What happened
Shares of Ubiquiti (UI 1.12%) increased 11.4% in October, according to data from S&P Global Market Intelligence. It was an otherwise tough month for technology stocks, so the fact that Ubiquiti bucked the trend certainly says something.
And in Ubiquiti's case, it was just getting warmed up for a massive earnings beat that the company reported on Friday, Nov. 6.
Image source: Getty Images.
So what
The notoriously tight-lipped Ubiquiti management didn't have much in the way of news in October, with one small exception. Late in the month, the company released its proxy statement, in which a company lists all of the issues that will be voted on by shareholders at an upcoming annual meeting.
The proxy statement isn't as relevant for Ubiquiti, since it's almost like a private company that's nearly 90%-owned by founder and CEO Robert Pera. However, one data point long-term Ubiquiti investors may know to look out for is the total shares outstanding at the moment of the proxy statement filing before the November earnings. If investors compare the number in the proxy with the share count in the August earnings report, they can find out how much stock the company repurchased during the September quarter and into October.
Ubiquiti fell along with the rest of the tech sector in September and August, and the buyback-friendly Pera swooped in, buying back shares and lowering the share count from 63,687,891 as of June 30 to 62,851,378, as of Oct. 19, lowering the total share count by 836,513. It also appears the company continued buying even after the proxy statement release, as Ubiquiti's recent earnings report on Friday showed the company buying back 912 million shares in total since the June quarter.
Ubiquiti is not widely covered by analysts, given Robert Pera's 90% ownership and the fact that he doesn't hold conference calls. However, close observers of the company might have seen the sizable buyback in the proxy and bid shares up going into November.
Now what
Ubiquiti management apparently knows what it's doing, as the company's September quarter results, reported on Friday morning, absolutely destroyed analyst estimates. Revenue surged 46.5%, accelerating over last quarter's 10.1% growth. Earnings per share was up a whopping 72%, almost doubling analyst's EPS expectations.
It's a bit difficult to understand how Ubiquiti's results accelerated so much last quarter. Possibly, supply constraints restrained growth in the first two quarters of the year before catching up. In any case, public shareholders have to be rejoicing at the results, as well as the timely September and October buybacks as the stock has surged to all-time highs.
