Executive Summary

ePlus delivered a high-quality Q2 FY26 with broad-based growth: revenue +23.4% YoY to $608.8M, gross billings +26.5% to $1.02B, gross profit +27.4% to $162.1M, and GAAP diluted EPS (continuing ops) up 96% to $1.45; non-GAAP diluted EPS was $1.53 .
Results materially beat S&P Global consensus: revenue $608.8M vs $518.3M estimate and non-GAAP EPS $1.53 vs $0.945 estimate; guidance raised to mid-teens growth for FY26 revenue and gross profit, and adjusted EBITDA to grow at ~2x revenue growth, setting a constructive near-term narrative and catalyst path for the stock . Revenue est: $518.3M*; EPS est: $0.945* (Values retrieved from S&P Global).
Mix and execution drove margin expansion: product gross margin improved with higher third‑party maintenance/services mix recognized on a net basis; foreign exchange gains and higher interest income lifted other income; services remained a structural support despite modest margin compression from the Bailiwick acquisition .
Capital returns and balance sheet strength underpin the outlook: $402M cash, another $0.25 quarterly dividend declared, and selective M&A (Realwave) enhancing AI capabilities; these, alongside raised FY26 guide, are key stock catalysts into the next prints .

What Went Well and What Went Wrong

What Went Well
- Strong top-line and profitability momentum: net sales +23.4% YoY to $608.8M; gross profit +27.4% to $162.1M; adjusted EBITDA +61.6% to $58.7M .
- Mix-led margin expansion and operating leverage: consolidated gross margin up ~80 bps YoY to 26.6%; operating income +80.9% YoY to $48.8M as opex grew slower than gross profit .
- Strategic progress in AI with Realwave and record billings: “quarterly gross billings exceeding $1 billion for the first time” and continued investment in AI/security/cloud/networking; “strength and resiliency” emphasized by CEO Mark Marron .
What Went Wrong
- Sequential revenue softness vs Q1 FY26: Q2 revenue $608.8M vs Q1 $637.3M as large enterprise deals and mix dynamics can create q/q variability .
- Services margin compression tied to Bailiwick: professional services gross margin 38.2% vs 41.3% YoY due to acquired mix; managed services margin edged down to 29.4% (29.5% prior year) .
- Select end-market/product pockets weaker: SLED net sales down 10.7% YoY and collaboration down 7.9% YoY; “Other” product sales also declined YoY .

Financial Results

Metric	Q2 FY2025	Q1 FY2026	Q2 FY2026
Net Sales ($M)	$493.4	$637.3	$608.8
Gross Billings ($M)	$808.2	$952.8	$1,022.7
Gross Profit ($M)	$127.3	$148.2	$162.1
Gross Margin (%)	25.8%	23.3%	26.6%
Operating Income ($M)	$27.0	$36.2	$48.8
Adjusted EBITDA ($M)	$36.3	$46.7	$58.7
Diluted EPS – GAAP (Cont. Ops)	$0.74	$1.03	$1.45
Diluted EPS – Non-GAAP (Cont. Ops)	$0.94	$1.26	$1.53

Results vs Estimates (S&P Global)

Revenue: Consensus $518.3M* vs Actual $608.8M → Beat by ~$90.5M (~17.5%) .
EPS (Non-GAAP/Normalized): Consensus $0.945* vs Actual $1.53 → Beat by ~$0.585 (~62%) .
Values retrieved from S&P Global.

Segment Net Sales and Gross Profit (Q2)

Segment	Q2 FY2025 Net Sales ($M)	Q2 FY2026 Net Sales ($M)	YoY	Q2 FY2025 Gross Profit ($M)	Q2 FY2026 Gross Profit ($M)	YoY
Product	389.6	485.0	+24.5%	89.4	119.0	+33.2%
Professional Services	61.9	76.3	+23.3%	25.6	29.2	+14.0%
Managed Services	41.8	47.4	+13.5%	12.3	14.0	+13.1%
Total	493.4	608.8	+23.4%	127.3	162.1	+27.4%

Net Sales by Type (Q2)

Type	Q2 FY2025 ($M)	Q2 FY2026 ($M)	YoY
Networking	186.8	258.2	+38.2%
Cloud	121.3	128.3	+5.7%
Security	41.2	65.9	+59.9%
Collaboration	18.0	16.6	(7.9%)
Other	22.3	16.1	(27.6%)

Net Sales by Customer End Market (Q2)

End Market	Q2 FY2025 ($M)	Q2 FY2026 ($M)	YoY
Telecom, Media & Entertainment	108.9	176.8	+62.2%
SLED	97.7	87.2	(10.7%)
Healthcare	78.2	82.3	+5.2%
Technology	55.0	69.5	+26.7%
Financial Services	34.8	63.1	+81.5%
All Other	118.8	129.9	+9.3%

Balance Sheet KPIs

Metric	Mar 31, 2025	Jun 30, 2025	Sep 30, 2025
Cash & Cash Equivalents ($M)	$389.4	$480.2	$402.2
Accounts Receivable – Trade, net ($M)	$516.9	$700.9	$676.8
Inventory ($M)	$120.4	$101.1	$154.1

