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Ubiquiti (UI) Stock Gains on Q1 Earnings & Revenue Beat

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Ubiquiti Inc. (UI - Free Report) reported solid first-quarter fiscal 2021 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.

Shares of the New York-based network technology company appreciated 24% on Nov 6, closing at $245.22 in response to the results.

Net Income

On a GAAP basis, net income in the September quarter was $156.5 million or a record $2.46 per share compared with $98.1 million or $1.43 per share in the prior-year quarter. The improvement was driven by higher operating income and a reduction in shares outstanding.

Non-GAAP net income came in at $157.1 million or $2.47 per share compared with $98.7 million or $1.44 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by $1, with the positive surprise being 68%.

Ubiquiti Inc. Price, Consensus and EPS Surprise Ubiquiti Inc. Price, Consensus and EPS Surprise

Ubiquiti Inc. price-consensus-eps-surprise-chart | Ubiquiti Inc. Quote

Revenues

Quarterly revenues increased 46.5% year over year to a record $473.5 million, driven by an increase in direct-to-consumer sales through the company’s webstores and growth in sales to its distributors. Ubiquiti’s revenues continue to be significantly influenced by distributor order patterns and inventory availability.

Revenues from Service Provider Technology were $157.4 million compared with $115.9 million in the year-ago quarter. Enterprise Technology revenues were $316.1 million, up from $207.4 million in the prior-year quarter. The top line surpassed the consensus estimate of $342 million.

Region wise, revenues from North America were $220.9 million compared with $148 million in the year-ago quarter. Revenues from Europe, Middle East and Africa were $179.2 million, up from $125.8 million in the prior-year quarter. Revenues from Asia Pacific were $41.9 million compared with $29.7 million a year ago, and the same from South America totaled $31.5 million, up from $19.8 million.

Other Details

Gross profit increased to $228.1 million from $151.4 million in the year-ago quarter, led by higher revenues. Gross margin improved to 48.2% from 46.8%, supported by favorable changes in product mix. This was, however, partly offset by higher tariffs, shipping costs and inventory reserves.

Total operating expenses increased to $38.2 million from $30.7 million in the prior-year quarter. This was due to higher research and development) as well as sales, general and administrative expenses. Operating income came in at $190 million compared with $120.7 million a year ago.

During the quarter, Ubiquiti repurchased 602,003 shares at an average price of $162.10 per share. The board approved a cash dividend of 40 cents per share. The amount is payable on Nov 23 to shareholders on record as of Nov 16.

Cash Flow & Liquidity

During the first quarter of fiscal 2021, Ubiquiti generated $117 million of net cash from operating activities compared with $119.7 million in the prior-year quarter.

As of Sep 30, the company had $128.4 million in cash and cash equivalents with $612.4 million of long-term debt compared with the respective tallies of $142.6 million and $628.4 million at the end of the previous quarter.

Zacks Rank & Stocks to Consider

Ubiquiti currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader industry are Turtle Beach Corporation (HEAR - Free Report) , Corning Incorporated (GLW - Free Report) and United States Cellular Corporation (USM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Turtle Beach delivered a trailing four-quarter positive earnings surprise of 81.5%, on average.

Corning delivered a trailing four-quarter positive earnings surprise of 40.7%, on average.

U.S. Cellular delivered a trailing four-quarter positive earnings surprise of 231.1%, on average.

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