UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from____ to ____.

Commission file number: 1-34167

ePlus inc.

(Exact name of registrant as specified in its charter)

Delaware		54-1817218
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

13595 Dulles Technology Drive, Herndon, VA 20171-3413

(Address, including zip code, of principal executive offices)

Registrant’s telephone number, including area code: (703) 984-8400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	PLUS	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of common stock outstanding as of November 11, 2024, was 26,802,972.

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ePlus inc. AND SUBSIDIARIES

Part I. Financial Information:

Item 1.	Financial Statements

	Unaudited Consolidated Balance Sheets as of September 30, 2024, and March 31, 2024	5

	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2024, and 2023	6

	Unaudited Consolidated Statements of Comprehensive Income for the Three and Six Months Ended September 30, 2024, and 2023	7

	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2024, and 2023	8

	Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended September 30, 2024, and 2023	10

	Notes to Unaudited Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

Item 4.	Controls and Procedures	46

Part II. Other Information:

Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	46

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	47

Item 6.	Exhibits	47

Signatures		49

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CAUTIONARY LANGUAGE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or “Exchange Act,” and are made in reliance upon the protections provided by such acts for forward-looking statements. Such statements are not based on historical fact but are based upon numerous assumptions about future conditions that may not occur. Forward-looking statements are generally identifiable by use of forward-looking words such as “may,” “should,” “would,” “intend,” “estimate,” “will,” “potential,” “possible,” “could,” “believe,” “expect,” “intend,” “plan,” “anticipate,” “project,” and similar expressions. Readers are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf. Forward-looking statements are made based upon information that is currently available or management’s current expectations and beliefs concerning future developments and their potential effects upon us, speak only as of the date hereof, and are subject to certain risks and uncertainties. We do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we later become aware. Actual events, transactions and results may materially differ from the anticipated events, transactions, or results described in such statements. Our ability to consummate such transactions and achieve such events or results is subject to certain risks and uncertainties. Such risks and uncertainties include, but are not limited to, the matters set forth below:

•

exposure to fluctuation in foreign currency rates, interest rates, and inflation, including as a result of national and international political instability fostering uncertainty and volatility in the global economy, which may cause increases in our costs and wages and our ability to increase prices to our customers, negative impacts to the arrangements that have pricing commitments over the term of an agreement and/or the loss of key lenders or constricting credit markets as a result of changing interest rates, which may result in adverse changes in our results of operations and financial position;

•

significant adverse changes in, reductions in, or loss of one or more of our larger volume customers or vendors;

•

reliance on third-parties to perform some of our service obligations to our customers, and the reliance on a small number of key vendors in our supply chain with whom we do not have long-term supply agreements, guaranteed price agreements, or assurance of stock availability;

•

our ability to remain secure during a cybersecurity attack or other information technology (“IT”) outage, including disruptions in our, our vendors or other third party’s IT systems and data and audio communication networks;

•

our ability to secure our own and our customers’ electronic and other confidential information, while maintaining compliance with evolving data privacy and regulatory laws and regulations and appropriately providing required notice and disclosure of cybersecurity incidents when and if necessary;

•

ongoing remote work trends, and the increase in cybersecurity attacks that have occurred while employees work remotely and our ability to adequately train our personnel to prevent a cyber event;

•

the possibility of a reduction of vendor incentives provided to us;

•

our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train, and retain sufficient qualified personnel by recruiting and retaining highly skilled, competent personnel, and vendor certifications;

•

risks relating to use or capabilities of artificial intelligence (“AI”) including social and ethical risks;

•

our ability to manage a diverse product set of solutions, including AI products and services, in highly competitive markets with a number of key vendors;

•

our ability to maintain our proprietary software and update our technology infrastructure to remain competitive in the marketplace and our dependence on continued innovations in hardware, software, and service offerings, including AI products and services, by our vendors and our ability to partner with them;

•

changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service (“IaaS”), software as a service (“SaaS”), platform as a service (“PaaS”), and AI;

•

our ability to increase the total number of customers using integrated solutions by up-selling within our customer base and gaining new customers;

•

our ability to increase the total number of customers who use our managed services and professional services and continuing to enhance our managed services offerings to remain competitive in the marketplace;

•

loss of our credit facility or credit lines with our vendors may restrict our current and future operations;

•

domestic and international economic regulations uncertainty (e.g., tariffs, sanctions, and trade agreements);

•

supply chain issues, including a shortage of IT products, may increase our costs or cause a delay in fulfilling customer orders, or increase our need for working capital, or delay 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;

