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Conference Call Discussing Earnings for Third Quarter 2023 Results

February 7, 2023

Prepared Remarks

Good day, ladies and gentlemen. Welcome to the ePlus Earnings Results Conference Call. As a reminder, this conference call is being recorded. I would like to introduce your host for today's conference, Mr. Kley Parkhurst, SVP. Sir, you may begin.

Kley Parkhurst, SVP
Thank you for joining us today. On the call is Mark Marron, CEO & President; Elaine Marion, CFO; Darren Raiguel, COO and President of ePlus Technology; and Erica Stoecker, General Counsel.

I want to take a moment to remind you that the statements we make this afternoon that are not historical facts may be deemed to be forward-looking statements and are based on management's current plans, estimates, and projections. Actual and anticipated future results may vary materially due to certain risks and uncertainties detailed in the earnings release we issued this afternoon and our periodic filings with the Securities & Exchange Commission including our most recent Annual Report on Form 10-K, Quarterly Report(s) on Form 10-Q, and in other documents that we file with the SEC. .Any forward-looking statement speaks only as of the date of which the statement is made, and the Company undertakes no responsibility to update any of these forward-looking statements in light of new information, future events, or otherwise. In addition, we will be using certain non-GAAP measures during the call. We have included a GAAP financial reconciliation in our earnings release, which is posted on the Investor Information section of our website at www.eplus.com.

I’d now like to turn the call over to Mark Marron. Mark?

Mark Marron, CEO, President
Thank you, Kley, and thank you, everyone, for participating in today's call to discuss our results for the third quarter of fiscal 2023.

This was a strong financial and operational quarter for ePlus. We continued to successfully execute on our growth strategy to deliver IT solutions focused on digital transformation, hybrid workforce plans, security and cloud. With broad-based growth across all customer size segments and vertical markets, we believe we are gaining market share aided by the breadth of our solutions across the technology stack. The strength of our third quarter results also reflected fulfillment of several enterprise customers’ large projects, due in part to some relief in the supply chain.

The investments we have made in our teams and in our capabilities are driving growth and delivering value to our customers. Consolidated net sales increased 26%, and our adjusted gross billings increased 29.7% with particularly strong growth in our Technology segment. We are continuing to generate operating leverage driven by strong top line growth and balanced SG&A management which has supported our expanded solution offerings. Our net earnings increased 35.1% to $35.7MM and diluted EPS increased 36.7%, both above our revenue growth rate as our focus on operational efficiencies continues.

As our customers continue to invest in upgrading their IT systems to accommodate remote and hybrid work, ePlus is well positioned to provide integrated and flexible workplace transformational systems. Our offerings include multi-vendor architecture support, vendor life cycle management and on-premises data center infrastructure provided in an “as a service” model such as our Storage as a service solution. With our customers transitioning more of these processes and workloads to the cloud, they increasingly look to ePlus to develop more strategic security roadmaps and build more sophisticated and more comprehensive security solutions to protect these new virtual workplace environments. As a result, our security business has grown to more than 22% of our Adjusted Gross Billings (AGB) over the trailing twelve months, as compared to almost 20% last year.

Our services revenues, comprised of professional and managed services, increased 7.9% in the quarter and more than 9% fiscal year-to-date. While we don’t expect services growth rates to be aligned with top line revenue, as a significant portion are from recurring, managed services recognized ratably over the term of the contract, our expanded services capabilities are fundamental to providing comprehensive solutions for our customers. Services margins, while down year over year, have stabilized sequentially. We continue to see some pressure in services margins due to project delays and service mix, supply chain constraints, and some larger land and expand deals at lower margins.

Managed services are a key driver of financial growth, and a differentiated, value-added solution for customers. These offerings generate higher-margin annuity-quality revenue, and create “sticky” long term relationships with customers who value the reduced IT complexity and cost savings that we deliver. Our managed services business also serves to broaden our available market opportunity, as we leverage our capabilities to provide specialized IT expertise in adjacent areas, such as Cloud and Security advisory services.

Moving on to our Financing segment, third quarter sales were $11.7 million, compared to $17.9 million in the same period last year, primarily due to lower proceeds from sales of leased equipment. As we have frequently noted, our financing segment produces variable results quarter-to-quarter due to the timing of large transactions. That said, its unique offerings remain an important competitive differentiator, providing our customers with flexibility in how they acquire and optimize their IT investments.

