What ePlus (PLUS) Said on Its Q2 Earnings Call

Key Points

• ePlus raised its fiscal 2027 outlook, now expecting upper-single-digit growth in net sales and gross profit and low-double-digit growth in adjusted EBITDA. Q2 net sales rose 9.7% to $667.9 million, while adjusted EBITDA increased 14.3% to $67.1 million.
• Demand for AI-related data center infrastructure, cloud and cybersecurity helped drive product sales up 12.8%; data center and cloud sales surged 39.2%. Open orders exceeded $1.8 billion, though memory constraints and some high-end networking delays persist.
• Services revenue declined to $120.8 million as professional services fell 11.3%, offsetting growth in managed services. Inventory rose to $271.4 million, mainly for projects expected to ship in the second half of fiscal 2027.

ePlus NASDAQ: PLUS raised its fiscal 2027 outlook after reporting higher second-quarter sales and profit, citing demand for data center infrastructure, cloud services and cybersecurity as customers invest in artificial intelligence.

The technology solutions provider reported net sales of $667.9 million for the quarter ended September 30, 2026, up 9.7% from a year earlier. Gross profit rose 11.2% to $180.3 million, while adjusted EBITDA increased 14.3% to $67.1 million. Gross billings rose 4.3% to a quarterly record of $1.07 billion.

CEO and President Mark Marron said growth was largely organic and spread across the company’s customer base. Operating income increased 15.8% to $56.5 million, and Marron said he expects operating leverage to continue improving in the second half of the fiscal year.

Higher Outlook and Growing Open Orders

ePlus now expects upper-single-digit growth in both net sales and gross profit for fiscal 2027, with adjusted EBITDA projected to grow in the low double digits. Marron attributed the raised outlook to first-half performance, demand and growth in bookings and open orders.

Open orders increased by nearly $750 million from a year earlier and by approximately $300 million from the prior quarter, according to COO and ePlus Technology President Darren Raiguel. In response to an analyst’s question, Raiguel said total open orders exceeded $1.8 billion; CFO Elaine Marion cited $1.1 billion for the prior-year comparison.

Raiguel said the backlog includes high-end networking and data center products, alongside increased customer activity. He said a good portion of open orders will extend into fiscal 2028, although the company expects a significant portion of its inventory to ship during the second half of fiscal 2027.

Asked about supply constraints, Raiguel said memory issues persist in high-end computing, particularly GPU-related products, and have contributed to some delays in high-end networking. He said the impact across the broader market was more about price increases than widespread delays.

Product Growth Outpaces Services

Product segment net sales rose 12.8% to $547.1 million. Data center and cloud net sales increased 39.2%, while security product sales grew 10.3%. Raiguel said the company secured several multimillion-dollar wins across data center, cloud, security and networking, supported by AI and IT modernization projects.

Services revenue fell to $120.8 million from $123.8 million a year earlier. Managed services revenue grew 11.9% to $53.1 million, but professional services revenue declined 11.3% to $67.8 million. Marion attributed the professional services decline to continued delays in large retail projects and a difficult comparison with the prior year’s record quarter for that business.

Consolidated gross margin expanded to 27% from 26.6%. Product gross margin rose to 25.8%, reflecting a shift in product mix and increased revenue from third-party maintenance and subscriptions. Services gross margin fell to 32.5% from 34.8%, with Marion citing a shift in mix and higher third-party costs.

Net earnings from continuing operations were $40.4 million, or $1.56 per diluted share, compared with $38.2 million, or $1.45 per share, a year earlier. Non-GAAP diluted earnings per share rose 19% to $1.82.

Cash, Inventory and Capital Returns

ePlus ended the quarter with $380.9 million in cash and cash equivalents, down from $448.9 million at the end of the first quarter. Inventory increased to $271.4 million from $146 million, primarily reflecting projects for a large customer that the company expects to ship in the second half, Marion said.

The company repurchased approximately 148,000 shares during the quarter, bringing first-half repurchases to about 400,000 shares for nearly $34 million. It also announced a dividend of $0.27 per common share, payable December 16, 2026, to shareholders of record on November 24.

During the quarter, ePlus acquired Daymark Solutions, which Marron said expands the company’s presence in the Northeast and adds a Microsoft Tier 1 Cloud Solution Provider certification and expertise in regulated and data-intensive industries.

About ePlus (NASDAQ:PLUS)

ePlus inc. NASDAQ: PLUS provides technology solutions, professional services and financing to organizations in the commercial, government, healthcare and education sectors. Through its technology business, the company helps customers plan, implement and manage information technology environments, including data center, networking, cybersecurity, collaboration, cloud and digital infrastructure solutions.

The company also offers managed and professional services, technology consulting, IT asset management, and lifecycle services.

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