PLUS Q3 Deep Dive: AI, Security, and Cloud Demand Accelerate Growth and Margins

Core Insights - ePlus reported Q3 CY2025 results that exceeded market revenue expectations, with sales increasing by 18.2% year-on-year to $608.8 million and a non-GAAP profit of $1.53 per share, which was 61.9% above analysts' consensus estimates [1][3][6] Financial Performance - Revenue reached $608.8 million, surpassing analyst estimates of $518.3 million, reflecting an 18.2% year-on-year growth and a 17.5% beat [6] - Adjusted EPS was $1.53 compared to analyst estimates of $0.95, marking a 61.9% beat [6] - Adjusted EBITDA was $58.7 million, significantly exceeding analyst estimates of $38.3 million, with a margin of 9,642% [6] - Operating margin remained stable at 8%, consistent with the same quarter last year [6] - Market capitalization stood at $2.22 billion [6] Growth Drivers - Strong demand in security, networking, and cloud solutions contributed to the outperformance, with security gross billings rising by 56% year-over-year due to customer investments in AI-driven infrastructure [3][7] - Broad-based growth was observed across customer segments and verticals, except for state and local government, which faced budget constraints [3][7] - Internal automation initiatives improved incident resolution and customer experience, leading to operating leverage that allowed adjusted EBITDA to grow at twice the rate of net sales [7] Strategic Focus - ePlus aims to build momentum through targeted investments in AI, cloud, and security, leveraging its strong cash position for organic growth and acquisitions [4] - The company is focused on enhancing its recurring revenue base through expanded service offerings and strategic hiring [4] - ePlus completed the acquisition of Realwave, a cloud-based AI software platform, to enhance its capabilities in delivering real-time, AI-driven insights [7] Capital Allocation - With over $400 million in cash, ePlus has significant flexibility for growth investments or returning capital to shareholders [8] - The company repurchased 60,000 shares and announced a quarterly dividend as part of its capital allocation strategy [8]