Ubiquiti Networks Beats on Q3 Earnings and Revs - Analyst Blog
May 09 2014 - 10:00AM
Zacks
Ubiquiti Networks,
Inc. (UBNT) reported strong third-quarter fiscal 2014
results with non-GAAP earnings of 50 cents per share, exceeding the
Zacks Consensus Estimate of 48 cents by 4.2%. Earnings also beat
the prior-year quarter earnings of 24 cents by a robust 108%. The
company reported non-GAAP net income of $45.2 million compared with
$21.1 million in the year-ago quarter, reflecting an increase of
114.2%.
Growth in the company’s core
business primarily drove the earnings. Ubiquiti’s consistent focus
on enhancing services by increasingly investing in innovation and
development also supported the upside. Management’s executive
abilities and the opportunities in the enterprise business also
contributed to the strong results.
Revenues
Ubiquiti’s total revenue for the
third quarter surged 78.2% year over year and 7.2% sequentially to
$148.3 million. Top-line growth was driven by increased transaction
volumes and addition of new services for existing customers.
Additionally, strong performance by the Enterprise Technology
segment contributed to the top-line growth. Revenues also surpassed
the Zacks Consensus Estimate of $141 million by 5.2%.
Segment
Performance
TheService Provider
Technology segment’s sales increased 60.3% year over year
to $121 million driven by strong performance across all its
businesses, including airMAX, airFiber and EdgeMAX.
TheEnterprise Technology
segment’s sales reflected a phenomenal increase of 254.5%
year over year to $27.3 million. The improvement was supported by a
significant sales increase in its UniFi platform business.
Income and
Expenses
The company reported operating
income of $50.1 million, up 113.2% from $23.5 million in the
prior-year quarter. Gross margins also expanded 156 basis points to
44.2% from 42.7% in the year-earlier quarter.
The company’s research and
development expenses totaled $9.4 million, up 65.8% year over year
from $5.7 million. Meanwhile, sales, general and administration
expenses stood at $6.1 million versus $6.3 million in the
prior-year quarter.
Balance Sheet and Cash
Flow
Cash and cash equivalents were
$291.7 million at quarter-end compared with $227.8 million as of
Jun 30, 2013. The company reported total equity of $283.9 million
against $147.4 million as on Jun 30, 2013. The company’s long-term
debt declined 7.0% in the last nine months to $66.1 million.
Cash flow from operating activities
for the quarter aggregated $14.0 million compared with $27.6
million in the prior quarter. The deterioration resulted from
increased investments in inventories during the third quarter.
Outlook
Management expects revenues for the
fourth quarter of fiscal 2014 in the range of $147–$153
million.
The company projects non-GAAP
earnings per share between 48 cents and 52 cents, while GAAP
earnings are expected to lie in the 47–51 cents band.
Other Stocks to
Consider
Ubiquiti currently carries a Zacks
Rank #3 (Hold). Some better–ranked stocks operating in the same
sector worth reckoning include ShoreTel, Inc.
(SHOR), Juniper Networks Inc. (JNPR) and
Nokia Corp. (NOK). While SHoreTel sports a Zacks
Rank #1 (Strong Buy), Juniper Networks and Nokia carry a Zacks Rank
#2 (Buy).
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