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Ubiquiti (UI) Q1 Earnings Top Estimates on Record Revenues

Zacks Equity Research

Ubiquiti Inc. UI reported solid first-quarter fiscal 2020 results, wherein both the bottom line and top line surpassed the respective Zacks Consensus Estimate and increased year over year. Notably, the company registered record revenues and GAAP earnings per share. Following the results, its share price jumped 35.96% in Friday’s trading session to close at $176.74.

Net Income

On a GAAP basis, net income for the September quarter was $98.1 million or $1.43 per share compared with $85.7 million or $1.16 per share in the prior-year quarter. The improvement was primarily attributable to higher operating income and a reduction in share count.

Non-GAAP net income came in at $98.7 million or $1.44 per share compared with $86.2 million or $1.17 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 16 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 increased 14.3% year over year to $323.3 million backed by higher sales of service provider technology and enterprise technology products. By product type, revenues from Service Provider Technology were $115.9 million compared with $105 million reported in the year-ago quarter. Enterprise Technology revenues were $207.4 million, up from $177.9 million. The top line surpassed the consensus estimate of $299 million.

Region wise, revenues from North America were $148 million compared with $119.4 million a year ago. Revenues from South America were $19.8 million compared with $14.2 million, and the same from Asia Pacific totaled $29.7 million, up from $24.4 million. The increase was primarily due to higher revenues from both product segments. Revenues from Europe, Middle East and Africa were $125.8 million, slightly up from $124.9 million.

Other Details

Overall gross profit increased to $151.4 million from $131.6 million in the year-ago quarter driven by top-line growth. Gross margin improved to 46.8% from 46.5%, led by favorable mix of products sold, partly offset by higher tariffs and indirect costs. Total operating expenses were $30.7 million compared with $32 million in the year-earlier quarter on account of lower SG&A expenses. Operating income improved to $120.7 million from $99.6 million mainly due to higher gross profit.

Cash Flow & Liquidity

During the fiscal first quarter, Ubiquiti generated $119.7 million of net cash from operating activities compared with $93.9 million in the prior-year quarter. As of Sep 30, 2019, the computer networking company had $119.7 million in cash and equivalents with $621.5 million of long-term debt.

During the reported quarter, Ubiquiti repurchased 3,635,534 shares at an average price of $114.49 per share. It bought back an additional 995,495 shares at an average price of $120.11 subsequent to Sep 30, 2019. Further, the company initiated a new stock repurchase program to buy back up to $200 million worth of shares.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader industry are Ultra Clean Holdings, Inc. UCTT and Veeco Instruments Inc. VECO, both sporting a Zacks Rank #1 (Strong Buy) and Entegris, Inc. ENTG, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ultra Clean Holdings surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 25.4%.

Veeco Instruments surpassed earnings estimates in each of the trailing four quarters, the average surprise being 23.3%.

Entegris surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 2.6%.

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