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Ubiquiti (UBNT) Beats on Q3 Earnings, Reiterates Guidance
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Ubiquiti Networks, Inc. reported solid third-quarter fiscal 2018 results with year-over-year increase in earnings and revenues driven by healthy growth dynamics. Adjusted earnings came in at 98 cents per share, which beat the Zacks Consensus Estimate of 80 cents by 22.5%. The bottom line jumped 25.6% from year-ago figure of 78 cents. The year-over-year improvement can primarily be attributable to impressive growth in revenues generated by its enterprise technology during the quarter.
Its share price increased about 11% in the trading session following the results. The impressive bottom line growth was further propelled by the company’s stock repurchase program, wherein it repurchased 4,389,195 shares, reducing its total number of outstanding shares.
Revenues
Ubiquiti reported revenues of $250.4 million, which lies within the company’s projected range of $245-$260 million. The top line grew 14.6% on a year-over-year basis. Increase in the number of installations of their service providing technology as well as the number of active users on the mobile application has proved conducive to top-line growth. GAAP gross margin improved to 45.7% from 45.4% in the last-year quarter.
Ubiquiti Networks, Inc. Price, Consensus and EPS Surprise
The company’s Enterprise Technology segment continued to fare remarkably well, with revenues surging 31.6% year over year to $149.5 million. However, the Service Provider Technology segment experienced a drop of 3.6%, generating $100.9 million. The company attributes this fall in revenues to some imperfections in the supply chain and aims to take necessary steps to fill this gap and strengthen this segment.
In terms of geography, revenues from EMEA regions (Europe, the Middle East and Africa) increased 29.6% year over year. This rise can be attributed to rise in demand owing to more customer awareness of the powerful performance of the company’s UniFi platform, especially in Western Europe. North America also witnessed 20.7% growth on a year-over-year basis with revenues of $94.8 million. Strong revenue performance in EMEA and North America managed to offset the lag in the revenues generated from South America and Asia Pacific (down 28.4% and 9.3%, respectively).
Liquidity
Ubiquiti ended the fiscal third quarter with cash and cash equivalents of $690.8 million, while long-term debt was about $466.5 million.
Outlook
Ubiquiti has reiterated its previous guidance for fiscal 2018. The company continues to expect generating $1 billion revenues and earnings per share of $3.70 in fiscal 2018.
To Conclude
The solid year-over-year revenue growth of Ubiquiti is a major positive.
However, the company faces issues with its sales channel and supply chain execution, which might affect operations and impact margins negatively.
Ubiquiti currently carries a Zacks Rank #3 (Hold).
Motorola Solutions has an expected long term earnings growth rate of 8%.
PC-Tel has exceeded earnings estimates twice in the trailing four quarters with an average of 17.9%.
SITO Mobile has an expected long term earnings growth rate of 25%.
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Ubiquiti (UBNT) Beats on Q3 Earnings, Reiterates Guidance
Ubiquiti Networks, Inc. reported solid third-quarter fiscal 2018 results with year-over-year increase in earnings and revenues driven by healthy growth dynamics. Adjusted earnings came in at 98 cents per share, which beat the Zacks Consensus Estimate of 80 cents by 22.5%. The bottom line jumped 25.6% from year-ago figure of 78 cents. The year-over-year improvement can primarily be attributable to impressive growth in revenues generated by its enterprise technology during the quarter.
Its share price increased about 11% in the trading session following the results. The impressive bottom line growth was further propelled by the company’s stock repurchase program, wherein it repurchased 4,389,195 shares, reducing its total number of outstanding shares.
Revenues
Ubiquiti reported revenues of $250.4 million, which lies within the company’s projected range of $245-$260 million. The top line grew 14.6% on a year-over-year basis. Increase in the number of installations of their service providing technology as well as the number of active users on the mobile application has proved conducive to top-line growth. GAAP gross margin improved to 45.7% from 45.4% in the last-year quarter.
Ubiquiti Networks, Inc. Price, Consensus and EPS Surprise
Ubiquiti Networks, Inc. Price, Consensus and EPS Surprise | Ubiquiti Networks, Inc. Quote
Segment-Wise Performance
The company’s Enterprise Technology segment continued to fare remarkably well, with revenues surging 31.6% year over year to $149.5 million. However, the Service Provider Technology segment experienced a drop of 3.6%, generating $100.9 million. The company attributes this fall in revenues to some imperfections in the supply chain and aims to take necessary steps to fill this gap and strengthen this segment.
In terms of geography, revenues from EMEA regions (Europe, the Middle East and Africa) increased 29.6% year over year. This rise can be attributed to rise in demand owing to more customer awareness of the powerful performance of the company’s UniFi platform, especially in Western Europe. North America also witnessed 20.7% growth on a year-over-year basis with revenues of $94.8 million. Strong revenue performance in EMEA and North America managed to offset the lag in the revenues generated from South America and Asia Pacific (down 28.4% and 9.3%, respectively).
Liquidity
Ubiquiti ended the fiscal third quarter with cash and cash equivalents of $690.8 million, while long-term debt was about $466.5 million.
Outlook
Ubiquiti has reiterated its previous guidance for fiscal 2018. The company continues to expect generating $1 billion revenues and earnings per share of $3.70 in fiscal 2018.
To Conclude
The solid year-over-year revenue growth of Ubiquiti is a major positive.
However, the company faces issues with its sales channel and supply chain execution, which might affect operations and impact margins negatively.
Ubiquiti currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
A few better-ranked stocks in the same space are Motorola Solutions, Inc. (MSI - Free Report) and PC-Tel, Inc. and SITO Mobile, Ltd. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Motorola Solutions has an expected long term earnings growth rate of 8%.
PC-Tel has exceeded earnings estimates twice in the trailing four quarters with an average of 17.9%.
SITO Mobile has an expected long term earnings growth rate of 25%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>