ePlus (PLUS) Q1 FY2027: Managed Services Hits $51.3 Million as Margin Pressure Builds Across All Segments
A memory chip shortage stretched shipment timelines for ePlus inc. (NASDAQ: PLUS) in the fiscal first quarter ended June 30, 2026, pressing margins across all three business segments even as net sales edged 1.0% higher to $649.1 million. Adjusted EBITDA fell 9.2% to $47.8 million on the print, and non-GAAP diluted EPS from continuing operations came in at $1.28, down from $1.41 in the year-ago quarter. CEO Mark Marron pointed to record sales and a significant increase in booked and open orders as indicators the Herndon, Virginia technology solutions provider is positioned for a stronger second half.
Key takeaways
- ePlus (NASDAQ: PLUS) reported fiscal Q1 2027 net sales of $649.1 million, up 1.0% year over year, for the quarter ended June 30, 2026.
- A memory chip shortage stretched shipment timelines and compressed gross margin across all three business segments, pulling overall gross margin to 23.3% from 23.9%.
- The managed services segment was the bright spot, with revenue climbing 15.1% to $51.3 million, its first quarter above $50 million, driven by cloud managed services.
- Adjusted EBITDA fell 9.2% to $47.8 million and non-GAAP diluted EPS from continuing operations was $1.28, down from $1.41 a year earlier.
- ePlus reiterated fiscal 2027 guidance for mid-single-digit year-over-year growth in net sales, gross profit, and adjusted EBITDA, excluding recessionary conditions or other unforeseen developments.
A memory chip shortage stretched shipment timelines for ePlus inc. (NASDAQ: PLUS) in the fiscal first quarter ended June 30, 2026, pressing margins across all three business segments even as net sales edged 1.0% higher to $649.1 million. Adjusted EBITDA fell 9.2% to $47.8 million on the print, and non-GAAP diluted EPS from continuing operations came in at $1.28, down from $1.41 in the year-ago quarter. CEO Mark Marron pointed to record sales and a significant increase in booked and open orders as indicators the Herndon, Virginia technology solutions provider is positioned for a stronger second half.
Where margin compression showed up
Gross profit slipped 1.5% to $151.3 million, pulling the gross margin to 23.3% from 23.9% a year earlier. All three segments contributed to the squeeze. The product segment generated $529.6 million in sales (up 0.6%), yet its gross margin edged down to 21.0% from 21.3%, partly because a smaller share of sales came from third-party maintenance and subscriptions recorded on a net basis.
Professional services revenue dropped 5.1% to $68.1 million, with margin falling to 36.9% from 39.2% as project services and staff augmentation volumes declined. Operating income decreased 9.6% to $38.8 million, with operating expenses rising 1.6% to $112.5 million on higher general and administrative costs and salary and benefits.
Net earnings from continuing operations came to $30.3 million, down 5.4%. The effective tax rate widened to 27.8% from 26.5%, adding another drag on the bottom line. One partial offset: other income, net, reached $3.1 million versus $0.6 million in the prior year quarter, reflecting higher interest income and smaller foreign currency losses.
Managed services and the balance sheet
The managed services segment was the clear bright spot. Revenue climbed 15.1% to $51.3 million, driven by cloud managed services, marking the segment's first quarter above $50 million. Gross profit from managed services rose 11.3% year over year, though margin there also compressed, to 29.4% from 30.4%.
Cash and cash equivalents stood at $448.9 million at June 30, 2026, up from $410.8 million at March 31, 2026. Inventory fell 27.3% to $146.0 million as projects in process wound down. Accounts receivable trade, net, expanded 14.8% to $746.0 million. Total stockholders' equity was $1,072.0 million.
What to watch
ePlus reiterated fiscal 2027 guidance for mid-single-digit year-over-year growth in net sales, gross profit, and adjusted EBITDA. That guidance explicitly excludes recessionary conditions or other unforeseen developments. The next confirmable milestone is whether the memory chip shortage eases enough in coming quarters to convert the elevated open-order backlog Marron cited into recognized revenue.
Related reading
Filed by the newsroom of MarketPR on August 5, 2026. Source: sec.gov. Indicative figures are not investment advice.