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EI

EPLUS INC (PLUS)·Q1 2026 Earnings Summary

Executive Summary

  • Strong start to FY26: net sales up 19.0% to $637.3M; services revenue up 48.8% to $116.3M; record gross billings of $952.8M; non-GAAP diluted EPS $1.26; Adjusted EBITDA $46.7M .
  • Beat vs S&P Global consensus: revenue $637.3M vs $516.7M estimate; EPS $1.26 vs $1.105 estimate; EBITDA $49.2M vs $43.2M estimate; notable upside driven by enterprise projects and strength in cloud/security* .
  • Guidance raised: FY26 net sales and gross profit growth both to “upper single digits” and Adjusted EBITDA growth to “mid-teens” (from low/mid single digits previously) .
  • Capital allocation catalysts: initiated $0.25 quarterly dividend and new buyback authorization up to 1.5M shares; transformation to pure-play tech provider following sale of domestic financing business .
  • Management sees AI, cloud, security, and networking as core growth engines; early wins in “plumbing” for AI workloads and plans to bolster AI consultative services .

What Went Well and What Went Wrong

What Went Well

  • Record quarter: “strongest gross billings and net sales quarter in our history,” with double-digit increases in revenue, gross profit, and EPS .
  • Services momentum: professional services +92.4% YoY to $71.7M (Bailiwick acquisition), managed services +9.0% to $44.6M; combined services revenue +48.8% .
  • Strategic repositioning and capital returns: divested domestic financing business, initiated quarterly dividend, and launched new buyback program; “largest cash position in our history” ($480.2M) .

What Went Wrong

  • Margin compression: consolidated gross margin fell 40 bps YoY to 23.3% and product margin declined to 20.4% on mix (lower third-party maintenance/services sold on net basis) .
  • FX headwinds: other income declined to $0.6M vs $1.7M prior year due to higher foreign currency transaction losses .
  • Uneven end markets/product lines: networking (-7.0%), collaboration (-43.7%), and technology end market (-24.2%) year over year, offset by strength in cloud and telecom/media/entertainment .

Financial Results

Headline metrics progression (older → newer)

MetricQ3 FY25Q4 FY25Q1 FY26
Net Sales ($USD Millions)$511.0 $498.1 $637.3
Gross Profit ($USD Millions)$140.9 $145.8 $148.2
Gross Margin (%)27.6% 29.3% 23.3%
Operating Income ($USD Millions)$28.5 $34.7 $36.2
Adjusted EBITDA ($USD Millions)$39.1 $43.8 $46.7
GAAP Diluted EPS – Continuing Ops ($)$0.91 $0.95 $1.03
Non-GAAP Diluted EPS – Continuing Ops ($)$1.06 $1.11 $1.26
Effective Tax Rate (%)25.0% 29.7% 26.3%

Q1 FY26 Actual vs S&P Global Consensus

MetricConsensus*ActualSurprise
Revenue ($USD Millions)$516.7*$637.3 +$120.6M / +23.3%*
Primary EPS ($)$1.105*$1.26 +$0.155 / +14.0%*
EBITDA ($USD Millions)$43.15*$49.16*+$6.01 / +13.9%*

Values retrieved from S&P Global. Company-reported Adjusted EBITDA was $46.7M .*

Segment breakdown (Q1 FY26 vs Q1 FY25)

SegmentNet Sales ($USD Millions) Q1 FY25Net Sales ($USD Millions) Q1 FY26YoY %Gross Profit ($USD Millions) Q1 FY25Gross Profit ($USD Millions) Q1 FY26YoY %
Product$457.3 $520.9 13.9% $98.5 $106.5 8.1%
Professional Services$37.3 $71.7 92.4% $15.5 $28.2 82.2%
Managed Services$40.9 $44.6 9.0% $12.8 $13.5 5.5%
Other$1.2 $0.1 (26.5%) $0.08 $0.05 (41.3%)

KPIs and Operating metrics

KPIQ4 FY25Q1 FY26
Gross Billings ($USD Millions)$789.0 $952.8
Gross-to-Net Adjustment (%)34.6% 33.8%
Cash and Equivalents ($USD Millions)$389.4 $480.2
Accounts Receivable – Trade ($USD Millions)$517.1 $700.9
Inventory ($USD Millions)$120.4 $101.1
Headcount (period-end)2,199 2,182
Inventory Days—14
Cash Conversion Days—26

