Ubiquiti's (UI) Q2 Earnings Miss Estimates, Revenues Fall Y/Y
Ubiquiti Inc. UI reported soft second-quarter fiscal 2024 results, with both the bottom and top line falling short of the respective Zack Consensus Estimate. The New York-based networking products and solutions providers reported a top-line contraction year over year, owing to demand softness in both Enterprise Technology and Service Provider verticals.
Net Income
Net income on a GAAP basis in the quarter was $82.1 million or $1.36 per share compared with $112.2 million or $1.86 per share in the year-ago quarter. The downturn was primarily induced by a year-over-year decline in net sales.
Non-GAAP net income in the second quarter of fiscal 2024 was $83.3 million or $1.38 per share, down from $113 million or $1.87 per share in the year-earlier quarter. The bottom line missed the Zacks Consensus Estimate of $1.95.
Ubiquiti Inc. Price, Consensus and EPS Surprise
Ubiquiti Inc. price-consensus-eps-surprise-chart | Ubiquiti Inc. Quote
Revenues
Net sales in the quarter declined to $465 million from $493.6 million in the prior year quarter. Sales decline, owing to weak demand trends in several regions, impeded revenue growth. The top line missed the consensus estimate by $24 million.
Enterprise Technology generated $391.5 million in revenues, down 6% from $417.4 million in the prior year quarter. The top line fell short of our estimate of $403.6 million. Declining demand trends in Asia Pacific and EMEA (Europe, the Middle East and Africa) hindered revenue growth from this segment.
Service Provider Technology registered $73.5 million in revenues, down from $76.2 million in the year-ago quarter. Net sales fell short of our revenue estimate of $84.4 million.
Region-wise, revenues from North America stood at $225.9 million compared with $227.5 million in the year ago quarter. Net sales from Europe, the Middle East, and Africa aggregated $173 million, down from $195.1 million. Asia Pacific revenues decreased 24% year over year to $33.3 million from $43.9 million in the year-earlier quarter. Revenues from South America were $32.9 million, up 21% year over year.
Other Details
During the December quarter, gross profit was $177.6 million compared with $197.6 million in the year-ago quarter, with respective margins of 38.2% and 40%. The research and development expenses increased 9% year over year to $36.9 million due to higher employee-related expenses and prototype-related expenses. Operating income was $121.1 million, down from $145.2 million in the prior year.
Cash Flow & Liquidity
In the six months ended Dec 31, Ubiquiti generated $146.3 million of cash in operating activities compared to a cash flow of $2.3 million in the previous-year period. As of Dec 31, 2023, the company had $97.6 million in cash and cash equivalents, with $958.1 million of long-term debt.
Zacks Rank & Other Stocks to Consider
Ubiquiti currently carries a Zacks Rank #2 (Buy).
Here are some other top-ranked stocks that investors may consider:
NVIDIA Corporation NVDA, currently carrying a Zacks Rank #2, delivered a trailing four-quarter average earnings surprise of 18.99%. In the last reported quarter, it delivered an earnings surprise of 19.64%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. IDCC, carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 170.71%. In the last reported quarter, it delivered an earnings surprise of 78.99%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. ANET, carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
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