ePlus at Small-Cap Virtual Conference: Strategic Shift to Tech and AI

On Wednesday, 17 September 2025, ePlus (NASDAQ:PLUS) presented its strategic vision at the Small-Cap Virtual Conference. The company outlined its focus on technology and services following the sale of its finance segment. While emphasizing its commitment to shareholder value, ePlus highlighted both its financial flexibility for future investments and the challenges of transitioning to a technology-focused company.

Key Takeaways

• ePlus sold its finance segment to focus on technology and AI opportunities.
• The company plans to use its financial flexibility for mergers and acquisitions.
• A strong balance sheet supports strategic investments, with $480 million in cash.
• ePlus projects growth in net sales, gross profit, and adjusted EBITDA for the fiscal year.
• AI and managed services are key growth areas, driven by infrastructure modernization.

Financial Results

• Net sales grew at a CAGR of 7% over the last five years.
• Service revenue now comprises nearly 20% of net sales, with a CAGR of 19%.
• Professional services gross profit increased at a CAGR of 13% from fiscal 2021 to 2025.
• Managed services gross profit grew at a CAGR of 24% from fiscal 2021 to 2025.
• Consolidated gross margin improved from 23% in fiscal 2021 to 26% in fiscal 2025.
• ePlus holds $480 million in cash and a $500 million credit limit with Wells Fargo.

Operational Updates

• The sale of the domestic financing business in June 2025 generated $180 million.
• ePlus is expanding its technology segment, focusing on AI, cloud, and security.
• The company increased customer-facing personnel by 557 from fiscal 2021 to 2025.
• ePlus serves over 4,600 customers, including Fortune 100 companies.

Future Outlook

• ePlus aims to expand through acquisitions, focusing on services and AI-related companies.
• The company anticipates upper single-digit growth in net sales and gross profit.
• Adjusted EBITDA is expected to grow in the mid-teens.
• IT spending is normalizing, with a strong pipeline and market demand.

Q&A Highlights

• The sale of the finance segment allows ePlus to focus on technology and AI.
• Geographic expansion and technical capabilities are key targets for M&A.
• AI is in its early stages, with customers exploring use cases and infrastructure upgrades.

ePlus’s strategic shift highlights its commitment to leveraging technology to drive growth. For more detailed insights, please refer to the full transcript below.

Full transcript - Small-Cap Virtual Conference:

Greg, Host: for participating, listening in, and ePlus for presenting here at our September small cap conference. From the company, we have Mark Marron, ePlus’ CEO, and Elaine Marion, the company’s CFO. They’re going to run through a presentation, and then we’ll get to as much Q&A as we can at the end. With that, let me hand it over to Mark and Elaine.

Mark Marron, CEO, ePlus: All right, thanks, Greg, and thanks everyone for joining us this afternoon. I’ll try to walk through the slides. Elaine and myself will walk through the slides at a fairly quick pace, so we can potentially take any questions you may have. I won’t bore you with the safe harbor. If you look at ePlus overall, here’s what I think you have. We’ve been in business for over 30 years, so we’ve been doing this for a long time. Started off as a finance company. Actually, a lot of what we were financing was, I’ll say, IT assets, built up our technology segment. Now see where the market’s going. We think that’s our biggest opportunity. In June, we sold our finance segment, and then are looking to leverage that cash and that capability or flexibility to continue to build out our technology segment as we go forward.

Revenues last fiscal were a little over $2 billion. Our gross billings, though, were $3.2 billion, and Elaine will touch on that a little bit about gross to net. The other thing is, we’ve got over 4,600 customers. We’ve got over 2,100 employees, and we’ve got all the certs and accreditations from all the key vendors in the key spaces, which I’ll touch on later that we play in. Next slide. I apologize. The slide’s not moving, so just bear with me. It’ll be one second. What I can, I’ll talk off the top while Elaine tries to pull up the slide. Why we’re excited about ePlus overall, two things that we did. One, we sold our finance segment. That gives us financial flexibility to do certain things. We also implemented our first dividend, a quarterly dividend to return value to our shareholders.

As we look at our capital allocation plans and things along those lines, we believe we have a couple different things. We have the dividend, we have a share buyback, and also we consider ourselves to be a growth company. From that end, there’s enough opportunities out there from an acquisition standpoint for us to continue to build out both our footprint, our customer base, and our expertise across not only the U.S., but across the globe, if you will. If I look at, and I’ll just try to do the slides off the top of my head while we wait for this, when I look at the management team, we’ve all been here and been in the industry for a long time. We work well together. During strategy sessions, it’s just true sharing of what we think we need to do to be successful as we go forward.

