previous year [2] - Adjusted EBITDA reached $46.7 million, reflecting a 19.4% increase from $39.1 million in Q1 FY25 [2] - Gross profit was $148.2 million, up 16.8% from $126.9 million a year earlier [2] Business Model and Focus - ePlus provides a range of technology solutions including consulting, cloud, security, managed services, and IT infrastructure products, targeting commercial, healthcare, education, and government sectors [3] - The company has formed strategic partnerships with major technology vendors like AWS, Cisco, Microsoft, and VMware to offer multi-vendor solutions [3] Service and Product Performance - Services revenue surged by 48.8% year-over-year to $116.3 million, with professional services nearly doubling, increasing by 92.4% [5] - Cloud-related net sales climbed 50.8% to $206.996 million, while security product sales advanced by 27.3% [6] - However, networking and collaboration product sales declined by 7.0% and 43.7%, respectively, indicating a shift in customer demand [6] Strategic Actions - ePlus completed the sale of its financing business to focus on higher-growth technology solutions, marking its transition to a pure technology solutions company [4][10] - The company reduced inventory by 16.1% compared to Q4 FY2025, while trade receivables increased by 35.6% [10] Outlook - For fiscal 2026, ePlus raised its financial outlook, expecting net sales and gross profit to grow in the upper single-digit percentage range, with adjusted EBITDA projected to rise in the mid-teens [12] - Strong demand in cloud, security, and data center markets is anticipated to continue driving growth [12]

Financial Data and Key Metrics Changes - The first quarter consolidated net sales increased by 19% to $637.3 million, driven by strong performance in both product and service segments [14] - Gross billings reached a record high of $953 million, indicating robust growth [13] - Consolidated gross profit rose by 16.8% to $148.2 million, although gross margin decreased to 23.3% from 23.7% in the previous year [15][16] - Net earnings from continuing operations amounted to $27.1 million, or $1.03 per diluted share, compared to $24.2 million, or $0.90 per diluted share in the prior year [18] Business Line Data and Key Metrics Changes - Product sales grew by 13.9% to $521 million, driven by demand for data center, cloud, and security offerings [14] - Service sales surged by 49% year over year, bolstered by the acquisition of Bailiwick and increased demand for managed services [15][9] - Security products and services saw a significant increase of 24.4% year over year, now representing 22.8% of gross billings [8][14] Market Data and Key Metrics Changes - Telecom, media, and entertainment, along with SLED, are the two largest end markets, accounting for 25% and 16% of net sales, respectively [15] - Healthcare, technology, and financial services contributed 14% and 13% to net sales, with the remaining 24% from other verticals [15] Company Strategy and Development Direction - The company has transitioned to a pure play technology services provider following the sale of its domestic finance business, positioning itself for long-term growth [4][11] - The strategy focuses on delivering integrated service-rich solutions with an emphasis on AI, security, data center, cloud, and networking [4][12] - The company initiated its first quarterly dividend of $0.25 per share and announced a new stock buyback program, reflecting confidence in its financial stability [12][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong start to fiscal 2026, with double-digit growth across key metrics and a solid pipeline for future growth [22][24] - The company is adjusting its fiscal 2026 guidance upwards, expecting net sales and gross profit growth in the upper single-digit range, and adjusted EBITDA growth in the mid-teens [23][24] - Management highlighted the transformative impact of AI on demand and the company's readiness to capitalize on this trend [10][40] Other Important Information - The company closed the quarter with a record cash position of $480 million, providing flexibility for growth initiatives and shareholder returns [11][19] - The effective tax rate decreased to 26.3% from 27.1% in the prior year [18] Q&A Session Summary Question: Can you elaborate on the drivers behind the increase in adjusted EBITDA growth guidance? - Management noted solid performance across various metrics, with double-digit growth in net sales and services, particularly in security and AI-related areas [28][30] Question: Are large enterprise customers back to normal spending levels? - Management indicated that while there was a nice quarter with enterprise customers, the spending is still project-based and may not be a consistent trend throughout the year [32] Question: Why was now the right time to divest the financing business? - Management explained that the divestiture was a strategic move to simplify the business model and focus on technology services, capitalizing on market trends in AI and cybersecurity [38][39] Question: Are there areas of investment needed to bolster AI service offerings? - Management acknowledged the need to enhance consultative services related to AI and indicated readiness to explore both organic and inorganic growth opportunities in this area [40][42]

