ePlus Q3 2026 Earnings Report

ePlus EPS Results

• Actual EPS: $1.45
• Consensus EPS: $1.01
• Beat/Miss: Beat by +$0.44
• One Year Ago EPS: N/A

ePlus Revenue Results

• Actual Revenue: $614.77 million
• Expected Revenue: $529.60 million
• Beat/Miss: Beat by +$85.17 million
• YoY Revenue Growth: N/A

ePlus Announcement Details

• Quarter: Q3 2026
• Date: 2/4/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, February 4, 2026
• Conference Call Time: 4:30PM ET

ePlus (NASDAQ:PLUS) Inc (NASDAQ:PLUS) is a technology solutions provider that helps enterprises and public-sector organizations maximize the value of their information technology investments. The company specializes in designing, implementing and managing complex IT infrastructures, with a focus on security, cloud computing, data center modernization and unified communications. By combining consulting services with software license management and hardware procurement, ePlus delivers end-to-end solutions that align with its clients’ strategic objectives.

The company’s offerings include cybersecurity assessments and managed security services, hybrid and public cloud deployments, network architecture and optimization, and collaboration platforms. ePlus also provides software asset management and license compliance services to ensure that clients realize cost efficiencies and mitigate compliance risks. Its professional services team handles project management, system integration and support, while its digital growth practice focuses on leveraging emerging technologies such as analytics, automation and mobility.

Headquartered in Herndon, Virginia, ePlus serves a diverse customer base across North America, spanning industries such as financial services, healthcare, manufacturing, retail and government. The company has built longstanding partnerships with leading technology vendors, enabling it to offer best-of-breed solutions tailored to each client’s operational requirements. Through its regional offices and distribution centers, ePlus delivers hardware, software and support services with consistent quality and responsiveness.

ePlus Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q3 results — net sales rose 24.6% to $614.8M, product sales +32.2%, net earnings from continuing operations +129.3% to $33.4M, and adjusted EBITDA nearly doubled to $53.4M (8.7% margin).
• Positive Sentiment: Management cites AI, cloud, networking, and security as the main demand drivers and says integrated solutions plus expanded AI envisioning/acceleration services are helping win share across mid‑market and enterprise customers.
• Positive Sentiment: The company raised full‑year targets, now guiding to 20–22% net sales growth, 19–21% gross profit growth, and 41–43% adjusted EBITDA growth.
• Negative Sentiment: Services were mixed (managed services +10.5% but professional services -7.8% from retail project delays) and inventory rose to $241M, pushing the cash conversion cycle to 41 days and reducing cash balances, which could pressure near‑term working capital and timing of revenue recognition.
• Positive Sentiment: Board approved a quarterly dividend of $0.25/share and the company repurchased >200,000 shares, highlighting continued shareholder returns and stated flexibility to pursue acquisitions.

Presentation

[Operator]

Earnings results conference call. As a reminder, this conference call is being recorded. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question at that time, please press star, then the number one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, simply press star one again. Thank you. I would now like to introduce your host for today's conference, Mr. Kley Parkhurst, Senior Vice President. Sir, you may begin.

[Kley Parkhurst, Senior VP at ePlus]

Thank you for joining us today. On the call is Mark Marron, CEO and President, Darren Raiguel, COO and President of ePlus Technology, Elaine Marion, CFO, and Erica Stoecker, General Counsel. I want to take a moment to remind you that the statements we make this afternoon that are not historical facts may be deemed to be forward-looking statements and are based on management's current plans, estimates, and projections. Actual and anticipated future results may vary materially due to certain risks and uncertainties detailed in the earnings press release we issued this afternoon and our periodic filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other documents that we file with the SEC.

[Kley Parkhurst, Senior VP at ePlus]

Any forward-looking statement speaks only as of the date of which the statement is made, and the company undertakes no responsibility to update any of these forward-looking statements in light of new information, future events, or otherwise. In addition, we will use certain non-GAAP measures during the call. We've included a GAAP financial reconciliation in our earnings release, which is posted on the investor information section of our website at www.eplus.com. I'd now like to turn the call over to Mark Marron. Mark?

[Mark Marron, CEO and President at ePlus]

Thank you, Kley. Good afternoon, everyone, and thank you for joining us today for our third quarter fiscal 2026 earnings call. The momentum we are seeing across the business continues to affirm our strategy and our focus on efficient operations, which is driving strong bottom line results. A few key things to note: We are seeing the most strength across our key focus areas of AI, cloud, networking, and security. We believe our ability to bring these capabilities together through integrated solutions is resonating in the market and helping us gain market share. We saw growth across all customer size segments, with a particularly strong performance in the mid-market and enterprise space.