As we look ahead to 2023, global IT spending is expected to grow at a low single-digit rate this calendar year, according to Gartner, reflecting an uncertain economic outlook. Despite the potential for an economic slowdown this year, we believe that spending in our areas of focus - including security, cloud, and networking - remains a necessity for many organizations as they support a hybrid workforce and execute on their digital transformation plans. At the same time, the tight labor market for tech workers continues to drive corporate spending on outsourced IT services. Our ability to hire and retain skilled professionals in this tight labor market is a competitive differentiator and a valued service to our customers. We continue to monitor the market and will make adjustments as necessary to optimize solutions delivery and staffing levels.

In closing, I am very pleased with our financial results and the progress we have made in broadening our capabilities and strengthening our position to capture future growth opportunities. As a reminder, our fiscal third quarter is seasonally strong, as it marks the end of the budget year for many of our customers. Backed by the strength of our balance sheet, we continue to have the financial flexibility to pursue attractive acquisition opportunities that expand our geographic footprint and are aligned with our growth strategy.

I will now turn the call over to Elaine Marion to provide details on our third quarter financial results. Elaine?

Elaine Marion, CFO
Thank you, Mark, and good afternoon, everyone. Our third quarter fiscal 2023 results reflected solid execution by the ePlus team and the continued success of our strategy focused on capturing opportunities in high-growth end markets.

Third quarter consolidated net sales increased 26% year-over-year to $623.5 million. Technology segment net sales rose 28.3% to $611.8 million, driven by 31% growth in Product revenue and 7.9% growth in Services revenue. Adjusted gross billings were $888.6 million, up 29.7% compared to $685 million in the year ago quarter. The adjusted gross billings to net sales adjustment increased to 31.2% compared to 30.4% in the third quarter of fiscal 2022.

Our end-market mix on a trailing 12-month basis remained consistent with previous periods. Our two largest markets - Telecom, Media and Entertainment and Technology - represented 28% and 18% of Technology segment net sales, respectively. Healthcare, SLED and Financial Services accounted for 14%, 13% and 9%, respectively, with the remaining 18% from other end markets.

As Mark mentioned, due to a decline in proceeds from leased equipment sales year-to-year, our Financing segment revenue totaled $11.7 million compared to $17.9 million in last year's third quarter.

Consolidated gross profit increased 18.1% to $138.4 million and gross margin was 22.2% compared to 23.7% in the previous year’s quarter. Within our Technology segment, gross profit increased by 22.4% to $127.9 million. Technology segment gross margin was 20.9% compared to 21.9% in the year ago quarter. The decrease in gross margin was due to increased costs from managed services as well as several large, competitively priced project-related contracts that blended down our services margin. Product gross margin of 19.2% was stable compared to 19.3% in last year’s third quarter. Financing segment gross profit declined 16.7% to $10.5 million mainly due to decreased sales of leased equipment, partially offset by higher transactional gains.

Third quarter SG&A increased 12.8% year-over-year, as we have continued to strategically invest in our team to better serve our customer’ growing IT needs. At quarter-end, our headcount totaled 1,745, compared to 1,554 in the prior-year quarter. The year-over-year change includes 158 customer-facing employees, 101 of whom are professional services and technical support staff members. Increased third quarter SG&A spend also reflected higher variable compensation tied to our improved gross profit performance, as well as higher travel expenses from more frequent in-person client meetings.

Interest expense was up year-over-year due to higher interest rates and increased borrowing on our credit facility.

Overall, operating expense growth was well below our consolidated net sales growth resulting in an operating income increase of 28.7% to $46.5 million.

The effective tax rate was 27.7% in the third quarter of fiscal 2023, compared to 26.4% in the year-ago quarter.

Consolidated net earnings in the third quarter of fiscal 2023, inclusive of other income which includes foreign currency transaction gains and proceeds from a class action claim, were $35.7 million or $1.34 per diluted share, compared to $26.4 million or $0.98 per diluted share in the year ago quarter. Non-GAAP diluted earnings per share were $1.38 compared to $1.10 in the third quarter of fiscal 2022.

