ePlus(PLUS) - 2026 Q1 - Quarterly Results

Executive Summary & Highlights This section provides an overview of ePlus's strong Q1 FY26 performance, strategic initiatives, and key financial achievements Management Commentary ePlus's CEO, Mark Marron, reported a strong start to fiscal year 2026 with double-digit growth in key financial metrics, including revenue, gross profit, and EPS. The services business saw nearly 50% growth, contributing to the strongest gross billings and net sales quarter in company history. Strategic initiatives included the sale of the domestic financing business to become a pure-play technology company, and new capital allocation strategies like the first-ever quarterly dividend and a new share repurchase program - Fiscal 2026 started strong with double-digit growth across key financial metrics, including revenue, gross profit, and earnings per share. The services business increased nearly 50% in the quarter[3] - ePlus implemented strategic initiatives, including the sale of its domestic financing business, to become a pure-play technology company, increasing capital position and flexibility[4] - The Board of Directors declared a quarterly dividend of $0.25 per common share (the first in company history) and approved a new share buyback program authorizing the repurchase of up to 1.5 million shares[5] First Quarter Fiscal Year 2026 Highlights ePlus reported significant growth in Q1 FY26, with consolidated net sales up 19.0% to $637.3 million, driven by a 48.8% increase in services revenues. Gross billings rose 14.3% to $952.8 million, and consolidated gross profit increased 16.8% to $148.2 million. Net earnings from continuing operations grew 12.1% to $27.1 million, and diluted EPS from continuing operations increased 14.4% to $1.03 Q1 FY26 Key Financial Metrics | Metric | Q1 FY26 (Millions) | YoY Change | | :-------------------------------- | :----------------- | :--------- | | Consolidated Net Sales | $637.3 | +19.0% | | Services Revenues | $116.3 | +48.8% | | Gross Billings | $952.8 | +14.3% | | Consolidated Gross Profit | $148.2 | +16.8% | | Consolidated Gross Margin | 23.3% | -0.4 pp | | Net Earnings from Continuing Operations | $27.1 | +12.1% | | Adjusted EBITDA | $46.7 | +19.6% | | Diluted EPS from Continuing Operations | $1.03 | +14.4% | | Non-GAAP Diluted Net Earnings per Common Share | $1.26 | +24.8% | First Quarter Fiscal Year 2026 Financial Results This section details ePlus's Q1 FY26 financial performance, including consolidated and segment-specific results, operating expenses, and discontinued operations Consolidated Performance For Q1 FY26, ePlus's consolidated net sales increased 19.0% to $637.3 million, driven by higher product and service revenue. Gross billings also saw a substantial increase of 14.3% to $952.8 million. Consolidated gross profit grew 16.8% to $148.2 million, though the consolidated gross margin slightly decreased to 23.3% from 23.7% in the prior year Consolidated Financial Performance (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :--------------------- | :----------------- | :----------------- | :--------- | | Consolidated Net Sales | $637.3 | $535.7 | +19.0% | | Gross Billings | $952.8 | $833.7 | +14.3% | | Consolidated Gross Profit | $148.2 | $126.9 | +16.8% | | Consolidated Gross Margin | 23.3% | 23.7% | -0.4 pp | Segment Performance ePlus's segments showed varied performance in Q1 FY26. Product segment sales increased due to cloud and security, while professional services saw significant growth primarily from the Bailiwick Services acquisition. Managed services also grew, though gross margins for both product and professional services declined due to mix changes and acquisition impact Product Segment Product segment sales increased due to higher cloud and security products net sales, offset by decreases in networking and collaboration products. Product segment margin declined due to a lower proportion of third-party maintenance and services sold, which are recorded on a net basis Product Segment Performance (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :------------------ | :----------------- | :----------------- | :--------- | | Product Segment Sales | $521.0 | $457.5 | +13.9% | | Product Segment Margin | 20.4% | 21.5% | -1.1 pp | - Product segment sales increased due to higher cloud and security products net sales, offset by decreases in networking and collaboration products[9] - Product segment margin declined due to a lower proportion of third-party maintenance and services sold, which are recorded on a net basis[9] Professional Services Segment Professional services segment revenue increased primarily due to the acquisition of Bailiwick Services, LLC. Gross margin declined due to the addition of Bailiwick Services, LLC, whose services are generally at a lower margin than core professional services Professional Services Segment Performance (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :-------------------------- | :----------------- | :----------------- | :--------- | | Professional