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ePlus (PLUS) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q4 FY26)· Information Technology· May 28, 2026

Source: earnings call transcript

Executive summary

ePlus inc. Q4 FY26 — Strong Double-Digit Growth and AI Momentum

ePlus concluded a strong fiscal year 2026, driven by robust demand across its IT solutions and services, particularly in AI, cloud, and security. The company achieved significant double-digit growth in key financial metrics, leveraging operational efficiencies and a focused strategy following the divestiture of its financing business. Management expressed confidence in continued profitable growth for the upcoming fiscal year, supported by a healthy balance sheet and strategic capital allocation.

Highlights

5

  • Full year diluted EPS from continuing operations increased 64%.

  • Fourth quarter diluted EPS from continuing operations increased 53% year-over-year to $0.78.

  • Full year gross billings reached a record $3.8 billion, up 17%.

  • Consolidated net sales increased 20.6% in Q4 to $576.2 million and 22.1% for the full year to $2.4 billion.

  • Full year adjusted EBITDA grew 49.5% to $204.8 million.

Concerns

4

  • Q4 consolidated gross margin declined to 24.6% from 26.5% in the prior year quarter, primarily due to lower product margins.

  • Product segment gross margin was 22.2% in Q4, down from 24.7% in the prior year quarter, reflecting competitive pricing on large enterprise sales.

  • Other expense included a $3 million charge in Q4 related to an adjustment to the fair value of contingent consideration from the financing business sale.

  • Potential headwinds from the worldwide memory chip shortage and geopolitical issues were noted.

Guidance & targets

CategoryTargetConfidence
Net sales growth
mid-single-digit range
high materiality
Medium
Gross profit growth
mid-single-digit range
high materiality
Medium
Adjusted EBITDA growth
mid-single-digit range
high materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Products
Q4 sales increased 25% to $466.2 million, and full year sales advanced 24% to nearly $2 billion, driven by strong customer demand across data center, cloud, networking, and security, with increasing contribution from AI. Q4 gross margin was 22.2%, down from 24.7% in prior year.
$466.2 million25%—22.2%
Services
Q4 services revenue increased 4.9% to $110 million. Full year services revenue increased 16%. Managed services grew, partially offset by smaller growth and elongation of some professional services projects.
$110 million4.9%——
Managed Services
Q4 managed services revenue increased approximately 9.3% to $48.7 million. Full year managed services revenue increased approximately 11%. Q4 gross margin was 30.5%, up from 29.1% in prior year.
$48.7 million9.3%—30.5%
Professional Services
Q4 professional services revenue grew 2% to $61.3 million, reflecting timing delays from select retail customers. Full year professional services revenue increased 19%, supported by the addition of Bailiwick services. Q4 gross margin was 38.3%, up 240 basis points from 35.9% in prior year.
$61.3 million2%—38.3%
Customer Vertical: Telecom, Media & Entertainment
Represents 30% of net sales on a trailing 12-month basis.
Percentage of net sales (trailing 12-month): 30%
————
Customer Vertical: Healthcare
Represents 13% of net sales on a trailing 12-month basis.
Percentage of net sales (trailing 12-month): 13%
————
Customer Vertical: SLED
Represents 13% of net sales on a trailing 12-month basis.
Percentage of net sales (trailing 12-month): 13%
————
Customer Vertical: Technology
Represents 12% of net sales on a trailing 12-month basis.
Percentage of net sales (trailing 12-month): 12%
————
Customer Vertical: Financial Services
Represents 10% of net sales on a trailing 12-month basis.
Percentage of net sales (trailing 12-month): 10%
————
Customer Vertical: Retail
Represents 6% of net sales on a trailing 12-month basis.
Percentage of net sales (trailing 12-month): 6%
————
Customer Vertical: Other End Markets
Represents 16% of net sales on a trailing 12-month basis.
Percentage of net sales (trailing 12-month): 16%
————

Orderbook & backlog

Gross Billings $3.8 billion FY26

17% from prior year

Record gross billings, highlighting sustained demand across offerings.

