EPLUS INC 10-Q

Item 1. Financial Statements e Plus inc. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) December 31, 2021 March 31, 2021 ASSETS Current assets: Cash and cash equivalents $ 105,566 $ 129,562 Accounts receivable—trade, net 520,629 391,567 Accounts receivable—other, net 40,818 41,053 Inventories 147,739 69,963 Financing receivables—net, current 98,183 106,272 Deferred costs 34,684 28,201 Other current assets 12,932 10,976 Total current assets 960,551 777,594 Financing receivables and operating leases—net 90,026 90,165 Deferred tax asset—net 1,972 1,468 Property, equipment and other assets 46,215 42,289 Goodwill 126,604 126,645 Other intangible assets—net 29,778 38,614 TOTAL ASSETS $ 1,255,146 $ 1,076,775 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Current liabilities: Accounts payable $ 162,670 $ 165,162 Accounts payable—floor plan 157,667 98,653 Salaries and commissions payable 39,184 36,839 Deferred revenue 93,319 72,802 Recourse notes payable—current 51,104 5,450 Non-recourse notes payable—current 37,245 50,397 Other current liabilities 26,224 30,061 Total current liabilities 567,413 459,364 Recourse notes payable - long-term 7,689 12,658 Non-recourse notes payable - long-term 6,340 5,664 Other liabilities 34,408 36,679 TOTAL LIABILITIES 615,850 514,365 COMMITMENTS AND CONTINGENCIES (Note 9) 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; 26,966 outstanding at December 31 , 2021 and 27,006 outstanding at March 31 , 2021 270 145 Additional paid-in capital 157,721 152,366 Treasury stock, at cost, 50 shares at December 31 , 2021 and 1,987 shares at March 31 , 2021 ( 2,592 ) ( 75,372 ) Retained earnings 483,601 484,616 Accumulated other comprehensive income—foreign currency translation adjustment 296 655 Total Stockholders’ Equity 639,296 562,410 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,255,146 $ 1,076,775 See Notes to Unaudited Consolidated Financial Statements. 5 Table of Contents e Plus inc. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 Net sales Product $ 432,307 $ 375,512 $ 1,190,524 $ 1,066,408 Services 62,527 52,092 178,976 149,308 Total 494,834 427,604 1,369,500 1,215,716 Cost of sales Product 339,810 297,514 914,666 827,111 Services 37,907 31,939 109,203 92,935 Total 377,717 329,453 1,023,869 920,046 Gross profit 117,117 98,151 345,631 295,670 Selling, general, and administrative 76,874 65,390 220,153 201,746 Depreciation and amortization 3,597 3,143 11,376 10,000 Interest and financing costs 561 355 1,262 1,179 Operating expenses 81,032 68,888 232,791 212,925 Operating income 36,085 29,263 112,840 82,745 Other income (expense) ( 175 ) 813 ( 377 ) 1,095 Earnings before tax 35,910 30,076 112,463 83,840 Provision for income taxes 9,486 8,438 31,108 24,996 Net earnings $ 26,424 $ 21,638 $ 81,355 $ 58,844 Net earnings per common share—basic $ 0.99 $ 0.81 $ 3.05 $ 2.21 Net earnings per common share—diluted $ 0.98 $ 0.81 $ 3.03 $ 2.20 Weighted average common shares outstanding—basic 26,668 26,664 26,666 26,684 Weighted average common shares outstanding—diluted 26,930 26,756 26,887 26,804 See Notes to Unaudited Consolidated Financial Statements. 6 Table of Contents e Plus inc. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 NET EARNINGS $ 26,424 $ 21,638 $ 81,355 $ 58,844 OTHER COMPREHENSIVE INCOME, NET OF TAX: Foreign currency translation adjustments 81 983 ( 359 ) 1,540 Other comprehensive income (loss) 81 983 ( 359 ) 1,540 TOTAL COMPREHENSIVE INCOME $ 26,505 $ 22,621 $ 80,996 $ 60,384 See Notes to Unaudited Consolidated Financial Statements. 7 Table of Contents e Plus inc. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Nine Months Ended December 31, 2021 2020 Cash flows from operating activities: Net earnings $ 81,355 $ 58,844 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 18,620 13,762 Provision for credit losses 77 1,920 Share-based compensation expense 5,355 5,427 Deferred taxes ( 504 ) 1,033 Payments from lessees directly to lenders—operating leases ( 32 ) ( 25 ) Gain on disposal of property, equipment, and operaing lease equipment ( 855 ) ( 408 ) Changes in: Accounts receivable ( 132,228 ) ( 67,989 ) Inventories-net ( 77,921 ) ( 28,340 ) Financing receivables—net ( 20,296 ) ( 67,112 ) Deferred costs and other assets ( 12,432 ) ( 15,865 ) Accounts payable-trade 526 70,726 Salaries and commissions payable, deferred revenue, and other liabilities 16,793 33,271 Net cash provided by (used in) operating activities ( 121,542 ) 5,244 Cash flows from investing activities : Proceeds from sale of property, equipment, and operating lease equipment 2,927 670 Purchases of property, equipment and operating lease equipment ( 21,375 ) ( 4,227 ) Cash used in acquisitions, net of cash acquired - ( 27,102 ) Net cash used in investing activities ( 18,448 ) ( 30,659 ) Cash flows from financing activities: Borrowings of non-recourse and recourse notes payable 98,547 31,698 Repayments of non-recourse and recourse notes payable ( 32,099 ) ( 41,870 ) Repurchase of common stock ( 9,466 ) ( 6,948 ) Repayments of financing of acquisitions - ( 556 ) Net borrowings on floor plan facility 59,014 44,058 Net cash provided by financing activities 115,996 26,382 Effect of exchange rate changes on cash ( 2 ) ( 735 ) Net increase (decrease) in cash and cash equivalents ( 23,996 ) 232 Cash and cash equivalents, beginning of period 129,562 86,231 Cash and cash equivalents, end of period $ 105,566 $ 86,463 See Notes to Unaudited Consolidated Financial Statements. 