Ubiquiti Networks Crushes Expectations, Sees More Strength Ahead

Ubiquiti Networks (UBNT +4.27%) announced impressive fiscal fourth-quarter 2017 results on Thursday morning, detailing broad strength and its eighth straight quarter of top-line growth as the network hardware specialist rolled out new products in several leading consumer retail outlets.

With shares up more more than 20% in early trading, let's take a closer look at how Ubiquiti Networks finished its fiscal year, as well as what to expect in the quarters ahead.

IMAGE SOURCE: UBIQUITI NETWORKS.

Ubiquiti Networks results: The raw numbers

Data source: Ubiquiti Networks. 

What happened with Ubiquiti Networks this quarter?

• On an adjusted (non-GAAP) basis, which excludes items like stock-based compensation, net income increased 4.8% year over year to $61 million, and rose 8.7% on a per-share basis to $0.75.
• By comparison, Ubiquiti's guidance provided last quarter called for lower revenue of $215 million to $225 million, and adjusted earnings per share of $0.70 to $0.75.
• By product type:
• Service provider technology revenue grew 5.2% year over year to $114.7 million, driven by demand for Ubiquiti's airMAX AC and airMAX AC Gen 2 products.
• Enterprise technology revenue increased 48.6% to just under $114 million, driven by continued adoption of UniFi access points, switches, gateways, and IP cameras. Ubiquiti also continued the rollout of Amplify products in new retailers including Best Buy, Sam's Club, GameStop, and other international retail chains.
• By geography:
• Revenue from North America climbed 18.3% to $84.1 million.
• Revenue from South America rose 43.2% to $34.3 million.
• Revenue from the EMEA region climbed 26.2% to $87.9 million.
• Asia-Pacific revenue increased 6.3% to $22.3 million.
• Repurchased 50,000 shares of common stock for $2.5 million during the quarter, good for an average price $49.55 per share.
• Introduced GPS synchronization features for the airMAX AC product family.
• Released several new features for the UniFi family of products, including hotspot analytics, improved scalability, and high-density WLAN improvements.
• Introduced the UFiber GPON platform for ISPs to more quickly build high-speed fiber networks for many users over long distances.

What management had to say

In a prepared statement, Ubiquiti Networks management largely reiterated optimism for its innovation-focused propensity for industry disruption:

We remain focused on execution as we continue to grow our business, and believe we run one of the most efficient R&D teams in technology. This is evidenced by our industry leading annual sales per employee of $1.3 million. We will continue to make substantial investments in R&D, inventory and operations that we believe will help us expand our addressable market and maintain our industry leading financial metrics. We're very excited about our
new product pipeline, which we expect will enable us to increase average selling prices for our high performance, best value proposition products.

Looking forward

For the current fiscal first quarter 2018, Ubiquiti Networks anticipates revenue will be in the range of $230 million to $250 million, and translate to GAAP diluted earnings per share of $0.80 to $90. And for the full fiscal year ended June 30, 2018, Ubiquiti expects revenue of $1.0 billion to $1.15 billion (up from $865.3 million in fiscal 2017), driven by growth in both of its core segments, with diluted earnings per share of $3.70 to $4.30. By comparison -- and though we don't usually pay close attention to Wall Street's demands -- analysts' consensus estimates predicted significantly lower full-year revenue of $928.2 million, and earnings of just $3.21 per share.

All things considered, this was a stellar beat from Ubiquiti Networks on broad-based growth, followed by significantly better-than-expected guidance as as the company continues to take share in the markets it enters. And it should be no surprise to see Ubiquiti Networks stock up big right now.