[Mark Marron, CEO and President at ePlus]

Throughout the year, we have consistently delivered strong, broad-based growth and continue to achieve operating leverage with the strategic alignment of our workforce towards higher growth areas and disciplined expense management, all while continuing to invest in the areas most important to our customers. Our strong balance sheet gives us the flexibility to invest organically, pursue strategic acquisitions, and return capital to our shareholders. Today, our board of directors approved a quarterly dividend of $0.25 per common share, and during the quarter, the company repurchased over 200,000 shares. Turning now to a brief overview of the financial results of the quarter. Net sales grew 24.6% to $615 million. Our product sales increased 32.2% year-over-year, led by a strong performance in data center and cloud, networking, and security.

[Mark Marron, CEO and President at ePlus]

Demand tied to AI initiatives continue to drive infrastructure modernization across customers of all sizes. Services were flat as strong managed services were offset by weaker professional services revenue. We saw an increase in storage and cloud services as the continued build-out of data centers and underlying infrastructure suggests a long runway of opportunity across the ecosystem, and ePlus is well positioned to benefit from this trend. Offsetting this was a decrease in project work, due in large part to delays from customers in our retail sector. Our service offerings continue to play an increasingly important role as customers look for ePlus to help assess, design, deploy, and manage AI use cases. Security also continues to be an important business driver for us.

[Mark Marron, CEO and President at ePlus]

Overall, security gross billings for products and services grew 16.4% year-over-year and is up 27.6% for the trailing 12 months. Customers continue to prioritize cybersecurity investments as threat levels rise due to AI. Our expanding security capabilities are resonating with our customers, and we are well positioned to meet demand here too. This includes helping our customers around their governance and risk frameworks, as well as providing data governance advice to ensure the right classifications and permissions are in use to support AI consumption of data, while also providing guidance on the correct protection architectures to secure AI workloads, both in development and production. Moving on to profitability.

[Mark Marron, CEO and President at ePlus]

Net earnings from continuing operations increased 129.3% to $33.4 million from the $14.6 million in the prior year quarter, and adjusted EBITDA increased 97% to $53.4 million, with a margin of 8.7%, 320 basis points higher than the same period of the prior year. Closing out the financial commentary, our fiscal year 2026 operating performance has been particularly strong, with net sales up 22% and adjusted EBITDA up 55% year to date. This reflects healthy demand trends combined with disciplined operational execution. With respect to industry trends, AI continues to be a meaningful growth driver. For us, AI adoption continues to accelerate across our customer base and remains a powerful tailwind as we are seeing AI-driven investments drive demand across data centers, security, cloud, and networking.

[Mark Marron, CEO and President at ePlus]

We continue to look for ways to enhance and expand our AI envisioning sessions and AI acceleration offerings to help customers identify use cases that would benefit their company and provide cost-effective solutions to help them get started. This includes working on AI-specific solutions and services to address areas of need, address any financial constraints, and help supplement their current workforce. Overall, we remain focused on expanding our solutions portfolio, growing our professional and managed services capabilities, and extending our geographic reach. We continue to evaluate acquisitions and investments that enhance our position in higher growth areas, help us scale, provide access to new customers, markets, and capabilities, and support our long-term vision of delivering comprehensive workplace transformation solutions. In summary, our third quarter and nine-month year-to-date results reflect our diversified business model, emphasis on high-growth areas, and our disciplined execution.

[Mark Marron, CEO and President at ePlus]

We believe we are well positioned for continued growth, supported by industry demand trends, operating leverage, and financial flexibility. I'll now turn the call over to Elaine. Elaine?

[Elaine Marion, CFO at ePlus]

Thank you, Mark, and thank you everyone for joining us. Today, I will review our financial performance in the third quarter of fiscal 2026. Our third quarter results demonstrate the resilience and scalability of our business model as we delivered double-digit growth across all key metrics. Consolidated net sales increased 24.6% to $614.8 million, as compared to the same three-month period in the prior year, led by continued broad-based growth across customer sizes and verticals, with notable strength from mid-market and enterprise customers, with some outsized projects from enterprise customers. Importantly, we delivered this growth while operating expenses increased a more modest 6%, underscoring operating leverage.

[Elaine Marion, CFO at ePlus]

Driven by our strategic focus areas of AI, cloud, security, and networking, we delivered 15.6% growth in quarterly gross billings to $982.1 million, and 18.7% growth in year-to-date gross billings, which approached nearly $3 billion. For the quarter, product revenue grew 32.2% year-over-year to $501.9 million, reflecting growth across all categories, and service revenue totaled $112.8 million, down slightly from $113.6 million in the prior year period. Managed services revenue grew 10.5%, led by continued demand for cloud and enhanced maintenance support offerings, while professional services revenue declined 7.8% due to project delays from customers in our retail sector.

