ePlus inc. (PLUS) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with record revenue growth driven by AI, cloud, and security demand. Despite risks in government budgets and AI infrastructure, the raised guidance and operating leverage indicate confidence in future growth. Shareholder returns through dividends and repurchases further support positive sentiment. Given the company's market cap, these factors suggest a positive stock price movement in the range of 2% to 8% over the next two weeks.
Key Financial Performance
Gross Billings $1.02 billion in the quarter, a 26.5% increase year-over-year. Majority of this growth was organic, driven by strong demand in high-growth areas including AI consumption.
Consolidated Net Sales $608.8 million, up 23.4% year-over-year. Growth driven by sustained demand across security, networking, and cloud.
Product Sales $485.1 million, up 24.5% year-over-year. Growth led by robust demand in networking and security solutions, aided by increased AI adoption and growth in data center and cloud.
Service Revenue $123.8 million, up 19.4% year-over-year. Professional Services grew 23.3%, driven by the acquisition of Bailiwick, while Managed Services increased 13.5%, led by enhanced maintenance support and cloud offerings.
Gross Profit $162.1 million, up 27.4% year-over-year. Consolidated gross margin increased to 26.6% from 25.8%, driven by increased product margins.
Adjusted EBITDA $58.7 million, up 61.6% year-over-year. Growth reflects operating leverage and strategic alignment towards high-growth areas like AI, cloud, security, and networking.
Net Earnings from Continuing Operations $38.2 million, up from $19.8 million in the prior year quarter. Growth driven by increased gross profit and operating leverage.
Cash and Cash Equivalents $402.2 million at quarter end, up from $389.4 million at the end of the last fiscal year. Increase provides flexibility for organic and inorganic growth initiatives.
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Operating Highlights
AI, Security, and Cloud Investments: ePlus continues to invest in AI, security, and cloud to deliver value-added products and solutions, enabling growth in customer base and sales to existing customers.
Realwave Acquisition: Acquired Realwave, a cloud-based AI-powered software, to expand capabilities in delivering real-time AI-driven insights.
Revenue Growth: Revenue increased over 20% year-to-date, with total gross billings of almost $2 billion in the 6-month period.
Customer Segments and Verticals: Broad-based growth across customer sizes and industries, with notable performance in mid-market and enterprise segments. Strong performance in all verticals except state and local government.
Operational Leverage: Adjusted EBITDA grew 62% in Q2 and 40% year-to-date, reflecting strategic alignment of headcount and internal automation initiatives.
AI-Driven Internal Efficiency: Leveraged AI internally for faster incident resolution and improved customer experience.
Focus on High-Growth Areas: Aligned resources towards AI, data center and cloud, security, and networking to capitalize on growth opportunities.
Simplified Business Model: Sale of domestic financing business to focus on being a pure technology player.
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Risk or Challenges
State and Local Government Budget Constraints: Persistent budget constraints in the state and local government vertical have negatively impacted performance in this segment, limiting growth opportunities.
Infrastructure Readiness for AI: 81% of surveyed leaders expressed concerns about whether their infrastructure can support advanced AI applications, posing a challenge for scaling AI solutions effectively.
Acquisition Integration Challenges: The acquisition of Bailiwick has resulted in lower gross margins in Professional Services, indicating potential challenges in integrating acquired businesses effectively.
Inventory Management: Inventory days outstanding increased slightly to 15 days from 12 days in the prior year, which could indicate inefficiencies in inventory management.
Dependence on High-Growth Areas: The company's strategic focus on high-growth areas like AI, cloud, and security may expose it to risks if these markets experience a slowdown or increased competition.
Foreign Exchange Risks: Foreign exchange gains of $700,000 were noted, but fluctuations in currency exchange rates could pose financial risks in the future.
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Guidance & Outlook
Net Sales Growth: Net sales growth over the prior fiscal year is now expected to grow at a rate in the mid-teens from fiscal year 2025's $2.01 billion from continuing operations.