```markdown [Front Matter](index=1&type=section&id=Front%20Matter) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the basic identification details for ePlus inc.'s Form 10-Q filing for the quarterly period ended June 30, 2025, confirming its status as a large accelerated filer and the number of common shares outstanding as of August 4, 2025 - ePlus inc. is a Delaware corporation, identified by Commission file number **1-34167**, with its principal executive offices in Herndon, VA[3](index=3&type=chunk)[4](index=4&type=chunk)[5](index=5&type=chunk) - The company is a **large accelerated filer** and has filed all required reports and interactive data files during the preceding 12 months[6](index=6&type=chunk)[7](index=7&type=chunk)[8](index=8&type=chunk) - As of August 4, 2025, the number of common stock shares outstanding was **26,625,574**[10](index=10&type=chunk) [Table of Contents](index=3&type=section&id=TABLE%20OF%20CONTENTS) The Table of Contents outlines the structure of the Form 10-Q, detailing the sections for Financial Information (Part I) and Other Information (Part II), along with their respective items and starting page numbers [Cautionary Language About Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20LANGUAGE%20ABOUT%20FORWARD-LOOKING%20STATEMENTS) This section warns readers about forward-looking statements within the report, emphasizing that actual results may differ materially due to various risks and uncertainties, including economic instability, customer/vendor relationships, cost increases, cybersecurity, and rapid changes in IT and AI technologies - Forward-looking statements are subject to risks and uncertainties, and actual results may materially differ from anticipated events[13](index=13&type=chunk) - Key risks include financial losses from political instability, changes in interest rates, tariffs, and inflation[13](index=13&type=chunk)[15](index=15&type=chunk) - Significant adverse changes in relationships with major customers or vendors, including decreased profitability or loss of relationships[13](index=13&type=chunk)[15](index=15&type=chunk) - Increases in costs (e.g., wages) and the ability to adjust prices, or negative financial impacts from existing pricing arrangements[13](index=13&type=chunk)[15](index=15&type=chunk) - Reliance on third parties for service obligations and a small number of key vendors in the supply chain[13](index=13&type=chunk)[15](index=15&type=chunk) - Cybersecurity attacks, IT outages, and the ability to secure confidential information while complying with data privacy regulations[13](index=13&type=chunk)[15](index=15&type=chunk) - Dependence on key personnel and the ability to hire, train, and retain qualified staff[13](index=13&type=chunk)[15](index=15&type=chunk) - Risks related to Artificial Intelligence (AI), including its use, capabilities, and emerging regulations[13](index=13&type=chunk)[15](index=15&type=chunk) - Supply chain issues, including component shortages, which may increase costs, delay orders, or impact working capital[13](index=13&type=chunk)[15](index=15&type=chunk) - Exposure to changes in legislation and regulatory matters, and potential non-compliance with public sector contracts[13](index=13&type=chunk)[15](index=15&type=chunk) [Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for ePlus inc. and its subsidiaries, including balance sheets, statements of operations, comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining significant accounting policies, recent pronouncements, and specific financial items [Unaudited Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) The unaudited consolidated balance sheets show a decrease in total assets from $1,884,805 thousand as of March 31, 2025, to $1,799,135 thousand as of June 30, 2025, primarily due to the divestiture of discontinued operations. Total liabilities also decreased, while total stockholders' equity increased Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :--------------------------------- | :------------ | :------------- | | Total Assets | $1,799,135 | $1,884,805 | | Total Liabilities | $778,704 | $907,182 | | Total Stockholders' Equity | $1,020,431 | $977,623 | | Cash and cash equivalents | $480,178 | $389,375 | | Accounts receivable—trade, net | $700,873 | $516,925 | | Current assets of discontinued operations | $- | $222,399 | | Current liabilities of discontinued operations | $- | $166,463 | - The decrease in **total assets** and **liabilities** is largely attributable to the reclassification and sale of discontinued operations[16](index=16&type=chunk)[29](index=29&type=chunk) [Unaudited Consolidated Statements of Operations](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, net sales increased to $637,315 thousand from $535,652 thousand in the prior year. Net earnings also saw a significant increase, reaching $37,697 thousand, up from $27,339 thousand, driven by growth in both continuing and discontinued operations Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $637,315 | $535,652 | | Gross profit | $148,216 | $126,874 | | Operating income | $36,200 | $31,459 | | Net earnings from continuing operations | $27,128 | $24,193 | | Earnings from discontinued operations, net of tax | $10,569 | $3,146 | | Net earnings | $37,697 | $27,339 | | Diluted EPS (Continuing Operations) | $1.03 | $0.90 | | Diluted EPS (Total) | $1.43 | $1.02 | - **Net sales** increased by **$101.7 million** (**19.0%**) year-over-year, with product sales up **13.9%** and services up **48.8%**[17](index=17&type=chunk) - **Net earnings from discontinued operations** significantly increased from **$3,146 thousand** in 2024 to **$10,569 thousand** in 2025[17](index=17&type=chunk) [Unaudited Consolidated Statements of Comprehensive Income](index=9&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income for the three months ended June 30, 2025, increased to $40,855 thousand from $27,407 thousand in the prior year, primarily due to higher net earnings and a substantial increase in foreign currency translation adjustments Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Net Earnings | $37,697 | $27,339 | | Foreign currency translation adjustments | $3,158 | $68 | | Total Comprehensive Income | $40,855 | $27,407 | - **Foreign currency translation adjustments** contributed significantly to