EPLUS INC

Previous wording

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 consulting, professional, and managed services, has enabled us to remain a trusted advisor for our customers. With the addition of Bailiwick, we can support large scale multi-site retailers with professional and managed services relating todigital signage, EV charging solutions, loss prevention and security, store openings, and store closings. In addition, we offer a wide range of consumption options including leasing and financing for technology and other capital assets. We believe our lifecycle approach offering of integrated solutions, services and financing, asset management and our proprietary supply chain software, is unique in the industry. This broad portfolio enables us to deliver a customized customer experience that spans the continuum from fast delivery of competitively priced products and services to subsequent management and maintenance, and through to end-of-life disposal services. This approach permits us to deploy sophisticated solutions to enable our customers’ business outcomes.

Current wording

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 consulting, professional, and managed services, has enabled us to remain a trusted advisor for our customers. With the addition of Bailiwick, we can support large scale multi-site retailers with professional and managed services relating to digital signage, EV charging solutions, loss prevention and security, store openings, and store closings. In addition, we offer a wide range of consumption options including leasing and financing for technology and other capital assets. We believe our lifecycle approach offering of integrated solutions, services and financing, asset management and our proprietary supply chain software, is unique in the industry. This broad portfolio enables us to deliver a customized customer experience that spans the continuum from fast delivery of competitively priced products and services to subsequent management and maintenance, and through to end-of-life disposal services. This approach permits us to deploy sophisticated solutions to enable our customers’ business outcomes.

Previous wording

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, retail, and financial services. We sell to customers in the United States (“US”), which account for most of our sales, and to customers in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, and Singapore. Our technology business segments accounted for 97% of our net sales and 77% of our operating income, while our financing business segment accounted for 3% of our net sales and 23% of our operating income, for the six months ended September 30, 2024.

Current wording

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, retail, and financial services. We sell to customers in the United States (“US”), which account for most of our sales, and to customers in select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, and Singapore. Our technology business segments accounted for 97% of our net sales and 71% of our operating income, while our financing business segment accounted for 3% of our net sales and 29% of our operating income, for the nine months ended December 31, 2024.

Previous wording

We also use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve annual budgets. We use gross billings as an operational metric to assess the volume of transactions or market share for our technology business segments—product, professional services, and managed services—as well as to understand changes in our accounts receivable and accounts payable balances and our statement of cash flows. We believe gross billings will aid investors in the same manner.

Current wording

We also use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve annual budgets. We use gross billings as an operational metric to assess the volume of transactions or market share for our technology business segments—product, professional services, and managed services—as well as to understand changes in our accounts receivable and accounts payable balances and our statement of cash flows. We believe our gross billings metrics will aid investors in the same manner to evaluate our business.

Previous wording

Set forth in footnotes (1) and (2) of the tables that immediately follow the next 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.

Current wording

In footnotes (1) and (2) of the tables that immediately follow the next paragraph are our reasons for using and presenting Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share-diluted.

Previous wording

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. We believe that the exclusion of other income and acquisition-related amortization expense in calculating Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provide useful information to investors and others in understanding and evaluating our operating results. However, our use of non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate similar Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted or similarly titled measures differently, which may reduce their usefulness as comparative measures. Our acquisition related expenses for the three and six months ended September 30, 2024 are related to our acquisition of Bailiwick.

Current wording

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. We believe that the exclusion of other income and acquisition-related amortization expense in calculating Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted provide useful information to investors and others in understanding and evaluating our operating results. However, our use of non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate similar Non-GAAP: Net earnings and Non-GAAP: Net earnings per common share – diluted or similarly titled measures differently, which may reduce their usefulness as comparative measures. Our acquisition related expenses for the three and nine months ended December 31, 2024 are related to our acquisition of Bailiwick.

Previous wording

Net sales: Net sales for the three months ended September 30, 2024, decreased 12.3% to $515.2 million, or a decrease of $72.4 million compared to $587.6 million in the same three-month period in the prior year. The decrease in net sales was driven by lower product revenues offset by higher managed services and professional services revenue from our technology business segments, and higher revenues from our financing business segment. For additional information, see the “Segment Results of Operations” below.

