8-K: ePlus Reports Strong Q3 FY26, Raises Full-Year Guidance

ePlus inc. announced robust third-quarter fiscal year 2026 results with double-digit growth across key metrics, prompting a raise in its full-year guidance and a quarterly cash dividend declaration.

Summary

• Consolidated net sales increased 24.6% to $614.8 million for the three months ended December 31, 2025.
• Net earnings from continuing operations more than doubled, increasing 129.3% to $33.4 million for the third quarter.
• Diluted earnings per common share from continuing operations rose 130.9% to $1.27 for the quarter.
• Adjusted EBITDA increased 97.4% to $53.4 million for the third quarter.
• For the first nine months of fiscal year 2026, consolidated net sales increased 22.2% to $1,860.9 million.
• Net earnings from continuing operations for the nine months increased 68.5% to $98.7 million.
• Diluted earnings per common share from continuing operations for the nine months increased 70.8% to $3.74.
• Adjusted EBITDA for the nine months increased 55.0% to $158.8 million.
• The company raised its fiscal year 2026 guidance, now expecting net sales to increase 20% to 22%, gross profit to grow 19% to 21%, and Adjusted EBITDA to increase 41% to 43% year-over-year.
• A quarterly cash dividend of $0.25 per common share was declared, payable on March 18, 2026, to shareholders of record as of February 24, 2026.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a very positive report, driven by strong double-digit growth across key financial metrics, significant earnings increases, and an upward revision of full-year guidance, despite some minor service segment declines and increased working capital.

Positives

• Consolidated net sales increased 24.6% to $614.8 million in Q3 FY26 and 22.2% to $1,860.9 million for the first nine months of FY26.
• Consolidated gross profit increased 26.8% to $158.7 million in Q3 FY26 and 23.7% to $469.0 million for the first nine months of FY26.
• Net earnings from continuing operations increased 129.3% to $33.4 million in Q3 FY26 and 68.5% to $98.7 million for the first nine months of FY26.
• Adjusted EBITDA increased 97.4% to $53.4 million in Q3 FY26 and 55.0% to $158.8 million for the first nine months of FY26.
• Net earnings from continuing operations per common share-diluted increased 130.9% to $1.27 in Q3 FY26 and 70.8% to $3.74 for the first nine months of FY26.
• Product segment sales increased 32.2% in Q3 FY26 and 22.9% for the first nine months of FY26, driven by networking, cloud, security, and collaboration products.
• Managed services segment revenue increased 10.5% in Q3 FY26 and 11.0% for the first nine months of FY26, primarily due to additional cloud services.
• The company raised its fiscal year 2026 guidance for net sales (20-22% YOY), gross profit (19-21% YOY), and Adjusted EBITDA (41-43% YOY).
• A quarterly cash dividend of $0.25 per common share was declared.
• Strong demand for AI is fueling spend across all solution sets, including cloud, compute, storage, and networking.
• Strong revenue growth from largest enterprise customers modernizing infrastructure for AI initiatives.
• The acquisition of Bailiwick Services, LLC contributed to a 25.8% increase in professional services segment revenues for the nine months.
• Mike Portegello was appointed to the Board of Directors.
• ePlus Technology subsidiary Bailiwick was selected for the National Retail Federation Innovators Showcase for digital lock technology.
• ePlus Vice President, Dori White, was named Solution Provider Marketing Executive of the Year in CRN's 2025 Women of the Year Awards.

Negatives

• Services revenues decreased 0.7% to $112.8 million in Q3 FY26.
• Professional services segment revenues decreased 7.8% to $64.1 million in Q3 FY26, primarily due to project delays by certain retail and consumer customers.
• Professional services gross margin decreased to 39.2% in Q3 FY26 from 40.1% in the prior year quarter.
• Managed services gross margin declined to 29.0% in Q3 FY26 from 29.8% in the prior year quarter.
• Net earnings from discontinued operations decreased to $1.7 million in Q3 FY26 from $9.6 million in the prior year quarter, primarily due to the sale of the domestic financing business.
• Net earnings from discontinued operations for the nine months decreased to $8.9 million from $24.2 million in the prior year period.
• Cash and cash equivalents decreased to $326.3 million as of December 31, 2025, from $389.4 million as of March 31, 2025.
• Inventory increased 100.1% to $241.0 million as of December 31, 2025, from $120.4 million as of March 31, 2025, due to an increase in projects in process.
• Accounts receivable-trade, net increased 35.0% to $698.0 million as of December 31, 2025, from $516.9 million as of March 31, 2025.

