ePlus: A Record Year of Execution, Pivoting to Pure-Play IT Solutions
Record gross billings, +64% EPS growth, and a strategic divestiture position ePlus for an AI-driven fiscal 2027.
PLUS · Earnings Call · 2026-05-28
A Year of Broad-Based Delivery
Fiscal 2026 was a defining year for ePlus. The company delivered record gross billings of $3.8 billion, with net sales up 22% and adjusted EBITDA up 49.5%, while keeping headcount flat. CEO Mark Marron credited "strong execution" and "strong demand across our diverse customer base particularly with respect to their AI journey" — a recurring AI journey theme that has evolved from early-stage curiosity to tangible order flow. The results were notably broad based, spanning product categories, verticals, and customer sizes, with particular strength from large enterprise customers. The operating leverage was evident: Total Revenue reached $2.4 billion, while operating expenses grew just 9.1%. Fourth-quarter diluted EPS from continuing operations jumped 53% year over year, and full-year EPS rose 64%. The balance sheet remains healthy, ending the year with $410.8 million in cash, up from $389.4 million at fiscal 2025 year-end.AI Tailwinds and the Memory Shortage
Management has consistently signaled that AI would transition from a headwind to a tailwind. On the February 2026 call, Mark Marron noted: "AI was somewhat of a headwind. We now see it as a tailwind" — “AI was somewhat of a headwind. We now see it as a tailwind” — Mark Marron, Chief Executive Officer · 2026-02-04. That inflection is now showing up across the income statement. Product sales grew 25% in Q4, with strong demand in data center, cloud, networking, and security. Security gross billings rose 23.1% to $842 million, and the company's AI experience center inside Digital Realty's innovation lab is driving partner awards and customer engagement. At the same time, management remains cautious about near-term headwinds. In prepared remarks, Mark highlighted: "We are also mindful of potential headwinds, including the worldwide memory chip shortage and geopolitical issues" — “We are also mindful of potential headwinds, including the worldwide memory chip shortage and geopolitical issues” — Mark Marron, CEO and President · 2026-05-28. This is consistent with global context where recent hurricanes and other supply-chain issues are impacting the sector. The company expects the memory shortage to affect lead times through fiscal 2027, but the AI-driven demand for infrastructure modernization is offsetting the risk.Strategic Pivot and Capital Returns
Fiscal 2026 was also transformative in its divestiture of the domestic financing business, completing ePlus's transition to a pure-play technology solutions provider. The sale, combined with the initiation of a quarterly dividend and continued share repurchases, underscores a disciplined capital allocation framework. The board authorized an 8% dividend increase to $0.27 per share, reflecting confidence in the business and its cash-generating ability.The financing business divestiture simplified the model and unlocked resources for faster-growing IT markets. The resulting cash position—$410.8 million at year-end—affords ample dry powder for acquisitions in the AI and security space. The company also introduced fiscal 2027 guidance for mid-single-digit growth in net sales, gross profit, and adjusted EBITDA, a conservative target given the memory shortage and geopolitical backdrop.In closing, we believe our results show that our strategy is working and our teams are focused and executing in key areas where our customers require our solutions and services. The strength of our balance sheet provides financial flexibility to implement key organic hires, make strategic M&A decisions, and return shareholder value through share buyback and dividend plans.