8 Table of Contents UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued (in thousands) Nine Months Ended December 31, 2021 2020 S upplemental disclosures of cash flow information : Cash paid for interest $ 1,182 $ 929 Cash paid for income taxes $ 35,676 $ 21,257 Cash paid for amounts included in the measurement of lease liabilities $ 3,420 $ 4,460 S chedule of non-cash investing and financing activities : Proceeds from sale of property, equipment, and leased equipment $ 87 $ - Purchases of property, equipment, and operating lease equipment $ ( 16 ) $ ( 221 ) Borrowing of non-recourse and recourse notes payable $ 56,240 $ 77,289 Repayments of non-recourse and recourse notes payable $ ( 32 ) $ ( 25 ) Vesting of share-based compensation $ 8,439 $ 7,926 New operating lease assets obtained in exchange for lease obligations $ 2,489 $ 1,097 See Notes to Unaudited Consolidated Financial Statements. 9 Table of Contents e Plus inc. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Nine Months Ended December 31, 2021 Common Stock Additional Paid-In Treasury Retained Accumulated Other Comprehensive Shares Par Value Capital Stock Earnings Income Total Balance, March 31, 2021 27,006 $ 145 $ 152,366 $ ( 75,372 ) $ 484,616 $ 655 $ 562,410 Issuance of restricted stock awards 156 1 - - - - 1 Share-based compensation - - 1,735 - - - 1,735 Repurchase of common stock ( 90 ) - - ( 4,111 ) - - ( 4,111 ) Net earnings - - - - 23,518 - 23,518 Foreign currency translation adjustment - - - - - 66 66 Balance, June 30, 2021 27,072 $ 146 $ 154,101 $ ( 79,483 ) $ 508,134 $ 721 $ 583,619 Issuance of restricted stock awards 12 - - - - - - Share-based compensation - - 1,840 - - - 1,840 Repurchase of common stock ( 63 ) - - ( 2,763 ) - - ( 2,763 ) Net earnings - - - - 31,413 - 31,413 Foreign currency translation adjustment - - - - - ( 506 ) ( 506 ) Balance, September 30, 2021 27,021 $ 146 $ 155,941 $ ( 82,246 ) $ 539,547 $ 215 $ 613,603 Issuance of restricted stock awards ( 5 ) - - - - - - Share-based compensation - - 1,780 - - - 1,780 Repurchase of common stock ( 50 ) - - ( 2,592 ) - - ( 2,592 ) Stock split effected in the form of a dividend - 135 - - ( 135 ) - - Retirement of treasury stock - ( 11 ) - 82,246 ( 82,235 ) - - Net earnings - - - - 26,424 - 26,424 Foreign currency translation adjustment - - - - - 81 81 Balance, December 31, 2021 26,966 $ 270 $ 157,721 $ ( 2,592 ) $ 483,601 $ 296 $ 639,296 Nine Months Ended December 31, 2020 Common Stock Additional Paid-In Treasury Retained Accumulated Other Comprehensive Shares Par Value Capital Stock Earnings Income Total Balance, March 31, 2020 27,000 $ 144 $ 145,197 $ ( 68,424 ) $ 410,219 $ ( 991 ) $ 486,145 Issuance of restricted stock awards 182 1 - - - - 1 Share-based compensation - - 1,885 - - - 1,885 Repurchase of common stock ( 76 ) - - ( 2,703 ) - - ( 2,703 ) Net earnings - - - - 17,360 - 17,360 Foreign currency translation adjustment - - - - - 37 37 Balance, June 30, 2020 27,106 $ 145 $ 147,082 $ ( 71,127 ) $ 427,579 $ ( 954 ) $ 502,725 Issuance of restricted stock awards 16 - - - - - - Share-based compensation - - 1,763 - - - 1,763 Repurchase of common stock ( 48 ) - - ( 1,784 ) - - ( 1,784 ) Net earnings - - - - 19,846 - 19,846 Foreign currency translation adjustment - - - - - 520 520 Balance, September 30, 2020 27,074 $ 145 $ 148,845 $ ( 72,911 ) $ 447,425 $ ( 434 ) $ 523,070 Issuance of restricted stock awards 2 - - - - - - Share-based compensation - - 1,779 - - - 1,779 Repurchase of common stock ( 70 ) - - ( 2,461 ) - - ( 2,461 ) Net earnings - - - - 21,638 - 21,638 Foreign currency translation adjustment - - - - - 983 983 Balance, December 31, 2020 27,006 $ 145 $ 150,624 $ ( 75,372 ) $ 469,063 $ 549 $ 545,009 See Notes to Unaudited Consolidated Financial Statements. 10 Table of Contents e Plus 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. e Plus inc. is sometimes referred to in this Quarterly Report on Form 10-Q as “we,” “our,” “us,” “ourselves,” or “ e Plus.” e Plus inc. is a holding company that through its subsidiaries provides information technology solutions that 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 in North America, the United Kingdom (“UK”), and other European countries. BASIS OF PRESENTATION — The unaudited consolidated financial statements include the accounts of e Plus 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 nine months ended December 31, 2021, and 2020, 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 nine months ended December 31, 2021, and 2020, are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ended March 31, 2022, 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, 2021 (“2021 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 were 38 % and 32 % of our technology segment’s net sales for the three months ended December 31, 2021, and 2020, respectively, and 40 % and 37 % of our technology segment’s net sales for the nine months ended December 31, 2021, and 2020, 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, 2021 . STOCK SPLIT — On December 13, 2021, we completed a two -for-one stock split in the form of a stock dividend. References made to outstanding shares or per share amounts in the accompanying financial statements and disclosures have been retroactively adjusted for this stock split. 11 Table of Contents 2. REVENUES CONTRACT BALANCES Accounts receivable – trade consists entirely of amounts due from contracts with customers. In addition, we had $ 62.7 million and $ 54.6 million of receivables from contracts with customers included within financing receivables as of December 31 , 2021, and March 31, 2021, respectively. The following table provides the balance of contract liabilities from contracts with customers (in thousand s): December 31, 2021 March 31, 2021 Current (included in deferred revenue) $ 92,662 $ 72,299 Non-current (included in other liabilities) $ 28,335 $ 26,042 Revenue recognized from the beginning contract liability balance was $ 11.7 million and $ 47.9 million for the three and nine months ended December 31, 2021, respectively, and $ 9.6 million and $ 36.5 million for the three and nine months ended December 31, 2020, respectively. PERFORMANCE OBLIGATIONS The following table includes revenue expected to be recognized in the future related to performance obligations, primarily non-cancelable contracts for e Plus managed services, that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousand s): Remainder of the year ending March 31, 2022 $ 17,884 Year ending March 31, 2023 34,059 Year ending March 31, 2024 15,388 Year ending March 31, 2025 4,626 Year ending March 31, 2026 and thereafter 1,742 Total remaining performance obligations $ 73,699 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. 