This article first appeared on GuruFocus.

Release Date: November 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

ePlus Inc (NASDAQ:PLUS) achieved a record $1 billion in gross billings for the quarter, indicating strong demand across its portfolio.

Consolidated net sales grew by 23.4%, with adjusted EBITDA increasing at more than twice the rate of net sales, showcasing effective operating leverage.

The company is investing in high-growth areas such as AI, security, and cloud, which are driving increased sales and customer base expansion.

ePlus Inc (NASDAQ:PLUS) maintains a strong balance sheet with over $400 million in cash, providing flexibility for organic and inorganic growth.

Security products and services saw a 52% year-over-year increase in gross billings, highlighting the company's strength in this sector.

State and local government verticals experienced budget constraints, leading to weaker performance in this segment.

Professional services gross margin decreased due to the acquisition of Bailiwick, which had lower margins than legacy services.

Discontinued operations resulted in a net loss of $3.3 million compared to net earnings in the previous year.

Inventory days outstanding increased slightly, indicating potential inefficiencies in inventory management.

The effective tax rate increased to 29.3% from 27.5% in the previous year, impacting net earnings.

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Q: What is driving the strength in ePlus Inc's security offerings? A: Marc Maron, CEO and President, explained that security gross billings were up 56% due to AI initiatives, data classification, and network security investments. There is an uptick in AI-related deals across compute, storage, and security, contributing to the strong performance in these areas.

Q: Can you discuss the variability in strength across different customer markets? A: Marc Maron noted that almost every vertical experienced growth except for state and local government due to budget constraints. The mid-market and enterprise segments showed significant growth across all product areas except for collaboration.

Q: How does the pipeline look, and what gives you confidence in the raised outlook for the year? A: Marc Maron expressed optimism due to strong execution in an uncertain economic environment. The company tracks its pipeline closely and had several large deals in Q2, supporting their positive guidance for the rest of the year.

Q: How should we think about operating leverage versus the need to invest, especially with AI becoming a significant driver? A: Marc Maron stated that while operating leverage will continue in the short term, ePlus Inc is a growth company with a strong cash position. They plan to expand their footprint and customer base through organic hires and acquisitions, particularly in AI and services.

Q: What are the key financial highlights from the second quarter of fiscal 2026? A: Elaine Marion, CFO, reported that consolidated net sales increased by 23.4% year over year, with gross billings reaching $1.02 billion. Adjusted EBITDA grew by 61.6%, and the company maintained a strong cash position with $402.2 million, supporting both organic and inorganic growth initiatives.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.