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Ubiquiti (UI) Misses Q1 Earnings Estimates on Supply Chain Woes

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Ubiquiti Inc. (UI - Free Report) reported lackluster first-quarter fiscal 2022 results with both the bottom line and the top line missing the Zacks Consensus Estimate as supply chain disruptions affected its production schedule. Consequently, the New York-based network technology company’s share price declined significantly and closed at $302.50 in after-market trading as of Nov 5, 2021.

Net Income

On a GAAP basis, net income in the September quarter decreased to $132.1 million or $2.11 per share from $156.5 million or $2.46 per share in the prior-year quarter. The decline was primarily due to top-line contraction and higher operating expenses as Ubiquiti grappled with coronavirus-induced adversities.

Quarterly non-GAAP net income was $132.8 million or $2.12 per share compared with $157.1 million or $2.47 per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by 69 cents.

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 were down 3.1% year over year to $458.9 million, due to lower sales of Service Provider Technology as supply chain turmoil led to a shortage of essential components and increased logistic delays, affecting the production and delivery of products. However, total revenues were partially offset by higher sales of Enterprise Technology products, primarily driven by portfolio expansion. The top line lagged the consensus estimate of $519 million.

Revenues from Service Provider Technology decreased to $112.1 million from $157.5 million in the year-ago quarter with lower revenues in all regions across all the platforms. Enterprise Technology revenues were $346.8 million, up from $316.1 million with product expansion and increased adoption of UniFi technology platform across all regions.

Region-wise, revenues from North America were $209.1 million compared with $220.9 million in the year-ago quarter while that from Europe, Middle East and Africa totaled $172.6 million, down from $179.2 million. Revenues from the Asia Pacific were $42.9 million compared with $41.9 million a year ago and the same from South America totaled $34.3 million, up from $31.5 million.

Other Details

Gross profit decreased to $209.5 million from $228.1 million in the year-ago quarter on soft revenues, with respective margins of 45.6% and 48.2%. Total operating expenses increased to $47.8 million from $38.2 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 $161.7 million compared with $190 million a year ago.

Cash Flow & Liquidity

In the first three months of fiscal 2022, Ubiquiti generated $100.9 million of cash from operating activities compared with $117 million in the prior-year period. As of Sep 30, 2021, the company had $265.9 million in cash and cash equivalents with $460.9 million of long-term debt. During the quarter, Ubiquiti repurchased 130,994 shares at an average price of $299.64 each.

Zacks Rank & Stocks to Consider

Ubiquiti currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Clearfield, Inc. (CLFD - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Arista Networks, Inc. (ANET - Free Report) and SeaChange International, Inc. (SEAC - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered an earnings surprise of 49%, on average, in the trailing four quarters.

Arista has a long-term earnings growth expectation of 16.7%. It delivered an earnings surprise of 6%, on average, in the trailing four quarters.

SeaChange has a long-term earnings growth expectation of 10%. It delivered an earnings surprise of 28.9%, on average, in the trailing four quarters.