If I look at our business, at a very high level, the areas that we’re in are data center, cloud, and artificial intelligence. It’s networking, it’s security, and collaboration. If you look at it, that data center/cloud is kind of that infrastructure play, your compute, storage, even networking. That’s what we grew up as, as a technology segment company. All the things going on with artificial intelligence, when you hear about artificial intelligence and everybody’s excited, a lot of folks are trying to figure out how to leverage artificial intelligence with use cases and things along those lines. With that said, most don’t know where to begin. We have artificial intelligence envisioning sessions to help a customer figure out what use cases they want to put in place. We then walk them through.

We’ve got a briefing center where we actually show the customer how this would work, how the use cases would work in their organization. We help them with the infrastructure spend and all the services they would need to be successful. I’ll start with you, Erica, and then, yeah. If you look at this, Elaine’s going to touch on it. Our five-year CAGRs, net sales up 7% and everything else up double digit. As I said, we just sold our finance business. Elaine will touch on that with the proformas in terms of the continuing operation and what have you. Consistently, year over year and over multiple year periods, we’ve been in that seven to double digit range in terms of growth across all the key different metrics. Next slide. I touched on the leadership team, so I’ll do this really quick.

Everybody, if you look at it, has been in the industry a long time and has been with ePlus inc. for a significant amount of time. Next slide. Locations, we’ve got 30 plus locations, almost 35 locations across the U.S. and the globe. We’ve got integration centers and warehouses where we get big projects from some of our bigger enterprise customers that we build to order, config, and then ship across the U.S. or the globe and have those capabilities. Next slide. This is where I was touching on our capabilities overall. Cloud, data center, networking, collaboration. Emerging is really a lot of that now is your artificial intelligence, which we’re calling AI Ignite, and security. Security is about 22% of our gross billings for the trailing 12 months. Services, we’ve made a major commitment to services, and you know, services is almost 20% of our net sales.

If you look at the ring on the top, all those areas are what we’ve been doing for years, and it really fits artificial intelligence. You know, when people talk about artificial intelligence, it’s all about, one, doing the services work, about a data-first strategy, making sure that you’ve got the data from all your different areas, whether on-prem or in the cloud, doing the governance and risk work with that data, and then deciding, hey, is this staying internally? Is it going externally? What are the risks and what have you? Once you’ve done that, then you could figure out your use cases on whether you’re trying to drive more revenue, increase efficiencies, maybe reduce expenses.

We feel we’re in a good space with our services, our advisory and consultative services, but then also once they make a decision on all the infrastructure that they’ll need in order to implement whatever they’re doing. Next slide. All right, I kind of touched on this. If I could, the journey to modernization is really what’s happening here. A lot of folks have old infrastructure. In order to be ready for artificial intelligence, it’s got to be artificial intelligence-enabled, and people have to modernize their existing infrastructure. There’s a big opportunity there. Security, as everybody knows, there’s not any public company or any company that’s not going to make sure that they’ve got a security roadmap in place, all the right protocols. Artificial intelligence, I touched on, so I won’t go through it again. You know, it’s a conversation that every customer wants to have and understand.

Most customers are in what I’d call a curious phase as compared to the ready phase. Next slide. Services, what we think sets us apart, we’ve made some major investments in services throughout the years. We’ve got, I’ll call it the strategize, which is really just the consultative and the advisory where we’ll actually sit with the customer, understand what initiative or what they’re trying to do, and then help them build the roadmap out both from a product and solutions and services standpoint. Once they’ve decided on the solution, we can actually help them implement and install that solution. We can provide bodies in a staffing type motion if that’s what they’re interested in. We’ve got managed services where we’ll proactively manage this environment for them. This has been a real nice area for us.

Normally three-year deals, they’re ratable over the three years, so the revenue is very predictable and profitable. It’s a nice business, and that’s grown at about a 25% clip over the last year for us. Next slide. Now here’s a slide trying to depict where ePlus inc. fits in the market. On the left is all the different vendors, and most go through the channel or the majority through the channel. The first, the distributors, there’s both ValueAd and Broadline distributors. They do a really nice job of, from an inventory, just-in-time logistics type, and they do more than that, but that’s just at a high level, but normally a little bit lower margin business. You then have your kind of corporate resellers or VARs, if you will, and that’s your CDW, PC Connection, Insight, all really nice companies do a nice job.