Current wording

Net sales: Net sales for the three months ended December 31, 2024, increased 0.4%, to $511.0 million, or an increase of $1.9 million compared to $509.1 million in the same three-month period in the prior year. The increase in net sales was driven by higher service revenues from our technology business segments and higher revenue from our financing business segment, offset by lower product revenue in our technology business segments. For additional information, see the “Segment Results of Operations” below.

Previous wording

Net sales for the six months ended September 30, 2024, decreased 8.8% to $1,059.7 million, or a decrease of $102.1 million compared to $1,161.8 million in the same six-month period in the prior year. The decrease in net sales was driven by lower product revenues offset by higher managed services and professional services revenue from our technology business segments, and higher revenues from our financing business segment. For additional information, see the “Segment Results of Operations” below.

Current wording

Net sales for the nine months ended December 31, 2024, decreased 6.0%, to $1,570.7 million, or a decrease of $100.1 million compared to $1,670.8 million in the same nine-month period in the prior year. The decrease in net sales was driven by lower product revenues offset by higher managed services and professional services revenue from our technology business segments, and higher revenues from our financing business segment. For additional information, see the “Segment Results of Operations” below.

Previous wording

Gross profit: Gross profit for the three months ended September 30, 2024, increased 2.5%, to $148.0 million, compared to $144.4 million in the same three-month period in the prior year as increases in professional and managed services were offset by declines in product sales. Overall, gross margins were up by 410 basis points to 28.7%, primarily due to a shift in product mix towards sales of third-party maintenance and subscriptions.

Current wording

Gross profit: Gross profit for the three months ended December 31, 2024, increased 5.3%, to $140.9 million, compared to $133.8 million in the same three-month period in the prior year as increases in professional and managed services were partially offset by declines in product sales. Overall, gross margins were up by 130 basis points to 27.6%, primarily due to higher product margins led by a shift in product mix towards sales of third-party maintenance and subscriptions that are recognized on a net basis, partially offset by lower services margins.

Previous wording

Gross profit for the six months ended September 30, 2024, decreased 1.4%, to $282.5 million, compared to $286.6 million in the same six-month period in the prior year as declines from product sales were partially offset by increases in professional and managed services. Overall, gross margins were up by 200 basis points to 26.7% due to higher product margin, offset slightly by lower managed service margin.

Current wording

Gross profit for the nine months ended December 31, 2024, increased 0.7%, to $423.4 million, compared to $420.4 million in the same nine-month period in the prior year as increases in professional and managed services were partially offset by declines in product sales. Overall, gross margins were up by 180 basis points to 27.0% primarily due to higher product margins led by a shift in product mix towards sales of third-party maintenance and subscriptions that are recognized on a net basis, partially offset by lower service margins.

Previous wording

Operating expenses: Operating expenses for the three months ended September 30, 2024, increased $5.8 million, or 5.8%, to $105.3 million, as compared to $99.5 million for the same three-month period in the prior year. Our increase in operating expenses was primarily due to an increase in salaries and benefits, acquisition related expenses and provision for credit losses, offset by a decrease in interest and financing costs. As of September 30, 2024, we had 2,323 employees, an increase of 23.8% from 1,877 as of September 30, 2023. For additional information, see the “Segment Results of Operations” below.

Current wording

Operating expenses: Operating expenses for the three months ended December 31, 2024, increased $16.6 million, or 17.3%, to $112.4 million, as compared to $95.8 million for the same three-month period in the prior year. Our increase in operating expenses was primarily due to an increase in salaries and benefits, general and administrative expenses, depreciation and amortization expenses, and provision for credit losses, offset by a slight decrease in interest and financing costs. Our increases in these categories for the three-month period December 31, 2024, compared to the same period in the prior year, were partially due to our acquisition of Bailiwick in August 2024. As of December 31, 2024, we had 2,291 employees, an increase of 20.8% from 1,897 as of December 31, 2023, largely due to our acquisition of Bailiwick in August 2024. For additional information, see the “Segment Results of Operations” below.

