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What changed in EPLUS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of EPLUS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+379 added−398 removedSource: 10-K (2024-05-23) vs 10-K (2023-05-25)

Top changes in EPLUS INC's 2024 10-K

379 paragraphs added · 398 removed · 299 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

81 edited+11 added−21 removed32 unchanged
Biggest changeStaff 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. • Project management services enhance productivity and collaboration management and enable successful implementations and adoption of solutions for our customers. • Cloud Consulting Services is a global team of architects and consultants focused on assessing customer workloads for cloud, assisting with the selection of the appropriate cloud solution, design and build of cloud platforms, application modernization and migration, automation, and ongoing management and optimization of cloud platforms. • Security solutions help safeguard our customers’ business and information assets, including: o Governance, Risk, and Compliance (GRC) services help ensure customers are meeting governance and compliance requirements by leveraging regulatory frameworks, industry best practices, and supporting controls - thereby allowing customers to effectively identify, assess, and mitigate risk. o Technology Introduction and Deployment services help customers rapidly adopt and integrate key security controls and embrace efficiencies across technology types like network, endpoint, data, and cloud. 6 Table of Contents FINANCING SEGMENT We specialize in financing arrangements, including sales-type and operating leases; loans, and consumption-based financing arrangements; and underwriting and management and disposal of IT equipment and assets.
Biggest changeStaff 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. • Project management services enhance productivity and collaboration management and enable successful implementations and adoption of solutions for our customers. • Cloud Consulting Services is a global team of architects and consultants focused on assessing customer workloads for cloud, assisting with the selection of the appropriate cloud solution, design and build of cloud platforms, application modernization and migration, automation, and ongoing management and optimization of cloud platforms. • Consulting Services helps customers strategize ways to ensure their business has maximum agility.
SALES AND MARKETING We focus our sales and marketing efforts on becoming the primary provider of IT solutions for each of our customers. We actively seek to acquire new account relationships through personal relationships, electronic commerce, and leveraging our partnerships with vendors and targeted demand-generation activities to increase awareness of our solutions.
OUR SALES AND MARKETING We focus our sales and marketing efforts on becoming the primary provider of IT solutions for each of our customers. We actively seek to acquire new account relationships through personal relationships, electronic commerce, leveraging our partnerships with vendors, and targeted demand-generation activities to increase awareness of our solutions.
At the same time the prevalence of security threats, increased use of cloud platforms, software-defined networking, new architectures, rapid software development frameworks, the proliferation of mobile devices, dispersed workforces, employees working from anywhere, bring-your-own-device (BYOD) policies, and complexity of multi-vendor solutions have made it difficult for IT departments to implement high-quality IT solutions.
At the same time the prevalence of security threats, increased use of cloud platforms, AI, software-defined networking, new architectures, rapid software development frameworks, the proliferation of mobile devices, dispersed workforces, employees working from anywhere, bring-your-own-device (BYOD) policies, and complexity of multi-vendor solutions have made it difficult for IT departments to implement high-quality IT solutions.
We provide virtual desktop infrastructure, unified communications, collaboration, networking, security, storage, big data, mobility, converged and hyper-converged infrastructures, and managed services offerings, all of which remain in high demand. We believe our ability to deliver advanced professional services provides benefits in two ways.
We provide virtual desktop infrastructure, unified communications, collaboration, networking, security, storage, big data, mobility, converged and hyper-converged infrastructures, and managed services segment offerings, all of which remain in high demand. We believe our ability to deliver advanced professional services provides benefits in two ways.
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.
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 continue to increase our breadth and depth of engineering expertise through the integration of recent acquisitions, supplementing our Cisco service offerings, expanding our NetApp and Palo Alto Enhanced Maintenance Support (EMS) portfolio, and adding support for additional market leading security solutions.
We continue to increase our breadth and depth of engineering expertise through the integration of recent acquisitions, supplementing our Cisco service offerings, expanding our Palo Alto Enhanced Maintenance Support (EMS) portfolio, and adding support for additional market leading security solutions.
In the US, our registered trademarks include e +®, e Plus®, OneSource®, Where Technology Means More® and GRIT: Girls Re-Imagining Tomorrow®. We also have registered IGXGlobal®, and IGXGlobal an e Plus Technology, inc. Company® and certain variations thereon in the UK and the EU.
In the US, our registered trademarks include e +®, e Plus®, OneSource®, Where Technology Means More® and GRIT: Girls Re-Imagining Tomorrow®. We have registered IGXGlobal®, and IGXGlobal an e Plus Technology, inc. Company® and certain variations thereon in the UK and the EU.
These data protection offerings, delivered under SOC 2 Type 2 and HIPAA frameworks, are focused on delivering confidence to our customers in their ability to rapidly recover when incidents such as ransomware occur. • 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.
These data protection offerings, delivered under SOC 2 Type 2 and HIPAA attestations, are focused on delivering confidence to our customers in their ability to rapidly recover when incidents such as ransomware occur. • 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.
Part of our growth strategy is to hire purposefully and enhance our technical skill base through strategic acquisitions. Once recruited, w e believe that our culture, competitive performance-based compensation, policies, and labor practices contribute to strong relations with our employees. We offer a range of affordable and flexible benefits options to assist with health and well-being.
Part of our growth strategy is to hire purposefully and enhance our technical skill base through strategic acquisitions. Once recruited, we believe that our culture, competitive performance-based compensation, policies, and labor practices contribute to strong relations with our employees. We offer a range of affordable and flexible benefits options to assist with health and well-being.
In our technology segment, we manage our risk by using conservative credit quality analysis and periodic monitoring of customer financial results or third-party risk evaluation tools; monitoring customer accounts receivable balances and payment history; proactively pursuing delinquent accounts; ensuring we have appropriate contractual terms and conditions; perfecting security interests when practicable; requiring prepayment or deposits if indicated; performing fraud checks for new accounts; and evaluating general economic as well as industry specific trends.
In our technology business segments, we manage our risk by using conservative credit quality analysis and periodic monitoring of customer financial results or third-party risk evaluation tools; monitoring customer accounts receivable balances and payment history; proactively pursuing delinquent accounts; ensuring we have appropriate contractual terms and conditions; perfecting security interests when practicable; requiring prepayment or deposits if indicated; performing fraud checks for new accounts; and evaluating general economic as well as industry specific trends.
The competitors 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.
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.
Our highly skilled, experienced personnel include account executives, pre-sales and inside-sales staff trained on our broad solutions capabilities and category-focused subject-matter experts. We have over 1,600 unique certification titles, with a heavy concentration in our top vendor partners.
Our highly skilled, experienced personnel include account executives, pre-sales and inside-sales staff trained on our broad solutions capabilities and category-focused subject-matter experts. We have over 1,950 unique certification titles, with a heavy concentration in our top vendor partners.
We purchase inventory at our customer’s request to order products usually from a purchase order from our customer. In addition, we have drop-shipment arrangements with many of our vendors and distributors, which permit us to offer products to our customers without taking physical delivery of the equipment.
We purchase inventory at our customers’ request to order products usually from a purchase order from our customer. In addition, we have drop-shipment arrangements with many of our vendors and distributors, which permit us to offer products to our customers without taking physical delivery of the equipment.
Our solutions are comprised of world class leading technologies from partners such as Amazon Web Services, 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, among many others.
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 sales representatives are compensated by a combination of salary and commission, with commission becoming the primary component of compensation as the sales representatives gain experience. To date, we acquired a majority of our customers through the efforts of our direct sales force and acquisitions.
Our sales representatives are compensated by a combination of salary and commission, with commission becoming the primary component of compensation as the sales representatives gain experience. To date, we acquired most of our customers through the efforts of our direct sales force and acquisitions.
While developing threats, new regulations and cyber liability insurance premiums continue to increase, putting pressure on stake holders and stockholders, we continue to invest in our service delivery capabilities and align with industry leading cybersecurity OEMs to help ensure our customers are accelerating their security programs and leveraging the latest capabilities to harden defenses and ensure preparedness against threats to their business.
While developing threats, new regulations and cyber liability insurance premiums continue to increase, putting pressure on stakeholders and stockholders, we continue to invest in our service delivery capabilities and align with industry leading cybersecurity OEMs to help ensure our customers are accelerating their security programs and leveraging the latest capabilities to harden defenses and ensure preparedness against threats to their business.
The SEC maintains an Internet site that contains reports, proxy statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov . The contents on or accessible through these websites are not incorporated into this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only. 12 Table of Contents
The SEC maintains an Internet site that contains reports, proxy statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov . The contents on or accessible through these websites are not incorporated into this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only.
DISRUPTIVE TECHNOLOGIES ARE CREATING COMPLEXITY AND CHALLENGES FOR CUSTOMERS AND VENDORS The rapid evolution of disruptive technologies, and the speed by which they impact organizations’ IT platforms, has made it difficult for customers to effectively design, procure, implement, and manage their own IT systems.
DISRUPTIVE TECHNOLOGIES ARE CREATING COMPLEXITY AND CHALLENGES FOR CUSTOMERS AND VENDORS The rapid evolution of disruptive technologies such as AI, and the speed by which they impact organizations’ IT platforms, has made it difficult for customers to effectively design, procure, implement, and manage their own IT systems.
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. 5 Table of Contents OUR SOLUTIONS TECHNOLOGY SEGMENT 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.
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. 5 Table of Contents 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 the majority of our sales are derived from integrated solutions involving our customers’ data center, cloud, network, security, and collaboration infrastructure.
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.
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 policies 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.
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 also use agency purchase orders to procure equipment for lease to our customers and otherwise take measures to minimize our inventory of financed assets. When our technology segment is the supplier of the assets being financed, we retain certain procurement risks. Our financing arrangements with our customers are generally fixed rate.
We also use agency purchase orders to procure equipment for lease to our customers and otherwise take measures to minimize our inventory of financed assets. When our technology business segments are the supplier of the assets being financed, we retain certain procurement risks. Our financing arrangements with our customers are generally fixed rate.
We award top performers in our sales and services departments with awards and gifts, including a “President’s Club” trip. We also promote employee engagement and recognition through our e Plus Recognition platform where employees can announce and/or thank other employees for their efforts and receive awards.
We recognize our employee successes in many ways. We award top performers in our sales and services departments with awards and gifts, including a “President’s Club” trip. We also promote employee engagement and recognition through our e Plus Recognition platform where employees can announce and/or thank other employees for their efforts and receive awards.
Our systems automatically decrease trade credit lines based on assigned risk ratings. In our financing segment, we manage our risk in assets we finance by assigning the contractual payments due under the financing arrangement to third-parties and the continued monitoring of our customers’ credit profile.
Our systems automatically decrease trade credit lines based on assigned risk ratings. 11 Table of Contents In our financing business segment, we manage our risk in assets we finance by assigning the contractual payments due under the financing arrangement to third-parties and the continued monitoring of our customers’ credit profile.
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 with SOC 1 Type 2, SOC 2 Type 2, and HIPAA accreditation based.
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 target middle-market and large commercial entities and state and local governments, and educational institutions . We undertake direct marketing and leverage digital marketing and social media campaigns to target certain markets in conjunction with our primary vendor partners, who may provide financial reimbursement, outsourced services, and personnel to assist us in these efforts.
We target middle-market and large commercial entities and SLED institutions. We undertake direct marketing and leverage digital marketing and social media campaigns to target certain markets in conjunction with our primary vendor partners, who may provide financial reimbursement, outsourced services, and personnel to assist us in these efforts.
FINANCIAL PERFORMANCE CHARACTERIZED BY GROWTH AND PROFITABILITY We have focused on achieving top-line revenue growth while maintaining industry-leading gross margins – with a compound annual growth rate of 10.8% on net sales and 11.9% for consolidated gross profit, respectively, from fiscal year 2019 to fiscal year 2023.
FINANCIAL PERFORMANCE CHARACTERIZED BY GROWTH AND PROFITABILITY We have focused on achieving top-line revenue growth while maintaining industry-leading gross margins – with a compound annual growth rate of 8.8% on net sales and 8.9% for consolidated gross profit, respectively, from fiscal year 2020 to fiscal year 2024.
The increase in our employee base has largely been in customer facing roles, which represented 81.6% of the total increase in headcount over the same period, as we continue to build our sales and services team while leveraging our operational infrastructure. 8 Table of Contents GROWTH STRATEGY Our goal is to continue to grow as a leading provider of technology solutions.
The increase in our employee base has largely been in customer facing roles, which represented 82.2% of the total increase in headcount over the same period, as we continue to build our sales and services team while leveraging our operational infrastructure. OUR GROWTH STRATEGY Our goal is to continue to grow as a leading provider of technology solutions.
We market to different areas within a customer’s organization, including business units as well as the IT department, lines of business, or finance department, depending on the solutions. As of March 31, 2023, our sales force consisted of 644 sales, marketing and sales support personnel organized regionally across the US, UK, India, and Singapore.
We market to different areas within a customer’s organization, including business units as well as the IT department, lines of business, or finance department, depending on the solutions. 10 Table of Contents As of March 31, 2024, our sales force consisted of 719 sales, marketing and sales support personnel organized regionally across the US, UK, India, and Singapore.
Underpinning the broader areas of cloud, security, 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 compute and other advanced and emerging technologies.
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.
During our previous fiscal year, our stockholders approved an employee stock purchase program (ESPP) pursuant to which our employees may purchase our common stock at a discount. 9 Table of Contents IMPROVE OPERATIONAL EFFICIENCIES We continue to invest in our internal technology infrastructure and software platforms to scale our infrastructure for growth, while optimizing our operations and engaging in process re-engineering efforts to become more streamlined and cost effective.
We offer employees an employee stock purchase program (ESPP) pursuant to which our employees may purchase our common stock at a discount. IMPROVE OPERATIONAL EFFICIENCIES We continue to invest in our internal technology infrastructure and software platforms to scale our infrastructure for growth, while optimizing our operations and engaging in process re-engineering efforts to become more streamlined and cost effective.
OUR BUSINESS We are a leading provider of technology solutions across the spectrum spanning security, cloud, data center, networking, collaboration, artificial intelligence, and emerging solutions, to domestic and foreign organizations across all industry segments.
OUR SOLUTIONS We are a leading provider of technology solutions across the 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.
We focus on obtaining and maintaining top-level engineering certifications and professional services expertise in advanced technologies of strategic vendors that we leverage to help our customers achieve positive business outcomes. Across our company, we have more than 700 employees that collectively hold over 5,500 certifications, including over 3,300 technical certifications.
We focus on obtaining and maintaining top-level engineering certifications and professional services expertise in advanced technologies of strategic vendors that we leverage to help our customers achieve positive business outcomes. Throughout our company, we have more than 850 employees that collectively hold over 7,000 certifications, including over 3,800 technical certifications.
To meet current and future security threats, enterprises must identify their risks, select and implement security controls and technology solutions that leverage integrated products and services to help monitor, mitigate, and remediate security threats and attacks while ensuring a data-centric security model that is scalable to meet today’s digital demands on premise, at the edge and in the cloud.
We believe it is necessary to select and implement security controls and technology solutions that leverage integrated products and services to help monitor, mitigate, and remediate security threats and attacks while ensuring a data-centric security model that is scalable to meet today’s digital demands on premise, at the edge and in the cloud.
GRIT introduces diverse groups of middle school girls to technology-focused career possibilities, with an emphasis on cybersecurity and artificial intelligence. Students have opportunities to learn about the many possibilities in technology-focused companies and participate in hands-on technology-focused learning with top industry representatives and community mentors.
Since 2017, we have sponsored GRIT: Girls Re-Imagining Tomorrow® in partnership with Cisco Systems, Inc. GRIT introduces diverse groups of middle school girls to technology-focused career possibilities, with an emphasis on cybersecurity and artificial intelligence. Students have opportunities to learn about the many possibilities in technology-focused companies and participate in hands-on technology-focused learning with top industry representatives and community mentors.
HUMAN CAPITAL Our employees are an important resource for us, and their collective dedication and talent enable us to be a trusted advisor to our customers. As of March 31, 2023, we employed a total of 1,754 employees, including 1,702 in the US, 28 in India, 22 in the UK, and 2 in Singapore.
OUR HUMAN CAPITAL Our employees are an important resource for us, and their collective dedication and talent enable us to be a trusted advisor to our customers. As of March 31, 2024, we employed a total of 1,900 employees, including 1,847 in the US, 27 in India, 25 in the UK, and 1 in Singapore.
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.
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.
We offer a range of affordable and flexible benefits options to assist with health and well-being, and at the request of our employees, in 2022 we adopted an Employee Stock Purchase Plan. We have continued the flexible work from home strategy we adopted during the COVID-19 pandemic, and we anticipate evolving to varied hybrid models for the future of work.