the increase in **comprehensive income**, rising from **$68 thousand** in 2024 to **$3,158 thousand** in 2025[19](index=19&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended June 30, 2025, the company experienced a net cash outflow from operating activities of $98,967 thousand, a significant shift from a $97,127 thousand inflow in the prior year. This was largely offset by a substantial cash inflow from investing activities, primarily due to the sale of discontinued operations, resulting in a net increase in cash and cash equivalents of $90,803 thousand Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by (used in) operating activities | $(98,967) | $97,127 | | Net cash provided by (used in) investing activities | $155,857 | $(1,906) | | Net cash provided by financing activities | $31,924 | $1,612 | | Net increase in cash and cash equivalents | $90,803 | $96,888 | | Cash and cash equivalents, end of period | $480,178 | $349,909 | - **Operating activities** of continuing operations used **$106,003 thousand** in cash in 2025, compared to providing **$110,145 thousand** in 2024, mainly due to an increase in **accounts receivable**[21](index=21&type=chunk)[139](index=139&type=chunk) - **Investing activities** provided **$155,857 thousand** in 2025, primarily from **$156,681 thousand** in net cash from discontinued operations, including **$180.1 million** in proceeds from the sale of HoldCo[21](index=21&type=chunk)[144](index=144&type=chunk) - **Financing activities** provided **$31,924 thousand** in 2025, driven by **$39,888 thousand** in net borrowings on the **floor plan facility**, partially offset by common stock repurchases[21](index=21&type=chunk)[146](index=146&type=chunk) [Unaudited Consolidated Statements of Stockholders' Equity](index=12&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased to $1,020,431 thousand as of June 30, 2025, from $977,623 thousand as of March 31, 2025. This increase was primarily driven by net earnings and foreign currency translation adjustments, partially offset by common stock repurchases Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :--------------------------------- | :------------ | :------------- | | Total Stockholders' Equity | $1,020,431 | $977,623 | | Retained Earnings | $888,653 | $850,956 | | Accumulated Other Comprehensive Income | $6,599 | $3,441 | | Treasury Stock | $(74,052) | $(70,748) | - **Net earnings** of **$37,697 thousand** and **foreign currency translation adjustments** of **$3,158 thousand** contributed positively to equity[24](index=24&type=chunk) - Repurchase of common stock amounted to **$3,304 thousand** for the three months ended June 30, 2025[24](index=24&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the company's financial statements, covering significant accounting policies, the impact of the financing business divestiture, revenue recognition, goodwill, credit facilities, and other financial instruments. They clarify the retrospective presentation of discontinued operations and the accounting for recent acquisitions [Note 1. Organization and Summary of Significant Accounting Policies](index=13&type=section&id=1.%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) ePlus inc. is an IT solutions provider focusing on medium to large enterprises and SLED markets in the US and select international regions. The company completed the sale of its domestic financing business on June 30, 2025, transitioning to a pure-play technology solutions provider, with the financing business retrospectively presented as discontinued operations - ePlus provides **IT solutions**, consulting, professional, and managed services, focusing on optimizing IT environments and supply chain processes[27](index=27&type=chunk) - On June 30, 2025, ePlus sold its domestic financing business (Expo Holdings, LLC), becoming a **pure-play technology solutions provider**. Financial results for the domestic financing business are retrospectively presented as discontinued operations[29](index=29&type=chunk)[41](index=41&type=chunk) - A substantial portion of sales (**26%** in Q1 2025, **36%** in Q1 2024) are products from Cisco Systems, indicating a concentration of risk[32](index=32&type=chunk) [Note 2. Recent Accounting Pronouncements](index=14&type=section&id=2.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) ePlus is evaluating the impact of recently issued FASB ASUs: ASU 2023-09 (Income Taxes) effective for fiscal year ending March 31, 2026, requiring disaggregated tax information, and ASU 2024-03 (Income Statement—Reporting Comprehensive Income) effective for fiscal year ending March 31, 2028, requiring detailed expense disclosures - **ASU 2023-09 (Income Taxes)** requires disaggregated effective tax rate reconciliation and income taxes paid, effective for fiscal year ending March 31, 2026[33](index=33&type=chunk) - **ASU 2024-03 (Income Statement—Reporting Comprehensive Income)** requires detailed expense disclosures, effective for fiscal year ending March 31, 2028[34](index=34&type=chunk) [Note 3. Revenues](index=14&type=section&id=3.%20REVENUES) This note details the composition of accounts receivable and contract liabilities, and outlines future revenue expected from unsatisfied performance obligations, primarily for non-cancelable managed services contracts Accounts Receivable—Trade, Net (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :-------------------------- | :------------ | :------------- | | Accounts receivable | $687,904 | $507,052 | | Contract assets | $16,288 | $13,775 | | Allowance for credit losses | $(3,319) | $(3,902) | | Total accounts receivable—trade, net | $700,873 | $516,925 | - Revenues recognized from beginning **contract liability** balance were **$42.8 million** for Q1 2025, up from **$40.5 million** for Q1 2024[37](index=37&type=chunk) Total Remaining Performance Obligations (in thousands) | Period | Amount | | :--------------------------------- | :------- | | Remainder of the year ending March 31, 2026 | $74,913 | | Year ending March 31, 2027 | $50,250 | | Year ending March 31, 2028 | $25,546 | | Year ending March 31, 2029 | $13,538 | | Year ending March 31, 2030 and thereafter | $4,369 | | Total remaining performance obligations | $168,616 | [Note 4. Discontinued Operations](index=15&type=section&id=4.