Ubiquiti Networks, Inc. reported solid second-quarter fiscal 2019 results, wherein both the bottom line and the top line surpassed the respective Zacks Consensus Estimate, and increased on a year-over-year basis.
Net Income
On a GAAP basis, net income for the reported quarter was $77.8 million or $1.09 per share against loss of $51.5 million or loss of 66 cents per share in the prior-year quarter. The year-over-year improvement was primarily due to top-line growth and lower provision for income taxes.
Non-GAAP net income came in at $95.1 million or $1.33 per share compared with $59.6 million or 76 cents per share a year ago. The bottom line beat the Zacks Consensus Estimate by 39 cents.
Ubiquiti Networks, Inc. Price, Consensus and EPS Surprise
Revenues
Quarterly revenues increased 22.5% year over year to $307.3 million, primarily driven by higher sales at Enterprise Technology business. The top line surpassed the consensus estimate of $253 million.
By product type, revenues from Service Provider Technology were $113.2 million compared with $119.9 million in the year-ago quarter. Enterprise Technology revenues were $194.1 million compared with $131 million a year ago.
Geographically, revenues from North America were $121.2 million compared with $95 million in the year-ago quarter. Revenues from Europe, the Middle East and Africa were $134.4 million, up from $102 million. Revenues from Asia Pacific were $30.7 million, down from $33.1 million. Revenues from South America were $20.9 million compared with $20.7 million in the prior-year quarter.
Other Quarterly Details
Gross profit increased to $140.2 million from $96.9 million in the year-ago quarter on the back of top-line growth. Gross margin improved to 45.6% from 38.6%. The computer networking company expects to incur costs due to higher tariffs imposed on certain Chinese products imported into the United States, and thus anticipates near-term gross margin between 42% and 45%.
Total operating expenses were $48.6 million compared with $30.8 million in the year-earlier quarter. Despite year-over-year increase in operating expenses, operating income improved to $91.7 million from $66.1 million owing to higher gross profit.
Cash Flow and Liquidity
During the first six months of fiscal 2019, Ubiquiti generated $144.6 million of cash from operating activities compared with $165.7 million in the year-ago period. As of Dec 31, 2018, the company had $293.3 million of cash and cash equivalents with long-term debt of $448.2 million.
Ubiquiti repurchased 356,576 shares for $34.7 million at an average price of $97.31 per share between Nov 8, 2018 and Feb 7, 2019.
The company’s board of directors announced a cash dividend of 25 cents per share payable Feb 25 to shareholders of record as on Feb 18.
Fiscal 2019 Outlook Reaffirmed
Ubiquiti has reaffirmed its earlier guidance for full-fiscal 2019 based on the recent healthy demand trends in its end markets. The company expects to generate revenues between $1.1 billion and $1.2 billion and earnings per share (EPS) of $4.00-$4.80 in fiscal 2019. Also, due to the potential impact of the tariffs imposed for certain products imported into the United States from China, the low-end of EPS may decline to $3.65 or lower. The company anticipates to mitigate the effect of the tariffs in the long term and expects long-term gross margin between 45% and 50%.
Zacks Rank and Other Stocks to Consider
Ubiquiti currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the industry include Comtech Telecommunications Corp. (CMTL - Free Report) , Harris Corporation and PCTEL, Inc. , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Comtech has a long-term earnings growth expectation of 5%.
Harris has a long-term earnings growth expectation of 8%.
PCTEL currently has a forward P/E (F1) of 65.3x.
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Ubiquiti Networks, Inc. reported solid second-quarter fiscal 2019 results, wherein both the bottom line and the top line surpassed the respective Zacks Consensus Estimate, and increased on a year-over-year basis.
Net Income
On a GAAP basis, net income for the reported quarter was $77.8 million or $1.09 per share against loss of $51.5 million or loss of 66 cents per share in the prior-year quarter. The year-over-year improvement was primarily due to top-line growth and lower provision for income taxes.
Non-GAAP net income came in at $95.1 million or $1.33 per share compared with $59.6 million or 76 cents per share a year ago. The bottom line beat the Zacks Consensus Estimate by 39 cents.
Ubiquiti Networks, Inc. Price, Consensus and EPS Surprise
Revenues
Quarterly revenues increased 22.5% year over year to $307.3 million, primarily driven by higher sales at Enterprise Technology business. The top line surpassed the consensus estimate of $253 million.
By product type, revenues from Service Provider Technology were $113.2 million compared with $119.9 million in the year-ago quarter. Enterprise Technology revenues were $194.1 million compared with $131 million a year ago.
Geographically, revenues from North America were $121.2 million compared with $95 million in the year-ago quarter. Revenues from Europe, the Middle East and Africa were $134.4 million, up from $102 million. Revenues from Asia Pacific were $30.7 million, down from $33.1 million. Revenues from South America were $20.9 million compared with $20.7 million in the prior-year quarter.
Other Quarterly Details
Gross profit increased to $140.2 million from $96.9 million in the year-ago quarter on the back of top-line growth. Gross margin improved to 45.6% from 38.6%. The computer networking company expects to incur costs due to higher tariffs imposed on certain Chinese products imported into the United States, and thus anticipates near-term gross margin between 42% and 45%.
Total operating expenses were $48.6 million compared with $30.8 million in the year-earlier quarter. Despite year-over-year increase in operating expenses, operating income improved to $91.7 million from $66.1 million owing to higher gross profit.
Cash Flow and Liquidity
During the first six months of fiscal 2019, Ubiquiti generated $144.6 million of cash from operating activities compared with $165.7 million in the year-ago period. As of Dec 31, 2018, the company had $293.3 million of cash and cash equivalents with long-term debt of $448.2 million.
Ubiquiti repurchased 356,576 shares for $34.7 million at an average price of $97.31 per share between Nov 8, 2018 and Feb 7, 2019.
The company’s board of directors announced a cash dividend of 25 cents per share payable Feb 25 to shareholders of record as on Feb 18.
Fiscal 2019 Outlook Reaffirmed
Ubiquiti has reaffirmed its earlier guidance for full-fiscal 2019 based on the recent healthy demand trends in its end markets. The company expects to generate revenues between $1.1 billion and $1.2 billion and earnings per share (EPS) of $4.00-$4.80 in fiscal 2019. Also, due to the potential impact of the tariffs imposed for certain products imported into the United States from China, the low-end of EPS may decline to $3.65 or lower. The company anticipates to mitigate the effect of the tariffs in the long term and expects long-term gross margin between 45% and 50%.
Zacks Rank and Other Stocks to Consider
Ubiquiti currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the industry include Comtech Telecommunications Corp. (CMTL - Free Report) , Harris Corporation and PCTEL, Inc. , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Comtech has a long-term earnings growth expectation of 5%.
Harris has a long-term earnings growth expectation of 8%.
PCTEL currently has a forward P/E (F1) of 65.3x.
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
Click to get it free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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