ePlus inc (PLUS)PLUS

ePlus inc.: A Comprehensive Overview

Company Profile:

Detailed history and background: ePlus inc., founded in 1990, is a leading IT solutions provider specializing in technology distribution and managed IT services. Initially focused on reselling IT products, the company expanded into offering comprehensive solutions encompassing software, hardware, cloud, and cybersecurity. Headquartered in Herndon, Virginia, ePlus boasts over 1,900 employees serving a diverse clientele of over 6,100 customers across various industries.

Description of the company’s core business areas: ePlus operates through two segments: Technology Solutions and Technology Infrastructure.

• Technology Solutions: This segment focuses on delivering technology products, including hardware, software, cloud subscriptions, and cybersecurity solutions, through its extensive network of vendors.
• Technology Infrastructure: This segment offers comprehensive managed services encompassing endpoint management, data center, network, and cloud infrastructure management, aiming to optimize customers' IT environments.

Overview of the company’s leadership team and corporate structure: ePlus boasts a seasoned leadership team with extensive industry expertise.

• Mark Marron (CEO and President): With over 25 years of experience, Marron leads ePlus' growth strategy and overall operations.
• Gregory Dougherty (CFO): Dougherty brings over 20 years of financial leadership, overseeing ePlus' financial strategy and performance.
• Mark Harlacher (COO): Harlacher leads ePlus' Technology Infrastructure segment, driving the managed services offering.
• Kevin Lynch (Executive Vice President, Technology Solutions): Lynch spearheads ePlus' Technology Solutions segment, focusing on product distribution and vendor relationships.

Top Products and Market Share:

• Top products: ePlus offers a diverse portfolio, including products from leading technology vendors like HP, Microsoft, Cisco, Dell, and IBM. Their focus lies in software, cloud, cybersecurity, and endpoint solutions.
• Market share: Determining ePlus' precise market share in the global and US IT market is challenging due to the fragmented nature of the industry and the presence of various players. However, ePlus holds significant market share within its specific niche of IT solutions and managed services, holding top-tier reseller status with several major vendors and serving numerous Fortune 1000 companies.
• Comparison with competitors: While trailing behind larger competitors like CDW and Tech Data in pure product

Total Addressable Market: The global managed services market is vast and expanding rapidly, estimated to be worth $356.2 billion in 2022 and projected to reach $434.8 billion by 2027, indicating significant growth potential for ePlus and its competitors.

Financial Performance:

• Recent financial statements: Based on ePlus' 2022 annual report, they generated revenue of $6.59 billion with $50.3 million in net income and an EPS of $1.14, reflecting profitability.
• Year-over-year comparison: Revenue has steadily grown in recent years, with 2022 illustrating an 11.2% increase from 2021, demonstrating consistent performance.
• Cash flow and balance sheet: ePlus maintains a healthy balance sheet with strong cash flow generation, indicating financial resilience and potential for further investment in growth initiatives.

Dividends and Shareholder Returns:

• Dividend History: ePlus initiated dividend payouts in 2012 and has maintained a steady dividend payout ratio of approximately 40-50% in recent years, offering a current annual yield of 0.84%.
• Shareholder returns: Over the past year, ePlus has delivered total shareholder returns of approximately 20%, exceeding the broader market performance and indicating shareholder value creation.

Growth Trajectory:

• Historical growth analysis: ePlus has consistently demonstrated growth over the past five years, with revenue increasing from $4.75 billion in 2017 to $6.59 billion in 2022, representing a compound annual growth rate (CAGR) of approximately 8%.
• Future growth projections: Industry analysts project continued revenue growth for ePlus in the coming years, driven by increasing IT spending, cloud adoption, and demand for managed services, suggesting favorable growth prospects.
• Strategic initiatives: ePlus is actively pursuing strategic initiatives to fuel growth, including expanding its cloud and cybersecurity offerings, enhancing digital capabilities, and pursuing strategic acquisitions and partnerships aimed at expanding market reach and service portfolio.

Market Dynamics:

• Industry trends: The IT solutions and managed services industry is characterized by rapid technological advancement, evolving customer needs, and increasing competition. ePlus continues to adapt by investing in emerging technologies like AI and IoT to enhance service offerings.
• Market positioning and adaptability: ePlus' focus on value-added services, deep vendor relationships, and customer-centric approach positions them well to adapt to market changes and cater to evolving client requirements.

Competitors:

• Key Competitors: Major players in the industry include CDW (CDW), Tech Data (TECD), Insight Enterprises (NSIT), and SYNNEX Corporation (SNX), each possessing different strengths and market focuses.
• Competitive comparison: ePlus holds similar market shares to Insight and SYNNEX but trails CDW and Tech Data in size. However, they distinguish themselves through a more robust managed services portfolio and focus on specialized technology solutions, attracting a distinct customer base.

Potential Challenges and Opportunities:

• Challenges: ePlus faces potential supply chain disruptions, evolving customer demands, and intense competition, which require continuous strategic adjustments.
• Opportunities: Growing adoption of cloud and cybersecurity solutions presents lucrative growth avenues for ePlus to capitalize on, alongside potential M&A opportunities to further strengthen their market position.

Recent Acquisitions:

• 2021: ePlus acquired Vology, a cloud and managed service provider special