Our diluted share count at the end of the quarter totaled 26.6 million compared to 26.9 million in the third quarter of fiscal 2022. Adjusted EBITDA was $53.3 million, 27.6% ahead of the comparable quarter in fiscal 2022.

Summarizing our year-to-date performance, net sales in the first nine months of fiscal 2023 increased by 15% to $1.576 billion, mainly attributable to Technology segment net sales growth of 16.6%, to $1.532 billion. Adjusted gross billings were up 18.9%, again reaching another milestone of $2.36 billion. Year-to-date consolidated gross profit amounted to $385.2 million, 11.4% ahead of the year ago period. The consolidated gross margin was 24.4% compared to 25.2% a year ago, with Technology segment gross margin of 22.8%, compared to 23.2% reported for the first nine months of fiscal 2022. Net earnings increased by 6.3% to $86.5 million or $3.24 per diluted share. Adjusted EBITDA was up 9.0% to $141.9 million, and non-GAAP diluted earnings per share increased 8.3% year-over-year to $3.66 per diluted share.

Our balance sheet remains strong, with cash and cash equivalents of $99.4 million at December 31, 2022, compared to $155.4 million at the end of fiscal 2022. The decrease in cash and cash equivalents reflected the effect of share repurchases on a year-to-date basis, as well as increased working capital needs due to strong demand for our products and services.

While inventory increased 57.9% to $244.8 million from the fiscal 2022 year end, we reduced inventory by $30 million sequentially compared to the fiscal second quarter. Shifts in our inventory levels primarily explain the changes in our cash conversion cycle, which increased to 51 days in the third quarter of fiscal 2023 compared to 48 days in the quarter ended March 31, 2022, while improving sequentially by three days.

On balance, we are pleased with our third quarter financial results and believe we are well-positioned in the market in spite of current economic uncertainty.

With that, I will now turn the call back to Mark. Mark?

Mark Marron, CEO, President
To recap, this was a strong quarter for ePlus, with broad-based demand across all of our customer size segments and vertical end markets. By targeting faster-growing end markets with a comprehensive suite of integrated solutions, we continue to bolster our competitive position and capture incremental market share. Supported by our strong balance sheet, extensive industry partnerships and talented team, ePlus remains well positioned for continued long-term growth and we remain cautiously optimistic despite the uncertain economic environment.

Operator, I’d now like to open the call for questions.

Question and Answer

[Operator Instructions]. Our first question will come from the line of Maggie Nolan with William Blair. Please go ahead.

Maggie Nolan, William Blair
Thank you. You mentioned the fulfillment of projects for several large enterprise customers in the quarter. Can you give us a little more detail on what types of projects or solutions these were and an idea of maybe the magnitude of that or how we might expect that to impact financial results sequentially?

Mark Marron, CEO, President
Sure. Hey Maggie, how are you? So, a couple of different things there, if I could. I'll touch on why the quarter was up so nicely overall and then try to work in the deals. So first off, we had a really strong tech quarter, both from top line to bottom line. All our customer size segments and verticals were up nicely.

Security continues to grow. Some of the focus we put on the mid and enterprise counts grew nicely for us in this quarter. And that's where we're talking about land and expand. We had a few really nice deals in the security in the data center cloud and in the services space with nice- sized deals with decent margins. Now with that said, some of the things that also added to this quarter that were positives. We saw some easing of the supply chain. So, we did see some movement in the supply chain. And I think you may have noticed our open orders are down 5% sequentially, and that's by design, trying to bring that in line. It's still above historical levels. Our inventory was down $30 million sequentially by design, trying to get product out the door, the land and expand deals as you talked about, and then just some year-end budget. But some of the land and expand are with some of your big mid to enterprise customers across, as I said, data center cloud, security and service opportunities.

Maggie Nolan, William Blair
That's great. And any thoughts about how we should consider the impact of that sequentially or on a year- over-year basis for next year?

Mark Marron, CEO, President
Okay. Yes. In terms of Q4, if I had to look at it, Q4 is traditionally one of our smaller quarters, Q2, Q3 are bigger quarters. We still have a lot of the supply chain, and it's fluctuating by vendor and by solutionary Maggie. So, it's literally moving in and out as we go forward. If I looked at Q4 sequentially, it would be down. Finance is going to be a really tough compare for us. We had some early buyouts last year.