%20DISCONTINUED%20OPERATIONS) On June 30, 2025, ePlus completed the sale of its domestic financing business (HoldCo) for net cash proceeds of $156.7 million, recognizing a gain on sale of $4.4 million before income taxes. This divestiture marks a strategic shift to a pure-play technology solutions provider, with the financing business results retrospectively presented as discontinued operations - Sale of domestic financing business (HoldCo) completed on June 30, 2025, for **net cash proceeds** of **$156.7 million**[40](index=40&type=chunk) - Recognized a **gain from sale of HoldCo** before income taxes of **$4,368 thousand** for the three months ended June 30, 2025[43](index=43&type=chunk) Operating Results of Discontinued Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $15,811 | $8,886 | | Gross profit | $14,077 | $7,607 | | Operating income | $10,028 | $4,010 | | Earnings from discontinued operations, net of tax | $10,569 | $3,146 | [Note 5. Goodwill and Other Intangible Assets](index=17&type=section&id=5.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Goodwill remained stable at $202,979 thousand as of June 30, 2025, with only minor foreign currency translation adjustments. Other intangible assets, primarily customer relationships and trade names, decreased slightly due to amortization, with total amortization expense for other intangible assets at $5.5 million for Q1 2025 Goodwill by Segment (in thousands) | Segment | March 31, 2025 | June 30, 2025 | | :---------------- | :------------- | :------------ | | Product | $129,177 | $129,271 | | Professional Services | $63,779 | $63,797 | | Managed Services | $9,902 | $9,911 | | Total | $202,858 | $202,979 | - The only activity in **goodwill** for the quarter was foreign currency translation adjustments[47](index=47&type=chunk) Purchased Intangible Assets (Net, in thousands) | Asset Type | June 30, 2025 | March 31, 2025 | | :-------------------- | :------------ | :------------- | | Customer relationships | $68,781 | $74,008 | | Trade names and other | $7,640 | $7,959 | | Total | $76,421 | $81,967 | - Total **amortization expense** for other **intangible assets** was **$5.5 million** for Q1 2025, up from **$3.8 million** in Q1 2024[51](index=51&type=chunk) [Note 6. Allowance for Credit Losses](index=18&type=section&id=6.%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) The allowance for credit losses within accounts receivable—trade decreased to $3,319 thousand as of June 30, 2025, from $3,902 thousand at the beginning of the period, despite an increase in the provision for credit losses due to higher exposure to accounts with elevated credit risk Allowance for Credit Losses Activity (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | Beginning balance | $3,902 | $2,549 | | Provision for credit losses | $596 | $75 | | Write-offs and other | $(1,179) | $(12) | | Ending balance | $3,319 | $2,612 | - The **provision for credit losses** increased significantly to **$596 thousand** in Q1 2025 from **$75 thousand** in Q1 2024, driven by increased exposure to higher credit risk accounts[52](index=52&type=chunk)[117](index=117&type=chunk) [Note 7. Credit Facility](index=18&type=section&id=7.%20CREDIT%20FACILITY) ePlus utilizes a $500.0 million floor plan facility and a $200.0 million revolving credit facility with Wells Fargo Commercial Distribution Finance, LLC. The floor plan facility had an outstanding balance of $129.4 million as of June 30, 2025, used for inventory purchases, while the revolving credit facility had no outstanding balance. The facility was amended in anticipation of the financing business sale, but substantive terms remained unchanged - The WFCDF **Credit Facility** includes a **$500.0 million floor plan facility** and a **$200.0 million revolving credit facility**[54](index=54&type=chunk) - Outstanding balance on the **floor plan facility** was **$129.4 million** as of June 30, 2025, up from **$89.5 million** as of March 31, 2025[55](index=55&type=chunk) - No outstanding balances were reported under the **revolving credit facility** as of June 30, 2025, or March 31, 2025[57](index=57&type=chunk) - The WFCDF **Credit Facility** was amended on June 20, 2025, in anticipation of the financing business sale, but its substantive terms were not materially changed[54](index=54&type=chunk) [Note 8. Commitments and Contingencies](index=19&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) ePlus is subject to various legal proceedings and claims in the normal course of business. As of June 30, 2025, the company does not believe there is a reasonable possibility of material losses exceeding recognized amounts, but acknowledges that outcomes are uncertain and could adversely affect financial condition - ePlus is involved in various legal proceedings and claims arising in the normal course of business[62](index=62&type=chunk) - As of June 30, 2025, management does not believe there is a reasonable possibility of material losses exceeding already recognized amounts[62](index=62&type=chunk) [Note 9. Earnings Per Share](index=20&type=section&id=9.