PLUS

e Plus Inc. (PLUS) - Q3 2025 Filing Summary

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended December 31, 2025, and the nine months ended December 31, 2025. e Plus Inc. is a leading IT solutions provider focusing on security, cloud, networking, and AI technologies. The company serves medium to large enterprises and SLED (State, Local, Education, and Government) sectors primarily in the U.S., with select international operations.

Strategic Shift: On June 30, 2025, the company completed the sale of its domestic financing business (HoldCo) to PEAC Solutions. Consequently, the domestic financing business is now reported as discontinued operations. The company now operates through three reportable segments: Product, Professional Services, and Managed Services.

Key Financial Metrics

Note: Operating cash flow for the nine months ended Dec 31, 2025, was negative primarily due to significant increases in accounts receivable and inventory.

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 24.6% year-over-year (YoY) in Q3 and 22.3% for the nine-month period. Growth was driven by the Product segment (up 32.2% in Q3) and Managed Services (up 10.5% in Q3), partially offset by a decline in Professional Services (down 7.8% in Q3).
• Profitability Expansion: Operating income surged 163.9% in Q3 and 71.5% for the nine months, driven by higher gross margins and improved operating leverage.
• Discontinued Operations: The sale of the domestic financing business resulted in a $4.4 million gain recognized in the nine-month period. Q3 earnings from discontinued operations included a $2.3 million gain from settling a legal matter.
• Working Capital: Accounts receivable increased to $698.0 million (from $516.9 million at March 31, 2025), and inventory doubled to $241.0 million (from $120.4 million), contributing to a negative operating cash flow of $223.4 million for continuing operations in the nine-month period.

Guidance, Outlook, and Risks

Management Commentary: Management attributes growth to increased demand in telecom, healthcare, and financial services sectors, driven by AI, security, and cloud initiatives. The company is focusing on shifting product mix toward higher-margin items and leveraging vendor incentives.

Capital Allocation:

• Dividends: A quarterly dividend of $0.25 per share was declared, payable March 18, 2026.
• Share Repurchases: The company repurchased 212,900 shares in Q3 2025. As of December 31, 2025, approximately 1.23 million shares remained available under the current repurchase plan.

Risks and Contingencies:

• Supply Chain: Ongoing shortages of memory chips and IT components may lead to extended lead times and price increases.
• Concentration: Cisco Systems products represented approximately 29% of net sales for the three months ended December 31, 2025.
• Regulatory: The "One Big Beautiful Bill Act" (OBBBA) was enacted in July 2025, extending tax provisions; management assesses no material immediate impact.
• Legal: A legal matter related to discontinued operations was settled in December 2025 for $2.3 million.

Investor Verification Checklist

• Cash Flow Reversal: Verify the sustainability of operations given the $223 million negative operating cash flow in the first nine months, driven by receivables and inventory buildup.
• Discontinued Operations Impact: Confirm the extent to which future earnings will be impacted by the removal of the financing business segment.
• Vendor Concentration: Assess the risk associated with 29% of sales being derived from Cisco Systems.
• Inventory Levels: Monitor inventory turnover given the doubling of inventory balances to $241 million.
• Share Buyback Capacity: Track the remaining authorization under the share repurchase plan ($1.23 million shares remaining).