Previous wording

Operating expenses for the six months ended September 30, 2024, increased $8.8 million, or 4.5%, to $204.3 million, as compared to $195.4 million for the same six-month period in the prior year. Our increase in operating expenses was primarily due to an increase in salaries and benefits, acquisition related expenses and share-based compensation, offset by a decrease in interest and financing costs. For additional information, see the “Segment Results of Operations” below.

Current wording

Operating expenses for the nine months ended December 31, 2024, increased $25.5 million, or 8.7%, to $316.7 million, as compared to $291.2 million for the same nine-month period in the prior year. Our increase in operating expenses was primarily due to an increase in salaries and benefits, general and administrative expenses, acquisition related expenses, depreciation and amortization expenses, and share-based compensation, partially offset by a decrease in interest and financing costs. Our increases in these categories for the nine-month period ended December 31, 2024, compared to the same period in the prior year, were partially due to our acquisition of Bailiwick in August 2024. For additional information, see the “Segment Results of Operations” below.

Previous wording

Operating income: As a result of the foregoing, operating income for the three months ended September 30, 2024, decreased $2.2 million, or 4.9%, to $42.7 million, as compared to $44.9 million for the same three-month period in the prior year, and operating income margin increased by 70 basis points to 8.3%.

Current wording

Operating income: As a result of the foregoing, operating income for the three months ended December 31, 2024, decreased $9.5 million, or 25.1%, to $28.5 million, as compared to $38.0 million for the same three-month period in the prior year, and operating income margin decreased by 190 basis points to 5.6%.

Previous wording

As a result of the foregoing, operating income for the six months ended September 30, 2024, decreased $13.0 million, or 14.3%, to $78.2 million, as compared to $91.2 million for the same six-month period in the prior year, and operating income margin decreased by 40 basis points to 7.4%.

Current wording

As a result of the foregoing, operating income for the nine months ended December 31, 2024, decreased $22.5 million, or 17.4%, to $106.7 million, as compared to $129.2 million for the same nine-month period in the prior year, and operating income margin decreased by 90 basis points to 6.8%.

Previous wording

Adjusted EBITDA for the three months ended September 30, 2024, was $52.1 million, a decrease of $1.5 million, or 2.8%, compared to $53.6 million for the same three-month period in the prior year. Adjusted EBITDA margin for the three months ended September 30, 2024, increased 100 basis points to 10.1%, as compared to 9.1% for the three months ended September 30, 2023. The increase in Adjusted EBITDA margin was due to an increase in gross profit offset by an increase in operating expenses.

Current wording

Adjusted EBITDA for the three months ended December 31, 2024, was $39.1 million, a decrease of $7.1 million, or 15.2%, compared to $46.2 million for the same three-month period in the prior year. Adjusted EBITDA margin for the three months ended December 31, 2024, decreased 140 basis points to 7.7%, as compared to 9.1% for the three months ended December 31, 2023. The decrease in Adjusted EBITDA margin was due to an increase in operating expenses, offset by an increase in gross profit.

Previous wording

Adjusted EBITDA for the six months ended September 30, 2024, was $95.3 million, a decrease of $12.1 million, or 11.3%, compared to $107.4 million for the same six-month period in the prior year. Adjusted EBITDA margin for the six months ended September 30, 2024, decreased 20 basis points to 9.0%, as compared to the six months ended September 30, 2023, of 9.2%. The decrease in Adjusted EBITDA margin was due to a decrease in gross profit and an increase in operating expenses.

Current wording

Adjusted EBITDA for the nine months ended December 31, 2024, was $134.4 million, a decrease of $19.2 million, or 12.5%, compared to $153.6 million for the same nine-month period in the prior year. Adjusted EBITDA margin for the nine months ended December 31, 2024, decreased 60 basis points to 8.6%, as compared to the nine months ended December 31, 2023, of 9.2%. The decrease in Adjusted EBITDA margin was due to an increase in operating expenses, offset by an increase in gross profit.