[Elaine Marion, CFO at ePlus]

Services remain a strategic focal point for ePlus as we continue to add capabilities in our managed services segment to build out our recurring revenue basis. Sales across our customer verticals remain broad-based, with telecom, media, and entertainment accounting for 27% of net sales on a trailing 12-month basis, and technology, SLED, and healthcare each accounting for 13%, and financial services at 9%, with the remaining 25% divided among other end markets, which have been growing. Third quarter consolidated gross profit totaled $158.7 million, up 26.8% from $125.1 million in the prior year quarter, and consolidated gross margin came in at 25.8%, up 40 basis points from 25.4% last year.

[Elaine Marion, CFO at ePlus]

Product segment gross margin expanded 170 basis points to 23.8%, benefiting from a higher gross margin on sales, offset by a lower impact from the sales of products that are recorded on a net basis. Professional services gross margin was 39.2%, down from 40.1% in the prior year, due to the blending of services from our acquisition of Bailiwick, while managed services margins decreased slightly to 29% from 29.8%. Operating expenses increased 6.1% to $115.2 million in the quarter, mainly due to increased variable compensation, reflective of the increased gross profit. Continuing operations headcount declined 3.4% to 2,166, as we emphasize roles in our strategic high-growth areas.

[Elaine Marion, CFO at ePlus]

Operating income totaled $43.5 million, and earnings before taxes were $45.6 million, compared to $16.5 million and $19.9 million, respectively, in the third quarter of fiscal 2025. Other income totaled $2.1 million, compared to $3.4 million in the prior year. Our effective tax rate came in at 26.7%, essentially in line with 26.9% in the prior year. Net earnings from continuing operations were $33.4 million, or $0.27 per diluted share, more than double the $14.6 million or $0.55 per diluted share reported in the year ago period. Discontinued operations net income was $1.7 million, due to the settlement of a legal matter, compared to the $9.6 million reported in the third quarter of fiscal 2025.

[Elaine Marion, CFO at ePlus]

Net earnings from discontinued operations per diluted share were $0.06, compared to $0.36 in the prior year quarter. Non-GAAP diluted earnings per share from continuing operations more than doubled to $1.45 from $0.71 in the prior year. Adjusted EBITDA for the quarter totaled $53.4 million, nearly double the $27 million we reported in the third quarter of fiscal 2025. Adjusted EBITDA growth significantly outpaced gross profit and net sales growth, demonstrating the meaningful operating leverage in our business model. Now, I would like to review our results for the nine months ended December 31st, 2025. Consolidated net sales increased 22.2% to $1.86 billion, up from $1.52 billion in the first nine months of fiscal 2025, driven by balanced growth across products and services.

[Elaine Marion, CFO at ePlus]

Year-to-date consolidated gross profit rose 23.7% to $469 million, and gross margin expanded 30 basis points to 25.2%, led by strong product margins. Year-to-date consolidated net earnings from continuing operations totaled $98.7 million, 68.5% above the $58.6 million reported in the first nine months of fiscal 2025. Diluted EPS from continuing operations increased to $3.74 from the $2.19 per diluted share reported in the prior year. Discontinued operations net earnings for the first nine months was $8.9 million, or $0.34 per diluted share, versus $24.2 million, or $0.91 per diluted share in the first nine months of fiscal 2025.

[Elaine Marion, CFO at ePlus]

Non-GAAP earnings per share from continuing operations grew 59% to $4.23, up from $2.66 in the prior year period. Turning to our balance sheet, 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. Our strong cash position provides financial flexibility and enables us to pursue organic and inorganic investments, while also allowing us to return capital to shareholders. Inventory at quarter end was $241 million, up from $120.4 million at the end of fiscal 2025, primarily due to an increase in projects in process.

[Elaine Marion, CFO at ePlus]

Inventory days outstanding were 22 days, above the 15 days reported in the prior sequential quarter and 13 days in the prior year. This contributed to an increase in our cash conversion cycle to 41 days from 32 days in the last year's fiscal third quarter. We continue to take a disciplined approach to capital allocation, with a focus on organic and inorganic investments in our key strategic areas and returning capital to shareholders through dividends and share repurchases. In line with this framework, we repurchased over 200,000 shares during the quarter. We are also very pleased to announce a quarterly dividend of $0.25 per common share, payable on March 18th, 2026, to shareholders of record on February 24th, 2026. Our third quarter demonstrates the resilience of our business model and continued execution on our strategic priorities.

