ePlus(US:PLUS)2021-11-10 01:57Financial Data and Key Metrics Changes - Adjusted gross billings increased by 10.5% year-over-year to $664.1 million, with consolidated net sales rising 5.8% to $458 million [5][14][15] - Operating income grew more than 55% year-over-year, with earnings climbing over 58% from the prior quarter to $2.34 per diluted share [5][18] - Consolidated gross profit increased by 24.3% to $123 million, and gross margin improved by 400 basis points to 26.9% [17] Business Line Data and Key Metrics Changes - Technology net sales increased by 4% year-over-year, driven by a 23.1% increase in service revenue [6][16] - Financing segment net sales surged approximately 58% year-over-year to $21.7 million, with adjusted EBITDA increasing nearly 94% [11][16] Market Data and Key Metrics Changes - Telecom media and entertainment remains the largest end market, accounting for 28% of net sales, followed by SLED, healthcare, technology, and financial services at 15%, 15%, 14%, and 11% respectively [19] Company Strategy and Development Direction - The company is focused on high-growth areas such as cloud, security, and digital infrastructure, aiming to enhance capabilities and expand its solutions portfolio [4][8] - Continued investment in cloud and networking capabilities, including achieving AWS network competency status and launching an AI bundle for healthcare organizations [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth strategy, citing solid demand for services and solutions across various end markets [13][24] - The company is actively monitoring supply chain bottlenecks but has managed to minimize their impact through strong channel partner relationships [13] Other Important Information - The company announced a 2-for-1 stock split for shareholders of record on November 29, 2021 [14][23] - Total headcount increased by 3.8% year-over-year, reflecting ongoing investments in talent [18] Q&A Session Summary Question: How did the results compare to expectations and the impact of supply chain challenges? - Management indicated that the quarter was in line with expectations, with strong demand outpacing supply and open orders up 25% sequentially [28][29] Question: How is the supply chain impacting demand for financing services? - Management noted that supply chain issues have not significantly affected financing services, but inflation and potential interest rate increases could pose risks [30] Question: Can you explain the difference between open orders and backlog? - Management clarified that open orders are at record levels, with customers placing orders early due to extended lead times [33][35] Question: Are customers moving workloads off-prem due to product constraints? - Management observed some movement to the cloud but emphasized that many customers are still focused on modernizing existing data centers first [36][37] Question: What areas are experiencing product shortages? - Management identified networking and storage as areas with some delays, but noted that these issues are not significant [39] Question: How is the company managing cost inputs and talent acquisition? - Management acknowledged challenges in recruiting talent and rising OEM pricing but confirmed that they have successfully passed on price increases to customers [41] Question: Is the AI bundle for healthcare a growth area? - Management confirmed strong growth in healthcare and indicated potential for expansion into other verticals [43]