ePlus announced its second quarter fiscal year 2025 financial results, reporting a consolidated net sales decrease of 12.3% to $515.2 million, missing analyst estimates of $576.5 million. Diluted earnings per share also decreased by 4.1% to $1.17, falling short of the $1.39 per share consensus. The decline in net sales was primarily attributed to lower product sales in the technology business, which faced tough comparisons to the prior year's easing supply chain.
Despite the top-line pressure, consolidated gross profit increased by 2.5% to $148.0 million, leading to a significant gross margin expansion to 28.7% from 24.6% in the prior year. This improvement was driven by strong growth in higher-margin services revenues, which increased by 46.0% to $103.7 million, and a solid contribution from the financing segment. The company noted a shift towards ratable and subscription revenue models, which impacts net sales but can improve profitability.
For the first half of fiscal year 2025, consolidated net sales decreased 8.8% to $1,059.7 million, while consolidated gross profit decreased 1.5% to $282.5 million. ePlus updated its fiscal year 2025 guidance, expecting net sales to be similar to fiscal year 2024, and adjusted EBITDA to be in the range of $195 million to $205 million. The company's cash and cash equivalents decreased to $187.5 million from $253.0 million due to the acquisition of Bailiwick Services, LLC and share repurchases.
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