3. FINANCING RECEIVABLES AND OPERATING LEASES Our financing receivables and operating leases consist primarily of leases of IT and communication equipment and notes receivable from financing customer purchases of third -party software, maintenance, and services. Our leases often include elections for the lessee to purchase the underlying asset at the end of the lease term. Often, our leases provide the lessee a bargain purchase option. 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 nine months ended December 31, 2021, and 2020 (in thousands): Three months ended December 31, Nine months ended December 31, 2021 2020 2021 2020 Net sales $ 3,212 $ 4,182 $ 12,991 $ 22,000 Cost of sales 2,645 3,362 10,936 14,091 Gross profit $ 567 $ 820 $ 2,055 $ 7,909 12 Table of Contents The following table provides interest income in aggregate on our sales-type leases and lease income on our operating leases for the three and nine months ended December 31, 2021, and 2020 (in thousands): Three months ended December 31, Nine months ended December 31, 2021 2020 2021 2020 Interest income on sales-type leases $ 786 $ 1,956 $ 3,076 $ 6,059 Lease income on operating leases $ 7,356 $ 3,623 $ 19,200 $ 11,361 FINANCING RECEIVABLES—NET The following tables provide a disaggregation of our financing receivables – net (in thousand s): December 31 , 2021 Notes Receivable Lease Receivables Financing Receivables Gross receivables $ 115,446 $ 46,509 $ 161,955 Unguaranteed residual value (1) - 11,522 11,522 Initial direct costs, net of amortization 234 - 234 Unearned income - ( 5,988 ) ( 5,988 ) Allowance for credit losses (2) ( 1,160 ) ( 646 ) ( 1,806 ) Total, net $ 114,520 $ 51,397 $ 165,917 Reported as: Current $ 78,426 $ 19,757 $ 98,183 Long-term 36,094 31,640 67,734 Total, net $ 114,520 $ 51,397 $ 165,917 (1) Includes unguaranteed residual values of $ 7,176 thousand that we retained after selling the related lease receivable. (2) Refer to Note 6, “Allowance for Credit Losses” for details. March 31 , 2021 Notes Receivable Lease Receivables Financing Receivables Gross receivables $ 112,641 $ 68,393 $ 181,034 Unguaranteed residual value (1) - 14,876 14,876 Initial direct costs, net of amortization 425 - 425 Unearned income - ( 8,393 ) ( 8,393 ) Allowance for credit losses (2) ( 1,212 ) ( 1,171 ) ( 2,383 ) Total, net $ 111,854 $ 73,705 $ 185,559 Reported as: Current $ 73,175 $ 33,097 $ 106,272 Long-term 38,679 40,608 79,287 Total, net $ 111,854 $ 73,705 $ 185,559 (1) Includes unguaranteed residual values of $ 9,453 thousand that we retained after selling the related lease receivable. (2) Refer to Note 6 , “Allowance for Credit Losses” for details. 13 Table of Contents OPERATING LEASES—NET Operating leases—net represents leases that do not qualify as sales-type leases. The components of the operating leases—net are as follows (in thousands): December 31, 2021 March 31, 2021 Cost of equipment under operating leases $ 34,893 $ 18,748 Accumulated depreciation ( 12,601 ) ( 7,870 ) Investment in operating lease equipment—net (1) $ 22,292 $ 10,878 (1) Amounts include estimated unguaranteed residual values of $ 5.0 million and $ 2.5 million as of December 31, 2021, and March 31, 2021, respectively. TRANSFERS OF FINANCIAL ASSETS We enter into arrangements to transfer the contractual payments due under financing receivables and operating lease agreements, which are accounted for as sales or secured borrowings. For transfers accounted for as a secured borrowing, the corresponding investments serve as collateral for non-recourse notes payable. As of December 31, 2021, and March 31, 2021, we had financing receivables of $ 33.3 million and $ 60.5 million, respectively, and operating leases of $ 8.6 million and $ 3.3 million, respectively, which were collateral for non-recourse notes payable. See Note 8, ‘‘Credit Facility and Notes Payable.’’ For transfers accounted for as sales, we derecognize the carrying value of the asset transferred plus any liability and recognize a net gain or loss on the sale, which are presented within net sales in the consolidated statement of operations. During the three months ended December 31, 2021, and 2020, we recognized net gains of $ 2.3 million and $ 3.0 million, respectively, and total proceeds from these sales were $ 63.5 million and $ 67.5 million, respectively. For the year to date periods ended December 31, 2021, and 2020, we recognized net gains of $ 15.6 million and $ 10.1 million, respectively, and total proceeds from these sales were $ 753.9 million and $ 259.2 million, respectively. When we retain servicing obligations in transfers accounted for as sales, we allocate a portion of the proceeds to deferred revenue, which is recognized as we perform the services. As of December 31, 2021, and March 31, 2021, we had deferred revenue of $ 0.5 million and $ 0.3 million, respectively, for servicing obligations. In a limited number of transfers accounted for as sales, we indemnified the assignee if the lessee elects to early terminate the lease. As of December 31, 2021, and March 31, 2021, the total potential payments that could result from these indemnities is immaterial. 