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What's Happening: Shares of Ubiquiti Networks (NASDAQ:UBNT) were up more than 16% at noon Friday after the company handily beat analyst estimates for its second-quarter earnings.
Total revenue rose 11% year-over-year to $153.1 million, driving an 8% rise in operating profit and an 11% increase in net income. Ubiquiti reported non-GAAP EPS of $0.53 for the quarter, five cents higher than what analysts were expecting.
Why It's Happening: While revenue from Ubiquiti's service provider segment, which is its largest, declined by 10.5%, strong growth in its enterprise technology segment more than made up for it. Enterprise technology revenue almost doubled to $53.4 million, making up a little more than a third of the company's total revenue. This is up from just 20% in the same period last year.
The North American market performed well, making up for weakness in both South America and the Asia Pacific region. North American revenue rose by 66% to $54.1 million, while the smaller South American and Asia Pacific markets declined by 20.5% and 12.4%, respectively.
Guidance for the third quarter did come in below expectations, despite the strong results. Ubiquiti expects revenue between $146 million and $158 million, barely including the average analyst estimate of $157.9 million. Expected non-GAAP EPS between $0.45 and $0.50 also falls short of the $0.51 consensus.
Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Ubiquiti Networks. 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.