ePlus (PLUS) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 FY25 declined 12.3% year-over-year to $515.2M, driven by lower product sales but partially offset by strong growth in managed and professional services and financing revenues.

• Gross profit increased 2.5% to $148.0M, with gross margin improving to 28.7% from 24.6% due to a favorable product mix and higher-margin services.

• Operating income decreased 4.8% to $42.7M; net earnings were $31.3M or $1.17 per share, down 4.1% year-over-year.

• The Bailiwick acquisition in Q2 2024 expanded professional services, added 441 employees, and broadened offerings in AI, digital signage, and EV charging, especially in retail and multi-site solutions.

• Services and managed services growth contributed to more predictable and profitable revenue streams.

Financial highlights

• Q2 FY25 consolidated net sales were $515.2M, down from $587.6M in Q2 FY24; six-month net sales dropped 8.8% to $1.06B.

• Gross profit for Q2 was $148.0M, up 2.5% year-over-year; gross margin rose to 28.7% from 24.6%.

• Service revenue grew 46% year-over-year to $104M in Q2; managed services revenue up 28% organically.

• Adjusted EBITDA for Q2 was $52.1M (10.1% margin), down 2.7% year-over-year; six-month Adjusted EBITDA was $95.3M (9.0% margin).

• Cash provided by operating activities for six months was $75.5M, up from $10.3M a year ago.

Outlook and guidance

• FY25 net sales expected to be similar to FY24, reflecting tough product sales comparisons and economic uncertainty.

• Adjusted EBITDA guidance for FY25 revised to $195M–$205M.

• Management prioritizes investments in AI, security, and software/services for long-term growth.

• Gross margin expected to tighten in the second half as product sales and services both increase.

• Macroeconomic headwinds, including inflation and interest rates, may impact future results.