ePlus inc.
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OUR BUSINESS
ePlus inc., sometimes referred to in this Annual Report on Form 10-K as “we,” “our,” “us,” “ourselves,” or “ePlus,” has been delivering solutions for our customers since 1990. We conduct our operations through two businesses. Our technology business, consisting of our product, professional services, and managed services segments, provides technology solutions. Our technology solutions leverage third-party hardware, software, maintenance and other services with our own advanced professional and managed services. Our financing business segment primarily provides financing of IT equipment, software, and related services. Across both businesses, we sell to commercial entities, state and local governments, government contractors, and educational institutions.
OUR SOLUTIONS
We are a leading provider of technology solutions across the IT spectrum spanning security, cloud, data center, networking, collaboration, AI, service provider and critical infrastructure, and emerging solutions, to domestic and foreign organizations across all industry segments.
Our solutions are comprised of world class leading technologies from partners such as Amazon Web Services (“AWS”), Arista Networks, Check Point, Cisco Systems, Citrix, Commvault, Crowdstrike, Deepwatch, Dell EMC, F5 Networks, Foresite, Fortinet, Gigamon, HPE, Juniper Networks, Lenovo, Microsoft, NetApp, Nutanix, NVIDIA, Oracle, Palo Alto Networks, Proficio, Pure Storage, Rubrik, Splunk, Varonis, and VMware by Broadcom, among many others.
Our solutions leverage a broad range of professional, consultative, and managed services, across the technology spectrum. We possess top-level engineering certifications with a broad range of leading IT technologies that enable us to offer multi-vendor IT solutions that are optimized for each of our customers’ specific requirements. Underpinning the broader areas of cloud, security, AI, networking, data center and collaboration are specific skills in orchestration and automation, application modernization, DevSecOps, zero-trust architectures, data management, data visualization, analytics, network modernization, edge computing, consumption licensing models, and other advanced and emerging technologies.
Our scale and financial resources have enabled us to continue investing in engineering and technology resources to stay at the forefront of technology trends. Our cloud/hosted, proprietary software solutions are focused on giving our customers more control over their IT supply chain, by automating and optimizing the procurement and management of their owned, leased, and consumption-based assets. These solutions have expanded to include private marketplace experiences to our customers to support platforms such as those on AWS marketplace.
We also offer a wide portfolio of technology and other capital asset financing solutions to customers across commercial and government enterprises, designing programs that are tailored to fit their unique processes, structures, and requirements. Our expertise in core and emerging technologies, buttressed by our robust portfolio of professional, services and managed services, has enabled ePlus to remain a trusted advisor for our customers.
OUR CUSTOMERS
We serve 4,600 customers that are primarily middle market to large enterprises and state and local government institutions, including state and local education (“SLED”) institutions, across diverse customer end markets. For the year ended March 31, 2025, the percentage of revenue by customer end market within our technology business includes 23% for the telecommunications, media and entertainment, 17% for SLED, 15% for technology, 14% for healthcare, and 9% for financial services. Sales to Verizon Communications Inc. represented 16%, 19%, and 22% of our net sales for the years ended March 31, 2025, 2024, and 2023, respectively. We sell to customers in the United States (“US”), which account for most of our sales, and to customers in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, and Singapore.
Our technology business segments accounted for 97% of our net sales—78% from the product segment, 11% from the professional services segment, and 8% from the managed services segment—and 75% of our operating income for the year ended March 31, 2025. Our financing business segment accounted for 3% of our net sales, and 25% of our operating income for the year ended March 31, 2025.
OUR COMPETITION
The market for IT solutions is highly competitive, subject to macro-economic cycles, and the entry of new competitors. Additionally, the market is subject to disruption from consolidation of existing market participants that will create larger competitors, by the introduction of disruptive technologies, and by other activities of industry participants. We expect to continue to compete in all areas of our business against local, regional, national, and international firms, including vendors, consulting firms, international, national, and regional resellers, and service providers. Some of our competitors are direct marketers with little value-add and sell products as commodities, which can place downward pressure on product pricing. In addition, many IT vendors may sell or lease directly to our customers, and our continued ability to compete effectively may be affected by the strategies and business practices of such vendors. Some Original Equipment Manufacturers (OEMs) are building and launching their own adoption and managed services to better ensure customer satisfaction and retainment. We face indirect competition from potential customers’ reluctance to move away from legacy systems, processes, and solutions providers. As IT consumption shifts from IT personnel and legacy infrastructure to line-of-business based outcomes using off-premise, on-demand, and cloud solutions, the legacy resale model has continued to shift from an upfront sale to a recurring revenue model.