We offer a range of affordable and flexible benefits options to assist with health and well-being, and at the request of our employees, in 2022 we adopted an Employee Stock Purchase Plan. We have a flexible work from home strategy.
FUNCTIONAL AREAS OF OUR EMPLOYEE BASE The functional areas of our employees are as follows: As of March 31, 2023 2022 Change Sales and marketing 644 588 56 Professional services 750 666 84 Administration 354 317 37 Executive management 6 6 - 1,754 1,577 177 ATTRACTING TALENT While we operate in a competitive labor environment, we believe that that our culture, policies and labor practices, and our competitive performance-based compensation contribute to strong relations with our employees.
FUNCTIONAL AREAS OF OUR EMPLOYEE BASE The functional areas of our employees are as follows: As of March 31, 2024 2023 Change Sales and marketing 719 644 75 Professional services 816 750 66 Administration 359 354 5 Executive management 6 6 - Total 1,900 1,754 146 ATTRACTING TALENT While we operate in a competitive labor environment, we believe that that our culture, policies and labor practices, and our competitive performance-based compensation contribute to strong relations with our employees.
For example, we currently have patents in the US. We cannot provide assurance that any patents, as issued, will prevent the development of competitive products or that our patents will not be successfully challenged by others or invalidated through the administrative process or litigation.
We cannot provide assurance that any patents, as issued, will prevent the development of competitive products or that our patents will not be successfully challenged by others or invalidated through the administrative process or litigation. Additionally, we have registered and common-law trademarks.
Ingram Micro, Arrow Electronics, and TD SYNNEX are our largest distributors. Risk Management and Process Controls : We use and maintain conservative underwriting policies and disciplined credit approval processes in both our technology and financing segments. We have an executive management review process and other internal controls in place to evaluate transactions’ potential risk.
Risk Management and Process Controls : We use and maintain conservative underwriting policies and disciplined credit approval processes in our technology business segments and our financing business segment. We have an executive management review process and other internal controls in place to evaluate transactions’ potential risk.
OUR INDUSTRY BACKGROUND AND MARKET OPPORTUNITY We have identified and focused on several specific trends that we believe will create higher growth in the broader US IT market: 3 Table of Contents MULTI-CLOUD STRATEGY Over the past several years, public, private and hybrid cloud architectures and cloud-enabled frameworks have become a core foundation of modern IT.
OUR INDUSTRY BACKGROUND AND MARKET OPPORTUNITY We have identified and focused on several specific trends that we believe will create higher growth in the overall US IT market such as: MULTI-CLOUD STRATEGY Cloud-enabled frameworks have become a core foundation of modern IT.
We intend to use and protect these and our other marks, including common-law marks, as we deem necessary. We have over 20 registered copyrights, in addition to unregistered copyrights in our website content, software, marketing and other written materials. We believe our trademarks and copyrights have significant value and are an important factor in the marketing of our products.
We intend to use and protect these and our other marks, including common-law marks, as we deem necessary. We also have over 20 registered copyrights, in addition to unregistered copyrights in our website content, software, marketing and other written materials.
We also seek to broaden our customer base, expand our geographic reach, and improve our technology and professional services delivery capabilities. During the last fiscal year, we continued to expand our sales and delivery capabilities across multiple international markets as we see more demand for solutions within this market.
During the last fiscal year, we continued to expand our sales and delivery capabilities across multiple international markets as we see more demand for solutions within this market.
Professional Services: • Professional services focus on cloud infrastructure, unified communications, collaboration, networking, storage, hyper-converged infrastructure, and virtual desktop infrastructure, supported by security and managed services solutions. • Staff augmentation services provide customers with flexible headcount options, which may range from service desk to infrastructure to software developer skills.
Services include Security Operations Center (SOC), Vulnerability Management, Managed Detection and Response (MDR), and Incident Response (IR). 6 Table of Contents Professional services segment: • Professional services focus on cloud infrastructure, unified communications, collaboration, networking, storage, hyper-converged infrastructure, and virtual desktop infrastructure, supported by security and managed services solutions. • Staff augmentation services provide customers with flexible headcount options, which may range from service desk to infrastructure to software developer skills.
Managed Services: • Managed services proactively monitor and manage a broad range of technologies on-premises and in the cloud with services such as managed infrastructure, service desk, Managed Power Protection, and first call lifecycle support (i.e., eLSS), to ensure support of a broad cross-section of technologies spanning multiple Original Equipment Manufacturer (OEM) solutions.
Managed services segment: • 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 Call Center, network and firewall management and Managed Power Protection to ensure support of a broad cross-section of technologies spanning multiple Original Equipment Manufacturer (OEM) solutions.
Through our organic expansion and acquisitions, we have increased our employee count by 14.1% from March 31, 2019, to March 31, 2023.
Through our organic expansion and acquisitions, we have increased our employee count by 20.3% from March 31, 2020, to March 31, 2024.
Our technology segment sells IT hardware products, third-party software and maintenance contracts, our own and third-party advanced professional and managed services, and our proprietary software. Our financing segment operations primarily consist of the financing of IT equipment, software, and related services. Both segments sell to commercial entities, state and local governments, government contractors, and educational institutions.
Our technology solutions leverage third-party hardware, software, and 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.
TRAINING AND DEVELOPMENT As our employees are a crucial resource to us, we invest in their ongoing professional development. Our education program provides financial support for employees who want to participate in undergraduate and graduate studies, continuing education, skill building including technical certifications, and other professional enrichment related to their position with e Plus.
Our education program provides financial support for employees who want to participate in undergraduate and graduate studies, continuing education, skill building including technical certifications, and other professional enrichment related to their position with e Plus. All employees are supported in, and expected to, remain current in the knowledge areas relevant to their position.
Using the distribution systems available, we frequently sell products that are shipped from the vendors or distributors directly to our customers’ locations, which assists us in reducing inventory and minimizing shipping costs. For the year ended March 31, 2023, our three largest distributors accounted for over 20% of our purchases related to our technology segment net sales.
Using the distribution systems available, we frequently sell products that are shipped from the vendors or distributors directly to our customers’ locations, which assists us in reducing inventory and minimizing shipping costs.
Our strategy is to assist our customers in aligning cloud strategy with business objectives, creating an enterprise cloud foundation, enabling multi-cloud capabilities, accelerating cloud migrations, modernizing the datacenter, and optimizing cloud deployments for cost and security. We focus on being a guide to customers on their Journey to Modernization of applications, data, and platforms.
Our strategy consists of assisting customers in aligning cloud strategy with business objectives, creating an enterprise cloud foundation, enabling multi-cloud capabilities, accelerating cloud migrations, modernizing the datacenter, and optimizing cloud deployments for cost and security.
Additional drivers include data privacy concerns of both user data and machine data as companies continue to pursue digital transformation via data science and analytics. We believe our customers are focused on maturing all aspects of cybersecurity, including information and physical security, data protection, threat management and compliance requirements related to industry and government regulations.
We believe our customers are focused on maturing all aspects of cybersecurity, including information and physical security, data protection, threat management and compliance requirements related to industry and government regulations.
ITEM 1. BUSINESS GENERAL e Plus inc., sometimes referred to in this Annual Report on Form 10-K as “we,” “our,” “us,” “ourselves,” or “ e Plus.”, was founded in 1990. We conduct our operations through two business segments.
ITEM 1. BUSINESS OUR BUSINESS e Plus inc., sometimes referred to in this Annual Report on Form 10-K as “we,” “our,” “us,” “ourselves,” or “ e Plus.”, 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.
Through our policies, our training, and the everyday actions of our leadership, we expect our employees to treat each other, our customers, and all our business partners with respect and equality for all persons consistent with our “Be Safe, Be Smart, and Be Kind” motto. 11 Table of Contents Corporate social responsibility is also an important part of our culture, and we focus efforts around supporting the communities in which we live and work.
Through our policies, our training, and the everyday actions of our leadership, we expect our employees to treat each other, our customers, and all our business partners with respect and equality for all persons consistent with our “Be Safe, Be Smart, and Be Kind” motto.
This allows customers to consume storage in a cloud-like model in their data center in a time of uncertainty of what upcoming capacity needs will be due to ongoing cloud migrations. • Cloud Hosted Services provide cloud-hosted offerings including Cloud Managed Backup and Cloud Disaster Recovery.
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. • Cloud Hosted Services provide cloud-hosted offerings including Cloud Managed Backup and Cloud Disaster Recovery.
For over 30 years, we have also offered 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.
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.
We offer enhanced financing solutions, and our business process services approach automates a significant portion of the IT procurement process and reduces our customers’ cost of doing business.
We may also finance industrial machinery and equipment, office furniture and general office equipment, transportation equipment, and other general business equipment. We offer our solutions both directly and through vendors. We offer enhanced financing solutions, and our business process services approach automates a significant portion of the IT procurement process and reduces our customers’ cost of doing business.
OUR CULTURE We are dedicated to fostering, cultivating, and preserving a culture that represents diversity, enables inclusion, and makes our employees feel comfortable bringing their full, unique selves to work.
OUR CULTURE We are an equal opportunity employer, dedicated to fostering, cultivating, and preserving a culture that represents diversity, enables inclusion, and makes our employees feel comfortable bringing their full, unique selves to work. This includes providing an inclusive, safe, and supportive workplace, free of unlawful harassment or discrimination.
We sell to customers in the United States (“US”), which accounts for most of our sales, and to customers in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, Singapore, and Israel.
Sales to Verizon Communications Inc. represented 19%, 22%, and 24% of our net sales for the years ended March 31, 2024, 2023, and 2022, respectively. 3 Table of Contents We sell to customers in the United States (“US”), which accounts for most of our sales, and to customers in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, Singapore, and Israel.
INTELLECTUAL PROPERTY RIGHTS Our success depends in part upon proprietary business methodologies and technologies that we have licensed and modified. We own certain software programs or have entered into software licensing agreements to provide services to our customers.
OUR INTELLECTUAL PROPERTY RIGHTS Our success depends in part upon proprietary business methodologies and technologies that we have licensed and modified.
We believe we have a good relationship with our employees. More than one-third of our employees have a tenure of six or more years, and over 20% have a tenure of more than 10 years. None of our employees are represented by a labor union.
We believe we have a good relationship with our employees, with twenty percent of our employee base having a tenure of ten or more years. None of our employees are represented by a labor union.
Our partners are also evolving by developing more annuity models through subscription and consumption-based models operating both on-premise and in the cloud, which further enables our offerings. 4 Table of Contents LACK OF SUFFICIENT INTERNAL IT RESOURCES AT MID-SIZED AND LARGE ENTERPRISES, AND SCARCITY OF IT PERSONNEL IN CERTAIN HIGH-DEMAND DISCIPLINES We believe that IT departments at mid-sized and large enterprises are facing pressure to deliver business outcomes that rely on emerging technologies but lack the professionally trained staff and the ability to hire personnel with high in-demand disciplines such as security, solution architecture and data analytics.
Customers are increasingly turning to IT solutions providers such as e Plus to implement complex IT offerings, including managed services, security architecture, software-defined infrastructure, cloud platforms, converged and hyper-converged infrastructures, big data analytics, and data protection. 4 Table of Contents LACK OF SUFFICIENT INTERNAL IT RESOURCES AT MID-SIZED AND LARGE ENTERPRISES, AND SCARCITY OF IT PERSONNEL IN CERTAIN HIGH-DEMAND DISCIPLINES We believe that IT departments at mid-sized and large enterprises are facing pressure to deliver business outcomes that rely on emerging technologies but lack the professionally trained staff and the ability to hire personnel with high in-demand disciplines such as security, solution architecture and data analytics.
BUILD OUR GEOGRAPHIC FOOTPRINT We intend to increase our direct sales and go-to-market capabilities in each of our geographic areas. We actively seek to acquire new account relationships through personal relationships, electronic commerce, leveraging our partnerships with vendors, and targeted demand-generation activities to increase awareness of our solutions.
We actively seek to acquire new account relationships through personal relationships, electronic commerce, leveraging our partnerships with vendors, and targeted demand-generation activities to increase awareness of our solutions. We also seek to broaden our customer base, expand our geographic reach, and improve our technology and professional services delivery capabilities.
We can provide complete, turn-key solutions aligned to the entire IT lifecycle – procurement, products, services, software, and financing. We provide upfront assessments, design and configuration capabilities, installation and implementation, and ongoing services to support our customers’ solutions.
We provide upfront assessments, design and configuration capabilities, installation and implementation, and ongoing services to support our customers’ solutions.
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.
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.
For the year ended March 31, 2023, the percentage of revenue by customer end market within our technology segment includes 26% for the telecommunications, media and entertainment industry, 20% for the technology industry, 14% for healthcare, 14% for state and local government, and educational institutions (“SLED”), and 8% for financial services.
For the year ended March 31, 2024, the percentage of revenue by customer end market within our technology business includes 25% for the telecommunications, media and entertainment industry, 17% for the technology industry, 15% for SLED, 13% for healthcare, and 11% for financial services.
We leverage our strategic partnerships with leading vendors such as Amazon Web Services, Cisco Systems, Dell EMC, Hewlett Packard Enterprise, Microsoft, NetApp, Rubrik, and VMware in conjunction with our professional, managed and lifecycle services to help our customers achieve their desired business outcomes.
We leverage our strategic partnerships with leading vendors such as Amazon Web Services, Cisco Systems, Dell EMC, Hewlett Packard Enterprise, Microsoft, NetApp, Rubrik, and VMware in conjunction with our professional, managed and lifecycle services to help our customers achieve their desired business outcomes. 8 Table of Contents STRATEGIC INVESTMENTS IN EXPERIENCED CYBERSECURITY PRACTITIONERS TO GUIDE CUSTOMERS RISK MITIGATION STRATEGIES We believe our organizational structure and resources in both security advisory services and technology teams best enable our consulting teams to deliver clear business outcomes for our customers looking to identify and mitigate risk to their organizations.
The solution incorporates value-added services at every step in the process, including: • Front-end processing, such as procurement, order aggregation, order automation, vendor performance measurement, ordering, reconciliation, and payment. • Lifecycle and asset ownership services, including asset management, change management, and property tax filing. • End-of-life services such as equipment audit, removal, and disposal.
The solution incorporates value-added services at every step in the process, including: • Front-end processing, such as procurement, order aggregation, order automation, vendor performance measurement, ordering, reconciliation, and payment. • Lifecycle and asset ownership services, including asset management, change management, and property tax filing. • End-of-life services such as equipment audit, removal, and disposal. 7 Table of Contents OUR COMPETITIVE STRENGTHS BROAD SKILL SETS THAT CAN SCALE TO SUPPORT LARGE ADDRESSABLE MARKET We sell IT solutions focusing on the data center, cloud, network, security, virtualization, and mobility segments of the industry, facilitated by our professional and managed service solutions.
Our go-to-market strategy focuses primarily on diverse end-markets for middle market to large enterprises. We serve customers in markets including telecom, media and entertainment, technology, state and local government and educational institutions (“ SLED”), healthcare, and financial services.
We serve customers in markets including telecom, media and entertainment, technology, state and local government and educational institutions (“SLED”), healthcare, and financial services.
Our technology segment accounted for 97% of our net sales, and 84% of our operating income, while our financing segment accounted for 3% of our net sales, and 16% of our operating income for the year ended March 31, 2023.
Our technology business segments accounted for 98% of our net sales—85% from the product segment, 7% from the professional services segment, and 6% from the managed services segment—and 84% of our operating income. Our financing business segment accounted for 2% of our net sales, and 16% of our operating income for the year ended March 31, 2024.
Our technology segment’s products, solutions and services include the following: Product Revenue: • IT sales consists of hardware, perpetual and subscription software, maintenance, software assurance, and internally provided and outsourced services.
Our technology business segments provide the following products and services within their respective segments: Product segment: • IT sales provides hardware, perpetual and subscription software, maintenance, software assurance, and outsourced services.
Our expertise in core and emerging technologies, buttressed by our robust portfolio of consulting, professional, and managed services, has enabled e Plus to remain a trusted advisor for our customers. 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 expertise in core and emerging technologies, buttressed by our robust portfolio of professional, services and managed services, has enabled e Plus to remain a trusted advisor for our customers. OUR CUSTOMERS We focus primarily on diverse end-markets for middle market to large enterprises.
We rely on a combination of copyrights, trademarks, service marks, trade secret protection, confidentiality and nondisclosure agreements, and licensing arrangements to establish and protect our intellectual property rights. We seek to protect our documentation and other written materials and confidential corporate information under trade secret and copyright laws, which afford only limited protection.