Previous wording

Net earnings per common share—diluted for the three months ended September 30, 2024, decreased $0.05, or 4.1%, to $1.17 per share, as compared to $1.22 per share in the same three-month period in the prior year. Non-GAAP: Net earnings per common share—diluted for the three months ended September 30, 2024, decreased $0.04, or 2.9%, to $1.36 per share, as compared to $1.40 per share for the three months ended September 30, 2023.

Current wording

Net earnings per common share—diluted for the three months ended December 31, 2024, decreased $0.11, or 10.8%, to $0.91 per share, as compared to $1.02 per share in the same three-month period in the prior year. Non-GAAP: Net earnings per common share—diluted for the three months ended December 31, 2024, decreased $0.12, or 10.2%, to $1.06 per share, as compared to $1.18 per share for the three months ended December 31, 2023.

Previous wording

Net earnings per common share—diluted for the six months ended September 30, 2024, decreased $0.30, or 12.0%, to $2.19 per share, as compared to $2.49 per share in the same six-month period in the prior year. Non-GAAP: Net earnings per common share—diluted for the six months ended September 30, 2024, decreased $0.31, or 11.0%, to $2.50 per share, as compared to $2.81 per share for the six months ended September 30, 2023.

Current wording

Net earnings per common share—diluted for the nine months ended December 31, 2024, decreased $0.42, or 11.9%, to $3.10 per share, as compared to $3.52 per share in the same nine-month period in the prior year. Non-GAAP: Net earnings per common share—diluted for the nine months ended December 31, 2024, decreased $0.43, or 10.8%, to $3.56 per share, as compared to $3.99 per share for the nine months ended December 31, 2023.

Previous wording

We manage the technology business segments based on gross profit and the operating expenses associated with these segments in total as our technology business.

Current wording

We manage each technology business segment based on gross profit and manage the operating expenses associated with these segments in the aggregate as our technology business.

Previous wording

We endeavor to minimize the cost of sales in our product segment through incentive programs provided by vendors and distributors. 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. 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.

Current wording

We endeavor to minimize the cost of sales in our product segment through incentive programs provided by vendors and distributors. 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. 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 cost of sales provided by these vendor consideration programs.

Previous wording

Our financing business segment offers financing solutions to corporations, government contractors, and SLED institutions in the US, which accounts for most of our transactions, and to corporations in select international markets including Canada, the UK, and the EU. Our financing business segment leases IT equipment, medical equipment, and other equipment, and sells the off-lease equipment at the end of the lease. Additionally, our financing business segment finances purchases of third-party software licenses, software assurance, maintenance, and other services.

Current wording

Our financing business segment offers financing solutions to corporations, government contractors in arrangements where the federal government is the end user, and SLED institutions in the US, which accounts for most of our transactions, and to corporations in select international markets including Canada, the UK, and the EU. Our financing business segment leases IT equipment, medical equipment, and other equipment, and sells the off-lease equipment at the end of the lease. Additionally, our financing business segment finances purchases of third-party software licenses, software assurance, maintenance, and other services.

Previous wording

Our operating results may fluctuate due to customer demand for our products and services, supplier costs, product availability, changes in vendor incentive programs, interest rate fluctuations, currency fluctuations, the timing of sales of financial assets, general economic conditions, and differences between estimated residual values and actual amounts realized for leased equipment. We 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.

Current wording

Our operating results may fluctuate due to customer demand for our products and services, competitive customer pricing, supplier costs (including tariffs), product availability, changes in vendor incentive programs, interest rate fluctuations, currency fluctuations, the timing of sales of financial assets, general economic conditions, and differences between estimated residual values and actual amounts realized for leased equipment. We 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.

Previous wording

Net sales: Net sales of the combined technology business segments for the three months ended September 30, 2024, decreased compared to the three months ended September 30, 2023, driven by decreased demand for products from customers in telecom, media, and entertainment, technology, and financial services industries, offset by increased demand from customers in the SLED and healthcare industries.