The leasing and financing markets are also competitive and subject to changing economic conditions and market activities of leading industry participants. We expect to continue to compete against local, regional, national, and international firms, including banks, specialty finance companies, private-equity asset managers, vendors’ captive finance companies, and third-party leasing companies. Banks and other large financial services companies sell directly to business customers, particularly larger enterprise customers, and may provide other financial or ancillary services that we do not provide. Vendor captive leasing companies may use internal transfer pricing to effectively lower lease rates and/or bundle equipment sales and leasing to provide highly competitive packages to customers. Third-party leasing companies may have deep customer relationships with contracts in place that are difficult to displace; however, these competitors typically do not provide the breadth of product, service, and software offerings that we provide to our customers. These competitors may have access to more capital to fund more originations than we do and may be better able to adapt to a rapidly changing interest rate environment.
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. Many current and potential competitors also have greater name recognition and engage in more extensive promotional marketing and advertising activities, offer more attractive terms to customers, and adopt more aggressive pricing policies than we do.
OUR OFFERINGS
TECHNOLOGY BUSINESS SEGMENTS
We provide a range of IT products and advanced professional and managed services to help our customers improve productivity, profitability, and revenue growth while reducing operating costs. We believe that our customers view technology purchases as integrated solutions, rather than discrete product and service categories, and most of our sales are derived from integrated solutions involving our customers’ data center, cloud, network, security, and collaboration infrastructure. We hold various technical and sales-related certifications from leading manufacturers and software publishers, which authorizes us to market their products and enables us to provide advanced professional and managed services. We actively engage with emerging vendors to offer their technologies to our customers. Our flexible platform and customizable catalogs facilitate the addition of new vendors’ products with minimal incremental effort. Our technology business segments provide the following products and services within their respective segments:
Product segment:
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IT sales includes sales of third-party hardware, perpetual and subscription software, maintenance, software assurance, and services.
Managed services segment:
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Managed services for infrastructure and cloud proactively monitor and manage a broad range of technologies on-premises and in the cloud with services such as Managed Services for Azure, Managed WebEx Calling, Managed Webex Contact Center, unified communications, video-enabled workspaces, compute, storage, network infrastructure, firewall management and Managed Power Protection to ensure support of a broad cross-section of technologies spanning multiple Original Equipment Manufacturer (OEM) solutions. These solutions are built in a flexible subscription model to monitor, manage, and maximize business critical technologies—including cloud, security, data center, mobility, and collaboration based on an ITIL Framework backed with SOC 1 Type 2 and SOC 2 Type 2 attestations. We also provide ePlus® Automated Virtual Assistant (AVA) for Collaboration Spaces. ePlus AVATM uses robotic process automation accompanied by ePlus Managed Services to present an exceptional experience for users in video-enabled conference rooms and workspaces.
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Enhanced Maintenance Support (EMS) or ePlus Lifecycle-Services Support (ELSS) simplifies our customers support experience with single-call support for multi-vendor environments. We provide 24x7x365 level 1, 2, and 3 support from dedicated engineers and a certified bench of experts. Our services are certified by our leading manufacturer partners. Various OEM solutions are e-Bonded or Smart-Bonded, providing bi-directional ticket synchronization to facilitate expedient resolution and a custom executive dashboard provides related lifecycle data to the customer for all contracted assets.
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Service desk provides outsourced functions including, but not limited to, server and desktop account management, Microsoft Office support, and IT Service Management (ITSM) integration of tailored knowledgebase articles to respond to our varying customers’ business demands while minimizing overhead.
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Storage-as-a-Service is a solution powered by Pure Storage Evergreen/One and NetApp Keystone that provides customers with on-premises storage in a consumption-based model with on-demand burst capacity, backed by Service Level Agreements (SLAs), and ePlus expert Enhanced Maintenance Support (EMS). This allows customers to consume storage in a cloud-like model in their data center addressing planned and/or unforeseen capacity needs resulting from ongoing cloud migrations and other parallel IT projects.
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Azure Recover provides Cloud Disaster Recovery with automated monthly recovery testing and annual full failover testing. This offering focuses on delivering confidence to our customers in their ability to rapidly recover when incidents such as ransomware occur.
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Cloud Managed Services are focused on helping our customers consume public cloud in a way that reduces time-to-market for new applications, lowers their ongoing cloud costs, and increases security. By taking day-to-day cloud management off their hands, our clients can focus on the applications that drive their business.
