On August 6, 2024, ePlus Inc (PLUS, Financial) released its 8-K filing for the first quarter of fiscal year 2025. ePlus Inc, a holding company providing information technology solutions, reported a decline in both revenue and earnings, missing analyst estimates.
Company Overview
ePlus Inc is a holding company that, through its subsidiaries, provides information technology solutions. The company's technology solutions enable organizations to optimize their IT environment and supply chain processes. It also offers consulting, professional and managed services, and complete lifecycle management services, including flexible financing solutions. ePlus focuses on medium and large enterprises in the United States and select international markets, including the United Kingdom, the European Union, India, Singapore, and Israel.
Performance and Challenges
For the first quarter ended June 30, 2024, ePlus Inc reported a 5.2% decrease in net sales to $544.5 million, down from $574.2 million in the same period last year. This decline was driven by a 5.3% decrease in technology business net sales to $535.5 million and an 8.2% drop in product sales to $457.3 million. The company attributed these declines to a more normalized supply chain, the absorption of prior purchases by customers, and a shift in product mix.
Net earnings decreased by 19.2% to $27.3 million, and diluted net earnings per common share fell by 19.7% to $1.02, missing the analyst estimate of $1.05. Adjusted EBITDA also saw a significant decline of 19.9% to $43.1 million.
Financial Achievements
Despite the challenges, ePlus Inc reported a 15.8% increase in services revenues to $78.2 million and a 28.0% rise in managed service revenues to $40.9 million. The company also ended the quarter with a strong cash position of $350 million, up from $253 million as of March 31, 2024.
Income Statement Highlights
| Metric | Q1 FY2025 | Q1 FY2024 | Change |
|---|---|---|---|
| Net Sales | $544.5 million | $574.2 million | -5.2% |
| Gross Profit | $134.5 million | $142.3 million | -5.5% |
| Net Earnings | $27.3 million | $33.8 million | -19.2% |
| Diluted EPS | $1.02 | $1.27 | -19.7% |
Balance Sheet Highlights
As of June 30, 2024, ePlus Inc reported cash and cash equivalents of $349.9 million, up from $253.0 million as of March 31, 2024. Inventory decreased by 36.2% to $89.1 million, and total stockholders' equity increased to $921.9 million from $901.8 million as of March 31, 2024.
Management Commentary
“We continued to see strong growth in security and services overall with our managed services up 28%. For many years we have been building strong services and recurring revenue streams, in part to offset headwinds created by the increase in netted down revenues and ratable recognition of sales, both to build a more consistent financial model, but also to deliver the solutions that customers demand with today’s advanced technologies," said Mark Marron, president and CEO of ePlus.
Analysis
ePlus Inc's performance in the first quarter of fiscal year 2025 reflects the challenges of a normalized supply chain and shifts in product mix. While the company has seen growth in its services and managed services segments, the decline in product sales and overall net sales indicates potential headwinds. However, the strong cash position and continued investment in growth initiatives provide a solid foundation for future performance.
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Explore the complete 8-K earnings release (here) from ePlus Inc for further details.
