ePlus — Second Quarter Fiscal Year 2027 Earnings Summary

Financial Performance:

• Net sales increased 9.7% year-over-year to $667.9 million for the second quarter and 5.2% to $1,317.0 million for the first half of fiscal 2027.
• Gross billings reached a record $1,066.8 million in the second quarter (up 4.3%) and $2,023.9 million for the first half (up 2.5%).
• Gross profit increased 11.2% to $180.3 million in the second quarter and 5.0% to $331.6 million in the first half.
• Gross margin was 27.0% in the second quarter, up from 26.6% in the prior year period, and remained consistent at 25.2% for the first half.
• Net earnings from continuing operations increased 5.8% to $40.4 million in the second quarter and 0.7% to $70.7 million in the first half.
• Adjusted EBITDA increased 14.3% to $67.1 million in the second quarter and 3.2% to $114.9 million in the first half.
• Diluted net earnings per share from continuing operations were $1.56 in the second quarter (up 7.6%) and $2.72 in the first half (up 2.3%).
• Non-GAAP diluted net earnings per share were $1.82 in the second quarter (up 19.0%) and $3.11 in the first half (up 5.1%).
• Operating expenses were $123.8 million in the second quarter (up 9.2%) and $236.3 million in the first half (up 5.5%).
• Cash and cash equivalents were $380.9 million as of September 30, 2026, down from $410.8 million as of March 31, 2026.
• Inventory increased 35.1% to $271.4 million as of September 30, 2026, compared to $200.9 million at the start of the fiscal year.
• Accounts receivable—trade, net increased 14.9% to $746.9 million as of September 30, 2026.
• Total stockholders' equity was $1,096.4 million as of September 30, 2026, compared to $1,069.0 million as of March 31, 2026.

Guidance and Future Outlook:

• ePlus increased its fiscal year 2027 guidance to expect year-over-year growth in the upper single digits for net sales and gross profit, and the low double digits for adjusted EBITDA.
• Management cited accelerating adoption of AI, increasing demand for advanced data center infrastructure, and growing emphasis on cybersecurity and digital transformation as key drivers for long-term growth.
• The guidance does not factor in recessionary conditions or other unexpected developments.

Business Segments and Product Lines:

• Product Segment: Sales increased 12.8% in the second quarter to $547.1 million and 6.5% in the first half to $1,076.7 million, driven by cloud, security, and collaboration products, partially offset by a decrease in networking products. Product gross margin was 25.8% in the second quarter (up from 24.5%) and 23.4% in the first half (up from 22.8%).
• Professional Services Segment: Revenues decreased 11.3% to $67.8 million in the second quarter and 8.3% to $135.8 million in the first half, with gross margins declining to 35.4% and 36.2% respectively due to delays from retail customers and decreases in project services and staff augmentation.
• Managed Services Segment: Revenue increased 11.9% to $53.1 million in the second quarter and 13.4% to $104.4 million in the first half, primarily due to cloud managed services, though gross margins declined to 28.8% and 29.1% respectively.
• Cloud: Gross billings for cloud increased 33.1% in the second quarter and 8.5% in the first half.
• Security: Gross billings for security increased 6.7% in the second quarter and 10.5% in the first half.
• Networking: Gross billings for networking decreased 9.2% in the second quarter and 6.7% in the first half.

Market and Competitive Landscape:

• The company highlighted strong momentum in AI and cybersecurity solutions.
• Financial services end market revenue increased 48.3% in the second quarter and 50.9% in the first half.
• Healthcare end market revenue increased 22.0% in the second quarter and 14.7% in the first half.
• Telecom, media & entertainment end market revenue decreased 12.9% in the second quarter and 19.1% in the first half.

Risks and Challenges:

• Professional services revenue and margins were negatively impacted by delays from retail customers.
• Managed services gross margins declined due to increased third-party costs.
• Other income/expense was negatively impacted by a $3.5 million reduction in the fair value of contingent consideration receivable from the sale of the domestic financing business, lower interest income, and foreign currency transaction losses.
• Forward-looking statements note risks including political instability, supply chain issues, component shortages, vendor price fluctuations, cybersecurity attacks, and integration risks associated with acquisitions.

Management Commentary and Tone:

• Mark Marron, President and CEO, described the second quarter as delivering "robust top line growth, improved profitability, and experienced growth against key metrics."
• Management attributed record gross billings to a "customer-first approach" and the strength of their diversified business model.
• The tone reflected confidence in the sustainability of business trends and the ability to meet demand for modernizing IT networks and strengthening cybersecurity.

Other Key Points:

• ePlus acquired certain assets and liabilities of Daymark Solutions, a provider of IT solutions focused on hybrid cloud, cybersecurity, compliance, and data centers.
• The Board of Directors declared a quarterly cash dividend of $0.27 per common share, payable on December 16, 2026, to shareholders of record as of November 24, 2026.
• ePlus achieved Exclusive Ambassador Partner Status with Everpure.
• ePlus was named NetApp North America Flash Partner of the Year.
• Financial results for the three and six months ended September 30, 2026, were revised to reflect the correction of certain immaterial misstatements in previously issued financial statements.