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Ubiquiti (UI) Up 12.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Ubiquiti Inc. (UI - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ubiquiti due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ubiquiti reported solid third-quarter fiscal 2020 results, with the bottom and the top line surpassing the respective Zacks Consensus Estimate and increasing year over year.
Net Income
On a GAAP basis, net income in the March quarter was $103.7 million or $1.60 per share compared with $88.3 million or $1.25 per share in the prior-year quarter. The improvement can be primarily attributed to top-line growth.
Non-GAAP net income came in at $104.3 million or $1.61 per share compared with $88.9 million or $1.26 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 20 cents.
Revenues
Quarterly revenues increased 18.4% year over year to $337.4 million backed by higher sales of enterprise technology products. By product type, revenues from Service Provider Technology were $106.4 million compared with $109.4 million reported in the year-ago quarter. Enterprise Technology revenues were $231 million, up 31.6% from $175.5 million in the prior-year quarter. The top line surpassed the consensus estimate of $317 million.
Region wise, revenues from North America were $133.9 million compared with $109.1 million in the year-ago quarter, driven by higher revenues from Enterprise Technology products. Revenues from South America were $17.8 million compared with $23 million and that of Asia Pacific totaled $26.2 million, down 3.3% from $27.1 million in the year-ago quarter. The year-over-year decline was primarily caused by lower revenues from Service Provider Technology products, partially offset by higher revenues from Enterprise Technology products. Revenues from Europe, Middle East and Africa were $159.4 million, up 26.9% from $125.7 million in the prior-year quarter mainly on higher Enterprise Technology revenues.
Other Details
Overall gross profit increased to $159.6 million from $132.8 million in the year-ago quarter, driven by top-line growth. Gross margin improved to 47.3% from 46.6%, led by favorable mix of products sold and reduced inventory reserves. However, it was partly offset by higher tariffs and indirect costs. Total operating expenses were $32.3 million compared with $30.7 million in the year-earlier quarter due to higher R&D and SG&A expenses. Operating income increased to $127.3 million from $102.1 million, primarily owing to to higher revenues.
Cash Flow & Liquidity
For the first nine months of fiscal 2020, Ubiquiti generated $335.3 million of net cash from operating activities compared with $158.3 million in the prior-year quarter. As of Mar 31, 2020, the computer networking company had $77.8 million in cash and equivalents with $659.4 million of long-term debt.
During the reported quarter, Ubiquiti repurchased more than 1.1 million shares at an average price of $133.38 per share for $148.4 million. It bought back an additional 99,165 shares at an average price of $138.25 for $13.7 million subsequent to the end of the quarter. Further, the company started off a new stock repurchase program to buy back up to $500 million worth of shares.
Moving Ahead
Despite the uncertainties pertaining to the COVID-19 pandemic, Ubiquiti has emerged as a strong player by augmenting its proprietary network communication platform that is well equipped to meet end-market customers’ needs. Backed by a resilient business model, the operating framework contributes significantly toward the expansion of its addressable market, thereby maintaining its dominant foothold in the industry. However, the global pandemic has taken a toll on Ubiquiti’s supply chain and logistics, thereby disrupting the distribution of products and services globally. Nevertheless, the company is committed to increase R&D investments and enhance its inventory management techniques to steer challenges and maximize growth.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
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Ubiquiti (UI) Up 12.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Ubiquiti Inc. (UI - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ubiquiti due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ubiquiti Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Ubiquiti reported solid third-quarter fiscal 2020 results, with the bottom and the top line surpassing the respective Zacks Consensus Estimate and increasing year over year.
Net Income
On a GAAP basis, net income in the March quarter was $103.7 million or $1.60 per share compared with $88.3 million or $1.25 per share in the prior-year quarter. The improvement can be primarily attributed to top-line growth.
Non-GAAP net income came in at $104.3 million or $1.61 per share compared with $88.9 million or $1.26 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 20 cents.
Revenues
Quarterly revenues increased 18.4% year over year to $337.4 million backed by higher sales of enterprise technology products. By product type, revenues from Service Provider Technology were $106.4 million compared with $109.4 million reported in the year-ago quarter. Enterprise Technology revenues were $231 million, up 31.6% from $175.5 million in the prior-year quarter. The top line surpassed the consensus estimate of $317 million.
Region wise, revenues from North America were $133.9 million compared with $109.1 million in the year-ago quarter, driven by higher revenues from Enterprise Technology products. Revenues from South America were $17.8 million compared with $23 million and that of Asia Pacific totaled $26.2 million, down 3.3% from $27.1 million in the year-ago quarter. The year-over-year decline was primarily caused by lower revenues from Service Provider Technology products, partially offset by higher revenues from Enterprise Technology products. Revenues from Europe, Middle East and Africa were $159.4 million, up 26.9% from $125.7 million in the prior-year quarter mainly on higher Enterprise Technology revenues.
Other Details
Overall gross profit increased to $159.6 million from $132.8 million in the year-ago quarter, driven by top-line growth. Gross margin improved to 47.3% from 46.6%, led by favorable mix of products sold and reduced inventory reserves. However, it was partly offset by higher tariffs and indirect costs. Total operating expenses were $32.3 million compared with $30.7 million in the year-earlier quarter due to higher R&D and SG&A expenses. Operating income increased to $127.3 million from $102.1 million, primarily owing to to higher revenues.
Cash Flow & Liquidity
For the first nine months of fiscal 2020, Ubiquiti generated $335.3 million of net cash from operating activities compared with $158.3 million in the prior-year quarter. As of Mar 31, 2020, the computer networking company had $77.8 million in cash and equivalents with $659.4 million of long-term debt.
During the reported quarter, Ubiquiti repurchased more than 1.1 million shares at an average price of $133.38 per share for $148.4 million. It bought back an additional 99,165 shares at an average price of $138.25 for $13.7 million subsequent to the end of the quarter. Further, the company started off a new stock repurchase program to buy back up to $500 million worth of shares.
Moving Ahead
Despite the uncertainties pertaining to the COVID-19 pandemic, Ubiquiti has emerged as a strong player by augmenting its proprietary network communication platform that is well equipped to meet end-market customers’ needs. Backed by a resilient business model, the operating framework contributes significantly toward the expansion of its addressable market, thereby maintaining its dominant foothold in the industry. However, the global pandemic has taken a toll on Ubiquiti’s supply chain and logistics, thereby disrupting the distribution of products and services globally. Nevertheless, the company is committed to increase R&D investments and enhance its inventory management techniques to steer challenges and maximize growth.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.