ePlus Inc. Reports Slight Increase in Net Sales but Decline in Profitability for Q3 FY 2025

ePlus Inc. reported its financial results for the third quarter of fiscal year 2025, revealing a slight increase in net sales but a decline in profitability compared to the same period last year. For the three months ended December 31, 2024, the company achieved net sales of $511.0 million, a 0.4% increase from $509.1 million in the prior year. However, net earnings fell to $24.1 million, down 11.5% from $27.3 million, resulting in diluted earnings per share of $0.91, compared to $1.02 in the same quarter of the previous year.

The decrease in net earnings was attributed to a significant rise in operating expenses, which increased by 17.3% to $112.4 million, primarily due to higher salaries and benefits, general and administrative expenses, and costs associated with the recent acquisition of Bailiwick Services, LLC. The company's operating income for the quarter decreased by 25.1% to $28.5 million, reflecting a decline in profitability margins. The gross profit for the quarter increased by 5.3% to $140.9 million, driven by higher service revenues, particularly in professional and managed services, despite lower product sales.

In terms of strategic developments, ePlus completed the acquisition of Bailiwick Services on August 19, 2024, for approximately $124.9 million. This acquisition is expected to enhance ePlus's capabilities in providing professional and managed services, particularly in sectors such as retail and hospitality. The company also reported an increase in its employee headcount to 2,291, a 20.8% rise from the previous year, largely due to this acquisition.

Operationally, ePlus experienced a mixed performance across its business segments. The product segment saw a decline in sales, primarily due to lower demand for networking and cloud products, while the professional services segment reported a significant increase in revenue, reflecting the impact of the Bailiwick acquisition. The managed services segment also grew, driven by increased demand for cloud services and enhanced maintenance support. The company’s financing segment reported increased net sales of $17.8 million, up from $14.9 million, bolstered by higher portfolio earnings and transactional gains.

Looking ahead, ePlus remains cautious about the economic environment, citing potential impacts from inflation, interest rate fluctuations, and geopolitical uncertainties on customer spending. The company anticipates continued growth in its service offerings and plans to leverage its recent acquisitions to enhance its market position. However, it acknowledges the challenges posed by pricing pressures and project delays within its enterprise accounts.