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Managed Security Services help customers strengthen their information security profile with industry-leading tools, technology, and expertise often at a fraction of the cost of in-house security resources. Services include Security Operations Center (SOC), Vulnerability Management, Managed Detection and Response (MDR), and Incident Response (IR).
Professional services segment:
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Professional services provide services in the spaces of cloud infrastructure, unified communications, collaboration, networking, storage, hyper-converged infrastructure, virtual desktop infrastructure, and AI and emerging technologies. We offer architecture, deployment, and configuration services, software adoption services, training services and assessments. Additionally, we offer professional services in the spaces of digital signage, EV charging solutions, loss prevention and security, and retail store openings, remodels, and closings.
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Staff augmentation services provide customers with flexible headcount options, which may range from service desk to infrastructure to software developer skills. Staff augmentation allows customers to access talent, fill specific technology skill gaps, or provide short-term or long-term IT professional help, which also includes services, such as Virtual Chief Information Officer (vCIO) and Virtual Chief Information Security Officer (vCISO) used to complement existing personnel and build three-to-five-year IT roadmaps.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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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, the audited consolidated financial statements included in our annual report on Form 10-K for the year ended March 31, 2025 (“2025 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 2025 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.
EXECUTIVE OVERVIEW
BUSINESS DESCRIPTION
We are a leading solutions provider in the areas of security, cloud, networking, collaboration, artificial intelligence (“AI”), and emerging technologies. AI continues to be a transformative force and demand driver particularly for our core products: Compute, Cloud, 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. 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 that take advantage of the cost, scale, and efficiency of private, public and hybrid cloud services in an evolving market.
As part of our solutions, we provide consulting, professional services, managed services, IT staff augmentation, and complete lifecycle management services in the areas of security, cloud, networking, collaboration, and emerging technologies. Further, we offer professional services in the spaces of digital signage, electric vehicle (“EV”) charging solutions, loss prevention and security, store openings, remodels, and store closings.
We deliver integrated solutions that address our customers’ business needs, leveraging the appropriate technologies, both on-premises and in the cloud. Our approach is to lead with advisory consulting to understand our customers’ needs, and then design, deploy, and manage solutions aligned to their objectives. Underpinning the broader areas of cloud, security, networking, and collaboration are specific skills in orchestration and automation, application modernization, DevSecOps, zero-trust architectures, data management, data visualization, analytics, network modernization, edge computing and other advanced and emerging technologies. These solutions are comprised of class-leading technologies from our commercial partners.
We are a reseller for thousands of manufacturers, which enables us to provide our customers with new and evolving IT solutions. We possess top-level IT engineering certifications with a broad range of leading IT vendors that enable us to offer IT solutions that are optimized for each of our customers’ specific requirements.
We serve primarily middle market to large enterprises across diverse markets including telecom, media and entertainment, technology, state and local government and educational institutions (“SLED”), healthcare, and financial services. We sell to customers in the United States (“US”), which account for most of our sales, and to customers in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, and Singapore.
On June 30, 2025, we completed the sale of 100% of the membership interests of Expo Holdings, LLC, a Delaware limited liability company and our wholly-owned subsidiary (“HoldCo”), to Marlin Leasing Corporation, a Delaware corporation (d/b/a PEAC Solutions) pursuant to the terms of the Membership Interest Purchase Agreement, dated June 20, 2025 (the “Sale Transaction”). By selling HoldCo, together with its U.S. 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.
BUSINESS TRENDS
We believe the following key factors may impact our business performance and our ability to achieve business results:
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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 technology and services.
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There is a worldwide shortage of memory chips due to the demand for
AI-ready products, which is also causing rapid price increases across many IT
products. Like others, we may experience ongoing supply constraints for memory
chips that may affect lead times for delivery of products, our having to carry
more inventory for longer periods, our and the customer’s costs of products,
vendor return and cancellation policies, and our ability to meet customer
demands. We continue to work closely with our suppliers and manufacturers 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.
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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 outcomes.
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Modernizing legacy applications, data modernization, reducing operational complexity, securing workloads, the cost and performance of IT operations, and agility are changing the way companies are purchasing and consuming technology. These are fueling deployments of solutions on cloud, managed services and hybrid platforms and licensing models, which may include invoicing over the term of the engagement and may result in additional revenue recognized on a net basis.