4. LESSEE ACCOUNTING We lease office space for periods up to six years . We recognize our right-of-use assets as part of property, equipment, and other assets. We recognize the current and long-term portions of our lease liability as part of other current liabilities and other liabilities, respectively. We recognized rent expense as part of selling, general and administrative expenses. We recognized rent expense of $ 1.4 million and $ 1.5 million for the three months ended December 31, 2021, and 2020, respectively. We recognized rent expense of $ 4.0 million and $ 4.6 million for the nine months ended December 31, 2021, and 2020, respectively. 14 Table of Contents 5. GOODWILL AND OTHER INTANGIBLE ASSETS GOODWILL The following table summarizes the changes in the carrying amount of goodwill for the nine months ended December 31, 2021 (in thousand s): Nine months ended December 31, 2021 Goodwill Accumulated Impairment Loss Net Carrying Amount Beginning balance $ 135,318 $ ( 8,673 ) $ 126,645 Foreign currency translations ( 41 ) - ( 41 ) Ending balance $ 135,277 $ ( 8,673 ) $ 126,604 Goodwill represents the premium paid over the fair value of the net tangible and intangible assets that are individually identified and separately recognized in business combinations. Our entire balance as of December 31, 2021, relates to our technology segment, which we also determined to be one reporting unit. The change in our goodwill balance during the nine months ended December 31, 2021, is due solely to foreign currency translation. We test goodwill for impairment on an annual basis, as of the first day of our third fiscal quarter, and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying value. In our annual test as of October 1, 2021, we performed a qualitative assessment of goodwill and concluded that, more likely than not, the fair value of our technology reporting unit continued to substantially exceed its carrying value . OTHER INTANGIBLE ASSETS O ur other intangible assets consist of the following on December 31, 2021, and March 31, 2021 (in thousands) : December 31, 2021 March 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships & other intangibles $ 77,290 $ ( 49,929 ) $ 27,361 $ 77,335 $ ( 42,115 ) $ 35,220 Capitalized software development 10,515 ( 8,098 ) 2,417 10,553 ( 7,159 ) 3,394 Total $ 87,805 $ ( 58,027 ) $ 29,778 $ 87,888 $ ( 49,274 ) $ 38,614 Customer relationships and other intangibles are generally amortized between 5 to 10 years. Capitalized software development is generally amortized over 5 years. Total amortization expense for customer relationships and other intangible assets was $ 2.8 million and $ 2.3 million for the three months ended December 31, 2021, and December 31, 2020, respectively, and $ 8.8 million and $ 7.3 million for the nine months ended December 31, 2021, and December 31, 2020, respectively. 15 Table of Contents 6. ALLOWANCE FOR CREDIT LOSSES The following table provides the activity in our allowance for credit losses for the nine months ended December 31, 2021, and 2020 (in thousands): Accounts Receivable Notes Receivable Lease Receivables Total Balance April 1, 2021 $ 2,064 $ 1,212 $ 1,171 $ 4,447 Provision for credit losses 330 60 ( 313 ) 77 Write-offs and other ( 129 ) ( 112 ) ( 212 ) ( 453 ) Balance December 31 , 2021 $ 2,265 $ 1,160 $ 646 $ 4,071 Accounts Receivable Notes Receivable Lease Receivables Total Balance April 1, 2020 $ 1,781 $ 798 $ 610 $ 3,189 Provision for credit losses 866 570 484 1,920 Write-offs and other ( 46 ) ( 88 ) ( 6 ) ( 140 ) Balance December 31 , 2020 $ 2,601 $ 1,280 $ 1,088 $ 4,969 We evaluate our customers using an internally assigned credit quality rating “CQR”. The CQR categories of our financing receivables are: • High CQR: This rating includes accounts with excellent to good business credit, asset quality and capacity to meet financial obligations. Loss rates in this category are generally less than 1 % . • Average CQR: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. Loss rates in this category are generally in the range of 2 % to 10 % . • Low CQR: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. The loss rates in this category in the normal course are generally in the range of 10 % to 100 % . The following table provides the amortized cost basis of our financing receivables by CQR and by credit origination year as of December 31, 2021 (in thousands): Amortized cost basis by origination year ending March 31, 2022 2021 2020 2019 2018 2017 Total Transfers (2) Net credit exposure Notes receivable: High CQR $ 57,295 $ 32,657 $ 1,952 $ 285 $ 110 $ 6 $ 92,305 $ ( 46,939 ) $ 45,366 Average CQR 17,762 3,724 1,337 316 2 - 23,141 ( 10,759 ) 12,382 Low CQR - - - - - - - - - Total $ 75,057 $ 36,381 $ 3,289 $ 601 $ 112 $ 6 $ 115,446 $ ( 57,698 ) $ 57,748 Lease receivables: High CQR $ 16,273 $ 5,671 $ 3,047 $ 1,241 $ 103 $ 14 $ 26,349 $ ( 3,194 ) $ 23,155 Average CQR 10,250 5,579 1,330 124 110 10 17,403 ( 2,234 ) 15,169 Low CQR 267 848 - - - - 1,115 - 1,115 Total $ 26,790 $ 12,098 $ 4,377 $ 1,365 $ 213 $ 24 $ 44,867 $ ( 5,428 ) $ 39,439 Total amortized cost (1) $ 101,847 $ 48,479 $ 7,666 $ 1,966 $ 325 $ 30 $ 160,313 $ ( 63,126 ) $ 97,187 (1) Unguaranteed residual values of $ 7,176 thousand that we retained after selling the related lease receivable and initial direct costs of notes receivable of $ 234 thousand are excluded from amortized cost. (2) Transfers consist of receivables that have been transferred to third-party financial institutions on a non-recourse basis and receivables that are in the process of being transferred to third-party financial institutions. 