8-K: ePlus Soars with Record Q2 Billings, Raises FY26 Guidance

ePlus inc. reported strong fiscal year 2026 second quarter and first half financial results, including record quarterly gross billings exceeding $1 billion, and raised its full fiscal year 2026 guidance.

Summary

• Consolidated net sales for the second quarter of fiscal year 2026 increased 23.4% year-over-year to $608.8 million.
• Gross billings for the second quarter increased 26.5% to $1,022.7 million, marking the first time quarterly gross billings exceeded $1 billion in company history.
• Net earnings from continuing operations for the second quarter increased 92.7% to $38.2 million.
• Diluted earnings per share (EPS) from continuing operations for the second quarter increased 95.9% to $1.45 (Non-GAAP diluted EPS increased 62.8% to $1.53).
• For the first half of fiscal year 2026, consolidated net sales increased 21.1% to $1,246.1 million, and net earnings from continuing operations increased 48.4% to $65.3 million.
• The Board of Directors declared a quarterly cash dividend of $0.25 per common share, payable on December 17, 2025, to shareholders of record as of November 25, 2025.
• The company completed the acquisition of certain assets of Realwave, Inc. during the quarter to enhance its Artificial Intelligence (AI) capabilities.
• Fiscal year 2026 guidance for net sales, gross profit, and Adjusted EBITDA has been raised, reflecting strong performance and expected continued momentum.
• The domestic financing business was sold on June 30, 2025, and its results are now retrospectively presented as discontinued operations.

Sentiment

Score: 9

Explanation: The company delivered exceptional Q2 and H1 results with double-digit growth across all key financial metrics, including a historic milestone of over $1 billion in quarterly gross billings. The significant increase in net earnings and Adjusted EBITDA, coupled with a raised full-year guidance and strategic investment in AI, indicates very strong operational execution and a positive outlook.

Positives

• Consolidated net sales increased 23.4% to $608.8 million in Q2 FY26 and 21.1% to $1,246.1 million in H1 FY26.
• Gross billings increased 26.5% to $1,022.7 million in Q2 FY26, exceeding $1 billion for the first time in company history.
• Consolidated gross profit increased 27.4% to $162.1 million in Q2 FY26 and 22.1% to $310.3 million in H1 FY26.
• Net earnings from continuing operations increased 92.7% to $38.2 million in Q2 FY26 and 48.4% to $65.3 million in H1 FY26.
• Adjusted EBITDA increased 61.6% to $58.7 million in Q2 FY26 and 39.8% to $105.4 million in H1 FY26.
• Net earnings from continuing operations per common share-diluted increased 95.9% to $1.45 in Q2 FY26 and 50.6% to $2.47 in H1 FY26.
• The company ended the quarter with a strong cash position of $402.2 million.
• Fiscal year 2026 guidance for net sales, gross profit, and Adjusted EBITDA has been raised.
• Product segment sales increased 24.5% in Q2 FY26 and 18.8% in H1 FY26, driven by higher cloud, networking, and security products net sales.
• Professional services segment revenues increased 23.3% in Q2 FY26 and 49.3% in H1 FY26, partly due to the acquisition of Bailiwick Services, LLC.
• Managed services segment revenue increased 13.5% in Q2 FY26 and 11.3% in H1 FY26, primarily due to enhanced maintenance support and cloud services.
• Significant growth in gross billings by type: Networking up 43.4% in Q2, Security up 56.0% in Q2, and Cloud up 3.6% in Q2.
• Strong net sales growth across key customer end markets in Q2: Telecom, media & entertainment up 62.2%, Financial services up 81.5%, and Technology up 26.7%.

Negatives

• Net sales of collaboration products decreased in both Q2 and H1 FY26.
• Professional services gross margin decreased to 38.2% in Q2 FY26 (from 41.3%) and 38.7% in H1 FY26 (from 41.4%), attributed to the addition of lower-margin services from Bailiwick Services, LLC.
• Managed services gross margin slightly declined to 29.4% in Q2 FY26 (from 29.5%) and 29.9% in H1 FY26 (from 30.4%).
• The effective tax rate for Q2 FY26 (29.3%) and H1 FY26 (28.1%) was higher than the prior year periods.
• A loss from discontinued operations of $3.3 million was recorded in Q2 FY26, primarily due to a $4.6 million contingent liability related to a legal matter from the sold domestic financing business.
• Net earnings from discontinued operations decreased by $7.4 million in H1 FY26 due to the sale of the domestic financing business.
• Net sales to the SLED (State, Local, and Education) customer end market decreased by 10.7% in Q2 FY26 and 6.3% in H1 FY26.

