ePlus(PLUS) - 2025 Q4 - Annual Report

Financial Performance - Net sales for the year ended March 31, 2025, were $2,068,789, a decrease of 7.1$2,225,302 in 2024[169]. - Gross profit increased to $569,121 for the year ended March 31, 2025, up from$550,793 in 2024, resulting in a gross margin of 27.5%[169]. - Operating income margin decreased to 6.8% for the year ended March 31, 2025, compared to 7.1% in 2024[169]. - Net earnings for the year ended March 31, 2025, were $107,978, down from$115,776 in 2024, maintaining a net earnings margin of 5.2%[169]. - Non-GAAP net earnings for the year ended March 31, 2025, were $124,475, compared to$131,327 in 2024[169]. - Adjusted EBITDA for the year ended March 31, 2025, was $178,234, a decrease from$190,441 in 2024, with an adjusted EBITDA margin of 8.6%[169]. - Total gross billings for the year ended March 31, 2025, were $3,280,447, slightly down from$3,329,764 in 2024[169]. - For the year ended March 31, 2025, net sales decreased by $156.5 million compared to the prior fiscal year, driven by lower product revenues, although managed services and professional services revenue increased[177]. - Consolidated gross profit increased by$18.3 million year-over-year, with gross margins up by 270 basis points to 27.5%, primarily due to a shift in product mix towards higher-margin services[178]. - Operating income decreased by $16.8 million, with operating margin declining by 30 basis points to 6.8$12.2 million, while the Adjusted EBITDA margin remained flat at 8.6%[181]. - GAAP net earnings per common share—diluted decreased by $0.28 to$4.05, while Non-GAAP net earnings per common share—diluted decreased by $0.25 to$4.67[182]. - Basic earnings per common share for the year ended March 31, 2025, were $4.07, a decrease of 6.4$4.35 for the year ended March 31, 2024[214]. - Diluted earnings per common share for the year ended March 31, 2025, were $4.05, a decrease of 6.5$4.33 for the year ended March 31, 2024[214]. - The effective income tax rate for the year ended March 31, 2025, was 27.5%, lower than 28.1% for the year ended March 31, 2024, primarily due to lower state taxes[212]. Business Segments - For the year ended March 31, 2025, technology business segments accounted for 97% of net sales, with 78% from the product segment, 11% from professional services, and 8% from managed services[25]. - The financing business segment accounted for 3% of net sales and 25% of operating income for the year ended March 31, 2025[25]. - The technology business segments include product, professional services, and managed services, with a focus on gross profit and operating expenses[183]. - The financing business segment offers solutions primarily to corporations and government contractors, with a focus on leasing IT and medical equipment[187]. - Net sales for the technology business segments decreased by 7.7% to $2,009,145, compared to$2,175,886 in the previous year[190]. - Product sales declined by 14.6% to $1,608,768, while professional services increased by 48.2$229,030, and managed services rose by 24.6% to $171,347[190]. - Gross profit for the technology business segments increased by 1.4$515,381, with a gross profit margin of 25.7%, up 230 basis points from the prior year[196]. - Portfolio earnings in the financing business segment increased by 30.8% to $18,229, while transactional gains rose by 51.8$28,866[206]. - Total proceeds from sales of financing receivables decreased to $634.9 million from$762.6 million in the previous year[206]. Customer and Market Insights - ePlus serves 4,600 customers, with revenue distribution by end market: 23% telecommunications, media and entertainment, 17% state and local education, 15% technology, 14% healthcare, and 9% financial services[23]. - Sales to Verizon Communications Inc. represented 16%, 19%, and 22% of net sales for the years ended March 31, 2025, 2024, and 2023, respectively[23]. - Approximately 17% of accounts receivable-trade balance was due from Verizon Communications Inc. as of March 31, 2025[58]. - The company is experiencing an increase in federal contract terminations, which may lead to claims and increased costs[125]. - Sales to SLED customers are highly regulated, and funding cuts from the federal government may decrease spending from these customers[127]. Employee and Operational Insights - ePlus employs 714 sales, marketing, and sales support personnel as of March 31, 2025, organized regionally across the US, UK, and India[36]. - As of March 31, 2025, the company employed a total of 2,199 employees, an increase of 299 from 1,900 in the previous year[48]. - The professional and managed services segment saw an increase of 277 employees from the previous year, totaling 1,093 as of March 31, 2025[51]. - The company added 300 employees, bringing the total to 2,166, with a focus on increasing customer-facing personnel[201]. - Operating expenses increased by $35.2 million, largely due to higher salaries, benefits, and acquisition-related expenses from the acquisition of Bailiwick, resulting in a total of 2,199 employees, a 15.7$500 million, and any loss or reduction in this facility could adversely affect its operational capabilities[92]. Market Trends and Economic Factors - Key business trends indicate a focus on AI, security, and cloud solutions, with increasing customer demand for digital transformation and modernization[168]. - The company may face adverse effects on its business due to general economic weakness, including inflation and rising interest rates[114]. - The company anticipates that supply chain disruptions could adversely impact financial results due to reliance on vendor performance and shipping services[67][71]. - The company is exposed to financial losses due to fluctuations in foreign currency rates, although operations in foreign countries are not material[103]. - The company’s operations could be negatively impacted by natural disasters or adverse events at its configuration centers, warehouses, or data centers[105]. - The company’s ability to monetize financing receivables may be affected by changes in interest rates or the loss of key lenders[120].