Ubiquiti's Q1 Earnings Beat Estimates - Analyst Blog

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Ubiquiti Networks, Inc. ( UBNT ) reported strong first-quarter fiscal 2014 results with non-GAAP net income of $41.2 million or 46 cents per share, well exceeding the Zacks Consensus Estimate of 39 cents. In the prior-year quarter, the company had reported adjusted net income of $13.6 million or 15 cents per share.

On a GAAP basis, the company's net income came in at $40.5 million, an increase of 206.8% from $13.2 million in the last year; whereas earnings per share increased 221.4% to 45 cents from 14 cents in the prior-year quarter.

Growth in the company's core business primarily drove the earnings. Ubiquiti's persistent focus on expanding the services by increasing investments in innovation and development was a key driver for the growth. Management's executive abilities and the opportunities in the enterprise business also contributed to the strong results.

Revenues

Ubiquiti's total revenue surged 110.8% year over year and 28.2% sequentially to $129.7 million. The growth was driven by increased transaction volumes and addition of new services for existing customers. Additionally, strong performances from the Enterprise Technology segment contributed to top-line growth. Revenues beat the Zacks Consensus Estimate of $113 million by 14.8%.

Segment Performance

Service Provider Technology segment sales increased 82% year over year to $94.2 million driven by strong performance in all its business including airMAX, New platforms, Other systems, Embedded radio and Antennas.

Enterprise Technology segment sales surged 257.7% year over year to $35.5 million driven by significant sales increase in its New platforms business. The Antennas and Other systems also performed well.

Income and Expenses

The company reported operating income of $45.9 million compared with $15.8 million in the prior-year quarter. Gross margins also increased to 44.7% from 40.7% in the prior-year quarter.

The company's research and development expenses were $6.3 million, up 34.1% year over year from $4.7 million, while sales, general and administration expenses were $5.8 million versus $4.5 million in the prior-year quarter.

Balance Sheet and Cash Flow

Cash and cash equivalents were $279.7 million at the quarter-end, compared with $227.8 million at the end of Jun 30, 2013. The company reported total equity of $190.9 million, compared with $147.4 million at the end of the previous quarter. The company's long-term debt reduced 1.7% sequentially to $69.9 million.

The cash flow from operating activities for the quarter aggregated $51.9 million.

Outlook

Along with the earnings release, management provided guidance for the second quarter of fiscal 2014. Revenues for the second quarter of fiscal 2014 are expected to be in the range of $130 million to $136 million.

For the second quarter of fiscal 2014, the company expects non-GAAP income per share to be between 42 cents and 46 cents, while the GAAP earnings are expected to be between 40 cents and 44 cents.

Ubiquiti currently carries a Zacks Rank #2 (Buy). Some other players within the sector that are worth mentioning include ShoreTel Inc ( SHOR ), which carries a Zacks Rank #1 (Strong Buy), and Novatel Wiresless, Inc . ( NVTL ) and Motorola solutions, Inc. ( MSI ), both of which carry a Zacks Rank #2 (Buy).



MOTOROLA SOLUTN (MSI): Free Stock Analysis Report

NOVATEL WIRELES (NVTL): Free Stock Analysis Report

SHORETEL INC (SHOR): Free Stock Analysis Report

UBIQUITI NETWRK (UBNT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: MSI , NVTL , SHOR , UBNT

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