PLUS earnings call analysis

NASDAQ:PLUS Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Clay | Call Moderator: Thank you for joining us today. On the call is Mark Marin, CEO and President, Elaine Marion, CFO, and Erica Stoker, General Counsel. I want to take a moment to remind you that the statements we make this afternoon that are not historical facts may be deemed to be forward-looking statements and are based on management's current plans, estimates, and projections. Actual and anticipated future results may vary materially due to certain risks and uncertainties detailed in the earnings release we issued this afternoon. and our periodic filing to the Securities and Exchange Commission, including our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other documents we may file with the SEC. Any forward-looking statement speaks only as of the date of which the statement is made, and the company undertakes no responsibility to update any of these forward-looking statements in light of new information, future events, or otherwise. In addition, we will be using certain non-GAAP measures during the call, and we've included a GAAP financial reconciliation earnings release, which is posted on the investor information section of our website at www.eplus.com. And now I'd like to turn the call over to Mark. Mark? Mark Marin | CEO and President: Thank you, Clay. Good afternoon, everyone, and thank you for joining our fourth quarter and fiscal year 2025 earnings call. Our financial results continue to reflect the ongoing industry-wide shift towards ratable and subscription-based revenue models, which impacts how we recognize product revenue. In fiscal year 2025, we delivered higher gross profitability and margin expansion on lower net sales and gross billings. In our fourth quarter, operating metrics were strong with double-digit increases in gross profit, operating income, adjusted EBITDA, and diluted earnings per share. We also saw continued improvement in our gross margin, which increased 270 basis points since fiscal year 2024. During the quarter, we believe sales were slightly impacted by business uncertainty surrounding the tariffs and government spending. With our strong focus on services-led solutions, continuing to build out our security and AI capabilities that are in high demand by our customers, and holding the line on expenses, we believe we are well positioned for future growth. Q4 net sales declined 10.2% year-over-year, driven primarily by a reduction in product sales due in part to economic uncertainty, as well as a tough compare to the prior year, when Q4 last year benefited from supply chain easing of networking product orders. Despite an increased gross-to-net adjustment caused by the industry-wide shift towards ratable and subscription-based revenue models, we saw strength in several areas. Gross profit rose by nearly 12% and gross margin expanded 580 basis points year over year to 29.3% in the fourth quarter due to a more profitable business mix between product and services and a higher proportion of netted down revenue. Gross profit increased and margin expanded in the full year for the same reasons. Our services revenue continued its rapid growth, increasing 33% in the quarter and 37% for the year. This is a key component of our trusted advisor status to our customers, which deepens the relationship and results in long-term customer loyalty. Our managed services continue to grow nicely up 16.6% for the quarter and 24.6% in the year, which provides predictable long-term revenue and profitability. Let me take a moment to discuss our long-term strategy, which is centered on delivering solutions across four key growth focus areas, AI, cloud, security, and networking, of which we expect to drive related consultative, professional, and managed services growth. We are making strategic investments in the most promising opportunities, both organic and inorganic, to expand our capabilities and meet evolving customer needs. AI adoption continues to be a significant potential business driver, and we are particularly well positioned to capitalize on its transformative growth across our expanding suite of products. Throughout the past year, we have discussed the positive reception from our customers of our AI Ignite workshops and envisioning sessions. These are designed to share the latest AI trends and insights and demonstrate how this revolutionary technology can empower our customers' businesses. We combine these AI Ignite offerings with our AI Experience Center and our generative AI accelerator solution that helps customers navigate and rapidly test use cases in a secure private instance. We also believe E-Plus is the only NVIDIA partner in North America that has achieved both the NVIDIA DGX Ready SuperPOD specialization and DGX Ready Managed Service Providers specializations. This achievement demonstrates our engineering expertise for enterprise-grade AI infrastructure deployments and capabilities to provide end-to-end lifecycle services from initial design through implementation and management of AI workloads. And finally, as the capabilities and benefits of AI become more clear, we have stepped up our AI investments to meet our internal business needs as well. We have seen how AI can support our customers better, automate some internal processes, and provide real-time information for our sales teams to leverage and provide value to their customers. Security remains a standout for E+. On a trailing 12-month basis, it now represents 22% of gross billings, underscoring our success in aligning with enterprise priorities around digital risk mitigation, and will only be more relevant as AI becomes more prevalent in the market. In conclusion, we have a very strong balance sheet, which gives us the opportunity to make strategic investments both organically and through acquisitions. We exited the year with a record-cast position of approximately $389 million. This financial flexibility provides a solid foundation as we navigate macroeconomic uncertainty and supports our growth initiatives. As always, we remain committed to discipline capital allocation and driving long-term shareholder value. I will now turn the call over to Elaine to discuss our financial results in more detail. Elaine Marion | CFO: Thank you, Mark, and thank you, everyone, for joining us today. I will provide additional details about our financial performance in the fourth quarter of fiscal 2025 and review our full fiscal year results, which ended March 31, 2025. Consolidated net sales in the fiscal 2025 fourth quarter were $498.1 million, down from $554.5 million in the fourth quarter of fiscal 2024. And our consolidated adjusted EBITDA was $43.8 million, up from $36.8 million in the prior year, which exceeded our expectations as we captured increased gross profit from the sales of product. Technology business net sales declined 10.4% year-over-year to $487.2 million, reflecting lower product sales, which continue to be impacted by the industry-wide shift towards ratable and subscription-based services, resulting in more netted-down revenues. Product sales also faced a tough year-over-year comparison as the fourth quarter of fiscal 2024 benefited from elevated deliveries of networking products. partially offsetting the decline in product sales with strong demand for our services offerings, which we have strategically emphasized and grown. ePLUS' services-led approach is evident in our results, as our service revenues increased 33% year-over-year. Professional services revenues were up 48% as the segment continues to benefit from the bailiwick acquisition, while revenues for our managed services rose 17%, led by sustained growth in enhanced maintenance support, or EMS, and cloud-managed services. Managed services bookings remain strong, underscoring our confidence in the segment. Technology business growth fillings declined 5.4% in the quarter due to softer demand from enterprise customers, as well as a challenging comparable in the prior period. Telecom Media and