Disappointing Growth, Guidance Tanks Ubiquiti Networks Inc. Stock
A Ubiquiti Networks Air Fiber dish array broadcasting along the coastline. Credit: Ubiquiti Networks via Facebook.
Shares of Ubiquiti Networks stock fell 4.9% on Thursday as of 5:21 p.m. ET as investors took a dim view of the company's fiscal third-quarter results. Here's a closer look at the final Q3 totals versus Wall Street's projections:
|UBNT||Revenue||YOY Growth||EPS||YOY Growth|
|Consensus estimate||$147.49 million||(0.57%)||$0.47||(6%)|
|Q3 actuals||$147.46 million||(0.59%)||$0.47||(6%)|
Sources: S&P Capital IQ and Ubiquiti Networks press release.
Commenting on the results, CEO and founder Robert Pera said in a press release: "We are focused on advancing our R&D and expanding our market opportunities in the coming quarters."
What went right: Enterprise technology sales, a catalyst last quarter , came in strong again. Segment sales rose 50.9% as companies snapped up UniFi access points and related products for enhanced wireless service. Pera and his team also controlled direct expenses and administrative expenses -- both were essentially flat year over year -- to invest heavily in R&D to chase the opportunities Pera alludes to in his quote.
What went wrong: Service provider revenue continued its descent, falling 12.1% year over year. That wouldn't have been so bad if Enterprise Technology had grown more. Instead, Enterprise sales accounted for just 27.9% of revenue versus 34.9% last quarter, resulting in a slight year-over-year decline in gross sales.
What's next: Looking ahead, Ubiquiti Networks expects $140 million to $150 million in fiscal fourth-quarter revenue, resulting in $0.43 to $0.48 a share in profits after accounting for non-cash charges and one-time items. Analysts tracked by S&P Capital IQ have the company generating $155.47 million in revenue and $0.49 a share in adjusted profit versus $156.01 million and $0.56 a share in last year's Q4.
The disparity between Ubiquiti's revenue projection and Wall Street's hopes appears to have contributed to the after-hours sell-off. Longer term, analysts have Ubiquiti Networks growing earnings by an average of 8.81% annually during the next three-to-five years.
In the meantime, investors should also review Ubiquiti's 10-Q quarterly filing with the SEC. There you'll find cash flow detail that's left out of the press release plus additional management commentary on the financial results -- though Ubiquiti did say that it produced $36.7 million in cash from operations during the quarter.
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The article Disappointing Growth, Guidance Tanks Ubiquiti Networks Inc. Stock originally appeared on Fool.com.
Some days, Tim Beyers is just earning his keep. He's also a member of theMotley Fool Rule Breakersstock-picking team and the Motley Fool Supernova Odyssey I mission and owned shares of Apple at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+ , Tumblr , or Twitter, where he goes by @milehighfool .The Motley Fool recommends Apple, Facebook, and Ubiquiti Networks. The Motley Fool owns shares of Apple and Facebook. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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