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•

exposure to changes in, interpretations of, or enforcement trends in, and customer and vendor actions in anticipation of or response to, legislation and regulatory matters;

•

our inability to identify acquisition candidates, perform sufficient due diligence prior to completing an acquisition, successfully integrate a completed acquisition, or identify an opportunity for or successfully complete a business disposition, may affect our earnings;

•

our service agreements may require external audits and deficiencies in any such reports could negatively affect our client engagements, and our professional and liability insurance policies coverage may be insufficient to cover a claim;

•

a natural disaster or other adverse event at one of our primary configuration centers, data centers, or a third-party provider location could negatively impact our business;

•

failure to comply with public sector contracts, or applicable laws or regulations;

•

our ability to raise capital, maintain or increase as needed our lines of credit with vendors or our floor plan facility, obtain debt for our financing transactions, or the effect of those changes on our common stock price;

•

our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration, and other key strategies; and

•

our ability to protect our intellectual property rights and successfully defend any challenges to the validity of our patents or allegations that we are infringing upon any third-party patents, and the costs associated with those actions, and, when appropriate, the costs associated with licensing required technology.

We cannot be certain that our business strategy will be successful or that we will successfully address these and other challenges, risks, and uncertainties. For a further list and description of various risks, relevant factors, and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see Part II, Item 1A, “Risk Factors” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained elsewhere in this report, as well as other reports that we file with the Securities and Exchange Commission (“SEC”).

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PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

e Plus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	September 30, 2024			March 31, 2024
ASSETS

Current assets:
Cash and cash equivalents	$	187,528		$	253,021
Accounts receivable—trade, net		587,998			644,616
Accounts receivable—other, net		76,102			46,884
Inventories		93,857			139,690
Financing receivables—net, current		136,357			102,600
Deferred costs		61,874			59,449
Other current assets		58,663			27,269
Total current assets		1,202,379			1,273,529

Financing receivables and operating leases—net		90,561			79,435
Deferred tax asset		5,633			5,620
Property, equipment, and other assets—net		104,081			89,289
Goodwill		203,233			161,503
Other intangible assets—net		94,167			44,093
TOTAL ASSETS	$	1,700,054		$	1,653,469

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Current liabilities:
Accounts payable	$	281,927		$	315,676
Accounts payable—floor plan		115,660			105,104
Salaries and commissions payable		45,163			43,696
Deferred revenue		143,334			134,596
Non-recourse notes payable—current		28,970			23,288
Other current liabilities		34,868			34,630
Total current liabilities		649,922			656,990

Non-recourse notes payable—long-term		9,723			12,901
Other liabilities		93,412			81,799
TOTAL LIABILITIES		753,057			751,690

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS’ EQUITY

Preferred stock, $0.01 per share par value; 2,000 shares authorized; none outstanding		-			-
Common stock, $0.01 per share par value; 50,000 shares authorized; 26,798 outstanding at September 30, 2024, and 26,952 outstanding at March 31, 2024		276			274
Additional paid-in capital		187,330			180,058
Treasury stock, at cost, 750 shares at September 30, 2024, and 447 shares at March 31, 2024		(47,461	)		(23,811	)
Retained earnings		801,627			742,978
Accumulated other comprehensive income—foreign currency translation adjustment		5,225			2,280
Total Stockholders’ Equity		946,997			901,779
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,700,054		$	1,653,469

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
Net sales
Product	$	411,505	$	516,609	$	877,854	$	1,023,265
Services		103,667		71,002		181,856		138,521
Total		515,172		587,611		1,059,710		1,161,786
Cost of sales
Product		301,436		398,234		661,593		787,138
Services		65,745		45,012		115,645		88,010
Total		367,181		443,246		777,238		875,148

Gross profit		147,991		144,365		282,472		286,638

Selling, general, and administrative		98,971		92,652		192,579		182,950
Depreciation and amortization		5,765		5,630		10,584		10,422
Interest and financing costs		537		1,220		1,122		2,071
Operating expenses		105,273		99,502		204,285		195,443

Operating income		42,718		44,863		78,187		91,195

Other income		579		117		2,652		307

Earnings before tax		43,297		44,980		80,839		91,502

Provision for income taxes		11,987		12,316		22,190		24,991

Net earnings	$	31,310	$	32,664	$	58,649	$	66,511

Net earnings per common share—basic	$	1.18	$	1.23	$	2.20	$	2.50
Net earnings per common share—diluted	$	1.17	$	1.22	$	2.19	$	2.49

Weighted average common shares outstanding—basic		26,567		26,624		26,604		26,588
Weighted average common shares outstanding—diluted		26,676		26,679		26,750		26,659