Services Revenue | $71.7 | $37.3 | +92.4% | | Professional Services Gross Margin | 39.2% | 41.5% | -2.3 pp | - Professional services segment revenue increase primarily due to the acquisition of Bailiwick Services, LLC[10] - Gross margin declined due to the addition of Bailiwick Services, LLC, whose services are generally at a lower margin than core professional services[10] Managed Services Segment Managed services segment revenue increased primarily due to additional sales of enhanced maintenance support and cloud services Managed Services Segment Performance (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :--------------------- | :----------------- | :----------------- | :--------- | | Managed Services Revenue | $44.6 | $40.9 | +9.0% | | Managed Services Gross Profit | N/A | N/A | +5.5% | | Managed Services Gross Margin | 30.4% | 31.4% | -1.0 pp | - Managed services segment revenue increased primarily due to additional sales of enhanced maintenance support and cloud services[11] Operating Expenses & Income Consolidated operating expenses increased 17.4% to $112.0 million, mainly due to higher salaries and benefits from increased headcount, largely driven by the Bailiwick Services acquisition. Despite this, consolidated operating income from continuing operations grew 15.1% to $36.2 million. The effective tax rate for the quarter was 26.3%, slightly lower than the prior year Operating Expenses and Income (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :------------------------------------ | :----------------- | :----------------- | :--------- | | Consolidated Operating Expenses | $112.0 | $95.4 | +17.4% | | Consolidated Operating Income (Continuing Ops) | $36.2 | $31.5 | +15.1% | | Effective Tax Rate | 26.3% | 27.1% | -0.8 pp | - Operating expenses increased primarily due to increases in salaries and benefits from additional headcount (2,182 total, up 275 from a year ago, with 249 customer-facing, largely due to the acquisition of Bailiwick Services, LLC)[12] Discontinued Operations ePlus retrospectively presented its domestic financing business as discontinued operations following its sale. Net earnings from discontinued operations significantly increased to $10.6 million in Q1 FY26, up from $3.1 million in the prior year, primarily due to a $4.4 million gain on the sale of the business and increased operating income - Results of the domestic financing business are retrospectively presented as discontinued operations for all prior periods due to its sale[7] Net Earnings from Discontinued Operations (Q1 FY26 vs Q1 FY25) | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :------------------------------------ | :----------------- | :----------------- | :--------- | | Net Earnings from Discontinued Operations | $10.6 | $3.1 | +$7.5M | | Diluted EPS from Discontinued Operations | $0.40 | $0.12 | +$0.28 | - The increase in net earnings from discontinued operations was primarily due to a $4.4 million gain on sale of the domestic financing business before income taxes and an increase in operating income[17] Financial Position & Capital Allocation This section outlines ePlus's balance sheet, fiscal year 2026 guidance, and new capital allocation strategies, including dividends and share repurchases Balance Sheet Highlights As of June 30, 2025, ePlus reported a strong cash position of $480.2 million, significantly up from March 31, 2025, largely due to proceeds from the financing business sale. Inventory decreased, while accounts receivable—trade, net, increased. Total stockholders' equity grew to $1,020.4 million Balance Sheet Summary (June 30, 2025 vs March 31, 2025) | Metric | June 30, 2025 (Millions) | March 31, 2025 (Millions) | Change | | :-------------------------- | :----------------------- | :------------------------ | :------- | | Cash and Cash Equivalents | $480.2 | $389.4 | +$90.8M | | Inventory | $101.1 | $120.4 | -16.1% | | Accounts Receivable—Trade, Net | $700.9 | $516.9 | +35.6% | | Total Stockholders' Equity | $1,020.4 | $977.6 | +$42.8M | - Cash and cash equivalents increased primarily due to cash proceeds from the sale of the domestic financing business[19] Fiscal Year 2026 Guidance ePlus has increased its fiscal year 2026 guidance, now expecting net sales growth in the upper single digits over FY25's $2.01 billion from continuing operations. Gross profit growth is also projected in the upper single-digit range, and adjusted EBITDA growth is forecasted in the mid-teens over FY25's $141 million from continuing operations. This guidance excludes potential recessionary conditions or unexpected developments - Fiscal year 2026 net sales growth over the prior fiscal year is now expected to be in the upper single digits above fiscal year 2025's $2.01 billion from continuing operations[20] - Gross profit growth is expected in the upper single-digit range from fiscal year 2025's $515.5 million from continuing operations[20] - Adjusted EBITDA growth is forecasted in the mid-teens over fiscal year 2025's $141 