We own certain software programs or have entered into software licensing agreements to provide services to our customers. We rely on a combination of copyrights, trademarks, service marks, trade secret protection, confidentiality and nondisclosure agreements, licensing arrangements and other contractual provisions to establish and protect our intellectual property rights.
BROAD AND DIVERSE CUSTOMER BASE ACROSS A WIDE RANGE OF END MARKETS We have a broad and diverse customer base of 4,300 customers across a wide range of end-markets, including education, financial services, healthcare, media and entertainment, state and local government, technology, and telecommunications. 7 Table of Contents DIFFERENTIATED BUSINESS MODEL SERVING ENTIRE IT LIFECYCLE – PROCUREMENT, SOLUTIONS, SERVICES, SOFTWARE, FINANCING We believe we are a trusted IT advisor to our customers, delivering differentiated products and services to enable our customers to meet increasingly complex IT requirements.
BROAD AND DIVERSE CUSTOMER BASE ACROSS A WIDE RANGE OF END MARKETS We have a broad and diverse customer base of 4,600 customers across a wide range of end-markets, including education, financial services, healthcare, media and entertainment, state and local government, technology, and telecommunications.
Our managed services portfolio expanded this year to include Azure, VMware Cloud on AWS, and Automated Virtual Assistant (AVA) for collaboration in addition to our offerings for Managed SDWAN, Service Desk, Carrier Expense Management, Cloud Cost Optimization, Vulnerability Management as a Service (VMaas), Managed Unified Communication Manager (UCM), Hyperflex, Nutanix, WebEx Calling, WebEx Contact Center, and numerous other managed infrastructure offerings.
Second, within our existing and potential customer base, our advanced professional services are a key differentiator against competitors who cannot provide services or advanced services for these key technologies or across multiple vendor product lines. 9 Table of Contents Our managed services segment portfolio includes AWS, Microsoft Azure, Automated Virtual Assistant (AVA) for collaboration, Managed SDWAN, Service Desk, Carrier Expense Management, Cloud Cost Optimization, Vulnerability Management as a Service (VMaaS), Managed Unified Communication Manager (UCM), Hyperflex, Nutanix, WebEx Calling, WebEx Contact Center, Managed Power Protection, Storage as a Service and numerous other managed infrastructure offerings.
We also provide ePlus® Automated Virtual Assistant (AVA) for Collaboration Spaces. ePlus AVA TM uses robotic process automation accompanied by ePlus Managed Services to present an exceptional experience for users in video-enabled conference rooms and workspaces. • Service desk provides outsourced functions including, but not limited to, server and desktop support to respond to our customers’ business demands while minimizing overhead. • Storage-as-a-Service is a solution powered by Pure Storage Evergreen//One 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).
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. • Service desk provides outsourced functions including, but not limited to, server and desktop and account management support to respond to our customers’ business demands while minimizing overhead. • Storage-as-a-Service is a solution powered by Pure Storage Evergreen//One that provides customers with on-premises storage in a consumption-based model with on-demand burst capacity, backed by Service Level Agreements (SLAs), and e Plus expert Enhanced Maintenance Support (EMS).
For example, we may build a private cloud solution to host mission critical applications, while utilizing a public cloud solution for development, collaboration, or disaster recovery. As the market matures, we will continue to build and acquire skills that align with DevOps, application refactoring, and analytics.
By understanding our customers’ environment, applications, and business requirements, we deploy solutions that leverage the most appropriate technology on the most appropriate platform with the most appropriate consumption model. For example, we may build a private cloud solution to host mission critical applications, while utilizing a public cloud solution for development, collaboration, or disaster recovery.
Our Managed Services portfolio continues to be enhanced so that e Plus annuity-based service solutions are represented within a single service management platform to enhance customer experience. Likewise, we have increased automation of Service Level Target reporting to ensure remediation and response are top-of-mind.
Our managed services segment portfolio continues to evolve so that e Plus annuity-based service solutions are represented within a single service management platform, leveraging the latest technologies to enhance customer experience. BUILD OUR GEOGRAPHIC FOOTPRINT We intend to increase our direct sales and go-to-market capabilities in each of our geographic areas.
Our financing operations include sales, pricing, credit, contracts, accounting, risk management, and asset management. We primarily finance IT equipment, communication-related equipment, and medical equipment. We may also finance industrial machinery and equipment, office furniture and general office equipment, transportation equipment, and other general business equipment. We offer our solutions both directly and through vendors.
FINANCING BUSINESS SEGMENT We specialize in financing arrangements, including sales-type and operating leases, loans, and consumption-based financing arrangements, as well as underwriting and management and disposal of IT equipment and assets. Our financing operations include sales, pricing, credit, contracts, accounting, risk management, and asset management. We primarily finance IT equipment, communication-related equipment, and medical equipment.
A sample of our efforts include participating in One Tree Planted, Habitat for Humanity, Tech in Pink (which raises money to support the Breast Cancer Research Foundation) and Be the Match. Since 2017, we have sponsored GRIT: Girls Re-Imagining Tomorrow® in partnership with Cisco Systems, Inc.
Corporate social responsibility is also an important part of our culture, and we focus efforts around supporting the communities in which we live and work. These efforts include participating in One Tree Planted, Habitat for Humanity, Tech in Pink (which raises money to support the Breast Cancer Research Foundation) and the National Marrow Donor Program.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf our information systems are not operational for reasons which may include cybersecurity attacks, data center failures, failures by telecom providers to provide services to our business and to our employees’ homes, as well as the home offices of our vendors’ and customers’ employees, power failures, or failures of off-premise software such as SaaS based software, our business and financial results may be adversely impacted.
Biggest changeIf our information systems are not operational for reasons which may include cybersecurity attacks, data center failures, failures by telecom providers to provide services to our business and to our employees’ homes, as well as the home offices of our vendors’ and customers’ employees, power failures, or failures of cloud application software such as SaaS based software, our business and financial results may be adversely impacted. 15 Table of Contents If third-parties or our employees are able to maliciously penetrate our network security or otherwise misappropriate our customers’ information or employees’ personal information, or other information for which our customers may be responsible and for which we agree to be responsible in connection with service contracts into which we may enter, or if we give third-parties or our employees improper access to certain information, we could be subject to liability.
We are currently experiencing a competitive labor market not only for our sales, marketing, and engineering roles, but for all of our roles including support and administrative positions, and as such are experiencing wage increases. New laws requiring public posting of compensation information may also contribute to wage increases.
We are currently experiencing a competitive labor market not only for our sales, marketing, and engineering roles, but for all our roles including support and administrative positions, and as such are experiencing wage increases. New laws requiring public posting of compensation information may also contribute to wage increases.
In addition, a reduction in the trade credit lines or the favorable terms granted to us by our vendors and financial partners could increase our need for, and cost of, working capital and have a material adverse effect on our business, results of operations and financial condition.
In addition, a reduction in the trade credit lines or the favorable terms granted to us by our vendors and financial partners could increase our need for, and the cost of, working capital and have a material adverse effect on our business, results of operations and financial condition.
In addition, the acquisition of third-party companies that we are relying upon to perform certain of our customer obligations, by our competitors may impact our revenue. We rely on independent shipping companies to deliver products from us and our vendors to our customers.
In addition, the acquisition by our competitors of third-party companies that we are relying upon to perform certain of our customer obligations may impact our revenue. We rely on independent shipping companies to deliver products from us and our vendors to our customers.
Many competitors compete based principally on price and may have lower costs or accept lower selling prices than we do and, therefore, our gross margins may not be maintainable. Online marketplace competitors are continually improving their pricing and offerings to customers as well as ease of use of their online marketplaces.
Many competitors compete principally based on price and may have lower costs or accept lower selling prices than we do and, therefore, our gross margins may not be maintainable. Online marketplace competitors are continually improving their pricing and offerings to customers as well as ease of use of their online marketplaces.
Our products, or automation solutions, may be inadvertently harmed, such as during a product integration or upgrade, or may be circumvented or sabotaged by third parties such as hackers, which could result in the disclosure of sensitive information or personal information, unauthorized procurement, or cause other business interruptions that could damage our reputation and disrupt our business.
Our products and our automation solutions may be inadvertently harmed, such as during a product integration or upgrade, or may be circumvented or sabotaged by third parties such as hackers, which could result in the disclosure of sensitive information or personal information, unauthorized procurement, or cause other business interruptions that could damage our reputation and disrupt our business.
In addition, the adoption of new or modified procurement regulations and other requirements may increase our compliance costs and reduce our gross margins, which could have a negative effect on our business, results of operations, or cash flows. We face risks of claims from third parties for intellectual property infringement, including counterfeit products, that could harm our business.
In addition, the adoption of new or modified procurement regulations and other requirements may increase our compliance costs and reduce our gross margins, which could have a negative effect on our business, results of operations, or cash flows. We face risks of claims from third parties for intellectual property infringement, including counterfeit products, which could harm our business.
Illness or insufficient staffing, or improper training, performance, or supervision may negatively affect the services we provide our customers resulting in decreased revenue and the potential for litigation. Products as complex as those used to provide our solutions or cloud automation solutions can contain unknown and undetected errors, performance problems, or use open-source code.
Illness or insufficient staffing, or improper training, performance, or supervision may negatively affect the services we provide our customers resulting in decreased revenue and the potential for litigation. Products as complex as those used to provide our solutions and services, including our cloud automation solutions, can contain unknown and undetected errors, performance problems, or use open-source code.
Supply chain issues, including a shortage of IT products and available services, may increase our costs or cause a delay in purchasing IT products needed to support our internal infrastructure or operations, resulting in an impact on our technology operations and availability of our IT systems, which could result in a materially adverse effect on our operations and financial results.
Supply chain issues, including a shortage of IT products and available services, may increase our costs or cause a delay in purchasing IT products needed to support our internal infrastructure or operations, resulting in an impact on our technology operations and availability of our IT systems, which could result in an adverse effect on our operations and financial results.
Our competitors may offer better or different products and services than we offer. In addition, we do not have guaranteed purchasing volume commitments from our customers and, therefore, our sales volume may be volatile. In our financing segment, we face competition from many sources including much larger companies with greater financial resources.
Our competitors may offer better or different products and services than we offer. In addition, we do not have guaranteed purchasing volume commitments from our customers and, therefore, our sales volume may be volatile. In our financing business segment, we face competition from many sources including much larger companies with greater financial resources.
We depend heavily upon the accuracy and reliability of our information, telecommunication, cybersecurity, and other platforms which are used for customer management, sales, distribution, marketing, purchasing, inventory management, order processing and fulfillment, customer service and general accounting functions. We must continually maintain, secure, and improve our systems.
We depend heavily upon the accuracy and reliability of our information technology, telecommunication, cybersecurity, and other platforms which are used for customer management, sales, distribution, marketing, purchasing, inventory management, order processing and fulfillment, customer service and general accounting functions. We must continually maintain, secure, and improve our systems.
Risks or regulations related to an epidemic, pandemic, or other health crisis may continue to lead to the complete or partial closure of one or more of our offices or configuration centers or the operations of our customers or our sourcing partners. Office closures of our customers may reduce our ability to provide onsite professional services and staffing.
Risks or regulations related to an epidemic, pandemic, or other health crisis may continue to lead to the complete or partial closure of one or more of our offices, configuration centers, or warehouse, or the operations of our customers or our sourcing partners. Office closures of our customers may reduce our ability to provide onsite professional services and staffing.
Our business involves the storage and/or transmission of proprietary information and sensitive or confidential data, including personal information of our employees, customers, and others. In addition, we rely on our vendors that provide goods and services to us to maintain appropriate security measures in place to protect our operations.
Our business involves the storage and/or transmission of proprietary information and sensitive or confidential data, including personal information of our employees, customers, and others. In addition, we rely on our vendors that provide goods and services to us to maintain appropriate security measures to protect our operations.
This liability could include claims for unauthorized access to devices on our network; unauthorized access to our customers’ networks, hardware, applications, data, devices, or software; unauthorized purchases with credit card information; and identity theft or other similar fraud-related claims. This liability could also include claims for other misuses of or inappropriate access to personal information.
This liability could include claims for unauthorized access to devices on our network; unauthorized access to our customers’ or suppliers’ networks, hardware, applications, data, devices, or software; unauthorized purchases with credit card information; and identity theft or other similar fraud-related claims. This liability could also include claims for other misuses of or inappropriate access to personal information.
The evolving nature of such threats, considering new and sophisticated methods used by criminals and cyberterrorists, including computer viruses, malware, phishing, misrepresentation, social engineering, and forgery, are making it increasingly challenging to anticipate and adequately mitigate these risks.
The evolving nature of such threats, considering new and sophisticated methods used by criminals and cyberterrorists, including computer viruses, malware, phishing, social engineering, and forgery, are making it increasingly challenging to anticipate and adequately mitigate these risks.
A natural disaster or other adverse event at one of our primary configuration centers, data center, or a third-party provider location could negatively impact our business. We have configuration centers and data centers in the US and third-party providers in the UK and Netherlands.
A natural disaster or other adverse event at one of our primary configuration centers, warehouses, data center, or a third-party provider location could negatively impact our business. We have configuration centers, warehouses, and data centers in the US and third-party providers in the UK and Netherlands.
We could incur additional expenses when new laws or regulations regarding the use, safeguarding, or privacy of information are enacted, or if governmental agencies require us to substantially modify our privacy or security practices.
We could incur additional expenses when new laws or regulations regarding the use, safeguarding, or privacy of information are enacted, or interpreted if governmental agencies require us to substantially modify our privacy or security practices.
There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular claim.
There can be no assurance that the limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any claim.
The realization of the residual value of the equipment we lease, predominantly at the end of the term of a lease, as well as during the life of the lease, is an important element in our financing segment.
The realization of the residual value of the equipment we lease, predominantly at the end of the term of a lease, as well as during the life of the lease, is an important element in our financing business segment.
Historically, our financing segment is very transaction-based and has had volatility in its results of operations primarily due to large transaction gains derived from large transactions with system integrators where the federal government is the end user, and customer-driven events such as early buyouts or terminations. These transactions are unpredictable and often outsized.
Historically, our financing business segment is very transaction-based and has had volatility in its results of operations primarily due to large transaction gains derived from significant transactions with system integrators where the federal government is the end user, and customer-driven events such as early buyouts or terminations. These transactions are unpredictable and often outsized.
We have privacy and data security policies in place that are designed to prevent security breaches; however, as newer technologies emerge, and the portfolio of the service providers with whom we share confidential information grows, we could be exposed to increased risk of breaches in data security and other illegal or fraudulent acts, including ransomware attacks and other types of cyberattacks.
We have privacy and data security policies in place that are designed to prevent security breaches; however, as newer technologies emerge, and the portfolio of the service providers with whom we share sensitive information grows, we could be exposed to increased risk of breaches in data security and other illegal or fraudulent acts, including ransomware attacks and other types of cyberattacks.
As a provider of a comprehensive set of solutions, which involves the offering of bundled solutions consisting of direct IT sales, advanced professional and managed services, our propriety software, and financing, we expect to encounter some of the challenges, risks, difficulties, and uncertainties frequently encountered by companies providing bundled solutions in rapidly evolving markets.
As a provider of a comprehensive set of technology solutions, which involves the offering of bundled solutions consisting of direct IT sales, advanced professional and managed services, our propriety software, and financing, we expect to encounter some of the challenges, risks, and uncertainties frequently encountered by companies providing bundled solutions in rapidly evolving markets.
Our earnings may fluctuate, which could adversely affect the price of our common stock. Our earnings are susceptible to fluctuations for several reasons, including, but not limited to, variability in the timing of large transactions in our technology and financing segments, product constraints, inflation, and the risk factors discussed herein .
Our earnings may fluctuate, which could adversely affect the price of our common stock. Our earnings are susceptible to fluctuations for several reasons, including, but not limited to, variability in the timing of large transactions in our technology business segments and financing business segment, product constraints, inflation, and the risk factors discussed herein.
Supply chain issues, including a shortage of IT products, may increase our costs or cause a delay in fulfilling customer orders, completing professional services, or purchasing IT products or services needed to support our internal infrastructure or operations, resulting in an adverse impact on our financial results.
Supply chain issues, including a shortage of IT products, may increase our costs or cause a delay in fulfilling customer orders, delivering and completing professional services, or purchasing IT products or services needed to support our internal infrastructure or operations, resulting in an adverse impact on our financial results.
