Financial Data and Key Metrics Changes - ePlus achieved over $1 billion in gross billings for the first time in its history, reflecting a 26.5% year-over-year increase [4][10] - Consolidated net sales for the quarter reached $608.8 million, up 23.4% year-over-year, with total gross billings for the first six months nearly $2 billion, marking a 20.3% increase [10][15] - Adjusted EBITDA increased 61.6% to $58.7 million, growing more than twice as fast as net sales, indicating strong operating leverage [14][15] Business Line Data and Key Metrics Changes - Product sales totaled $485.1 million, up 24.5% year-over-year, driven by demand in networking and security solutions [11] - Service revenue reached $123.8 million, representing a 19.4% increase, with professional services growing 23.3% and managed services increasing 13.5% [11][12] - Security products and services saw a 52% year-over-year increase in gross billings, now accounting for 24% of trailing 12 months' gross billings [6][10] Market Data and Key Metrics Changes - Strong performance was noted across various customer segments, particularly in mid-market and enterprise sectors, while state and local government sales were constrained due to budget issues [6][12] - Telecom, media, and entertainment, along with state and local government, were the largest verticals, accounting for 27% and 14% of net sales, respectively [12] Company Strategy and Development Direction - ePlus is focusing on high-growth areas such as AI, security, and cloud, aiming to enhance its product offerings and customer base [5][8] - The company completed the sale of its domestic financing business, allowing it to concentrate on technology services and expand its market presence [19][20] - A disciplined capital allocation strategy is in place, prioritizing strategic acquisitions, organic investments, dividends, and share repurchases [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current market demand and raised guidance for fiscal year 2026, expecting mid-teens growth in net sales and gross profit [18][19] - The company is optimistic about leveraging its strong cash position to pursue growth opportunities while maintaining operating leverage [31][32] Other Important Information - ePlus closed the quarter with over $400 million in cash, providing flexibility for investments and shareholder returns [9][16] - The company announced a quarterly dividend of $0.25 per common share, payable on December 17, 2025 [19][17] Q&A Session Summary Question: What is driving the strength in security offerings? - Management noted that security gross billings were up 56%, driven by AI initiatives and investments in data classification and network security [22][23] Question: Can you discuss variability in strength across different end markets? - Management indicated strong performance across most verticals, with the exception of state and local government due to funding issues [25] Question: How does the pipeline look and what gives confidence in the raised outlook? - Management highlighted strong execution in a challenging economic environment and noted a healthy pipeline with large deals contributing to optimism [30] Question: How should leverage be balanced with the need to invest? - Management expects continued operating leverage while actively seeking opportunities for organic and inorganic growth [31]