EPLUS INC

8. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are subject to various legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of our business and have not been fully resolved. The ultimate outcome of any litigation or other legal dispute is uncertain. When a loss related to a legal proceeding or claim is probable and reasonably estimable, we accrue our best estimate for the ultimate resolution of the matter. If one or more legal matters are resolved against us in a reporting period for amounts above our expectations, our financial condition and operating results for that period may be adversely affected. As of September 30, 2026, we do not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for these proceedings and matters, if any, has been incurred. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current, or future transactions or events.

9. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding plus common stock equivalents during each period.

The following table provides a reconciliation of the numerators and denominators used to calculate basic and diluted net income per common share as disclosed in our unaudited consolidated statements of operations for the three and six months ended September 30, 2026, and 2025, respectively (in thousands, except per share data).

10. STOCKHOLDERS’ EQUITY

Share Repurchase Plan

On August 4, 2026, our Board of Directors (“Board”) authorized the repurchase of up to 1,500,000 shares of our outstanding common stock over a 12-month period commencing on August 11, 2026. Previously, on August 7, 2025, our Board authorized the repurchase of up to 1,500,000 shares of our outstanding common stock, over a 12-month period that began on August 11, 2025 and terminated on August 10, 2026. Under each authorized share repurchase program, when such program is in place, we may make purchases from time to time in the open market, or in privately negotiated transactions, subject to availability and the plan terms. Any repurchased shares have the status of treasury shares and may be used, when needed, for general corporate purposes.

During the six months ended September 30, 2026, we purchased 399,388 shares of our outstanding common stock at a value of $33.9 million under the share repurchase plan; we also purchased 52,927 shares of common stock at a value of $4.4 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock awards and performance stock units.

During the six months ended September 30, 2025, we purchased 60,000 shares of our outstanding common stock at a value of $4.4 million under the share repurchase plan; we also purchased 47,488 shares of common stock at a value of $3.3 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock.

11. SHARE-BASED COMPENSATION

Share-Based Plans

During the six months ended September 30, 2026, we had share-based awards outstanding under the following plans: (1) the 2024 Non-Employee Director Long-Term Incentive Plan (the “2024 Director LTIP”) and (2) the 2021 Employee Long-Term Incentive Plan (the “2021 Employee LTIP”).

These share-based plans define fair market value as the closing sales price of a share of common stock as quoted on any established stock exchange for such date or the most recent trading day preceding such date if there were no trades on such date.

Restricted Stock Activity

For the six months ended September 30, 2026, we granted 853 restricted shares under the 2024 Director LTIP and 111,773 restricted shares under the 2021 Employee LTIP. For the six months ended September 30, 2025, we granted 652 restricted shares under the 2024 Director LTIP and 121,844 restricted shares under the 2021 Employee LTIP.

The following table provides a summary of the unvested restricted shares for the six months ended September 30, 2026:

Performance Stock Units

We have granted Performance Stock Units (“PSUs”) to executive officers under our 2021 Employee LTIP. The PSUs will vest based on the achievement of certain performance goals at the end of athree-year performance period. The PSUs represent the right to receive shares of our common stock at the time of vesting. The total number of PSUs that vest range from 0% to 200% of the target number of PSUs based on our achievement of certain performance targets.

The following table provides a summary of the target amount of unvested PSUs for the six months ended September 30, 2026:

(1)

An adjustment to the PSUs that vested during the period to reflect the final attainment compared to the target.

Employee Stock Purchase Plan

We provide eligible employees the opportunity to purchase shares of our stock through the 2022 Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, eligible employees may collectively purchase up to an aggregate of 2.50 million shares of our stock. Employees in the ESPP contribute part of their earnings over asix-month offering period. At the end of each offering period, employees purchase our shares using their contributions at a discount off the lesser of the closing market price on the first or the last trading day of each offering period. During the six months ended September 30, 2026, and 2025, we issued 25,930 shares at a weighted average price of $70.75 per share and 28,665 shares at a weighted average price of $61.29 per share, respectively, under the ESPP. As of September 30, 2026, there were 2.29 million shares remaining under the ESPP.