16 Table of Contents The following table provides the amortized cost basis of our financing receivables by CQR and by credit origination year as of March 31, 2021 (in thousands): Amortized cost basis by origination year ending March 31, 2021 2020 2019 2018 2017 Total Transfers (2) Net credit exposure Notes receivable: High CQR $ 93,793 $ 6,250 $ 769 $ 771 $ 19 $ 101,602 $ ( 63,471 ) $ 38,131 Average CQR 7,689 2,468 550 8 - 10,715 ( 2,896 ) 7,819 Low CQR - - 324 - - 324 - 324 Total $ 101,482 $ 8,718 $ 1,643 $ 779 $ 19 $ 112,641 $ ( 66,367 ) $ 46,274 Lease receivables: High CQR $ 28,898 $ 5,885 $ 1,798 $ 463 $ 125 $ 37,169 $ ( 7,468 ) $ 29,701 Average CQR 23,445 3,482 1,017 270 40 28,254 ( 4,592 ) 23,662 Low CQR - - - - - - - - Total $ 52,343 $ 9,367 $ 2,815 $ 733 $ 165 $ 65,423 $ ( 12,060 ) $ 53,363 Total amortized cost (1) $ 153,825 $ 18,085 $ 4,458 $ 1,512 $ 184 $ 178,064 $ ( 78,427 ) $ 99,637 (1) Unguaranteed residual values of $ 9,453 thousand that we retained after selling the related lease receivable and initial direct costs of notes receivable of $ 425 thousand are excluded from amortized cost. (2) Transfers consist of receivables that have been transferred to third-party financial institutions on a non-recourse basis and receivables that are in the process of being transferred to third-party financial institutions. The following table provides an aging analysis of our financing receivables as of December 31 , 2021 (in thousands): 31-60 Days Past Due 61-90 Days Past Due > 90 Days Past Due Total Past Due Current Total Billed Unbilled Amortized Cost Notes receivable $ 945 $ 87 $ 866 $ 1,898 $ 6,112 $ 8,010 $ 107,436 $ 115,446 Lease receivables 256 208 482 946 2,578 3,524 41,343 44,867 Total $ 1,201 $ 295 $ 1,348 $ 2,844 $ 8,690 $ 11,534 $ 148,779 $ 160,313 The following table provides an aging analysis of our financing receivables as of March 31 , 2021 (in thousands): 31-60 Days Past Due 61-90 Days Past Due > 90 Days Past Due Total Past Due Current Total Billed Unbilled Amortized Cost Notes receivable $ 648 $ 910 $ 673 $ 2,231 $ 3,240 $ 5,471 $ 107,170 $ 112,641 Lease receivables 804 132 643 1,579 2,566 4,145 61,278 65,423 Total $ 1,452 $ 1,042 $ 1,316 $ 3,810 $ 5,806 $ 9,616 $ 168,448 $ 178,064 Our financial assets on nonaccrual status were not significant as of December 31, 2021, and March 31, 2021. 17 Table of Contents 7. PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES Our property, equipment, other assets and liabilities consist of the following (in thousands): December 31, 2021 March 31, 2021 Other current assets: Deposits & funds held in escrow $ 459 $ 759 Prepaid assets 12,063 9,939 Other 410 278 Total $ 12,932 $ 10,976 Property, equipment and other assets Property and equipment, net $ 7,644 $ 7,388 Deferred costs - non-current 19,734 19,063 Right-of-use assets 7,935 8,763 Other 10,902 7,075 Total $ 46,215 $ 42,289 Other current liabilities : Accrued expenses $ 13,663 $ 13,598 Accrued income taxes payable 905 4,439 Short-term lease liability 4,114 3,934 Other 7,542 8,090 Total $ 26,224 $ 30,061 Other liabilities : Deferred revenue - non-current $ 28,691 $ 26,309 Long-term lease liability 3,833 5,040 Other 1,884 5,330 Total $ 34,408 $ 36,679 In the above table, deposits and funds held in escrow relate to financial assets that were sold to third-party banks. In conjunction with those sales, a portion of the proceeds was placed in escrow and will be released to us upon payment of outstanding invoices related to the underlying financing arrangements that were sold. 8. CREDIT FACILITY AND NOTES PAYABLE CREDIT FACILITY We finance the operations of our subsidiaries ePlus Technology, inc., ePlus Technology Services, inc., and SLAIT Consulting, LLC (collectively, the “Borrowers”) in our technology segment through a credit facility with Wells Fargo Commercial Distribution Finance, LLC (“WFCDF”). The WFCDF credit facility has a floor plan facility and a revolving credit facility. Under the floor plan facility, we had an outstanding balance of $ 157.7 million and $ 98.7 million as of December 31, 2021, and March 31, 2021, respectively. On our balance sheet, our liability under the floor plan facility is presented as accounts payable – floor plan . Under the revolving credit facility, we had $ 44.0 million outstanding as of December 31, 2021, and no balance outstanding as of March 31, 2021. On our balance sheet, our liability under the revolving credit facility is presented as part of recourse notes payable – current. 18 Table of Contents The fair value of the outstanding balances under the WFCDF credit facility were approximately equal to their carrying value as of December 31, 2021, and March 31, 2021. On October 13, 2021, the Borrowers amended, restated, and replaced in entirety their then-existing credit agreements with WFCDF. The new credit facility is established by a syndicate of banks for which WFCDF acts as administrative agent and consists of a discretionary senior secured floorplan facility in favor of the Borrowers in the aggregate principal amount of up to $ 375 million, an increase from $ 275 million, together with a sublimit for a revolving credit facility for up to $ 100 million (collectively, the “2021 Credit Facility”). The amount of principal available is subject to a borrowing base determined by, among other things, the Borrowers’ accounts receivable and inventory, each pursuant to a formula and subject to certain reserves. Loans accrue interest at a rate per annum equal to LIBOR plus 1.75 %. The LIBOR rate is based upon one-month, three-month, six-month and 12-month LIBOR periods, as selected by the Borrowers, and subject to a floor of 0.00 %. Our borrowings under the 2021 Credit Facility are secured by the assets of the Borrowers. Additionally, the 2021 Credit Facility requires a guaranty of $ 10.5 million by e Plus inc. Under the 2021 Credit Facility, and under the predecessor WFCDF credit facility, the Borrowers are restricted in their ability to pay dividends to e Plus inc. unless