Recent Acquisitions Bring New People, Services To ePlus As The Company Plans For Future Growth

Acquisitions are having an impact on Herndon, Va.-based IT solution provider ePlus. The company's CFO, Elaine Marion, said about 50 percent of ePlus' revenue growth in the first half of fiscal 2018 came from acquired businesses.

And ePlus acquisitions have been helping the company reach new markets and geographies. In September 2017, its acquisition of Integrated Data Storage, brought ePlus an increased Midwest footprint and a strong services offering for data protection and disaster recovery.

The company's May 2017 acquisition of OneCloud Consulting, a software developer and Cisco premier partner; and the December 2016 acquisition of Consolidated Communications IT Services, gave ePlus a broad range of data center, collaboration, networking, and security solutions and services and a strong Cisco practice.

[Related: ePlus Continues Acquisition Spree With Purchase Of Integrated Data Storage]

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The OneCloud acquisition brought ePlus to the forefront cloud services and training, and will help the company boost its recurring services, CEO and President Mark Marron said.

"We believe that OneCloud's unique skillsets will also help to increase sales of traditional ePlus products and services as we continue to drive the penetration of their services to our over 3,200 enterprise and mid-market customers," he said. "We continue to view consultative and annuity services as a key differentiator and a long-term growth driver for ePlus."

ePlus ended the quarter with 1,282 employees, up about 186 people, said CFO Marion and most of the growth in personnel stemmed from acquisitions, she said.

CEO Marron said about 85 percent of the company's new hires are customer-facing. The company now has 467 systems engineers, compared to 400 in March. "We continue to invest in the talent we need to stay competitive in the market," he said.

The solution provider ended its second fiscal quarter of 2018 with a strong cash balance, and letting it invest in new acquisitions, increasing headcount, and increasing services offerings, Marion said. "We constantly evaluate all these opportunities," she said.

The company reported a slight downturn in total sales for the quarter ended September 30. It brought in $370.8 million, down 0.2 percent compared to its second fiscal quarter 2017.

ePlus' net earnings on a GAAP basis were $17.2 million, or $1.23 per share, up from last year's earnings of $16.8 million , or $1.21 per share. On a non-GAAP basis, the company reported net earnings of $17.8 million, or $1.27 per share, up from last year's $17.1 million, or $1.23 per share.

While revenue for the quarter was $43.58 million below analysts expectations, according to Seeking Alpha, the reported non-GAAP earnings-per-share number beat analysts' expectations by $0.15.

"Following the strong 23 percent sales growth that we achieved in the first quarter of this year, our second quarter sales were flat as compared to the year-ago period in part because the current quarter reflected a higher proportion of sales that were reported on a net basis while adjusted gross billing of products and services increased 3.3 percent for the quarter," ePlus CEO Marron explained.

He said ePlus is continuing to benefit from high-growth businesses like cloud, security, and digital infrastructure, with security products and services representing 17.5 percent of adjusted gross billing during the quarter.