Compensation Expense

The following table provides a summary of our total share-based compensation expense for continuing operations, including for restricted stock awards, PSUs, our ESPP, and the related income tax benefit for the three and six months ended September 30, 2026, and 2025, respectively (in thousands):

We recognized the income tax benefit as a reduction to our provision for income taxes. As of September 30, 2026, the total unrecognized compensation expense related to unvested restricted stock was $14.8 million, which is expected to be recognized over a weighted-average period of 30 months.

We also provide our employees with a contributory 401(k) profit sharing plan (the “401(k) plan”), to which we may contribute from time to time at our sole discretion. Employer contributions to the 401(k) plan are always fully vested. Our estimated contribution expense to the 401(k) plan for the three months ended September 30, 2026, and 2025, were each $1.5 million. For the six months ended September 30, 2026, and 2025, our estimated contribution expense for the plan was $3.2 million and $3.0 million, respectively.

12. INCOME TAXES

Our provision for income tax expense was $15.6 million and $27.3 million for the three and six months ended September 30, 2026, as compared to $15.8 million and $27.4 million for the same three-and six-month periods in the prior year. Our effective tax rate for the three and six months ended September 30, 2026, were each 27.9%, compared with 29.3% and 28.1% for the same three- and six-month periods in the prior year, respectively. The effective tax rate for the three and six months ended September 30, 2026, and September 30, 2025, differed from the US federal statutory rate of 21.0% primarily due to state and local income taxes and non-deductible executive compensation.

13. DISCONTINUED OPERATIONS

On June 30, 2025, (the “Closing Date” or the “Closing”), we completed the sale of 100% of the membership interests of Expo Holdings, LLC, a Delaware limited liability company and our wholly-owned subsidiary (“HoldCo”), to Marlin Leasing Corporation, a Delaware corporation (d/b/a PEAC Solutions) pursuant to the terms of the Membership Interest Purchase Agreement, dated June 20, 2025 (the “Sale Transaction”). By selling HoldCo, together with its US subsidiaries, we sold our domestic financing business that comprised most of our financing business segment.

As a result of the Sale Transaction, we determined that the domestic financing business that was sold met the definition of discontinued operations. Consequently, for all periods presented in these financial statements, we are presenting the results of our domestic financing business as discontinued operations.

In the Sale Transaction, we received net cash proceeds of $164.2 million, consisting of initial net cash proceeds of $156.7 million delivered in June 2025 and $7.5 million delivered in March 2026 upon settlement of the final purchase price adjustment. Our initial net cash proceeds of $156.7 million consisted of cash proceeds of $180.1 million less cash transferred with HoldCo of $23.4 million.

Additionally, we also recognized a receivable for contingent consideration that had an initial fair value of $13.5 million. See Note 14, “Fair Value of Financial Instruments” for a discussion of our contingent consideration asset. After settling the final purchase price adjustment, we had $0.2 million payable related to the Sale Transaction, which we paid in August 2026.

We incurred approximately $4.0 million in transaction costs during our quarter ended June 30, 2025, which is netted against the gain on sale of HoldCo before income taxes.

In our year ended March 31, 2026, we recognized a gain on sale before taxes of $3.8 million consisting of an initial gain on sale of $4.4 million that was recognized in our quarter ended June 30, 2025 less an adjustment of $0.6 million that was recognized in our quarter ended March 31, 2026, due to concessions offered to the buyer related to settling the final purchase price adjustment.

The following table provides our operating results of discontinued operations for the three and six months ended September 30, 2025 (in thousands):

14. FAIR VALUE OF FINANCIAL INSTRUMENTS

We account for the fair values of our assets and liabilities utilizing a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. The following table provides the fair value of our assets and liabilities measured at fair value as categorized within the fair value hierarchy as of September 30, 2026, and March 31, 2026 (in thousands):

Our contingent receivable was part of the consideration that we received from our sale of HoldCo. Through the agreement for the sale of HoldCo, we may earn and receive Holdback Premium (as defined below) payments andtwo different types of Earn-Outs (as defined below, and together with the Holdback Premium the “Contingent Consideration”) based on the post-Closing performance of the HoldCo Group (as defined below), as operated by PEAC Solutions. We recognize the short-term and long-term portions of the receivable for the Contingent Consideration as part of other current assets and property, equipment, and other assets—net, respectively, in our consolidated balance sheet.