So, I think finance will be a tough compare. And then if I look at the supply chain, I don't know if we'll get as much relief as we did with some of the focus we put on this quarter.

Maggie Nolan, William Blair
Just a follow-up on that last comment with respect to supply chain constraints. How might that affect the results when you're considering performance for the next fiscal year or fiscal 2024?

Mark Marron, CEO, President
That's a tough variable, as you know, Maggie that I think everybody is kind of struggling with. These times are moving, the lead times are moving, in and out by vendor. There are some that are starting to loosen up. We saw networking actually loosen up. So, we actually had a nice quarter within the networking section of our business.

I do expect that this will continue for a couple of quarters. One of the things that's, I guess, a benefit for us as it relates to supply chain, we're not really in the laptop/PC business. So, some of the decline that some of the folks are seeing in that space were not going to be affected by. But for the fiscal year, I think we'll still have the supply chain issues that we've been dealing with over the last year or so.

Maggie Nolan, William Blair
Thanks, Mark.

Mark Marron, CEO, President
Thanks, Maggie, we'll see you soon.

Your next question will come from the line of Matt Sheerin with Stifel. Please go ahead.

Matt Sheerin, Stifel
Yes. Thank you. Good afternoon, everyone. Just a follow-up question regarding the strength that you had in the quarter, a lot higher than consensus and I think higher than, although you didn't give guidance, certainly higher than you had indicated on the last call. It sounds like demand was good. It sounds like supply opened up. But was there some pull-in where orders that you were because of loosening supply in your own inventory were you able to fulfill backlog faster than expected? And in other words, pulled some sales into this quarter or the December quarter?

Mark Marron, CEO, President
Yes, Matt, I think there's probably a little pull through. I wouldn't say significant, though. So, if you look at it, as I touched on the back, you know, the open orders are down 5% sequentially. So, there's some there. The inventory is down by $30 million. We put a very focused effort on getting equipment out the door as soon as we get it. So, there's definitely some potential pull through, not dramatic though, to be honest.

So, I think we benefited that in the quarter due to some supply chain things that we saw came in a little quicker than we thought. And also some of the land and expand deals also help with some of the growth that you saw. I don't know if I called it out on my piece, but our Tech net sales were up almost 28% and change percent. So, we saw a really nice quarter in tech across all verticals and customer sizes. And we'd like to think that's by design.

Matt Sheerin, Stifel
And these land and expand deals. So we're talking about, what, multimillion dollar orders that you were able to fill perhaps at a discount or at least fulfill orders more efficiently than competitors and then you were giving up some price there because your gross margin was down pretty significantly quarter-on- quarter?

Mark Marron, CEO, President
Yes. So Matt, I can't comment on the competitors since I'm not watching their business. What I'd tell you, yes, these are large multimillion dollar deals. As we've always said, we're really focused on the mid to enterprise. We don't play in the small size segment of customer base, if you will.

So, these are larger deals that require a lot of work upfront advisory services that then lead to these multimillion dollar deals that traditionally, the margins are a little tighter because it's competitive upfront. So, the margins are a little bit down. The other thing that contributed to our gross margins being down, our service margins were down a little bit. So that's those are the 2 pieces that affected the gross margins.

Matt Sheerin, Stifel
Okay. And you said that the open orders were down sequentially. Was your backlog down? And how does that compare to your backlog to sort of normal levels? I know it's been well above normal levels.

Mark Marron, CEO, President
Yes. Backlog was actually up, Matt.

Matt Sheerin, Stifel
Your backlog is up. Okay. What are some of the product constrained areas that you're still seeing? Because we're hearing from some distributors and suppliers that networking demands, I mean, orders, and supply seems to be improving, but you're not seeing that across the board?

Mark Marron, CEO, President
Yes. We're not seeing it across the board. The networking has got the longest lead times and it's  improving some, but that's probably the biggest piece from a, I'll say, supply chain and lead time standpoint, Matt.

Matt Sheerin, Stifel
Okay. Thank you.

Mark Marron, CEO, President
All right, Matt, talk to you soon.

