Business Overview and History
ePlus Inc. (NASDAQ:PLUS) is a leading provider of IT solutions and services, offering a comprehensive portfolio that empowers organizations to optimize their IT environments and supply chain processes. With over three decades of industry experience, ePlus has established itself as a trusted advisor, delivering tailored solutions that drive business agility and innovation.
ePlus was founded in 1990 and is headquartered in Herndon, Virginia. The company operates through three key segments: Product, Professional Services, and Managed Services. The Product segment focuses on the sale of third-party hardware, software, and services, including internet-based business-to-business supply chain management solutions for IT products. The Professional Services segment offers advanced consulting, assessments, configuration, logistic services, training, staffing, and project management expertise. The Managed Services segment provides comprehensive managed solutions, including security, cloud, and service desk offerings.
In its early years, ePlus primarily focused on selling IT products, third-party software, and maintenance services to medium and large enterprises, as well as state and local government and educational institutions in the United States. As the company evolved, it expanded its offerings to include advanced professional services, staff augmentation, project management, cloud consulting, and security services. ePlus also developed its managed services capabilities, providing solutions such as security services, storage-as-a-service, cloud hosting, cloud management, and service desk support.
Throughout its history, ePlus has faced and overcome various industry challenges, including currency fluctuations, product shortages, and shifts in customer buying patterns. The company has successfully adapted to these changes by investing in high-growth areas, diversifying its customer base, and expanding its services portfolio. ePlus' strong financial position has enabled it to fund organic growth initiatives and pursue strategic acquisitions to enhance its capabilities and market reach.
A significant milestone in ePlus' growth trajectory was the acquisition of Bailiwick Services, LLC in August 2024. This strategic move expanded the company's professional services capabilities, particularly in areas supporting digital signage, EV charging solutions, loss prevention and security, store openings, and store closings. The Bailiwick acquisition also helped ePlus broaden its customer base and diversify into new verticals such as retail.
Financial Performance and Ratios
Financials
ePlus has maintained a strong financial position, with a healthy balance sheet and a diversified revenue stream. For the fiscal year ended March 31, 2024, ePlus reported total revenue of $2.23 billion, a 7.7% increase from the prior year. Net income for the same period stood at $115.78 million, reflecting a net profit margin of 5.2%.
In the most recent quarter (Q3 2025), ePlus reported revenue of $510.97 million, which remained flat year-over-year. Lower product sales were partially offset by faster-growing high-margin service revenue, which increased 52.2%. The main factor impacting revenue was a higher gross to net adjustment, up 840 basis points from the prior year, which reduced revenue by approximately $60 million. Net income for the quarter was $24.13 million.
Liquidity
The company's financial ratios further showcase its operational efficiency and liquidity. As of December 31, 2024, ePlus' current ratio stood at 1.83, indicating a strong ability to meet its short-term obligations. The quick ratio was 1.69, further underscoring the company's liquidity position. The debt-to-equity ratio was 0.16 as of March 31, 2024, suggesting a conservative capital structure.
ePlus' cash flow position is equally compelling, with operating cash flow of $248.45 million and free cash flow of $239.95 million in the fiscal year ended March 31, 2024. These robust cash flows have enabled the company to fund its growth initiatives, including strategic acquisitions and capital expenditures, while also returning capital to shareholders through share repurchases.
As of December 31, 2024, ePlus had cash and cash equivalents of $253.07 million. The company also maintains a $500 million credit facility with a $200 million revolving credit component. As of December 31, 2024, ePlus had no outstanding balance on the revolving credit facility, providing additional financial flexibility.
Diversified Customer Base and Vertical Expertise
ePlus' customer base spans a diverse range of industries, including telecommunications, media and entertainment, technology, state and local government, education, healthcare, and financial services. This diversification has proved invaluable, as it has helped the company navigate industry-specific challenges and maintain a well-balanced revenue stream.
The company's deep expertise in various verticals has also been a key differentiator. ePlus has developed specialized solutions and services tailored to the unique needs of its customers, from enabling secure and efficient IT environments in the public sector to supporting the complex technology requirements of large enterprises.
ePlus primarily sells in the United States and select international markets, including the United Kingdom, European Union, India, and Singapore. This geographic diversification provides additional stability to the company's revenue streams and offers opportunities for expansion in growing markets.