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Three Months Ended September 30,					Six Months Ended September 30,
	2024		2023			2024		2023

NET EARNINGS	$	31,310	$	32,664		$	58,649	$	66,511

OTHER COMPREHENSIVE INCOME, NET OF TAX:

Foreign currency translation adjustments		2,877		(1,749	)		2,945		(802	)

Other comprehensive income (loss)		2,877		(1,749	)		2,945		(802	)

TOTAL COMPREHENSIVE INCOME	$	34,187	$	30,915		$	61,594	$	65,709

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Six Months Ended September 30,
	2024			2023
Cash flows from operating activities:
Net earnings	$	58,649		$	66,511

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization		12,580			12,285
Provision for credit losses		1,051			1,079
Share-based compensation expense		5,452			4,619
Loss (gain) on disposal of property, equipment, and operating lease equipment		92			(293	)
Changes in:
Accounts receivable		78,286			(145,632	)
Inventories		56,198			21,739
Financing receivables—net		(42,089	)		(29,018	)
Deferred costs and other assets		(38,879	)		(5,436	)
Accounts payable—trade		(58,333	)		69,537
Salaries and commissions payable, deferred revenue, and other liabilities		2,492			14,945
Net cash provided by operating activities		75,499			10,336

Cash flows from investing activities:
Proceeds from sale of property, equipment, and operating lease equipment		158			377
Purchases of property, equipment, and operating lease equipment		(3,258	)		(5,608	)
Cash used in acquisitions, net of cash acquired		(124,646	)		(48,603	)
Net cash used in investing activities		(127,746	)		(53,834	)

Cash flows from financing activities:
Borrowings of non-recourse and recourse notes payable		13,598			191,639
Repayments of non-recourse and recourse notes payable		(14,378	)		(180,103	)
Proceeds from issuance of common stock		1,811			1,398
Repurchase of common stock		(23,551	)		(8,352	)
Payments to settle liabilities for acquisitions		(2,307	)		-
Net borrowings on floor plan facility		10,556			18,032
Net cash provided by (used in) financing activities		(14,271	)		22,614

Effect of exchange rate changes on cash		1,025			289

Net decrease in cash and cash equivalents		(65,493	)		(20,595	)

Cash and cash equivalents, beginning of period		253,021			103,093

Cash and cash equivalents, end of period	$	187,528		$	82,498

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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

(in thousands)

	Six Months Ended September 30,
	2024			2023

Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,210		$	1,875
Cash paid for income taxes	$	35,071		$	22,657
Cash paid for amounts included in the measurement of lease liabilities	$	2,676		$	2,543

Schedule of non-cash investing and financing activities:
Proceeds from sale of property, equipment, and leased equipment	$	13		$	25
Purchases of property, equipment, and operating lease equipment	$	(545	)	$	(282	)
Consideration for acquisitions	$	(272	)	$	-
Borrowing of non-recourse and recourse notes payable	$	14,586		$	21,387
Debt derecognized due to sales of financial assets	$	(11,303	)	$	(19,703	)
Vesting of share-based compensation	$	11,576		$	9,328
Repurchase of common stock	$	(99	)	$	(65	)
New operating lease assets obtained in exchange for lease obligations	$	6,329		$	3,122

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

	Six Months Ended September 30, 2024
														Accumulated
						Additional								Other
	Common Stock					Paid-In			Treasury			Retained		Comprehensive
	Shares			Par Value		Capital			Stock			Earnings		Income		Total
Balance, March 31, 2024		26,952		$	274	$	180,058		$	(23,811	)	$	742,978	$	2,280	$	901,779
Issuance of restricted stock awards		121			1		(1	)		-			-		-		-
Issuance of common stock		29			1		1,810			-			-		-		1,811
Share-based compensation		-			-		2,866			-			-		-		2,866
Repurchase of common stock		(162	)		-		-			(11,935	)		-		-		(11,935	)
Net earnings		-			-		-			-			27,339		-		27,339
Foreign currency translation adjustment		-			-		-			-			-		68		68

Balance, June 30, 2024		26,940		$	276	$	184,733		$	(35,746	)	$	770,317	$	2,348	$	921,928
Issuance of restricted stock awards		(1	)		-		-			-			-		-		-
Share-based compensation		-			-		2,597			-			-		-		2,597
Repurchase of common stock		(141	)		-		-			(11,715	)		-		-		(11,715	)
Net earnings		-			-		-			-			31,310		-		31,310
Foreign currency translation adjustment		-			-		-			-			-		2,877		2,877