[Elaine Marion, CFO at ePlus]

With that, I will turn the call back to Mark. Mark?

[Mark Marron, CEO and President at ePlus]

Thank you, Elaine. We reported a solid quarter and year-to-date performance with double-digit growth across all key metrics. Our third quarter and year-to-date results reinforce the strength of our strategy, the demand momentum across our portfolio, and the scalability of our operating model. Importantly, we see this momentum continuing. Accordingly, we are increasing our full year guidance for net sales, gross profit and adjusted EBITDA growth. We are raising our net sales guidance to 20%-22% year-over-year growth, an increase from the prior guidance of mid-teens. This increase is against fiscal year 2025's $2.01 billion from continuing operations. Gross profit is now expected to grow at a rate of 19%-21% as compared to the prior guidance of mid-teens from fiscal year 2025's $515.5 million from continuing operations.

[Mark Marron, CEO and President at ePlus]

We now expect adjusted EBITDA to increase 41%-43% over our fiscal year 2025 adjusted EBITDA of $141 million from continuing operations. This is an increase from our prior guidance that was twice the pace of net sales when net sales was expected to be in the mid-teens. As we look ahead, we're also mindful of potential near-term risks, including the industry-wide memory shortage. The global memory chip market is experiencing a notable supply squeeze and rapid, unexpected price increases. Demand for advanced memory components, especially those used in large AI systems and data centers, is outpacing the industry's ability to produce them. While this dynamic could impact certain customer deployments or timing, we believe we are well positioned to manage through it, given our diversified supplier relationships and close coordination with customers. Still, it is a development we must monitor closely.

[Mark Marron, CEO and President at ePlus]

We are entering the last quarter of the year with strong momentum and balance sheet resources to continue investing while supporting our capital allocation priorities. Our focus remains on executing our long-term strategy, delivering consistent results, maintaining disciplined capital allocation, and supporting our customers as they invest and grow. The progress we have made year to date underscores the strength of our strategy and successful execution and positions us well for the future. We are excited about the opportunities ahead and remain focused on driving sustainable growth and long-term shareholder value. I want to close by thanking our ePlus team for their continued dedication and execution in delivering another strong quarter. Their efforts are critical to delivering value to our customers and our shareholders. Thank you for joining us today. We will now open up the call for questions.

[Operator]

Thank you. We will now begin the question-and-answer session. Again, if you'd like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and enter the queue. If you'd like to withdraw your question at any time, you can simply press star one again. We'll pause just for a moment to compile the roster. Your first question comes from the line of Maggie Nolan with William Blair. Your line is open.

[Maggie Nolan, Research Analyst at William Blair]

Hi, thank you, and congrats from me on the quarter and the guidance. I wanted to dig into the comment one of you had made about outsized projects from enterprise customers. Can you fill us in a little bit on the nature of these, you know, how big they are, the drivers of them, and then how many quarters of kind of that outsized impact do you potentially expect until it reverts to normal or moderates?

[Mark Marron, CEO and President at ePlus]

Okay. First off, thanks, Maggie, for the quick appreciation of the quarter. So a couple different things happened in the quarter. I'll touch on a few of them and then address your enterprise piece. One, we saw growth across all product segments and customer size segments. What was really interesting, our mid-market customers had the biggest growth, so that's kind of our sweet spot. So some of the things we've talked about throughout the years about our strategy and where our focus is around AI, cloud, security, and networking is really taking hold. What we were trying to message, if you will, as it relates to the enterprise customers, we had a few of our large enterprise customers that had fairly large quarters in Q3.

[Mark Marron, CEO and President at ePlus]

We don't think that'll be a major slowdown in Q4, but we don't think we'll be able to replicate that, and that kinda shows in our guidance that we gave for the year.

[Maggie Nolan, Research Analyst at William Blair]

Okay, great. Thank you, Mark. And then on the professional services piece, you mentioned some project delays from retail customers. Are those more like push outs where you would expect maybe that revenue to materialize in March or fiscal 2027? And then any insight on, you know, what is the nature of these delays and whether that could be more widespread across your services business?

[Mark Marron, CEO and President at ePlus]

Yeah, I would expect, Maggie, more in 2027, in 2027, or I guess 2026, our fiscal 2027, is when you'd see it. So we don't expect it to be a long term. It was just a few customers that delayed projects, specifically in the retail and consumer space, that affected that. That's why our PS was down. You know, our staffing was down a little bit as well, but we're not as concerned on that. And then the other thing just to note, if you remember, last year, our services were up significantly, over 50%. That was really due to the Bailiwick acquisition. So it was a combination of a tough compare, you know, a few customers that kind of slid off this quarter that'll slide into next fiscal year, and then staffing being down.

