Ubiquiti Networks (UI -1.04%) released fiscal fourth quarter 2018 results early Friday, detailing accelerated growth from its core Enterprise technology segment, as well as the company's efforts to continue improving operations.
With shares up modestly in response as of this writing, let's take a closer look at how the wireless networking company ended the year, and what investors can expect.
Image source: Getty Images.
Ubiquiti Networks results: The raw numbers
| Metric |
Fiscal Q4 2018* |
Fiscal Q4 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$269.8 million |
$228.6 million |
18% |
|
GAAP net income |
$70.1 million |
$60.7 million |
15.5% |
|
GAAP earnings per share |
$0.94 |
$0.74 |
27.3% |
Data source: Ubiquiti Networks. *For the quarter ended June 30, 2018.
What happened with Ubiquiti Networks this quarter?
- On an adjusted (non-GAAP) basis, which excludes items like tax adjustments and stock-based compensation, Ubiquiti's net income was $74.8 million, or $1.01 per share, up 34.7% from $0.75 per share in the same year-ago period.
- For context, and keeping in mind Ubiquiti Networks is no longer providing quarterly guidance (a move that it says it's making to hone its "focus on long-term shareholders"), consensus estimates predicted roughly the same EPS on lower revenue of $256 million.
- Service-provider technology segment revenue -- including the airMAX, airFiber, EdgeMAX, and UFiber product lines -- fell 7.7% year over year, to $105.9 million.
- Enterprise technology segment revenue -- including the UniFi, mFi, and its consumer-centric AmpliFi and FrontRow products -- increased 43.7% to $163.8 million.
- By geography, North America revenue climbed 48% to $124.5 million; Europe, Middle East, and Africa revenue grew 16.3% to $102.3 million; Asia-Pacific sales increased 0.6% to $22.4 million, and South America revenue declined 40% to $20.6 million.
- The company repurchased 586,924 shares at an average price of $70.11 per share. That left $306.2 million remaining under Ubiquiti's repurchase authorizations.
What management had to say
Commenting on the relative outperformance in the Enterprise space and North America, CEO Robert Pera reiterated that UniFi is "expanding fast from just being known as Wi-Fi to being a unified networking solution, with getting in network security, and we continue to add advanced features."
In addition, Pera said the company still has significant room for improvement in its supply chain and sales channel -- which it aims to address with a recently set-up large inventory facility in the United States.
He added: "Moving forward, we continue to expand the application use and get into more verticals. And then we need to continue improving our operations to just meet the demand, which we are not doing yet."
Looking forward
Ubiquiti Networks provided guidance for fiscal 2019 revenue of $1.1 billion to $1.2 billion, which should translate to EPS of $4 to $4.80. The EPS range comes with a caveat: Full fiscal-year earnings may decline to "$3.65 or lower" if recently proposed tariffs are implemented. For context, the midpoints of both ranges were comfortably above consensus estimates, which predicted full fiscal 2019 EPS of $4.23, on revenue of $1.12 billion.
This was a solid showing from Ubiquiti Networks as it strives to continue innovating while improving operations to meet demand. And I think long-term investors should be more than happy with where it stands today.
