Motley Fool

Ubiquiti Networks Beats Expectations, Unveils New $200 Million Repurchase Plan

Steve Symington, The Motley Fool
Updated

Ubiquiti Networks (NASDAQ: UBNT) announced fiscal third-quarter 2018 results early Thursday, highlighting strong demand from its Enterprise Technology product lines and a large new share-repurchase plan. Shares of the wireless networking technology company climbed 11% Thursday when all was said and done.

Let's dig deeper to see what Ubiquiti Networks accomplished this quarter, as well as what investors should be watching in the months ahead.

A piece of Ubiquiti Networks networking hardware plugged into an outlet in a contemporary kitchen
A piece of Ubiquiti Networks networking hardware plugged into an outlet in a contemporary kitchen

IMAGE SOURCE: UBIQUITI NETWORK

Ubiquiti Networks results: The raw numbers

Metric

Fiscal Q3 2018

Fiscal Q3 2017

Year-Over-Year Growth

Revenue

$250.4 million

$218.4 million

14.7%

GAAP net income (loss)

$102.7 million

$64.4 million

59.5%

GAAP earnings (loss) per share

$1.32

$0.77

71.4%

Data source: Ubiquiti Networks.

What happened with Ubiquiti Networks this quarter?

  • On an adjusted (non-GAAP) basis, which notably excludes items related to stock-based compensation and tax adjustments, Ubiquiti's net income was $76 million, or $0.98 per diluted share, up from $0.78 per share in the same year-ago period.

  • By comparison, Ubiquiti's latest guidance -- provided in early February -- called for adjusted earnings per share of $0.92 to $0.99 and revenue between $245 million and $260 million. And though we don't usually pay close attention to Wall Street's expectations, consensus estimates predicted lower earnings of $0.93 per share on revenue of $247.9 million.

  • Service-provider technology segment revenue -- which includes the airMAX, airFiber, EdgeMAX, and UFiber product lines -- declined 3.6% year over year, to $100.9 million, or roughly 40% of total sales.

  • Enterprise technology segment revenue -- which includes UniFi and mFi products, as well as Ubiquiti's consumer-centric AmpliFi and FrontRow products -- grew 31.6%, to $149.5 million, or 60% of total sales.

  • By geography:

  • Repurchased 4,389,195 shares of common stock through May 7, 2018 for an average price of $66.53 per share.

  • Earlier Thursday, Ubiquiti Networks announced a new $200 million stock-repurchase program.

  • Ubiquiti Networks also repatriated $677.2 million in cash from foreign subsidiaries to U.S. banks this quarter in response to recent favorable changes in U.S. tax law.

What management had to say

During the subsequent conference call, Ubiquiti Networks CEO Robert Pera noted that the company's UniFi product line continues to evolve nicely from its beginnings -- which were primarily WiFi access points -- to include more diversified products ranging from CloudKeys to Security Gateways and PoE Switches. Video-centric UniFi products also are gaining traction.

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