Where we think we set ourselves apart, if you look at the gross margins up top, our gross margins are normally 400 to 600 basis points higher. We believe that’s due to our services being 20% of our net sales and a few other things that we do. We don’t do a lot of commodity sales, so we kind of stay away from that space. On the right, you know, high-end margin projections we’d love to get to. Not saying we’re ever going to be an Accenture. They’re just trying to show you where we fit within the market. Acquisitions. I touched on the cash a little bit earlier. At the end of June, I think we had about $480 million, almost a half a billion in cash.

We feel we got the flexibility to enhance both our territory coverage, expand our footprint, our customer base, and potentially pick up acquisitions that have some expertise that we could leverage. All these acquisitions either gave us that territory coverage or brought some type of either service or security, or in one case, service slash help desk capability that we’d then be able to pour it across the rest of ePlus inc. Our capital allocation, M&A, as well as organic hires, we believe we can continue to grab market share if we execute correctly. Customers, just to kind of give you a feel, you know, across the different industries. By the way, up top, it shows you normally our top five are healthcare, finance, telecom, SLED, and what am I missing there? I can’t even read that. SLED and technology. So are normally the five.

You can see we’ve got some of the biggest customers, you know, Fortune 100 type customers. Our sweet spot is probably the mid-market, that 500 employee to 10,000, but as you can see, we’ve got some of the biggest customers in the world as well. Just to close off, there are so many areas that we think we can help our customers, whether it’s through data center migration and modernization, whether it’s providing VC, so virtual CISO-like capabilities. Right now in the storage space, it used to be you’d buy storage in a perpetual. Now you can buy it as a drink and a storage as a service type. If you think about it, in this world, everybody wants to make sure they have a real clear backup and disaster recovery plan. Those are just a couple.

If I look at it and can kind of sum it all up, I think we’re positioned well in the market. We’re in all the right areas that a lot of customers are looking for our help, both from a services as well as solution standpoint. We just implemented our first quarterly dividend, and we have some financial flexibility to make moves. Elaine?

Elaine Marion, CFO, ePlus: Thank you, Mark. I’ll go over some of our financial results over the last five years. Just to begin with, the next several slides, I’m going to be discussing our proforma results relating to our continuing operations. As Mark talked about, we did sell our domestic financing business in June of 2025, just recently, for $180 million, with some contingent consideration, about $13.5 million or so. Also, we are a 3/31 year-end, so these year-end dates are, as of 3/31, our fiscal year-end. Our operations are really conducted through three segments. We have our product segment, our professional services segment, and our managed services segment. The majority of the revenues are derived from the product segment, as you would guess, about 80% or so. You can see our net sales CAGR was 7% over the last five years, and our gross billings CAGR was 10%.

Just to explain gross billings, we do provide this metric, this financial metric to our investors publicly, just because it really shows our market share. This is the amount that we’re billing and collecting from our customers. We have a portion of our billings that we have to net down, which means that we’re only recognizing the gross profit in the transaction in revenue. Those billings consist of things like maintenance, where we’re not providing that maintenance. Maybe it’s a Cisco SmartNet agreement, or it could be a SaaS-related software, where that software is really looked upon as a service being provided over the term of the SaaS agreement, such as security software. In many cases, are netted down. We like to give this metric because if you’re doing balance sheet-related financial metrics, this is the amount that’s obviously flowing through AP and AR.

I wanted to give you that as well. The next slide really shows our services revenue. Our motto is customer first, service is led, and results driven. We do really focus on our services business, and it’s grown at quite a good clip over the last several years. Our service revenue CAGR over the last five years has been 19%. It’s nearly 20% of our net sales now as well. The segments within our services business are professional services, and it really includes project-related work as well as staff augmentation. Like Mark said, we provide talent to people on sort of an ad hoc basis. We have project management services and cloud consulting services. Security services are in those professional services numbers.

We have a managed services offering that Mark talked about, like service desk or storage as a service, cloud hosted services, things of that nature that’s in that segment as well. From fiscal 2021 to 2025, the total service revenue grew at a 19% compounded rate. The gross profit from professional services has grown at a 13% CAGR, and our managed services gross profit has grown at a 24% CAGR. It is continuing to grow, that business. We’re very focused on it as well. Just looking at our total gross profit, our consolidated gross profit has grown at a CAGR of 10%. That is larger than our net sales CAGR, so it is showing that we are generating a very profitable business. Our consolidated gross margin has also increased. From fiscal 2021, it was at 23%, and we ended fiscal 2025 at 26%.

That’s really a contribution from the growth in the services revenue at a much higher margin, as well as a larger proportion of those sales that are recognized on a net basis that also impacts our gross margin. Looking at our net earnings, our net earnings and EPS CAGR over the last five years has been 12%, and our non-GAAP net earnings and non-GAAP EPS has had a CAGR of 11% over the last five years. Non-GAAP EPS just excludes other income, share-based comps, some acquisition and integration-related expenses, and the tax effect for that. It’s a pretty clean calculation. In terms of our proforma-adjusted EBITDA, it represents really net earnings from continuing operations for interest and depreciation, kind of a clean adjusted EBITDA calculation as well.