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Rapid cloud adoption has led to customer challenges around increasing costs, security concerns, and skillset gaps. These challenges are consistent across all industries and business sizes. We have developed a Cloud Managed Services portfolio to address these needs, allowing our clients to focus on driving business outcomes via optimized and secure cloud platforms.
KEY BUSINESS METRICS
Our management monitors several financial and non-financial measures and ratios on a regular basis to track the progress of our business. We believe that the most important of these measures and ratios include net sales, gross profit and margin, operating income margin, 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 annual budgets. We use gross billings as an operational metric to assess the volume of transactions or market share for our product, professional services, and managed services segments as well as to understand changes in our accounts receivable and accounts payable balances and our statement of cash flows. We believe our gross billings metric will aid investors in the same manner to evaluate our business.
These key indicators include financial information that is prepared in accordance with US GAAP and presented in our consolidated financial statements, as well as non-GAAP and operational performance measurement tools. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are correspondingly not normally excluded or included in the most directly comparable measure calculated and presented in accordance with US GAAP. Our use of non-GAAP information as analytical tools has limitations and should not be considered in isolation or as substitutes 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 below tables for more information.
The following tables provide our key business metrics for our consolidated entity (in thousands, except per share amounts):
| Three months ended December 31, | Nine months ended December 31, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||
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Financial metrics
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Net sales
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$ | 614,774 | $ | 493,221 | $ | 1,860,915 | $ | 1,522,245 | ||||||
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Gross profit
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$ | 158,654 | $ | 125,078 | $ | 468,994 | $ | 379,254 | ||||||
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Gross profit margin
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25.8 | % | 25.4 | % | 25.2 | % | 24.9 | % | ||||||
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Operating income
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$ | 43,466 | $ | 16,470 | $ | 128,501 | $ | 74,925 | ||||||
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Operating income margin
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7.1 | % | 3.3 | % | 6.9 | % | 4.9 | % | ||||||
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Net earnings from continuing operations
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$ | 33,400 | $ | 14,566 | $ | 98,688 | $ | 58,558 | ||||||
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Net earnings from continuing operations margin
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5.4 | % | 3.0 | % | 5.3 | % | 3.8 | % | ||||||
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Net earnings from continuing operations per common share —diluted
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$ | 1.27 | $ | 0.55 | $ | 3.74 | $ | 2.19 | ||||||
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Non-GAAP financial metrics
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Non-GAAP: Net earnings from continuing operations (1)
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$ | 38,009 | $ | 18,629 | $ | 111,630 | $ | 71,151 | ||||||
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Non-GAAP: Net earnings from continuing operations per common share—diluted (1)
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$ | 1.45 | $ | 0.71 | $ | 4.23 | $ | 2.66 | ||||||
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Adjusted EBITDA (2)
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$ | 53,383 | $ | 27,038 | $ | 158,795 | $ | 102,441 | ||||||
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Adjusted EBITDA margin (2)
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8.7 | % | 5.5 | % | 8.5 | % | 6.7 | % | ||||||
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Operational metrics
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Gross billings (3)
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Networking
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$ | 300,075 | $ | 214,762 | $ | 883,996 | $ | 716,087 | ||||||
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Cloud
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257,848 | 207,762 | 772,693 | 644,888 | ||||||||||
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Security
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221,971 | 190,808 | 667,174 | 506,256 | ||||||||||
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Collaboration
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22,606 | 22,381 | 86,669 | 102,074 | ||||||||||
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Other
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72,358 | 76,513 | 200,721 | 193,650 | ||||||||||
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Product segment
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874,858 | 712,226 | 2,611,253 | 2,162,955 | ||||||||||
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Services
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107,223 | 137,320 | 346,248 | 328,527 | ||||||||||
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Total
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$ | 982,081 | $ | 849,546 | $ | 2,957,501 | $ | 2,491,482 | ||||||
(1)
Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted are based on net earnings from continuing operations calculated in accordance with US GAAP, adjusted to exclude other (income) expense, share-based compensation, and acquisition related amortization and integration expenses, and the related tax effects.
We believe that the exclusion of other income and acquisition-related amortization expense in calculating Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance, which helps in understanding and the evaluation of 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 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 similar Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted, or similarly titled measures differently, which may reduce their usefulness as comparative measures.
