ePlus inc. (PLUS) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings report shows strong financial performance with a 24.6% increase in net sales, 129.3% growth in net earnings, and a significant rise in adjusted EBITDA. Despite some project delays in the retail sector, the company maintains a positive outlook with AI initiatives driving growth and a strong demand trend. The shareholder return plan, including dividends and share repurchases, further supports a positive sentiment. However, inventory build-up and delayed project revenues are concerns, but overall, the strong financial metrics and optimistic guidance suggest a positive stock price movement.
Key Financial Performance
Net Sales Net sales grew 24.6% to $615 million year-over-year, driven by broad-based growth across customer sizes and verticals, with notable strength in mid-market and enterprise customers.
Product Sales Product sales increased 32.2% year-over-year, led by strong performance in data center and cloud, networking, and security. Demand tied to AI initiatives drove infrastructure modernization.
Services Revenue Services revenue was flat year-over-year at $112.8 million, as strong managed services growth of 10.5% was offset by a 7.8% decline in professional services revenue due to project delays in the retail sector.
Security Gross Billings Security gross billings for products and services grew 16.4% year-over-year and 27.6% for the trailing 12 months, driven by increased cybersecurity investments due to rising AI-related threats.
Net Earnings from Continuing Operations Net earnings from continuing operations increased 129.3% to $33.4 million from $14.6 million in the prior year quarter, reflecting strong demand trends and disciplined operational execution.
Adjusted EBITDA Adjusted EBITDA increased 97% to $53.4 million, with a margin of 8.7%, up 320 basis points from the prior year, demonstrating significant operating leverage.
Gross Profit Consolidated gross profit increased 26.8% to $158.7 million, with gross margin improving to 25.8%, up 40 basis points year-over-year, driven by higher product margins.
Operating Expenses Operating expenses increased 6.1% to $115.2 million, mainly due to increased variable compensation tied to higher gross profit.
Cash and Cash Equivalents Cash and cash equivalents at quarter-end totaled $326.3 million, down from $389.4 million at the end of the last fiscal year, primarily due to working capital needs.
Inventory Inventory at quarter-end was $241 million, up from $120.4 million at the end of fiscal 2025, driven by an increase in projects in process.
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Operating Highlights
AI, Cloud, Networking, and Security: Strong performance in these areas, with integrated solutions resonating in the market and driving market share growth.
Data Center and Cloud: Product sales increased 32.2% year-over-year, driven by demand tied to AI initiatives and infrastructure modernization.
AI-specific Solutions and Services: Focus on enhancing AI envisioning sessions and acceleration offerings to help customers identify use cases and provide cost-effective solutions.
Geographic Reach: Focus on extending geographic reach and evaluating acquisitions to access new customers and markets.
Customer Segments: Growth across all customer size segments, with strong performance in mid-market and enterprise spaces.
Operating Leverage: Achieved through strategic workforce alignment and disciplined expense management.
Managed Services: Revenue grew 10.5%, driven by demand for cloud and enhanced maintenance support offerings.
Security Capabilities: Expanded capabilities to address governance, risk frameworks, and data governance for AI workloads.
Acquisitions and Investments: Evaluating opportunities to enhance position in high-growth areas and scale operations.
Capital Allocation: Repurchased over 200,000 shares and announced a quarterly dividend of $0.25 per share.
Memory Chip Market: Monitoring industry-wide memory shortage and its potential impact on customer deployments.
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Risk or Challenges
Customer Project Delays: Delays from customers in the retail sector have impacted project work, leading to a decrease in professional services revenue.
Memory Chip Shortage: The global memory chip market is experiencing a supply shortage and price increases, which could impact customer deployments or timing.
Inventory Management: Inventory levels have increased significantly, contributing to a longer cash conversion cycle and potential working capital challenges.
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Guidance & Outlook
Revenue Growth: The company has increased its full-year guidance for net sales to 20%-22% year-over-year growth, up from the prior guidance of mid-teens. This is based on fiscal year 2025's $2.01 billion from continuing operations.
Gross Profit Growth: Gross profit is now expected to grow at a rate of 19%-21%, compared to the prior guidance of mid-teens, based on fiscal year 2025's $515.5 million from continuing operations.
Adjusted EBITDA Growth: Adjusted EBITDA is projected to increase by 41%-43% over fiscal year 2025's adjusted EBITDA of $141 million from continuing operations. This is an increase from the prior guidance, which was twice the pace of net sales when net sales were expected to grow in the mid-teens.
AI and Technology Trends: AI adoption is accelerating and is expected to remain a significant growth driver, driving demand across data center, security, cloud, and networking. The company is enhancing its AI-specific solutions and services to address customer needs and financial constraints.