There are two components of the WFCDF credit facility (collectively, the “WFCDF Credit Facility”): (1) a floor plan facility and (2) a revolving credit facility. As of March 31, 2023, the facility agreement had an aggregate limit of the two components of $500 million, together with a sublimit for a revolving credit facility for up to $200 million.
There are two components of the WFCDF credit facility (collectively, the “WFCDF Credit Facility”): (1) a floor plan facility and (2) a revolving credit facility. As of March 31, 2024, the facility agreement had an aggregate limit of the two components of $500 million, together with a sublimit for a revolving credit facility for up to $200 million.
Rising interest rates or the loss of key lenders or the constricting of credit markets may affect our future profitability and our ability to monetize our financing receivables and investments in operating leases. We finance transactions with our customers utilizing fix-rate borrowing.
Changes in interest rates or the loss of key lenders or the constricting of credit markets may affect our future profitability and our ability to monetize our financing receivables and investments in operating leases. We finance transactions with our customers utilizing fix-rate borrowing.
Defense of any lawsuit or failure to obtain any such required license could significantly increase our expenses and/or adversely affect our ability to offer one or more of our services. 22 Table of Contents We may be unable to protect our intellectual property and costs to protect our intellectual property may affect our earnings.
Defense of any lawsuit or failure to obtain any such required license could significantly increase our expenses and/or adversely affect our ability to offer one or more of our services. 24 Table of Contents We may be unable to protect our intellectual property and costs to protect our intellectual property may affect our earnings.
Manufacturing interruptions or delays, including as a result of the financial instability or bankruptcy of manufacturers, changes to or the addition of trade laws, duties or tariffs, currency fluctuations, significant labor disputes such as strikes, natural disasters, political or social unrest, international conflicts, such as Russia’s invasion of Ukraine, pandemics, other public health crises, or other adverse events affecting any aspect of our vendors’ business, could disrupt our supply chain.
Manufacturing interruptions or delays, including as a result of the financial instability or bankruptcy of manufacturers, changes to or the addition of trade laws, duties or tariffs, currency fluctuations, significant labor disputes such as strikes, natural disasters, political or social unrest, international conflicts, pandemics, other public health crises, or other adverse events affecting any aspect of our vendors’ business, could disrupt our supply chain.
As a result, we may be at risk for customers’ cancelling orders due to delays and we may not be able to cancel our order correspondingly with the supplier. If we are unable to mitigate these disruptions, our financial results may be adversely impacted.
As a result, we may be at risk for customers’ cancelling orders due to delays and we may not be able to cancel our corresponding order with the supplier. If we are unable to mitigate these disruptions, our financial results may be adversely impacted.
Our failure to hire, develop, retain, and supervise competent IT personnel to secure our data, as well as design and maintain resilient technology systems including our data and voice networks, infrastructure, and applications, could significantly interrupt our business causing a negative impact on our results.
Our failure to hire, develop, retain, and supervise competent IT personnel to secure our data, as well as design and maintain a resilient technology ecosystem including our data and voice networks, infrastructure, and applications, could significantly interrupt our business causing a negative impact on our results.
Breaches of data security and the failure to protect our information technology systems and confidential information from cybersecurity threats, our ability to maintain compliance with data privacy laws and regulations, or misuse of our customers’ or employees’ information could adversely impact our business.
Breaches of data security and the failure to protect our information technology systems and confidential information from cybersecurity threats, our inability to maintain compliance with data privacy laws and regulations, or misuse of our customers’ or employees’ information could adversely impact our business.
We depend on having creditworthy customers to avoid an adverse impact on our operating results and financial condition. Our financing and technology segments require sufficient amounts of debt or equity capital to fund our equipment purchases.
We depend on having creditworthy customers to avoid an adverse impact on our operating results and financial condition. Our financing business segment and our technology business segments require sufficient amounts of debt or equity capital to fund our equipment purchases.
We may need to implement new software, or make changes to existing software and processes, to be compliant with rapidly evolving data privacy laws, which may incur costs and impact data integrity. The protections we have in place address a variety of threats to our information technology systems, both internal and external, including human error.
We may need to implement new software, or update existing software and processes, to be compliant with rapidly evolving data privacy laws, which may incur costs and impact data integrity. The protections we have in place address a variety of threats to our information technology systems, both internal and external, including human error.
We may have serious defects following introduction of new products or enhancements to existing products. Undetected errors or performance problems may be discovered in the future and certain errors we consider to be minor may be serious to our customers.
We may identify serious defects following the introduction of new products or enhancements to existing products. Undetected errors or performance problems may be discovered in the future and certain errors we consider to be minor may be serious to our customers.
In our technology segment, we compete in all areas of our business against local, regional, national, and international firms, including other direct marketers; national and regional resellers; online marketplace competitors; and regional, national, and international service providers.
In our technology business segments, we compete in all areas of our business against local, regional, national, and international firms, including other direct marketers; national and regional resellers; online marketplace competitors; and regional, national, and international service providers.
Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats. Advances in computer capabilities, new discoveries in the field of cryptography or quantum computing, or other events or developments may result in a compromise or breach of the security practices we use to protect sensitive customer transaction information and employee information.
Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats. Advances in technology, new discoveries in the field of cryptography, quantum computing, or artificial intelligence, other events or developments may result in a compromise or breach of the security practices we use to protect sensitive customer transaction information and employee information.
We are subject to such claims and the cost of defending such claims due to the nature of our business. We also are subject to audits by various vendor partners and customers, including government agencies, relating to purchases and sales under various contracts. In addition, we are subject to indemnification claims under various contracts.
We are subject to such claims and the cost of defending such claims due to the nature of our business. We also are subject to audits by various vendor partners and customers, including government agencies, relating to purchases, sales, data privacy and compliance under various contracts. In addition, we are subject to indemnification claims under various contracts.
If we fail to react in a timely manner to such changes, our results of operations may be adversely affected. Our sales can be dependent on demand for specific product categories, and any change in demand for, or supply of, such products could have a material adverse effect on our results of operations.
If we fail to react in a timely manner to such changes, such as generative artificial intelligence, our results of operations may be adversely affected. Our sales can be dependent on demand for specific product categories, and any change in demand for, or supply of, such products could have a material adverse effect on our results of operations.
Our operations are subject to numerous US and foreign laws and regulations in a number of areas including, but not limited to, areas of labor and employment, immigration, advertising, e-commerce, patent and copyright, tax, import and export requirements, anti-corruption, data privacy requirements, anti-competition, and environmental, health, and safety.
Our operations are subject to numerous US and foreign laws and regulations in several areas including, but not limited to, areas of labor and employment, immigration, advertising, e-commerce, patent and copyright, tax, import and export requirements, financing, anti-corruption, data privacy requirements, anti-competition, and environmental, health, and safety.
Our personnel must continually stay current with vendor and marketplace technology advancements, create solutions which may integrate evolving vendor products and services, as well as services and solutions we provide, to meet changing marketplace and customer demand.
Our personnel must continually stay current with vendor and marketplace technology advancements, develop solutions which may integrate evolving and multiple vendor products and services, as well as services and solutions we provide, to meet changing marketplace and customer demand.
However, we may delay funding the transaction, and if interest rates increase in the interim, the interest rate spread will decrease, which will adversely impact our profitability, or we may not choose to fund the transaction due to higher interest rates, thus inhibiting our ability to monetize our portfolio to generate cash.
However, we may delay funding the transaction, and if interest rates increase in the interim, the interest rate spread will decrease, which will adversely impact our profitability, or we may not choose to fund the transaction due to higher interest rates, thus inhibiting our ability to monetize our portfolio to generate cash and increasing our credit loss exposure.
Alleged or actual v iolations of a contract that results in either the termination of our ability to sell the product or a decrease in our certification level with the vendor could adversely impact our financial results.
Alleged or actual violations of a contract that results in either the termination of our ability to sell the product or a decrease in our certification level with the vendor could adversely impact our financial results.
Actions taken by central banks to counter inflation or weakness in the global banking industry, sustained uncertainty about global political conditions, periods of intense diplomatic or armed conflict (such as the ongoing conflict between Russia and Ukraine and responsive sanctions against Russia), government spending cuts and the impact of new government policies (including the introduction of new or increased taxes, the imposition of minimum taxes or new or increased limitations on deductions, credits or other tax benefits), or a tightening of credit markets, or rising interest rates, could cause our customers and potential customers to postpone or reduce spending on technology products or services which could have an adverse effect on our business, results of operations or cash flows.
Actions taken by central banks to counter inflation or weakness in the global banking industry, sustained uncertainty about global political conditions, periods of intense diplomatic or armed conflict, government spending cuts and the impact of new government policies (including the introduction of new or increased taxes, the imposition of minimum taxes or new or increased limitations on deductions, credits or other tax benefits), or a tightening of credit markets, or rising interest rates, could cause our customers and potential customers to postpone or reduce spending on technology products or services which could have an adverse effect on our business, results of operations or cash flows.
We are experiencing product constraints due to the unavailability of raw materials or components, delays in shipping, failure of vendors to accurately forecast customer demand or to manufacture or otherwise obtain sufficient quantities of product or component parts to meet customer demand, among other reasons.
We may experience product constraints due to the unavailability of raw materials or components, delays in shipping, failure of vendors to accurately forecast customer demand or to manufacture or otherwise obtain sufficient quantities of product or component parts to meet customer demand, among other reasons.
If we do not grow our sales over prior periods, or if we do not comply with the terms of these programs, or do not sell certain products that earn the incentive, there could be a material negative effect on the amount of incentives offered or paid to us by vendors.
If we do not grow our sales over prior periods, or if we do not comply with the terms of these programs, or do not sell certain products or sufficient quantity of products that earn the incentive, there could be a material negative effect on the number of incentives offered or amounts paid to us by vendors.
This could result in lost revenues, delays in customer acceptance, security breaches, and unforeseen liabilities that could be detrimental to our reputation and to our business. We rely on the competency of our internal IT personnel.
This could result in lost revenues, business interruption, delays in customer acceptance, security breaches, and unforeseen liabilities that could be detrimental to our reputation and to our business. 18 Table of Contents We rely on the competency of our internal IT personnel.
If these third-parties do not perform these services in accordance with the terms of our agreement and of a professional standard customary for the services, or if they cause disruption of, or security weaknesses in, our customers’ businesses, results to our organization could include legal claims and associated costs, monetary damages paid to our customers, and an adverse effect on our customer relationships, our brand, and our reputation, and our results of operations or cash flows could be affected.
If these third-parties do not perform these services in accordance with the terms of our agreement and to a professional standard customary for the services, including if their services include an error or omission, or if they cause disruption of, or security weaknesses within, our customers’ businesses, results to our organization could include legal claims and associated costs, monetary damages paid to our customers, and an adverse effect on our customer and other business partner relationships, our brand, our reputation, and our results of operations or cash flows could be affected.
Our technology segment, primarily through our subsidiary e Plus Technology, inc., finances its operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC and its agents or (“WFCDF”). This facility provides short-term capital for our technology segment.
Our technology business, primarily through our subsidiary e Plus Technology, inc., finances its operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC, and its agents or (“WFCDF”). This facility provides short-term capital for certain of our technology business entities.
Inadequate design or interruption of our information systems, Internet availability, telecommunications systems or power failures could have a material adverse effect on our business, our reputation, financial condition, cash flows, or results of operations. 17 Table of Contents Our managed services business requires us to monitor our customers’ devices on their networks across varying levels of service.
Inadequate design or interruption of our information systems, telecommunications systems or power failures could have a material adverse effect on our business, our reputation, financial condition, cash flows, or results of operations. Our managed services segment requires us to monitor our customers’ devices on their networks across varying levels of service.
The configuration centers contain inventory owned by us and our customers, which serve as distribution centers for orders we do not drop ship directly to the customer. We perform services in those configuration centers such as product configuration services, and warehouse and logistics services.
The configuration centers and warehouses contain inventory owned by us and our customers and serve as distribution centers for orders we do not drop ship directly to the customer. We perform services in these facilities such as product configuration services, and warehouse and logistics services.
If the credit quality of our customer base materially decreases, or if we experience a material increase in our credit losses, including by the federal government’s actual or attempted termination for convenience or other contract termination, we may find it difficult to continue to obtain the required capital for our business, and our operating results and financial condition may be harmed.
If the credit quality of our customer base materially decreases, or if we experience a material increase in our credit losses, including by the federal government’s actual or attempted termination for convenience or other contract termination, we may find it difficult to continue to obtain the required capital for our business, and our results from operations may be affected.
If we fund such transactions at inception with a third-party lender, we are able to lock an interest rate spread on the transaction between the customer rate and third-party rate.
If we fund such transactions at inception with a third-party lender, we can lock an interest rate spread on the transaction between the customer rate and third-party rate.
Factors not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, results of operations and cash flows. RISKS SPECIFIC TO OUR BUSINESS If we lost one or more of our large volume customers, our earnings may be affected.
Factors not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, results of operations and cash flows. RISKS SPECIFIC TO OUR BUSINESS If one or more of our large volume customers significantly reduces purchasing from us, our results of operations may be affected.
As of March 31, 2023, and 2022, our accounts receivable-trade balance included approximately 13% and 14%, respectively, concentration of invoices due from Verizon Communications Inc.
As of March 31, 2024, and 2023, our accounts receivable-trade balance included approximately 17% and 13%, respectively, concentration of invoices due from Verizon Communications Inc.
However, this may not be sufficient to avoid interruptions in our service or the loss of inventory at that location and may not enable us to meet all of the needs of our customers and would cause us to incur incremental operating costs.
However, this may not be sufficient to avoid interruptions in our service or the loss of inventory at that location, may prevent us from meeting all the needs of our customers and may cause us to incur incremental operating costs.
We are also subject to a vast number of pending laws, such as state privacy laws, and securities laws such as the SEC’s proposed rules on climate-related disclosures and proposed amended rules on cybersecurity risk management. Compliance with these laws, regulations, and similar requirements may be onerous and expensive.
We are also subject to a vast number of evolving laws, such as state at the local, state and federal levels, including employment and data privacy laws, and securities laws such as the SEC’s rules on climate-related disclosures and amended rules on cybersecurity risk management. Compliance with these laws, regulations, and similar requirements may be onerous and expensive.
We could incur substantial costs in defending infringement claims against ourselves and our customers. In the event of such claims, we and our customers may be required to obtain one or more licenses from third parties. We may not be able to obtain such licenses from third parties at a reasonable cost or at all.
In the event of such claims, we and our customers may be required to obtain one or more licenses from third parties. We may not be able to obtain such licenses from third parties at a reasonable cost or at all.
Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their holdings in our common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their holdings in our common stock.
Changes in laws relating to non-compete and non-solicitation agreements make it difficult to manage hiring and retention. In some cases, our competitors have required their employees to agree to non-compete and/or non-solicitation agreements as part of their employment, and in some cases, we may not be able to enforce similar restrictions. Both scenarios present challenges and costs.
In some cases, our competitors have required their employees to agree to non-compete and/or non-solicitation agreements as part of their employment, and in some cases, we may not be able to enforce similar restrictions. Both scenarios present challenges and potential costs.
A substantial portion of our revenue within our technology segment depends on a small number of key vendors. Products manufactured by Cisco Systems represented approximately 40%, 39%, and 36% of our technology segment net sales for the years ended March 31, 2023, 2022, and 2021, respectively.
A substantial portion of our revenue within our technology business segments depend on a small number of key vendors. Products manufactured by Cisco Systems represented approximately 44%, 40%, and 39% of net sales of our combined technology business segments for the years ended March 31, 2024, 2023, and 2022, respectively.
Unfavorable economic conditions including inflation and/or an increase in interest rates also could increase our financing segment’s funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing our financing portfolio and harm our operating results.
Unfavorable economic conditions including inflation and/or an increase in interest rates also could increase our financing segment’s funding costs, limit our access to capital markets or result in a decision by lenders not to extend credit to us.
In addition to the impact on our ability to attract capital, a material increase in our delinquency and default experience would itself have a material adverse effect on our business, operating results, and financial condition.
In addition to the impact on our ability to acquire capital, a material increase in our delinquency and default experience would itself have a material adverse effect on our business, and results from operations.
The current banking environment, particularly in the technology sector, is under regulatory and consumer scrutiny in the wake of recent bank failures such as Silicon Valley Bank, which may make it more difficult for us to obtain required capital and on desirable terms.
The current banking environment, particularly in the technology sector, is under regulatory and consumer scrutiny, which may make it more difficult for us to obtain required capital and on desirable terms.
We have acquired certain portions of our business and assets through acquisitions. Further, as part of our long-term business strategy, we may continue to pursue acquisitions of other companies or assets.