Current wording

Net sales: Net sales of the combined technology business segments for the three months ended December 31, 2024, decreased compared to the three months ended December 31, 2023, driven by decreased net sales to customers in telecom, media, and entertainment, and technology industries, partially offset by increased net sales to customers in SLED, healthcare, and financial service industries.

Previous wording

Net sales of the combined technology business segments for the six months ended September 30, 2024, decreased compared to the six months ended September 30, 2023, driven by decreased demand for products from customers in telecom, media, and entertainment, technology, SLED, healthcare, and financial service industries.

Current wording

Net sales of the combined technology business segments for the nine months ended December 31, 2024, decreased compared to the nine months ended December 31, 2023, driven by decreased net sales to customers in telecom, media, and entertainment, technology, SLED, healthcare, and financial service industries.

Previous wording

Product segment sales for the three and six months ended September 30, 2024, decreased compared to the same three- and six-month period in the prior year, due to lower sales of networking equipment, cloud, collaboration, and security products. These changes were driven by the timing of purchases by existing customers, which are determined by their buying cycles, and the timing of specific IT related initiatives.

Current wording

Product segment sales for the three and nine months ended December 31, 2024, decreased compared to the same three- and nine-month periods in the prior year, due to lower sales of networking equipment, cloud, collaboration, and security products. Our decrease in net sales for the three months ended December 31, 2024, compared to the same period in the prior year, was due to a shift in product mix towards sales of third-party maintenance and subscriptions that are recognized on a net basis, partially offset by higher demand. Our decrease in net sales for the nine months ended December 31, 2024, compared to the same period in the prior year, was due to decreases in demand and ashift in product mix towards sales of third-party maintenance and subscriptions that are recognized on a net basis. These changes were driven by the timing of purchases by existing customers, which are determined by their buying cycles, and the timing of specific IT-related initiatives.

Previous wording

Professional services segment sales for the three and six months ended September 30, 2024, increased compared to the same three- and six-month period in the prior year, primarily due to increases in revenues from the acquisition of Bailiwick.

Current wording

Professional services segment sales for the three and nine months ended December 31, 2024, increased compared to the same three- and nine-month periods in the prior year, primarily due to increases in revenues from the acquisition of Bailiwick.

Previous wording

Managed services segment sales for the three months ended September 30, 2024, increased compared to the same three-month period in the prior year, due to ongoing expansion of these service offerings primarily related to ongoing growth in enhanced maintenance support, and cloud services.

Current wording

Managed services segment sales for the three and nine months ended December 31, 2024, increased compared to the same three- and nine-month periods in the prior year, due to ongoing expansion of these service offerings, primarily related to ongoing growth in enhanced maintenance support, cloud services, and service desk services.

Previous wording

Gross profit of the combined technology business segments for the six months ended September 30, 2024, decreased compared to the six months ended September 30, 2023, due to a decrease in product sales, offset by an increase in professional and managed services. Gross margin increased by 130 basis points to 24.7% due to higher product margin, offset by lower managed service margin.

Current wording

Gross profit of the combined technology business segments for the nine months ended December 31, 2024, decreased compared to the nine months ended December 31, 2023, due to a decrease in product sales, partially offset by an increase in professional and managed services sales. Gross margin increased for this period by 120 basis points to 24.9% due to higher product margins, partially offset by lower managed services and professional services margin.

Previous wording

Product segment margin for the three months ended September 30, 2024, increased by 200 basis points from the same three-month period in the prior year due to a shift in product mix resulting in a higher proportion of sales of third party maintenance and subscriptions which are recorded on a net basis.

Current wording

Product segment margin for the three and nine months ended December 31, 2024, increased by 20 and 50 basis points, respectively, compared to the same three- and nine-month period in the prior year due to a shift in product mix resulting in a higher proportion of sales of third-party maintenance and subscriptions which are recorded on a net basis partially offset by lower margins to certain enterprise customers.

