ePlus reported a challenging Q2 FY2025 on a revenue basis, with consolidated net sales of $515.2 million, down 12.3% year over year from $587.6 million, as hardware product demand softened. The drop was partly offset by a pronounced shift toward higher-margin services, with service revenues up 46% year over year to $104 million and managed services bookings up 28%, supporting stronger gross profit growth and margin expansion. The quarter featured meaningful transition dynamics including a higher mix of netted-down revenues (net revenues recognized on a net basis) and ongoing investments in AI, cloud, and security capabilities, complemented by the Bailiwick acquisition completed near quarter-end. Gross profit rose 2.5% YoY to $148 million, driving a consolidated gross margin of 28.7% (up 410 basis points from the prior year). Operating income declined modestly to $42.7 million (-4.8% YoY), and net earnings were $31.3 million ($1.17 per share), down 4.1% YoY. Non-GAAP diluted EPS decreased to $1.36. Consolidated adjusted EBITDA totaled $52.1 million, marginally below the prior-year period. Management reiterated disciplined capital allocation, signaling continued share repurchases and accretive organic and inorganic growth, with a 2025 adjusted EBITDA target range of $195–$205 million and net sales expected to be similar to the prior year, reflecting a difficult year-over-year product sales comparison and ongoing gross-to-net transition. Management cautioned that AI initiatives can elongate sales cycles but view AI as a long‑term growth driver, and noted Bailiwick’s contribution would be primarily to professional services revenue with some incremental amortization in the near term.