ePlus Reports Third Quarter and First Nine Months Results

Core Insights - ePlus inc. reported a consolidated net sales increase of 0.4% to $511.0 million for the third quarter of fiscal year 2025, compared to $509.1 million in the same period last year [6] - The company's gross profit rose by 5.3% to $140.9 million, with a gross margin expansion of 130 basis points to 27.6% [5][11] - The services segment experienced significant growth, with service revenues increasing by 52.2% to $113.6 million, driven by both organic and inorganic growth [7][4] Financial Performance - For the third quarter ended December 31, 2024, consolidated net sales were $511.0 million, up from $509.1 million, while technology business net sales slightly declined to $493.1 million from $494.2 million [6] - Product sales decreased by 9.5% to $379.5 million, while service revenues increased by 52.2% to $113.6 million [7] - Consolidated gross profit increased to $140.9 million, up from $133.8 million, and the gross margin improved to 27.6% from 26.3% [11] Segment Performance - The technology business gross billings increased by 6.6% to $849.5 million, indicating solid customer demand for ePlus's solutions [5] - Professional service revenues surged by 73.6% to $69.5 million, primarily due to the acquisition of Bailiwick Services, LLC [8] - Managed service revenues rose by 27.5% to $44.2 million, reflecting ongoing growth in offerings such as Enhanced Maintenance Support and Cloud services [9] Operating Expenses and Earnings - Operating expenses increased by 17.3% to $112.4 million, primarily due to higher salaries and benefits from an increased headcount [12] - Net earnings decreased by 11.5% to $24.1 million, and adjusted EBITDA fell by 15.2% to $39.1 million [13][14] - The diluted earnings per share decreased to $0.91 from $1.02 in the prior year quarter [14] Balance Sheet Highlights - As of December 31, 2024, cash and cash equivalents slightly increased to $253.1 million, while total stockholders' equity rose to $962.3 million [23] - Inventory decreased by 29.1% to $99.0 million compared to March 31, 2024 [23] Future Outlook - ePlus anticipates fiscal year 2025 net sales to be in the range of $2.07 billion to $2.11 billion, with adjusted EBITDA expected between $165.0 million and $171.0 million [24] - The company is focused on investing in high-growth areas such as AI, cybersecurity, and cloud services, supported by a strong cash position and healthy balance sheet [25]