Previous wording

Managed services segment margin for the three and six months ended September 30, 2024, decreased by 160 and 50 basis points, respectively, from the same three- and six-month period in the prior year due to higher third party costs incurred for cloud services.

Current wording

Managed services segment margin for the three and nine months ended December 31, 2024, decreased by 200 and 100 basis points, respectively, from the same three- and nine-month period in the prior year due to higher third-party costs incurred for cloud services.

Previous wording

Selling, general, and administrative: Selling, general, and administrative expenses for the three and six months ended September 30, 2024, for the technology business increased compared to the three and six months ended September 30, 2023, mainly due to increases in salaries and benefits.

Current wording

Selling, general, and administrative: Selling, general, and administrative expenses for the technology business for the three and nine months ended December 31, 2024, increased compared to the three and nine months ended December 31, 2023, mainly due to increases in salaries and benefits.

Previous wording

Salaries and benefits for the three months ended September 30, 2024, increased $4.3 million, or 5.8% to $78.3 million, as compared to $74.0 million for the same three-month period in the prior year, due to an increase of $5.1 million in salaries and benefits, mainly driven by increased headcount, offset by a decrease of $0.8 million in variable compensation. Our technology business had an aggregate of 2,289 employees as of September 30, 2024, an increase of 447 from 1,842 employees as of September 30, 2023. We added 441 employees from our acquisition of Bailiwick. In total, we added 329 additional customer-facing employees in the technology business for the three months ended September 30, 2024, compared to the same three-month period in the prior year, of which 291 were professional services and technical support personnel.

Current wording

Salaries and benefits for the three months ended December 31, 2024, increased $9.6 million, or 13.0%, to $83.5 million, as compared to $73.9 million for the same three-month period in the prior year, due to an increase of $8.2 million in salaries and benefits, mainly driven by increased headcount, and an increase of $1.0 million in variable compensation due to the increase in gross profit. Our technology business had an aggregate of 2,258 employees as of December 31, 2024, an increase of 395 from 1,863 employees as of December 31, 2023. We added 441 employees from our acquisition of Bailiwick. In total, we added 356 additional customer-facing employees in the technology business for the three months ended December 31, 2024, compared to the same three-month period in the prior year, of which 330 were professional services and technical support personnel.

Previous wording

Salaries and benefits for the six months ended September 30, 2024, increased $7.8 million, or 5.3% to $155.9 million, as compared to $148.1 million for the same six-month period in the prior year, due to an increase of $8.6 million in salaries and benefits, mainly driven by increased headcount, and an increase of $0.8 million in share-based compensation, offset by a decrease of $1.6 million in variable compensation because of the decrease in gross profit.

Current wording

Salaries and benefits for the nine months ended December 31, 2024, increased $17.5 million, or 7.9%, to $239.4 million, as compared to $221.9 million for the same nine-month period in the prior year, due to an increase of $16.8 million in salaries and benefits, mainly driven by increased headcount, and an increase of $1.2 million in share-based compensation, partially offset by a decrease of $0.6 million in variable compensation because of the decrease in gross profit.

Previous wording

Provision for credit losses for our technology business for the three months ended September 30, 2024, was an expense of $0.2 million, as compared to a benefit of $0.1 million for the same three-month period in the prior year. Our higher provision for credit losses for the three months ended September 30, 2024, was due to changes in our net credit exposure.

Current wording

Provision for credit losses for our technology business for the three months ended December 31, 2024, was $1.2 million. There was no provision for credit losses for the three months ended December 31, 2023. Our higher provision for credit losses for the three months ended December 31, 2024, was due to an increase in exposure to accounts with higher credit risk.

Previous wording

Provision for credit losses for our technology business for the six months ended September 30, 2024, was $0.2 million, as compared to $0.4 million for the same six-month period in the prior year. Our lower provision for credit losses for the six months ended September 30, 2024, was due to changes in our net credit exposure.

