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

We still do it for some of our bigger customers. But we didn’t see some of the headwinds, I think that some of the others are in that space. And then the other thing is on our customer size segment, every customer size segment was up. What was really nice was our mid-market was up, which I believe is — those customers have real need for the types of solutions that we’re providing. So, we feel good about our guidance. We feel good about the quarter, but not overly — not jumping up and down yet in terms of where the economy can go in the second half.

Greg Burns: Okay. And then lastly, why did you split out professional managed services into their own segments. Is there like an expectation for a difference in terms of growth rates or margins? Like why provide that extra granularity now?

Mark Marron: Yes. You know what, Greg, it’s to help with some of the modeling. We’ve talked about our managed services/annuity quality revenues for years. We thought it made sense as we decided to give guidance to break out services as well. I would think what I’d call a transactional services or professional services and staffing over time, you’ll start to see an uptick. Some of that is held back by supply chain overall. So that’s one thing. And as it relates to or managed services, we saw that this quarter was up 23% year-over-year. And as I think I mentioned, the CAGR over the last five years is 24%. So, it’s a — it’s a very visible revenue stream and it’s a profitable reverse. But I would expect our transactional professional services over time to pick up as well.

Operator: And we’ll take the next question from Matthew Sheerin, Stifel.

Matthew Sheerin: Yes. Thank you. Good afternoon, Mark, and everyone and I also echo others’ comments about appreciating the disclosure, the outlook and guidance as well as the breakdown of some of your revenue streams. So I appreciate that. But just relative to your guidance for the year, Mark, as you said, it looks like your forward guide is it looks to be conservative because you’re up 25% year-on-year, you’re guiding up 10%, I mean, in the first quarter. So that would imply that the second half is going to be flat to down also in December, I know you’re going to be facing tough comps because you had a very, very strong December quarter last year. So I’m just wondering, are you just — is that just conservative because of maybe you don’t have visibility into the full year or some of the comments you made earlier about reasons maybe to be more conservative?

Just trying to get a feel for how you think about the rest of the year. And also, the September quarter, you’re typically up sequentially. But I’m wondering if — with all the pull-ins that you talked about, whether that’s going to be more flattish or down sequentially?

Mark Marron: Yes. So that was a lot in there, Matt. So a couple of different things, one is, I think I called out, we’re starting to see some of the tough comps on the finance piece. So we had a really big quarter I believe it was $12.2 million in operating income in Q2. So that’s going to be really tough to replicate. So that’s the first thing as it relates to Q2. You are right. Q3 is normally our strongest quarter. Q2 is normally a solid quarter, but I do believe we had some pull forward in this quarter. We saw some things that popped in that at the end of the quarter that popped into the quarter that we weren’t expecting. So, I think that’s part of what maybe is throwing you off a little bit because the quarter was so big.