million from continuing operations[20] Capital Allocation Strategy ePlus is enhancing shareholder returns through new capital allocation initiatives. The Board of Directors declared the company's first-ever quarterly cash dividend of $0.25 per common share and authorized a new stock repurchase program to buy back up to 1.5 million shares over 12 months, replacing the expired previous plan Quarterly Dividend Announcement ePlus announced its first quarterly cash dividend of $0.25 per common share, payable on September 17, 2025, to shareholders of record as of August 26, 2025 - ePlus announced its first quarterly cash dividend of $0.25 per common share[24] - The dividend will be paid on September 17, 2025, to shareholders of record as of August 26, 2025[24] New Stock Repurchase Program ePlus's Board of Directors authorized the repurchase of up to 1,500,000 shares of outstanding common stock over a 12-month period commencing August 11, 2025. Purchases may be made in the open market or privately negotiated transactions, subject to management's discretion, and may be suspended or discontinued at any time - ePlus's Board of Directors authorized the repurchase of up to 1,500,000 shares of outstanding common stock over a 12-month period commencing August 11, 2025[25] - Purchases may be made in the open market or privately negotiated transactions, subject to management's discretion, and may be suspended or discontinued at any time[26] Corporate Updates & Strategic Outlook This section covers ePlus's strategic outlook, recent corporate developments, and company information, highlighting growth areas and shareholder value initiatives Summary and Strategic Outlook ePlus is confident in its business momentum and outlook, leading to increased FY26 guidance. The company is well-positioned to capitalize on strategic opportunities in AI, cloud, security, and related services, as well as geographic expansion, supported by a healthy balance sheet. The focus remains on organic growth and exploring new business opportunities to build long-term value for stakeholders - ePlus is pleased with its solid first-quarter performance and business momentum, leading to increased fiscal year 2026 guidance[21] - ePlus is in a strong position to capitalize on strategic opportunities across key growth areas: AI, cloud, security, related services, and geographic expansion, supported by a healthy balance sheet[22] - The company is committed to building long-term value by expanding organically and exploring new business opportunities for sustainable top and bottom-line growth[23] Recent Corporate Developments/Recognitions ePlus achieved several recognitions and completed key corporate actions recently. In July, the sale of its Financing Business to Marlin Leasing Corporation was finalized. The company was also named Digital Realty's 2024 Rising Star Partner of the Year, received the Nutanix Portfolio Partner of the Year Award, and was recognized as Lenovo North American Infrastructure Partner of the Year. Other recognitions include Innovator Partner of the Year at Pure Storage and securing a spot on the CRN Solution Provider List for the 14th consecutive year - Announced the closing of the sale of the Financing Business to Marlin Leasing Corporation (dba PEAC Solutions), effective June 30, 2025[27] - Named Digital Realty's 2024 Rising Star Partner of the Year, received Nutanix Portfolio Partner of the Year Award, and recognized as Lenovo North American Infrastructure Partner of the Year[27] - Recognized as Innovator Partner of the Year at Pure Storage Annual Pure/Partner Forum and secured a spot on the CRN Solution Provider List for 14th Consecutive Year[27] Conference Call Information ePlus will host a conference call and webcast on August 7, 2025, at 4:30 p.m. ET to discuss its financial results. Details for live access and replay are provided, with a transcript available on the investor relations website - A conference call and webcast will be held on August 7, 2025, at 4:30 p.m. ET[28] - Audio webcast (Live & Replay) available at https://events.q4inc.com/attendee/688930192[28](index=28&type=chunk) - A replay of the call will be available approximately two hours after the call through August 14, 2025, with a transcript on the ePlus Investor Relations website[28] About ePlus inc. ePlus inc. is a customer-first, services-led technology solutions provider offering a full portfolio including AI, security, cloud, data center, networking, and collaboration, along with managed, consultative, and professional services. With approximately 2,200 employees and over three decades of experience, ePlus serves various industries globally, headquartered in Virginia with international locations - ePlus is a customer-first, services-led, and results-driven industry leader offering transformative technology solutions and services[29] - Offers a full portfolio of solutions, including artificial intelligence, security, cloud and data center, networking, and collaboration, as well as managed, consultative and