The following table provides our calculation of Non-GAAP: Net earnings from continuing operations and Non-GAAP: Net earnings from continuing operations per common share – diluted (in thousands, except per share amounts):
| Three months ended December 31, |
Nine months ended December 31, |
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| 2025 | 2024 | 2025 | 2024 | |||||||||||
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GAAP: Earnings from continuing operations before tax
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$ | 45,589 | $ | 19,917 | $ | 136,399 | $ | 80,399 | ||||||
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Share-based compensation
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3,424 | 2,863 | 9,922 | 8,184 | ||||||||||
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Acquisition related expenses
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- | 29 | - | 1,072 | ||||||||||
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Acquisition related amortization expense
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5,006 | 5,983 | 15,867 | 14,180 | ||||||||||
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Other (income) expense, net
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(2,123 | ) | (3,447 | ) | (7,898 | ) | (5,474 | ) | ||||||
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Non-GAAP: Earnings from continuing operations before tax
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51,896 | 25,345 | 154,290 | 98,361 | ||||||||||
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GAAP: Provision for income taxes
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12,189 | 5,351 | 37,711 | 21,841 | ||||||||||
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Share-based compensation
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916 | 772 | 2,728 | 2,266 | ||||||||||
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Acquisition related expenses
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- | 7 | - | 300 | ||||||||||
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Acquisition related amortization expense
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1,338 | 1,495 | 4,363 | 3,788 | ||||||||||
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Other (income) expense, net
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(568 | ) | (930 | ) | (2,243 | ) | (1,498 | ) | ||||||
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Tax benefit (expense) on restricted stock
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12 | 21 | 101 | 513 | ||||||||||
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Non-GAAP: Provision for income taxes
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13,887 | 6,716 | 42,660 | 27,210 | ||||||||||
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Non-GAAP: Net earnings from continuing operations
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$ | 38,009 | $ | 18,629 | $ | 111,630 | $ | 71,151 | ||||||
| Three months ended December 31, |
Nine months ended December 31, |
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| 2025 | 2024 | 2025 | 2024 | |||||||||||
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GAAP: Net earnings from continuing operations per common share - diluted
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$ | 1.27 | $ | 0.55 | $ | 3.74 | $ | 2.19 | ||||||
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Share-based compensation
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0.10 | 0.08 | 0.27 | 0.22 | ||||||||||
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Acquisition related expenses
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- | - | - | 0.03 | ||||||||||
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Acquisition related amortization expense
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0.14 | 0.17 | 0.43 | 0.39 | ||||||||||
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Other (income) expense, net
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(0.06 | ) | (0.09 | ) | (0.21 | ) | (0.15 | ) | ||||||
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Tax benefit (expense) on restricted stock
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- | - | - | (0.02 | ) | |||||||||
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Total non-GAAP adjustments - net of tax
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0.18 | 0.16 | 0.49 | 0.47 | ||||||||||
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Non-GAAP: Net earnings from continuing operations per common share - diluted
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$ | 1.45 | $ | 0.71 | $ | 4.23 | $ | 2.66 | ||||||
(2)
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. 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 the exclusion of other income in calculating Adjusted EBITDA and Adjusted EBITDA margin provides management and investors with a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance, which helps in the understanding and evaluation of our operating results. We use Adjusted EBITDA as a supplemental measure of our performance to gain and provide insight into our operating performance and performance trends. However, our use of Adjusted EBITDA and Adjusted EBITDA margin as analytical tools has limitations and should not be considered in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate Adjusted EBITDA and Adjusted EBITDA margin, or similarly titled measures differently, which may reduce their usefulness as comparative measures.
The following table provides our calculations of Adjusted EBITDA (in thousands):
| Three months ended December 31, |
Nine months ended December 31, |
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| 2025 | 2024 | 2025 | 2024 | |||||||||||
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GAAP: Net earnings from continuing operations
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$ | 33,400 | $ | 14,566 | $ | 98,688 | $ | 58,558 | ||||||
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Provision for income taxes
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12,189 | 5,351 | 37,711 | 21,841 | ||||||||||
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Share-based compensation
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3,424 | 2,863 | 9,922 | 8,184 | ||||||||||
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Acquisition related expenses
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- | 29 | - | 1,072 | ||||||||||
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Depreciation and amortization
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6,493 | 7,676 | 20,372 | 18,260 | ||||||||||
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Other (income) expense, net
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(2,123 | ) | (3,447 | ) | (7,898 | ) | (5,474 | ) | ||||||
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Non-GAAP: Adjusted EBITDA
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$ | 53,383 | $ | 27,038 | $ | 158,795 | $ | 102,441 | ||||||
(3)
Gross billings are the total dollar value of customer purchases of goods and services including shipping charges during the period, net of customer returns and credit memos, sales, or other taxes from our product, professional services, and managed services segments. Gross billings include the transaction values for certain sales transactions that are recognized on a net basis, and, therefore, include amounts that will not be recognized as revenue.