Market Risks: The global memory chip market is experiencing a supply shortage and price increases, which could impact customer deployments or timing. However, the company believes it is well-positioned to manage this risk due to diversified supplier relationships and close coordination with customers.
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Shareholder Return Plan
Quarterly Dividend: The Board of Directors approved a quarterly dividend of $0.25 per common share, payable on March 18, 2026, to shareholders of record on February 24, 2026.
Share Repurchase: The company repurchased over 200,000 shares during the quarter as part of its capital allocation strategy.
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Key Q&A
Q:Can you provide details on the outsized projects from enterprise customers, their size, drivers, and expected duration of impact?
A:The company experienced growth across all product and customer size segments, with mid-market customers showing the largest growth. Some large enterprise customers had significant quarters in Q3, but this is not expected to replicate in Q4, as reflected in the annual guidance.
Q:What is the nature of the project delays from retail customers, and when is the revenue expected to materialize?
A:The delays are expected to push revenue into fiscal 2027. These delays were specific to a few retail and consumer customers. The professional services segment was down due to these delays, a tough comparison from the previous year, and a slight decline in staffing. However, managed services continue to grow.
Q:When do you expect to deliver against the inventory build on your balance sheet?
A:The inventory increased by $85 million sequentially due to higher demand. Inventory levels are expected to remain inflated for the next several quarters, with fluctuations as projects progress. AI and inventory traditionally increase at the end of the year.
Q:Can you quantify the impact of AI on your business and provide additional color on its growth?
A:AI, previously a headwind, is now a tailwind as customers define use cases and modernize legacy systems. Growth is seen in data center cloud, networking, and security areas, driven by AI. Networking has recovered from supply chain issues, and AI is enabling networking and refreshing systems. Security growth includes governance risk, compliance, data governance, and threat protection.
Q:How important is offering integrated solutions across AI, cloud, and networking to your growth and market share?
A:Offering integrated solutions is a key differentiator, as customers prefer to work with a few strategic vendors. This approach is likened to the earlier success with converged infrastructure, where the company combined compute, storage, and virtualization with managed services.
Q:Review of Unclear Management Responses
A:No questions were avoided or lacked clarity in the responses provided by management.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI acceleration
AI cloud
AI session
Demand AI
Directors dividend
Elaine Today
Inventory
Mr Parkhurst
Parkhurst Vice
Services
area AI
base
billing product
cloud networking
customer size
delay sector
demand trend
dividend share
focus area
framework
governance
income tax
leverage
market enterprise
mid market
month share
networking security
project
resilience
role
sale product
share month
share period
use case
vertical
workforce
PLUS Transcript
ePlus inc. (PLUS) Q3 2026 Earnings Call Transcript
Positive2-4
The earnings report shows strong financial performance with a 24.6% increase in net sales, 129.3% growth in net earnings, and a significant rise in adjusted EBITDA. Despite some project delays in the retail sector, the company maintains a positive outlook with AI initiatives driving growth and a strong demand trend. The shareholder return plan, including dividends and share repurchases, further supports a positive sentiment. However, inventory build-up and delayed project revenues are concerns, but overall, the strong financial metrics and optimistic guidance suggest a positive stock price movement.
ePlus inc. (PLUS) Q2 2026 Earnings Call Transcript
Positive11-7
The earnings call highlights strong financial performance with record revenue growth driven by AI, cloud, and security demand. Despite risks in government budgets and AI infrastructure, the raised guidance and operating leverage indicate confidence in future growth. Shareholder returns through dividends and repurchases further support positive sentiment. Given the company's market cap, these factors suggest a positive stock price movement in the range of 2% to 8% over the next two weeks.
ePlus inc. (PLUS) Q1 2026 Earnings Call Transcript
Positive9-22
The strong financial performance, particularly the record high revenue, substantial growth in key areas like AI and security, and the initiation of dividends and share repurchase programs indicate a positive outlook. Despite some risks like economic uncertainty and margin pressures, the optimistic guidance and strategic investments in growth areas suggest a positive stock price movement. Considering the market cap, the stock is likely to experience a moderate positive reaction in the next two weeks.
ePlus inc. (PLUS) Q2 2025 Earnings Call Transcript
Positive8-8
The earnings call highlights strong financial performance with record revenue and growth in key areas like security and services, alongside a positive shareholder return plan with dividends and share repurchases. Despite some risks like foreign currency losses and margin impacts, the optimistic guidance and strategic investments in AI and security are promising. The Q&A session confirmed growth drivers and aligned strategic divestments with market trends. Given the mid-cap market cap, the stock is likely to react positively, falling in the 2% to 8% range.
PLUS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