professional services[29] - Has approximately 2,200 employees, over three decades of experience, and is headquartered in Virginia with locations in the United States, United Kingdom, Europe, and Asia‐Pacific[29] Financial Statements & Non-GAAP Reconciliations This section presents ePlus's unaudited consolidated financial statements, including balance sheets and statements of operations, along with detailed segment results and reconciliations of non-GAAP financial measures Unaudited Consolidated Balance Sheets The unaudited consolidated balance sheets show ePlus's financial position as of June 30, 2025, compared to March 31, 2025. Key changes include a significant increase in cash and cash equivalents, a rise in accounts receivable—trade, net, and a decrease in inventories. Total assets slightly decreased, while total stockholders' equity increased to $1,020.4 million Unaudited Consolidated Balance Sheets (in thousands) | ASSETS (in thousands) | June 30, 2025 | March 31, 2025 | | :-------------------------------- | :------------ | :------------- | | Cash and cash equivalents | $480,178 | $389,375 | | Accounts receivable—trade, net | 700,873 | 516,925 | | Inventories | 101,053 | 120,440 | | Total current assets | 1,402,316 | 1,363,790 | | TOTAL ASSETS | $1,799,135 | $1,884,805 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | | | | Accounts payable | $320,434 | $324,580 | | Accounts payable—floor plan | 129,415 | 89,527 | | Total current liabilities | 687,750 | 797,883 | | TOTAL LIABILITIES | 778,704 | 907,182 | | Total Stockholders' Equity | 1,020,431 | 977,623 | - Cash and cash equivalents increased primarily due to cash proceeds from the sale of the domestic financing business[19] Unaudited Consolidated Statements of Operations The unaudited consolidated statements of operations for Q1 FY26 show total net sales of $637.3 million, a significant increase from the prior year. Gross profit reached $148.2 million. Net earnings from continuing operations were $27.1 million, and including discontinued operations, total net earnings were $37.7 million. Diluted EPS from continuing operations was $1.03 Unaudited Consolidated Statements of Operations (in thousands) | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $637,315 | $535,652 | | Cost of sales | 489,099 | 408,778 | | Gross profit | 148,216 | 126,874 | | Operating expenses | 112,016 | 95,415 | | Operating income | 36,200 | 31,459 | | Net earnings from continuing operations | 27,128 | 24,193 | | Earnings from discontinued operations, net of tax | 10,569 | 3,146 | | Net earnings | $37,697 | $27,339 | | Diluted earnings per common share—continuing operations | $1.03 | $0.90 | | Diluted earnings per common share—discontinued operations | $0.40 | $0.12 | | Diluted earnings per common share | $1.43 | $1.02 | Segment Results (Detailed Tables) Detailed segment results for Q1 FY26 highlight strong growth in professional services revenue (92.4%) and managed services revenue (9.0%). Product segment net sales increased 13.9%. Cloud and security products showed significant net sales growth, while networking and collaboration declined. Telecom, Media, & Entertainment and 'All other' customer end markets experienced substantial growth Net Sales and Gross Profit by Segment (in thousands) | Net Sales (in thousands) | 2025 | 2024 | Change | | :----------------------- | :----- | :----- | :----- | | Product segment | $520,895 | $457,312 | 13.9% | | Professional services segment | 71,729 | 37,279 | 92.4% | | Managed services segment | 44,580 | 40,910 | 9.0% | | Other | 111 | 151 | (26.5%) | | Total | $637,315 | $535,652 | 19.0% | | Gross Profit (in thousands) | 2025 | 2024 | Change | | :------------------------ | :----- | :----- | :----- | | Product segment | $106,482 | $98,505 | 8.1% | | Professional services segment | 28,153 | 15,455 | 82.2% | | Managed services segment | 13,534 | 12,834 | 5.5% | | Other | 47 | 80 | (41.3%) | | Total | $148,216 | $126,874 | 16.8% | Net Sales by Product Type (in thousands) | Net Sales by Type (in thousands) | 2025 | 2024 | Change | | :----------------------------- | :----- | :----- | :----- | | Networking | $218,202 | $234,740 | (7.0%) | | Cloud | 206,996 | 137,231 | 50.8% | | Security | 61,107 | 48,005 | 27.3% | | Collaboration | 11,757 | 20,899 | (43.7%) | | Other | 22,833 | 16,437 | 38.9% | | Total products segment | 520,895 | 457,312 | 13.9% | Net Sales by Customer End Market (in thousands) | Net Sales by Customer End Market (in thousands) | 2025 | 2024 | Change | | :-------------------------------------------- | :----- | :----- | :----- | | Telecom, Media, & Entertainment | $184,979 | $117,553 | 57.4% | | SLED | 90,562 | 92,096 | (1.7%) | | Technology | 82,747 | 109,106 | (24.2%) | | Healthcare | 74,291 | 75,280 | (1.3%) | | Financial Services | 47,500 | 49,725 | (4.5%) | | All other | 157,236 | 91,892 | 71.1% | | Total net sales | $637,315 | $535,652 | 19.0% | Reconciliation of Non-GAAP Information ePlus provides reconciliations for Adjusted EBITDA, non-GAAP Net Earnings, and