ePlus reported consolidated net sales of $511 million for Q3 FY2025, essentially flat versus the prior year, as growth in high-margin services offset softer hardware and product sales. The shift toward a services-led model is evident: services revenue rose 52% year over year to reach a quarterly high of $114 million, supporting a 130 basis point expansion in gross margin to 27.6% and a modest operating margin of 5.58%. The core driver of profitability remains the mix shift to higher-margin services and netted-down revenues on software and maintenance, though the company noted a meaningful uptick in gross-to-net adjustments (approximately 840â940 basis points in recent quarters), which dampened top-line revenue relative to gross billings. Adjusted EBITDA declined 15% year over year to $39.2 million as investments in headcount (including Bailiwick and PEAK Resources acquisitions) and continued go-to-market expansion offset higher Services contribution. Net income was $24.1 million ($0.91 per share), with non-GAAP diluted EPS of $1.06, reflecting a higher share count and ongoing capex in growth initiatives. Cash generation remained robust: net cash provided by operating activities was $65.7 million, free cash flow was $64.2 million, and cash at period-end stood at $253.1 million. The company maintains a strong balance sheet (net cash position of approximately $103.5 million) and disciplined capital allocation, including approximately 380,000 shares repurchased for $30 million in the first nine months. Management signaled a continued transition to ratable revenue and AI-enabled services, including the Secure GenAI platform and AI Ignite initiatives, while updating FY2025 guidance to revenue of $2.07â$2.11 billion and adjusted EBITDA of $165â$171 million. These dynamics set a mixed near-term earnings trajectory typical of an services-led, software-enabled IT solutions provider in a transitional macro environment.