their available borrowing meets or met certain thresholds. As of December 31, 2021, and March 31, 2021, their available borrowing met the thresholds such that there were no restrictions on their ability to pay dividends. The 2021 Credit Facility has an initial one-year term, which automatically renews for successive one-year terms thereafter. However, either the Borrowers or WFCDF may terminate by providing a written termination notice to the other party no less than 90 days prior to such termination. RECOURSE NOTES PAYABLE Recourse notes payable consist of borrowings that, in the event of default, the lender has recourse against us. As of December 31, 2021, we had $ 58.8 million in recourse borrowings consisting of $ 44.0 million outstanding under our revolving WFCDF credit facility, and $ 14.8 million arising from one installment payment arrangement within our technology segment. Our payments under this installment agreement are due quarterly in amounts that are correlated to the payments due to us from a customer under a related notes receivable. We discounted our payments due under this installment agreement to calculate our payable balance using an interest rate of 3.50 % as of both December 31, 2021, and March 31, 2021. NON-RECOURSE NOTES PAYABLE Non-recourse notes payable consists of borrowings that, in the event of a default by a customer, the lender generally only has recourse against the customer, and the assets serving as collateral, but not against us. As of December 31, 2021, and March 31, 2021, we had $ 43.6 million and $ 56.1 million, respectively, of non-recourse borrowings that were collateralized by investments in notes and leases. Principal and interest payments are generally due in amounts that are approximately equal to the total payments due from the customer under the leases or notes receivable that collateralize the notes payable. The weighted average interest rate for our non-recourse notes payable was 3.68 % and 3.35 %, as of December 31, 2021, and March 31, 2021, respectively. 9. 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 any 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 management’s expectations, our financial condition and operating results for that period could be adversely affected. 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 the us in the future, and these matters could relate to prior, current or future transactions or events . 19 Table of Contents 10. 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 on our unaudited consolidated statements of operations for the three and nine months ended December 31, 2021, and 2020, respectively (in thousands, except per share data). The numbers of shares and per share amounts for the prior periods presented in the table have been retroactively restated to reflect the stock split. See Note 1 “Organization and Summary of Significant Accounting Policies” and Note 11 “Stockholders’ Equity” in the consolidated financial statements included elsewhere in this report for additional information on the stock split. Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 Net earnings attributable to common shareholders - basic and diluted $ 26,424 $ 21,638 $ 81,355 $ 58,844 Basic and diluted common shares outstanding : Weighted average common shares outstanding — basic 26,668 26,664 26,666 26,684 Effect of dilutive shares 262 92 221 120 Weighted average shares common outstanding — diluted 26,930 26,756 26,887 26,804 Earnings per common share - basic $ 0.99 $ 0.81 $ 3.05 $ 2.21 Earnings per common share - diluted $ 0.98 $ 0.81 $ 3.03 $ 2.20 11. STOCKHOLDERS’ EQUITY STOCK SPLIT AND TREASURY STOCK On November 9, 2021, our Board of Directors (“Board”) approved a two -for-one stock split of our common stock in the form of a stock dividend paid on December 13, 2021 , to shareholders of record as of close of business on November 29, 2021 . All share and per share information have been retroactively adjusted to reflect the stock split and the incremental par value of the newly issued shares was recorded with the offset to additional paid-in capital. On November 10, 2021, we retired 2,139,918 shares of treasury stock, adjusted for the stock split, with a carrying value of $ 82.2 million, which was deducted from common stock, for the par value of the retired shares, and from retained earnings, for the excess of cost over the par value. SHARE REPURCHASE PLAN On March 18, 2021, our board of directors authorized the repurchase of up to 1,000,000 shares of our outstanding common stock, adjusted for the stock split, over a 12-month period beginning May 28, 2021. On May 20, 2020, our board of directors authorized the repurchase of up to 1,000,000 shares of our outstanding common stock, retroactively restated for the split, over a 12-month period beginning May 28, 2020. Under both authorized programs, purchases may be made from time to time in the open market, or in privately negotiated transactions, subject to availability. Any repurchased shares will have the status of treasury shares and may be used, when needed, for general corporate purposes. 