ePlus (PLUS) Q1 2025 earnings summary

Executive summary

• Net sales declined 5.2% year-over-year to $544.5 million, mainly due to lower product revenues, while services revenues grew 15.8% and managed services rose 28%.

• Gross profit fell 5.5% to $134.5 million, with gross margin down 10 basis points to 24.7% as lower product margin was partially offset by higher managed and professional services margins.

• Net earnings dropped 19.2% to $27.3 million, and adjusted EBITDA decreased 19.9% to $43.1 million; diluted EPS was $1.02, non-GAAP EPS $1.13.

• Cash and cash equivalents rose to $350 million, aided by improved inventory turns and a 36% sequential inventory decline.

• Management maintained full-year guidance and highlighted strong growth in security, managed services, and a robust cash position supporting growth and share repurchases.

Financial highlights

• Q1 consolidated net sales were $544.5 million, down from $574.2 million, with product segment net sales down 8.2% to $457.3 million.

• Consolidated gross profit was $134.5 million, gross margin at 24.7%, and operating income was $35.5 million, all down year-over-year.

• Net earnings were $27.3 million ($2 per diluted share), non-GAAP diluted EPS was $1.13, and adjusted EBITDA was $43.1 million.

• Cash provided by operating activities was $97.1 million, compared to cash used of $20.9 million in the prior year.

• Inventory turns improved to 14 days from 23 days sequentially and 32 days year-over-year.

Outlook and guidance

• Fiscal 2025 guidance maintained: net sales growth of 3%-6% over prior year and adjusted EBITDA of $200-$215 million.

• Q2 expected to be flat year-over-year, with growth weighted to the back half of the year.

• Management expects continued top-line growth, supported by new products, services, and recent acquisitions.

• Operating leverage expected to improve as new hires ramp up and revenue grows, with OpEx expected to remain stable.

• Ongoing investment in engineering, technology, and integrated IT solutions, with focus on cloud, security, and managed services.