Executive Summary

Q4 FY25 delivered strong profitability on lower sales: gross profit +11.8% to $145.8M, gross margin +580 bps to 29.3%, and GAAP EPS +15.9% to $0.95; non-GAAP EPS rose 19.4% to $1.11 .
Versus Wall Street, PLUS posted an EPS beat and a revenue miss: EPS consensus $0.865 vs actual $1.11; revenue consensus $523.85M vs actual $498.1M; estimates had low coverage (2 estimates for both) [Values retrieved from S&P Global]*.
Mix shift to services and ratable/subscription models lifted margins; product sales fell 17.8% YoY, but product margin expanded to 26.6% as more revenue was recognized on a net basis .
FY26 outlook initiated: net sales growth low single digits, gross profit and adjusted EBITDA mid single digits, reflecting macro uncertainty and ongoing ratable revenue transition .
Near-term catalysts: services-led margin expansion and AI/security momentum vs lingering networking softness and digestion by enterprise customers; management highlighted tariffs/government spending uncertainty and ratable mix as key narrative drivers .

What Went Well and What Went Wrong

What Went Well

Gross margin expansion to 29.3% (+580 bps YoY) on a more profitable mix (higher netted-down product and services), driving operating income +19.6% YoY to $34.7M .
Services strength: professional services revenue +48.4% and managed services +16.6% YoY, aided by Bailiwick acquisition and EMS/cloud growth .
Financing segment solid: net sales +4.9% YoY to $10.9M and gross profit +8.2% to $9.5M, supported by transactional gains and portfolio earnings .

Management quotes:

“We delivered double digit growth across several key metrics… Our services-led approach… contributed to significant gross margin expansion.” — CEO Mark Marron .
“We are particularly well positioned to capitalize on [AI’s] transformative growth… only NVIDIA partner in North America with both DGX ready SuperPOD and DGX-ready MSP specializations.” — CEO .

What Went Wrong

Top-line pressure: consolidated net sales down 10.2% YoY; product sales down 17.8% YoY, with networking and collaboration weakness and higher gross-to-net adjustments dampening reported revenue .
Professional services gross margin declined to 35.9% (from 50.0%) due to Bailiwick mix (higher third-party costs) and service mix shift .
Operating expenses rose 9.6% YoY to $111.0M on added headcount and acquisition-related D&A/G&A; headcount increased by 299 YoY (mostly customer-facing), pressuring opex .

Financial Results

Quarterly progression (oldest → newest)

Metric	Q2 FY25	Q3 FY25	Q4 FY25
Net Sales ($USD Millions)	$515.2	$511.0	$498.1
Gross Profit ($USD Millions)	$148.0	$140.9	$145.8
Consolidated Gross Margin %	28.7%	27.6%	29.3%
Operating Income ($USD Millions)	$42.7	$28.5	$34.7
Adjusted EBITDA ($USD Millions)	$52.1	$39.1	$43.8
Net Earnings ($USD Millions)	$31.3	$24.1	$25.2
Diluted EPS (GAAP) ($USD)	$1.17	$0.91	$0.95
Non-GAAP Diluted EPS ($USD)	$1.36	$1.06	$1.11

Notes: Non-GAAP EPS excludes other (income)/expense, share-based compensation, acquisition-related amortization/expenses, with related tax effects .

Q4 YoY vs prior year and estimates

Metric	Q4 FY24	Q4 FY25	Consensus Estimate	Actual vs Consensus
Net Sales ($USD Millions)	$554.5	$498.1	$523.85*	Miss (revenue below consensus)
Gross Profit ($USD Millions)	$130.3	$145.8	—	—
Gross Margin %	23.5%	29.3%	—	—
Diluted EPS (GAAP) ($USD)	$0.82	$0.95	—	—
Non-GAAP Diluted EPS ($USD)	$0.93	$1.11	$0.865*	Beat (EPS above consensus)

Estimates source: S&P Global (Capital IQ). Period: Q4 FY25. Primary EPS Consensus Mean and Revenue Consensus Mean had 2 contributing estimates each [Values retrieved from S&P Global]*.

Segment breakdown – Technology business (Q4 FY25 vs Q4 FY24)

Type	Q4 FY24 Net Sales ($M)	Q4 FY25 Net Sales ($M)	YoY Change
Networking	$281.9	$178.8	(36.6%)
Cloud	$119.0	$134.3	+12.9%
Security	$37.5	$48.7	+30.1%
Collaboration	$12.1	$8.2	(32.0%)
Other	$14.8	$12.3	(17.2%)
Total Product	$465.2	$382.4	(17.8%)
Professional Services	$40.7	$60.4	+48.4%
Managed Services	$38.2	$44.5	+16.6%
Total Tech Net Sales	$544.1	$487.2	(10.4%)

End-market mix – Technology business (Q4 FY25 vs Q4 FY24)

End Market	Q4 FY24 ($M)	Q4 FY25 ($M)	YoY Change
Telecom, Media & Entertainment	$142.3	$101.3	(28.9%)
SLED	$65.2	$72.2	+10.7%
Technology	$111.4	$65.1	(41.6%)
Healthcare	$64.7	$74.3	+14.8%
Financial Services	$69.2	$44.1	(36.3%)
All Other	$91.2	$130.3	+42.9%
Total Tech Net Sales	$544.1	$487.2	(10.4%)

Financing segment – Q4 FY25 vs Q4 FY24

Metric	Q4 FY24	Q4 FY25
Net Sales ($USD Millions)	$10.4	$10.9
Gross Profit ($USD Millions)	$8.8	$9.5
Operating Income ($USD Millions)	$4.5	$4.7