Entertainment and SLED were our two largest customer end markets, accounting for 23% and 17% of technology business net sales on a trailing 12-month basis. Technology, healthcare, and financial services accounted for 15%, 14%, and 9% respectively, with the remaining 22% from other end markets. In our financing segment, net sales rose 4.9% to 10.9 million, primarily due to higher transaction gains and portfolio earnings. Fourth quarter 2025 consolidated gross profit increased 11.8% to 145.8 million, representing a gross margin of 29.3%, comparing favorably to gross profit of 130.3 million and gross margin of 23.5% in the prior year fourth quarter. The increase in gross margin was led by our technology business, which saw product margin expand from 19.3% to 26.6%, reflecting more profitable mix and a larger proportion of sales of product that were recognized on a net basis, as well as additional gross profit from our services business. In our services business, professional services gross margin was 35.9% versus 50% in the comparable prior year period. DailyWIC, which we acquired in August of 2024, has lower professional services gross margin due to a higher concentration of third-party cost in the business model, contributing to the year-over-year decline. Managed services gross margin of 29.1% declined modestly from the 30.5% reported in a prior year due to an expanded mix of services provided. Fourth quarter 2025 operating expenses of $111 million increased 9.6% from the prior year quarter as we recognized costs related to increased headcount from the bailiwick acquisition. Our headcount at the end of the quarter increased to $2,199 from $1,900 a year ago reflecting an increase of 299 employees, of which 272 were customer facing. Sequentially, our headcount decreased from 2,291 at December 31, 2024. Benefiting from our strong margin performance, consolidated operating income and earnings before taxes rose 19.6% and 14.9% respectively. Other income totaled 1.1 million, driven by interest income of 2 million, partially offset by foreign exchange losses. Our effective tax rate in the fourth quarter was 29.7%, slightly higher than the 29.5% reported in the prior year quarter. Consolidated net earnings were up 14.6% to 25.2 million, or 95 cents per diluted share. versus net income of $22 million or $0.82 per diluted share a year ago. Non-GAAP diluted earnings per share was $1.11, representing an increase of 19.4% year-over-year, and weighted average diluted share count decreased slightly from the prior year's fourth quarter. Consolidated adjusted EBITDA increased 19.1% to $43.8 million, with 97% of the increase from our technology business. Moving on to our results for the full year of fiscal 2025. Consolidated net sales for the fiscal year were $2.07 billion, down from $2.23 billion in fiscal 2024. The decline was driven by a 13.7% decline in product sales, partially offset by 37.1% growth in services and strong performance in the financing segment. Technology business gross billings of $3.3 billion were down slightly year over year. Fiscal 2025 consolidated gross profit rose 3.3% to $569.1 million, led by growth in both the technology business and financing segment. Gross margin expanded 270 basis points to 27.5%, reflecting favorable product mix, a larger proportion of netted down revenues, and additional services revenue in the technology business. Operating income was $141.4 million versus $158.3 million a year ago. The decline was primarily a function of lower product sales and increased operating expenses, which rose 9% year over year due to the bailiwick and peak acquisitions, as well as continued investments in technology and customer-facing headcount. Our effective tax rate for the full year was 27.5% below the 28.1% reported in the prior year due to lower state taxes. Consolidated net earnings were $108 million or $4.05 per diluted share in fiscal 2025. This compares to $115.8 million or $4.33 per diluted share in the year-ago period. Non-GAAP diluted EPS amounted to $4.67 per share, down from $4.92. Fiscal 2025 adjusted EBITDA decreased 6.4% to $178.2 million. Our balance sheet remains solid with assets over $1.8 billion, highlighted by our cash position of $389.4 million at the end of fiscal 2025, well above $253 million at the end of fiscal 2024, reflecting strong operating cash flows of $302.1 million compared to $248.4 million in fiscal 2024. As of March 31, 2025, our inventories were $120.4 million. While inventories were higher sequentially, they were below $139.7 million reported at the end of fiscal 2024. Stockholders' equity was $977.6 million compared to $901.8 million at the end of fiscal 2024. During fiscal 2025, we repurchased more than 557,000 shares under our repurchase program, leaving 26.5 million shares outstanding at March 31, 2025. Our cash conversion cycle was 29 days compared to 46 days a year ago. As inventory days outstanding declined, from 23 days in fiscal 2024 to 14 days at the end of March 2025, highlighting a more normalized supply chain. Our strategy of focusing on high growth areas and anticipating our customers' needs continues to position us well for the future. We remain focused on strategic capital allocation with an eye toward organic and inorganic investments in an effort to add geographies and increase our service offerings. With that, I will turn the call back over to Mark. Mark? Mark Marin | CEO and President: Thank you, Elaine. Our core business is solid and our team is executing well. This is reflected in our financial results with solid gross profit growth and margin expansion. We continue to review our portfolio of products and services, identifying new sources of growth in our core markets. Our strong balance sheet provides us the opportunity to invest organically and make acquisitions when the right opportunity comes along. As always, we will continue to take a balanced and disciplined approach to building our company and evolving our business model for the future. Moving next to a comment about guidance, we are cautiously optimistic as we head into fiscal year 2026, but want to be prudent when considering the entire year and the trends we are experiencing with regard to ratable and netted down revenue. Today, we are initiating fiscal year 2026 guidance for net sales growth of low single digits while we expect gross profit and adjusted EBITDA to grow at mid single digits over the prior fiscal year. This guidance assumes some level of impact from economic uncertainty, but does not factor in recessionary conditions or other unexpected developments. To sum up, our strategic pivot towards services, subscriptions, and high-growth technology areas is gaining traction. We believe these foundations, combined with our financial strength and customer-first approach, position us well to support our customers' evolving and growing business needs. We believe we are well positioned for the opportunities ahead and remain committed to delivering value for all of our shareholders. Operator, please open the call for questions. Thank you. Operator | Conference Call Operator: Thank you. And we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, It is star one if you would like to join the queue. And our first question comes from the line of Greg Burns with Sedodian Company. Your line is open. Greg Burns | Analyst, Sedodian Company: Good morning or afternoon. Where is the demand environment currently? Did you see any improvement throughout the quarter? Are you still seeing soft demand on the product side of the business? Can you just maybe give us an update on what you saw during the quarter, how it evolved, and kind of where we are currently. Thank you. Mark Marin | CEO and President: Yeah. Hey, Greg. Good morning and good afternoon, okay? A couple different things we're seeing in the market. We are seeing pickup in the data center cloud and security space. That's not surprising. When you think about some of the AI initiatives that are going on, some of the things that folks have to think through is security in