Current wording

Provision for credit losses for our technology business for the nine months ended December 31, 2024, was $1.5 million, as compared to $0.4 million for the same nine-month period in the prior year. Our higher provision for credit losses for the nine months ended December 31, 2024, was due to an increase in exposure to accounts with higher credit risk.

Previous wording

Depreciation and amortization: Depreciation and amortization for our technology business for the three and six months ended September 30, 2024, increased compared to the three and six months ended September 30, 2023, primarily due to amortization from intangible assets acquired in the Bailiwick acquisition during the current three-month period.

Current wording

Depreciation and amortization: Depreciation and amortization for our technology business for the three and nine months ended December 31, 2024, increased compared to the three and nine months ended December 31, 2023, primarily due to amortization from intangible assets acquired in the Bailiwick acquisition during the current nine-month period.

Previous wording

Interest and financing costs: Interest and financing costs for our technology business for the three and six months ended September 30, 2024, decreased compared to the three and six months ended September 30, 2023, as we had no outstanding borrowings under our WFCDF Credit Facility as of September 30, 2024.

Current wording

Interest and financing costs: Interest and financing costs for our technology business for the three and nine months ended December 31, 2024, decreased compared to the three and nine months ended December 31, 2023, as we had no outstanding borrowings under our WFCDF Credit Facility as of December 31, 2024.

Previous wording

Net sales: Net sales for the three and six months ended September 30, 2024, increased compared to the three and six months ended September 30, 2023, due to higher transactional gains and portfolio earnings offset by lower post-contract earnings. Transactional gains increased due to increased volume and higher gains on the sale of financial assets due in part to several large transactions in the current quarter. Total proceeds from sales of financing receivables were $277.0 million and $220.8 million for the three months ended September 30, 2024, and 2023, respectively. Total proceeds from sales of financing receivables were $324.9 million and $282.2 million for the six months ended September 30, 2024, and 2023, respectively. Portfolio earnings increased due to higher average investments outstanding as well as a higher average earnings rate. Post-contract earnings decreased due to lower proceeds from sales of off-lease equipment, and lower month-to-month rents.

Current wording

Net sales: Net sales for the three months ended December 31, 2024, increased compared to the three months ended December 31, 2023, due to higher post-contract earnings, portfolio earnings, and transactional gains. Post-contract earnings increased due to higher proceeds from sales of off-lease equipment, offset by lower month-to-month rents. Portfolio earnings increased due to higher average investments outstanding as well as a higher average earnings rate. Transactional gains increased due to increased margins. Total proceeds from sales of financing receivables were $192.6 million and $422.1 million for the three months ended December 31, 2024, and 2023, respectively. Our proceeds from sales of financing receivables for the three months ended December 31, 2024, are lower than the same period in the prior year partially due to a few large transactions in the prior year period.

Previous wording

Gross Profit: Gross profit for the three and six months ended September 30, 2024, increased compared to the three and six months ended September 30, 2023, due to the increase in transactional gains.

Current wording

Gross profit for the nine months ended December 31, 2024, increased compared to the nine months ended December 31, 2023, due to the increase in transactional gains.

Previous wording

Selling, general and administrative: Selling, general, and administrative expenses for the three and six months ended September 30, 2024, increased compared to the three and six months ended September 30, 2023, primarily due to an increase in variable compensation attributable to the increase in gross profit.

Current wording

Selling, general and administrative:* *Selling, general, and administrative expenses for the three months ended December 31, 2024, increased compared to the three months ended December 31, 2023, primarily due to an increase in provision for credit losses due to an increase in our exposure to accounts with a higher credit risk.

Previous wording

Our financing business segment employed 34 people as of September 30, 2024, compared to 35 people as of September 30, 2023. Certain support functions for the financing business segment are shared resources with the technology business and expenses are allocated accordingly.

Current wording

Our financing business segment employed 33 people as of December 31, 2024, compared to 34 people as of December 31, 2023. Certain support functions for the financing business segment are shared resources with the technology business and expenses are allocated accordingly.