Risks

• Financial losses resulting from national and international political instability fostering uncertainty and volatility in the global economy, including changes in interest rates, tariffs, inflation, export requirements, sanctions, and exposure to foreign currency rate changes.
• Supply chain issues, including a shortage of IT component parts and products, and vendors' rapid and unpredictable price fluctuations, or customer/vendor cancellations of orders, which may increase costs, decrease gross profit, cause delays in fulfilling orders, increase working capital needs, or delay professional services.
• Significant adverse changes in relationships with one or more larger customer accounts or vendors, including decreased account profitability, reductions in contracted services, or a loss of such relationships.
• Increases to costs, including wages, and the ability to increase prices to customers as a result, or negative financial impacts due to existing pricing arrangements.
• A material decrease in the credit quality of the customer base, or a material increase in credit losses.
• Reliance on third parties to perform some service obligations to customers, and reliance on a small number of key vendors in the supply chain without long-term supply agreements, guaranteed price agreements, or assurance of stock availability.
• The possibility of a reduction of vendor incentives provided to the company.
• Inability to identify merger and acquisition candidates, perform sufficient due diligence, successfully integrate completed mergers/acquisitions, successfully complete M&A transactions on favorable terms, or identify/successfully complete a business disposition.
• Inability to remain secure during a cybersecurity attack or other information technology (IT) outage, including disruptions in the company's, vendors', or third party's IT systems and data/audio communication networks.
• Inability to secure the company's and customers' electronic and other confidential information, while maintaining compliance with evolving data privacy and cybersecurity laws and regulations and appropriately providing required notice and disclosure of cybersecurity incidents.
• Dependence on key personnel to maintain certain customer relationships, and the ability to hire, train, and retain sufficient qualified personnel with needed vendor certifications.
• Risks relating to artificial intelligence (AI), including the use or capabilities of AI and emerging laws, rules, and regulations related to AI.
• Ability to manage a diverse product set of solutions, including AI products and services, in highly competitive markets with a number of key vendors.
• Changes in the IT industry and/or rapid changes in product offerings, including the proliferation of cloud, infrastructure as a service (IaaS), software as a service (SaaS), platform as a service (PaaS), and AI, which may affect financial results.
• Ongoing remote work trends, and the increase in cybersecurity attacks that have occurred while employees work remotely, and the ability to adequately train personnel to prevent a cyber event.
• Ability to raise capital, maintain or increase lines of credit with vendors or the floor plan facility, or the effect of those matters on common stock price.
• Ability to predictably meet expectations of the investor and analyst community, including relative to financial performance guidance.
• Ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration, and other key strategies following mergers and acquisitions.

Future Outlook

ePlus is raising its fiscal year 2026 guidance, now expecting net sales to increase 20% to 22% year-over-year, gross profit to grow 19% to 21%, and Adjusted EBITDA to increase 41% to 43%. The company plans to continue expanding services and value-added solutions, delivering consistent growth, maintaining financial discipline, and returning capital to shareholders through dividends and share repurchases, while prioritizing strategic investments in its core business to achieve sustainable competitive advantages and preserve a healthy balance sheet.

Management Comments

• "We continued to experience strong momentum in our third fiscal quarter as we achieved robust growth, with net sales increasing 24.6% and net earnings from continuing operations more than doubling year over year." Mark Marron, President and CEO.
• "The scalability of our operating platform has provided operating leverage which is reflected in our growth in gross profit, operating income, adjusted EBITDA and earnings per share." Mark Marron, President and CEO.
• "Our solid revenue growth reflects, in part, demand for AI that is fueling spend across all of our solution sets including cloud, compute, storage and networking." Mark Marron, President and CEO.
• "We continued to see strong revenue growth from our largest enterprise customers, who are modernizing their infrastructure to support their AI initiatives. We also saw strong demand from our mid-market customer base where we have continued to evolve and expand our product and services solutions to meet our customers needs in todays market." Mark Marron, President and CEO.
• "As a result of our strong third quarter and nine-month results, we are raising our fiscal year 2026 guidance. Our teams remain committed to executing on our long-term strategy centered on expanding services and value-added solutions, delivering consistent growth, maintaining strong financial discipline and returning capital to shareholders in the form of dividends and share repurchases." Mark Marron, President and CEO.
• "We will continue to take a disciplined approach to capital deployment, prioritizing investments in our core business, strengthening our capabilities, and focusing on areas where we can achieve sustainable competitive advantages, all while preserving a healthy balance sheet." Mark Marron, President and CEO.
• "We are executing from a position of strength, delivering solid near-term performance while investing strategically for the future. All of this positions us well to deliver sustainable growth over the long term and lasting value for our shareholders." Mark Marron, President and CEO.

Industry Context

StockSavvy.ai notes that ePlus's strong revenue growth, particularly in product sales, is significantly driven by the increasing demand for AI, which is fueling technology spending across cloud, compute, storage, and networking solutions. This aligns with broader industry trends where enterprises are rapidly modernizing infrastructure to support AI initiatives, indicating a robust market for IT solutions providers capable of delivering these complex integrations.

Management Changes

Legal Proceedings

• Net earnings from discontinued operations for the three months ending December 31, 2025, included $1.7 million primarily due to the settlement of a legal matter.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, increased guidance, and the declaration of a quarterly cash dividend ($0.25 per common share), indicating potential for enhanced returns and long-term value.
• Customers: Continued focus on expanding services and value-added solutions, including AI, cloud, security, and networking, suggests enhanced offerings and support for their technology needs.
• Employees: Increases in variable compensation commensurate with gross profit growth and additional salaries and benefits for the nine months indicate a positive impact on employee compensation.

Next Steps

• Payment of the quarterly cash dividend on March 18, 2026.
• Continued execution on the long-term strategy centered on expanding services and value-added solutions.
• Delivering consistent growth and maintaining strong financial discipline.
• Returning capital to shareholders in the form of dividends and share repurchases.
• Taking a disciplined approach to capital deployment, prioritizing investments in the core business, strengthening capabilities, and focusing on areas for sustainable competitive advantages.

Key Dates

Recommendation

The company delivered exceptional Q3 and nine-month results, significantly outperforming previous periods with double-digit growth in net sales, gross profit, and a more than doubling of net earnings and Adjusted EBITDA in the quarter. The upward revision of fiscal year 2026 guidance across all key metrics demonstrates strong management confidence and operational momentum, particularly driven by AI demand. The declaration of a cash dividend further signals financial health and commitment to shareholder returns. Despite some working capital increases and minor service segment declines, the overall performance and outlook are robust, making it a compelling investment opportunity.

Keywords

ePlus, PLUS, Technology Solutions, IT Services, Cloud, Security, Networking, AI, Managed Services, Professional Services, Financial Results, Earnings, Guidance, Dividend, Corporate Governance, Fiscal Year 2026