Further, as part of our long-term business strategy, we may continue to pursue acquisitions of other companies or assets.
We may not have adequately designed or maintained our IT platforms for internal use or solutions we offer to our customers or have adequate or competent IT personnel to support our business.
We may not have adequately designed or maintained our IT platforms for internal use or solutions we offer to our customers or have adequate or competent IT personnel to support our business, or we may have inadequate training and technology safeguards to prevent a cyber event.
To the extent that a vendor’s offering that is highly in demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another vendor that we are authorized to sell in such customer channels, or we are unable to develop relationships with new technology providers or companies that we have not historically represented, or we partner with a vendor that is not in demand or the demand for whose products significantly decreases, our business, results of operations, or cash flows could be adversely impacted. 21 Table of Contents RISKS RELATED TO LAWS AND REGULATIONS Failure to comply with new laws or changes to existing laws may adversely impact our business.
To the extent that a vendor’s offering that is highly in demand is not available to us for resale in one or more customer channels, and there is not a competitive offering from another vendor that we are authorized to sell in such customer channels, or we are unable to develop relationships with new technology providers or companies that we have not historically represented, or we partner with a vendor that is not in demand or the demand for whose products significantly decreases, our business, results of operations, or cash flows could be adversely impacted. 22 Table of Contents Changes in the IT industry, customers’ usage or procurement of IT, and/or rapid changes in product standards may result in reduced demand for the IT hardware and software solutions and services we sell as well as financing.
Changes in interest rates, the federal government’s early termination of contracts, or other factors may make it more difficult or impossible for us to find or maintain lenders needed for us to profitably finance leasing solutions where the government is the end-user, which may have an adverse effect on our business, results of operations or cash flows. 20 Table of Contents Changes in the IT industry, customers’ usage, or procurement of IT, and/or rapid changes in product standards may result in reduced demand for the IT hardware and software solutions and services we sell as well as financing.
Changes in interest rates, the federal government’s early termination of contracts, or other factors may make it more difficult or impossible for us to find or maintain lenders needed for us to profitably finance leasing solutions where the government is the end-user, which may have an adverse effect on our business, results of operations or cash flows.
In the event our sales or net earnings are less than the level expected by the market in general, such shortfall could have an immediate and significant adverse impact on the market price of our common stock. We may be required to take impairment charges for goodwill or other intangible assets related to acquisitions.
In the event our sales or net earnings are less than the level expected by the market in general, such shortfall could have an immediate and significant adverse impact on the market price of our common stock.
Additionally, as our customers and vendors implement policies and processes for their own compliance with current, anticipated, and pending laws and regulations, they may impose requirements on us, which we may not be able to timely and cost-effectively fulfill.
Additionally, as our customers and vendors implement policies and processes for their own compliance with current, anticipated, and pending laws and regulations, they may impose requirements on us, which we may not be able to timely and cost-effectively fulfill. 23 Table of Contents We may not adequately protect ourselves through our contract vehicles, or our insurance policies may not be adequate to address potential losses or claims.
Since techniques used to obtain unauthorized access change frequently and the impact and severity of security breaches are increasing, we may be unable to implement adequate preventative measures or timely identify or stop security breaches while they are occurring. 14 Table of Contents We may be required to expend significant capital and other resources to protect against security breaches or to remediate the subsequent risks and issues caused by such breaches.
Since techniques used to obtain unauthorized access change frequently and the impact and severity of security breaches are increasing, we may be unable to implement adequate preventative measures or timely identify or stop security breaches while they are occurring.
If we are unable to react timely to any fundamental changes in the programs of vendors, including the elimination of funding for some of the activities for which we have been compensated in the past, such changes could have a material adverse effect on our business, results of operations and financial condition. 16 Table of Contents We may fail to innovate or create new solutions which align with changing market and customer demand, and we face substantial competition from other companies.
If we are unable to react timely to any fundamental changes in the programs of vendors, including the elimination of funding for some of the activities for which we have been compensated in the past, such changes could have a material adverse effect on our business, results of operations and financial condition.
We also have foreign currency exposure to the extent net sales and purchases are not denominated in a subsidiary’s functional currency, which could have an adverse effect on our business, results of operations, or cash flows.
We also have foreign currency exposure to the extent net sales and purchases are not denominated in a subsidiary’s functional currency, which could have an adverse effect on our business, results of operations, or cash flows. 21 Table of Contents Actual or anticipated epidemics, pandemics, outbreaks, or other public health crises may adversely affect our customers’ and suppliers’ financial condition and the operations of our business.
Additionally, the loss of senior leaders or the failure to successfully implement a succession plan could adversely affect our ability to manage operations and execute strategies. 13 Table of Contents In addition, changes to immigration laws may impact our ability to hire or retain talent.
Wage inflation may adversely impact our ability to hire and retain personnel, which may impact our ability to acquire, retain and serve our customers. Additionally, the loss of senior leaders or the failure to successfully implement a succession plan could adversely affect our ability to execute strategies and manage operations.
These programs are usually of finite terms and may not be renewed or may be changed in a way that adversely affects us. Vendor funding is used to offset inventory costs, costs of goods sold, marketing costs and other operating expenses. Certain of these funds are based on our volume of purchases, growth rate of purchases, and marketing programs.
Vendor funding is used to offset inventory costs, costs of goods sold, marketing costs and other operating expenses. Certain of these funds are based on our volume of purchases, growth rate of purchases, and marketing programs.
The technology industry is characterized by rapid innovation and the frequent introduction of new and enhanced hardware, software, and service offerings, such as cloud-based solutions, including IaaS, SaaS, and PaaS. We depend on innovations in hardware, software, and service offerings by our vendors, as well as the acceptance of those innovations by our customers for the offerings we sell.
The technology industry is characterized by rapid innovation and the frequent introduction of new and enhanced hardware, software, and service offerings, such as generative artificial intelligence, and cloud-based solutions, including IaaS, SaaS, and PaaS.
Further, we may provide customized solutions and services that are solely reliant on our own marketing, design, and fulfillment services, and we may lack the skills or personnel to execute. Our failure to innovate and provide bespoke value to our customers may erode our competitive position, market share and lead to reduced revenue and financial performance.
Further, we may provide customized solutions and services that are solely reliant on our own marketing, design, and fulfillment services, and we may lack the skills or personnel to execute.
For example, our sales and engineering candidates must have highly technical hardware and software knowledge to create a customized solution for our customers’ business processes. Competition for qualified sales, marketing and engineering personnel fluctuates depending on market conditions.
Our products and services require a sophisticated sales effort and significant technical engineering talent. For example, our sales and engineering candidates must possess a high degree of technical acumen, including hardware and software knowledge, to create customized solutions for our customers’ business processes. Competition for qualified sales, marketing and engineering personnel fluctuates depending on market conditions.
If we fail to identify businesses available for purchase or at an acceptable valuation, our growth strategy may be negatively affected and, as such, may negatively affect our results of operations. Our ability to successfully integrate the operations we acquire, reduce costs, or leverage these operations to generate revenue and earnings growth, could significantly impact future revenue and earnings.
Additionally, if we fail to identify an opportunity or fail to successfully complete an intended asset disposition, our operations or earnings may be negatively affected. Our ability to successfully integrate the operations we acquire, reduce costs, or leverage these operations to generate revenue and earnings growth, could significantly impact future revenue and earnings.
Actual or anticipated epidemics, pandemics, outbreaks, or other public health crises may adversely affect our customers’ and suppliers’ financial condition and the operations of our business. Our business could be materially and adversely affected by the impact of any epidemic, pandemic, outbreak, or other public health crisis.
Our business could be materially and adversely affected by the impact of any epidemic, pandemic, outbreak, or other public health crisis.
Many of our customers may be susceptible to economic slowdowns or recessions and may be unable to pay for their purchases or repay the leases or notes receivable to us or repayment may be extended by our customers or us.
Many of our customers may be susceptible to changes in their industries, challenges to their business models, economic slowdowns or recessions, or other adverse events and may be unable to pay for their purchases or repay the leases or notes receivable or multi-year agreements such as maintenance or software subscription agreements to us or repayment may be extended by our customers or us.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe have certain employees that work at customer sites or from their homes. Additionally, we utilize coworking spaces in certain cities. Our largest office space is our headquarters in Herndon, Virginia. Our lease on this space terminates on December 31, 2024. We anticipate no difficulty in retaining occupancy through lease renewals, month-to-month occupancy, or replacing leased properties with equivalent properties.
Biggest changeOur leases expire at varying dates over the next 10 years. We have certain employees that work at customer sites, their homes, or other locations. Additionally, we utilize coworking spaces in certain cities. Our largest office space is our headquarters in Herndon, Virginia. Our lease on this space terminates on December 31, 2026.
ITEM 2. PROPERTIES As of March 31, 2023, we leased a total of 326 thousand square feet of office and warehouse space across 20 properties, primarily in the US, that are used in our technology segment and financing segment. Our leases expire at varying dates over the next 10 years.
ITEM 2. PROPERTIES As of March 31, 2024, we leased a total of 292 thousand square feet of office and warehouse space across 19 properties, primarily in the US, that are used in common by our technology business segments- product, professional services, and managed services- and our financing business segment.
We believe that suitable additional or substitute leased properties will be available as required. 23 Table of Contents
We anticipate no difficulty in retaining occupancy through lease renewals, month-to-month occupancy, or replacing leased properties with equivalent properties. We believe that suitable additional or substitute leased properties will be available as required.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs (2) January 1, 2023 through January 31, 2023 0 $ - 0 1,000,000 February 1, 2023 through February 28, 2023 0 $ - 0 1,000,000 March 1, 2023 through March 31, 2023 2,500 $ 48.65 2,500 997,500 Total 2,500 2,500 (1) All shares were acquired in open-market purchases.
Biggest changePeriod Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number of shares that may yet be purchased under the plans or programs (2) January 1, 2024 through January 31, 2024 - $ - - 956,602 February 1, 2024 through February 28, 2024 574 $ 64.89 574 956,028 March 1, 2024 through March 31, 2024 - $ - - 956,028 Total 574 574 (1) All shares were acquired in open-market purchases.
DIVIDEND POLICIES AND RESTRICTIONS We did not pay any cash dividends on our common stock during the fiscal years ended March 31, 2023, and 2022. Holders of our common stock are entitled to dividends if and when declared by our Board of Directors (“Board”), out of funds legally available.
DIVIDEND POLICIES AND RESTRICTIONS We did not pay any cash dividends on our common stock during the fiscal years ended March 31, 2024, and 2023. Holders of our common stock are entitled to dividends if and when declared by our Board of Directors (“Board”), out of funds legally available.
Any future determination concerning the payment of dividends will depend upon our financial condition, results of operations, capital requirements and any other factors deemed relevant by our Board. PURCHASES OF OUR COMMON STOCK The following table provides information regarding our purchases of our common stock during the three months ended March 31, 2023.
Any future determination concerning the payment of dividends will depend upon our financial condition, results of operations, capital requirements and any other factors deemed relevant by our Board. PURCHASES OF OUR COMMON STOCK The following table provides information regarding our purchases of our common stock during the three months ended March 31, 2024.
(2) The amounts presented in this column are the remaining number of shares that may be repurchased after repurchases during the month. On March 24, 2022, our board of directors authorized the repurchase of up to 1,000,000 shares of our outstanding common stock, over a 12-month period beginning May 28, 2022.
(2) The amounts presented in this column are the remaining number of shares that may be repurchased after repurchases during the month. On March 22, 2023, our Board authorized the repurchase of up to 1,000,000 shares of our outstanding common stock, over a 12-month period beginning May 28, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION On March 31, 2023, our common stock traded on the NASDAQ Global Select Market under the symbol “PLUS.” On May 1, 2023, there were 215 stockholders of record of our common stock, although there is a much larger number of beneficial owners.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION On March 31, 2024, our common stock traded on the NASDAQ Global Select Market under the symbol “PLUS.” On May 7, 2024, there were 247 stockholders of record of our common stock, although there is a much larger number of beneficial owners.
Removed
On March 22, 2023, our board of directors authorized the repurchase of up to 1,000,000 shares of our outstanding common stock, over a 12-month period beginning May 28, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRESULTS OF OPERATIONS The Year Ended March 31, 2023, Compared to the Year Ended March 31, 2022 32 Table of Contents TECHNOLOGY SEGMENT The results of operations for our technology segment for the years ended March 31, 2023, and 2022 were as follows (in thousands): Year Ended March 31, Percent 2023 2022 Change Change Financial Metrics Net sales Product $ 1,750,802 $ 1,492,411 $ 258,391 17.3 % Services 264,443 240,625 23,818 9.9 % Total 2,015,245 1,733,036 282,209 16.3 % Cost of sales Product 1,370,061 1,175,789 194,272 16.5 % Services 170,694 149,094 21,600 14.5 % Total 1,540,755 1,324,883 215,872 16.3 % Gross profit 474,490 408,153 66,337 16.3 % Selling, general, and administrative 317,885 283,690 34,195 12.1 % Depreciation and amortization 13,598 14,535 (937 ) (6.4 %) Interest and financing costs 2,897 928 1,969 212.2 % Operating expenses 334,380 299,153 35,227 11.8 % Operating income $ 140,110 $ 109,000 $ 31,110 28.5 % Key Metrics & Other Information Gross billings $ 3,145,888 $ 2,625,749 $ 520,139 19.8 % Adjusted EBITDA $ 164,184 $ 131,353 $ 32,831 25.0 % Net sales by customer end market: Telecom, Media & Entertainment $ 532,921 $ 502,408 $ 30,513 6.1 % Technology 393,594 250,485 143,109 57.1 % SLED 290,624 241,769 48,855 20.2 % Healthcare 274,936 270,481 4,455 1.6 % Financial Services 156,257 155,160 1,097 0.7 % All others 366,913 312,733 54,180 17.3 % Total $ 2,015,245 $ 1,733,036 $ 282,209 16.3 % Net sales by type: Data Center / Cloud $ 587,097 $ 581,113 $ 5,984 1.0 % Networking 803,678 611,488 192,190 31.4 % Security 214,459 158,927 55,532 34.9 % Collaboration 57,472 57,244 228 0.4 % Other 88,096 83,639 4,457 5.3 % ePlus services 264,443 240,625 23,818 9.9 % Total $ 2,015,245 $ 1,733,036 $ 282,209 16.3 % 33 Table of Contents Net sales: Net sales for the year ended March 31, 2023, increased due to an increase in customer demand, primarily from customers in technology and SLED industries, due to customer specific IT related initiatives.
Biggest changeWe expect to continue to expand by hiring additional staff for specific targeted market areas and roles whenever we can find both experienced personnel and desirable geographic areas over the longer term, which may impact our operating results. 34 Table of Contents SEGMENT RESULTS OF OPERATIONS The Year Ended March 31, 2024, Compared to the Year Ended March 31, 2023 TECHNOLOGY BUSINESS SEGMENTS The results of operations for our technology business segments were as follows (in thousands): Year ended March 31, 2024 2023 Change Percent Change Financial metrics Net sales Product $ 1,883,809 $ 1,750,802 $ 133,007 7.6 % Professional services 154,549 151,785 2,764 1.8 % Managed services 137,528 112,658 24,870 22.1 % Total $ 2,175,886 $ 2,015,245 $ 160,641 8.0 % Gross Profit Product 397,618 380,741 16,877 4.4 % Professional services 68,194 61,594 6,600 10.7 % Managed services 42,667 32,155 10,512 32.7 % Total 508,479 474,490 33,989 7.2 % Selling, general, and administrative 353,540 317,885 35,655 11.2 % Depreciation and amortization 20,951 13,598 7,353 54.1 % Interest and financing costs 1,428 2,897 (1,469 ) (50.7 %) Operating expenses 375,919 334,380 41,539 12.4 % Operating income $ 132,560 $ 140,110 $ (7,550 ) (5.4 %) Key metrics & other information Gross billings $ 3,329,764 $ 3,145,888 $ 183,876 5.8 % Adjusted EBITDA $ 164,409 $ 164,184 $ 225 0.1 % Product margin 21.1 % 21.7 % Professional services margin 44.1 % 40.6 % Managed services margin 31.0 % 28.5 % Net sales by customer end market: Telecom, media & entertainment $ 547,525 $ 532,921 $ 14,604 2.7 % Technology 379,720 393,594 (13,874 ) (3.5 %) SLED 329,617 290,624 38,993 13.4 % Healthcare 278,893 274,936 3,957 1.4 % Financial services 243,630 156,257 87,373 55.9 % All others 396,501 366,913 29,588 8.1 % Total $ 2,175,886 2,015,245 160,641 8.0 % Net sales by type: Networking $ 1,005,679 $ 803,678 $ 202,001 25.1 % Cloud 546,341 587,097 (40,756 ) (6.9 %) Security 193,956 214,459 (20,503 ) (9.6 %) Collaboration 65,714 57,472 8,242 14.3 % Other 72,119 88,096 (15,977 ) (18.1 %) Total products 1,883,809 1,750,802 133,007 7.6 % Professional services 154,549 151,785 2,764 1.8 % Managed services 137,528 112,658 24,870 22.1 % Total $ 2,175,886 $ 2,015,245 $ 160,641 8.0 % Net sales : Net sales of the combined technology business segments for the year ended March 31, 2024, increased compared to the year ended March 31, 2023, driven by demand from customers in telecom, media, and entertainment, SLED, financial services, and healthcare industries, offset by decreased volume with customers in the technology industry.