RESULTS OF OPERATIONS
Net sales: Net sales for the three months ended December 31, 2025, increased $121.6 million compared to the three months ended December 31, 2024, due to increased 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 demand was primarily driven by midmarket, large enterprise, and healthcare customers. For further information, see the “Segment Results of Operations” below.
Net sales for the nine months ended December 31, 2025, increased $338.7 million compared to the nine months ended December 31, 2024, due to increased 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 demand was primarily driven by large enterprise customers. For further information, see the “Segment Results of Operations” below.
Gross profit: Consolidated gross profit for the
three months ended December 31, 2025, increased $33.6 million
compared to the prior three-month period due to
increases in net sales in our product segment and managed services segment,
offset by a decrease in our professional services segment. Overall, gross margin increased
40 basis points year over year to 25.8%, primarily due to higher product margin
led by a shift in product mix and higher vendor incentives, partially offset by
a lower percentage of sales of third-party maintenance and subscriptions that
are recognized on a net basis and lower services margin. For further
information, see the “Segment Results of Operations” below.
Consolidated gross profit for the nine months ended December 31, 2025, increased $89.7 million compared to the prior nine-month period due to increases in net sales in all three of our operating segments. Overall, gross margin increased 30 basis points year over year to 25.2%, primarily due to higher product margin led by a shift in product mix as we sold more third-party maintenance and subscriptions that are recognized on a net basis, offset by lower services margin. 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 December 31, 2025, increased $7.8 million and $34.1 million, compared to the three and nine months ended December 31, 2024, respectively.
Salaries and benefits, including variable compensation and share-based compensation for the three months ended December 31, 2025, increased $8.1 million, compared to the same three-month period in the prior year, primarily due to increases in variable compensation commensurate with the increase in our gross profit.
Salaries and benefits, including variable compensation and share-based compensation for the nine months ended December 31, 2025, increased $31.1 million, compared to the same nine-month period in the prior year, primarily due to increases in variable compensation commensurate with the increase in our gross profit and secondarily due to additional salaries and benefits due to our acquisition of Bailiwick on August 19, 2024.
General and administrative expenses for the three months ended December 31, 2025, increased $0.5 million as compared to the prior three-month period, mainly driven by higher legal fees.
General and administrative expenses for the nine months ended December 31, 2025, increased $3.9 million as compared to the prior nine-month period, due to the addition of Bailiwick. In total, we had higher professional fees of $1.9 million, higher software, subscription, and maintenance fees of $1.8 million, higher office rent of $0.7 million, and higher travel and entertainment expenses of $0.7 million. These increases were offset by a decrease in acquisition-related expenses of $1.0 million, due to the addition of Bailiwick in the prior nine-month period.
Provision for credit losses for the three and nine months ended December 31, 2025, was $0.4 million and $0.6 million, respectively, as compared to $1.2 million and $1.5 million for the prior three- and nine-month periods, respectively. Our lower provision for credit losses for the three and nine months ended December 31, 2025, was due to favorable changes in our net credit exposure.
Depreciation and amortization: Depreciation and amortization for the three months ended December 31, 2025, decreased compared to the three months ended December 31, 2024, primarily due to decreased acquisition amortization expense.
Depreciation and amortization for the nine months ended December 31, 2025, increased compared to the nine months ended December 31, 2024, primarily due to amortization from intangible assets acquired in the Bailiwick acquisition.
Operating income: As a result of the foregoing, operating income for the three months ended December 31, 2025, increased $27.0 million compared to the prior three-month period, and operating margin increased by 380 basis points to 7.1%.
As a result of the foregoing, operating income for the nine months ended December 31, 2025, increased $53.6 million compared to the prior nine-month period, and operating margin increased by 200 basis points to 6.9%.
Other income, net: Other income, net for the three months ended December 31, 2025, was $2.1 million, compared to $3.4 million for the three months ended December 31, 2024. Our decrease in other income was primarily due to lower foreign exchange gains in the current three-month period compared to the same period in the prior year and $1.2 million in expense in the current three-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, offset by higher interest income in the current three-month period compared to the same period in the prior year. We had foreign exchange gains of $0.1 million for the three months ended December 31, 2025, compared to $1.9 million for the same period in the prior year. We had $3.0 million in interest income for the three months ended December 31, 2025, compared to $1.6 million for the same period in the prior year.
