Please ensure Javascript is enabled for purposes of website accessibility

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

By Steve Symington – May 10, 2018 at 8:41PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The wireless networking products company is up big after its latest quarter. Here's what investors need to know.

Ubiquiti Networks (UI 0.02%) 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


Ubiquiti Networks results: The raw numbers


Fiscal Q3 2018

Fiscal Q3 2017

Year-Over-Year Growth


$250.4 million

$218.4 million


GAAP net income (loss)

$102.7 million

$64.4 million


GAAP earnings (loss) per share




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:
    • North American revenue grew 20.7%, to $94.8 million.
    • South American revenue declined 28.4%, to $19.9 million.
    • EMEA revenue increased 29.6%, to $113.7 million.
    • Asia-Pacific revenue declined 9.3%, to $22 million.
  • 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.

Pera further cautioned investors against drawing conclusions from temporary fluctuations on a geographic basis, which he says are largely a function of the company's "imperfect" supply chain.

"I think they create a misrepresentation of the strength of our business," Pera added. "But there's also opportunities there; I think if we could make our supply chain more efficient, we should see increased scale and hopefully more consistencies."

Finally, given Ubiquiti's growing cash pile, Pera also touched on Ubiquiti's decision to continue pursuing share repurchases rather than acquisitive growth, stating:

My goal is to use our cash or capital efficiently and I think as demonstrated by our past share buyback performance, it's been a much better return on investment versus leaving the cash in the bank. We're also always looking at acquisitions. The problem with acquisitions is we have such a unique culture that it's going to be difficult to devote resources to cultural integration. And we're much faster, in my opinion, growing new technology and new businesses organically. So it leaves, I guess, a good opportunity for us. We have cash on hand and if we feel the stock's undervalued and we believe in our long-term prospects, it's [an] easy decision to use that cash to retire shares and improve our future EPS.

Looking forward

Looking ahead to the full fiscal-year 2018, Ubiquiti reaffirmed last-quarter's prediction that it remains on track to reach the low end of its previous financial guidance, which calls for revenue between $1.0 billion and $1.15 billion and earnings per share of $3.70 to $4.30. Wall Street was less optimistic, with consensus estimates calling for earnings of only $3.61 per share on revenue of $1.01 billion.

All things considered, this was a relatively clean quarterly beat from Ubiquiti Networks relative to expectations. And it's hardly surprising to see investors bidding the stock up in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ubiquiti Networks. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ubiquiti Networks, Inc. Stock Quote
Ubiquiti Networks, Inc.
$285.85 (0.02%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.