Balance, September 30, 2024		26,798		$	276	$	187,330		$	(47,461	)	$	801,627	$	5,225	$	946,997

	Six Months Ended September 30, 2023
														Accumulated
						Additional								Other
	Common Stock					Paid-In			Treasury			Retained		Comprehensive
	Shares			Par Value		Capital			Stock			Earnings		Income			Total
Balance, March 31, 2023		26,905		$	272	$	167,303		$	(14,080	)	$	627,202	$	1,568		$	782,265
Issuance of restricted stock awards		153			2		(2	)		-			-		-			-
Issuance of common stock		36			-		1,398			-			-		-			1,398
Share-based compensation		-			-		2,205			-			-		-			2,205
Repurchase of common stock		(147	)		-		-			(7,371	)		-		-			(7,371	)
Net earnings		-			-		-			-			33,847		-			33,847
Foreign currency translation adjustment		-			-		-			-			-		947			947

Balance, June 30, 2023		26,947		$	274	$	170,904		$	(21,451	)	$	661,049	$	2,515		$	813,291
Issuance of restricted stock awards		10			-		-			-			-		-			-
Share-based compensation		-			-		2,414			-			-		-			2,414
Repurchase of common stock		(15	)		-		-			(924	)		-		-			(924	)
Net earnings		-			-		-			-			32,664		-			32,664
Foreign currency translation adjustment		-			-		-			-			-		(1,749	)		(1,749	)

Balance, September 30, 2023		26,942		$	274	$	173,318		$	(22,375	)	$	693,713	$	766		$	845,696

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS — Our company was founded in 1990 and is a Delaware corporation. ePlus inc. is sometimes referred to in this Quarterly Report on Form 10-Q as “we,” “our,” “us,” “ourselves,” or “ePlus.” ePlus inc. is a holding company that through its subsidiaries provides information technology (“IT”) solutions which enable organizations to optimize their IT environment and supply chain processes. We also provide consulting, professional, and managed services and complete lifecycle management services including flexible financing solutions. We focus on selling to medium and large enterprises and state and local government and educational institutions (“SLED”) in the United States (“US”) and select international markets including the United Kingdom (“UK”), the European Union (“EU”), India, and Singapore.

BASIS OF PRESENTATION — The unaudited consolidated financial statements include the accounts of ePlus inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accounts of businesses acquired are included in the unaudited consolidated financial statements from the dates of acquisition.

INTERIM FINANCIAL STATEMENTS — The unaudited consolidated financial statements for the three and six months ended September 30, 2024, and 2023, were prepared by us and include all normal and recurring adjustments that, in the opinion of management, are necessary for a fair presentation of our financial position, results of operations, changes in comprehensive income, and cash flows for such periods. Operating results for the three and six months ended September 30, 2024, and 2023, are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ended March 31, 2025, or any other future period. These unaudited consolidated financial statements do not include all disclosures required by the accounting principles generally accepted in the United States (“US GAAP”) for annual financial statements. Our audited consolidated financial statements are contained in our annual report on Form 10-K for the year ended March 31, 2024 (“2024 Annual Report”), which should be read in conjunction with these interim consolidated financial statements.

USE OF ESTIMATES — The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values, vendor consideration, lease classification, goodwill and intangible assets, allowance for credit losses, inventory obsolescence, and the recognition and measurement of income tax assets and other provisions and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.

CONCENTRATIONS OF RISK — A substantial portion of our sales are products from Cisco Systems, which represented approximately 37% and 53% of our technology business net sales for the three months ended September 30, 2024, and 2023, respectively, and 37% and 49% of our technology business net sales for the six months ended September 30, 2024, and 2023, respectively.

SIGNIFICANT ACCOUNTING POLICIES — The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in our Consolidated Financial Statements for the year ended March 31, 2024, except for the changes provided in Note 2, “Recent Accounting Pronouncements.”

2.	RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. This update is effective for annual periods beginning in our fiscal year ending March 31, 2025, and interim periods beginning in the first quarter of our fiscal year ending March 31, 2026. Early adoption is permitted. We are currently evaluating the impact that this update will have on our financial statement disclosures.

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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. This update is effective for annual periods beginning in our fiscal year ending March 31, 2026. Early adoption is permitted. We are currently evaluating the impact that this update will have on our financial statement disclosures.

REVENUES

ACCOUNTS RECEIVABLE AND CONTRACT ASSETS

Our balance in accounts receivable—trade, net includes our accounts receivable recognized from contracts with customers and contract assets. Contract assets represent our right to consideration in exchange for goods or services that we transferred to a customer when that right is conditioned on something other than the passage of time.