20 Table of Contents During the nine months ended December 31, 2021, we purchased 147,999 shares of our outstanding common stock at a value of $ 6.9 million under the share repurchase plan; we also purchased 55,430 shares of common stock at a value of $ 2.6 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock. During the nine months ended December 31, 2020, we purchased 118,202 shares of our outstanding common stock at a value of $ 4.2 million under the share repurchase plan; we also purchased 75,280 shares of common stock at a value of $ 2.7 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock. 12. SHARE-BASED COMPENSATION SHARE-BASED PLANS e Plus’ 2021 Employee Long-Term Incentive Plan (“2021 Employee LTIP”) was approved by our shareholders on September 16, 2021. The 2021 Employee LTIP is effective October 1, 2021 and replaces the ePlus inc. 2012 Employee Long-Term Incentive Plan (“2012 Employee LTIP”), as approved by our stockholders on September 13, 2012. Beginning September 15, 2021, we permanently ceased issuing any additional shares under the 2012 Employee LTIP. As of December 31, 2021, we had share-based awards outstanding under the following plans: (1) the 2017 Non-Employee Director Long-Term Incentive Plan (“2017 Director LTIP”), and (2) the 2012 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 nine months ended December 31, 2021, adjusted for the stock split, we granted 13,562 shares under the 2017 Director LTIP, and 155,722 restricted shares under the 2012 Employee LTIP. For the nine months ended December 31, 2020, retroactively restated for the stock split, we granted 19,742 shares under the 2017 Director LTIP, and 179,746 restricted shares under the 2012 Employee LTIP. A summary of our restricted stock activity, reflecting the stock split, is as follows: Number of Shares Weighted Average Grant-date Fair Value Nonvested April 1, 2021 366,756 $ 37.49 Granted 169,284 $ 46.52 Vested ( 184,962 ) $ 39.12 Forfeited ( 6,106 ) $ 40.57 Nonvested December 31 , 2021 344,972 Upon each vesting period of the restricted stock awards, employees are subject to minimum tax withholding obligations. Under the 2012 Employee LTIP, we purchased enough shares due to participants to satisfy the minimum tax withholding requirements on employee stock awards. For the nine months ended December 31, 2021, adjusted for the stock split, we withheld 55,430 shares of common stock at a value of $ 2.6 million, which was included in treasury stock and retired on November 10, 2021. 21 Table of Contents COMPENSATION EXPENSE We recognize compensation cost for awards of restricted stock with graded vesting on a straight-line basis over the requisite service period. There are no additional conditions for vesting other than service conditions. Share-based compensation expense for both the three and nine months ended December 31, 2021, and 2020, were $ 1.8 million and $ 5.4 million, respectively. Unrecognized compensation expense related to unvested restricted stock was $ 10.4 million as of December 31, 2021, which will be fully recognized over the next 30 months. We also provide our employees with a contributory 401(k) profit sharing plan, to which we may contribute from time to time at our sole discretion. Employer contributions to the plan are always fully vested. Our estimated contribution expense for the plan for the three months ended December 31, 2021, and 2020, was $ 0.8 million and $ 0.9 million, respectively. For the nine months ended December 31, 2021, and 2020, o ur estimated contribution expense for the plan was $ 2.6 million and $ 2.2 million, respectively. 13. INCOME TAXES Our provision for income tax expense was $ 9.5 million and $ 31.1 million for the three and nine months ended December 31, 2021, as compared to $ 8.4 million and $ 25.0 million for the same periods in the prior year. Our effective income tax rate for the three and nine months ended December 31, 2021, was 26.4 % and 27.7 %, compared to 28.1 % and 29.8 % for the three and nine months ended December 31, 2020. The change in our effective income tax rate for the nine months ended December 31, 2021 compared to the same period in the prior year was primarily due to a prior year unfavorable adjustment to the federal benefit from state taxes. 14. FAIR VALUE OF FINANCIAL INSTRUMENTS The following table summarizes the fair value hierarchy of our financial instruments as of December 31, 2021, and March 31, 2021 (in thousands): Fair Value Measurement Using Recorded Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31 , 2021 Assets: Money market funds $ 5,136 $ 5,136 $ - $ - March 31 , 2021 Assets: Money market funds $ 45,134 $ 45,134 $ - $ - 15. BUSINESS COMBINATIONS SYSTEMS MANAGEMENT PLANNING, INC. (“SMP”) On December 31, 2020, our subsidiary, e Plus Technology, inc., acquired certain assets and liabilities of SMP, an established provider of technology solutions and services in upstate New York and the Northeast. The acquisition enhances e Plus’ footprint across the region, broadens our technology solution offerings especially in the areas of collaboration and supporting virtual employees, and adds to e Plus’ set of commercial, enterprise and state, local, and education customers. 22 Table of Contents Our sum of consideration transferred was $ 27.0 million consisting of $ 29.0 million paid in cash at closing less $ 2.0 million that was paid back to us in our quarter ended March 31, 2021, related to a working capital adjustment. Our allocation of the purchase consideration to the assets acquired and liabilities assumed is presented below (in thousands): Acquisition Date Amount Accounts receivable $ 14,526 Other assets 3,344 Identified intangible assets 14,280 Accounts payable and other current liabilities ( 11,424 ) Performance obligations ( 2,020 ) Total identifiable net assets 18,706 Goodwill 8,328 Total purchase consideration $ 27,034 The identified intangible assets of $ 14.3 million consists of customer relationships with an estimated useful life of seven years . The fair value of acquired receivables equals the gross contractual amounts receivable. We expect to collect all acquired receivables. We recognized goodwill related to this transaction of $ 8.3 million, which was assigned to our technology reporting unit. The goodwill recognized in the 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 is expected to be deductible for tax purposes. The amount of revenues and earnings of the acquiree 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, 2020, is not material. 