terms of governance and risk. uh, data readiness and things along those lines. They also make, uh, a lot of times the simple choices to move to the cloud. So we saw some nice pickup there. Uh, we did not see a pickup in networking year over year. So networking was down pretty big still, uh, for us. And then if I look at net sales, just overall generically, what we kind of saw was as we looked over the last couple of years, a few things for this quarter was a big gross to net that affected our net sales. We had a tough compare, no excuses. We were up 12% last year, so that was another. And we had a few customers that are digesting some of the supply chain, specifically in the networking space. We think they'll start to come back into play in the coming quarters. So overall, data center cloud, security, nice pickup. Networking still needs to improve. Greg Burns | Analyst, Sedodian Company: Okay. And then when you look at the AI opportunity, Most of the investment's been going into like the hyperscaler data center environment. Where does like enterprise AI adoption, enterprise investment stand? And do you think that, I guess maybe in your guidance for next year, does that contemplate any kind of acceleration and maybe AI demand? Mark Marin | CEO and President: Yeah, not, not yet, Greg, maybe towards the end of the year, beginning of next year. So you're right. Most of the spend with Nvidia and the bigger players is going towards the hyperscalers. What we're saying is customers are taking advantage of some of our, uh, workshops envisioning sessions. Uh, we've got a hosted, uh, proof of concept, basically a private, uh, gen AI chat bot, uh, that we, that gives customers the ability to kind of test and play around with your data to come up with use cases. So we think a lot of that'll be on the services side that'll drive for us, which is a good thing. It's our most profitable business. And then we think the infrastructure stuff will start to pick up. We've made investments with the training of our sales teams. We also just got the NVIDIA SuperPod specialization, which is their high-end computing. So over time, we think that infrastructure spend will pick up, but it'll take a little bit of time. Greg Burns | Analyst, Sedodian Company: Okay, thank you. Mark Marin | CEO and President: No problem. See you soon. Operator | Conference Call Operator: And there are no further questions, so I will now turn the conference back over to Mr. Mark Maron for closing remarks. Mark Marin | CEO and President: Okay. Thanks, Abby. Thank you, everyone, for attending our Q4 and full-year earnings call. I hope everybody gets to enjoy the long Memorial Day holiday, and we look forward to speaking with you again on our next earnings call. Take care and be safe. Operator | Conference Call Operator: And ladies and gentlemen, this concludes today's call and we thank you for your participation. You may now disconnect. jsPDF 3.0.3 D:20260606090352-00'00'

NASDAQ:PLUS Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Host: call is Mark Marin, CEO and President, Darren Ragwell, COO and President of E-Plus Technology, Elaine Marion, CFO, and Erica Stoker, General Counsel. I want to take a moment to remind you that the statements we make this afternoon that are not historical facts may be deemed to be forward-looking statements and are based on management's current plans, estimates, and projections. Actual and anticipated future results may vary materially due to certain risks and uncertainties detailed in the earnings release we issued this afternoon, and our periodic filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other documents we might file with the FCC. Any forward-looking statement speaks only as of the date of which the statement is made, and the company undertakes no responsibility to update any of these forward-looking statements in light of new information, future events, or otherwise. In addition, we will be using certain non-GAAP measures during the call. We've included a GAAP financial reconciliation in our earnings release, which is posted on the investor information section of our website at www.eplus.com. I'd now like to turn the call over to Mark Maron. Mark? Mark Marin | CEO and President: Thank you, Clay. Good afternoon, everyone, and thank you for joining us. I will give a recap of our fiscal third quarter 2025 highlights and an update on our business overall. Elaine will follow with the discussion of our financial results, and I will then conclude with an update of our current outlook. We continue to execute on our strategic priorities of expanding our footprint and customer base and broadening our suite of solution and service offerings as we are investing in the most promising growth areas. We continue to see the evolution of our industry transition to our more ratable consumption and subscription-based model, which has impacted the comparability of our quarterly results. As noted last quarter, our revenue trends reflects an acceleration of gross billings recorded on a net basis, as well as a move towards more ratable revenue models. Software subscriptions orders have continued to increase year over year, with these deals being recognized on a net basis or ratably. While this evolution helped to contribute to a flat year-over-year revenue, we delivered solid growth in gross billings, gross profit, and gross margin. It is also a solid forward indicator for growth with our subscription orders up 51.4% year over year, accounting for almost 46% of our open orders currently compared to 31.7% last year and growth of over 100 million. On a consolidated basis, total revenues were flat as lower product sales were partially offset by faster growing high margin service revenue. which is partially reflected in our gross profit being up 5.3%. We believe customers are still digesting purchases from last year's inventory flush, primarily impacting our networking and data center cloud sales. The main factor, though, was that we had a much higher gross to net adjustment this year, which was up 840 basis points from the prior year and impacted our top line revenues by approximately $60 million. This year-over-year increase in SG&A expenses was primarily due to increased headcount from the Bailiwick acquisition, as well as investments in the business. Of note, much of the increased headcount were customer-facing employees. Adjusted EBITDA decreased 15% as higher earnings in the finance segment were offset by a decrease in our technology business adjusted EBITDA. We continue to see softer than expected hardware sales, and lower demand from some enterprise customers. As we have moved towards a services-led model, our services revenues continue to grow nicely, increasing 52% year-on-year and reaching a new high of $114 million, with services gross profit up 45% year-over-year. Revenue in the quarter benefited from the acquisition of Bailiwick early in the year, which is integrating well, and organic managed services revenue increased 28% year over year. Our finance segment delivered another solid quarter with revenue increasing 20%, primarily due to an increase in proceeds from the sale of equipment, as well as higher portfolio earnings and transaction gains. As we look at our longer-term growth drivers, AI is a good place to start. In an E-plus AI survey, 76% of IT leaders have said their organizations have yet to reach AI maturity. They noted the top challenges they are facing are a skills gap, security concerns, and cost. There is a disparity between AI aspirations and AI readiness, and most companies are in the early stages of their AI journey. With that, we continue to build out our AI Ignite and SecureGen AI programs that deliver services and solutions our customers need to make informed decisions. Our SecureGen AI program is a platform developed by ePlus utilizing leading AI technology from our strategic partners to deliver a SecureGen AI chatbot experience. This allows customers to test use cases and convert them into actionable plans with built-in