%20EARNINGS%20PER%20SHARE) Basic and diluted earnings per common share for continuing operations increased to $1.03 for the three months ended June 30, 2025, from $0.91 (basic) and $0.90 (diluted) in the prior year. Total basic and diluted EPS, including discontinued operations, rose to $1.43 from $1.03 and $1.02, respectively Earnings Per Common Share (EPS) (except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Net earnings (Continuing operations) | $27,128 | $24,193 | | Net earnings (Discontinued operations) | $10,569 | $3,146 | | Total Net earnings | $37,697 | $27,339 | | Basic EPS (Continuing operations) | $1.03 | $0.91 | | Basic EPS (Total) | $1.43 | $1.03 | | Diluted EPS (Continuing operations) | $1.03 | $0.90 | | Diluted EPS (Total) | $1.43 | $1.02 | - **Weighted average common shares outstanding (diluted)** decreased to **26,381 thousand** in Q1 2025 from **26,801 thousand** in Q1 2024[65](index=65&type=chunk) [Note 10. Stockholders' Equity](index=20&type=section&id=10.%20STOCKHOLDERS'%20EQUITY) ePlus repurchased 47,488 shares of common stock for $3.3 million in Q1 2025 to satisfy tax withholding obligations. The board authorized a new share repurchase program on August 7, 2025, for up to 1,500,000 shares over a 12-month period - During Q1 2025, ePlus repurchased **47,488 shares** of common stock for **$3.3 million** to satisfy tax withholding obligations[67](index=67&type=chunk) - On August 7, 2025, the board authorized a new **share repurchase program** for up to **1,500,000 shares** over a 12-month period starting August 11, 2025[69](index=69&type=chunk) - In Q1 2024, **109,869 shares** were repurchased for **$8.1 million** under the then-current plan, and **52,450 shares** for **$3.8 million** for tax withholding[68](index=68&type=chunk) [Note 11. Share-Based Compensation](index=21&type=section&id=11.%20SHARE-BASED%20COMPENSATION) ePlus granted 122,195 restricted shares in Q1 2025 under its Director and Employee LTIPs. Total share-based compensation expense for the quarter was $3.44 million, with $17.1 million in unrecognized compensation expense remaining, expected to be recognized over 36 months - Granted **122,195 restricted shares** in Q1 2025 (**351** under 2024 Director LTIP, **121,844** under 2021 Employee LTIP)[72](index=72&type=chunk) Share-Based Compensation Expense (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Equity-based compensation expense | $3,440 | $2,791 | | Income tax benefit | $(905) | $(756) | - Total **unrecognized compensation expense** related to unvested restricted stock was **$17.1 million** as of June 30, 2025, with a weighted-average recognition period of **36 months**[76](index=76&type=chunk) - Issued **28,665 shares** under the ESPP at **$61.29** per share in Q1 2025, with **2.34 million shares** remaining under the plan[75](index=75&type=chunk) [Note 12. Income Taxes](index=22&type=section&id=12.%20INCOME%20TAXES) The provision for income tax expense for Q1 2025 was $9.7 million, up from $9.0 million in Q1 2024. The effective income tax rate decreased to 26.3% from 27.1% year-over-year, primarily due to lower state taxes. The company is assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) Income Tax Provision and Effective Rate (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Provision for income tax expense | $9,684 | $8,977 | | Effective income tax rate | 26.3% | 27.1% | - The **effective tax rate** decreased primarily due to lower state taxes[78](index=78&type=chunk) - ePlus is currently assessing the impact of the One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, which permanently extends many 2017 tax provisions and introduces modifications to corporate tax provisions[79](index=79&type=chunk) [Note 13. Fair Value of Financial Instruments](index=22&type=section&id=13.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) ePlus holds money market funds as Level 1 assets and a contingent consideration asset of $13.5 million as a Level 3 asset as of June 30, 2025. This contingent consideration stems from the sale of HoldCo and includes potential Holdback Premium and Earn-Out payments based on post-closing performance, valued using a Monte Carlo simulation model Fair Value Hierarchy of Financial Instruments (in thousands) | Asset | June 30, 2025 (Recorded Amount) | Level 1 | Level 2 | Level 3 | | :------------------------ | :------------------------------ | :------ | :------ | :------ | | Money market funds | $392,717 | $392,717 | $- | $- | | Contingent Consideration | $13,502 | $- | $- | $13,502 | - The **contingent consideration asset** of **$13.5 million** is related to the sale of HoldCo and includes potential Holdback Premium (up to **$3.0 million**) and two types of Earn-Outs (Lease Originations Earn-Out capped at **$10.0 million**, Transaction Gains Earn-Out uncapped)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - The fair value of the **contingent consideration** was estimated using a Monte Carlo simulation model[81](index=81&type=chunk) [Note 14. Business Combinations](index=23&type=section&id=14.%20BUSINESS%20COMBINATIONS) On August 19, 2024, ePlus acquired Bailiwick Services, LLC for a preliminary consideration of $124.9 million. This acquisition added $41.3 million in goodwill, assigned to the professional services and product segments, and $58.0 million in identified intangible assets, primarily customer relationships and trade names - ePlus acquired Bailiwick Services, LLC on August 19, 2024, for a preliminary consideration of **$124.9 million**[84](index=84&type=chunk)[85](index=85&type=chunk) - The acquisition resulted in **$41.3 million** in **goodwill**, assigned to **professional services** and **product segments**, attributable to the acquired workforce and expected synergies[86](index=86&type=chunk) - Identified **intangible assets** totaled **$58.0 million**, comprising **$49.3 million** in **customer relationships** (10-year useful life) and **$8.7 million** in **trade names** (7-year useful life)[85](index=85&type=chunk) [Note 15. Segment Reporting](index=24&type=section&id=15.