Gross Billings $881 million Q4 FY26

11.7%

Reflecting sustained demand across strategic focus areas of AI, cloud, security and networking.

Open Orders Up Q4 FY26

A good sign for the business, but dictated by lead times.

Product announcements

ProductTypeDetails
AI Experience Centermilestone

Deals & partnerships

Domestic financing business divestiture

Completed the divestiture of the domestic financing business earlier in the fiscal year.

Dell Technologies partnership

Recognized as the Dell channel Strategic Impact Partner of the Year at Dell Technology World.

Digital Realty partnership

Announced as Digital Realty's 2025 Americas Partner of the Year, partly due to the AI experience center.

Risks & headwinds

Worldwide memory chip shortage Ongoing

Unquantified

Mitigation:Being conservative in guidance due to impact on lead times.

Geopolitical issues Ongoing

Unquantified

Mitigation:Being conservative in guidance due to external factors.

Project timing delays in professional services Q4 FY26

Resulted in 2% growth in Q4 professional services revenue

Mitigation:Expected to normalize in fiscal 2027, with signs of positive progress.

Lower product margins due to competitive pricing Q4 FY26

Q4 product segment gross margin was 22.2% compared to 24.7% in the prior year quarter

Mitigation:Optimistic about expansion opportunities through 'land and expand' and services value over time.

Charge related to fair value adjustment of contingent consideration Q4 FY26

$3 million charge

Q&A highlights

Asked for more detail on the framework for FY27 guidance, specifically regarding conservatism due to potential headwinds, and inquired about the impact of competitive pricing on large enterprise sales on margins.

Management stated that the guidance is conservative due to tough comparisons from a strong prior year, the worldwide memory chip shortage, and geopolitical issues. They also expressed optimism about expanding margins at large enterprises over time through 'land and expand' strategies and services value, despite current competitive rates.

“once again, it really comes down to being conservative with the memory shortage and some of the geopolitical unrest that's going on that we don't control.”

asked by Margaret Nolan · answered by Mark Marron

2 min read 6 chapters

Detailed narrative

Strategic Transformation and Focus

ePlus completed the divestiture of its domestic financing business earlier in the fiscal year, transforming into a pure-play technology solutions and services provider. This strategic move allowed the company to increase focus and allocate resources to faster-growing IT markets, including AI, cloud, data center, networking, and security, aiming to build IT solutions and capture market share more effectively.

AI and Digital Transformation Momentum

The company experienced strong demand across its diverse customer base, particularly for AI-driven technologies and digital transformation strategies. This trend led to increased demand for infrastructure modernization across various product categories. ePlus also established an AI experience center within Digital Realty's Innovation Lab, providing customers with hands-on demonstrations of advanced AI infrastructure.

Operational Efficiency and Scalability

ePlus demonstrated significant operating leverage in fiscal year 2026, with operating expenses growing 9.1% against 22.1% net sales growth and 49.5% adjusted EBITDA growth. The company achieved this while maintaining a flat headcount, reflecting a focus on high-growth areas and a scalable operating model. This efficiency contributed to a 67% growth in operating income for the full year.

Customer Satisfaction and Loyalty

The company achieved a Net Promoter Score (NPS) of 74, which is considered world-class and places ePlus in the top quartile of the technology and IT services industry. This high score indicates strong customer loyalty and advocacy, reflecting the company's efforts in quick response times, problem-solving, and actively listening to customer needs.

Capital Allocation Strategy

ePlus maintains a healthy balance sheet, ending the fiscal year with $410.8 million in cash and cash equivalents. This financial flexibility supports organic investments, strategic M&A opportunities, and returning capital to shareholders. The Board recently authorized an 8% increase in the quarterly dividend to $0.27 per share and the company repurchased 90,000 shares in the quarter.

Services Portfolio Expansion

The company continued to broaden its core portfolio offerings by adding professional and managed services. This includes new managed collaboration offerings for Cisco, Zoom, and Microsoft, as well as securing multiyear wins in storage and backup as a service. These longer-term engagements highlight customer confidence in ePlus's ability to deliver tangible business outcomes and strategic value.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.