guardrails. Ultimately, our secure GenAI program helps our customers more quickly make informed decisions and adopt GenAI safely. We're also leveraging the benefits of AI internally to create efficiencies that improve customer satisfaction and we expect will provide cost savings long term. With our internal use of AI, we're seeing an increase in quality due to automation and an ability to resolve inquiries and tickets faster. As such, we expect that AI will help us deliver enhanced customer experiences. Security is key to customers' long-term roadmap, especially related to AI initiatives around data strategy, governance, and risk. Our security offerings also continue to be a solid performer for us. Our security gross billings accounted for 21.2% of our trailing 12 months gross billings. We continue to benefit from very attractive cash flow characteristics. In turn, our balance sheet provides financial flexibility to support future growth initiatives. We will continue to be disciplined and strategic with our deployment of capital as we prioritize investing in the business to drive long-term growth, both organically and via M&A transactions, as well as return excess cash to our shareholders. I will now turn the call over to Elaine to discuss our financial results in more detail. Elaine? Elaine Marion | CFO: Thank you, Mark, and thank you, everyone, for joining us today. I will now review our financial performance for the third quarter of fiscal 2025. Consolidated net sales of $511 million were modestly above the $509.1 million reported in last year's third quarter. In our technology business, sales were flat year over year as a decline in product sales was more than offset by continued strength in services demand. The decline in product sales reflects a shift towards sales of third-party software and services, resulting in higher netted down revenues, as Mark mentioned, as well as lower sales of product as a result of last year's supply chain easing, particularly from enterprise customers. Notably, growth fillings growth of 6.6% year-over-year outpaced net sales growth, highlighting continued demand for Eplus's offerings and the netting down effect. Our strategic focus on services continues to deliver results as service revenue grew 52% in the quarter with strong contribution from both professional and managed services. The professional services segment benefited from the bailiwick acquisition while growth in the managed services segment was broad-based. Within our technology business, our two largest markets continue to be telecom, media, and entertainment. and technology representing 24 and 17% respectively of technology business net sales on a trailing 12-month basis. SLED healthcare and financial services accounted for 16, 13, and 10% respectively with the remaining 20% from other end markets. Our financing segment posted a solid quarter with revenues of 17.8 million up 19.8% from 14.9 million in last year's third quarter due to higher proceeds from sales of equipment and portfolio earnings. Consolidated growth profit grew 5.3% faster than our revenue growth to $140.9 million, representing a consolidated growth margin of 27.6%, up from 26.3% in the prior year. The 130 basis point expansion was primarily driven by higher product margins, which benefited from a shift in mix to third-party maintenance and subscriptions. While product margins were higher than last year, a higher proportion of product sales to certain enterprise customers at lower overall margins weighed on product margins, but this was offset by contribution from the netting effect I've mentioned. Professional services gross margin declined to 40.1% from 43.3%, due to a shift in mix of services provided, while managed services gross margin declined to 29.8% from 31.8%. Consolidated operating expenses increased 17.3% year-over-year to $112.4 million, primarily reflecting increased headcounts due to the bailiwick and peak resource acquisitions, as well as continued investments in our business to support our growth. Our headcount at the end of the quarter increased to 2,291 from 1,897 a year ago, primarily reflecting additions of customer-facing professionals acquired in the bailiwick transaction. Operating income was $28.5 million, down from $38 million, and earnings before taxes declined to $32.2 million from $38.4 million in the prior year quarter. During the third quarter, we realized interest income of 1.8 million and foreign exchange gains of 1.9 million, resulting in other income of 3.7 million. Our effective tax rate was 25% versus 29% a year ago due to lower state taxes. Third quarter consolidated net earnings were 24.1 million, or 91 cents per share, down from net earnings of $27.3 million or $1.02 per share in last year's third quarter. Non-GAAP diluted earnings came in at $1.06 per share compared to $1.18 per share last year. Our diluted share count at the end of the quarter was $26.6 million compared to $26.7 million in the prior year third quarter. Consolidated adjusted EBITDA amounted to $39.2 million versus $46.2 million in the third quarter of fiscal 24. For the nine months ended December 31, 2024, our consolidated net sales totaled $1.57 billion, down from $1.67 billion in the prior year. The decrease primarily reflects lower product sales in the technology business, partially offset by growth in services and stronger performance in our financing segment. Technology business net sales were 1.52 billion year-to-date compared to 1.63 billion last year. Despite the decline in net sales, gross billings in the technology business were essentially flat year-over-year at 2.49 billion. Year-to-date consolidated gross profit rose 0.7% to 423.4 million, while gross margin rose 180 basis points to 27%. Gross margin expansion was driven by higher product margins, which benefited from an increase in netted-down revenues partially offset by lower upfront margins. For the nine months ended December 31, 2024, consolidated net earnings were $82.8 million, or $3.10 per diluted share, compared to $93.8 million, or $3.52 per diluted share in the comparable period last year. and non-GAAP earnings per share were $3.56 versus $3.99. Adjusted EBITDA was 134.4 million, down from 153.6 million in the comparable period last year. We ended the quarter with cash and cash equivalents of 253.1 million, consistent with the balance at the close of fiscal 2024. Operating cash flow for the first nine months was $141.2 million compared to $143.5 million last year and included cash used to fund working capital, the bailiwick acquisition, and share repurchases. We ended the quarter with $99 million in inventory down from $139.7 million at the end of fiscal 2024. Inventory turns were 13 days, down significantly from 27 days in the third quarter of fiscal 2024. As a result, our cash conversion cycle improved to 32 days, down meaningfully from 54 days in the prior year. During the first nine months of the year, we repurchased approximately 380,000 shares under our repurchase plan at a cost of 30 million. Our strategy continues to focus on our core priorities driving organic growth, expanding through accretive acquisitions, and returning capital to shareholders through our repurchase program. With that, I will turn the call back over to Mark. Mark? Mark Marin | CEO and President: Thank you, Elaine. We are investing both organically and inorganically to develop a portfolio that provides us with multiple levers for growth across a broad range of verticals to drive growth and diversification. Growth of our gross profit and services are key indicators of the success of our go-to-market plans and being a trusted advisor for our customers. Our recent results reflect both the fast growth of our services-led business model and the accelerating shift towards ratable subscription and as-a-service revenue recognition models. This has resulted in mixed results for the quarter, and we will continue to adapt and adjust as the market transitions. As a result, we are adjusting our fiscal 2025 financial outlook. Turning to guidance, we