From fiscal 2021 to 2025, we did have a CAGR of 10%, and our margins have increased, bounced around a little bit from 6% to 7% is where we ended with fiscal 2025 as well. This is just continued operations. I won’t go through this since we have some limited time, but it is available for you if you’d like to look at that. That was our last June 30 quarter where we did have a discounts disclosure. Looking at our customer-facing personnel, we did recast this as well for our continuing operations. We’re continuing to increase the proportion of customer-facing personnel. We’ve increased it by 557 folks from fiscal 2021 to 2025, and we’re continuing to kind of leverage that operational infrastructure as well to just become more and more efficient.

Looking at the balance sheet, we have an extremely strong balance sheet with $480 million in cash and cash equivalents at 6/30. We have a $500 million credit limit with Wells Fargo for the technology part as well that had plenty of room on it as of June 30 as well. Mark mentioned our capital allocation strategy, but just as a review, it’s M&A first, organic investments. We also announced a dividend, a quarterly dividend we initiated last quarter for the first time, and also a new share repurchase program of up to 1.5 million shares. In terms of guidance, we did provide some updated guidance in August with our last results call. Net sales growth is expected to be in the upper single-digit range above the continuing operations net sales number.

Gross profit is expected to be in the upper single-digit range, and adjusted EBITDA is now expected to be in the mid-teens over the fiscal year continuing operations 2025. That is all I have, so we can open the call to questions.

All right, great. Thank you very much for that, Mark and Elaine. Let me just start off with the timing and maybe the thought process behind the divestiture of the financing business. Why now, and maybe what benefits are you able to unlock by divesting that asset?

Mark Marron, CEO, ePlus: Yeah, great question, Greg. We’ve actually talked about it for years as a company. In terms of if you look at our finance business, it was a very solid business. It was synergistic with our technology. It was very lumpy, though, from quarter to quarter, it really could swing. The main driver was when we started to look at the different potential acquisitions that were out there. Just as importantly, artificial intelligence and some of the associated infrastructure where that’s going and taking off, we think we can make some investments there and grab some market share based on doing it. It was more strategic, and I’ll say opportunistic, but we feel it’s the right move. It also makes us maybe a little bit easier for investors to look at as a pure technology play as compared to a finance and a technology play.

Okay. In terms of unlocking the financial flexibility within the business, I guess that’s an element of it with allowing you to initiate a dividend and do other things. In terms of M&A, what are you looking at? Is it geographic expansion, technical capability? What are the M&A opportunities that you’re looking at out there?

Yeah, good question. If I could touch on the one thing, what it did with selling of finance gave us a lot more financial flexibility. There were two things we did. I won’t say, you know, the dividend, which is our first quarterly dividend that we’ve ever had, and we’ve increased the share buyback, as Elaine Marion said, to 1.5 million shares at this last tranche, I believe, in May with the board’s approval. The bigger piece is the M&A side of it. When we look at M&A, we still have many areas from expanding our footprint that we can potentially acquire and not duplicate a region that we’re in. We have particular areas of expertise we can continue to build out. Love to focus more, you know, on the services type companies that are out there, but with artificial intelligence and everything else going on, those are in play.

A lot of times, you know, mainly we’ve done a lot of smaller tech under acquisitions. We now have the ability to still do those, but potentially do a little bit bigger acquisitions. That’s kind of how we look at it. We think it could be a real nice growth driver and market share gain for us.

Okay. Can you just talk about what the main drivers of your margin expansion have been, and maybe how you look at gross margin growth versus operating margin growth, like how much you kind of allow that to flow through given some of the investments that you’re making?

Yeah. If you look at our gross margin, there’s a few things. We don’t really sell commodity products, so that’s kind of lower margin business. We do for some of our bigger customers, but we’ve moved away from that. This is kind of historical, Greg. Over time, instead of being more product-led, we moved to more of a services-led organization, and our services margins are significantly higher than our products. The other thing is, based on the areas we’re in, there’s some of the more value-add, like security, some of the networking now that people are going to have to make decisions on, you know, their network going forward with all the data that’s going to be analyzed in artificial intelligence. You got to get more bandwidth. We’re in the areas where customers need solutions. We are providing the services. We’ve also built out our annuity services.