The following table provides a disaggregation of our balance in accounts receivable—trade, net (in thousands):

	September 30, 2024			March 31, 2024
Accounts receivable	$	574,762		$	635,370
Contract assets		15,652			11,795
Allowance for credit losses		(2,416	)		(2,549	)
Total accounts receivable—trade, net	$	587,998		$	644,616

In addition, we had $39.2 million and $44.6 million of receivables from contracts with customers included within financing receivables as of September 30, 2024, and March 31, 2024, respectively.

CONTRACT LIABILITIES

Contract liabilities represent our obligation to transfer goods or services to a customer for which we received consideration, or the amount is due from the customer. The following table provides our total balance of contract liabilities (in thousands):

	September 30, 2024		March 31, 2024
Current (included in deferred revenue)	$	142,917	$	134,110
Non-current (included in other liabilities)	$	77,193	$	68,174

Revenue recognized from the beginning contract liability balance was $32.0 million and $72.5 million for the three and six months ended September 30, 2024, respectively, and $23.4 million and $54.3 million for the three and six months ended September 30, 2023, respectively.

PERFORMANCE OBLIGATIONS

The following table includes revenue expected to be recognized in the future related to performance obligations, primarily non-cancelable contracts for ePlus managed services, that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands):

Remainder of the year ending March 31, 2025	$	56,178
Year ending March 31, 2026		55,475
Year ending March 31, 2027		31,633
Year ending March 31, 2028		13,063
Year ending March 31, 2029, and thereafter		8,550
Total remaining performance obligations	$	164,899

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The table does not include the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, and (ii) contracts where we recognize revenue at the amount that we have the right to invoice for services performed.

4.	FINANCING RECEIVABLES AND OPERATING LEASES

Our financing receivables and operating leases consist of our financing receivables from notes receivable and sales-type leases and the carrying value of our assets that we are leasing to our customers on leases that are classified as operating leases. We generally lease IT, communication, and medical equipment. Our lease terms generally range from 2 to 6 years, with most terms ranging between 3 to 4 years. Our leases often provide the lessee the option to purchase the underlying asset at the end of the lease term. Often, our leases provide the lessee a bargain purchase option. We classify our leases as either sales-type leases or operating leases. Additionally, we finance purchases of third-party software and third-party services for our customers, which we classify as notes receivable.

The following table provides the profit recognized for sales-type leases at their commencement date, including modifications that are recognized on a net basis, for the three and six months ended September 30, 2024, and 2023 (in thousands):

	Three months Ended September 30,				Six months Ended September 30,
	2024		2023		2024		2023
Net sales	$	7,855	$	4,872	$	11,365	$	12,495
Cost of sales		6,956		4,132		10,015		11,523
Gross profit	$	899	$	740	$	1,350	$	972

The following table provides interest income in aggregate on our sales-type leases and lease income on our operating leases for the three and six months ended September 30, 2024, and 2023 (in thousands):

	Three months Ended September 30,				Six months Ended September 30,
	2024		2023		2024		2023
Interest income on sales-type leases	$	2,219	$	1,624	$	4,242	$	2,986
Lease income on operating leases	$	2,094	$	2,801	$	4,961	$	5,609

FINANCING RECEIVABLES—NET

The following tables provide a disaggregation of our financing receivables – net (in thousands):

	Notes			Sales-Type Lease			Financing
September 30, 2024	Receivable			Receivables			Receivables
Gross receivables	$	148,407		$	94,819		$	243,226
Unguaranteed residual value (1)		-			11,963			11,963
Unearned income		(8,319	)		(20,591	)		(28,910	)
Allowance for credit losses (2)		(1,236	)		(1,828	)		(3,064	)
Total, net	$	138,852		$	84,363		$	223,215
Reported as:
Current	$	92,092		$	44,265		$	136,357
Long-term		46,760			40,098			86,858
Total, net	$	138,852		$	84,363		$	223,215

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(1)	Includes unguaranteed residual values of $4,683 thousand that we retained after selling the related lease receivable.

(2)	Refer to Note 7, “Allowance for Credit Losses” for details.

	Notes			Sales-Type Lease			Financing
March 31, 2024	Receivable			Receivables			Receivables
Gross receivables	$	114,713		$	75,658		$	190,371
Unguaranteed residual value (1)		-			9,078			9,078
Unearned income		(6,503	)		(12,036	)		(18,539	)
Allowance for credit losses (2)		(1,056	)		(1,435	)		(2,491	)
Total, net	$	107,154		$