[Operator Instructions]. Your next question will come from the line of Greg Burns with Sidoti & Company. Please go ahead.

Greg Burns, Sidoti
So, just to start off with some of the strength you saw in the quarter. So, I guess the upside, I guess, relative to consensus or maybe your internal expectations was mainly driven by demand. It was more weighted towards just market demand as opposed to dipping into your open orders?

Mark Marron, CEO, President
Well, no, Greg, I'd actually say it's a combination of the two. So, when I looked at the quarter, once again, if you -- I'll just go by customer size segments and the mid to enterprise. We actually grew very nicely. And that's by design with some of our account planning and some of the things that we're trying to do there. I think I mentioned it to Matt or Maggie as well as our tech segment had a very strong quarter where the net sales for tech were actually up 28.3% overall. So, I think it was by design on some of that, but there was also some supply chain easing with the open orders going down 5%. And in terms of the inventory going down $30 million. So, there was a real focus internally to try to get the product out as soon as we got it in, get it out the door. So, it's a little bit of supply chain easing plus a nice quarter by the team.

Greg Burns, Sidoti
Good. Is it like one for one, the $30 million decline of inventory that turns into revenue? Or how should we think about kind of the magnitude of what's left on the balance sheet in terms of open orders in terms of revenue potential?

Mark Marron, CEO, President
Yes. Yes. Yes. On the inventory, it would be a 1:1 on the inventory. But on the overall sales, that's a small percentage, as you can imagine, Greg, with our numbers. So yes, it's a one-to-one on the inventory, for sure.

Greg Burns, Sidoti
Okay. And then the OpEx level this quarter, is that a good way to model going forward? Or is there any other puts and takes why it might increase or decrease from here?

Mark Marron, CEO, President
Yes. I think there's a couple of things there. I think the overall level is good on the OpEx. I think there will obviously be some movement based on a smaller quarter in terms of revenue in GP based on Q3 being our largest quarter to date so far. So that will be the variable from an OpEx. It will be in that range overall less that difference, if you will, Greg.

But realize we are watching it pretty closely. So, we're watching the market and with all the economic uncertainties, if you think about all the different tech layoffs, we're watching very closely, and we're going to adjust accordingly. Actually, I look at the tech layoffs as potentially an opportunity for us. It sounds a little bit crazy with everything going on. But I think with the solutions and skill sets we have we might be able to pick up some of those opportunities.

But when you look at Gartner, projecting 2.4% IT spend and stuff like that, we're watching it and managing it very closely in terms of the OpEx. It actually, overall, our OpEx as a percentage of GP and AGB actually went in the right direction this quarter for sure, Greg.

Greg Burns, Sidoti
Okay. And then to your point about those tech layoffs, we are seeing some more cautious commentary in the industry. Are you seeing anything in terms of maybe customer decision cycles, sales cycles extending? Or anything that you see that would maybe give you some more caution going forward.

Mark Marron, CEO, President
Yes, there's definitely some caution in pause, Greg. I mean as you know, there's always challenges and opportunities in this kind of market. But I do see some budget tightening. Some are the sales cycles getting a little bit longer, especially with some of the bigger customers. So, there's definitely some of that going on as the economic uncertainties kind of stay out there. So yes, the sales cycles are longer for sure.

Greg Burns, Sidoti
Okay. And then lastly, you launched a new service storage as a service. Pure Storage. Can you just talk about how that works? Are you just reselling it? Are you actually providing the service? And when you launch something like that, is it market driven? Like have you been, is it something that your customers have been asking you to do? Or is it just something net new that you see as an opportunity?

Darren Raiguel, COO and President of ePlus Technology
Greg, it's Darren. What I'll say is we've been selling Pure as a Service, which is their offering for years now. And when we saw for our customers as they were looking for a more customized approach that we know their environment. We know the other components of their data center on their cloud play. So, this ePlus storage as a service is powered by Pure currently, and we're looking at other storage vendors as potential where we're providing additional services, taking calls, engaging our managed services centers to provide additional value-add helping the customers with sizing future investments and consumption over time as opposed to having to buy it all upfront.

So, it's a really nice play where we saw customers demanding it, and the team's really excited about the customers that are reaching out now with that recent announcement. So more to come.