%20SEGMENT%20REPORTING) ePlus manages its operations through three reportable segments: Product, Professional Services, and Managed Services, with performance evaluated based on gross profit. The 'Other' category includes retained international financing entities. Revenue disaggregation is provided by timing, principal/agent position, customer end market, and type - ePlus operates with three reportable segments: **Product**, **Professional Services**, and **Managed Services**, with performance measured by **gross profit**[88](index=88&type=chunk)[90](index=90&type=chunk) Net Sales by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Product | $520,895 | $457,312 | | Professional Services | $71,729 | $37,279 | | Managed Services | $44,580 | $40,910 | | Total Reportable Segments | $637,204 | $535,501 | Gross Profit by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Product | $106,482 | $98,505 | | Professional Services | $28,153 | $15,455 | | Managed Services | $13,534 | $12,834 | | Total Reportable Segments | $148,169 | $126,794 | Gross Margin by Segment | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | Product | 20.4% | 21.5% | | Professional Services | 39.2% | 41.5% | | Managed Services | 30.4% | 31.4% | - The 'Other' category consists of the international entities of the financing business retained after the domestic sale[126](index=126&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition for the quarter, highlighting the strategic shift to a pure-play technology solutions provider following the divestiture of the financing business. It details key financial metrics, operational trends, and segment-specific results, emphasizing growth in net sales and earnings despite some margin pressures [Executive Overview](index=27&type=section&id=EXECUTIVE%20OVERVIEW) ePlus is a leading IT solutions provider specializing in security, cloud, networking, collaboration, AI, and emerging technologies. Following the sale of its domestic financing business on June 30, 2025, the company is now a pure-play technology solutions provider, focusing on advisory consulting, design, deployment, and management of integrated solutions for middle market to large enterprises and SLED customers - ePlus is a leading solutions provider in **security**, **cloud**, **networking**, **collaboration**, **AI**, and emerging technologies, delivering IT and consulting solutions[95](index=95&type=chunk) - The company offers consulting, professional services, managed services, IT staff augmentation, and complete lifecycle management[96](index=96&type=chunk) - The sale of the domestic financing business on June 30, 2025, positions ePlus as a **pure-play technology solutions provider** with three reportable segments: **Product**, **Professional Services**, and **Managed Services**[100](index=100&type=chunk) [Business Trends](index=28&type=section&id=BUSINESS%20TRENDS) ePlus monitors key financial and non-financial metrics, including GAAP and non-GAAP measures like Adjusted EBITDA, and operational metrics like gross billings. Current business trends indicate customer focus on AI, security, and cloud solutions, driving demand for digital transformation and modernization, while general economic concerns and pricing pressures impact gross profit - Customers' top focus areas include AI, security, cloud solutions, digital transformation, and modernization[104](index=104&type=chunk) - Modernizing legacy applications, data modernization, reducing operational complexity, and securing workloads are fueling deployments on cloud, managed services, and hybrid platforms[104](index=104&type=chunk) - Rapid cloud adoption presents challenges in cost, security, and skillset gaps, addressed by ePlus's Cloud Managed Services portfolio[104](index=104&type=chunk) Key Business Metrics (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $637,315 | $535,652 | | Gross profit margin | 23.3% | 23.7% | | Operating income margin | 5.7% | 5.9% | | Non-GAAP: Net earnings from continuing operations | $33,164 | $27,366 | | Non-GAAP: Net earnings from continuing operations per common share - diluted | $1.26 | $1.01 | | Adjusted EBITDA | $46,709 | $39,069 | | Adjusted EBITDA margin | 7.3% | 7.3% | Gross Billings by Type (in thousands) | Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Cloud | $312,017 | $241,274 | | Networking | $268,732 | $281,528 | | Security | $190,045 | $151,883 | | Collaboration | $22,777 | $32,976 | | Other | $51,446 | $44,592 | | Product segment total | $845,017 | $752,253 | | Services | $107,748 | $81,455 | | Total Gross Billings | $952,765 | $833,708 | [Results of Operations](index=31&type=section&id=RESULTS%20OF%20OPERATIONS) Net sales increased by $101.7 million year-over-year, driven by growth in telecom, media, and entertainment, despite declines in other sectors. Gross profit rose by $21.3 million, but overall gross margin decreased by 40 basis points to 23.3% due to product mix shifts and lower services margins. Operating income increased by $4.7 million, while net earnings from continuing operations grew by $2.9 million, and total net earnings increased by $10.4 million, significantly boosted by discontinued operations - **Net sales** increased by **$101.7 million**, primarily due to increased sales in telecom, media, and entertainment industries[112](index=112&type=chunk) - Consolidated **gross profit** increased by **$21.3 million**, but **gross margins** decreased by **40 basis points** to **23.3%** due to a shift in product mix and lower services margins[113](index=113&type=chunk) - Selling, general, and administrative expenses increased by **$14.4 million**, mainly due to higher salaries and benefits (up **$11.8 million** from increased headcount, including Bailiwick acquisition) and general and administrative costs[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - **Operating