now forecast revenue range of 2.07 billion to 2.11 billion for fiscal year 2025 and an adjusted EBITDA range of 165 million to 171 million. Our guidance reflects higher gross to net adjustments than previously expected and also factors in the near-term potential of tariffs and how this might affect short-term decisions. We will continue to monitor this closely and expect to share more insight at the time of our year-end conference call. We are making investments in the business, focusing on high-growth areas where we seek the best return opportunities, and we are confident this will support our commitment to growth in 2025 and beyond. Our balance sheet and financial condition are healthy, which gives us a solid foundation for expansion. In conclusion, we remain confident in the growth opportunities for our business moving forward and our ability to execute. Operator, please open the line for questions. Operator | Host: Thank you. Ladies and gentlemen, we will now begin our question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Maggie Nolan with William Blair. Please go ahead. Maggie Miller | Analyst at William Blair: Hi. Thank you. Can you talk a little bit about your expectations for product sales that are included in the guide and maybe a couple of quarters beyond that? Mark Marin | CEO and President: Sorry, Maggie. Did you say we didn't hear you? Expectation for product sales in the quarter and then going forward or? Maggie Miller | Analyst at William Blair: Maggie Miller, The yeah that's the fiscal fourth quarter, and if you can go a couple quarters beyond that kind of flesh out the you know trends you're seeing given that it's been a weak spot. Mark Marin | CEO and President: James Meeker, yeah it's it's actually I think we noted it on the last earnings call as well Maggie. James Meeker, That there's a softening in the market around some of the hardware or product demands, if you will, we specifically sort with some select enterprise accounts in this quarter, we would expect it to continue into next quarter. The other things that affected are, I'll say bottom line, not so much top line, was some of the upfront gross margins on product sales. That was more of an anomaly, but that was offset by the netted down revenues. The other interesting thing in play here, Maggie, is the market is really changing. The OEMs are going more to as a service consumption subscription models, so they're recognized on a net and ratable basis. I think you may have seen our netted down revenues product sales were actually affected by 840 basis points. To put that in perspective, that's about 60 million in net sales that would have went to our top line if it were flat the last year. So it's a moving target. I would expect that they continue to be a soft demand for Q4 and then would expect it to start to pick up a little bit as we move into our Q1. Maggie Miller | Analyst at William Blair: So on that last point, Mark, I mean, we've talked about this shift toward net of down product revenues. Are you calling an acceleration? Do you have an idea of maybe what might be driving that trend to accelerate at this moment in time? Mark Marin | CEO and President: Yeah, we've seen a couple different things, Maggie. One, we still don't know if it's a new trend. If you look at just the last two quarters, Last quarter's netted down revenues for product sales was affected by 940 basis points. This quarter was 840 basis points. That's significantly higher than last year and higher than what we were projecting in the beginning of the year. So there is that play. What's really happening here is the OEMs are changing how they're going to market. As we sell more software, that subscription, normally recognized on a net or maybe an annual basis, So it's really the product mix and solutions that we're selling that's affecting this right now. Maggie Miller | Analyst at William Blair: Okay. Thank you. Mark Marin | CEO and President: No problem. Good hearing from you, Maggie. We'll talk to you soon. Operator | Host: Your next question comes from the line of Greg Burns with Sidoti. Please go ahead. Greg Burns | Analyst at Sidoti: Good afternoon. So I just wanted to talk, I guess, a little bit more about the demand environment. I know you've been kind of calling out this digestion of some of the product that's in the channel from the supply chain kind of improving over the last year. That seems to be lingering longer than probably we would have expected. So is there anything else going on? What are you hearing from your customers? Is it beyond that at this point? Is there other things driving the soft demand or is it really just kind of this digestion of product in the channel? Mark Marin | CEO and President: yeah it's the digestion greg we can see it specifically in the networking space and a few select enterprise customers so uh it is around supply chain for the most part uh there are things going on overall uh in the industry i think as you know with tariffs and doge and everything else that's going on i do think the election actually slowed things down a little bit for us in the beginning of the quarter we did see our billings were flattened down uh in the october november time frame and picked up in december But we didn't pick up a lot of what I call the year-end flush or what we normally expect in this quarter. So those are still the cases there. We still, from a, I'll say a customer set standpoint, both sides and by vertical, we're pretty diversified. In fact, we've actually diversified more with the Bailiwick acquisition with some of their customers or expanded the verticals we were in, in some cases. So we feel Greg Burns | Analyst at Sidoti: somewhat protected long term but there are some things going on that are affecting decisions right now okay um and then in terms of this ongoing shift towards more software subscription ratable models can you just talk about like what the value proposition for a for a bar is in that type of model is there an increased risk of maybe disintermediation over time if can they go more easily direct uh to customers with that model? Mark Marin | CEO and President: No, no, Greg. In fact, it's actually an opportunity for us to build up our services. So in a lot of cases with the subscription, there's add-on services, there's renewals, there's what they call lifecycle management. So you try to get them to adopt the technology or software, if you will, upsell additional features, add in incremental services, maybe provide some type of staffing and or managed service. So No, it's not. It's no different in terms of with the subscription versus hardware. I believe that would affect the channel. Greg Burns | Analyst at Sidoti: Okay, great. Thank you. Mark Marin | CEO and President: No problem. Operator | Host: Thanks, Greg. I'd like to turn the call back over to Mr. Mark Myron for closing remarks. Mark Marin | CEO and President: All right. Thank you, everybody. Hey, look, I will reiterate, we still feel very strongly about our strategy and our focus areas that we're in. We're going to continue to build out our services-led model. Our services were up 52%. They were approximately 23% of our net sales this quarter. We'll continue to leverage our customer base and customer segments. Our strong balance sheet gives us flexibility to make inorganic and organic moves. So we feel good where we're positioned. And we've been in business for a long time, so we will adapt and adjust to this new norm short term and be able to make the moves that we need to make. So I want to thank everybody for joining us today and look forward to seeing or hearing you on the next call. Thank you. Operator | Host: That concludes today's meeting. Thank you for your participation. You may now disconnect. jsPDF 3.0.3 D:20260606090353-00'00'