Financing segment revenue generally falls into the following three categories: • Portfolio income: Interest income from financing receivables and rents due under operating leases. • Transactional gains: Net gains or losses on the sale of financial assets. • Post-contract earnings: Month-to-month rents; early termination, prepayment, make-whole or buyout fees; and the sale of off-lease (used) equipment.
Financing revenue generally falls into the following three categories: • Portfolio income: Interest income from financing receivables and rents due under operating leases. • Transactional gains: Net gains or losses on the sale of financial assets. • Post-contract earnings: Month-to-month rents; early termination, prepayment, make-whole, or buyout fees; and the sale of off-lease (used) equipment.
We have developed advisory services, solutions, and professional and managed services to meet these priorities and help our customers attain and maintain their desired outcome. • 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.
We have developed advisory services, assessments, solutions, and professional and managed services to meet these priorities and help our customers attain and maintain their desired outcome. • 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.
Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. In a qualitative assessment, we assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill.
Goodwill is tested for impairment at a level of reporting referred to as a reporting unit. In a qualitative assessment, we assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, including goodwill.
The financing segment derives revenue from leasing IT, medical equipment and other equipment, and the disposition of that equipment at the end of the lease. The financing segment also derives revenues from the financing of third-party software licenses, software assurance, maintenance, and other services.
The financing business segment derives revenue from leasing IT equipment, medical equipment, and other equipment, and the disposition of that equipment at the end of the lease. The financing business segment also derives revenues from the financing of third-party software licenses, software assurance, maintenance, and other services.
Invoices processed through our credit facility, or the A/P-floor plan balance, are typically paid within 45-60 days from the invoice date, while A/P trade invoices are typically paid within 30 days from the invoice date.
Invoices processed through our credit facility, or the A/P-floor plan balance, are typically paid within 45-60 days from the invoice date, while A/P trade invoices are typically paid around 30 days from the invoice date.
Our borrowings in our financing segment are primarily through secured borrowings that involve transferring all or part of the contractual payments due to us to third-party financing institutions.
Our borrowings in our financing business segment are primarily through secured borrowings that involve transferring all or part of the contractual payments due to us to third-party financing institutions.
As of March 31, 2023, and 2022, we were not involved in any unconsolidated special purpose entity transactions. ADEQUACY OF CAPITAL RESOURCES The continued implementation of our business strategy will require a significant investment in both resources and managerial focus. In addition, we may selectively acquire other companies that have attractive customer relationships and skilled sales and/or engineering forces.
As of March 31, 2024, and 2023, we were not involved in any unconsolidated special purpose entity transactions. ADEQUACY OF CAPITAL RESOURCES The continued implementation of our business strategy will require a significant investment in both resources and managerial focus. In addition, we may selectively acquire other companies that have attractive customer relationships and skilled sales and/or engineering forces.
We believe that the most important of these measures and ratios include net sales, gross margin, operating income margin, net earnings, and net earnings per common share, in each case based on information prepared in accordance with US GAAP, as well as the non-GAAP financial measures and ratios, including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share.
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 US GAAP, as well as the non-GAAP financial measures and ratios, including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share - diluted.
We pay down the floor plan facility on three specified dates each month, generally 30-60 days from the invoice date . Our borrowings and repayments under the floor plan component are included in “net borrowings (repayments) on floor plan facility” within cash flows from the financing activities in our consolidated statements of cash flows.
We pay down the floor plan facility on three specified dates each month, generally 45-60 days from the invoice date. Our borrowings and repayments under the floor plan component are included in “net borrowings (repayments) on floor plan facility” within cash flows from the financing activities in our consolidated statements of cash flows.
We recognize most of our revenues from the sales of third-party products, third-party software, third-party maintenance, software support, and services, e Plus professional and managed services, and hosting e Plus proprietary software. Our recognition of revenue differs for each of these distinct types of performance obligations and identifying each performance obligation appropriately may require judgment.
We recognize most of our revenues from the sales of third-party products, third-party software, third-party maintenance, software support, and services, and e Plus professional and managed services. Our recognition of revenue differs for each of these distinct types of performance obligations and identifying each performance obligation appropriately may require judgment.
We are not liable for the repayment of non-recourse loans unless we breach our representations and warranties in the loan agreements. The lender assumes the credit risk and its only recourse, upon default by the customer, is against the customer and the specific equipment under lease.
We are not liable for the repayment of non-recourse loans unless we breach our representations and warranties in the loan agreements. The lender assumes the credit risk and their only recourse, upon default by the customer, is against the customer and the specific equipment under lease.
Our DSOs for the quarters ended March 31, 2023, and 2022 were greater than our standard payment terms primarily due to a significant proportion of sales in those quarters to customers with payment terms greater than or equal to net 60 days.
Our DSOs for the quarters ended March 31, 2024, and 2023 were greater than our standard payment terms primarily due to a significant proportion of sales in those quarters to customers with payment terms greater than or equal to net 60 days.
We use those funds to meet our capital requirements, which have historically consisted primarily of working capital for operational needs, capital expenditures, purchases of equipment for lease, payments of principal and interest on indebtedness outstanding, acquisitions and the repurchase of shares of our common stock. Our borrowings in our technology segment are through our WFCDF Credit Facility.
We use those funds to meet our capital requirements, which have historically consisted primarily of working capital for operational needs, capital expenditures, purchases of equipment for lease, payments of principal and interest on indebtedness outstanding, acquisitions and the repurchase of shares of our common stock. Our borrowings in our technology business segments are through our WFCDF Credit Facility.
We recognize revenue from sales of third-party maintenance, software support, and services when our customer and vendor accept the terms and conditions of the arrangement. On occasion, judgment is required to determine this point in time. 44 Table of Contents We provide e Plus professional services under both time and materials and fixed price contracts.
We recognize revenue from sales of third-party maintenance, software support, and services when our customer and vendor accept the terms and conditions of the arrangement. On occasion, judgment is required to determine this point in time. We provide e Plus professional services under both time and materials and fixed price contracts.
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 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. 29 Table of Contents KEY BUSINESS METRICS Our management monitors several financial and non-financial measures and ratios on a regular basis to track the progress of our business.
We utilize qualified attorneys to provide a true-sale-at-law opinion to support the conclusion that transferred financial assets have been legally isolated. RESIDUAL ASSETS — Our estimate for the residual asset in a lease is the amount we expect to derive from the underlying asset following the end of the lease term.
We utilize qualified attorneys to provide a true-sale-at-law opinion to support the conclusion that transferred financial assets have been legally isolated. 43 Table of Contents RESIDUAL ASSETS — Our estimate for the residual asset in a lease is the amount we expect to derive from the underlying asset following the end of the lease term.
Gross billings includes the transaction values for certain sales transactions that are recognized on a net basis, and, therefore, includes amounts that will not be recognized as revenue.
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.
Cash flows from financing activities During the year ended March 31, 2023, we used $21.0 million in financing activities. We had net repayments of notes payable and borrowings on our credit facility in our technology segment of $7.1 million, offset by net borrowings of non-recourse and recourse notes payable of $4.1 million by our financing segment.
During the year ended March 31, 2023, we used $21.0 million in financing activities. We had net repayments of notes payable and borrowings on our credit facility in our technology segment of $7.1 million, offset by net borrowings of non-recourse and recourse notes payable of $4.1 million by our financing segment.
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 agreement. 26 Table of Contents • Rapid cloud adoption has led to customer challenges around increasing costs, security concerns, and skillset gaps. These challenges are consistent across all industries and sizes.
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 agreement. • 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.
CREDIT FACILITY – TECHNOLOGY SEGMENT We finance the operations of our subsidiaries e Plus Technology, inc., e Plus Technology Services, inc. and SLAIT Consulting, LLC (collectively, the “Borrowers”) in our technology segment through a credit facility with WFCDF. The WFCDF Credit Facility has a floor plan facility and a revolving credit facility.
CREDIT FACILITY We finance the operations of our subsidiaries e Plus Technology, inc., e Plus Technology Services, inc. and SLAIT Consulting, LLC (collectively, the “Borrowers”) in our technology business segments through a credit facility with WFCDF. The WFCDF Credit Facility has a floor plan facility and a revolving credit facility.
(2) Represents the rolling three-month average of the balance of inventory, net for our technology segment at the end of the period divided by the direct cost of products and services billed to our customers for the same three-month period.
(2) Represents the rolling three-month average of the balance of inventory, net for our technology business segments at the end of the period divided by the direct cost of products and services billed to our customers for the same three-month period.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the financial condition and results of operations (the “financial review”) of e Plus is intended to help investors understand our company and our operations.
ITEM 7. M ANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the financial condition and results of operations (the “financial review”) of e Plus is intended to help investors understand our company and our operations.
In these situations, the portion of the proceeds paid directly to our vendors are non-cash transactions. SECURED BORROWINGS – FINANCING SEGMENT We may finance all or most of the cost of the assets that we finance for customers by transferring all or part of the contractual payments due to us to third-party financial institutions.
In these situations, the portion of the proceeds paid directly to our vendors are non-cash transactions. 40 Table of Contents SECURED BORROWINGS We may finance all or most of the cost of the assets that we finance for customers by transferring all or part of the contractual payments due to us to third-party financing institutions.
Weighted average common shares outstanding used in the calculation of basic and diluted earnings per common share were 26.7 million and 26.8 million, respectively, for the year ended March 31, 2021. LIQUIDITY AND CAPITAL RESOURCES LIQUIDITY OVERVIEW We finance our operations through funds generated from operations and through borrowings.
Weighted average common shares outstanding used in the calculation of basic earnings per common share and diluted earnings per common share were 26.6 million and 26.7 million, respectively, for the years ended March 31, 2024, and 2023. LIQUIDITY AND CAPITAL RESOURCES LIQUIDITY OVERVIEW We finance our operations through funds generated from operations and through borrowings.
Our valuations utilize significant estimates, such as forecasted revenues and profits. Changes in our estimates could significantly impact the value of certain assets and liabilities. RECENT ACCOUNTING PRONOUNCEMENTS Please refer to Note 2 , “Recent Accounting Pronouncements” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
Changes in our estimates could significantly impact the value of certain assets and liabilities. RECENT ACCOUNTING PRONOUNCEMENTS Please refer to Note 2 , “Recent Accounting Pronouncements” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.
The following table presents the components of the cash conversion cycle for our Technology segment: As of March 31, 2023 2022 (DSO) Days sales outstanding (1) 74 71 (DIO) Days inventory outstanding (2) 38 25 (DPO) Days payable outstanding (3) (53 ) (46 ) Cash conversion cycle 59 50 (1) Represents the rolling three-month average of the balance of trade accounts receivable-trade, net for our technology segment at the end of the period divided by Gross billings for the same three-month period.
The following table presents the components of the cash conversion cycle for our technology business segments: As of March 31, 2024 2023 (DSO) Days sales outstanding (1) 62 74 (DIO) Days inventory outstanding (2) 23 38 (DPO) Days payable outstanding (3) (39) (53) Cash conversion cycle 46 59 (1) Represents the rolling three-month average of the balance of trade accounts receivable-trade, net for our technology business segments at the end of the period divided by Gross billings for the same three-month period.
Our average month-end borrowing balance on the accounts receivable component of our WFCDF Credit Facility was $47.0 million over the year ended March 31, 2023, compared to $19.0 million over the prior year.
Our average month-end borrowing balance on the accounts receivable component of our WFCDF Credit Facility was $18.4 million over the year ended March 31, 2024, compared to $47.0 million over the prior fiscal year.
Additionally, while our lending partners in our financing segment have become more discerning in their approval processes, we currently have funding resources available for our transactions. 43 Table of Contents POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS Our future quarterly operating results and the market price of our common stock may fluctuate.
Additionally, while our lending partners in our financing segment continue to be discerning in their approval processes, we currently have funding resources available for our transactions. POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS Our future quarterly operating results and the market price of our common stock may fluctuate.
As of March 31, 2023, we had a maximum credit limit of $500.0 million, and an outstanding balance on the floor plan of $134.6 million. As of March 31, 2022, we had a maximum credit limit of $375.0 million, and the outstanding balance on the floor plan facility was $145.3 million.
As of March 31, 2024, we had a maximum credit limit of $500.0 million, and an outstanding balance on the floor plan of $105.1 million. As of March 31, 2023, we had a maximum credit limit of $500.0 million, and the outstanding balance on the floor plan facility was $134.6 million.
Our borrowing of non-recourse and recourse notes payable primarily arises from our financing segment when we transfer contractual payments due to us under financing agreements to third-party financial institutions. When the transfers do not meet the requirements for a sale, the proceeds paid to us represent borrowings of non-recourse and recourse notes payable.
When the transfers do not meet the requirements for a sale, the proceeds paid to us represent borrowings of recourse or non-recourse notes payable. Non-Cash Activities We transfer contractual payments due to us under lease and financing agreements to third-party financial institutions.
The increase in days payable outstanding is driven by our growth in sales volume. Financing Segment: During the year ended March 31, 2023, our financing segment used $32.6 million in operating activities, primarily due to changes in financing receivables and deferred costs, partially offset by net earnings.
During the year ended March 31, 2023, our financing segment used $32.6 million in operating activities, primarily due to changes in financing receivables and deferred costs, partially offset by net earnings.
The authorization level we achieve and maintain governs the types of products we can resell as well as such items as variable discounts applied against the list price, funds provided for the marketing of these products and other special promotions.
The programs we qualify for are generally set by our reseller authorization level with the vendor. The authorization level we achieve and maintain governs the types of products we can resell as well as such items as variable discounts applied against the list price, funds provided for the marketing of these products and other special promotions.
Please refer to Note 5 , “Lessee Accounting” and Note 9 , “Notes Payable and Credit Facility” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information regarding the maturities of these obligations.
Please refer to Note 9 , “Notes Payable and Credit Facility” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information concerning our WFCDF Credit Facility.
Selling, general, and administrative expenses: Selling, general, and administrative expenses for the year ended March 31, 2023, increased mainly due to an increase in salaries and benefits.
Selling, general, and administrative expenses : Selling, general, and administrative expenses for the year ended March 31, 2024 , for the technology business, increased compared to the year ended March 31, 2023, mainly due to increases in salaries and benefits.
We believe Gross billings will aid investors in the same manner. 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.
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.
Professional services include cloud consulting, staff augmentation services, and project management services. • Managed services: Revenue generated from our advanced managed services that include managing various aspects of our customers environments and are billed in regular intervals over a contract term, usually between three to five years.
Professional services include consulting, assessments, configuration, logistic services, training, staff augmentation services, and project management services. • 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.
During the year ended March 31, 2022, our financing segment used $0.3 million from operating activities, primarily due to the issuance of new financing receivables. 41 Table of Contents Cash flows related to investing activities During the year ended March 31, 2023, we used $18.9 million in investing activities, consisting of $9.4 million for purchases of property, equipment, and operating lease equipment and $13.3 million to acquire Future Com, Ltd., partially offset by $3.7 million of proceeds from the sale of operating lease equipment.
During the year ended March 31, 2023, we used $18.9 million in investing activities, consisting of $9.4 million for purchases of property, equipment, and operating lease equipment and $13.3 million to acquire Future Com, Ltd., partially offset by $3.7 million of proceeds from the sale of operating lease equipment.
Interest and financing costs: Interest and financing costs for the year ended March 31, 2023 , increased due to higher average borrowings outstanding and higher interest rates during the year under our WFCDF Credit Facility, offset by paydowns on an installment payment arrangement.
Interest and financing costs : Interest and financing costs for the year ended March 31, 2024 , decreased, compared to the year ended March 31, 2023, due to lower average borrowings outstanding during the year under our WFCDF Credit Facility offset by higher interest rates.
