ePlus(PLUS)2024-08-10 14:32Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2025 totaled 574.2 million in Q1 2024, reflecting a net sales decline of 5.2% year-over-year [9][3] - Product revenue decreased by 8.2% year-over-year, primarily due to lower sales of cloud and networking products [9] - Consolidated net earnings amounted to 1.02 per diluted share, down from 1.27 per diluted share in the prior year [13] - Adjusted EBITDA totaled 53.9 million in Q1 2024 [13] Business Line Data and Key Metrics Changes - Service revenues increased by 15.8% year-over-year, with managed services up 28% [4][10] - The finance segment saw revenue growth of 6.4% due to increased portfolio earnings [5] - Professional services revenue rose by 4.8% year-over-year, driven by staff augmentation services [10] Market Data and Key Metrics Changes - The two largest verticals in the technology business are telecom, media, and entertainment (24%) and technology (19%) [10] - Managed services accounted for over 20% of gross billings in the trailing 12 months, with a 9% increase quarter-over-quarter [5] Company Strategy and Development Direction - The company continues to focus on strategic initiatives around AI, cloud security, and related advisory services [3] - Investments are being made in customer-facing personnel in high-demand areas such as AI and security [6] - The company is committed to returning value to shareholders through share repurchase programs while maintaining flexibility for future growth initiatives [8][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a tough year-over-year comparison for Q1 but expressed confidence in achieving full-year guidance of 3% to 6% net sales growth [15][16] - The company believes it is well-positioned to capitalize on customer interest in AI and related services [6][25] - Management noted that gross billings have started to normalize as supply chains stabilize [22] Other Important Information - The company ended the quarter with cash and cash equivalents of 253 million at the end of Q4 2024 [13][14] - Inventory levels decreased significantly, with a 36% sequential decline, resulting in a three-year low of $89.1 million [14] Q&A Session Summary Question: Insights on the upcoming fiscal second quarter - Management indicated that Q2 is in line with expectations, similar to Q1 in terms of tough comparisons, but remains confident in guidance [16][17] Question: Expectations for operating leverage - Management expects operating leverage to manifest as new hires ramp up and revenues increase, with operating income having jumped 20% sequentially from Q4 to Q1 [18][19] Question: Customer product backlog status - Management believes the customer backlog has normalized, with gross billings showing signs of stabilization [21][22] Question: AI business growth opportunities - Management noted strong interest in the AI Ignite program, with many customers seeking assistance in managing data silos and developing AI strategies [24][25] Question: Impact of CrowdStrike issues - Management reported no negatives from the CrowdStrike issue, with one customer extending their service agreement after receiving assistance [26] Question: Outlook for Q2 and operating expenses - Management indicated that Q2 is expected to be flat year-over-year, with operating expenses likely to remain stable [27][29]