income** increased by **$4.7 million**, but **operating margin** decreased by **20 basis points** to **5.7%**[118](index=118&type=chunk) - **Net earnings from discontinued operations**, net of tax, increased by **$7.5 million** to **$10.6 million**, including a **$4.4 million gain on sale** of the domestic financing business[122](index=122&type=chunk) - Total **net earnings** increased by **$10.4 million** to **$37.7 million**[123](index=123&type=chunk) [Segment Overview](index=32&type=section&id=SEGMENT%20OVERVIEW) Following the divestiture of its domestic financing business, ePlus now operates with three reportable segments: Product, Professional Services, and Managed Services. The Product segment focuses on IT hardware and software sales, Professional Services offers advanced consulting and deployment, and Managed Services provides ongoing management and support for customer environments - **Product segment**: Sales of third-party hardware, software (perpetual and subscription), and maintenance/assurance services[124](index=124&type=chunk)[128](index=128&type=chunk) - **Professional services segment**: Advanced professional services including consulting, architecture, deployment, logistics, training, staff augmentation, and project management[124](index=124&type=chunk)[128](index=128&type=chunk) - **Managed services segment**: Advanced managed services, security solutions, storage-as-a-service, cloud hosted/managed services, and service desk, typically billed over 3-5 year contract terms[124](index=124&type=chunk)[128](index=128&type=chunk) - The 'Other' category consists of the international entities of the financing business retained after the domestic sale[126](index=126&type=chunk) [Segment Results of Operations](index=33&type=section&id=SEGMENT%20RESULTS%20OF%20OPERATIONS) Product segment sales increased due to demand and product mix shifts, while Professional Services sales grew significantly, primarily from the Bailiwick acquisition. Managed Services sales also increased due to expansion in enhanced maintenance and cloud services. However, gross margins for all three segments decreased, with Product margin down due to mix, Professional Services margin impacted by the lower-margin Bailiwick services, and Managed Services margin declining from reduced service desk revenue - **Product segment sales** increased due to demand and a shift in product mix, with less third-party maintenance and subscriptions recognized on a net basis[130](index=130&type=chunk) - **Professional services segment sales** increased significantly, primarily driven by revenues from the Bailiwick acquisition[131](index=131&type=chunk) - **Managed services segment sales** increased due to ongoing expansion of service offerings, particularly in enhanced maintenance support and cloud services[131](index=131&type=chunk) - **Product segment margin** decreased by **110 basis points** to **20.4%** due to a shift in product mix[132](index=132&type=chunk) - **Professional services segment margin** decreased by **230 basis points** to **39.2%**, primarily due to the Bailiwick acquisition, which has lower gross margins due to higher reliance on third-party delivery[133](index=133&type=chunk) - **Managed services segment margin** decreased by **100 basis points** to **30.4%** due to a decline in revenue from the service desk offering[134](index=134&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) ePlus finances operations through cash flow and borrowings, expecting current liquidity to cover needs for at least the next year. The cash conversion cycle improved to 26 days from 37 days, driven by a 10-day decrease in Days Sales Outstanding (DSO). The company relies on its WFCDF Credit Facility for working capital and has declared an initial quarterly cash dividend of $0.25 per common share - ePlus expects cash on hand, funds from operations, and available credit to finance **working capital**, capital expenditures, and other requirements for at least the next year[137](index=137&type=chunk) Cash Conversion Cycle (in days) | Metric | As of June 30, 2025 | As of June 30, 2024 | | :-------------------------- | :------------------ | :------------------ | | Days sales outstanding (DSO) | 58 | 68 | | Days inventory outstanding (DIO) | 14 | 14 | | Days payable outstanding (DPO) | (46) | (45) | | Cash conversion cycle | 26 | 37 | - The **cash conversion cycle** decreased to **26 days** from **37 days**, primarily due to a **10-day decrease** in **DSO**, reflecting higher sales to customers with shorter payment terms[143](index=143&type=chunk) - The WFCDF **Credit Facility**, with a **$500.0 million floor plan** and **$200.0 million revolving credit facility**, is crucial for daily **working capital**; its loss could materially affect future results[148](index=148&type=chunk)[150](index=150&type=chunk) - On August 7, 2025, the Board of Directors declared an **initial quarterly cash dividend** of **$0.25** per common share, payable September 17, 2025[155](index=155&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) ePlus is exposed to foreign currency risk from transactions not denominated in its subsidiaries' functional currency, including purchases, sales, and intercompany loans. While past exposure has not been significant, fluctuations in exchange rates could impact financial results - ePlus has **foreign currency exposure** from transactions not denominated in subsidiaries' functional currency, including product/service purchases and sales, and intercompany loans[165](index=165&type=chunk) - **Foreign currency exposure** from product/service transactions has not been significant to date, but fluctuations in exchange rates may impact results[165](index=165&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, ePlus's CEO and CFO