ePlus inc. (NASDAQ:PLUS) Q1 2024 Earnings Call Transcript

Mark Marron: Okay. So good question. So on the land and expand, it’s a strategy we’ve had for a while, and it’s where we work with the — I’ll say more on the enterprise side, but it’s also on the mid-market side that we’ll work with customers. We’ll try to get a foothold in the account. And then from there, we try to expand the sale everything that we have. So sometimes we’ll get a big pop or hit in the quarter based on a big opportunity. Normally, the margin is a little bit tighter on those deals, and then we try to expand it with our value-added solutions and services. And that can go across multiple quarters or multiple years as we try to expand it. So that’s not something that’s just the in a quarter or two, it could be multiple years that we see the benefit on that strategy, all right?

And the second question was around acquisitions. So, on the acquisitions, we like to think we acquired really good people and talented salespeople. We think it’s a great — two of them are both really good acquisitions for us. Future Com, which we acquired in July of 2022 and mainly in the security space and gave us some additional customers and access in the Texas region. And then network service systems group is in the service provider space. And they had a really nice quarter. Most acquisitions normally struggle in the first quarter, Jesse, and they actually had a nice quarter. And I think that was due to some of the network supply chain that open up as well as some things that they closed. But I would expect that to slow down a little bit as we move forward, but a nice jump to Q1.

Operator: Next, we’ll take a question from Greg Burns. Sidoti.

Greg Burns: Can you just delve into where you’re pipeline and backlog stands now because it sounds like you did deliver on some of those backlog projects this quarter, but the inventory didn’t really go down too much? So how much is left there to — that I guess would still be in process?

Mark Marron: Yes. So Greg, so what I was talking about is both in our CRM systems as well as looking at our open orders and backlog, we’ve got very good visibility. As it relates to our backlog/open orders, they’re probably down about $60 million sequentially. So that’s where we saw some of the runoff into the quarter. There was also some, what I’ll say, lead times that improved on the networking side that help our networking numbers were up about 67%. So there was some pull forward in my opinion, that I don’t know if we’ll see as much as we move throughout the year. But that’s kind of the high level on the quarter there.

Greg Burns: Okay. And then it seems like demand is broadening — you had broad-based demand across products and customer segments. But are you seeing any signs of caution, any indications that companies are pulling back? Or are they just reprioritizing and where your products and services are is where the money is flowing. Can you just give us a sense of maybe your outlook for the market?

Mark Marron: Yes. So it’s interesting, Greg. So, a couple of different things there. One, we do believe we’ll continue to pace the IT spend market, for sure. We’ve done that and believe we’ll continue to do it. We are seeing some longer deal cycles and there’s the economic uncertainty. There is some — there’s been some nice size layoffs from some of the tech vendors out there. And you see some of the projections from some of our public peers in terms of what they’re projecting in terms of declining revenue. So I never want to say we’re immune to it, but we are resilient, if you will, as it relates to our business. The other thing is — we don’t really play in the commodity space. We made a decision a long time ago in the PC laptop space to get out of that business.