Eplus Inc ((PLUS)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Eplus Inc’s recent earnings call painted a predominantly positive picture, highlighting significant revenue growth and strong performance in high-growth sectors such as security and AI. While challenges were noted in the state and local government sectors and a decline in Professional Services’ margins, the overall sentiment was optimistic, with the positive aspects significantly outweighing the challenges.
Record-Breaking Gross Billings
Eplus Inc achieved a milestone by surpassing $1 billion in gross billings for the first time in the company’s history. This achievement was accompanied by a revenue increase of over 20% year-to-date, marking a significant growth trajectory for the company.
Strong Revenue Growth
The company reported a consolidated net sales growth of 23.4% year-over-year, with total gross billings up by 26.5% year-over-year. This robust growth underscores the company’s expanding market presence and successful business strategies.
Security Segment Surge
Eplus Inc’s security products and services experienced a remarkable 52% increase in gross billings year-over-year. This segment now represents 24% of the trailing 12-month gross billings, highlighting its growing importance within the company’s portfolio.
Adjusted EBITDA Growth
The second quarter saw a 62% increase in adjusted EBITDA, significantly outpacing net sales growth. This indicates strong operational efficiency and the company’s ability to leverage its revenue growth effectively.
Healthy Balance Sheet
Eplus Inc closed the quarter with over $400 million in cash, providing the company with substantial flexibility for future investments. This financial health positions the company well for continued growth and expansion.
Guidance Increase
Eplus Inc increased its fiscal year 2026 guidance for net sales, gross profit, and adjusted EBITDA. This upward revision reflects the company’s strong performance and optimistic outlook for future growth.
State and Local Government Challenges
The company faced challenges in the state and local government sector, primarily due to budget constraints. This has been a notable area of concern, impacting overall performance in this segment.
Professional Services Margin Decline
The Professional Services segment saw a decline in gross margin to 38.2% from 41.3% a year ago. This decrease was attributed to the acquisition of Bailiwick, which affected overall profitability.
Discontinued Operations Loss
Eplus Inc reported a net loss of $3.3 million from discontinued operations, a significant drop compared to net earnings of $11.5 million in the prior year quarter. This reflects the company’s strategic shifts and restructuring efforts.
Forward-Looking Guidance
Eplus Inc provided updated guidance for fiscal year 2026, projecting net sales and gross profit to grow at mid-teen rates, with adjusted EBITDA expected to increase at approximately twice the rate of net sales growth. The company is well-positioned to capitalize on high-growth areas such as AI, security, and cloud, supported by ongoing demand across customer segments.
In summary, Eplus Inc’s earnings call conveyed a strong and optimistic outlook, driven by record-breaking gross billings and substantial growth in key segments like security. Despite some challenges, the company’s robust balance sheet and strategic investments in high-growth areas position it well for continued success. Investors and stakeholders can remain confident in Eplus Inc’s future prospects.