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 losses.
• 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 experience 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 an opportunity for or 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, its vendors', or a third party's IT systems and data and audio communication networks.
• Inability to secure the company's and its customers' electronic and other confidential information, while maintaining compliance with evolving data privacy and cybersecurity regulatory 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.
• Supply chain issues, including a shortage of IT component parts and products, may increase costs or cause a delay in fulfilling customer orders, increase the need for working capital, or delay completing professional services or purchasing IT products/services needed to support internal infrastructure or operations, resulting in an adverse impact on 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 changes 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 acquisitions.

Future Outlook

The company is increasing its fiscal year 2026 guidance, expecting net sales to grow at a mid-teens rate from fiscal year 2025's $2.01 billion from continuing operations. Gross profit is also anticipated to grow at a mid-teens rate from fiscal year 2025's $515.5 million from continuing operations. Adjusted EBITDA is projected to increase at approximately twice the rate of net sales growth for fiscal year 2026, benefiting from operating leverage. This guidance does not account for recessionary conditions or other unexpected developments.

Management Comments

• "Fiscal 2026 is off to a very strong start as the strength from the first quarter carried into the second quarter, with net sales growing 23.4% and diluted EPS increasing almost 63%." Mark Marron, President and CEO of ePlus.
• "This quarter marks an important milestone for ePlus, as we posted quarterly gross billings exceeding $1 billion for the first time in our history." Mark Marron.
• "Our second-quarter performance reflects steady progress in executing our strategic priorities as we reported double-digit growth in key financial metrics: revenue, gross profit, net earnings from continuing operations, Adjusted EBITDA and EPS." Mark Marron.
• "Our results highlight the strength and resiliency of our business. We continue to build momentum across our diversified end markets while maintaining disciplined cost management." Mark Marron.
• "We ended the quarter with a cash position of $402 million, enabling both organic growth and M&A activity." Mark Marron.
• "We completed the acquisition of certain assets of Realwave in the quarter to further enhance our Artificial Intelligence (AI) capabilities, in line with our strategy to invest in fast growing categories including cybersecurity, networking, AI and cloud." Mark Marron.
• "Furthermore, our teams are executing on our long-term plan, focused on services, value-added solutions, stable growth, and financial discipline." Mark Marron.
• "By balancing positive performance today with thoughtful investments for tomorrow, we are building a foundation for lasting growth and long-term value creation." Mark Marron.

Industry Context

The company's strong performance, particularly in cloud, networking, and security products, and its strategic acquisition to enhance AI capabilities, aligns with broader industry trends emphasizing digital transformation, robust cybersecurity demand, and the accelerating adoption of artificial intelligence. The diversified end markets, showing significant growth in telecom, media & entertainment, and financial services, suggest resilience and effective penetration across various sectors benefiting from technology solutions. The focus on services and value-added solutions positions the company well within a competitive IT services landscape.

Legal Proceedings

• A contingent liability of $4.6 million related to a legal matter from discontinued operations, for which the company remains responsible under the terms of the sale of its domestic financing business, resulted in a $3.3 million loss from discontinued operations in Q2 FY26.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, increased earnings, raised guidance, and the declaration of a quarterly cash dividend of $0.25 per share.
• Employees: Potential positive impact from increases in variable compensation commensurate with gross profit growth, as well as additional salaries and benefits.
• Customers: Continued focus on providing transformative technology solutions and services, with expanded portfolios in managed services and enhanced maintenance support, particularly in high-growth areas like AI, security, and cloud.
• Creditors: A strong cash position of $402.2 million and increased total stockholders' equity of $1,046.1 million indicate a healthy financial position and improved creditworthiness.

Next Steps

• Payment of a quarterly cash dividend of $0.25 per common share on December 17, 2025.
• Continued execution on the long-term plan, focused on services, value-added solutions, stable growth, and financial discipline.
• Maintain a disciplined capital allocation approach anchored around investment in the business, capabilities, and areas for competitive differentiation while maintaining a strong balance sheet.

Key Dates

Recommendation

The company has demonstrated exceptional financial performance with double-digit growth across all key metrics, including a record-breaking quarter for gross billings. The significant increase in net earnings and Adjusted EBITDA, combined with a raised full-year guidance, signals robust operational momentum and strong management execution. Strategic investments in high-growth areas like AI and cybersecurity, coupled with a healthy balance sheet and a declared dividend, position the company for continued value creation. The positive outlook and strong fundamentals make it a compelling investment opportunity.

Keywords

ePlus, PLUS, Financial Results, Earnings, Q2 2026, H1 2026, Net Sales, Gross Profit, Adjusted EBITDA, EPS, Dividend, Technology Solutions, Cloud, Networking, Security, Artificial Intelligence, AI, Managed Services, Professional Services, Acquisition, Realwave, Bailiwick Services, Guidance