Guidance Changes

MetricPeriodPrevious Guidance (May 22, 2025)Current Guidance (Aug 7, 2025)Change
Net Sales Growth (YoY)FY26Low single digits Upper single digits over FY25 $2.01B (continuing ops) Raised
Gross Profit Growth (YoY)FY26Mid single digits Upper single digits over FY25 $515.5M (continuing ops) Raised
Adjusted EBITDA Growth (YoY)FY26Mid single digits Mid-teens over FY25 $141M (continuing ops) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25 / Q4 FY25)Current Period (Q1 FY26)Trend
AI initiativesLaunched Secure GenAI Accelerator; focus on AI among secular drivers Investing in AI consultative services, labs/workshops; early “plumbing” wins in HPC/storage/networking/security Accelerating investment and customer adoption
Ratable/subscription mixShift driving higher gross-to-net and margin expansion on lower revenue base Lower product margins due to mix (less netted maintenance/services) despite strong revenue Mixed: overall strategic shift persists, quarterly mix variable
Networking & supply chainNetworking softness; supply chain normalization post constraints Sequential improvement in networking; expect benefit from AI-driven infrastructure demand Improving
Enterprise demandMixed/softer in prior periods Resumption of purchasing by some large enterprise customers (project-based) Recovering but project-driven
Capital allocationHealthy balance sheet and flexibility First quarterly dividend ($0.25) and new 1.5M share buyback; $480.2M cash Shareholder returns increased
Portfolio transformationFinancing business still contributing in FY25 Sale of domestic financing business; pure-play tech focus with relationship to provide financing via buyer Simplified model, reduced volatility

Management Commentary

  • “Fiscal 2026 is off to a strong start… our strongest gross billings and net sales quarter in our history with growth across all customer sizes and solid contributions from our data center, cloud and security product offerings.” — Mark Marron, CEO .
  • “We are now a pure play technology services provider… better positioned for long term growth.” — Mark Marron .
  • “We are… increasing our fiscal year 2026 guidance… net sales and gross profit growth in upper single digits… adjusted EBITDA growth in the mid-teens.” — Mark Marron .
  • “Our balance sheet remains strong… closing the quarter with $480,000,000 in cash and cash equivalents, a record level for us.” — Mark Marron .

Q&A Highlights

  • Adjusted EBITDA drivers: mix shifts, services growth, networking sequential improvement, and early AI “plumbing” traction; OpEx moves to support EBITDA growth faster than revenue .
  • Enterprise demand sustainability: large enterprise purchases resumed but remain project-based; not yet modeled as ongoing run-rate .
  • Financing divest timing: long-considered; AI/cyber/services market tailwinds made now the right time; simplifies, frees cash, enables dividends .
  • AI readiness: strong in infrastructure; plans to build AI consultative front-end capabilities; disciplined approach to organic/inorganic investments .

Estimates Context

  • Q1 FY26 beat vs S&P Global: revenue $637.3M vs $516.7M estimate; EPS $1.26 vs $1.105 estimate; EBITDA $49.16M vs $43.15M estimate; magnitude suggests upward revisions to FY26 topline and EPS trajectories* .
  • Company reports Adjusted EBITDA of $46.7M (continuing ops); SPGI “EBITDA” may differ in definition; use caution when comparing EBITDA metrics across sources .
  • Raised FY26 guidance implies consensus will likely move toward upper single-digit growth for sales/GP and mid-teens Adjusted EBITDA growth, contingent on enterprise demand and AI-related infrastructure cycles .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Upside quarter with broad-based strength; services and cloud/security drove revenue and EPS beats; momentum supports raised FY26 guide .
  • Capital return catalysts (dividend/buyback) plus pure-play transition increase investor appeal; robust cash ($480.2M) enables both growth and returns .
  • Mix can pressure product margins; watch quarterly variability in netted down maintenance/subscriptions and FX impacts on other income .
  • Enterprise demand is reviving but remains project-based; monitor sustainability into H2 and networking normalization tailwinds from AI infrastructure .
  • AI narrative strengthening: near-term revenue from infrastructure “plumbing,” medium-term opportunity from consultative services build-out .
  • Guidance raise is a key stock driver; execution against upper-single-digit sales/GP and mid-teens Adjusted EBITDA targets will be critical .
  • Balance sheet provides M&A optionality (e.g., expanding services footprint) while maintaining dividends and repurchases; discipline emphasized by management .
Notes: *S&P Global consensus and actuals used for estimate comparisons; definitions may vary versus company-reported Adjusted EBITDA.