Gross Profit Growth: Gross profit is expected to grow at a rate in the mid-teens from fiscal year 2025's $515.5 million from continuing operations.
Adjusted EBITDA Growth: Adjusted EBITDA is expected to increase from fiscal year 2025's $140 million at approximately twice the rate of net sales growth for fiscal year 2026 as continuing operation results are expected to benefit from operating leverage.
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Shareholder Return Plan
Quarterly Dividend: The company announced a quarterly dividend of $0.25 per common share, payable on December 17, 2025, to shareholders of record on November 25, 2025.
Share Repurchase: The company repurchased 60,000 shares during the quarter under the stock repurchase plan authorization that began on August 11, 2025.
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Key Q&A
Q:What is driving the strength in the security offering?
A:Security was up 56% in gross billings, driven by AI initiatives such as data classification and cleanliness, as well as traditional network security. There is also an uptick in AI-related deals across compute, storage, and security.
Q:What are you seeing by customer end market?
A:Strong performance across almost all verticals except state and local, which was down due to government funding issues. Mid-sized and enterprise customer segments showed significant growth across products, professional services, and managed services, except for collaboration.
Q:How does the pipeline look, and what gives confidence in the raised outlook for the year?
A:The team executed well despite economic uncertainties. The company tracks pipeline opportunities closely and had large deals in Q2. Guidance reflects optimism for the rest of the year.
Q:How should we think about leverage versus the need to invest, especially with AI becoming a meaningful driver?
A:Short-term operating leverage is expected, but the company is focused on growth. They are in a strong cash position and plan to expand market share and customer base through organic hires and acquisitions.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. All responses were direct and detailed.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI application
AI consumption
AI deployment
AI driver
AI efficiency
AI incident
AI industry
AI insight
AI software
Amanda afternoon
Associate
Elaine
Inventory
Professional Services
Services margin
action
area AI
automation
billing increase
customer base
customer size
dividend share
enterprise segment
flexibility capital
focus area
increase product
leader
market enterprise
mid market
milestone
model focus
momentum
month period
sale increase
sale leverage
sheet cash
strength model
summary result
vertical
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The earnings call summary indicates a positive outlook with a 10% YoY revenue increase, improved gross margin, and a 15% rise in net income. Although risks were acknowledged, the financial performance was strong, and there was no indication of negative sentiment from the Q&A. The company's market cap suggests a moderate reaction, leading to a predicted positive stock movement of 2% to 8%.
ePlus inc. (PLUS) Q3 2026 Earnings Call Transcript
Positive2-4
The earnings report shows strong financial performance with a 24.6% increase in net sales, 129.3% growth in net earnings, and a significant rise in adjusted EBITDA. Despite some project delays in the retail sector, the company maintains a positive outlook with AI initiatives driving growth and a strong demand trend. The shareholder return plan, including dividends and share repurchases, further supports a positive sentiment. However, inventory build-up and delayed project revenues are concerns, but overall, the strong financial metrics and optimistic guidance suggest a positive stock price movement.
ePlus inc. (PLUS) Q2 2026 Earnings Call Transcript
Positive11-7
The earnings call highlights strong financial performance with record revenue growth driven by AI, cloud, and security demand. Despite risks in government budgets and AI infrastructure, the raised guidance and operating leverage indicate confidence in future growth. Shareholder returns through dividends and repurchases further support positive sentiment. Given the company's market cap, these factors suggest a positive stock price movement in the range of 2% to 8% over the next two weeks.
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The strong financial performance, particularly the record high revenue, substantial growth in key areas like AI and security, and the initiation of dividends and share repurchase programs indicate a positive outlook. Despite some risks like economic uncertainty and margin pressures, the optimistic guidance and strategic investments in growth areas suggest a positive stock price movement. Considering the market cap, the stock is likely to experience a moderate positive reaction in the next two weeks.
PLUS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
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Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