16. SEGMENT REPORTING Our operations are conducted through two operating segments that are also both reportable segments. Our technology segment includes sales of IT products, third-party software, third-party maintenance, advanced professional and managed services, and our proprietary software to commercial enterprises, state and local governments, and government contractors. Our financing segment consists of the financing of IT equipment, software, and related services to commercial enterprises, state and local governments, and government contractors. We measure the performance of the segments based on operating income. 23 Table of Contents Our reportable segment information for the three-and nine-month periods ended December 31, 2021, and 2020 are summarized in the following table (in thousands): Three Months Ended December 31, 2021 December 31, 2020 Technology Financing Total Technology Financing Total Net Sales Product $ 414,448 $ 17,859 $ 432,307 $ 363,478 $ 12,034 $ 375,512 Service 62,527 - 62,527 52,092 - 52,092 Total 476,975 17,859 494,834 415,570 12,034 427,604 Cost of Sales Product 334,585 5,225 339,810 295,310 2,204 297,514 Service 37,907 - 37,907 31,939 - 31,939 Total 372,492 5,225 377,717 327,249 2,204 329,453 Gross Profit 104,483 12,634 117,117 88,321 9,830 98,151 Selling, general, and administrative 73,413 3,461 76,874 62,377 3,013 65,390 Depreciation and amortization 3,569 28 3,597 3,115 28 3,143 Interest and financing costs 335 226 561 - 355 355 Operating expenses 77,317 3,715 81,032 65,492 3,396 68,888 Operating income 27,166 8,919 36,085 22,829 6,434 29,263 Other income (expense) ( 175 ) 813 Earnings before tax $ 35,910 $ 30,076 Net Sales Contracts with customers $ 473,763 $ 5,840 $ 479,603 $ 411,175 $ 1,904 $ 413,079 Financing and other 3,212 12,019 15,231 4,395 10,130 14,525 Total $ 476,975 $ 17,859 $ 494,834 $ 415,570 $ 12,034 $ 427,604 Selected Financial Data - Statement of Cash Flow Depreciation and amortization $ 3,846 $ 2,730 $ 6,576 $ 3,311 $ 991 $ 4,302 Purchases of property, equipment and operating lease equipment $ 1,339 $ 3,793 $ 5,132 $ 959 $ 1 $ 960 Selected Financial Data - Balance Sheet Total assets $ 998,594 $ 256,552 $ 1,255,146 $ 887,684 $ 238,270 $ 1,125,954 24 Table of Contents Nine Months Ended December 31, 2021 December 31, 2020 Technology Financing Total Technology Financing Total Net Sales Product $ 1,134,658 $ 55,866 $ 1,190,524 $ 1,026,845 $ 39,563 $ 1,066,408 Service 178,976 - 178,976 149,308 - 149,308 Total 1,313,634 55,866 1,369,500 1,176,153 39,563 1,215,716 Cost of Sales Product 899,437 15,229 914,666 820,859 6,252 827,111 Service 109,203 - 109,203 92,935 - 92,935 Total 1,008,640 15,229 1,023,869 913,794 6,252 920,046 Gross Profit 304,994 40,637 345,631 262,359 33,311 295,670 Selling, general, and administrative 210,369 9,784 220,153 190,519 11,227 201,746 Depreciation and amortization 11,292 84 11,376 9,916 84 10,000 Interest and financing costs 693 569 1,262 266 913 1,179 Operating expenses 222,354 10,437 232,791 200,701 12,224 212,925 Operating income 82,640 30,200 112,840 61,658 21,087 82,745 Other income (expense) ( 377 ) 1,095 Earnings before tax $ 112,463 $ 83,840 Net Sales Contracts with customers $ 1,300,643 $ 13,034 $ 1,313,677 $ 1,157,519 $ 3,892 $ 1,161,411 Financing and other 12,991 42,832 55,823 18,634 35,671 54,305 Total $ 1,313,634 $ 55,866 $ 1,369,500 $ 1,176,153 $ 39,563 $ 1,215,716 Selected Financial Data - Statement of Cash Flow Depreciation and amortization $ 12,023 $ 6,597 $ 18,620 $ 10,444 $ 3,318 $ 13,762 Purchases of property, equipment and operating lease equipment $ 3,594 $ 17,781 $ 21,375 $ 4,060 $ 167 $ 4,227 Selected Financial Data - Balance Sheet Total assets $ 998,594 $ 256,552 $ 1,255,146 $ 887,684 $ 238,270 $ 1,125,954 25 Table of Contents TECHNOLOGY SEGMENT DISAGGREGATION OF REVENUE We analyze net sales for our technology segment by customer end market and by vendor, as opposed to discrete product and service categories, which are summarized for the three and nine month periods ended December 31, 2021, and 2020 in the tables below (in thousands): Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 Customer end market: Telecom, Media & Entertainment $ 152,584 $ 123,441 $ 380,560 $ 277,020 Technology 67,959 57,346 190,851 203,634 State and local government and educational institutions 59,449 50,703 193,526 197,758 Healthcare 64,775 44,706 207,700 150,494 Financial Services 39,182 60,610 106,229 154,763 All others 93,026 78,764 234,768 192,484 Net sales 476,975 415,570 1,313,634 1,176,153 Less: Revenue from financing and other ( 3,212 ) ( 4,395 ) ( 12,991 ) ( 18,634 ) Revenue from contracts with customers $ 473,763 $ 411,175 $ 1,300,643 $ 1,157,519 Three Months Ended December 31, Nine Months Ended December 31, 2021 2020 2021 2020 Vendor Cisco Systems $ 183,195 $ 132,290 $ 524,169 $ 433,388 Dell / EMC 40,254 34,027 110,092 80,457 Juniper Networks 28,792 29,781 71,944 68,076 HP Inc. & HPE 12,568 14,100 43,808 47,533 Arista Networks 13,484 22,157 33,029 42,420 NetApp 30,261 13,861 70,254 39,196 All others 168,421 169,354 460,338 465,083 Net sales 476,975 415,570 1,313,634 1,176,153 Less: Revenue from financing and other ( 3,212 ) ( 4,395 ) ( 12,991 ) ( 18,634 ) Revenue from contracts with customers $ 473,763 $ 411,175 $ 1,300,643 $ 1,157,519 FINANCING SEGMENT DISAGGREGATION OF REVENUE We analyze our revenues within our financing segment based on the nature of the arrangement. Our financing revenue generally consists of portfolio income, transactional gains, and post-contract earnings including month-to-month rents and the sales of off-lease equipment. All of our revenues from contracts with customers within our financing segment is from the sales of off-lease equipment. 26 Table of Contents