[Mark Marron, CEO and President at ePlus]

I will highlight as well, our MS continues to grow, our managed services, sorry. So, we feel like we're in a pretty good spot overall.

[Maggie Nolan, Research Analyst at William Blair]

Okay. Thank you.

[Mark Marron, CEO and President at ePlus]

All right, thanks. Stay warm in Chicago, Maggie.

[Operator]

Again, if you would like to ask a question, please press star, then the number one on your telephone keypad. Your next question comes from the line of Greg Burns with Sidoti & Company. The line is open.

[Greg Burns, Analyst at Sidoti & Company]

Good afternoon. I just wanted to touch on the inventory build and, I guess, the timing of those projects. When do you expect to be able to deliver against that inventory that you're carrying on your balance sheet?

[Elaine Marion, CFO at ePlus]

Yeah, Greg, so our sequentially, the inventory increased about $85 million, and that's really in concert with what we're seeing with the increase in just demand for the quarter as well. So the projects are fluctuating in and out. There'll be a progression of lesser inventory over time, but, you know, we're also seeing new orders as well. So, I would expect the inventory level to be a little more inflated, you know, in the next several quarters.

[Mark Marron, CEO and President at ePlus]

Traditionally, Greg, our AI and inventory tick up at the end of the year a little bit as well.

[Greg Burns, Analyst at Sidoti & Company]

Okay. Is there any way you can, I don't know, maybe we're not at the point yet, but to quantify, the impact AI is having for you, maybe any kind of additional kind of color you could give us to maybe understand kind of the size of that business now, versus maybe the growth rates?

[Mark Marron, CEO and President at ePlus]

Yeah. Hey, hey, Greg, we've kind of talked about it. What, what was interesting this quarter versus some of the prior quarters, AI was somewhat of a headwind. We now see it as a tailwind, and we've, we've talked about this in prior quarters. What's happening now is everybody's starting to define their use cases and figure out how to take advantage of these AI capabilities. What we've always talked about is people have to modernize their legacy systems, and that's, that's where we're seeing the growth. If you look at our data center cloud growth, if you look at our networking growth, which, by the way, networking, we've talked about it in previous quarters, it was kind of down a while back because the supply chain, people had to digest it. Well, they're through that.

[Mark Marron, CEO and President at ePlus]

They're now AI-enabling their networking and refreshing stuff based on timing. So a lot of what you're seeing in the growth in our product areas is being driven by AI. Also, from a security perspective, there's a lot going on with governance, risk and compliance, data governance, and I'd call it even threat protection, like the, you know, building the roadmaps for our customers as they try to take advantage of the AI capabilities. But it's been a very nice add for us over the last few quarters related to the different product areas.

[Greg Burns, Analyst at Sidoti & Company]

All right. And then you, you had mentioned, your, your ability to, to offer, kind of integrated solutions across all the areas you mentioned, like AI, cloud, networking. How important is that becoming for you? Could you just maybe talk—I haven't heard you mention that in the past. So how important is that dynamic to your ability to continue to grow and gain market share?

[Mark Marron, CEO and President at ePlus]

Yeah, I think it's, I think it's one of our differentiators, Greg. I think a lot of customers are looking to just lock down a few key partners or strategic vendors to kind of deal with. I'd almost liken it to, if you remember, back in the day with converged infrastructure, when that came out, with compute and storage and virtualization, that's what kind of put us on the map in that space, because we were able to bring all those vendors together in a tight solution while providing managed services around it.

[Greg Burns, Analyst at Sidoti & Company]

Okay. All right, great. Thank you.

[Mark Marron, CEO and President at ePlus]

No problem. Anything else, or? Okay.

[Operator]

Thank you. With no further questions in queue, I'd like to turn the conference back over to Mark for any closing remarks.

[Mark Marron, CEO and President at ePlus]

All right. Thank you, everyone, for joining us today for our earnings call. We look forward to updating you on our fiscal, our Q4 and fiscal earnings call in May. Thanks for taking the time today. Take care.

[Operator]

This concludes today's conference call. You may now disconnect.

Participants

Executives

• Elaine Marion, CFO
• Kley Parkhurst, Senior VP
• Mark Marron, CEO and President

Analysts

• Greg Burns, Analyst at Sidoti & Company
• Maggie Nolan, Research Analyst at William Blair