We continue to see the evolution of our industry transition to a more ratable consumption and subscription-based model, which has impacted the comparability of our quarterly results.
— Mark Marron
03Detailed Report
PLUS
Company PLUS
Period
Q3 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 25, 2026
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Executive Summary
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 840–940 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 $2.07–$2.11 billion and adjusted EBITDA of $165–$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.
Key Performance Indicators
Revenue
Increasing
510.97M
QoQ: 245.27% | YoY: 0.38%
Gross Profit
Increasing
140.89M
27.57% margin
QoQ: -4.80% | YoY: 5.29%
Operating Income
Decreasing
28.51M
QoQ: -33.26% | YoY: -25.06%
Net Income
Decreasing
24.13M
QoQ: -22.92% | YoY: -11.54%
EPS
Decreasing
0.91
QoQ: -22.88% | YoY: -10.78%
Revenue Trend
Margin Analysis
Financial Highlights
Overview of Q3 FY2025 performance highlights with YoY and QoQ context:
- Revenue: $511.0 million, up slightly from $509.1 million a year ago (YoY growth of 0.38%; QoQ was aided by a sharp uptick in net billings, but top-line revenue was pressured by higher gross-to-net adjustments).
- Gross profit: $140.9 million, up 5.3% YoY; gross margin 27.6% (up 130 bps from 26.3% prior year) driven by higher product margins and a favorable mix toward third-party maintenance and subscriptions, partially offset by higher netting and lower upfront margins on certain enterprise product sales.
- Operating expenses: $112.4 million, up 17.3% YoY due to Bailiwick and PEAK headcount additions and continued investments in growth initiatives.
- Operating income: $28.5 million; operating margin 5.58% (vs prior-year level near 8.0% depending on line items).
- Net income and EPS: Net earnings $24.1 million or $0.91 per share; non-GAAP diluted EPS $1.06 vs $1.18 in the prior year quarter.
- Adjusted EBITDA: $39.2 million vs $46.2 million prior year (down 15%), reflecting mix shift and investments in the business.
- Segment mix: Technology sales flat YoY with services up 52% to a quarterly high of $114 million; Financing segment revenues $17.8 million, up 19.8% YoY.
- Cash flow and liquidity: Operating cash flow $65.7 million; free cash flow $64.2 million; ending cash $253.1 million; inventory $99.0 million; inventory turns 13 days; cash conversion cycle improved to 32 days.
- Leverage and capital allocation: Total debt $149.5 million; net debt negative ~($103.5) million (net cash); stock repurchases around 380k shares for $30 million over the nine months; no dividend paid.
- Guidance: FY2025 revenue guidance of $2.07–$2.11 billion and adj. EBITDA $165–$171 million, reflecting higher gross-to-net adjustments and tariff-related considerations.
Notes: YoY and QoQ figures reflect GAAP revenue and mix with netted-down revenues; management emphasized the ongoing shift toward ratable and subscription-based revenue, which affects revenue recognition timing but can yield longer-term high-margin growth.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
510.97M
0.38%
245.27%
Gross Profit
140.89M
5.29%
-4.80%
Operating Income
28.51M
-25.06%
-33.26%
Net Income
24.13M
-11.54%
-22.92%
EPS
0.91
-10.78%
-22.88%
Key Financial Ratios
Gross Profit Margin
Fair
27.60%
Gross profit margin is moderate, room for improvement in cost management
Operating Profit Margin
Fair
5.58%
Operating margin is moderate, room for improvement in cost management
Net Profit Margin
Fair
4.72%
Net profit margin is moderate, room for improvement in cost management
Return on Assets
Weak
1.37%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
2.51%
Return on equity suggests inefficient capital allocation
Current Ratio
Healthy
1.83
Current ratio shows adequate liquidity to meet short-term obligations
Debt to Equity
Conservative
0.16
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
Fair Value
20.28x
P/E ratio in line with market averages
Price to Book
Fair Value
2.03x
Price-to-book ratio reasonable for profitable companies
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