concluded that the company's disclosure controls and procedures were effective. The acquisition of Bailiwick Services, LLC on August 19, 2024, was excluded from the internal control over financial reporting evaluation for the quarter, with integration ongoing. Management acknowledges the inherent limitations of control systems - The CEO and CFO concluded that **disclosure controls and procedures** were effective as of June 30, 2025[166](index=166&type=chunk) - Bailiwick Services, LLC, acquired on August 19, 2024, was excluded from the evaluation of **internal control over financial reporting** for the quarter ended June 30, 2025, with integration in progress[167](index=167&type=chunk) - Management acknowledges that control systems have inherent limitations and cannot prevent or detect all errors or fraud[168](index=168&type=chunk) [Part II. Other Information](index=40&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8 of the Consolidated Financial Statements for details on legal proceedings, commitments, and contingencies, indicating no new material information beyond what is already disclosed - Refer to Note 8, 'Commitment and Contingencies' for information on legal proceedings[169](index=169&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) The sale of the financing business has altered ePlus's operational and financial profile, reducing revenue diversification and potentially increasing volatility. The company faces risks that anticipated benefits from the sale may not be realized, and the receipt of contingent consideration depends on the post-closing performance of the divested entity - The sale of the financing business reduces **revenue diversification** and may increase **volatility** in results of operations, cash flows, and working capital[171](index=171&type=chunk) - There is a risk that anticipated benefits from the sale may not be realized, adversely affecting the business[171](index=171&type=chunk) - The ability to receive **contingent consideration** from the sale depends on the post-closing performance of the divested HoldCo Group, which is operated by PEAC Solutions[171](index=171&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended June 30, 2025, ePlus repurchased 47,488 shares of common stock in June 2025 at an average price of $69.58 per share to satisfy tax withholding obligations related to restricted stock vesting. The 2024 Repurchase Plan terminated on May 27, 2025 Common Stock Purchases (Three Months Ended June 30, 2025) | Period | Total shares purchased | Average price paid per share | | :--------------------------------- | :--------------------- | :--------------------------- | | April 1, 2025 through April 30, 2025 | - | $- | | May 1, 2025 through May 31, 2025 | - | $- | | June 1, 2025 through June 30, 2025 | 47,488 | $69.58 | | Total | 47,488 | | - The repurchases were made to satisfy tax withholding obligations related to the vesting of restricted stock[178](index=178&type=chunk) - The 2024 Repurchase Plan, which authorized the repurchase of up to **1,250,000 shares**, terminated on May 27, 2025[178](index=178&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as 'Not Applicable,' indicating no defaults upon senior securities during the reporting period [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as 'Not Applicable,' indicating no mine safety disclosures are relevant to the company [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025. Executive officers may participate in the employee stock purchase plan, which complies with Rule 10b5-1(c) - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[177](index=177&type=chunk) - Executive officers may participate in the employee stock purchase plan, which is designed to comply with Rule 10b5-1(c)[177](index=177&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the Membership Interest Purchase Agreement for the sale of Expo Holdings, LLC, amendments to the Credit Agreement, certifications from the CEO and CFO, and Inline XBRL documents - Key exhibits include the Membership Interest Purchase Agreement for Expo Holdings, LLC, and the Third Amendment to the First Amended and Restated Credit Agreement[179](index=179&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer are included, along with Inline XBRL documents for financial data[179](index=179&type=chunk) [Signatures](index=43&type=section&id=SIGNATURES) This section contains the signatures of ePlus inc.'s Chief Executive Officer and President, Mark P. Marron, and Chief Financial Officer, Elaine D. Marion, certifying the filing of the report on August 7, 2025 - The report was signed by Mark P. Marron, Chief Executive Officer and President, and Elaine D. Marion, Chief Financial Officer, on August 7, 2025[182](index=182&type=chunk)[183](index=183&type=chunk) ```

EXHIBIT 99.1 ePlus Reports First Quarter Fiscal Year 2026 Financial Results ~ Announces Initial Common Stock Quarterly Dividend of $0.25 Per Share and New Stock Repurchase Program ~ First Quarter Fiscal Year 2026 HERNDON, VA – August 7, 2025 – ePlus inc. (NASDAQ: PLUS), a leading provider of technology solutions, today announced financial results for the three months ended June 30, 2025, or the first quarter of its 2026 fiscal year. Management Comment "Fiscal 2026 is off to a strong start both financially a ...

HERNDON, Va., Aug. 7, 2025 /PRNewswire/ -- ePlus inc. (NASDAQ: PLUS), a leading provider of technology solutions, today announced that its Board of Directors has declared its first quarterly dividend. The initial quarterly cash dividend of $0.25 per common share will be paid on September 17, 2025, to shareholders of record as of the close of business on August 26, 2025. The declaration and payment of future dividends are subject to the sole discretion of the Board of Directors. All information set forth in ...