Other income for the nine months ended December 31, 2025, was $7.9 million, compared to $5.5 million for the nine months ended December 31, 2024. Our increase in other income was primarily due to higher 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 higher 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. We had $9.0 million in interest income for the nine months ended December 31, 2025, compared to $5.9 million for the same period in the prior year. We had foreign exchange losses of $0.6 million for the nine months ended December 31, 2025, compared to losses of $0.4 million for the same period in the prior year.
Provision for income taxes: Our provision for income tax expense was $12.2 million and $37.7 million for the three and nine months ended December 31, 2025, as compared to $5.4 million and $21.8 million for the same three- and nine-month periods in the prior year. Our effective tax rate for the three and nine months ended December 31, 2025, was 26.7% and 27.6% respectively, compared with 26.9% and 27.2%, respectively, for the same three- and nine-month periods in the prior year. Our effective income tax rate for the three months ended December 31, 2025, was lower compared to the same three-month period in the prior year primarily due to lower state taxes. Our effective income tax rate for the nine months ended December 31, 2025, was higher compared to the same nine-month period in the prior year primarily due a higher tax benefit from restricted stock and state taxes in the prior year.
Net earnings from continuing operations: Net earnings from continuing operations for the three months ended December 31, 2025, were $33.4 million, an increase of $18.8 million, as compared to $14.6 million for the same three-month period in the prior year. The net earnings increase was due to the increase in operating profits, offset by an increase in provision for income taxes and decrease in other income.
Net earnings from continuing operations for the nine months ended December 31, 2025, were $98.7 million, an increase of $40.1 million, as compared to $58.6 million for the same nine-month period in the prior year. The net earnings increase was due to the increase in operating profits, and an increase other income, offset by an increase in provision for income taxes.
Net earnings from discontinued operations, net of tax: Net earnings from discontinued operations, net of tax, for the three months ended December 31, 2025, was $1.7 million consisting of a gain of $2.3 million from settling a legal matter, offset by an income tax expense of $0.6 million. In December 2025, we paid $2.3 million to settle a legal matter related to our discontinued operations, which we had recorded as a contingent liability of $4.6 million during the three months ended September 30, 2025. As a result of this settlement, we recognized a gain of $2.3 million. We had net earnings from discontinued operations, net of tax, of $9.6 million for the same three-month period in the prior year consisting of $12.3 million in earnings before income tax, offset by income tax of $2.7 million.
Net earnings from discontinued operations, net of tax, for the nine months ended December 31, 2025, was $8.9 million consisting of $12.3 million in earnings before tax, offset by $3.4 million in income tax expense. Our earnings from discontinued operations before tax for the nine months ended December 31, 2025 include a $4.4 million gain from the sale of our domestic financing business and a $2.3 million loss to settle a legal matter related to our discontinued operations. We had net earnings from discontinued operations, net of tax, of $24.2 million for the same nine-month period in the prior year consisting of $32.6 million in earnings before income tax, offset by $8.4 million in income tax expense.
Net earnings: Due to the aforementioned reasons, net earnings for the three months ended December 31, 2025, were $35.1 million, an increase of $11.0 million, as compared to $24.1 million for the same three-month period in the prior year.
Due to the aforementioned reasons, net earnings for the nine months ended December 31, 2025, were $107.6 million, an increase of $24.8 million, as compared to $82.8 million for the same nine-month period in the prior year.
SEGMENT OVERVIEW
Following the divestiture of our domestic financing business, 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 endeavor to minimize the cost of sales in our product segment through incentive programs provided by vendors and distributors.
●
Professional services segment: Our professional services segment includes our advanced professional services to our customers that are performed under time and materials, fixed fee, or milestone contracts. Professional services include consulting, assessments, architecture, deployment, and configuration, logistic services, training, staff augmentation services, and project management services. Additionally, we offer professional services in the spaces of digital signage, EV charging solutions, loss prevention and security, store openings, remodels, and store closings.
●
Managed services segment: Our managed services segment includes our advanced managed services that encompass managing various aspects of our customers’ environments that are billed in regular intervals over a contract term, usually between three to five years. Managed services also include security solutions, storage-as-a-service, cloud hosted services, cloud managed services, and service desk.
Our other category consists of the international entities of our financing business that we retained after selling our domestic financing business.