Guidance Changes

Metric	Period	Previous Guidance (Q1 FY26)	Current Guidance (Q2 FY26)	Change
Net Sales Growth vs FY25 (cont. ops)	FY2026	Upper single digits	Mid-teens	Raised
Gross Profit Growth vs FY25 (cont. ops)	FY2026	Upper single digits	Mid-teens	Raised
Adjusted EBITDA Growth vs FY25 (cont. ops)	FY2026	Mid-teens	~2x net sales growth rate	Raised (implied)
Dividend	Quarterly	Initiated $0.25 (paid 9/17/25)	$0.25 declared, payable 12/17/25	Maintained

Earnings Call Themes & Trends

Note: A Q2 FY26 earnings call was held Nov 6, 2025; however, the transcript was not available in our corpus. The current period summaries below reflect press release commentary; prior periods reflect transcripts .

Topic	Previous Mentions (Q4 FY25 and Q1 FY26)	Current Period (Q2 FY26)	Trend
AI/Technology Initiatives	Built AI workshops/labs; NVIDIA DGX SuperPOD specializations; expect enterprise AI infra to pick up later; building consultative capabilities .	Acquired Realwave assets to enhance AI capabilities; reiterated focus on AI/security/cloud/networking .	Improving (capability expansion)
Security	TTM security ~22% of billings; key growth driver .	Security billings +56% YoY; net sales +59.9% YoY .	Strengthening
Networking	Weakness noted previously; digestion by customers .	Networking net sales +38.2% YoY; billings +43.4% YoY .	Rebound
Services Mix/Margins	Services revenue up; margins diluted by Bailiwick mix .	Services revenue +19.4% YoY; pro services margin 38.2% (from 41.3%) due to Bailiwick .	Mixed (growth with lower margins)
End Markets	Telecom/media strong; networking soft; varied vertical spend .	TME +62% YoY; Financials +82% YoY; SLED -11% YoY .	Mixed by vertical
FX/Other Income	FX losses impacted Q1 other income .	FX gains and higher interest income lifted other income in Q2 .	Positive swing

Management Commentary

“This quarter marks an important milestone for ePlus, as we posted quarterly gross billings exceeding $1 billion for the first time in our history.” — Mark Marron, President & CEO .
“We completed the acquisition of certain assets of Realwave in the quarter to further enhance our Artificial Intelligence (AI) capabilities… invest in fast growing categories including cybersecurity, networking, AI and cloud.” — Mark Marron .
“Reflecting the strong financial performance to date and momentum we expect to continue, the Company is increasing its fiscal year 2026 net sales, gross profit and Adjusted EBITDA guidance.” — Company outlook statement .

Q&A Highlights

Q2 FY26 call transcript not found in our document set; a call was held Nov 6, 2025 at 4:30pm ET (details provided in press release) .
Context from prior calls:
- AI adoption likely to accelerate from enterprise use cases with ePlus supporting consultative services and infrastructure; NVIDIA specializations position ePlus for enterprise-grade AI deployments .
- Mix dynamics: large enterprise projects can lift net sales but pressure product margins; services growth aided by Bailiwick acquisition but at lower margins vs legacy services .
- Demand trends: data center, cloud, and security strong; networking previously soft due to customer digestion but expected to improve in coming quarters .

Estimates Context

Consensus (S&P Global) vs Reported:
- Revenue: $518.3M* vs $608.8M → Beat by ~$90.5M (~17.5%) .
- EPS (Non-GAAP/Normalized): $0.945* vs $1.53 → Beat by ~$0.585 (~62%) .
  Values retrieved from S&P Global.
Implications: Street likely raises FY26/27 revenue, margin, and EBITDA trajectories given raised FY26 guide (mid-teens revenue/gross profit; EBITDA to grow ~2x revenue rate), stronger networking/security demand, and record billings momentum .

Key Takeaways for Investors

Quality beat and raise: ePlus produced a substantial top- and bottom-line beat, expanded margins, and raised FY26 growth targets—key catalysts that can support near-term multiple and estimate revisions (Revenue est: $518.3M*; EPS est: $0.945*; Values retrieved from S&P Global).
Mix improvements matter: higher net-basis third-party maintenance/services and FX/interest tailwinds lifted profitability; sustainable services-led model remains a structural advantage even as acquired mix tempers services margins .
Demand breadth: outsized growth in security and networking and strong TME/financials verticals offset weak SLED and collaboration, supporting a diversified growth narrative .
Record execution: surpassing $1B in quarterly billings underscores scale and sales force productivity, with runway in AI-enabled infrastructure and services (augmented by Realwave) .
Capital deployment flexibility: $402M cash, consistent $0.25 quarterly dividend, and ongoing M&A optionality support both growth and shareholder returns into FY26 .
Watch sequential cadence: Q2 revenue declined vs Q1 given large-deal/mix dynamics; track seasonality and enterprise project timing into Q3/Q4 .
Risk checks: end-market dispersion (SLED/collaboration softness), services margin mix from acquisitions, and FX variability remain monitoring points; however, raised guide suggests confidence in operating leverage .

Values with asterisk (*) are from S&P Global consensus. Values retrieved from S&P Global.

EPLUS INC (PLUS)·Q2 2026 Earnings Summary