ePlus CEO Marron: ‘Navigate The Next’ Solutions Targeted At Today’s New Environment
As customers move past the global pandemic, they are looking to technology as a way to improve their business, says ePlus President and CEO Mark Marron.
Increased customer spending on technology and an emphasis on services to help customers navigate the post-pandemic world led to a strong first fiscal quarter 2022 for ePlus.
The Herdon, Va.-based solution provider saw an IT environment that meshed well with the types of solutions it offered, said Mark Marron, president and CEO .
Marron, during his prepared remarks Wednesday during ePlus’ first fiscal quarter 2022 financial analyst conference call, said the solution provider experienced a strong start to its fiscal year as net sales and adjusted billings growth underscored robust customer demand for its technology and finance solutions.
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“More importantly, this quarter continued to show the scalability and efficiency of our operating model as strong top-line growth fueled healthy operating income and net earnings growth,” he said. “These results reflect strong demand for our solutions, a substantial rebound in the IT markets, and our continued focus on expense management and investments that enhance our operating efficiency.”
The global COVID-19 coronavirus pandemic led to a significant change in how customers looked at IT, Marron said.
“The pandemic has shifted users and applications beyond their traditional environments,” he said. “We continue to innovate, invest and help our customers go beyond their traditional cybersecurity methodologies to optimize environments and introduce new technologies that are purpose-built for securing the remote workforce and applications deployed across multiple clouds.”
Security remains a particularly important part of that change in spending, Marron said. He said security now accounts for 20.8 percent of ePlus’ 12-month trailing gross billings and is now a $500 million business on a stand-alone yearly basis.
“Security remains a critical area of customer focus and investment,” he said. “Our consultative approach to designing and implementing comprehensive security solutions help safeguard our customers’ data and help mitigate ever-present security risks.”
As customers move past the global pandemic, they are looking to technology as a way to improve their business, Marron said.
To help customers succeed in this new environment, ePlus developed an innovative suite of services and solutions called Navigate the Next that specifically address and help solve customers’ three most pressing IT challenges, he said.
The first is helping enterprises monitor physical distancing and safe working conditions as employees return to the office.
The second is to increase customers’ ability to manage IT expenses and develop a longer-term strategy for funding future IT projects with new expense management and financing programs.
The third is to provide a robust platform of business continuity for a remote workforce, including a hybrid cloud virtual desktop infrastructure.
Because of ePlus’ strong balance sheet, the company is able to fund organic growth initiatives as well as strategic acquisitions, Marron said.
“As we move forward, we will continue to identify and evaluate potential acquisition candidates that not only broaden our geographic presence, but also enhance our capabilities and participation in high-growth markets,” he said.
Marron said that electronics supply chain disruptions and other factors may negatively impact growth going forward.
“While this did not materially affect our first-quarter results, we recognize the potential for some revenue headwinds as we move through our fiscal year,” he said. “In addition, the emerging COVID variants and the possibility of a delayed return to work and/or government mandates, could affect our future performance. We remain well-positioned for continued growth in fiscal 2022 supported by the strength and breadth of our customer relationships, our strategic relationships with leading vendors across the IT ecosystem and our comprehensive portfolio of transformative technology solutions.”
When asked by a financial analyst about what drove the company’s increased business from customers returning to the office, Marron pointed to an increase in demand for ePlus’ solutions.
“We are seeing a lot of customers demand what we’re providing across a lot of different things in terms of return of the workforce: cost management, long-term funding for projects that they may have put on hold, some of the remote and hybrid solutions that we’re seeing customers build up,” he said. “I also think there’s a little bit of a rebound in the IT market. And we saw continued growth across our four key areas: data center and cloud, networking, security and collaboration.”
For its first fiscal quarter 2022 ended June 30, ePlus reported total revenue of $416.65 million, up 17.4 percent from the $355.03 million the company reported for its first fiscal quarter 2021. That beat analysts’ predictions by $26.6 million, according to Seeking Alpha.
The revenue included product sales of $344.77 million, up 17.5 percent over last year, and services revenue of $55.59 million, up 16.3 percent.
About 27 percent of ePlus’ sales went to customers in the telecom, media and entertainment market segment, followed by 16 percent to the technology segment, 15 percent to the SLED (state, local, and education) segment, 14 percent to health care, 12 percent to financial services and 16 percent to other segments.
On a GAAP basis, ePlus reported net earnings of $23.52 million, or $1.76 per share, up from last year’s $17.36 million, or $1.30 per share. On a non-GAAP basis, the company reported net earnings of $26.35 million, or $1.96 per share, up from last year’s $20.21 million, or $1.51 per share.
Earnings per share beat analysts’ expectations by 46 cents on a GAAP basis and 49 cents on a non-GAAP basis, according to Seeking Alpha.