We may receive aggregate post-Closing cash payments of up to $3.0 million (the “Holdback Premium”) based on the achievement of customer lease receivable originations targets by HoldCo (i) from the Closing Date to the 18-month anniversary of the Closing Date and (ii) from the 18-month anniversary of the Closing Date to the 30-month anniversary of the Closing Date.

Thetwo types of earn-out payments that are potentially payable to us are based on (i) the volume of originations of certain types of lease receivables (the “Lease Originations Earn-Out”) and (ii) the profitability of certain lease receivables originated either to US federal governmental entities or for which a prime contractor acting on behalf of a government entity is the obligor (the “Transaction Gains Earn-Out,” and together with the Lease Originations Earn-Out, the “Earn-Outs”). Each of the Earn-Outs will be measured for each of the first three consecutive twelve-month periods following the Closing. The Lease Originations Earn-Out is capped at $10.0 million in aggregate for allthree post-Closing years. The Transaction Gains Earn-Out does not have a maximum cap.

On the Closing date, we estimated the fair value of each component of the Contingent Consideration using a Monte Carlo simulation model based on forecasted results. We subsequently updated these estimates to reflect actual results and revised forecasts. During the three and six months ended September 30, 2026, we recorded a $3.5 million reduction in the fair value of the Contingent Consideration in other income (expense), net in our consolidated statements of operations. We also received $0.4 million in cash, which reduced the receivable.

15. BUSINESS COMBINATIONS

DAYMARK SOLUTIONS, INC.

On August 21, 2026, our subsidiary, e Plus Technology, inc., acquired certain assets and liabilities of Daymark. Based in Burlington, Massachusetts, Daymark is an IT solutions and professional services provider focused on architecting, implementing, and supporting complex hybrid cloud, cybersecurity, compliance, and modern data center environments.

Our preliminary sum for consideration transferred was $17.4 million, which consisted of $15.9 million paid in cash at closing, plus an estimated $1.5 million due to the sellers based on adjustments to a determination of the total net assets at closing. Our preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed is presented below (in thousands):

Our $7.5 million in identified intangible assets consists of $6.5 million for customer relationships with aten-year useful life and $1.0 million for certifications with afive-year useful life.

We recognized goodwill related to this transaction of $9.2 million, which was assigned to our professional services, managed services and product segments. The goodwill recognized in the Daymark acquisition is attributable to the acquired assembled workforce and expected synergies, none of which qualify for recognition as a separate intangible asset. The total amount of goodwill expected to be deductible for tax purposes is $9.2 million.

The amount of revenues and earnings of Daymark since the acquisition date are not material. Likewise, the impact to the revenue and earnings of the combined entity for the current reporting period as though the acquisition date had been April 1, 2026, is not material.

16. SEGMENT REPORTING

Our organizational structure is based on how our chief operating decision maker (“CODM”) allocates resources, manages operations, and evaluates performance. Our CODM is our Chief Executive Officer. We have three reportable segments: product, professional services, and managed services. In addition, we haveone other operating segment: financing, which does not meet the reportable segment quantitative thresholds and, accordingly, is included in an other category.

Our product segment includes sales of IT products, third-party software, and third-party maintenance, software assurance, and other third-party services. Our professional services segment includes our advanced professional services, staff augmentation, project management services, cloud consulting services and security services. Our managed services segment includes our advanced managed services, service desk, storage-as-a-service, cloud hosted services, cloud managed services and managed security services. Our financing segment consists of the international entities of our financing business that we retained after selling our domestic financing business.

Our CODM measures the performance of our reportable segments based on gross profit. We do not present asset information for our reportable segments as we do not provide asset information to our CODM. Our CODM reviews financial results and forecasts quarterly to manage operations and evaluate performance. Our CODM also uses our financial results and forecasts to make investment decisions as part of our annual budgeting process.

The following table provides reportable segment information (in thousands):

Disaggregation of Revenue

We recognize revenue in our product, professional services, and managed services segments from contracts with customers. We recognize revenue in the other category under guidance for financing and leases.

The following tables provide a disaggregation of revenue recognized from contracts with customers by timing and our position as principal or agent (in thousands):

The following table provides a disaggregation of our revenue from contracts with customers by customer end market and by type (in thousands):

Item 2.