NASDAQ:PLUS Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Good day, ladies and gentlemen. Welcome to the E-plus Earnings Results Conference Call. As a reminder, this conference call is being recorded. I would like to introduce your host for today's conference, Mr. Clay Parkhurst, Senior Vice President. Sir, you may begin. Clay Parkhurst | Senior Vice President: Thank you for joining us today. I'm on the call with Mark Marin, CEO and President, Darren Raguel, COO and President of E-plus Technology. Elaine Marion, CFO, and Erica Stoker, General Counsel. I want to take a moment to remind you that the statements we make this afternoon that are not historical facts may be deemed to be forward-looking statements and are based on management's current plans, estimates, and projections. Actual and anticipated future results may vary materially due to certain risks and uncertainties detailed in the earnings release we issued this afternoon and our periodic filings with the Securities and Exchange Commission including our most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and other documents we may file with the SEC. Any forward-looking statement speaks only as of the date at which the statement was made, and the company undertakes no responsibility to update any of these forward-looking statements in light of new information, future events, or otherwise. In addition, we will be using certain non-GAAP measures during the call. We've included the GAAP financial reconciliation in our earnings release, which was posted on the investor information section of our website at www.eplus.com. And now I'd like to turn the call over to Mark Merritt. Mark? Mark Marin | CEO and President: Thank you, Clay, and good afternoon, everyone. Thank you for joining us to discuss our fiscal second quarter 2025 results. I will recap our second quarter highlights and provide an update on our business. Then Elaine will discuss our financial results in more detail. I will conclude our prepared remarks with a discussion on our outlook. After that, we'll open the call to your questions. We continue to expand our solution and service offerings with the acquisition of Bailiwick. This, along with our strategic initiatives focusing on AI, cloud, networking, data, and security, has allowed us to build on our strong customer relationships, which was reflected in our year-over-year increases in gross profit and gross margin expansion. As we've noted before, the overall IT market is transforming and we are transitioning with it. More specifically, our revenue in a quarter reflects the ongoing evolution of the industry towards radical revenue models, netted down revenues, and the continued high growth of our services business, along with an overall softening in the demand in the market currently. On a consolidated basis, total net sales were down 12.3% as a decline in product sales offset the strong growth in higher margin services revenues. The decline is attributable to a few things. A tough compare as last year benefited from an easing supply chain, especially in networking. To put this in perspective, product sales in our technology business last year were up 23.3% in our second quarter and up 26.2% in the first half. We also had a higher proportion of netted down revenues in our product sales segment. The gross to net adjustment for product billings was up 940 basis points. As discussed on our last call, we continue to see a shift towards services contracts and more software subscription sales versus prior years. And these are often recognized randomly and can increase the proportion of revenue recognized on a net basis. Gross profit outperform sales, increasing 2.5%, while our gross margins increased 410 basis points, driven by continued strength in services, higher product margins, as well as a solid contribution from the financing segment. SG&A expenses were higher year on year, primarily due to increased headcount from the bailiwick and peak acquisitions, as well as increased acquisition-related costs. In our technology business, reflecting on the tough comp, we saw softer than expected hardware product sales overall and lower demand from certain enterprise customers as they continue to digest purchases from last year's flush. As a result, we have seen a delay or pause in rolling out new technologies for these customers. Our service revenues continue to deliver strong growth, increasing 46% year-on-year and reaching a new high of $104 million in the quarter, which included contribution from Bailiwick. Managed services revenue continue to grow nicely, up 28% year-over-year, all organically, and total managed service bookings are up 48% over the trailing 12 months. This bodes well for Eplus by helping to create predictable, profitable, and more consistent revenue streams. Our finance business delivered a solid quarter with higher transactional gains benefiting from some large deals and portfolio gains. An important accomplishment in the quarter was the acquisition of DailyWik, a provider of outsourced IT integration and deployment services across North America. Bailiwick has expanded our IT integration services to focus on AI, digital signage, and EV charging for clients in retail, finance, and hospitality. Although Bailiwick was a small contributor during the quarter, as the company was acquired at the end of August, it further broadens our portfolio to meet evolving customer demand. Importantly, it also expands our footprint in North America and our customer base, offering enhanced digital transformation capabilities into additional verticals, particularly in the enterprise segment. Bailiwick also has some additional capabilities leveraging AI to streamline operations through intelligent video surveillance with a strong focus on loss prevention solutions in the retail space, as well as digital lock solutions, which uses AI to analyze live video feeds to generate actionable recommendations. We are encouraged by the progress we have made against our artificial intelligence initiatives and the interest we are seeing from customers for our AI Ignite program. While we are excited about the promise of AI, we believe it has elongated some sales cycles. To better position Eplus for the AI market opportunity, we have trained our entire sales teams on our AI solutions and services. We also just launched our AI Experience Center with Digital Realty. This cutting-edge technology center will demonstrate to customers the building and consuming of AI use cases. It is designed to help accelerate an organization's AI journey. In addition to the technology demonstrations, customers can also take advantage of the suite of E-Plus Ignite assessments and workshops. These are designed to help them understand their level of AI maturity and what solutions best match their goals. This can include helping to identify use cases, define success criteria, assess their AI preparedness, and rapidly deploy proof of concepts. to ultimately help our customers make informed decisions on their AI investments and unlock maximum value from their data. We continue to see growth in our security practice. Our security gross billings were up 15.8% for the quarter, and it's now 21.4% of our trailing 12 months gross billings. We would expect customers to continue to invest in data security and governance risk initiatives related to AI. Overall, our balance sheet and cash position provides financial flexibility to support future growth initiatives. Our capital allocation priorities remain funding investments to drive organic and inorganic growth and opportunistically repurchase shares to provide value to our shareholders. I will now turn the call over to Elaine to discuss our financial results in more detail. Elaine? Elaine Marion | CFO: Thank you, Mark, and thank you everyone for joining us today. I will review our financial performance in the second quarter of fiscal 2025. Our consolidated net sales were $515.2 million compared to $587.6 million in the second quarter of fiscal 2024. Net sales in our technology business were $493.3 million versus $571.9 million in the same period of the prior year. Gross billings declined at a more modest pace of 5.6%, evidencing the effect of a larger proportion of netted down revenues in the quarter. The year-over-year