Navigating Industry Trends and Adapting to Market Shifts
The IT solutions industry has undergone significant transformation, with the growing adoption of cloud computing, cybersecurity, and emerging technologies like artificial intelligence (AI) and the Internet of Things (IoT). ePlus has successfully navigated these industry shifts, continuously investing in its technical capabilities and service offerings to remain at the forefront of innovation.
One notable example is the company's focus on AI. In 2024, ePlus launched its Secure GenAI Accelerator, a hosted proof-of-concept engagement that allows organizations to test and refine their generative AI use cases in a secure environment. This initiative, combined with ePlus' AI Ignite portfolio, demonstrates the company's commitment to helping customers navigate the complex landscape of AI adoption.
Moreover, ePlus has adapted to the changing consumption models in the IT industry, with a growing emphasis on subscription-based and as-a-service offerings. The company has seamlessly integrated these new revenue streams into its business model, ensuring it remains relevant and competitive in the evolving market. This trend is evident in the company's recent performance, with subscription orders increasing 51.4% year-over-year, now accounting for almost 46% of open orders compared to 31.7% last year.
Resilience and Future Outlook
ePlus has consistently demonstrated resilience in the face of industry headwinds. During recent economic uncertainties, the company's diversified customer base and strong financial foundation have enabled it to navigate challenges effectively.
Looking ahead, ePlus is well-positioned to capitalize on the continued growth in IT spending and the increasing demand for comprehensive technology solutions. The company's focus on high-growth areas, such as cloud, security, and emerging technologies, combined with its robust service capabilities, positions it as a trusted partner for organizations seeking to optimize their IT infrastructure and drive digital transformation.
For fiscal year 2025, ePlus has provided updated guidance, projecting revenue in the range of $2.07 billion to $2.11 billion and adjusted EBITDA between $165 million and $171 million. This guidance reflects higher gross to net adjustments than previously expected, as well as potential impacts from tariffs. While the company expects softness in product sales to continue into fiscal Q4, it anticipates a pickup in fiscal Q1 of the following year.
ePlus is making strategic investments in the business, focusing on high-growth areas, and remains confident in its commitment to growth in fiscal 2025 and beyond. The company's strong balance sheet and cash flow generation provide it with the financial flexibility to pursue strategic acquisitions, invest in organic growth initiatives, and return capital to shareholders through share repurchases and dividends, all of which contribute to its long-term sustainability and shareholder value creation.
Segment Performance
ePlus' three main product segments have shown varying performance in recent periods:
The Product segment reported net sales of $379.47 million for the three months ended December 31, 2024, a decrease compared to the same period in the prior year. This decline was driven by lower sales of networking equipment, cloud, collaboration, and security products. However, the segment's gross margin increased by 20 basis points to 22.1% due to a shift in product mix towards sales of third-party maintenance and subscriptions that are recognized on a net basis.
The Professional Services segment saw net sales of $69.50 million for the three months ended December 31, 2024, an increase compared to the same period in the prior year. This growth was primarily attributed to the addition of Bailiwick. However, the segment's gross margin decreased by 320 basis points to 40.1% during this period, also due to the Bailiwick acquisition.
The Managed Services segment reported net sales of $44.15 million for the three months ended December 31, 2024, an increase compared to the same period in the prior year. This growth was driven by ongoing expansion of these service offerings. The segment's gross margin decreased by 200 basis points to 29.8% during this period due to higher third-party costs incurred for cloud services.
Overall, the technology business segments generated net sales of $493.12 million and gross profit of $125.05 million for the three months ended December 31, 2024. The technology business segments' operating income was $16.93 million for the same period, with an Adjusted EBITDA of $27.50 million.
Conclusion
ePlus Inc. (NASDAQ:PLUS) has established itself as a leading provider of IT solutions and services, leveraging its deep industry expertise, diversified customer base, and continuous investment in innovation to navigate the dynamic IT landscape. The company's strong financial performance, resilient business model, and forward-looking strategies position it well to capitalize on the growing demand for comprehensive technology solutions. As ePlus continues to evolve and adapt to industry trends, particularly in high-growth areas like AI, security, and cloud solutions, it remains a compelling investment opportunity for those seeking exposure to the thriving IT services sector.