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Ubiquiti's (UI) Q2 Earnings Match Estimates, Shares Fall
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Ubiquiti Inc. (UI - Free Report) reported relatively modest second-quarter fiscal 2020 results, wherein the bottom line increased year over year and matched the Zacks Consensus Estimate. Following the results, its share price fell 15.1% in Friday’s trading session to close at $144.95 as the quarterly performance failed to meet the broader market expectations with investors probably anticipating a healthy beat.
Net Income
On a GAAP basis, net income for the December quarter was $85.8 million or $1.32 per share compared with $77.8 million or $1.09 per share in the prior-year quarter. The improvement was primarily attributable to lower operating expenses and a reduction in outstanding share count.
Non-GAAP earnings came in at $91.4 million or $1.40 per share compared with $95.1 million or $1.33 per share in the year-ago quarter. The bottom line was in sync with the Zacks Consensus Estimate.
Quarterly revenues were relatively flat at $308.3 million and missed the consensus estimate of $343 million. By product type, revenues from Service Provider Technology were $97.7 million compared with $113.2 million reported in the year-ago quarter due to lower revenues in Europe, Middle East and Africa (EMEA), North America, South America and Asia Pacific. Enterprise Technology revenues were $210.6 million, up from $194.1 million driven by product expansion and further adoption of UniFi technology platform across all regions other than EMEA.
Region wise, revenues from North America were $130 million compared with $121.2 million a year ago. Revenues from South America were $24.9 million compared with $20.9 million, and the same from Asia Pacific totaled $32.8 million, up from $30.7 million. The increase was primarily due to higher revenues from Enterprise Technology products, partially offset by lower contribution from Service Provider Technology products. Revenues from EMEA were $120.6 million, down from $134.4 million.
Other Details
Overall gross profit increased to $145.1 million from $140.2 million in the year-ago quarter driven by lower costs of sales. Gross margin improved to 47.1% from 45.6%, led by favorable mix of products sold, partly offset by higher tariffs and indirect costs. Total operating expenses were $33 million compared with $48.6 million in the year-earlier quarter led by higher litigation costs in the year-ago quarter. Operating income improved to $112 million from $91.7 million mainly due to lower operating expenses.
Cash Flow & Liquidity
For the first six months of fiscal 2020, Ubiquiti generated $243.3 million of net cash from operating activities compared with $144.6 million in the prior-year period. As of Dec 31, 2019, the computer networking company had $100 million in cash and equivalents with $615.5 million of long-term debt. During the reported quarter, Ubiquiti repurchased 995,495 shares at an average price of $120.11.
Bandwidth has long-term earnings growth expectation of 12.9%. It delivered positive earnings surprise of 67.6%, on average, in the trailing four quarters, beating estimates on each occasion.
ATN International surpassed earnings estimates twice in the trailing four quarters, the positive surprise being 143.9%, on average.
Calix has long-term earnings growth expectation of 6%. It delivered positive earnings surprise of 24%, on average, in the trailing four quarters, beating estimates thrice.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Ubiquiti's (UI) Q2 Earnings Match Estimates, Shares Fall
Ubiquiti Inc. (UI - Free Report) reported relatively modest second-quarter fiscal 2020 results, wherein the bottom line increased year over year and matched the Zacks Consensus Estimate. Following the results, its share price fell 15.1% in Friday’s trading session to close at $144.95 as the quarterly performance failed to meet the broader market expectations with investors probably anticipating a healthy beat.
Net Income
On a GAAP basis, net income for the December quarter was $85.8 million or $1.32 per share compared with $77.8 million or $1.09 per share in the prior-year quarter. The improvement was primarily attributable to lower operating expenses and a reduction in outstanding share count.
Non-GAAP earnings came in at $91.4 million or $1.40 per share compared with $95.1 million or $1.33 per share in the year-ago quarter. The bottom line was in sync with the Zacks Consensus Estimate.
Ubiquiti Inc. Price, Consensus and EPS Surprise
Ubiquiti Inc. price-consensus-eps-surprise-chart | Ubiquiti Inc. Quote
Revenues
Quarterly revenues were relatively flat at $308.3 million and missed the consensus estimate of $343 million. By product type, revenues from Service Provider Technology were $97.7 million compared with $113.2 million reported in the year-ago quarter due to lower revenues in Europe, Middle East and Africa (EMEA), North America, South America and Asia Pacific. Enterprise Technology revenues were $210.6 million, up from $194.1 million driven by product expansion and further adoption of UniFi technology platform across all regions other than EMEA.
Region wise, revenues from North America were $130 million compared with $121.2 million a year ago. Revenues from South America were $24.9 million compared with $20.9 million, and the same from Asia Pacific totaled $32.8 million, up from $30.7 million. The increase was primarily due to higher revenues from Enterprise Technology products, partially offset by lower contribution from Service Provider Technology products. Revenues from EMEA were $120.6 million, down from $134.4 million.
Other Details
Overall gross profit increased to $145.1 million from $140.2 million in the year-ago quarter driven by lower costs of sales. Gross margin improved to 47.1% from 45.6%, led by favorable mix of products sold, partly offset by higher tariffs and indirect costs. Total operating expenses were $33 million compared with $48.6 million in the year-earlier quarter led by higher litigation costs in the year-ago quarter. Operating income improved to $112 million from $91.7 million mainly due to lower operating expenses.
Cash Flow & Liquidity
For the first six months of fiscal 2020, Ubiquiti generated $243.3 million of net cash from operating activities compared with $144.6 million in the prior-year period. As of Dec 31, 2019, the computer networking company had $100 million in cash and equivalents with $615.5 million of long-term debt. During the reported quarter, Ubiquiti repurchased 995,495 shares at an average price of $120.11.
Zacks Rank & Stocks to Consider
Ubiquiti currently has a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader industry include Bandwidth Inc. (BAND - Free Report) , ATN International, Inc. (ATNI - Free Report) and Calix, Inc (CALX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bandwidth has long-term earnings growth expectation of 12.9%. It delivered positive earnings surprise of 67.6%, on average, in the trailing four quarters, beating estimates on each occasion.
ATN International surpassed earnings estimates twice in the trailing four quarters, the positive surprise being 143.9%, on average.
Calix has long-term earnings growth expectation of 6%. It delivered positive earnings surprise of 24%, on average, in the trailing four quarters, beating estimates thrice.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>