Greg Burns, Sidoti
Okay. Great. Sounds good. Thanks.

Mark Marron, CEO, President
Alright. Thanks, Greg.

We have no further questions at this time. I'll turn the conference back over to management for any concluding remarks.

Mark Marron, CEO, President
All right. Thanks, Regina, and thanks, everybody, for joining us for our Q3 2023 conference call. We look forward to speaking with you in Q4. Thanks, and have a good day.

Ladies and gentlemen, that does conclude today's meeting. Thank you all for joining. You may now disconnect.

Safe Harbor Statement
This transcript of the earnings call 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. Statements in this earnings call that are not historical facts may be deemed to be "forward-looking statements." Forward-looking statements can be identified by such words and phrases as "believe(s)," "outlook," "looking ahead," "anticipate(s)," "expect(s)," "intend(s)," "estimate(s)," "may," "will," "should," "continue" and similar expressions, comparable terminology or the negative thereof, and include the anticipated growth of our company, as well as our outlook for the fourth quarter and balance of the 2023 fiscal year. Actual and anticipated future results may vary materially due to certain risks and uncertainties, including, without limitation, national and international political instability fostering uncertainty and volatility in the global economy including exposure to fluctuation in foreign currency rates, interest rates, and  inflation, increases in our costs which may result in adverse changes in our gross profit and/or price increases to our customers which may result in adverse changes in our gross profit; reduction of vendor incentives provided to us; significant and rapid inflation may cause price, wage, and interest rate increases, as well as increases in operating costs which may impact the arrangements that have pricing commitments over the term of the agreement; significant adverse changes in, reductions in, or loss of one or more of our larger volume customers or vendors; our ability to successfully perform due diligence and integrate acquired businesses; disruptions or a security breach in our or our vendors' IT systems and data and audio communication networks; 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 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; ongoing remote work trends, and the increase in cybersecurity attacks that have occurred while employees work remotely; maintaining and increasing advanced professional services by recruiting and retaining highly skilled, competent personnel, and vendor certifications; our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train, and retain sufficient qualified personnel; 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; our ability to remain secure during a cyber-security attack. Including both disruptions in our or our vendors' IT systems and data and audio communication networks; reliance on third-parties to perform some of our service obligations with 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; the creditworthiness of our customers and our ability to reserve adequately for credit losses; loss of our credit facility or credit lines with our vendors may restrict our current and future operations; our ability to raise capital, maintain or increase as needed our lines of credit with vendors or floor planning facility, obtain debt for our financing transactions, or the effect of those changes on our common stock price; a reduction of vendor incentives provided to us; changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service, software as a service and platform as a service; our dependency on continued innovations in hardware, software, and services offerings by our vendors and our ability to partner with them; future growth rates in our core businesses; rising interest rates or the loss of key lenders or the constricting of credit markets; the possibility of a goodwill impairment charges in the future; our ability to adapt to meet changes in markets and competitive developments, to increase the total number of customers using integrated solutions by up-selling within our customer base and gaining new customers, to manage a diverse product set of solutions in highly competitive markets with a number of key vendors, to increase the total number of customers who use our managed services and professional services and continue to enhance our managed services offerings to remain competitive in this marketplace, to perform professional and managed services competently; and to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration, and other key strategies; 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; domestic and international economic regulations uncertainty (e.g., tariffs, sanctions, and trade agreements); our contracts may not be adequate to protect us, we are subject to audits which we may not pass, and our professional and liability insurance policies coverage may be insufficient to cover a claim; failure to comply with public sector contracts, or applicable laws and or regulations; our ability to maintain our proprietary software and update our technology infrastructure to remain competitive in the marketplace; our ability to realize our investment in leased equipment; our ability to successfully perform due diligence and integrate acquired business; and our ability to protect our intellectual property rights and successfully defend any challenges to the validity or 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; our ability to profitably adapt our services to meet changes in market developments; the possibility of defects in our products or catalog content data; and other risks or uncertainties detailed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 and other reports filed with the Securities and Exchange Commission. All information set forth on the earnings call is current as of the date of this release and ePlus undertakes no duty or obligation to update this information either as a result of new information, future events or otherwise, except as required by applicable U.S. securities law.

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