ePlus Q1 Earnings Call Highlights

Key Points

• Revenue rose modestly, but profitability declined: Fiscal Q1 2027 net sales increased 1% to $649.1 million, while operating income, net earnings and adjusted EBITDA fell year over year amid tougher comparisons and lower gross margins. ePlus maintained its full-year guidance.
• Bookings and open orders surged on AI infrastructure demand: Open orders exceeded $1.5 billion, up more than $650 million from a year earlier, driven by AI-related networking and data-center projects. Management expects much of the backlog to convert into revenue over time, particularly in the second half of the fiscal year.
• Security and managed services remain strategic growth areas: Security gross billings grew 15.6%, while managed services revenue surpassed $50 million and increased more than 15%, led by cloud and data-center offerings. ePlus also repurchased $20.8 million of stock and authorized a new plan for up to 1.5 million shares.

ePlus NASDAQ: PLUS reported fiscal first-quarter 2027 results that reflected modest revenue growth against a difficult prior-year comparison, while bookings and open orders increased substantially amid demand for artificial intelligence infrastructure, security, cloud and managed services.

Chief Executive Officer and President Mark Marron said the prior-year quarter had benefited from the timing of several large enterprise orders, making comparisons more challenging. Despite that backdrop, he said demand was healthy across the business, particularly among mid-market customers, and the company maintained its fiscal 2027 guidance.

“We are encouraged by the current level of bookings and open orders, which are up significantly as we move through the remainder of the year,” Marron said.

Revenue and Profitability

First-quarter consolidated net sales rose 1% year over year to $649.1 million, while gross billings increased 0.5% to $957.1 million. Product revenue increased 0.6% to $529.7 million, supported by security and networking demand, according to Chief Financial Officer Elaine Marion.

Services revenue increased 2.6% to $119.4 million. Managed services revenue surpassed $50 million for the first time and grew more than 15% from the prior-year period, driven primarily by cloud and data center services. Professional services revenue, however, declined 5.1% to $68.1 million as certain projects were delayed.

Gross profit totaled $151.3 million, compared with a gross margin of 23.3%, down from 23.9% a year earlier. Marion attributed the margin changes to shifts in product and service mix, including a lower proportion of third-party maintenance and subscription sales.

Operating income declined to $38.8 million from $42.9 million in the prior-year quarter. Net earnings from continuing operations were $30.3 million, or $1.16 per diluted share, compared with $32 million, or $1.21 per diluted share, a year earlier. Non-GAAP diluted earnings per share from continuing operations were $1.28, down from $1.41.

Adjusted EBITDA was $47.8 million, compared with $52.7 million in the prior-year quarter.

Orders Build as AI Infrastructure Demand Expands

Chief Operating Officer and President of ePlus Technology Darren Raiguel said open orders were more than $1.5 billion at quarter-end, up more than $650 million from a year earlier. He said the balance had increased further by the time of the earnings call. While a portion of open orders consists of ratable subscriptions, Raiguel said most of the balance will convert over time, with some expected to be recognized during the second half of the fiscal year.

Raiguel said the company has booked large AI-linked modern network infrastructure and data center wins in financial services, telecommunications, service providers and neocloud customers. Those wins will take time to convert into revenue, he said, but demonstrate ePlus’ ability to help clients design and provide infrastructure supporting future AI investments.

“AI-related demand for infrastructure is robust with a strong pipeline,” Raiguel said. The company also cited customer interest in services-oriented offerings including agentic AI and Memory-as-a-Service.

Marron highlighted a self-contained agentic AI platform developed with Cisco and NVIDIA. The company said the platform is intended to create a more secure AI infrastructure, reduce human interaction required for diagnosis and remediation, accelerate incident response and shift IT and security teams toward more autonomous operations.

Security and Managed Services Drive Strategic Focus

Security gross billings increased 15.6% during the quarter. Security represented 24.2% of gross billings on a trailing 12-month basis, Marion said. The company also completed multiple multi-year enterprise software licensing agreements in security worth several million dollars or more during the period.

Raiguel said security demand has been less affected by product availability constraints because of the category’s software mix. He described current customer activity as centered on “security for AI and AI for security.”

Managed services growth was led by data center and cloud offerings, while the company also cited demand for enhanced maintenance and support, managed backup and disaster recovery services. Raiguel said a multimillion-dollar booking during the quarter reflected customers selecting ePlus’ higher-touch, U.S.-based support offering at roughly the same price as a vendor-partner alternative.

The company said professional-services projects were slowed by product delivery delays. During the question-and-answer session, Raiguel said previously discussed retail project delays were specific to those customers rather than a broader demand signal.

Cash Position and Capital Returns

ePlus ended the quarter with $448.9 million in cash, up from $410.8 million at the end of fiscal 2026. Inventory declined by $54.9 million to $146 million as projects were completed, contributing to a 10-day sequential improvement in the cash conversion cycle to 41 days.

During the quarter, ePlus repurchased about 251,000 shares for $20.8 million. The board authorized a new repurchase plan for up to 1.5 million shares over a 12-month period beginning Aug. 11, 2026. The company also declared a quarterly dividend of $0.27 per common share, payable Sept. 16, 2026, to shareholders of record on Aug. 25, 2026.

Marron said ePlus intends to continue investing in organic growth, evaluating strategic acquisitions and returning capital through dividends and share repurchases. He also said the company continues to monitor potential headwinds, including the worldwide memory chip shortage and geopolitical issues.

About ePlus (NASDAQ:PLUS)

ePlus 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.

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