Operating income: As a result of the foregoing, operating income for the year ended March 31, 2023, increased $18.9 million, or 12.8%, to $166.2 million and operating margin decreased by 10 basis points to 8.0%, as compared to $147.3 million for the year ended March 31, 2022.
Operating income : As a result of the foregoing, operating income for the year ended March 31, 2024, decreased $7.9 million, or 4.8%, to $158.3 million and operating margin decreased by 90 basis points to 7.1%, as compared to $166.2 million for the year ended March 31, 2023.
Non-Cash Activities We transfer contractual payments due to us under lease and financing agreements to third-party financial institutions. In certain assignment agreements, we may direct the third-party financial institution to pay some of the proceeds from the assignment directly to the vendor or vendors that have supplied the assets being leased or financed.
In certain assignment agreements, we may direct the third-party financial institution to pay some of the proceeds from the assignment directly to the vendor or vendors that have supplied the assets being leased or financed.
We write off financing receivables when we deem them to be uncollectable. As of March 31, 2023, we estimated lower expected credit loss rates related to both our accounts receivable and financing receivables as compared to March 31, 2022. INCOME TAXES — We make certain estimates and judgments in determining income tax expense for financial statement reporting purposes.
As of March 31, 2024, we estimated expected credit loss rates related to both our accounts receivable and financing receivables at rates comparable to March 31, 2023. 44 Table of Contents INCOME TAXES — We make certain estimates and judgments in determining income tax expense for financial statement reporting purposes.
We are an authorized reseller of over 1,500 vendors, which have enabled us to provide our customers with new and evolving IT solutions. We possess top-level 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 possess top-level 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.
Our valuations of certain assets acquired, including customer relationships and trade names, and certain liabilities assumed, involve significant judgment and estimation. Additionally, our determination of the purchase price may include an estimate for the fair value of contingent consideration. We utilize independent valuation specialists to assist us in determining the fair value of certain assets and liabilities.
Additionally, our determination of the purchase price may include an estimate for the fair value of contingent consideration. We utilize independent valuation specialists to assist us in determining the fair value of certain assets and liabilities. Our valuations utilize significant estimates, such as forecasted revenues and profits.
Additionally, we had cash inflows of $10.7 million from net borrowings on the floor plan facility and cash outflows of $7.2 million from the repurchase of common stock. During the year ended March 31, 2022, financing activities provided $47.2 million.
Additionally, we had cash outflows of $10.7 million from net borrowings/repayments on the floor plan facility and cash outflows of $7.2 million from the repurchase of common stock.
We use Adjusted EBITDA as a supplemental measure of our performance to gain insight into our operating performance and performance trends.
Adjusted EBITDA margin is our calculation of Adjusted EBITDA divided by net sales. 31 Table of Contents We use Adjusted EBITDA as a supplemental measure of our performance to gain insight into our operating performance and performance trends.
In addition, other companies, including companies in our industry, might calculate similar Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted or similarly titled measures differently, which may reduce their usefulness as comparative measures. 28 Table of Contents The following table provides our calculation of Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted (in thousands, except per share amounts): Year Ended March 31, 2023 2022 2021 GAAP: Earnings before tax $ 162,974 $ 146,884 $ 106,906 Share based compensation 7,824 7,114 7,167 Acquisition and integration expense - - 271 Acquisition related amortization expense 9,411 10,072 9,116 Other (income) expense 3,188 432 (571 ) Non-GAAP: Earnings before provision for income taxes 183,397 164,502 122,889 GAAP: Provision for income taxes 43,618 41,284 32,509 Share based compensation 2,104 2,014 2,188 Acquisition and integration expense - - 78 Acquisition related amortization expense 2,527 2,803 2,730 Other (income) expense 950 120 (143 ) Tax benefit (expense) on restricted stock 267 317 (40 ) Non-GAAP: Provision for income taxes 49,466 46,538 37,322 Non-GAAP: Net earnings $ 133,931 $ 117,964 $ 85,567 Year Ended March 31, 2023 2022 2021 GAAP: Net earnings per common share - diluted $ 4.48 $ 3.93 $ 2.77 Share based compensation 0.21 0.20 0.19 Acquisition and integration expense - - 0.01 Acquisition related amortization expense 0.26 0.26 0.24 Other (income) expense 0.08 0.01 (0.02 ) Tax benefit (expense) on restricted stock (0.01 ) (0.01 ) - Total non-GAAP adjustments - net of tax 0.54 0.46 0.42 Non-GAAP: Net earnings per common share - diluted $ 5.02 $ 4.39 $ 3.19 (2) We define Adjusted EBITDA as net earnings 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.
The following table provides our calculation of Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted (in thousands, except per share amounts): Year Ended March 31, 2024 2023 2022 GAAP: Earnings before tax $ 161,093 $ 162,974 $ 146,884 Share-based compensation 9,731 7,824 7,114 Acquisition related amortization expense 15,180 9,411 10,072 Other (income) expense (2,836 ) 3,188 432 Non-GAAP: Earnings before provision for income taxes 183,168 183,397 164,502 GAAP: Provision for income taxes 45,317 43,618 41,284 Share-based compensation 2,772 2,104 2,014 Acquisition related amortization expense 4,306 2,527 2,803 Other (income) expense (831 ) 950 120 Tax benefit (expense) on restricted stock 277 267 317 Non-GAAP: Provision for income taxes 51,841 49,466 46,538 Non-GAAP: Net earnings $ 131,327 $ 133,931 $ 117,964 Year Ended March 31, 2024 2023 2022 GAAP: Net earnings per common share - diluted $ 4.33 $ 4.48 $ 3.93 Share-based compensation 0.27 0.21 0.20 Acquisition related amortization expense 0.40 0.26 0.26 Other (income) expense (0.07 ) 0.08 0.01 Tax benefit (expense) on restricted stock (0.01 ) (0.01 ) (0.01 ) Total non-GAAP adjustments - net of tax 0.59 0.54 0.46 Non-GAAP: Net earnings per common share - diluted $ 4.92 $ 5.02 $ 4.39 (2) We define Adjusted EBITDA as net earnings 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.
BUSINESS TRENDS We believe the following key business trends are impacting our business performance and our ability to achieve business results: • General economic concerns including inflation, rising interest rates, staffing shortages, remote work trends, and global unrest may impact our customers’ willingness to spend on technology and services. • A worldwide shortage of certain IT products is resulting from, among other things, shortages in semiconductors and other product components.
BUSINESS TRENDS We believe the following key factors are impacting our business performance and our ability to achieve business results: • General economic concerns including inflation, rising interest rates, staffing shortages, remote work trends, and geopolitical concerns may impact our customers’ willingness to spend on technology and services. • We are experiencing increases in prices from our suppliers.
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. 29 Table of Contents The following table provides our calculations of Adjusted EBITDA (in thousands): Year Ended March 31, Consolidated 2023 2022 2021 Net earnings $ 119,356 $ 105,600 $ 74,397 Provision for income taxes 43,618 41,284 32,509 Share based compensation 7,824 7,114 7,167 Interest and financing costs 2,897 928 521 Acquisition and integration expense - - 271 Depreciation and amortization 13,709 14,646 13,951 Other (income) expense, net 3,188 432 (571 ) Adjusted EBITDA $ 190,592 $ 170,004 $ 128,245 Technology Segment Operating income $ 140,110 $ 109,000 $ 75,665 Depreciation and amortization 13,598 14,535 13,839 Share based compensation 7,579 6,890 6,923 Interest and financing costs 2,897 928 521 Acquisition and integration expense - - 271 Adjusted EBITDA $ 164,184 $ 131,353 $ 97,219 Financing Segment Operating income $ 26,052 $ 38,316 $ 30,670 Depreciation and amortization 111 111 112 Share based compensation 245 224 244 Adjusted EBITDA $ 26,408 $ 38,651 $ 31,026 (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.
The following table provides our calculations of Adjusted EBITDA (in thousands): Year Ended March 31, 2024 2023 2022 Consolidated Net earnings $ 115,776 $ 119,356 $ 105,600 Provision for income taxes 45,317 43,618 41,284 Share-based compensation 9,731 7,824 7,114 Interest and financing costs 1,428 2,897 928 Depreciation and amortization 21,025 13,709 14,646 Other (income) expense (2,836 ) 3,188 432 Adjusted EBITDA $ 190,441 $ 190,592 $ 170,004 Technology business segments Operating income $ 132,560 $ 140,110 $ 109,000 Depreciation and amortization 20,951 13,598 14,535 Share-based compensation 9,470 7,579 6,890 Interest and financing costs 1,428 2,897 928 Adjusted EBITDA $ 164,409 $ 164,184 $ 131,353 Financing business segment Operating income $ 25,697 $ 26,052 $ 38,316 Depreciation and amortization 74 111 111 Share-based compensation 261 245 224 Adjusted EBITDA $ 26,032 $ 26,408 $ 38,651 (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.
As such, they are not included in the amounts added back to net earnings in the Adjusted EBITDA calculation. In the table below, we provide a reconciliation of Adjusted EBITDA to net earnings, 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.
In the table below, we provide a reconciliation of Adjusted EBITDA to net earnings, which is the most directly comparable financial measure to this non-GAAP financial measure.
Our cash conversion cycle increased to 59 days for March 31, 2023, compared to 50 days for March 31, 2022, as DIO increased by 13 days, DPO increased by 7 days, and DSO increased by 3 days from March 31, 2022, to March 2023.
Our cash conversion cycle decreased to 46 days for March 31, 2024, compared to 59 days for March 31, 2023, as DSO decreased by 12 days, DIO decreased by 15 days, and DPO decreased by 14 days from March 31, 2023, to March 2024.
As of March 31, 2023, and March 31, 2022, we did not have any outstanding balance under the revolving credit facility. The maximum credit limit under this facility was $200.0 million as of March 31, 2023, compared to $100.0 million as of March 31, 2022.
As of March 31, 2024, and March 31, 2023, we did not have any outstanding balance under the revolving credit facility.
We recognize liabilities for uncertain income tax positions based on our estimate of whether, and the extent to which, additional taxes will be required. BUSINESS COMBINATIONS — We account for business combinations using the acquisition method. For each acquisition, we recognize most assets acquired, and liabilities assumed at their fair values at the acquisition date.
We recognize liabilities for uncertain income tax positions based on our estimate of whether, and the extent to which, additional taxes will be required.
Our weighted average interest rate for non-recourse notes payable was 5.01% and 3.59% as of March 31, 2023, and 2022, respectively. CONSOLIDATED Other income (expense), net: Other income (expense), net, for the year ended March 31, 2023, was a net expense of $3.2 million, compared to a net expense of $0.4 million in the prior year.
As of March 31, 2024, our non-recourse notes payable increased to $36.2 million from $34.3 million in the prior year. Our weighted average interest rate for non-recourse notes payable was 6.49% and 5.01% as of March 31, 2024, and 2023, respectively.
Segment Adjusted EBITDA is defined as operating income calculated in accordance with US GAAP, adjusted for interest expense, share-based compensation, acquisition and integration expenses, and depreciation and amortization. We consider the interest on notes payable from our financing segment and depreciation expense presented within cost of sales, which includes depreciation on assets financed as operating leases, to be operating expenses.
Adjusted EBITDA presented for the technology business and the financing business segment is defined as operating income calculated in accordance with US GAAP, adjusted for interest expense, share-based compensation, acquisition and integration expenses, and depreciation and amortization.
The financial review is provided as a supplement to, and should be read in conjunction with, the Consolidated Financial Statements and the related notes included elsewhere in this report.
The financial review is provided as a supplement to, and should be read in conjunction with, the Consolidated Financial Statements and the related notes included elsewhere in this report. For a discussion of results for the year ended March 31, 2023, compared to the results for the year ended March 31, 2022, see Exhibit 99.4 “Item 7.
Net earnings: Net earnings for the year ended March 31, 2023, were $119.4 million, an increase of 13.0% or $13.8 million, as compared to $105.6 million in the prior year. The net earnings increase was due primarily to the increase in operating profits from our technology segment.
Net earnings : Net earnings for the year ended March 31, 2024, were $115.8 million, a decrease of 3.0% or $3.6 million, as compared to $119.4 million in the prior fiscal year, mainly due to the decrease in operating profits from our technology business, and higher income taxes.
The following table provides a breakdown of operating cash flows by segment for the years ended March 31, 2023, and 2022 (in thousands): Year Ended March 31, 2023 2022 Technology segment $ 17,157 $ (20,243 ) Financing segment (32,582 ) (328 ) Net cash used in operating activities $ (15,425 ) $ (20,571 ) Technology Segment: During the year ended March 31, 2023, our technology segment provided $17.2 million from operating activities primarily due to net earnings and an increase in payables, partially offset by increases in accounts receivables and inventories.
See below for a breakdown of operating cash flows by business (in thousands): Year Ended March 31, 2024 2023 Technology business segments $ 248,967 $ 17,157 Financing business segment (518 ) (32,582 ) Net cash provided by (used in) operating activities $ 248,449 $ (15,425 ) Technology business: During the year ended March 31, 2024, our combined technology business segments provided $249.0 million from operating activities primarily due to net earnings and a decrease in inventory, offset by an increase in accounts receivable.
(3) Represents the rolling three-month average of the combined balance of accounts payable-trade and accounts payable-floor plan for our technology segment at the end of the period divided by the direct cost of products and services billed to our customers for the same three-month period.
(3) Represents the rolling three-month average of the combined balance of accounts payable-trade and accounts payable-floor plan for our technology business segments at the end of the period divided by the direct cost of products and services billed to our customers for the same three-month period. 39 Table of Contents Our standard payment term for customers is between 30-60 days; however, certain customers or orders may be approved for extended payment terms.
Adjusted EBITDA for the year ended March 31, 2023, was $190.6 million, an increase of $20.6 million, or 12.1%, compared to the prior year. Adjusted EBITDA margin for the year ended March 31, 2023, decreased 10 b asis points to 9.2% , as compared to the prior year period of 9.3%.
Adjusted EBITDA for the year ended March 31, 2024, was $190.4 million, a decrease of $0.2 million, or 0.1%, compared to the prior fiscal year. Adjusted EBITDA margin for the year ended March 31, 2024, decreased 60 basis points to 8.6%, as compared to the prior fiscal year period of 9.2%.
During the year ended March 31, 2022, our technology segment used $20.2 million from operating activities primarily due to increases in working capital, inventories, and accounts receivable, offset by net earnings.
During the year ended March 31, 2023, our combined technology business segments provided $17.2 million from operating activities primarily due to net earnings and an increase in payables, partially offset by increases in accounts receivables and inventories.
Our weighted average interest rate on the accounts receivable component of our WFCDF Credit Facility was 5.35% during our year ended March 31, 2023, compared to 2.00% over the prior year. 34 Table of Contents FINANCING SEGMENT The results of operations for our financing segment for the years ended March 31, 2023, and 2022 were as follows (in thousands): Year Ended March 31, Percent 2023 2022 Change Change Financial Metrics Portfolio earnings $ 11,356 $ 17,764 $ (6,408 ) (36.1 %) Transactional gains 16,125 18,181 (2,056 ) (11.3 %) Post-contract earnings 23,581 50,495 (26,914 ) (53.3 %) Other 1,411 1,543 (132 ) (8.6 %) Net sales $ 52,473 $ 87,983 $ (35,510 ) (40.4 %) Cost of sales 9,439 35,154 (25,715 ) (73.1 %) Gross profit 43,034 52,829 (9,795 ) (18.5 %) Selling, general, and administrative 15,635 13,427 2,208 16.4 % Depreciation and amortization 111 111 - 0.0 % Interest and financing costs 1,236 975 261 26.8 % Operating expenses 16,982 14,513 2,469 17.0 % Operating income $ 26,052 $ 38,316 $ (12,264 ) (32.0 %) Key Metrics & Other Information Adjusted EBITDA $ 26,408 $ 38,651 $ (12,243 ) (31.7 %) Net sales: Net sales for the year ended March 31, 2023, decreased due to lower post-contract and portfolio earnings.
