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Ubiquiti (UBNT) Q4 Earnings Miss Estimates, Revenues Up Y/Y

Zacks Equity Research

Ubiquiti Networks, Inc. UBNT reported decent fourth-quarter fiscal 2019 financial results, wherein both the bottom line and the top line increased on a year-over-year basis. Following the announcement, share price declined 4.9% in Friday’s trading session to eventually close at $113.95.

Net Income

On a GAAP basis, net income for the June quarter was $70.9 million or $1.01 per share compared with $70.1 million or 94 cents per share in the prior-year quarter. The improvement was primarily due to top-line growth and reduction in share count. For fiscal 2019, GAAP net income was $322.7 million or $4.51 per share compared with $196.3 million or $2.51 per share in fiscal 2018.

For fiscal fourth-quarter, non-GAAP net income came in at $83.6 million or $1.19 per share compared with $74.8 million or $1.01 per share in the year-ago quarter. The bottom line, however, missed the Zacks Consensus Estimate by 11 cents.

Ubiquiti Networks, Inc. Price, Consensus and EPS Surprise

Ubiquiti Networks, Inc. Price, Consensus and EPS Surprise

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

Revenues

Quarterly revenues increased 6.3% year over year to $286.6 million on the back of higher sales at Enterprise Technology business. By product type, revenues from Service Provider Technology were $100.9 million compared with $105.9 million in the year-ago quarter. Enterprise Technology revenues were $185.7 million compared with $163.8 million a year ago.

Geographically, revenues from North America were $147.5 million compared with $124.5 million in the year-ago quarter. Revenues from Europe, Middle East and Africa were $92.3 million, down from $102.3 million. Revenues from Asia Pacific were $26.2 million, up from $22.4 million. Revenues from South America were $20.7 million compared with $20.6 million in the prior-year quarter. For fiscal 2019, revenues increased 14.2% year over year to $1,161.7 million.

Other Quarterly Details

Gross profit increased to $132.9 million from $120.5 million in the year-ago quarter led by top-line growth. Gross margin improved to 46.4% from 44.7%, driven by favorable mix of products sold and lower indirect expenses. Total operating expenses were $32.1 million compared with $32.4 million in the year-earlier quarter on account of lower SG&A expenses. Operating income improved to $100.9 million from $88.1 million due to higher gross profit.

Cash Flow & Liquidity

During fiscal 2019, Ubiquiti generated $259.3 million of net cash from operating activities compared with $332 million in fiscal 2018. As of Jun 30, 2019, the computer networking company had $238.1 million in cash and equivalents with $464.7 million of long-term debt compared with the respective tallies of $666.7 million and $460.4 million a year ago.

During the reported quarter, Ubiquiti repurchased 1,116,466 shares at an average price of $127.52 per share. For fiscal 2019, it repurchased 4,733,853 shares at an average price of $99.38 per share.

As of Aug 8, 2019, the company had $7.4 million worth of shares outstanding under its $200 million share repurchase program, announced on Nov 9, 2018. It has initiated a new share repurchase program for up to $500 million.

Stocks to Consider

Some top-ranked stocks in the broader industry are Nokia Corp. NOK, Verizon Communications Inc. VZ and United States Cellular Corporation USM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nokia surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 89.3%.

Verizon surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 2.6%.

U.S. Cellular surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 38.3%.

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