ePlus Inc. (NASDAQ: PLUS), a leading provider of technology solutions, saw its stock price plummet over 7% in after-hours trading on Wednesday, following the release of its fiscal third-quarter 2025 results and guidance that fell short of expectations.

For the quarter ended December 31, 2024, ePlus reported revenue of $511.0 million, a modest 0.4% increase year-over-year, but below analysts' estimates of $553.55 million. The company's non-GAAP earnings per share (EPS) came in at $1.06, missing the consensus estimate of $1.28 by a significant margin of 17.19%.

The disappointing results were primarily attributed to a 9.5% decline in product sales, due to waning customer demand and a shift in product mix towards third-party maintenance and services, which are recorded on a net basis. While the company saw strong growth in its professional and managed services segments, this was not enough to offset the weakness in product sales.

ePlus' gross margin did expand by 130 basis points to 27.6%, benefiting from the higher proportion of netted down revenues and increased contribution from higher-margin services. However, operating expenses surged by 17.3% due to increased headcount from recent acquisitions, leading to a 25.1% decline in operating income.

Looking ahead, ePlus lowered its fiscal 2025 guidance, now expecting net sales in the range of $2.07 billion to $2.11 billion, and adjusted EBITDA between $165.0 million and $171.0 million, citing the ongoing industry shift towards ratable, subscription, and 'as a service' revenue recognition models.