Our weighted average interest rate on the accounts receivable component of our WFCDF Credit Facility was 7.07% during our year ended March 31, 2024, compared to 5.35% over the prior fiscal year. 36 Table of Contents FINANCING BUSINESS SEGMENT The results of operations for our financing business segment were as follows (in thousands): Year ended March 31, 2024 2023 Change Percent Change Financial Metrics Portfolio earnings $ 13,937 $ 11,356 $ 2,581 22.7 % Transactional gains 19,016 16,125 2,891 17.9 % Post-contract earnings 14,301 23,581 (9,280 ) (39.4 %) Other 2,162 1,411 751 53.2 % Net sales $ 49,416 $ 52,473 $ (3,057 ) (5.8 %) Gross profit 42,314 43,034 (720 ) (1.7 %) Selling, general, and administrative 14,194 15,635 (1,441 ) (9.2 %) Depreciation and amortization 74 111 (37 ) (33.3 %) Interest and financing costs 2,349 1,236 1,113 90.0 % Operating expenses 16,617 16,982 (365 ) (2.1 %) Operating income $ 25,697 $ 26,052 $ (355 ) (1.4 %) Key Metrics & Other Information Adjusted EBITDA $ 26,032 $ 26,408 $ (376 ) (1.4 %) Net sales : Net sales for the year ended March 31, 2024, decreased due to lower post-contract earnings offset by higher portfolio earnings and transactional gains.
The market approach estimates fair value by applying performance metric multiples to the reporting unit’s prior and expected operating performance.
The market approach estimates fair value by applying performance metric multiples to the reporting unit’s prior and expected operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit.
During the year ended March 31, 2022, we used $1.3 million from investing activities, consisting of $23.2 million for purchases of property, equipment, and operating lease equipment, partially offset by $21.9 million of proceeds from the sale of property, equipment, and operating lease equipment.
Cash flows related to investing activities During the year ended March 31, 2024, we used $62.0 million in investing activities, consisting of $54.2 million to acquire businesses and $8.5 million for purchases of property, equipment, and operating lease equipment, partially offset by $0.7 million of proceeds from the sale of property, equipment, and operating lease equipment.
We 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 within our Technology segment as well as to understand changes in our accounts receivable.
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.
Our service engagements are generally governed by statements of work and are primarily fixed price (with allowance for changes); however, some service agreements are based on time and materials.
Our service engagements are generally governed by statements of work and are primarily fixed price (with allowance for changes); however, some service agreements are based on time and materials. 33 Table of Contents We endeavor to minimize the cost of sales in our product segment through incentive programs provided by vendors and distributors.
Many of these programs extend over one or more quarters’ sales activities. Different programs have different vendor/program specific goals to achieve.
VENDOR CONSIDERATION — We receive payments and credits from vendors and distributors, including consideration pursuant to volume incentive programs, and shared marketing expense programs. Many of these programs extend over one or more quarters’ sales activities. Different programs have different vendor/program specific goals to achieve.
Also contributing to the increase in gross margin on product sales was higher vendor incentives which as a percentage of net sales for the year ended March 31, 2023, increased by 10 basis points.
Vendor incentives earned as a percentage of sales for the year ended March 31, 2024 decreased by 10 basis points, which has a negative effect on gross margin, as compared to the prior year.
Our solutions incorporate hardware and software products from multiple leading IT vendors. As our customers’ IT requirements have grown increasingly complex, we have evolved our offerings by investing in our professional and managed services capabilities and by expanding our relationships with existing and emerging key vendors.
As our customers’ IT requirements have grown increasingly complex, we have evolved our offerings by investing in our professional and managed services capabilities and by expanding our relationships with existing and emerging key vendors. We are an authorized reseller of over 1,800 vendors, which have enabled us to provide our customers with new and evolving IT solutions.
Set forth in footnotes (1) and (2) of the tables that immediately follow this paragraph, we set forth our reasons for using and presenting Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share-diluted in the tables and discussion that follow. 27 Table of Contents The following table provides our key business metrics (in thousands, except per share amounts): Year Ended March 31, Consolidated 2023 2022 2021 Financial Metrics Net sales $ 2,067,718 $ 1,821,019 $ 1,568,323 Gross profit $ 517,524 $ 460,982 $ 393,554 Gross margin 25.0 % 25.3 % 25.1 % Operating income margin 8.0 % 8.1 % 6.8 % Net earnings $ 119,356 $ 105,600 $ 74,397 Net earnings margin 5.8 % 5.8 % 4.7 % Net earnings per common share - diluted $ 4.48 $ 3.93 $ 2.77 Non-GAAP Financial Metrics Non-GAAP: Net earnings (1) $ 133,931 $ 117,964 $ 85,567 Non-GAAP: Net earnings per common share - diluted (1) $ 5.02 $ 4.39 $ 3.19 Adjusted EBITDA (2) $ 190,592 $ 170,004 $ 128,245 Adjusted EBITDA margin 9.2 % 9.3 % 8.2 % Technology Segment Financial Metrics Net sales $ 2,015,245 $ 1,733,036 $ 1,507,954 Gross profit $ 474,490 $ 408,153 $ 346,235 Gross margin 23.5 % 23.6 % 23.0 % Operating income $ 140,110 $ 109,000 $ 75,665 Non-GAAP Financial Metric Adjusted EBITDA (2) $ 164,184 $ 131,353 $ 97,219 Operational Metric Gross billings (3) Data Center / Cloud $ 892,308 $ 828,002 $ 723,971 Networking 927,319 709,687 590,690 Security 639,416 476,339 418,499 Collaboration 127,027 131,941 91,833 Other 282,748 240,586 236,707 Product gross billings 2,868,818 2,386,555 2,061,700 Service billings 277,070 239,194 210,136 Total gross billings $ 3,145,888 $ 2,625,749 $ 2,271,836 Financing Segment Financial Metrics Net sales $ 52,473 $ 87,983 $ 60,369 Gross profit $ 43,034 $ 52,829 $ 47,319 Operating income $ 26,052 $ 38,316 $ 30,670 Non-GAAP Financial Metric Adjusted EBITDA (2) $ 26,408 $ 38,651 $ 31,026 (1) Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted are based on net earnings calculated in accordance with US GAAP, adjusted to exclude other income (expense), share-based compensation, and acquisition and integration expenses, and the related tax effects.
The following tables provide our key business metrics for our consolidated entity, our technology business- consisting of our product, professional services, and managed services segments- and our financing business segment (in thousands, except per share amounts): Year Ended March 31, 2024 2023 2022 Consolidated Financial Metrics Net sales $ 2,225,302 $ 2,067,718 $ 1,821,019 Gross profit $ 550,793 $ 517,524 $ 460,982 Gross margin 24.8 % 25.0 % 25.3 % Operating income margin 7.1 % 8.0 % 8.1 % Net earnings $ 115,776 $ 119,356 $ 105,600 Net earnings margin 5.2 % 5.8 % 5.8 % Net earnings per common share - diluted $ 4.33 $ 4.48 $ 3.93 Non-GAAP Financial Metrics Non-GAAP: Net earnings (1) $ 131,327 $ 133,931 $ 117,964 Non-GAAP: Net earnings per common share - diluted (1) $ 4.92 $ 5.02 $ 4.39 Adjusted EBITDA (2) $ 190,441 $ 190,592 $ 170,004 Adjusted EBITDA margin (2) 8.6 % 9.2 % 9.3 % Technology business segments Financial Metrics Net sales Product $ 1,883,809 $ 1,750,802 $ 1,492,411 Professional services 154,549 151,785 146,747 Managed services 137,528 112,658 93,878 Total $ 2,175,886 $ 2,015,245 $ 1,733,036 Gross profit Product $ 397,618 $ 380,741 $ 316,622 Professional services 68,194 61,594 63,384 Managed services 42,667 32,155 28,147 Total $ 508,479 $ 474,490 $ 408,153 Gross margin Product 21.1 % 21.7 % 21.2 % Professional services 44.1 % 40.6 % 43.2 % Managed services 31.0 % 28.5 % 30.0 % Total 23.4 % 23.5 % 23.6 % Operating income $ 132,560 $ 140,110 $ 109,000 Non-GAAP Financial Metric Adjusted EBITDA (2) $ 164,409 $ 164,184 $ 131,353 Operational Metrics Gross billings (3) Networking $ 1,172,274 $ 927,319 $ 709,687 Cloud 824,128 892,308 828,002 Security 625,392 639,416 476,339 Collaboration 120,960 127,027 131,941 Other 262,439 282,748 240,586 Product gross billings 3,005,193 2,868,818 2,386,555 Service billings 324,571 277,070 239,194 Total gross billings $ 3,329,764 $ 3,145,888 $ 2,625,749 Financing business segment Financial Metrics Net sales $ 49,416 $ 52,473 $ 87,983 Gross profit $ 42,314 $ 43,034 $ 52,829 Operating income $ 25,697 $ 26,052 $ 38,316 Non-GAAP Financial Metric Adjusted EBITDA (2) $ 26,032 $ 26,408 $ 38,651 (1) Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted are based on net earnings calculated in accordance with US GAAP, adjusted to exclude other (income) expense, share-based compensation, and acquisition and integration expenses, and the related tax effects. 30 Table of Contents We use Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted as supplemental measures of our performance to gain insight into our operating performance and performance trends.
Please refer to Note 9 , “Notes Payable and Credit Facility” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information concerning our WFCDF Credit Facility. 42 Table of Contents The loss of the WFCDF Credit Facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology segment and as an operational function of our accounts payable process.
The loss of the WFCDF Credit Facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology business segments and as an operational function of our accounts payable process.
The technology segment also provides internet-based business-to-business supply chain management solutions for information technology products. Customers who purchase IT equipment and services from us may have a customer master agreement (“CMA”) with our company, which stipulates the terms and conditions of the relationship. Some CMAs contain pricing arrangements, and most contain mutual voluntary termination clauses.
Customers of our technology business may have a customer master agreement (“CMA”) with our company, which stipulates the terms and conditions of the commercial relationship. Some CMAs contain pricing arrangements, and most contain mutual voluntary termination clauses. Our other customers place orders using purchase orders without a CMA in place or with other documentation customary for the business.
PERFORMANCE GUARANTEES In the normal course of business, we may provide certain customers with performance guarantees, which are generally backed by surety bonds. In general, we would only be liable for these guarantees in the event of default in the performance of our obligations.
In general, we would only be liable for these guarantees in the event of default in the performance of our obligations.
CASH FLOWS The following table summarizes our sources and uses of cash for the years ended March 31, 2023, and 2022 (in thousands): Year Ended March 31, 2023 2022 Net cash used in operating activities $ (15,425 ) $ (20,571 ) Net cash used in investing activities (18,926 ) (1,259 ) Net cash provided by (used in) financing activities (20,950 ) 47,176 Effect of exchange rate changes on cash 3,016 470 Net increase in cash and cash equivalents $ (52,285 ) $ 25,816 40 Table of Contents Cash flows from operating activities We used $15.4 million in operating activities during the year ended March 31, 2023, compared to using $20.6 million during the year ended March 31, 2022.
While at this time we do not anticipate requiring any additional sources of financing to fund operations, if demand for IT products declines, or if our supply of products is delayed or interrupted, our cash flows from operations may be substantially affected. 38 Table of Contents CASH FLOWS The following table summarizes our sources and uses of cash for the years ended March 31, 2024, and 2023 (in thousands): Year Ended March 31, 2024 2023 Net cash provided by (used in) operating activities $ 248,449 $ (15,425 ) Net cash used in investing activities (61,964 ) (18,926 ) Net cash used in financing activities (36,619 ) (20,950 ) Effect of exchange rate changes on cash 62 3,016 Net increase (decrease) in cash and cash equivalents $ 149,928 $ (52,285 ) Cash flows from operating activities We provided $248.4 million from operating activities during the year ended March 31, 2024, compared to using $15.4 million during the year ended March 31, 2023.
Cost of sales: Cost of sales for the year ended March 31, 2023, increased due to the increase in demand for both product and services.
Gross profit : Gross profit of the combined technology business segments for the year ended March 31, 2024 , increased compared to the year ended March 31, 2023, due to the increase in product, professional service, and managed service sales.
FINANCIAL SUMMARY Net sales : Net sales for the year ended March 31, 2023, increased 13.5% to $2,067.7 million, or an increase of $246.7 million compared to $1,821.0 million in the prior fiscal year. The increase in net sales was driven by higher revenues from our technology segment, offset by lower revenues from our financing segment.
FINANCIAL SUMMARY Net sales : Net sales for the year ended March 31, 2024, increased 7.6% to $2,225.3 million, or an increase of $157.6 million compared to $2,067.7 million in the prior fiscal year.
Gross profit: Consolidated gross profit for the year ended March 31, 2023, increased 12.3%, to $517.5 million, compared to $461.0 million in the prior fiscal year due to increased net sales volume. Overall, gross margins were consistent year over year as higher product margins were offset by lower service margins.
Gross profit : Consolidated gross profit for the year ended March 31, 2024, increased 6.4%, to $550.8 million, compared to $517.5 million in the prior fiscal year due to increased net sales volume.
Non-GAAP: Net earnings per common share diluted for the year ended March 31, 2023, increased $0.63, or 14.4%, to $5.02 per share, as compared to $4.39 per share in the prior year. SEGMENT OVERVIEW Our operations are conducted through two segments: technology and financing.
Non-GAAP: Net earnings per common share diluted for the year ended March 31, 2024, decreased $0.10, or 2.0%, to $4.92 per share, as compared to $5.02 per share for the year ended March 31, 2023.
Our other customers place orders using purchase orders without a CMA in place or with other documentation customary for the business. Often, our work with state and local governments is based on public bids and our written bid responses.
Often, our work with state and local governments is based on public bids and our written bid responses.
These authorization levels are achieved by us through purchase volume, certifications held by sales executives or engineers and/or contractual commitments by us.
These authorization levels are achieved by us through purchase volume, certifications held by sales executives or engineers and/or contractual commitments by us. The authorization levels are costly to maintain, and these programs continually change; therefore, there is no guarantee of future reductions of costs provided by these vendor consideration programs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−1 removed1 unchanged
Biggest changeFOREIGN CURRENCY RISK We have transactions in foreign currencies, primarily in British Pounds, Euros, and Indian Rupees. There is a potential for exposure to fluctuations in foreign currency rates resulting primarily from the translation exposure associated with the preparation of our consolidated financial statements.
Biggest changeThere is a potential for exposure to fluctuations in foreign currency rates resulting primarily from the translation exposure associated with the preparation of our consolidated financial statements. In addition, we have foreign currency exposure when transactions are not denominated in our subsidiary’s functional currency.
Our financing transactions are funded with our cash flows, not debt, and may be subject to interest rate risk. If the market interest rate exceeds our internal rate of return, we may not fund the transaction to obtain the proceeds. Borrowings under the WFCDF Credit Facility bear interest at a market-based variable rate.
Certain financing transactions are funded with our cash flows, not debt, and may be subject to interest rate risk. If the market interest rate exceeds our internal rate of return, we may not fund the transaction to obtain the proceeds.
As our foreign operations have been smaller compared to our domestic operations, we believe that potential fluctuations in currency exchange rates will not have a material effect on our financial position.
As a lessor, we lease assets for amounts denominated in British Pounds, Euros, and Canadian dollars. As our foreign operations have been smaller compared to our domestic operations, we believe that potential fluctuations in currency exchange rates will not have a material effect on our financial position.
In addition, we have foreign currency exposure when transactions are not denominated in our subsidiary’s functional currency. To date, our foreign operations are insignificant in relation to total consolidated operations, and we believe that potential fluctuations in currency exchange rates will not have a material effect on our financial position.
To date, our foreign operations are insignificant in relation to total consolidated operations, and we believe that potential fluctuations in currency exchange rates will not have a material effect on our financial position. We lease assets in foreign countries, including Canada, the UK, and several other European countries.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our financial position is exposed to a variety of risks, including interest rate risks and foreign currency.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our financial position is exposed to a variety of risks, including interest rate risks and foreign currency. Additionally, we have seen an increase in these risks and related uncertainties with increased volatility in the financial markets and inflation.
Additionally, we have seen an increase in these risks and related uncertainties with increased volatility in the financial markets in the current environment with supply chain shortages. 46 Table of Contents INTEREST RATE RISK Although a substantial portion of our liabilities are non-recourse, fixed-interest-rate instruments, we utilize our lines of credit and other financing facilities which are subject to fluctuations in short-term interest rates.
INTEREST RATE RISK Although a substantial portion of our liabilities are non-recourse, fixed-interest-rate instruments, we utilize our lines of credit and other financing facilities which are subject to fluctuations in short-term interest rates.
Removed
We lease assets in foreign countries, including Canada, the UK, and several other European countries. As a lessor, we lease assets for amounts denominated in British Pounds, Euros, and Canadian dollars.
Added
Borrowings under the WFCDF Credit Facility bear interest at a market-based variable rate. 45 Table of Contents FOREIGN CURRENCY RISK We have transactions in foreign currencies, primarily in British Pounds, Euros, and Indian Rupees.

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