ePlus (PLUS) Q2 2025 earnings summary

Executive summary

• Net sales declined 12.3% year-over-year to $515.2M in Q2 FY25, mainly due to lower product sales, but gross profit increased 2.5% to $148.0M and gross margin expanded by 410 basis points to 28.7%, driven by strong services and favorable product mix.

• The acquisition of Bailiwick Services, LLC in Q2 2024 expanded IT integration and professional services, especially in AI, digital signage, EV charging, and retail/multi-site solutions, adding 441 employees.

• Managed services revenue grew 28% year-over-year organically, and professional services revenue rose 46% (6–8% organic), with Bailiwick contributing to the remainder.

• Security gross billings increased 15.8% and now represent 21.4% of trailing 12-month gross billings.

• Operating income declined 4.8% to $42.7M; net earnings fell 4.1% to $31.3M; adjusted EBITDA decreased 2.7% to $52.1M; diluted EPS was $1.17.

Financial highlights

• Consolidated net sales were $515.2M in Q2 FY25 (down from $587.6M); technology business net sales were $493.3M (down from $571.9M); financing segment net sales rose to $21.9M.

• First half FY25 net sales dropped 8.8% to $1.06B; gross profit was $282.5M (down 1.4%); gross margin rose to 26.7% from 24.7%.

• Adjusted EBITDA for Q2 was $52.1M (10.1% margin), down from $53.6M; first half adjusted EBITDA was $95.3M (9.0% margin).

• Net earnings for the first half declined 11.8% to $58.6M; non-GAAP net earnings per diluted share for Q2 was $1.36.

• Cash provided by operating activities for six months was $75.5M, up from $10.3M a year ago; cash and equivalents at quarter-end were $187.5M, down from $253M at March 31, 2024.

Outlook and guidance

• FY25 net sales are expected to be similar to last fiscal year, with adjusted EBITDA guidance of $195M–$205M.

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

• Management prioritizes investments in AI, security, and software/services for long-term growth, while noting macroeconomic headwinds and softening enterprise demand.