SEGMENT RESULTS OF OPERATIONS
The three and nine months ended December 31, 2025, compared to the three and nine months ended December 31, 2024
The results of operations for our segments were as follows (dollars in thousands):
| Three months ended December 31, | Nine months ended December 31, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||
|
Financial metrics
|
||||||||||||||
|
Net sales:
|
||||||||||||||
|
Product segment
|
$ | 501,827 | $ | 379,472 | $ | 1,507,736 | $ | 1,226,397 | ||||||
|
Professional services segment
|
64,065 | 69,497 | 212,138 | 168,676 | ||||||||||
|
Managed services segment
|
48,778 | 44,150 | 140,775 | 126,827 | ||||||||||
|
Total reportable segments
|
614,670 | 493,119 | 1,860,649 | 1,521,900 | ||||||||||
|
Other
|
104 | 102 | 266 | 345 | ||||||||||
|
Total
|
$ | 614,774 | $ | 493,221 | $ | 1,860,915 | $ | 1,522,245 | ||||||
|
Gross Profit:
|
||||||||||||||
|
Product segment
|
$ | 119,321 | $ | 84,046 | $ | 344,816 | $ | 271,910 | ||||||
|
Professional services segment
|
25,121 | 27,841 | 82,446 | 68,879 | ||||||||||
|
Managed services segment
|
14,151 | 13,160 | 41,638 | 38,333 | ||||||||||
|
Total reportable segments
|
158,593 | 125,047 | 468,900 | 379,122 | ||||||||||
|
Other
|
61 | 31 | 94 | 132 | ||||||||||
|
Total
|
$ | 158,654 | $ | 125,078 | $ | 468,994 | $ | 379,254 | ||||||
|
Gross margin:
|
||||||||||||||
|
Product segment
|
23.8 | % | 22.1 | % | 22.9 | % | 22.2 | % | ||||||
|
Professional services segment
|
39.2 | % | 40.1 | % | 38.9 | % | 40.8 | % | ||||||
|
Managed services segment
|
29.0 | % | 29.8 | % | 29.6 | % | 30.2 | % | ||||||
|
Total
|
25.8 | % | 25.4 | % | 25.2 | % | 24.9 | % | ||||||
|
Net sales by customer end market:
|
||||||||||||||
|
Telecom, media & entertainment
|
$ | 176,405 | $ | 126,201 | $ | 538,156 | $ | 352,624 | ||||||
|
Technology
|
89,368 | 71,293 | 241,664 | 235,387 | ||||||||||
|
Healthcare
|
81,460 | 58,670 | 238,036 | 212,185 | ||||||||||
|
Financial services
|
66,104 | 46,217 | 176,683 | 130,701 | ||||||||||
|
SLED
|
59,946 | 71,412 | 237,754 | 261,195 | ||||||||||
|
Retail
|
34,394 | 33,785 | 106,427 | 67,754 | ||||||||||
|
All others
|
||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-05-11 | RAIGUEL DARREN S indirect | CHIEF OPERATING OFFICER | Sell | -1,000 ×3 | $89.95 | -$89,948 |
| 2026-05-08 | RAIGUEL DARREN S indirect | CHIEF OPERATING OFFICER | Sell | -284 ×3 | $89.32 | -$25,366 |
| 2026-05-06 | RAIGUEL DARREN S indirect | CHIEF OPERATING OFFICER | Sell | -5 | $88.00 | -$440 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-05-21 10-K expected by 2026-05-27 (in 1 day)
- ~2026-08-07 10-Q expected by 2026-08-09 (in 79 days)
- ~2026-11-06 10-Q expected by 2026-11-08 (in 170 days)
- ~2027-02-04 10-Q expected by 2027-02-06 (in 260 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-02-04 10-Q Quarterly Report
- 2026-02-04 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2026-01-26 8-K Other Events; Financial Statements and Exhibits
- 2026-01-08 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-11-06 10-Q Quarterly Report
- 2025-11-06 8-K Earnings Release; Other Events
- 2025-08-07 10-Q Quarterly Report
- 2025-08-07 8-K Earnings Release; Financial Statements and Exhibits
- 2025-07-18 8-K Officer/Director Change
- 2025-07-01 8-K Completion of Acquisition/Disposition; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-06-23 8-K Material Agreement Entered; Financial Statements and Exhibits
- 2025-05-22 10-K Annual Report
- 2025-05-22 8-K Earnings Release; Financial Statements and Exhibits
- 2025-02-06 10-Q Quarterly Report
- 2025-02-05 8-K Earnings Release; Financial Statements and Exhibits