declines primarily reflect lower product sales in the technology business. Product sales faced a tough comparison against the prior year as results in the second quarter of the last year saw outsized benefits from an easing supply chain, particularly in networking products. We saw lower demand from enterprise customers as they continue to digest products we delivered as part of last year's supply chain flush, as Mark mentioned. Service revenue grew 46% in the quarter, driven by both professional and managed services. Professional services benefited from our acquisition of Bailiwick, as well as an increase in organic demand, while our managed services business saw continued momentum in enhanced maintenance support and cloud services. Shifting to our customer vertical, sales within our technology business remain broad-based. Telecom, media, and entertainment, and technology are two largest verticals represented 25% and 18%, respectively, of our technology business net sales on a trailing 12-month basis. SLED, healthcare, and financial services accounted for 15%, 13%, and 9%, respectively, with the remaining 20% divided among other end markets. Financing segment net sales were 21.9 million, up from 15.7 million in the prior year quarter, primarily due to higher transactional gains as we benefited from several large transactions. Despite the decline in consolidated net sales, gross profit grew 2.5% year-over-year to 148 million, led by a solid quarter from our financing segment and supported by continued strength in services. As Mark noted, our revenue mix shifted toward third-party maintenance and subscription sales in the quarter, which are recognized on a net basis. This increased our growth margin while negatively impacting product revenue. Product growth margin from the technology business expanded 200 basis points, contributing to a consolidated growth margin of 28.7% up from 24.6% in the prior year. Professional services growth margin remained consistent at 41.3%, while managed services growth margin declined to 29.5% from 31.1% due to higher third-party costs. Consolidated operating expenses of $105.3 million rose 5.8% year-over-year primarily due to increased headcount as a result of the bailiwick and peak resources acquisitions, as well as increases in acquisition-related expenses. At the end of the quarter, our headcount was 2,323, up 446 from a year ago, including 441 employees from our acquisition of Bailiwick and 24 from our acquisition of Peak Resources. Other income increased to 600,000 as higher interest income of 2.4 million was offset by foreign exchange losses of 1.8 million. Operating income decreased 4.8% to 42.7 million, And earnings before taxes decreased 3.7% to $43.3 million. Our effective tax rate was 27.7%, similar to 27.4% a year ago. Consolidated net earnings were $31.3 million, or $1.17 per share, representing a decrease of 4.1% from the prior year quarter. Non-GAAP diluted earnings per share decreased 2.9% to $1.36. Our diluted share count at the end of the quarter was 26.7 million, unchanged from the prior year. Consolidated adjusted EBITDA totaled 52.1 million, down from 53.6 million in the second quarter of fiscal 2024. Moving to our consolidated results for the six months ended September 30, 2024, consolidated net sales were 1.06 billion, compared to 1.16 billion in the prior year. The increase in netted down revenues was responsible for about half of the decrease in the net sales on a year-to-date basis. Technology business net sales were 1.03 billion for the first six months of fiscal 2025, down from 1.14 billion in the same period last year. Gross billings in the technology segment declined 3.3% to 1.64 billion. Consolidated gross profit was 282.5 million. below the $286.6 million reported in the first half of fiscal 2024. Consolidated gross margin increased 200 basis points to 26.7% led by a favorable mix in the product segment and increased services revenue. Consolidated net earnings were $58.6 million or $2.19 per diluted share compared to $66.5 million or $2.49 per diluted share. Non-GAAP earnings per share were $2.50 versus $2.81 in the comparable period last year. Adjusted EBITDA was $95.3 million, down from $107.4 million. Taking a look at our balance sheet, cash and cash equivalents totaled $187.5 million at the end of the quarter compared to $253 million at March 31, 2024. The decline reflects working capital needs, the bailiwick acquisition, and the repurchase of common stock. Operating cash flow for the first half of the year was 75.5 million compared to 10.3 million in the last year. We ended the quarter with 93.9 million in inventory, down from 139.7 million at the end of fiscal 2024. Inventory turns were 12 days, down from 14 days in the prior sequential quarter, and 29 days in the prior year. This improvement helped reduce our cash conversion cycle to 32 days compared to 51 days in the prior year. During the first half of the fiscal year, we repurchased 250,234 shares under our repurchase plan at a cost of $19.8 million. It's important to note for modeling purposes, our acquisition of Bailiwick will primarily contribute to professional services revenue, not product sales. and will also increase acquisition-related amortization expense for the second half of the fiscal year. As a result, we expect the bottom line contribution on a GAAP basis to be minimal for this initial period. Overall, we remain committed to executing on our core priorities, investing in organic growth initiatives, expanding through accretive acquisitions, and delivering shareholder returns through our repurchase program. With that, I will turn the call back over to Mark. Mark Marin | CEO and President: Thank you, Elaine. We are encouraged by the growth that we are experiencing in our services segment, including our managed service bookings, which bodes well for a longer-term growth, profitability, and visibility of the business. Our future investments will continue to be targeted towards faster-growing markets, including AI, security, and related software and services. Some of these solutions are still in the early stages with exciting growth opportunities ahead. Now turning to our fiscal 2025 financial outlook. Overall for the year, we expect positive comparisons for sales and earnings. Based upon first half results, we are modifying our 2025 guidance to adjusted EBITDA in the range of $195 million to $205 million. We are also tightening our guidance range for net sales to be similar to last fiscal year, which reflects the difficult compare we experienced for product sales higher gross to net as the industry transitions, and economic uncertainty. Our broadening portfolio of IT products, solutions, and services, coupled with our solid backlog and healthy balance sheet, will enable us to continue to deploy capital with discipline, focused on delivering long-term, sustainable, profitable growth, creating value for our shareholders. Operator, let's open the line for questions. Operator | Conference Operator: Thank you. We will now begin the question and answer session. At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Greg Burns with Sidoti & Company. Please go ahead. Greg Burns | Analyst at Sidoti & Company: Greg Burns Good afternoon. Just in terms of the product product sale demand or product demand you saw in the quarter. The technology flush that you mentioned last year, it seemed like maybe some of your technology partners had already moved past that. And maybe this is like a delayed impact on your business. I'm just trying to get a sense of like where we are in terms of that headwind and What your sense is, is this like a one-quarter issue that we moved past in the second half? What are you seeing in terms of that impact on demand and maybe just the broader macro environment in terms of enterprise spending? Mark Marin | CEO and President: Yeah. Hey, Greg, it's Mark. How are you? So a couple different things. There's still a lot of economic uncertainty going on. The election was one thing, right? If you look at the