KPIs (Q4 FY25)

KPI	Q4 FY25	Prior Period/Context
Product Margin %	26.6%	19.3% in Q4 FY24
Professional Services Gross Margin %	35.9%	50.0% in Q4 FY24
Managed Services Gross Margin %	29.1%	30.5% in Q4 FY24
Consolidated Gross Margin %	29.3%	23.5% in Q4 FY24
Headcount (end of quarter)	2,199	up 299 YoY (272 customer-facing)
Cash & Cash Equivalents	$389.4M	$253.0M at FY24 year-end
Inventory	$120.4M	$139.7M at FY24 year-end
Cash Conversion Cycle	29 days	46 days prior year
Effective Tax Rate (quarter)	29.7%	29.5% prior-year quarter
Diluted Shares (avg, quarter)	26.422M	26.806M prior-year quarter

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY2025	Similar to FY2024	$2.07B–$2.11B (tightened range)	Clarified/tightened
Adjusted EBITDA	FY2025	$195M–$205M	$165M–$171M	Lowered
Net Sales Growth	FY2026	—	Low single digits YoY	Initiated
Gross Profit Growth	FY2026	—	Mid single digits YoY	Initiated
Adjusted EBITDA Growth	FY2026	—	Mid single digits YoY	Initiated

Notes: Company unable to reconcile GAAP net earnings to adjusted EBITDA for FY26 forecast due to uncertainty around unusual items, GAAP tax impacts, interest income/expense, SBC, acquisition-related items .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
Ratable/subscription mix and gross-to-net	Gross-to-net up 940 bps in Q2; ratable/subscription shift accelerating; netted down revenues impacting top line	Continued netting effect; margin expansion despite sales decline	Increasing mix shift
AI initiatives	AI Ignite, Secure GenAI, AI Experience Center with Digital Realty; elongating sales cycles; training sales force	“Well positioned” with NVIDIA DGX specializations; expanding AI services and internal AI use	Building momentum
Demand/macro	Softer hardware; enterprise digestion; election/tariffs uncertainty; networking weakness	Data center/cloud/security pickup; networking still down; tariffs/government spending uncertainty	Mixed; networking soft
Managed services	Bookings up 48% TTM in Q2; strong growth	Continued growth; EMS/cloud contributing; margins modestly lower	Growing (slight margin pressure)
Security	~21–22% of TTM gross billings in Q2–Q4; ongoing strength	22% TTM; aligns with AI/data governance priorities	Strong/stable
Acquisitions (Bailiwick)	Adds core-to-edge integration; professional services contribution; increases opex; ~$85M 2H rev contribution guide	Benefits PS revenue growth; PS margins lower due to mix	Integration ongoing

Management Commentary

“We are benefiting from… increased ratable and subscription revenue models… driving a greater gross to net percentage… Our services-led approach resulted in services revenue increasing 33% in the quarter… This contributed to significant gross margin expansion.” — CEO .
“AI adoption continues to be a significant potential business driver… only NVIDIA partner in North America… DGX SuperPOD specialization and DGX-ready MSP.” — CEO .
“Consolidated gross margin… led by our technology business, which saw product margin expand from 19.3% to 26.6%… and additional gross profit from our services business.” — CFO .

Q&A Highlights

Demand environment: pickup in data center/cloud/security; networking remains depressed; enterprise customers still digesting prior networking purchases .
Enterprise AI adoption: spending still concentrated in hyperscalers; PLUS expects enterprise AI infrastructure demand to pick up toward late FY26/early FY27; near-term services-led AI engagements (workshops, private GenAI PoCs) .
Ratable model implications: shift viewed as positive for services upsell and lifecycle/renewals; not disintermediating VAR channel; supports recurring profitability .

Estimates Context

Q4 FY25 consensus: Primary EPS $0.865*, Revenue $523.85M*; actual non-GAAP EPS $1.11 and revenue $498.1M — EPS beat, revenue miss [Values retrieved from S&P Global]* .
Low estimate count (2) for both EPS and revenue suggests limited coverage, potentially amplifying surprise magnitude and prompting estimate recalibration [Values retrieved from S&P Global]*.

Key Takeaways for Investors

Services-led pivot and ratable mix are expanding margins and stabilizing profitability despite lower reported net sales; watch for continued mix shift effects on revenue optics vs economics .
Networking and select enterprise digestion remain headwinds; strength in cloud/security should underpin gross billings and services growth near term .
FY26 guide (low-single-digit sales; mid-single-digit gross profit/EBITDA) sets a conservative baseline given macro/tariff uncertainty and revenue netting; upside hinges on enterprise AI infrastructure demand timing .
Financing segment provides incremental earnings stability through transactional gains/portfolio earnings diversification .
Non-GAAP EPS beat vs consensus and material margin expansion are positive narrative catalysts; however, reported revenue miss reflects gross-to-net accounting dynamics rather than demand collapse [Values retrieved from S&P Global]*.
Monitor professional services margin trajectory post-Bailiwick integration and opex discipline as headcount normalizes; PS margin compression was the main services offset .
Near-term trading lens: margin strength and EPS beat supportive; stock could be sensitive to management commentary on networking recovery, tariff spread-through, and AI project conversion pace .

Other relevant Q4 FY25 press releases and items for context: ePlus announced the earnings release (May 15, 2025) , highlighted recent recognitions (F5 Partner of the Year; Broadcom VMware Fastest Growth Partner; NVIDIA DGX SuperPOD specialization) supporting AI/security positioning .

EPLUS INC (PLUS)·Q4 2025 Earnings Summary