ePlus (PLUS) shares dropped Wednesday as its technology business suffered in the third quarter, resulting in its earnings and revenue missing consensus expectations.
The company reported Q3 EPS of $1.18, $0.21 worse than the analyst estimate of $1.39. Revenue for the quarter came in at $509.1 million versus the consensus estimate of $595.07 million.
PLUS's technology business net sales decreased 19.2% to $494.2 million during the quarter, while its technology unit gross billings decreased 11.3% to $797 million. Its services revenues increased 10.7% to $74.7 million.
The technology business slowdown was put down to the improved product availability in the first half of the fiscal year, leading the company's larger customers to focus on completing previously delayed projects.
"Additionally, we saw sales cycle timelines extend as customers work through their project backlog. As we enter our fiscal fourth quarter, customer purchasing trends have improved, which supports the lower end of our fiscal 2024 financial guidance range," said Mark Marron, president and CEO of ePlus.
Looking ahead, ePlus expects to achieve the low end of its fiscal year 2024 revenue and adjusted EBITDA guidance ranges of $2.23 billion to $2.33 billion, and $200 million to $215 million, respectively. Its guidance assumes, in part, the continued supply chain improvement that will enable the execution of previously delayed customer projects.
PLUS shares are down 15.6% at $66.02 per share as of 10:37 am ET on Wednesday.
Following the report, analysts at William Blair noted that the "open orders’ decline in the first half of the fiscal year to more normal levels left a tough hurdle and led to lower growth in net sales during the quarter." However, they said that the company "holds a heavy cash position of over $142 million, providing ample flexibility for further acquisitions and stock buybacks."