product or hardware sales that you're talking about, they were definitely softer than expected. And that's been seen kind of across the entire IT market. There were a couple things that we knew going into this quarter. One, we knew we had a really tough compare. If you remember, our product sales were up over 23% in Q2 last year and up 26% in the first half last year. So we kind of knew we had the tough compare. The other thing that came into play besides the software demand on hardware saw a little bit of pause, if you will, or delay in the enterprise segment. So we think some of that is those customers consuming technology. The good news is we didn't lose them. I also have a personal belief that I think AI right now is a little bit of a headwind in that space where a lot of customers are evaluating what to do but haven't made decisions. And then the last thing related to that that really was outside or norm if you will was the gross to net or netted down revenues on that on those product sales which was a difference of about 940 basis points and that's about rough numbers about 60 million of product sales difference uh greg so that those would be the different factors for the quarter okay thanks um when we look at um just the the bailiwick acquisition uh how much revenue is Greg Burns | Analyst at Sidoti & Company: Is that going to contribute for the updated guidance for revenue this year? And maybe if you could just talk about their growth rate and margin profile relative to your own. Mark Marin | CEO and President: Yeah, so I'll start with the margin profile. The margin profile is in line with E+. It's in the range, if you will. It was immaterial in Q2. Looking at the second half, you're looking at approximately $85 million in terms of towards a guidance. Here's what I tell you that they bring that we're excited. One is it expands our offerings into core to edge space. And what that means, we're able to go back to our customers in terms of how they communicate data between the stores and the corporate offices. And a lot of companies are trying to push more things out to the edge and closer to the end user. They've got some great enterprise customers that we think we can cross-sell and up-sell in over time. And also, as part of our strategy, it expands our, I'll say, our services and solutions offerings that we can take to market. The one thing I'd put as a little bit of a caveat, Greg, is like any acquisition, it normally takes time for its early innings on this for them to adjust and get it acclimated to E-plus and vice versa. Greg Burns | Analyst at Sidoti & Company: Okay. And then the organic professional services growth this quarter? Mark Marin | CEO and President: You know, I don't know off the top of my head on professional services. I would say it's in the 6% to 8% range in terms of organic. The rest was bailiwick. On the annuity services, the managed services side, we were actually up 28% on that, Greg. And what's nice about that, when we kind of look at it overall, the trailing 12 months gross billings were up actually 48%, so it bodes well for our business. So, annuity continues to thrive. Professional services was in the 6% to 7% range in terms of organic, and the rest was bailiwick. Greg Burns | Analyst at Sidoti & Company: All right, great. Thank you. Operator | Conference Operator: No problem. The next question comes from the line of Victor Santiago with TESOL. Please go ahead. Victor Santiago | Analyst at TESOL: Good afternoon. This is Victor on for Matt Sheeran. Thanks for taking my question. Maybe real quick, just to follow up on the Ballywick acquisition, how should we think about the OpEx impact kind of going forward? It looks like it ticked up a little bit in the quarter with just over a month of ownership, so hoping to get some color there. Mark Marin | CEO and President: Yeah, Victor, it's Mark. I would expect that to uptick in Q3 because you'll have the full quarter of headcount as well as acquisition-related expenses, so I would expect that to uptick in Q3 for sure. Victor Santiago | Analyst at TESOL: Got it. And on gross margin, it looks like kind of backing into your guide, it looks like gross margin should take kind of a little bit of a sequential drop down over the next two quarters. And it looks like you should see some sequential product sales as well. So is that kind of the right way to think about gross margin, maybe the impact of more hardware kind of weighing down what you saw in Q2 from services? Mark Marin | CEO and President: Yeah, I think that's probably fair, Victor. If you look at the gross margins, we were up 410 basis points, so it was a pretty big swing, if you will, on this quarter. I would think it's safe to say, based on the guidance, that both product sales and services would be up in the second half, and the margins would be a little bit tighter than what it was this quarter. Victor Santiago | Analyst at TESOL: Great, thanks. That's all I had. Mark Marin | CEO and President: All right. Thanks, Victor. Operator | Conference Operator: The last question comes from the line of Maggie Nolan with William Baer. Please go ahead. Kate Kronstein | Analyst: Hi, everyone. Thanks for taking my question. It's Kate Kronstein. I'm from Maggie. Can you guys talk about what assumptions you've made around the MACRO in the updated outlook and just provide a little bit more detail there? Mark Marin | CEO and President: So, okay. Hey, Kate. It's Mark here. How are you? So, I would think MACRO, we'd expect some hardware challenges next quarter made in Q3, and then it would expect it to pick up. The other thing is we, for a third quarter, we had a tough compare for our finance. So I'm trying to work through both the quarter and the year. The wild card is the gross to net, which had a big, big effect this quarter. I would think when you think about some of the things as it relates to election and stuff, I think it's a little bit early on that in terms of the tariffs and how that may affect things. In the past, we've been able to pass that on to customers. You know, interest rates, if they're going to be affected or not, could improve buying power and, you know, improve growth, if you will. Trying to think of what else as it relates to that. I think that's most of it, Kate. Anything I missed or? Yeah. AI spending, you know, right now, Kate, it's a headwind. It's an exciting time on AI. We continue to expand our capabilities in that space. We just built out an AI briefing center. Uh, but I think it's real early innings there and over time we'd expect to see some upside there. Kate Kronstein | Analyst: Okay, great. Thank you, Mark. And then just 1 more question for me. Is there any early client feedback that you've received on the value acquisition that you can share? Mark Marin | CEO and President: I personally haven't heard anything I can tell you internally. Everybody's excited about the team that we picked up. They, we feel like they're very at the management level. Very professional. The offerings and the customer base that they have is, uh. pretty significant, so we feel good about everything that we've heard. There's been some deals that they've brought forward that Darren and Elaine have been involved in in terms of working through the process, but so far it's been nothing but positive related to bailiwick. Kate Kronstein | Analyst: Okay. Great to hear. Thank you. Mark Marin | CEO and President: All right. Thanks, Kate. Operator | Conference Operator: That concludes our Q&A session. I will now turn the conference back over to Mark Marin. CEO for closing remarks. Mark Marin | CEO and President: Thank you. Thank you everyone for joining us today. We appreciate you taking the time to listen to our earnings call. I'd like to make an early announcement to wish everybody a happy and healthy holiday season as well. Thanks for joining us and we look forward to speaking with you in February. Enjoy the holidays. Operator | Conference Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. jsPDF 3.0.3 D:20260606090355-00'00'