ePlus delivered a strong Q3, with the market responding positively to results that exceeded Wall Street expectations. Management attributed the outperformance to robust demand in security, networking, and cloud solutions, with CEO Mark Marron noting that security gross billings rose 56% year-over-year, fueled by customers investing in AI-driven infrastructure. Additionally, the company saw broad-based growth across customer segments and verticals, except for state and local government, which faced budget constraints. The successful execution of its automation initiatives and operational leverage also played a critical role in the quarter’s margin expansion and profitability.
Is now the time to buy PLUS? Find out in our full research report (it’s free for active Edge members).
ePlus (PLUS) Q3 CY2025 Highlights:
- Revenue: $608.8 million vs analyst estimates of $518.3 million (23.4% year-on-year growth, 17.5% beat)
- Adjusted EPS: $1.53 vs analyst estimates of $0.95 (61.9% beat)
- Adjusted EBITDA: $58.7 billion vs analyst estimates of $38.3 million (9,642% margin, significant beat)
- Operating Margin: 8%, up from 5.7% in the same quarter last year
- Market Capitalization: $2.40 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From ePlus’s Q3 Earnings Call
- Margaret Nolan (William Blair) asked what is driving the strength in security. CEO Mark Marron explained that AI initiatives, including data classification projects, and a general uptick in security-related deals contributed to the strong performance.
- Nolan (William Blair) inquired about variability across end markets. Marron answered that most verticals showed strength except for state and local government, which was impacted by funding constraints, while mid-market and enterprise segments were notably strong.
- Gregory Burns (Sidoti & Company) questioned the sustainability of the pipeline and factors supporting the raised outlook. Marron highlighted robust pipeline tracking, several large deals, and optimism based on current demand trends.
- Burns (Sidoti & Company) sought clarity on operating leverage versus investment needs. Marron responded that operating leverage should continue in the short term but emphasized ongoing investment in organic hires and acquisitions to expand AI and service capabilities.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely watch (1) the pace of customer adoption for AI and cloud solutions, (2) expansion of professional and managed services as recurring revenue drivers, and (3) deployment of capital toward acquisitions or organic growth initiatives. Progress in these areas will be critical to sustaining the company’s current momentum and achieving its strategic objectives.
ePlus currently trades at $89.39, up from $73.42 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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