Business Context and Reporting Period
Company: e Plus inc. (NASDAQ: PLUS)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended March 31, 2026
Business Overview: e Plus is a leading provider of IT solutions spanning AI, cloud, data center, security, networking, and collaboration. The company operates through three reportable segments: Product, Professional Services, and Managed Services. It serves approximately 4,200 customers, primarily middle-market to large enterprises and government institutions.
Key Strategic Event: On June 30, 2025, the company completed the sale of its domestic financing business (HoldCo) to PEAC Solutions. This business is now reported as discontinued operations, allowing e Plus to focus exclusively on technology solutions.
Key Financial Metrics (Fiscal Year 2026)
| Metric | 2026 | 2025 | Change |
|---|---|---|---|
| Net Sales | $2,442.5 million | $2,000.2 million | +22.1% |
| Gross Profit | $616.1 million | $512.1 million | +20.3% |
| Gross Margin | 25.2% | 25.6% | -40 bps |
| Operating Income | $166.1 million | $99.7 million | +66.5% |
| Operating Margin | 6.8% | 5.0% | +180 bps |
| Net Earnings (Continuing Ops) | $124.1 million | $76.4 million | +62.4% |
| Net Earnings (Total) | $132.6 million | $104.6 million | +26.8% |
| Diluted EPS (Total) | $5.03 | $3.93 | +28.0% |
| Adjusted EBITDA | $204.8 million | $137.0 million | +49.5% |
| Cash & Equivalents | $410.8 million | $389.4 million | + |
| Debt (Floor Plan Facility) | $119.7 million | $89.5 million | + |
Note: Net earnings include $8.5 million from discontinued operations (financing business) for 2026, compared to $28.1 million in 2025.
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased by $442.4 million (22.1%) driven by strong demand in the Product segment (+23.8%), Professional Services (+19.4%), and Managed Services (+10.6%). Growth was led by the Telecom, Media & Entertainment, Financial Services, and Retail sectors.
- Margin Compression: Gross margin decreased 40 basis points to 25.2%. This was primarily due to a shift in product mix and a lower percentage of sales recognized on a net basis (third-party maintenance/subscriptions), partially offset by increased vendor consideration.
- Operating Leverage: Operating income surged 66.5% to $166.1 million, outpacing revenue growth. This was achieved despite a $36.7 million increase in SG&A expenses, which were driven by higher variable compensation and the integration of the Bailiwick acquisition.
- Discontinued Operations: The sale of the domestic financing business resulted in a $3.8 million gain on sale and $8.5 million in net earnings from discontinued operations for the year. This contrasts with the prior year where the financing business contributed significantly to earnings before the sale.
- Financial Statement Revisions: The company revised previously issued financial statements for fiscal years 2024 and 2025 to correct misstatements related to revenue accruals and inventory costs. These revisions were deemed immaterial but resulted in adjustments to prior period balances.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- AI & Cloud Focus: Management identifies AI as a transformative force driving demand for core products and services. The company is expanding AI advisory services and infrastructure support.
- Supply Chain Constraints: The company faces ongoing shortages of memory chips and high-performance computing components due to AI demand. This has led to extended lead times and price increases, which are expected to persist for several quarters.
- Capital Allocation: The company continues to return capital to shareholders via dividends (recently increased to $0.27/share) and share repurchases (1.5 million shares authorized in August 2025).
Key Risks & Contingencies:
- Customer Concentration: Sales to Verizon Communications Inc. represented 24% of net sales in 2026. Accounts receivable from Verizon represented 36% of the trade balance as of March 31, 2026.
- Vendor Concentration: Products from Cisco Systems represented 29% of net sales in 2026. The company relies on a small number of key vendors without long-term guaranteed price agreements.
- Cybersecurity: As a technology provider, the company faces risks from ransomware and data breaches, which could impact reputation and operations.
- Regulatory & Economic: Risks include changes in trade laws, tariffs, inflation, and potential reductions in vendor incentive programs.
Investor Verification Checklist
- Revenue Quality: Verify the sustainability of the 22% revenue growth, specifically the contribution from the Telecom sector and the impact of the Verizon concentration (24% of sales).
- Margin Trends: Monitor the trajectory of gross margins given the headwinds from supply chain constraints and the shift away from net-basis sales recognition.
- Working Capital: Review the cash conversion cycle, which expanded to 51 days in 2026 from 29 days in 2025, driven by increases in Days Sales Outstanding (DSO) and Days Inventory Outstanding (DIO).
- Discontinued Operations: Confirm the final settlement of the financing business sale and the realization of any contingent consideration (currently estimated at $9.3 million).
- Acquisition Integration: Assess the performance of the Bailiwick acquisition (completed August 2024) and its impact on Professional Services margins, which were noted to be lower due to third-party delivery costs.
- Restatement Impact: Review the specific adjustments made to prior periods regarding revenue accruals to ensure no material impact on current period comparability.