ePlus inc.

What they do

ePlus runs three reportable segments after divesting its domestic financing business on June 30, 2025: product, professional services, and managed services. It resells technology from partners including AWS, Cisco, Dell, Microsoft, NetApp, NVIDIA, Oracle and VMware by Broadcom, and layers on advisory consulting, deployment and managed services. It served 4,200 customers as of the fiscal year ended March 31, 2026, mostly in the US with select sales in the UK, EU, India and Singapore.

Revenue drivers

• Product segment — Resale of networking, security, collaboration and cloud products; Q1 FY2027 sales were $529.6M, up 0.6% year over year and about 82% of net sales, with gross margin of 21.0%.
• Professional services segment — Project services, consulting, staff augmentation and lifecycle services; Q1 FY2027 revenue was $68.1M, down 5.1%, with gross margin of 36.9%.
• Managed services segment — Recurring cloud, security and lifecycle managed offerings; Q1 FY2027 revenue rose 15.1% to $51.3M, the first $50 million quarter, at 29.4% gross margin.
• Customer end markets — FY2026 revenue mix was 30% telecommunications, media and entertainment, 13% SLED, 13% healthcare, 12% technology, 10% financial services and 6% retail; Verizon alone was 24% of net sales.

Recent performance

For Q1 FY2027 ended June 30, 2026, net sales rose 1.0% to $649.1 million and gross billings rose 0.5% to $957.1 million. Gross profit fell 1.5% to $151.3 million and gross margin slipped to 23.3% from 23.9%, with lower margin in all three segments. Net earnings from continuing operations declined 5.4% to $30.3 million, or $1.16 diluted, and adjusted EBITDA fell 9.2% to $47.8 million. Management cited record sales and higher booked and open orders, but also product shipment delays and extended lead times from the ongoing memory chip shortage.

Strategy

ePlus positions itself as a services-led, value-add technology solutions provider following the June 30, 2025 sale of Expo Holdings, LLC and its US financing business to Marlin Leasing (d/b/a PEAC Solutions). Management points to growth in security, managed services and the mid-market, and says managed services now provides a reliable recurring revenue stream. The company ended the quarter with $448.9 million of cash, which it says gives flexibility to invest in the business, pursue M&A, and return value through dividends and share repurchases.

Risks

• Customer concentration — Verizon Communications was 24% of FY2026 net sales and contracts are generally non-exclusive, terminable on 30 days' notice without volume commitments.
• Gross margin pressure — Q1 FY2027 gross margin fell to 23.3% on lower margins in all three segments and a product mix shift away from net-basis third-party maintenance and subscriptions.
• Component shortages — Management said the ongoing memory chip shortage caused product shipment delays and extended lead times in the first quarter.
• Competitive and vendor-direct pressure — The IT solutions market is highly competitive, with commoditized resale, vendor direct sales, distributor competition and consolidation creating larger rivals.

Outlook

Management reiterated its fiscal 2027 guidance and said record sales and higher booked and open orders position the company for a strong second half. It expects to keep investing in the business while weighing M&A and shareholder returns with $449 million of cash. The company also flagged continued benefit from security and managed services growth and the mid-market customer base.