That’s kind of helped keep us sticky with the customers because those are normally three-year deals. That would be it. We’d expect, we would hope the margins would continue to grow as our services grow, you know, going forward. As it relates to operating margins, we don’t break it out besides we talk about what kind of growth we’re going to see at adjusted EBITDA, but we build five-year plans from top line all the way down to bottom line, as well as the margins, operating margins, EBITDA margins, and stuff like that, of what type of growth, both from a dollars and % standpoint, we’d see.

Okay. Maybe we could talk about the artificial intelligence opportunity. How much revenue are you kind of currently seeing from artificial intelligence? Maybe looking forward, how should we think about that becoming a bigger contributor to the revenue and profitability of the business?

Yeah, and I think everybody knows this. AI is in the beginning stages, I’ll say early innings, if you will, Greg. You know, what we’re seeing is we’re seeing a lot of envisioning sessions with customers. The way we look at it, we’ll do an envisioning session, help them make some decisions on where they think they can get benefits of AI. We also have a briefing center where they can actually come in and test their data and create use cases. We’re starting to see the infrastructure spend. A lot of people are, even if they’re not ready for AI, they’re buying AI-enabled technology infrastructure, if you will, as they continue to move down that path. When I say it’s in the early innings, we are starting to see some deals that start off as AI conversations with customers.

It’s a lot of what we call the plumbing, you know, that people are upgrading their compute or they’re upgrading the amount of storage that they have or they’re looking at different networking solutions that have the bandwidth. The other thing we’re seeing is everybody starts, though, from a security perspective, from a governance and risk standpoint. What’s nice about AI, AI is easy to have a conversation with a customer. All the stuff they need to implement to be successful with AI from an infrastructure standpoint, meaning your compute, your storage, your networking, your security, is what we’ve done for years. We have all the related services that go with that.

All right, great. Maybe we could talk a little bit about just market demand in general. It seems like the last quarter or two, maybe we started to see some of the larger type deals coming back. What are you seeing in the market in terms of IT spend and maybe, you know, companies moving forward on stuff that they were holding off on potentially now going forward?

Okay. If I look at it, Greg, I think there’s a couple of things that everybody has to take into account. You had the supply chain easing. A couple of years ago, you had everybody, you know, put their orders in, and then it was a wait time trying to get all their hardware and gear and what have you. We saw that supply chain easing, and not so much last year, but the previous year. What we think last year was people were digesting and implementing that technology, and we’re seeing more normalized run rates as it relates to, I’ll say, product or hardware buys and procurement. I think it’s more normalized. I do think, you know, from a pipeline and market, we haven’t seen any slowdown yet. Obviously concerned, you know, tariffs really haven’t affected things, either good or bad. They’re talking about a Fed rate cut today.

I haven’t had a chance to catch up with all the meetings today if anything happened there. I think overall, unless something changes, you know, from a macroeconomic, the market is now normalized and back to where it should be.

Okay, great. You touched on it earlier, but how you’re viewing the service component of the business. Do you have a target on what % of your revenue you want to get that to, or how should we think about the growth of the service elements and where are you seeing the most growth opportunity?

Yeah. Look, we’re kind of happy that, you know, we’re at 20% of net sales now with services. What we’re also seeing, though, is Elaine touched on it, our product business is about 80% of that. That’s still growing. To get to 30% as the products grow, it’s going to be a pretty hefty jump in terms of services. Here’s what we’ll tell you. We feel good that we’ve kind of made that jump from a product-led to a services-led company. It’s not perfect. The team has done a nice job of doing more of the advisory services upfront. Why that’s valuable, you’re in upfront, you’re understanding what the initiatives or outcomes that the customer is looking for, and then we’re providing both the product and the services that they need to implement that. What kind of sets us apart from the competition is also our managed services.

We can manage, proactively manage, and monitor those environments on a regular basis, which then continues to keep us in touch with the customer, which could add to additional sales. Services, to me, is very important, and it’s more margin-rich than product, as we all know.

All right, great. We’re right up against the end of our time slot. I don’t know if you had any closing comments or parting words you wanted to leave us with.

I can’t tell you what I really want to say, Greg, right? If I could, I do believe, look, the selling of finance, I think, gives us a lot of flexibility as a company. I believe being a pure technology play, we’re in all the right spaces. We’ve made the investments in services or integration centers or briefing centers and things like that to help our customers. With our capital allocation plans, I think we can continue to build out our footprint as well as our capabilities. That would be it, Greg.

All right, great. Thanks, thanks Mark Marron and Elaine Marion for presenting. Thanks everyone else for listening in. With that, we will wrap it up.

Perfect. Thanks, everyone. See you, Greg.

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