non-GAAP Net Earnings per Common Share - Diluted. These non-GAAP measures are used to offer supplemental insight into operating performance by excluding items not reflective of underlying operations, such as interest expense, depreciation and amortization, share-based compensation, acquisition and integration expenses, and certain tax effects. The company acknowledges limitations and potential differences in calculation compared to other companies - Non-GAAP financial measures (Adjusted EBITDA, non-GAAP Net Earnings, and non-GAAP Net Earnings per Common Share - Diluted) are used as supplemental measures to gain insight into operating performance and trends[39] - Adjusted EBITDA is defined as net earnings from continuing operations adjusted for interest expense, depreciation and amortization, share-based compensation, acquisition and integration expenses, provision for income taxes, and other income (expense)[37] - Non-GAAP Net Earnings and diluted EPS are based on net earnings from continuing operations, adjusted to exclude other income (expense), share-based compensation, acquisition-related amortization and integration expenses, and related tax effects[38] Adjusted EBITDA Reconciliation This section provides a detailed reconciliation of Adjusted EBITDA, starting from net earnings from continuing operations and adjusting for non-cash and non-operating items to offer a clearer view of core operational performance Adjusted EBITDA Reconciliation (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net earnings from continuing operations | $27,128 | $24,193 | | Provision for income taxes | 9,684 | 8,977 | | Depreciation and amortization | 7,069 | 4,819 | | Share-based compensation | 3,440 | 2,791 | | Other (income) expense, net | (612) | (1,711) | | Adjusted EBITDA | $46,709 | $39,069 | Non-GAAP Net Earnings Reconciliation This section details the reconciliation of non-GAAP Net Earnings, adjusting GAAP earnings from continuing operations before taxes for share-based compensation, acquisition-related amortization, and other income/expense, along with their related tax effects Non-GAAP Net Earnings Reconciliation (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | | GAAP: Earnings from continuing operations before taxes | $36,812 | $33,170 | | Share based compensation | 3,440 | 2,791 | | Acquisition related amortization expense [3] | 5,548 | 3,750 | | Other (income) expense, net [2] | (612) | (1,711) | | Non-GAAP: Earnings from continuing operations before taxes | 45,188 | 38,000 | | GAAP: Provision for income taxes | 9,684 | 8,977 | | Share-based compensation | 916 | 781 | | Acquisition related amortization expense [3] | 1,473 | 1,047 | | Other (income) expense, net [2] | (163) | (479) | | Tax benefit (expense) on restricted stock | 114 | 308 | | Non-GAAP: Provision for income taxes | 12,024 | 10,634 | | Non-GAAP: Net earnings from continuing operations | $33,164 | $27,366 | Non-GAAP Net Earnings per Common Share - Diluted Reconciliation This section presents the reconciliation of non-GAAP diluted net earnings per common share, adjusting GAAP diluted EPS from continuing operations for share-based compensation, acquisition-related amortization, and other income/expense, net of tax Non-GAAP Diluted EPS Reconciliation | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | | GAAP: Net earnings per common share from continuing operations – diluted | $1.03 | $0.90 | | Share-based compensation | 0.10 | 0.07 | | Acquisition related amortization expense [3] | 0.15 | 0.10 | | Other (income) expense, net [2] | (0.02) | (0.05) | | Tax benefit (expense) on restricted stock | - | (0.01) | | Total non-GAAP adjustments – net of tax | 0.23 | 0.11 | | Non-GAAP: Net earnings per common share from continuing operations – diluted | $1.26 | $1.01 | Forward-Looking Statements This section contains forward-looking statements regarding ePlus's future financial performance, which are subject to various risks and uncertainties. These include financial losses from global economic instability, changes in customer/vendor relationships, increased costs, credit quality issues, reduced vendor incentives, acquisition/disposition challenges, cybersecurity risks, dependence on key personnel, risks related to AI, competitive markets, supply chain issues, remote work trends, capital raising ability, and ability to meet investor expectations. The declaration of future dividends is at the Board's discretion, and ePlus undertakes no duty to update this information except as required by law - Statements regarding future financial performance are forward-looking and subject to risks and uncertainties[31] - Risks include financial losses from global instability, changes in customer/vendor relationships, increased costs, credit quality, reduced vendor incentives, acquisition/disposition challenges, cybersecurity attacks, dependence on key personnel, and risks related to AI[31] - The declaration and payment of future dividends are subject to the sole discretion of the Board of Directors[32]